Ways and Means

Lord Beamish Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Mel Stride]

I assure the hon. Lady that the process at the conclusion of this debate will be exactly the same as the one we go through on any consideration of Ways and Means measures in respect of such fiscal matters.

An open and consultative approach is important to our tax policy making process, and our commitment to a single major fiscal event each year is a further valuable step to improving the process for making fiscal policy. Just as with most other major economies, people will no longer face a host of tax changes twice a year.

The transition to the new Budget timetable will, of course, mean that a further Finance Bill will be introduced following this autumn’s Budget. In line with our past practice, the Government will next week publish drafts of some clauses that we plan to introduce in the next Finance Bill. The transition means there are fewer clauses than in recent years, but pre-legislative scrutiny will again help consideration of the Bill.

On that subject, Members may notice that there has been a slight change to the motions on today’s Order Paper. The Government have withdrawn a motion covering changes to the definition of a taxable disposal within landfill tax. That motion and the corresponding clause will no longer be taken forward in the current Bill.

[Mr Kevan Jones (North Durham) (Lab)]

Can I ask why?

[Mel Stride]

The hon. Gentleman has brilliantly pre-empted my next comments. If only he were a little more patient, all would be revealed. Her Majesty’s Revenue and Customs has been consulting on related changes to the taxation of illegal waste disposals over the summer, and we will set out our proposals in this area on 13 September when draft clauses for the winter Bill are published.

[Mr Jones]

Is the Minister saying that those proposals will actually come forward? I will address this in my speech, but I have been in discussion with HMRC’s policy department, which has given certain commitments to making some serious changes in order to collect more landfill tax and stop avoidance.

[Mel Stride]

The hon. Gentleman is right about the importance of those measures, and they will go forward. The policy has not changed; it will just come forward at a different time with other measures in this area.

[Mel Stride]

Our record on addressing tax avoidance speaks for itself. HMRC has raised £160 billion from clamping down on avoidance, evasion and non-compliance since 2010, which is a vast improvement. Given that our current deficit is running at about a third of the 2010 level, this Government have brought in a huge amount of money. In terms of having the resources, we have invested £1.8 billion in HMRC since 2010 to focus exactly on tax avoidance.

[Mr Kevan Jones]

As the Minister knows, HMRC’s landfill tax figures show a £150 million tax gap. Will the future proposals be published for further reaction and consultation? What I hear from the industry is that some of the proposals it wants are being ignored by HMRC.

[Mel Stride]

All the measures relating to the motions we are debating will be out there and will be clear. They will be brought forward along with other measures later in this Session.

Moving back to the Bill at hand, the motions on the Order Paper give little mystery as to the provisions that we will be introducing. I look forward to debating them in more detail as the Bill progresses, and I will say more about the overall aims of the Bill on Second Reading. For the moment, I will provide a brief outline of some of the main measures.

The Bill that the motions provide the basis for will make significant changes to the corporation tax regime for large companies. Building on work that this Government have championed internationally and the recommendations of the OECD, the Bill will limit the extent to which big multinational corporations can reduce the tax they pay in the UK through excessive deductions for interest expense. That measure will address a significant area of corporate tax avoidance, and is forecast to raise £5.3 billion over the next five years by ensuring those corporations pay a fair contribution.

The Bill will also change the treatment of losses within corporation tax; it restricts the extent to which past losses can be set against taxable profits, ensuring that companies with profits over £5 million in a year must pay some corporation tax. At the same time, the Bill will provide for allowances recognising donations to grassroots sport and to museum and gallery exhibitions, and for new £1,000 allowances so that those earning small amounts from trading or property will not have to pay tax on this income. The changes to tackle avoidance of corporation tax by multinationals are part of a number of changes that take further steps in tackling tax avoidance and tax evasion.

[Mel Stride]

My hon. Friend is relatively new to this House but she makes an important and insightful point, which is that, as we know, we should be under no illusions that under Labour’s plans corporation tax will rise. We have seen it fall from 28% to 19%, and it will continue down to 17%—

[Mr Kevan Jones]

On a point of order, Madam Deputy Speaker. I thought this debate was about the Government’s proposals. The Minister, following a set-up question from a Back Bencher, is now talking about what proposals Labour might have. Is that in order? Should we not be sticking to the—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I thank the hon. Gentleman for his point of order. It is right that we must keep a careful eye on these matters, which of course I am doing. I am sure the Minister is, in the remarks he is making, using as an illustration other policies that may not be his policies. Of course, if he is replying to points raised in the debate, I will always encourage that, because it is important that every Member in this House has a say in the debate. [Interruption.]

[Mr Jones]

It is a set-up—

[Madam Deputy Speaker]

The hon. Gentleman must not add more from a sedentary position to his point of order, so I will not take up that point, which in any case I cannot answer. The Minister has barely begun, and I am sure that in his wide-ranging speech he will cover everything he ought to cover and everything the House requires him to cover.

[Mel Stride]

Thank you, Madam Deputy Speaker. I could not have put that better myself. [Interruption.] And I will get on with it, too. I am not surprised that Labour Members are slightly shy about our discussing their tax plans, because they are not good for our country. Having a plan to raise corporation tax to 26%, with an increase for small companies as well, and to change the tax threshold to bring many, many more people into the higher rate of tax is not a way of incentivising jobs, wealth and economic growth, as the hon. Gentleman well knows.

Our changes to tackle avoidance of corporation tax by multinationals are part of a number of changes that take further steps in tackling tax avoidance and tax evasion. Others covered by these resolutions will introduce a penalty for those who enable tax avoidance, a penalty for transactions connected with VAT fraud and measures to tackle disguised remuneration tax-avoidance schemes.

The Government’s aim to make the tax system fairer is further supported by the Bill’s provisions on the taxation of those with non-domiciled status. A number of changes will be made, and these are forecast to raise £1.6 billion over the next five years. Most importantly, permanent non-dom status for people resident in the UK will be ended, so that they pay tax in the same way as everybody else. That major reform makes the tax system—

[Mr Kevan Jones]

I wish to make a point about tax avoidance and fraud. When it comes to landfill tax, will that extend to companies or public organisations which know that the price they are paying for the collection of their waste cannot possibly include the disposal rates of landfill tax? Or will it cover those accountants and others who are involved in a landfill tax company and know what is actually going on? Will that be covered by the definition of fraud and avoidance?

[Mel Stride]

I will ask the relevant Minister in the relevant Department to get back to the hon. Gentleman on that very specific point.

I was discussing a major reform that makes the tax system fairer and supports the public finances, increasing, but not jeopardising, the contribution that non-doms make to tax revenues. Other clauses will legislate for the changes—

--- Later in debate ---

[Nicky Morgan (Loughborough) (Con)]

This is the first time that I have spoken in a debate in which you have been in the Chair, Madam Deputy Speaker, so may I welcome you to your role? It is a real pleasure to see you in the Chair, and I thank you for calling me in this important debate.

First, let me welcome my right hon. Friend the Member for Central Devon (Mel Stride) to his new role as Financial Secretary to the Treasury. I know that he has already spoken at Question Time, but I think that this is his first formal debate. It is just about right to say that he has already been in that post for longer than I was before I was moved on to the Department for Education. As I shall explain shortly, and as we have already heard this afternoon, my right hon. Friend has already made a positive impact through his decision on the Making Tax Digital work. I look forward to working constructively with him and other Treasury Ministers over the next few months and years.

This is my first speech in the Chamber as the incoming Chair of the Treasury Committee, so it is right that I should pay tribute to my predecessor, the former Member for Chichester, the indefatigable Andrew Tyrie. During his seven years as Chairman, he took Select Committee scrutiny into new territory, successfully pressing for new powers over appointment hearings, securing fundamental reform of the Bank of England’s governance and accountability to Parliament, and conducting forensic cross-examination of Ministers, officials and senior figures in the financial services industry. His work on the Parliamentary Commission on Banking Standards led directly to vital reforms to restore public trust and personal accountability in our banking industry. I know that he will be a hard act to follow, but I will try my best to maintain his rigorous standards of scrutiny and to increase further the reputation and influence of the Treasury Committee.

It is unfortunate that we are having the debate before the Treasury Committee has been formally constituted. After a four-month hiatus, many of the incoming Select Committee Chairs are impatient for the normal business of Select Committee scrutiny to resume. I should note that until the other members of the Treasury Committee have formally been appointed, my remarks are made in a personal capacity.

The economic context for the resolutions is complex and uncertain, and some of it has already been highlighted. Employment is at record levels, but productivity is in the doldrums. Consumer spending and confidence seem resilient, but unsecured borrowing is rising rapidly. The deficit continues to fall, thanks to the efforts of the Chancellor and his predecessor, but the fiscal rules have had to be relaxed to insure against rising economic uncertainty. I am sure that over the coming months the Treasury Committee will consider this complex picture in detail, and we will want to hear from the Governor of the Bank of England and the Chancellor as part of that process. However, with the terms on which the UK will leave the EU as uncertain as they are, nobody can predict with confidence the path for our economy and public finances.

There is one thing that we can be certain about: the country’s economic success and fiscal credibility depend on the Government sustaining their commitment to economic openness—openness to trade, openness to investment and openness to migration. Leaving the European Union must not become a retreat into economic nationalism and isolationism. Global Britain must not just be a slogan.

Let me turn to the resolutions. In 2011, the Treasury Committee set out some principles of tax policy, and I expect that the new Committee will want to hold the Treasury to account for its adherence to them. In fact, I hope that we will be very interested in how future tax policy is made and the Treasury’s work on the overall tax base, given the changing nature of our economy and employment patterns.

Two of the principles identified in 2011 were that tax should provide certainty and stability, as was highlighted in an intervention by the hon. Member for North Down (Lady Hermon), who is not in the Chamber at the moment. It is alarming to see that 27 of the 48 Ways and Means resolutions are marked as

“including provision having retrospective effect”

because the principle of retrospective taxation undermines the certainty and stability of our tax system, so it should be deployed sparingly and only with good reason.

I acknowledge that in this case—the Minister has highlighted this—the Government have been quick to confirm their intentions. The previous Finance Bill was originally published in March, before the start of the tax year but, because many of its provisions were not passed before the June general election, they are coming back before the House in September. The shadow Minister complained that what is promised to be published in the summer comes forward in September. Well, it has always seemed rather strange to me that an autumn statement happens in December. There are always rather odd vagaries regarding when Government announcements are made, but perhaps that will be solved by our having just one major fiscal event in any one year.

The Financial Secretary stated in July that a number of the provisions from the original Bill would apply retrospectively to the start of this tax year when they were reintroduced in

“a Finance Bill as soon as possible after the summer recess”—[Official Report, 13 July 2017; Vol. 627, c. 11WS.]

It is therefore true to say that the retrospection in this case is not as bad as it might appear. The provisions were outlined before the start of the tax year and have been reiterated as soon as possible after the election.

As we heard from one of the former members of the Treasury Committee, my hon. Friend the Member for North West Hampshire (Kit Malthouse)—I am delighted to say that he has been re-elected—the Committee also had a strong interest in Making Tax Digital, to which resolutions 38 and 39 apply. It produced a valuable report on the subject in January, shortly before the Government announced their plans following a consultation. No one I have spoken to objects in principle to the idea of digital interaction with HMRC over tax, but widespread concerns were raised about the speed with which Making Tax Digital was being implemented and the fact that it would be mandatory for even the smallest businesses.

[Mr Kevan Jones]

Like the right hon. Lady, I think that the digital movement is an improvement, but has she come across examples—I have one in my constituency—of when there is a problem and small businesses particularly need to speak to somebody? Following the closure of tax offices, it takes a long time before one is actually able to speak to someone on the phone. Although the digital movement is welcome for many businesses, does she think we also need an element of personal interaction?

[Nicky Morgan]

The hon. Gentleman is absolutely right. We have agreed that people want more digital interactions. They are now much more used to them, and that is how people do their banking and lots of ordering. However, when there is a problem—we have seen this with the introduction of free childcare, which was the subject of the urgent question earlier today—people do need to speak to someone. That is particularly true for the smallest businesses, for which dealing with HMRC can be stressful and something they want resolved as quickly as possible. HMRC will want to consider whether that is done through face-to-face contact at offices, or by ensuring that there is a really good phone helpline system or another way of speaking online to people who are able to respond rapidly. I do not want to pre-empt what the Committee will look at, but as constituency Members of Parliament, we have all heard about cases when people have found getting hold of HMRC frustrating. HMRC is aware of that, and it has done a lot of work to improve customer service, but that is something that Members of Parliament could certainly look at further.

I welcome the deferral that the Financial Secretary announced on 13 July. It means that digital record-keeping and reporting for income tax and national insurance will not become mandatory until at least 2020. Although his statement kept open the possibility that Making Tax Digital would never be made mandatory for income tax and national insurance, resolution 38 suggests that that remains the Government’s medium to long-term ambition. His statement confirmed that the process will start with VAT in 2019. Most businesses already file their VAT returns quarterly and online, so it is sensible to start with a tax for which Making Tax Digital will not require such a significant change in businesses’ practice. Smaller businesses in particular will have breathed a huge sigh of relief when the concession was announced in July, so I thank the Minister for that.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

I begin by welcoming you to the Chair, Madam Deputy Speaker. I know that you were in the Chair before the recess, but it is the first time that I have had the honour of speaking when you are in the Chair and I wish you all the best in the coming years.

I would like to speak rubbish—[Interruption.] Somebody asks, “What’s new?” I could not possibly comment on my contributions in the Chamber. I actually want to talk about landfill tax and why it has not been included in the resolutions. It is a serious matter, and the Financial Secretary alluded to the reason for its omission. I want to put some of my concerns on record.

In the 2016 Budget and after consultation last summer, provisions were earmarked to be included in the 2017 Finance Bill through secondary legislation to amend taxable disposal for landfill tax purposes. The Financial Secretary explained that many things had been disrupted because of the general election. We cannot change that and I accept that certain matters were taken out of the Budget in the wash-up, which is standard practice. However, the measure on landfill tax was not. It was included until last week. The Financial Secretary said that the consultation on landfill tax will be included, but will now be published in September.

I will explain why landfill tax is so important in the context of the tax avoidance and fraud agenda that the Government say they wish to progress. I am not making party political points: the position is not all the fault of the current Conservative Government; it is as a result of the way in which successive Governments have implemented landfill tax. However, there are things that we can and must do, because the problem is not just that people do not pay the tax that they should to the Exchequer; it is that, in some areas, avoidance funds organised crime and leads to huge costs for local authorities and the taxpayer in cleaning up some of the issues.

The Government estimate in a 2014-15 report that some £150 million a year is not being paid in landfill tax. The Environmental Services Association reckons that the figure is nearly £1 billion a year. From my work in looking at the sector, £150 million seems a conservative figure. If we take HMRC’s figure, that represents 12% of lost revenue, which is on a par with tobacco and alcohol tax avoidance. One would think that it was easier to track landfill tax avoidance than alcohol and tobacco tax avoidance—so it should be. I accept that issues affect tobacco and alcohol sales that sometimes make it difficult to claim tax. However, with landfill tax, we are talking about large consignments of domestic and commercial waste, and its destination should not be hard to track.

The system was introduced as an environmental measure. The policy that Labour and Conservative Governments have pursued to try to reduce the amount of rubbish going to landfill and increase recycling is right. I will come on to the policy in Scotland, which creates a problem in England. The Scots are now dumping their rubbish in England to avoid the SNP Government’s so-called PR stunt in introducing 100% recycling, which we all know is impossible.

At present there are two rates of landfill tax: the standard rate of £84.40, which is due to rise to £88.95 in the 2018 Budget, and the lower rate of £2.65, which is due to rise to £2.80 in 2018. Successive Governments have, I think rightly, increased landfill tax over time—to generate revenue, obviously, but also to try to encourage people to recycle more. There is nothing wrong with that, and I do not criticise it at all; the problem lies in how the tax is avoided. It is paid by those who collect and dispose of waste. Some operators own not just the collection system, but the hole in the ground where the waste will go. That leads to clear cases of fraud, in which what actually goes into the ground is not declared to HMRC or to anyone.

Another issue is the type of tax that landfill operators pay. Some claim that tax on inert waste should be paid at the lower rate and pay that rate, although the tax should, in fact, be paid at the higher rate. What has made the situation worse is the mistake that was made in 2015, when the Government basically gave the industry a licence to print money by making it responsible for determining what type of waste was involved by means of something called the loss on ignition test. If a pile of rubbish, or a sample of rubbish, has a loss on ignition of 10% or less, it is classified as being subject to the £2.65 rate; otherwise, it will be subject to the full standard rate. There is thus a clear incentive for operators to declare waste to be subject to the lower rate, which means that the tax avoidance amounts to a little over £80 per tonne.

I am told that, in most areas where that is going on, if inspectors are looking around, operators will have a sample box of rubbish. In the majority of cases, what actually goes into the landfill site could be anything, and the higher rate of tax that the operator should be paying is being completely avoided because HMRC has extracted itself from the process and left the decision to the industry. It may be said that the aim is to attack red tape, which would be fine if the people concerned were responsible and law-abiding.

Let me put it on record that I am not accusing everyone in the industry of this practice. Some are clearly behaving correctly. However, there are a great many rogues, and, in some cases, not rogues but criminals, who have become involved in the practice because they see it as a good way of doing two things: making easy cash, and laundering money through what is a very high-volume business, given the amount of cash that goes through it. I shall say more about that shortly, but giving the responsibility to landfill operators, with no checks, is basically saying, “You decide what tax you pay.”

Another aspect that concerns me, and should concern everyone, is the issue of what is going into landfill sites. What is being classed as inert waste, or as waste that will not catch fire or is not dangerous, is paid for at a certain tax rate. That is declared as going into landfill sites, but what is in fact going in could be very different. I have a simple question: what records do people check? Again, it is very much a matter of self-regulation: the operators fill them in, and a toothless tiger of an organisation called the Environment Agency does spot checks on them. I have been told that one operator deliberately sent in the previous year’s returns and they were just accepted. That is what this comes down to: a lack of co-ordination in the way the HMRC and other Government agencies are tackling the problem.

The other way of avoiding tax entirely is for someone to buy a hole in the ground, to set themselves up as a landfill tax operator and to go around advertising their wares by asking for tenders from organisations, and when the process gets to the weighbridge to determine the amount, to bypass it and just put the waste straight in—paying no tax at all, not even the lower rate. There are quite a few examples of that happening, but again there are no HMRC checks. I will come on to some proposals that I hope the Minister will consider.

[Robert Jenrick (Newark) (Con)]

The hon. Gentleman is making a valuable contribution. I want to emphasise a point he made at the beginning of his remarks: the rise of serious organised crime from this tax. In Nottinghamshire—which I know he knows very well, as a son of Worksop—there have been large-scale frauds where huge rubbish dumps have been put on private property, often with the agreement of the owner, who of course denies it to the police, and the Environment Agency provides absolutely no prosecutions. A number have fallen down; multimillion pound prosecutions have collapsed. It is becoming one of the easiest ways to conduct serious organised crime in this country.

[Mr Jones]

The problem is not only that the hon. Gentleman’s constituents have to live next door to those illegal dumps, but that there is the expense of clearing them up, which falls back on the taxpayer.

There is another widespread scam. This morning I tried to find the figure for the number of fires at waste transfer stations, but I could not. For the uninitiated, I will explain. Having been a chair of public health in Newcastle, I could bore on about waste: when waste is being transferred, it usually does not go straight to the actual site, but goes first to a waste transfer station where it is either sorted or graded into different things. The number of fires that occur at waste transfer stations is out of all proportion to the probability of that happening. The reason for that is that once there is just a pile of ash, there is nothing to dispose of. That is the problem, and, again, organised crime is involved in that.

We have had some instances in County Durham of the point raised by the hon. Member for Newark (Robert Jenrick). There are frauds such as those he describes—to be fair to Durham police, they have cracked down on some of the individuals concerned—but there are some people who have bought into this business. If we look back at what they did or how they got their money, we find serious questions about whether they should be allowed anywhere near the waste industry.

We all know why, for example, in the 1970s the mafia got control of waste in New York: because there is money to be made in it. It is the same in this country, but unfortunately we are not taking the robust approach needed to address that.

One of the issues is about who is responsible for that. The hon. Gentleman mentioned the Environment Agency. It is a good organisation in one respect; it is full of some very good and committed people, but they do not have the killer instinct to be enforcers. The agency needs to have a certain mindset and to take robust action, rather than just looking at the odd illegal site. It needs to closely monitor some of the existing organisations. Without that mindset and enforcement, this will never succeed.

This is also a matter that falls between the Environment Agency and HMRC. I give credit to Durham police for taking a lead in trying to get people together and for saying, “Look, wait a minute. We know that the people behind this are involved in x, y and z, which has mostly nothing to do with rubbish. It is to do with other serious organised crime.” The police have worked with HMRC and others and tried to concentrate on these issues.

I have a concern about HMRC’s approach to this problem, and the Minister might want to reflect on it. I shall not go into details because the case is ongoing, but when I raised one particular matter with HMRC, I was told that no enforcement action would be taken because the fraud was not worth more than £20 million a year. That seems like a lot of money to me. Another case that is ongoing at the moment involves fraud totalling £78 million a year. I wonder whether these decisions are the result of a lack of resources. I have spoken to a lot of the investigators in HMRC and I pay tribute to them for the work they do. Some of the people they are dealing with are very dangerous, and it is a complex matter to put these cases together. What we need in this country is a joined-up approach by HMRC, the Environment Agency and the police. I had a meeting earlier this year with the Minister for Security, the right hon. Member for Wyre and Preston North (Mr Wallace), to discuss where all this money goes. The amounts being generated are huge, and I have seen evidence that it is going into the drugs trade or other illicit organisations. That has an impact on society.

There are some things that could be done. As I have said, we need to adopt a joined-up approach—dare I say the Eliot Ness approach—and take a robust line on this. As the hon. Member for Newark has just said, the people who have to pay for the clear-up are the taxpayers. In many cases, that involves local authorities that are already under a lot of pressure. We need to adopt a hard-headed approach, and the Minister needs to look at the figure of £150 million. I think that the figure is way more than that.

Self-certification and the loss on ignition test just need to be binned. I know that there are pressures, and people have talked about cuts in HMRC—[Interruption.] Oh, there is more yet, don’t worry! The hon. Member for Chelmsford (Vicky Ford) is looking exasperated. What is needed is one single rate for landfill, whatever it is. That test is not enforceable; every shipment going into a landfill site would have to be tested. People have talked about leaving this up to the industry, and I am not besmirching the reputation or integrity of any particular party, but it is open to anyone who wants to do so to abuse the system. I therefore think that those tests need binning, and that we need one single rate.

People ask whether landfill sites could be monitored. Yes, we have the technology. I have raised the matter with the Minister’s policy people and asked whether we could have a system similar to those at weighbridges and slaughterhouses in which cameras can record how many vehicles are going into a site. In one case that I have examined, the owner was clearly not paying the landfill tax despite the fact that a ridiculous number of vehicles were going into the site. If we had people in Revenue and Customs checking these things, I think it would pay back very quickly.

The other thing is the checking of sites. The Environment Agency has responsibility for most of the checks, but I do not get the sense from HMRC that there is robust enforcement even when questions are asked. The right hon. Member for Loughborough (Nicky Morgan) raised the issue of retrospection. Can I suggest to the Minister, if he wants to get some back tax in, how he might do it? Once a landfill operator has finished with a site, it puts a cap on it, and that is the end of it. I have been told of an operator in the north-east that has done that, and I know from evidence I have seen that it did not pay the right tax. The question was raised with the Environment Agency and HMRC of how to make sure the right tax is paid. The easiest thing is to put a borehole through and check what is actually in there. If we did that on a few sites, I think we would find that what incurs the lower rates is not what is there. That is an important point.

In policy terms, as I have said to the Minister’s policy officer, we need to make the producers of the waste responsible for where it goes. At the rates that some waste collection organisations advertise, they could not possibly make a profit if they were paying landfill tax. The problem is that because local government and others are being squeezed, many local government organisations have got into bed with these operators because they charge the lowest rates, but they can do that only because they are either not paying landfill tax or paying it at the incorrect rate. The onus should be on large organisations to take responsibility for what happens to their waste; their responsibility should not end once the waste operator has taken it away. The rates being paid by quite a few public bodies in the north-east of England make one wonder how these organisations can be making any money, if they are paying landfill tax.

Operators are also making claims that are completely unachievable, such as 100% or 98% recycling of commercial waste, which is not possible. If that is the case and they are collecting at a certain price, what is happening to the 10% or 15% they cannot recycle? Its collection would be completely uneconomic if they were paying landfill tax. If HMRC had its eyes open and looked at some adverts, it would be thinking, “Wait a minute. There’s something wrong here.”

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Does my hon. Friend agree that local authorities and the Local Government Association could play a greater role in monitoring the amount of waste going to landfill?

[Mr Jones]

Yes, I do, but the problem is that local authority budgets are under tremendous pressure, so they are going for the cheapest price. If somebody goes to them and says, “I can get rid of your waste for less”, what are they going to do? One council in Wales was trucking its waste up to the north-east. Can someone tell me, if the operator was paying the proper amount of landfill tax, how that could be economically viable? It cannot be. The onus is on local authorities to start asking questions about who they are contracting with.

There is also an issue with the individuals who can now operate licences. It does not take a genius to look at some operators who get involved in the industry and ask, “What is their experience? Where is the money suddenly coming from to set up a business?” This is fraud, but it is also an environmental concern.

Scotland has huge great policies about zero landfill waste and things like that, but the reason for that is very simple: the waste is coming over the border. Operators in Scotland are avoiding the cost of having to dispose of waste and of separating it at source, which the Scottish Government pride themselves on, by taking it to the north-east of England or anywhere else where things are cheaper. Parts of the UK are becoming Scotland’s rubbish tip because the Scottish Government have no control over where Scotland’s waste is going. There is some evidence that we may be making money through the landfill tax that is paid when it comes over the border, but I suggest that quite a lot of landfill tax is not being paid. That is the problem, and there are things that need to be done.

What the Minister would find if he spoke to the industry is that, behind closed doors, everyone knows that this is going on. It is no great secret. If he is going to come back with regulations later in September, I want them to be robust, because I have a niggling feeling that the policy people at HMRC see the problem as one that will go away of its own accord. In 15 or 20 years’ time, when we are no longer using landfill, we may not have large-scale problems, but we will have lost millions if not billions of pounds in the meantime and, as the hon. Member for Newark said earlier, many communities will have been blighted by unscrupulous operators. I ask the Minister to talk to the Minister for Security, because this is not just about waste, but about the cost to society as a whole.

When I asked the Minister whether the regulations would be published, I was not being provocative; I just want to see what they are and know what the process will be. The industry and others who have been involved should be able to react to them before they come into force. One simple thing that could stop a lot of fraud would be the ignition test, for example, so if the Minister lets me know when the regulations are coming up, I would be happy to meet him or even make some suggestions about the proposals.

I now want to change the subject entirely and talk about air travel. The resolutions include a commitment to look at air passenger duty. We have been promised reform for a long time—I looked it up this morning, and this matter has been raised at least since 2011. I do not want to be accused of raising problems relating to Scotland this afternoon, but air passenger duty is of great concern to the north-east due to the Scottish Government’s new air departure tax. That decision is entirely up to them as part of the devolution settlement, but the new tax will reduce air passenger duty in 2018, which will have an impact on regional airports such as Newcastle. As I say, that is no criticism of the Scottish Government, because they have the devolved responsibilities and can do that, but if they abolish air passenger duty altogether, that could have a devastating impact on those airports. Members from Northern Ireland have also made representations because the same situation applies there to Belfast International, Dublin City and City of Derry airports due to differential rates in the Republic of Ireland.

Why does that matter? The north-east of England is the poorest region in the UK with, sadly, the highest unemployment. Newcastle airport has been a success, for which I give credit to the local authorities that own it and their private sector partners. It sustains some 7,800 jobs, 3,200 of which are directly at the airport, but the knock-on effect throughout the region is also important. The airport brings some £57 million of tourism a year to the north-east, sustaining some 1,750 jobs.

London has four airports, so the economic impact of each is possibly not as great as the impact of an airport in a region such as mine. Regional airports provide connectivity for people who want to travel not only for leisure but for business—some £173 million of exports go through Newcastle airport each year, nearly £150 million of which go through just one airline. The Emirates flight from Newcastle to Dubai moves goods not just into the middle east but into the far east and Asia. The airport is important not only in carrying people but in supporting the region’s businesses.

At the 2015 general election the then Prime Minister, David Cameron, said that he would not allow regional airports such as Newcastle to be at a disadvantage if Scotland were to reduce the rate of APD. We all know what happened to a lot of David Cameron’s promises, so I will not hold the present Minister to that one, but it is important that the issue is addressed.

The Government could use APD more imaginatively. Obviously it was introduced for environmental reasons, but we all know that it is now a big cash cow for the Exchequer. If we had differential rates to try to encourage airlines to relocate to regional airports, it might help to reduce the overcapacity at airports in London and the south-east. It would also be a cheap way of regenerating regions such as the north-east.

The present rate of APD puts Newcastle airport at a disadvantage because, unlike London Heathrow, we have a relatively small number of business travellers. If we wanted to think creatively, we could introduce an incentive. I understand from the media that the new metro Mayor of Tees Valley made an election pledge to nationalise, reopen or somehow expand Teesside airport, which is a little ambitious. He may find that that election promise is difficult to translate into action. Again, if the APD rate goes down in Scotland and Newcastle airport is affected, trying to get any new flights to a place like Teesside will be virtually impossible. The issue is important to the north-east, and it is not just about passenger travel and tourism flights; it is about the broader economy. Our regional universities need access to international students, and a region where jobs have not boomed would be severely affected if the airport’s passengers leaked to Scotland.

Let me turn to small business and some of the issues raised earlier. I am not opposed to the use of new technology or to recognising that we have to change the way we do things. My party made mistakes when it was in Government by closing a lot of DWP offices and going directly to doing things by phone, which made it difficult for people to have interaction, and we are in danger of making the same mistake on tax offices.

A constituent who came to see me last year runs a one-person business. If she had a problem with her tax, she would drive to Durham tax office and meet somebody she knew, and they would explain the situation to her. I am not saying we should keep tax offices open just for that one person, but if we are going to go into the digital age—I have no problem with that, as it might be easier for some businesses—we need to ensure that we have either telephone access or dedicated processes whereby people can at least get assistance. I believe it was the right hon. Member for Loughborough who mentioned webchats, which are a way of doing this and are used by a lot of service providers. That needs to happen before any roll-out of the changes, because there is nothing more frustrating than not being able to get through. My constituent told me that when she eventually did get through, she got through to three different people. I do not know whether this could be done, but perhaps we could use a case-management approach, with individuals taking control of certain areas. People might think personal relationships between small businesses and their tax inspectors would be hostile, but in my experience they are not. If the relationship works well, it helps the business in terms of how it operates and it helps how HMRC can collect.

I now wish to discuss HMRC’s priorities. HMRC comes in for a lot of criticism, but it has a huge task to do. Even so, I sometimes wonder whether it gets its priorities wrong and I wish to give an example from my constituency. I have just spoken about the lack of enthusiasm for cracking down on landfill tax fraud, but an overzealous approach is taken to some small businesses. I have written to the Chancellor about a constituent of mine, Mr Marshall, who runs a bathroom business in Chester-le-Street. I have not yet received a reply, even though I have written twice—obviously, the Chancellor has been very busy. This is an example of where HMRC uses a sledgehammer to crack a nut. Mr Marshall and his family—it is a family business—have a showroom, where people can order and pay for a bathroom, and then they will organise everything that needs to be done. They do not employ anyone—they fit bathrooms, but they do not employ the plumbers, electricians and so on. Mr Marshall subcontracts the work to plumbers and electricians, and the client then pays them, as is common in the industry.

Last year, Mr Marshall had a visit from HMRC, which said that he is now responsible for the VAT payable by those individuals, even though he does not directly employ them, because they are small businesspeople. He freely admits to me that he does not use the same person every time; it depends on who is available. He is now being hit with a tax bill for some £24,000, which to a small, well-respected business is a little harsh. As I say, I have written to the Chancellor twice without receiving a reply. HMRC will not discuss this because it is under its veil of secrecy, as it always is, but I want to know why one person has taken it upon himself to deem that the VAT liability of these individuals—if there is one—should fall on someone who is procuring a service. If that is the case, and if I was regularly employing someone to do some work on my behalf and they went above the VAT threshold, would HMRC suggest that I, as the person employing them, should pay their VAT?

I would like the Minister to look at that case. As I said, I have tried writing to the Chancellor, without success. I am happy to email him the details and copies of the letters I have. I was going to say that such cases give HMRC a bad name, but that is not hard to do. No one likes to pay taxes, but the point is the disproportionality between a family business—this is not a multinational corporation—and the Googles of this world and the landfill operators that completely ignore the actual tax situation without any grievance falling upon them from HMRC. It is about proportionality in some of the enforcement. The new Chair of the Treasury Committee might want to look at how HMRC deals with small businesses. It is not only about the forms, but about what is facing my constituent. The process is time-consuming, but it can cause anxiety if someone suddenly has to find such an amount of money.

There is another issue I want to raise—I have moved on from rubbish; I am going to speak about cosmetic surgery. I tabled a parliamentary question a couple of weeks ago about the Government’s proposals for collecting VAT for cosmetic surgery. I have looked at the issue and got into the subject. I will not hasten to go through the whole issue of the regulation of cosmetic surgery, but it is another area I am pursuing.

[Wes Streeting (Ilford North) (Lab)]

Declare your interest.

[Mr Jones]

I think even the best plastic surgeon would struggle with me.

The question is whether VAT is payable on cosmetic procedures. The problem is that such procedures vary from facelifts and tummy tucks to boob jobs, fillers and that side of the industry. I came to the issue through a constituent. I will not talk about the regulation, because that does not apply to the taxation of cosmetic surgery, but I want some clarity from the Government on the rules about whether cosmetic surgery should be VAT-registered.

There is an organisation called the Hospital Group. In a previous life, it went into administration owing the taxman nearly £9 million in VAT because there was an argument about whether VAT should be levied on the surgical procedures. The bill started at £17 million and went down to £9 million before, lo and behold, the director folded the company. HMRC is left with £9 million that it has not recovered. That company owes money and tax to quite a few other organisations, including councils.

This is an interesting issue, because while people would not pay VAT on a medical procedure, these are not medical procedures. I am not for one minute suggesting that women who have had mastectomies should pay VAT if they need reconstructive surgery, but if a procedure is purely for cosmetic reasons, it should be VAT-chargeable, as I read the regulations, but HMRC does not seem to be enforcing that. There is an argument, which I have heard from the new owners of the Hospital Group, that these are medical procedures, as people are having them because of mental health issues. If that is the case, evidence needs to be provided.

Given the amount of money that the industry generates, I wonder whether the Government are losing revenue. In the one case that I know of, the Revenue is owed £9 million, although it is never going to get that because the company has gone into liquidation. How many similar cases are there? We should consider whether VAT is chargeable on not just surgery but other aspects of the cosmetic surgery industry—things such as fillers and other products that enhance one’s aesthetic beauty, on which I am sure my hon. Friend the Member for Ilford North (Wes Streeting) will be able to enlighten me. If VAT is not being charged, we must consider that, because this is a huge industry in this country. As I said, there are regulation issues for some organisations that need to be addressed, but my parliamentary question was whether there were any proposals to look at the tax aspects of this issue, and the answer was that there were not. Will the Minister let me know what the regulations are and how they are being enforced? It could be that the Revenue is losing out on quite a large amount of money.

My hon. Friend the Member for Bootle (Peter Dowd) talked about the general treatment of tax avoidance, and he obviously hit a raw nerve with some Conservative Members with his accusation that they were the party of tax avoiders. It is in all our interests to ensure that people pay their tax. We all moan about the level of tax that we pay, but ordinary people have no way of influencing what tax they pay—the money comes off their salaries or wages through pay-as-you-earn. What grates with and hurts them is that they see hard-working people paying their tax—there are no clever schemes for them to lower their tax bill—while large corporations and others use mechanisms to generate huge profits but not pay tax. They see sporting individuals and others using mechanisms such as the film schemes that were deliberately set up so that people could avoid their tax liabilities. To be fair to the Government, they have cracked down on some schemes, but that is what irks a lot of people. They have also had austerity and the wage freeze for the past seven years, and they see the injustice of that. We need fairness and to ensure that people pay the tax that others are entitled to expect. Look at the earnings of some of the BBC’s stars, which were published a few weeks ago. The idea that some people want to reduce their tax bill when their initial wages are paid for by taxation is just amazing.

Finally, I just want to—[Interruption.] If the Minister wants more, I can give him more. I am trying to be helpful. I have been very helpful to him and tried to work with his Department, because there are occasions on which we can co-operate to get things done. Making sure that everyone pays their tax and that the system is fair is in the public interest. The Minister was right when he said that we cannot have public services or anything else if people do not pay the right levels of taxation. The system has to be fair.

There is another issue that I think HMRC is already on to, but on which it might want to take a more proactive stance because it relates to organised crime. You might think I am strange, Madam Deputy Speaker, going from rubbish to airports to cosmetic surgery, but I am now going to talk about puppy farming. I met the Dogs Trust yesterday, which has produced a very good report—I do not know whether the Minister’s Department has seen it, but it should read it, as this is another area in which organised crime is getting involved in cruel practices—and it concerns not only breeding dogs in this country but importing them. Now the importations are from Poland and Lithuania, and the Dogs Trust study is of both cases.

There are some horrendous cases, and not just as concerns the cruelty of the trade. If honourable colleagues or the Minister would like to look at it, the report is called “Puppy Smuggling: A Tragedy Ignored”, and it is an investigation into the pet travel scheme. It is quite clear from talking to the trust and the local police that this is another new way of making lots of money without paying any tax. It is a cash business, Madam Deputy Speaker. A lot of these pups are advertised on the internet and the process involves cash transactions. It has been described by one HMRC official as the new cocaine or drugs angle for some types of organised crime, as large amounts of money can be made.

Again, this is a question of co-operation between HMRC and other agencies, for example when local authorities are in charge of enforcement. I give credit to the Government for making changes to the puppy farming regulations, but we are now seeing the importation of these animals from abroad, and we need action at the port and to ensure that when sales take place, the correct amount of tax is paid. If we want to stop the trade, one way of doing so would be to use the tax system, because large amounts are being produced in cash, and if HMRC can use the system to ask where the cash is coming from, the focus is suddenly on that question.

This example demonstrates the innovative way in which organised crime works. It will look for the easiest way of making untraceable cash—landfill tax was one, and now, tragically, as some of the stories in this report are terrible, so is the trade in pups, which should not be bred in such a way or kept in such conditions. As the Bill goes through the House, the Government might want to consider this matter.

Again, this comes back to enforcement and attitudes. I am not criticising individuals at HMRC, as I say, because they have a difficult job, but we need an attitude in favour of enforcement and, on occasion, we must consider how that happens through HMRC and how it is linked with the police and other enforcement agencies. One thing that is quite clear in the examples that the Dogs Trust has highlighted concerning the scandal of puppy farming and importation, as well as what has happened with landfill tax, is that these things are not just HMRC’s responsibility. There are other agencies. Durham police have very effectively come together with others to limit and crack down on these individuals, so I ask the Minister to consider taking a cross-government approach to some of these issues, if we can. On that point, I shall conclude my remarks.

[Wes Streeting (Ilford North) (Lab)]

It is a pleasure to follow my hon. Friend the Member for North Durham (Mr Jones), who gave a very comprehensive speech. I personally felt that there were some areas of the Ways and Means resolutions to which he did not do justice, but I am sure we will get a chance to return to those on another occasion.

“A revolutionary moment in the world’s history is a time for revolutions, not for patching”—

those were the words of William Beveridge 75 years ago in his landmark report that paved the way for the modern welfare state. There is no doubt that we live in a similarly revolutionary moment. We are still in the long tail of the biggest economic crash since the great depression and the consequences that follow. We are on the brink of leaving the most sophisticated political and economic alliance in the history of the world, with consequences for our economy, a wide breadth of public policy and our citizens. We are also at the beginnings of an industrial revolution of a pace and scale that the world has never seen. Against that backdrop, the resolutions we are debating and the summer Finance Bill firmly fall into the category of patching.

In the time I have today, I will: specifically address the patching provisions in the Ways and Means resolutions; talk about the issues that are not addressed by the summer Budget and the Ways and Means resolutions; and touch on areas of Government policy that run completely contrary to our national economic interest. Ultimately, the patching measures in the Ways and Means resolutions are pretty small and fairly inconsequential given the wider economic impact of Government policy if that policy continues on the course that the Government have set out.

I turn first to the issue of patching. We heard from the new Chair of the Treasury Committee, who I am absolutely delighted has been elected. I have no doubt that she will fill the enormous shoes of her predecessor. As I have been re-elected to the Committee from this side of the House, I very much look forward to working with her and other cross-party colleagues. As both she and the Minister set out today, the Treasury Committee raised a number of concerns following our evidence gathering. We listened to a wide range of evidence from tax specialists, representatives of small and medium-sized businesses and, indeed, those businesses themselves on the consequences for them of pursuing the Making Tax Digital policy as it was originally conceived.

As other hon. and right hon. Members have said, there is no doubt that there are many benefits for the Revenue and potentially for businesses against the wider backdrop and the move to digitalisation. But there was a serious concern for small and medium-sized businesses in particular about the impact, which—granted—could be unintended. None the less, it would be red tape and bureaucracy for small and medium-sized enterprises that cannot really afford the extra burden. It should be the intention of the Government in any case when pursuing policy to try to implement it in a way that is not burdensome for SMEs or large corporations. We should seek to legislate and regulate effectively, which does not necessarily always mean heavily.

There was a concern that the timing of Making Tax Digital, as it was originally conceived, would have created an unnecessary and unwarranted burden on SMEs. There are more than 5,000 SMEs in my constituency alone. Since being elected to the House two years ago, I have made it my mission to speak up in their interests. I was therefore pleased, during the summer Budget and when listening to the Minister this afternoon, to see that the concerns expressed by the Treasury Committee have been taken on board, that the deadline has been moved back and that there is still some degree of flexibility about when mandatory provisions will kick in. None the less, Ministers ought to take into account some further cautionary notes, particularly following the points made by my hon. Friend the Member for Bootle (Peter Dowd), the shadow Chief Secretary.

As the implementation timeline stands, we will be looking to implement Making Tax Digital for SMEs in spring 2019—an auspicious year because it happens to coincide with our departure from the European Union. If that departure is smooth, perhaps the Making Tax Digital process can be equally smooth, but I have yet to see any evidence that it will be, be that in Government position papers, the reaction in the Cabinet to different Government position papers, the reaction of colleagues on both sides of the House to the Government’s position, the reaction of all 27 EU member states to what the Government have put forward or the reaction of the European Commission. As far as I can see, there is currently no hope of a smooth exit from the European Union; in fact, we are in danger of crashing out of the European Union. If that is the case, and we are not able to provide stability and certainty to businesses at least over a transitional period while we exit the European Union, we will be adding Making Tax Digital on top of the new customs and border checks and the new compliance and regulatory regimes that businesses will be wresting with—if those are, indeed, in place by that time. Ministers need to keep an eye on wider events and to think about Making Tax Digital in that context. I hope that is something the Minister will reflect on.

There was an interesting exchange between my hon. Friend on the Labour Front Bench and Government Back Benchers over tax avoidance and non-doms. No one pretends the issue is easy. There is a booming business in tax avoidance; indeed, individuals and corporations pay huge sums to very clever accountants to minimise their tax liability. Of course, much of that is perfectly legal, but that does not make it right or ethical. What is often missed in the debate about tax avoidance, particularly when we listen to the protests of people who face a larger tax liability, is that, in the aftermath of the financial crash, with everything we have seen in terms of the impact of austerity on public service provision, the burden of taxation and wage stagnation—I will come to those wider, structural economic problems shortly—there is sometimes a real sense of detachment among those who have benefited enormously from the current economic order and those who have been at the sharp end.

[Mr Kevan Jones]

Does my hon. Friend also think that there is a mindset in some parts of the Government—perhaps not on the Treasury Bench today—that the trickle-down effect of encouraging wealthy individuals from abroad to come to settle in London will boost the economy? In fact, it sometimes fosters corruption in those people’s countries, and it also takes away flats and other valuable assets in the capital, which local people can then never hope to gain access to.

[Wes Streeting]

I strongly agree with my hon. Friend. This idea of trickle-down economics must surely be discredited now: it does not work. People are rather ill aware of the extent to which the benefits of economic growth have been unevenly distributed and disproportionately enjoyed by those at the very top. I do not have a great deal of time for special pleading by wealthy individuals and corporations about being asked to pay their fair share of tax, because not everyone is feeling the pinch, and it is entirely reasonable to look at what we can do to tighten loopholes in terms of tax avoidance.

That brings me to the specifics of Government policy. We have had some remarkable rhetoric from those on the Treasury Bench, even over the two years I have been a Member of Parliament. The former Prime Minister, David Cameron, lauded his global leadership on tax avoidance, but the rhetoric is rather divorced from the reality. Even with the measures set out today, there are still means available to non-doms that enable them to enjoy tax exemptions and concessions for many years that are not available to the average UK citizen. Let me give one example: non-doms are able to keep their assets out of the scope of tax if they are held in an overseas trust that was created before they were deemed as domicile. That strikes me as rather unfair and as fairly easy to solve. That is just one example, but there are lots on which Government could clamp down further. The political rhetoric is there, but I do not think the political will is being delivered by policy.

[Wes Streeting]

My hon. Friend makes a powerful point. She will already have seen in her casework as a new Member the impact of changes to Government welfare policy on some of the most disadvantaged people in our society.

If politics in this country and across the western world tells us anything at the moment, it is that large numbers of people feel completely left behind by the economic order and are expressing their frustration through the ballot box in a variety of ways, whether that be by voting to leave the European Union because they see it as central to a global economic order that has left them behind, or by electing Donald Trump because of his promises to the central rust belt of America, which I think he will struggle to deliver. I will talk in my concluding remarks about what the current economic order means for politics and why Government really do need to listen to the voice of the people.

It is interesting to note the enormous complacency among Government Members. Sure, they occupy the Treasury Bench and Downing Street, and Government Departments are staffed by Conservative Ministers enacting, by and large, Government policies, with the very expensive assistance of the Democratic Unionist party. However, the Conservatives lost their majority at the election, and the tragedy for Conservative colleagues who lost their seats is that the Government have not actually listened to the message of the people.

Of course, our side has some humility about the fact that we did not win the election either. Lots of new hon. Members who have been elected to this House rightly celebrate their achievements and those of their party activists, but we know that we have further to go to earn the trust of the British people. Looking at the Government’s policies, we know that we have a responsibility to earn that trust to deal with the economic malaise and entrenched economic inequality that is affecting our citizens and those in many other economies. I welcome the Government’s rhetoric on tax avoidance and taking on non-doms, but I just do not see it reflected substantially enough in Government policy. I strongly support the criticism set out by the shadow Chief Secretary, my hon. Friend the Member for Bootle.

There is a sad irony in the point that a number of right hon. and hon. Members have made about the provisions for retrospective changes to tax arrangements. It seems that the provisions for non-dom arrangements in particular rule out retrospective changes. The Government are saying clearly, “If you have a trust overseas before the rules kick in, don’t worry: we’re not going to touch that money.” Of course, the nature of so many of those trusts is that they are family trusts that are passed down and inherited. In effect, the Government are acknowledging that those trusts exist and that there is an unfairness, and they are setting out to do something about it hereafter, but they are not applying retrospective changes to non-doms in the same way that other measures will affect many others retrospectively.

[Mr Kevan Jones]

Does my hon. Friend share my concern that wealthy individuals are found wanting when, as usually happens, a secret deal is done with HMRC to pay a certain amount to cover the liability? That is not open to many of my constituents, who are not able to argue when they have a pay-as-you-earn problem. Does he think it is fair that such deals are agreed by HMRC? They should be published if we are going to get fairness into the system.

[Wes Streeting]

I wholeheartedly agree with my hon. Friend. We should be putting an end to sweetheart deals. We certainly should not, as he says, allow them to take place behind closed doors without the appropriate levels of transparency; such transparency means that we at least know what is being done. What makes me angry, and what makes the individual taxpayers and the businesses that I represent angry, is the fact that we know—particularly if we have been self-employed or run a business—that if we are late with our tax return or our payment of tax due, we will be subject to fines and penalties, which will continue to accrue as long as we delay payment. However, not only can wealthy individuals and corporations pay long after they are supposed to, but they get to determine their own rate of tax. That is outrageous.

The Government have, even during the short time for which I have been a Member of this place, introduced measures to try to deal with tax avoidance by individuals and corporations, but those measures always fall short. Let us take the diverted profits tax—the so-called Google tax. Google barely paid a penny. That illustrates the gulf between the rhetoric we hear from those on the Treasury Bench and the reality of the impact of policy on the tax liability of wealthy individuals and corporations, who can effectively determine their own tax rate. People see that hypocrisy at the heart of the system, and I do not think that the measures proposed by the Government today or previously do enough to allay the concerns that people are expressing.

[Mr Jones]

I agree with my hon. Friend. Does he think that part of the problem is the operation of HMRC and its arm’s-length relationship with the Treasury? He speaks eloquently about people’s disillusionment with politicians and their ability to affect things. Does he agree that it is perhaps now time for Treasury Ministers to have more direct control over the operational decisions of HMRC?

[Wes Streeting]

I certainly feel that HMRC is insufficiently accountable to taxpayers and citizens, and I think there are two routes to redressing the problem. One is, as my hon. Friend suggests, for Ministers to take a far tighter grip on what is going on at HMRC, to rein the Department in and make sure that its conduct is in line with the expectations of the people we are sent here to represent. The other, as my hon. Friend the shadow Chief Secretary suggested, is to make sure that HMRC is resourced effectively so that it can implement public policy as intended.

Hon. and right hon. Members who have tax offices in their constituencies complain all the time about the loss of jobs in their constituency. They are fighting for their constituents, as they should do and as we all do. However, the closure of HMRC tax offices and the loss of HMRC jobs should be a concern not just for them, but for all of us. If we do not have the tax inspectors out there in the field clamping down on tax evasion, which is illegal, identifying areas of tax avoidance and, ideally, making recommendations to Government about improvements to the system, we will continue to have repeated debates in this place about how we clamp down on illegal tax evasion and aggressive tax avoidance.

Another way in which we can improve the scrutiny of HMRC is through the Treasury Committee. There is provision for a sub-committee of the Treasury Committee to look in detail at HMRC’s work, and when the Committee meets we ought to consider that. The question is always about time and resources. We are lucky to have on the Committee a hard-working and dedicated team of Clerks, who produce reports and briefing packs at a rate of knots on some of the most complicated areas of public policy. Of course, we have a heavy agenda because of the issues facing our financial system, in particular, which have preoccupied the Committee in its work. I think it is fair to say that our new Chair and Members have ambitions to look across the breadth of economic policy and Government spending policy. From our constituents’ experiences on the phone to HMRC—if they are able to get through—right through to our issues about the resourcing of HMRC, there is a serious and significant piece of work to be done on HMRC’s performance, the adequacy of its resourcing, the scope of its powers and its focus as a public body acting in the interest of all taxpayers.

[Mr Jones]

My hon. Friend raises a good point about staff. The problem we have had in all Departments during the years of austerity is that the easy target is to get rid of so-called civil servant pen pushers. The actual effect of that is starkly focused in the case of HMRC, because when we start to get rid of staff whose job is to collect tax, not only do we lose those individuals’ expertise and their years of experience, but it costs the taxpayer, in that staff are no longer available to enforce the tax regulations. I have highlighted the issue of landfill tax fraud, for example. Does my hon. Friend agree that the Government should look at this as a case of “invest to save”? In other words, if they invested in civil servants to do something, the Government would be able to prove that they were getting more in revenue than it was costing to employ those civil servants.

[Wes Streeting]

I wholeheartedly agree with my hon. Friend. The irony of some of the swingeing cuts of the past seven years is that although on a scorecard the cuts to civil service jobs represent significant savings, when we look at the roles and responsibilities of some of those civil servants, it does not take a rocket scientist to work out that cutting the number of tax inspectors may well mean that the Government will lose on tax yields and will lose revenue. There is a cost saving on the one hand, but on the other hand there is a direct cost to the Government in lost income.

I had the same experience in local government. Before I was elected to the House, I was the deputy leader of the London Borough of Redbridge. There is a continuing debate in local authorities about, for example, enforcement officers. There are huge pressures on local government budgets, and staff job losses can represent some of the biggest savings because staff are the biggest cost. If a council cuts its pool of parking enforcement officers, that will certainly help it to balance the budget when it comes to the budget council meeting, but it can end up losing revenue if enforcement officers are not out slapping penalties on cars. In addition to the loss of revenue, there are also worse outcomes for citizens, because such a policy encourages the bad practices that make our communities in the case of parking, or our society in terms of effective tax revenues, a lot worse off.

I hope that Ministers will turn to some of these issues when the Budget is next before us, because as well as being pretty thin on substance, the summer Budget did not deliver against the challenges of the time. At the opening of my speech, I quoted William Beveridge’s words about this being “a time for revolutions”. I have been struck by the interim report of the IPPR commission on economic justice, which has been launched today. In a succinct and effective way, the IPPR has summed up a number of the issues involving the great central planks of Government economic policy that have caused me great frustration, but it has also captured the sense of injustice felt by many of our constituents.

We could go on about this ad nauseam: I have sat in the Chamber many times listening to Conservative Members talking about their economic record, but I could spend much of the time available to me this afternoon cataloguing the broken promises of Conservative Chancellors. In fact, we could spend quite a lot of time talking about the broken promises of just one Conservative Chancellor. Our SNP colleague, the hon. Member for Glasgow East (David Linden), is new to the House and was not here to listen to George Osborne’s commitments, so I had better tell him about them. We were told in 2010 that the Conservatives would eliminate the structural deficit in one term, and they attacked the Labour party for lacking ambition and for not having a serious economic policy when we promised merely to halve the deficit over the course of a Parliament.

[Mr Jones]

Does my hon. Friend also remember that not only did George Osborne’s first Budget in 2010 help crash the economy, but the economically incompetent and hamfisted way in which the cuts were made—for example, cutting budgets in-year meant that it cost councils and others more to lay people off than it saved through redundancies—sucked demand out of the economy just at the time it was turning round?

[Wes Streeting]

That was one of my greatest frustrations as a Labour party member, looking in on debates in the House during the 2010-15 Parliament. We could be proud of Labour’s record in government from 1997 to the financial crash. There was unprecedented growth; we ran a budget surplus for four years—that has happened in only seven of the past 58 years; we lifted half a million children and more than 900,000 pensioners out of poverty, and we rebuilt public services. Yet we were told after the 2010 general election that Labour presided over reckless spending, but George Osborne was the shadow Chancellor who, up to the crash, committed to match Labour spending pound for pound.

How on earth in 2010 to 2015 we allowed revisionist history to take hold of Labour’s economic record will continue to confound me, but we must take that on. As my hon. Friend the Member for North Durham said, when we left office, the economy was growing and the initial impact of the early Osborne Budgets was to choke growth, scare away investment and suck money out of the economy through the cuts that were imposed. That did not make economic sense or even enable the then Chancellor to deliver his promises.

[Mr Jones]

Does my hon. Friend also agree that not only did what he describe happen, but if we had followed the Conservative party’s policy of deregulation of the banking and financial sector—the Conservatives never called for more regulation; they wanted less—and if we had accepted the suggestion of David Cameron and George Osborne at the time of the Northern Rock crisis to let it crash, we would have been in a much worse situation than we were?

[Wes Streeting]

I wholeheartedly agree. I am proud of the contribution that UK financial services make—not just the City of London, but other economic centres, for example, in Edinburgh and Leeds.

--- Later in debate ---

[Wes Streeting]

I wholeheartedly agree with my hon. Friend. Let me make two points about what she has said. In the Budget and the Ways and Means motions, and in previous Budgets and resolutions, the Government have chosen to pursue particular regressive forms of taxation. There is no doubt that VAT is a regressive form of taxation, in that it is paid by everyone, both individuals and businesses, regardless of income. If I went into a shop and bought an item that was subject to VAT, I would pay the same rate as someone with a much lower income buying the same item.

If a Government’s objective is to increase their tax revenues—and, of course, we understand why that would be an objective, given the context of the Budget and the revenue-generation measures in the Ways and Means motions—they should pursue revenue generators that are based on progressive taxation, and ensure that those with the broadest shoulders bear the greatest burden. We have heard those words, or a variation of those words, many times from the Treasury Bench, from successive Chancellors and in successive Budgets, but, as I have said previously, the rhetoric fails to match the reality.

As my hon. Friend has referred again to the issue of non-doms, let me again highlight the extent to which the motions fall short of what is required. Of course we welcome the Government’s measures on non-doms, but I have already criticised them for not addressing, in the Ways and Means motions, the ability of non-doms to keep their assets out of scope if they are held in an overseas trust that was created before they were deemed to be domiciled. We may also want to consider the issue of definition, because the definition of who can be deemed to be in that category seems misleading. It does give the impression that a UK-born non-dom will be deemed if they are now UK-resident, but, inexplicably, it only covers those whose parents were not non-doms, letting non-doms off the hook if their parents were also non-doms. That is very common.

[Mr Kevan Jones]

Does my hon. Friend agree that there is something archaic in people being able to pass down their tax advantages to their children in that way? The average taxpayer on pay-as-you-earn has no chance of having access to such measures, and they certainly cannot pass on their status to their children or get any advantage for their children in the tax system.

[Wes Streeting]

I wholeheartedly agree with my hon. Friend, and I am proud to be a member of the Labour party, because it is inherent in the founding principles of our party that we are here to represent the interests of labour. It should be a principle in the approach to taxation and funding our public services that a hard day’s work should result in a fair day’s pay and that the wealth people earn through hard work should be rewarded. There are many people covered under the Ways and Means resolutions we are discussing—particularly those on inheritance and people who enjoy non-dom status—who through chance or luck or birth have found themselves wealthy. It was not through hard work; they have just been lucky.

I understand the parental instinct that means parents or grandparents want to hand on assets of value, both financial and sentimental, to their successors. I understand that even more as someone who might benefit in the future—although, given my family background and the rising cost of social care, probably not in the way that many high-profile politicians have experienced in recent years. However, there is a problem in that people feel that the link between hard work and the rewards of hard work, and prosperity, have been loosened and weakened. Meanwhile, there are plenty of people out there who through luck, chance or circumstance have accumulated vast amounts of wealth and are seemingly untouchable by the tax collectors.

That situation is deeply regrettable, because it has a corrosive impact on the public finances and our ability to fund public services that benefit everyone, and it is also having a corrosive impact on politics itself. People feel that we gather in this place and work in the interests of a privileged few who have sharp elbows and access to Ministers and the corridors of power, while the vast majority of people, many of whom might have never even thought to email their MP, do not feel that they have a voice, and instead always feel that they are at the sharp end of things. We hear Ministers talking about the tough choices facing the Government, and of course they do face tough choices—if we had won the election we would have faced tough choices; we make no bones about that. However, tough times require fair choices: we should be operating fairly in the best of times, but when times are particularly tough we have to have social and economic justice at the heart of our programme.

--- Later in debate ---

[Mr Jones]

Does my hon. Friend agree that the privileged individuals are also the ones who will have choices come Brexit? If the Government get Brexit wrong for the economy of this country, the average person will not be able to move their wealth or savings offshore, so they will be the ones who suffer. The people my hon. Friend is referring to, however, will be able to move their capital anywhere in the world.

[Wes Streeting]

My hon. Friend’s critique is absolutely right once again. I hope the Minister will respond in detail to the points we are raising about the technical aspects of the Ways and Means resolutions, because I think we have given them a forensic examination and a serious and substantial critique, and the Government ought to respond to that.

I want to pick up on the issue of tax avoidance in Northern Ireland and the provisions in the Finance Bill in this area. The Government seem to be using the Bill to introduce measures that will loosen the definition of a Northern Ireland employer for SMEs, which will basically enable people to establish a business in Northern Ireland and claim the lower rate. Opposition Front Benchers have argued that this will lead to brass-plating, with companies setting up a nominal office in the Northern Ireland jurisdiction to take advantage of lower taxes. My hon. Friend the Member for Bootle, the shadow Chief Secretary to the Treasury, described that situation as an onshore tax haven. We should not be in the business of allowing such a practice.

Forgive my cynicism, but it seems that since the Government lost their majority, they have lost a hell of a lot of revenue in potential tax receipts and in Government expenditure going to Northern Ireland. I am sure that is merely coincidental and has nothing to do with the Democratic Unionist party deal, but in cash terms—that is, the outlay on infrastructure and public services—most UK taxpayers saw the deal between the Conservatives and the DUP as being expensive enough. By the way, I do not begrudge the people of Northern Ireland the investment in infrastructure, education and health that they need. In fact, I do not begrudge them one penny. I do, however, begrudge the unfairness of Northern Ireland being given preferential treatment over England, Wales and Scotland for no other reason than that the Prime Minister took a gamble. She has paid a heavy personal political price for that, but I am less bothered about that. I am really bothered about the fact that the taxpayers we represent in England, Wales and Scotland are paying a heavy financial price for the Government bribing the DUP into a deal.

This measure in particular really does trouble me. We have already had constituents writing to us about the cash outlay to Northern Ireland, and it seems that a lot of hidden benefits are now being given to it, including adjustments to the tax regime. That will not be good for maintaining a strong and cohesive United Kingdom—it does not play well with our constituents in England, Wales and Scotland when they see one part of the United Kingdom being given preferential treatment over the others. I am sorry to disappoint Scottish National party Members present today, but I am a strong Unionist. I strongly support the United Kingdom, but it has to be a partnership of equals. The way in which the Government are now treating Northern Ireland is particularly uneven, as we can see in the Ways and Means resolutions before us this afternoon. I am very disappointed by that.

Resolution 13 allows provisions to be made to expand the scope of business investment relief, which allows non-doms to remit funds to the UK tax-free if they are investing in certain categories of UK business. We have a serious structural problem in our economy when it comes to investment. As I have said, we have one of the world’s largest financial sectors, yet we have a lower rate of investment than most of our major competitors. Public and private investment accounts for about 5% of our GDP, which is below the average for developed economies, and that figure has been falling not only under this Government but for the past 30 years. That is a structural economic problem that we need to deal with. Corporate investment has fallen below the rate of depreciation, which means that our capital stock is falling, and investment in research and development is now lower than that of our major competitors.

There are a lot of causes of that, including the way in which the banking system is insufficiently focused on business lending. That has been picked up by the Treasury Committee and by Members throughout the House in recent years. Also, private equity markets are increasingly focusing on short-term returns, which is not leading to the kind of investment that we wish to see. If the Ways and Means resolutions had set out provisions to stimulate, support or benefit business investment in general terms, I would certainly have supported them. It seems, however, that resolution 13 is not about business investment in the broadest sense but about a special category of business investment that benefits non-doms. I do not understand how this measure sits with the rhetoric from the Minister about other Ways and Means resolutions that are meant to target non-doms.

The shadow Chief Secretary to the Treasury and other colleagues on the Opposition Front Bench will well remember that during the general election, which caught everyone unawares, including Ministers, a raft of Government measures in a wide range of Bills were dropped in the wash-up process. I was closely involved in the Higher Education and Research Bill and saw the consequences for that Bill. It was interesting that the changes to the business investment scheme in the March Budget resolutions were withdrawn in the wash-up process. The Government knew that there was no way we would have allowed the measure through and that we would have been prepared to talk it out—something we never hope to do, because we want to engage constructively with the Government, but only so long as they enable time for appropriate and thorough scrutiny of policy. That measure seemed particularly unfair. If the Government are serious about stimulating business investment and attracting foreign investment, I think there are better ways to do it than with a measure that benefits a particular category of individual. I am not sure it will generate the increased business investment that Ministers want, and it seems particularly unfair.

I understand the pressures around business taxation—it is sometimes all too tempting to turn to corporation tax as the answer to every public policy spending commitment one wishes to make—but whenever we suggest modest increases in corporation taxation, the Government’s reaction is to attack Labour as anti-business. It is important to remember that under Labour we had some of the most competitive corporation tax rates in the OECD and that we have maintained that commitment in every election manifesto since in order to keep the UK competitive, but I come back to the basic issue of fairness and making sure that people pay their fair share.

[Mr Jones]

Does my hon. Friend agree that the Government’s fixation with corporation tax being as low as possible, and the belief that somehow that will give us a competitive advantage, is blown out of the water by the very successful economies, such as Germany and others, that have corporation tax rates a lot higher than those in the UK?

[Wes Streeting]

I wholeheartedly agree—again—with my hon. Friend. It is almost as if he wrote my speech. I only wish I could have written his. I have learned a great deal this afternoon about landfill taxation policy and its importance, and I look forward to studying his speech later as we prepare to grill Ministers on the Treasury Committee.

I turn to resolution 4, relating to clause 14 of the pre-election Finance Bill, which introduced amendments to tighten the income tax treatment of termination payments. I made a point early in my remarks about the sense of unfairness and injustice that people feel about the way the rules are rigged. Many people fear, particularly in the current political and economic climate, and in the context of the Brexit process, that attempts will be made to erode workers’ rights. I was particularly concerned to learn, therefore, when I studied resolution 4, that the measure narrowed the scope of tax relief on redundancy and termination payments, removed any exemption for payments in lieu of notice, enshrined it in statute that injury to feelings—a main aspect of compensation in discrimination cases—was excluded from the tax-free scope of payments for injuries, and gave the Treasury the power to vary the tax-free amount.

--- Later in debate ---

[Mr Kevan Jones]

There aren’t any.

[Wes Streeting]

There is no one here—even Conservative Members have given up defending the Government’s Ways and Means motions. We have the poor Minister, his Whip and his poor Parliamentary Private Secretary in the Chamber, but there we are. I thank everyone else for paying attention this afternoon. The serious point is that the Ways and Means motions do not actually address the fundamental structural weaknesses in our economy.

I will now draw heavily from today’s report by the Institute for Public Policy Research, which I commend to the House and which I hope people will read. The fact is that the UK has the most geographically unbalanced economy in Europe. Although I am proud to be a London and Essex MP, I understand why colleagues from other regions and nations of the UK want a more balanced approach to regional economic and infrastructure investment, which is in the interests not only of their constituents but of my constituents. If we are to build a stronger, more resilient, more prosperous and fairer economy, it has to be one that is fairly balanced across the UK.

As Conservative Members tell us, we have a high employment rate and unemployment has been kept low, which I acknowledge and welcome, but Ministers and Conservative Members must have some humility about the fact that the high employment rate has been accompanied by an increasingly insecure and casualised labour market. Fifteen per cent. of the workforce are now self-employed, and many of those self-employed people will be hit by the Ways and Means motions, particularly those relating to Making Tax Digital.

We welcome self-employment. I have been self-employed, and I admire people who pluck up the courage to take the plunge and the risk of starting their own business, but there are many people who are not self-employed in the conventional sense—the sense that is to be encouraged and welcomed—but are in enforced self-employment, driven either by businesses seeking to duck their employer responsibilities or, worse still, by a punitive welfare regime in which people seek to declare themselves as self-employed so that they do not lose their tax credits while they scramble to find a real job. That is not properly understood.

Of course, there is also an unequal distribution of economic wealth. Between 1979 and 2012, only 10% of overall income growth went to the bottom half of the income distribution; almost 40% went to the richest tenth of households. Small wonder that we see this outcry from significant parts of our population, concentrated in certain parts of the country in particular, who are not just angry about the injustice they feel but are completely aware that it is a genuine injustice. It is not just a feeling of resentment—an irrational emotional response—as they are being left behind.

Let us be honest about the fact that we have, as the IPPR says,

“both world-leading businesses and world-lagging productivity.”

We have a lower rate of investment than most of our major competitors, as I have already said. Yes, we have a trade surplus in services, but our overall current account deficit as a percentage of GDP is the largest of all the G7 countries. The extent of manufacturing in our economy should make Ministers blush.

In the past seven years, the Government have been far too reliant on monetary policy levers. They have been over-reliant on quantitative easing, over-reliant on extremely low interest rates and over-reliant on growth that is fuelled by record consumer spending and consumer debt. We are building a new debt crisis in this country—it is a consumer debt crisis, and it is here. All it will take is a marginal interest rate increase for people to be unable to service their debt, and they are barely able to service that as it is. There are real questions to be answered about irresponsible lending, and the Treasury Committee needs to examine that.

These structural weaknesses in our economy ought to be at the forefront of the motions, but they are not. That would be irresponsible in the best of times, but let us look at what we face down the track. We are going to see deeper globalisation, and a shift of economic power to the south and to the east, with a requirement on us to become far more competitive, particularly in seizing opportunities in the service economy. We face enormous and fundamental technological change. The rate of such change is now vastly outstripping the rate at which regulators, government and businesses are able to respond to it. I am not someone who sees the rise of the robots as the beginning of human serfdom in the age of the machine; as with globalisation, there are huge opportunities here to deal with enormous inequality and with big issues facing the planet, such as climate change. Automation presents huge possibilities, but let us learn the lesson from globalisation. This is not something that we can slow or stop; it is happening, and it is a process. We must make sure that this new industrial revolution, the fourth one, works in the interests of everyone, rather than a select few. Otherwise, we will end up back where we are with Brexit, which is the biggest risk facing our country.

When we think about what could happen in the next couple of years as the UK leaves the EU or comes crashing out, we see that the idea that these Ways and Means motions would make any bit of difference is fanciful—it is not serious. When we look at policy coming from the Treasury and the Department for Business, Energy and Industrial Strategy, we see that it is insufficient to meet the challenges of the time. Worse, it seems that far from pursuing policies that will address these big challenges, the Government are pursuing an approach that would make things even worse, relegating the economy to a second-order issue. As George Osborne said from the Government Back Benches after he left office as Chancellor, in a debate about our relationship with the EU,

“the Government have chosen…not to make the economy the priority”.—[Official Report, 1 February 2017; Vol. 620, c. 1034.]

Can you imagine that? Can you imagine a Government not making the economy the priority? As I have said throughout this debate, that would be inexcusable in the best of times, but it is absolutely outrageous in the worst of times.

In conclusion, I hope that the Government not only take on board the detailed critique that has been made of their Ways and Means motions, but reflect on the structural weaknesses in our economy, the challenges that lie ahead and how they can meet them. Let us think about the biggest political event this country has seen in post-war history: the decision to leave the EU. We know that the referendum was lost because of a coalition of voters. I accept that there were a lot of committed Eurosceptics who always wanted out come what may, but the referendum was won thanks to the votes of millions of people who simply felt left behind, who felt unheard and who wanted to send a clear message. They are the people who have been at the sharp end of globalisation; they are the victims of economic inequality and social injustice. When we campaigned in areas where people turned out in droves to vote leave and we told people they may be voting to make themselves poorer, time and again we heard the same reply: “Things cannot get worse than this.” The thing I fear more than anything else about the economic outlook in this Parliament is that things can, and indeed may well, get worse. It would be a tragedy if the very people whose voices cried out to demand change, and who expect that change, were once again the ones who bore the brunt of short-term economic thinking, and of a politics and economics that works in the interests of the privileged few.

I did my democratic duty in honouring the referendum by voting to trigger article 50. What I will not do during this Parliament is pretend that I think the right decision has been made or that the warnings we gave will not come to pass. It is my responsibility, and the responsibility of us all, to protect the interests of our nation and our constituents. If we want to deal with what we are seeing across western democracies—the consequences of people abandoning their faith in mainstream politics—and we want to see off that trend and process, the only way to change course is to change our country. There is no shortcut to achieving change. It has to be meaningful, serious and a lot better than the measures the Government have presented this afternoon.

Commonwealth War Graves Commission

Lord Beamish Excerpts

Tuesday 10th May 2016 Westminster Hall

[Mr Kevan Jones (North Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the right hon. Member for Broadland (Mr Simpson) on securing the debate. I declare an interest as one of the two parliamentary commissioners for the Commonwealth War Graves Commission. Holding that post is a great honour. The right hon. Gentleman has described not only the detailed work that this organisation does, but the high esteem in which it is held by the public. It is clear that today the Commonwealth War Graves Commission is a national institution that people recognise, not only for its high standards but for the dedicated work that it does in commemorating the 1.7 million individuals who lost their lives in the two world wars.

That was not always the case. Like many British institutions, this organisation came into being almost by accident, as the right hon. Gentleman said, thanks to the determination and, I think, ferocity of Fabian Ware. This work was not being done at the time. It was clear at the beginning of the first world war that the War Office, as it was in those days, had not thought about what it would do with the casualties that would be left on battlefields across the world. It was only because of Ware’s dedication and the fact that he took it into his own hands to record the sites of the graves that the process began, in that the Government then decided that they needed a grave registration commission to take care of those graves and note where they were. Ware was an incredible individual who was determined to ensure not only that people had a lasting resting place but that the families could visit those graves in future years. Clearly, his contacts with the then Prince of Wales helped to secure the commission’s royal charter in 1917. It did not stop there.

Today, the proposal for a Commonwealth War Graves Commission—in those days, it was the Imperial War Graves Commission—would be straightforward. However, I draw hon. Members’ attention to the debate in the House on 4 May 1920, when an order was laid to agree the funding for the new Imperial War Graves Commission. Remarkably, it was actually opposed by some hon. Members, including the Conservative Member for Holborn, Sir James Remnant, who moved an amendment to reduce the amount by £5 to ensure that the debate took place.

There were two issues. One issue, as the right hon. Member for Broadland mentioned, was the great debate about whether the remains of the dead should be brought home. Sir James Remnant said:

“The dead are certainly not the property of the State or of any particular regiment; the dead belong to their own relations, and anything that savours of interfering with that right is bound to create opposition among the inhabitants certainly of our own Empire.”

At the same time, some local newspapers said that the state was nationalising death.

The other great debate was whether the relatives should be allowed to put their own memorials up in the Commonwealth cemeteries. Sir James Remnant’s argument was that families should be allowed, if they wished, to put their own memorials up, rather than having one imposed by the state. He said that

“the relations of the dead should have the right, within properly defined limits, as to size, taste, design, expense, and even of material to be used, to erect what headstones they like as representative of the personality of the individual, and as a personal tribute of affection to their own dead.”—[Official Report, 4 May 1920; Vol. 128, c. 1930.]

That would have led to quite some controversy.

In the same debate, Herbert Asquith, who lost his son Raymond in 1916, said:

“These men, be they officers or rank and file, who fell, died with the same courage and the same devotion and for the same cause, and they should have their names and their services perpetuated by the same memorial.”—[Official Report, 4 May 1920; Vol. 128, c. 1947.]

That goes to the root cause of a very clever idea that Ware came up with: that no one should get a bigger or different memorial because they were of higher rank or their family were able to pay.

The best example of that in this country must be Hollybrook memorial in Southampton, which is a memorial to those who have no known grave or were lost at sea. It includes the 823 members of the South African Native Labour Corps, who were lost when the SS Mendi sank just off the Isle of Wight following a collision with a steam packet ship. Alongside those names is the name of Field Marshal Lord Kitchener, who was lost at Scapa Flow in 1916. The memorial, which I visited a few years ago, includes that long list of 823 names alongside that of Lord Kitchener. That sums up the commission’s approach that there is no special treatment for rank.

I have the great honour of being on the commission, and it is something of a tradition in my constituency to be a commissioner. One of my predecessors was Jack Lawson, the Member of Parliament for Chester-le-Street—now in my constituency—from 1919 to 1949. He was on the original Imperial War Graves Commission. Like a lot of people who were involved in the early work of the commission, he was directly affected by the great war as his younger brother, William, was killed in 1916 and was buried at the Chester Farm cemetery in Belgium.

The work of the commission is complex, with a variety of sites in about 23,000 locations across 150 countries. Everyone sees and is rightly proud of the cemeteries in Belgium and northern France, but the standard everywhere in the world is the same, whether it is France, Belgium, Gaza or Egypt. A few years ago, I had the privilege of going to the jungles of Papua New Guinea, where there is a beautiful cemetery, and others are located in Sri Lanka. Ensuring that standards are maintained is incredibly difficult but they are, and that is down to the dedication of those who work for the commission. They ensure not only that standards are maintained, but that the ethos of the commission, which was laid down in its early charter, is maintained for future generations.

When I was a Minister in the Ministry of Defence, I was honoured to be involved in the delivery of the newest commission cemetery at Fromelles in France, which opened in 2010. That showed that the work of the commission never really stops because we are still discovering casualties around the world. I pay tribute to the men and women who work for the Ministry of Defence in the casualty recognition department. They go to great lengths to ensure that, where possible, we can identify casualties. That is not always possible, but the commission says that it is important that the names of as many casualties as possible are recorded in perpetuity.

Everyone knows the fantastic cemeteries of northern France, but many people do not realise that half the commission’s sites are in the UK. The commission is trying to ensure that they get recognition so that people know that they are in local communities and local cemeteries and that, whether they are commission headstones or private memorials, they are maintained by the Commonwealth War Graves Commission.

I urge hon. Members to visit some of the sites. The commission has a programme to put up green signs so that people know where the sites are located. The next phase, which will happen next year, is to get volunteers to help people with identification and to assist them when they visit. The work goes on. People should visit their local cemeteries and take school groups. The commission does important work not only on the first world war, but on the second world war. School groups are showing a great interest and the commission is rightly putting a great emphasis on education and awareness. I urge everybody to visit the commission’s excellent website if they want to know more about its work.

The hon. Member for Glasgow South West (Chris Stephens) has previously raised the issues he mentioned today. I chair the remunerations committee of the commission, and I have said that he can meet the head of personnel and others at the commission to discuss those issues. Decisions on pensions issues are difficult. Similar decisions have had to be taken by trade unions, including the Public and Commercial Services Union. I, along with the other commissioners, recognise the valuable work that all our staff do—not just in this country, but internationally.

The centenary of the commission is in 2017. It will be important not just to look back on the work that has taken place over the past century, but to look forward to ensure that we maintain the graves and memorials. We must ensure that the legacy and memory of the individuals who died in defence of the freedoms that we take for granted in this country are not lost for future generations.

--- Later in debate ---

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter.

It is vital that we remember, and that is what today’s debate is all about; indeed, it is what the Commonwealth War Graves Commission is all about. I thank the right hon. Member for Broadland (Mr Simpson) for securing this debate. This has been a very informative debate, with contributions from across the House about the importance of the commission’s work. That work is not only about maintaining the graves that we have heard so much about today, but about the way that the commission is taking history into the 21st century, by using web technology to help us look through our past and consider our own history, and of course so that we can take that knowledge and pass it on to the next generation. It is vital that we remember, and in particular that we remember the lives that were given for our freedom.

Of course, the Commonwealth War Graves Commission does phenomenal work. This year, we are remembering the losses in Jutland and, as we have already heard, the losses in the battle of the Somme in July 1916. The commission’s work continues day in and day out, and we must acknowledge it.

I am very grateful for the opportunity to contribute to this debate and, of course, very grateful for the work of the commissioners, including that of my hon. Friend the Member for North Durham (Mr Jones). The contributions this afternoon have really reflected the importance of the commission’s work.

Maintaining and upgrading 23,000 cemeteries and memorials across 154 countries is no mean feat. That work includes replacing around 20,000 graves a year. Of course, there is also the important work of building on 100 years of record-keeping. It is important that we recognise the outstanding work that the commission does, and of course quality is at the forefront of all that work.

That work can only be achieved because of the total dedication of the 1,300 people who work across the world for the commission. Many of them work here in the UK but others are employed to provide vital skills and services right across the globe. Of course, the commission’s work is dedicated to the memory of the 1,700,000 men and—as we have heard today—women from across the Commonwealth who were killed. The commission’s staff work so hard to maintain the highest standards, but above that to maintain the memory and dignity of each young life that was lost—and it was predominantly young lives that were lost. The staff keep alive the memory of those who were lost, gathering more information and historical knowledge over time, to share that collective memory and collective story that speak of a Europe that was once divided against itself. They ensure that that is never forgotten.

Although we often recall less peaceful times at formal ceremonies at the memorials and cemeteries, it is the individual care that the staff show to the families and friends of the lost that causes them to stand out. They enable people to move on but also to cherish their memories. When people walk into one of the commission’s many cemeteries—as I have on a number of occasions—scan the thousands of pristine graves and start to read the names, ages and ranks of those who fell, they are taken on a journey of sacrifice: the sacrifice of parents and families, of their children and of the many young who gave their lives. It is a reminder to us, and to all who hold power—not least in this place—that our responsibility to their legacy is to find political solutions, no matter how difficult that is, to the challenges we face in our globe today.

The commission does not just keep history alive, it presents the past in such a way that we will never forget. As the commission reaches 100 years next year, we must mark its excellent work, as the right hon. Member for Broadland reminded us. But the commission is not just an organisation; it is the sum of its many parts. By that I mean the dedicated staff, many of whom have spent all their working lives there—indeed, for some of those I met, generations of their families had worked in the organisation—and make the commission what it is. Nevertheless, they look to us to provide them with the support they need when their terms and conditions and pay need to be addressed, and it would be remiss of me not to raise that today.

I have met the trade unions—the Public and Commercial Services Union, Unite and Prospect—and I must declare an interest as secretary of the Unite group here in Parliament and as a former national official of that union. I have also met the commission’s staff and have listened closely to the issues they have raised, and I know that they want their voice to be heard in this place this afternoon.

We believe that deals can be brokered, to give the workforce greater morale. We know that there have been difficult discussions about pensions and that pension schemes have been challenged, but the staff have outstanding questions about what happened and it is only right that we look to find solutions to the challenges that they have identified.

[Mr Kevan Jones]

May I make the offer to my hon. Friend that I have already made to the hon. Member for Glasgow South West (Chris Stephens), that if she wants to meet the commission’s management to talk about personnel, I can certainly facilitate that?

[Rachael Maskell]

I thank my hon. Friend for that offer and I will certainly follow it up with him.

Commission staff have outstanding questions about their pensions, but that takes us on to the issues that are pertinent—particularly this week—regarding their pay. Over time, the staff have accepted lower rates of pay and less favourable terms and conditions—that came out in the Towers Watson global grading and pay review—and we have heard about the inconveniences to family life, whether that is taking children out of their schools or spouses not being able to have a career because of moves. The value of the jobs was also recognised in the review—for instance, the learning of a foreign language, not superficially but in a way that means being able to negotiate deals, employ staff and manage contracts. The staff’s dedication, and the quality and standard of their work, means that they should be remunerated at an appropriate rate. That is what the review says. Public sector workers are seeing a 1% increase in their pay but the commission is offering half that to its staff. We should seriously look at what the deals mean for the staff and ensure, as we enter this time when staff are working over and above what is expected of them so that the public can remember and commemorate 100 years since the battles of the first world war, that the staff’s battles today are well recognised and that staff are remunerated appropriately.

Labour wants a clear win-win solution and we believe that one can be found. I therefore urge the commissioners present and the Minister to find such a solution. We must remember that the staff are public servants and want to give the best they can, and the respect we show them will, therefore, be reflected in the excellence of their work.

As we move towards its 100th year next year, it is vital to ensure that the commission’s work and its vision for the future—building on Fabian Ware’s initial vision—is strong, including the commitment not only of its staff but of the public, in the way that it celebrates what has been achieved, and also to ensure that it continues to remember the ultimate price paid by the 1,700,000 people whose graves it cares for day in, day out, around the globe.

Scotland Bill

Lord Beamish Excerpts

Monday 29th June 2015 Commons Chamber

[Graham Stringer]

On 20 January, the Chancellor of the Exchequer told the Treasury Committee, in response to a question asked by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) about that very point:

“I think the best approach to dealing with this concern, which I think is perfectly legitimate, is to cross the political boundaries of our two parties to try to find a solution that helps these regional airports that can be affected by an air passenger duty decision north of the border.

HMRC has done some work on this and I think it anticipated that Manchester airport would lose around 3% of its traffic and Newcastle could lose around 10% of its traffic. That was work carried out a couple of years ago… I think you and I—I made the same offer to Ed Balls—could work to help regional airports in the north of England if the Scottish Government were to go down the road of dramatically cutting its air passenger duty.”

Further to that, the Chancellor told the House of Commons on 27 January:

“We have a couple of years to work this out—it does not have be done tonight or tomorrow—and we can work out a plan that protects the brilliant Newcastle, Manchester and other regional airports.”—[Official Report, 27 January 2015; Vol. 591, c. 726.]

What progress has been made on that? This is about a loss of 3% and 10% of business, which are not trivial amounts.

This will result in not only an economic benefit for Scotland, but in real competition, which will come in two forms: there will be competition for passengers on short-haul flights, for which APD is £13 per passenger, and for those on longer-haul flights, for which it is £71 per passenger. Obviously, the same amount is paid for the return flight. A passenger from Newcastle therefore has an incentive—this applies to large families in particular—to travel to Edinburgh or Glasgow in order to save some money. Someone travelling long distance from north America or China has the same incentive.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend agree that there is a knock-on effect on cargo? If the successful flight from Newcastle to Dubai were to be jeopardised in any way, the revenue earned from the airport through the transfer of cargo in that passenger aircraft would also be at risk.

--- Later in debate ---

[Mr Kevan Jones]

It is a pleasure to serve under your chairmanship, Mr Crausby.

I do not oppose the devolution of APD to the Scottish Parliament, but as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, it will have a dramatic effect on regional airports within the UK. The hon. Member for Dundee East (Stewart Hosie) mentioned the attractions of Edinburgh to north-east businesses that want international flights, but I have to say that they would sooner fly directly from Newcastle. As for the notion that people would fly to Edinburgh and then get on a train to travel south to our region, that would not be an alternative to flying directly to the north-east via Newcastle. Newcastle airport has been a success story for the north-east.

We hear much from this Government about rebalancing the economy. The north-east has taken the brunt when it comes to the loss of public sector jobs and it also has the highest levels of unemployment in the UK. There have also been knock-on effects from the Government’s decisions deliberately to divert funds from poorer regions such as the north-east to the Tory heartlands.

We have heard the Government’s rhetoric about growing the private sector. Newcastle airport has, I think, been a great example. A few years ago, I had the privilege of being a director of the airport, which is a great partnership between the local authorities in the region and the private sector. In 2012, the airport added value of some £640 million to the north-east economy, and under its master plan by 2030 it will generate some £1.3 billion for the north-east economy. It is currently sustaining 7,800 jobs, rising to over 10,000 by 2030.

The team at Newcastle airport now provides direct flights to Dubai and to New York, and those international flights will be put at risk if the Scottish Government go ahead with their plans. I understand that this is a devolved matter, and I understand the reasons why the Scottish Government want to reduce APD. Clearly, as my hon. Friend the Member for Blackley and Broughton said, the tax was brought in for environmental reasons that now make little sense when it comes to growing the country’s economy.

[Alex Salmond (Gordon) (SNP)]

I could be reading the amendment paper wrongly, but am I wrong to interpret the hon. Gentleman’s amendment 36, which has not been called for debate, as designed to delete the clause that would devolve air passenger duty? Several times, the hon. Gentleman said that he was not opposed to the devolution of APD, but I thought his amendment was supposed to delete the provisions that made APD a devolved matter.

[Mr Jones]

The reason for that is that I was advised to do so to get my probing amendment on the amendment paper. There is no intention to delete the provisions, and the amendment has not been selected. I would have thought that the right hon. Gentleman’s experience in the House would make him au fait with the procedures for ensuring that Members can get a subject debated.

The Scottish Government’s proposals on APD do not make economic sense. Reducing and abolishing APD will clearly grow airport traffic into airports in Scotland as well as grow jobs, yet that will be to the detriment of airports such as Newcastle’s.

[Peter Grant]

If the hon. Gentleman is concerned that further devolution to Scotland might make Scotland too successful, surely the answer is to see further devolution to the regions and great cities of England, not to stop further devolution in its tracks so that everything remains centred in London for ever and a day.

[Mr Jones]

I do not disagree with the hon. Gentleman’s thrust, but what the Government have proposed for the north-east is not clear: an elected mayor whose area would stretch from Berwick right down to the Tees. That is the only way we will get any sort of devolution to the north-east at all, and there has been no public debate about it.

Clearly, the measures on air passenger duty will grow jobs in Scottish airports. I accept the point made earlier about the more outlying airports. In this country, we seem to have a policy of looking at regional airports as we do the major city airports. However, it is clear that small airports and communities, whether in Scotland or the rest of the UK, need connectivity to the major hubs.

[Dr Whitford]

Prestwick airport, the oldest passenger airport in Scotland, is in my constituency. We are not even connected to London. There was a time when people could take transatlantic flights from it, but no longer. Rather than thinking that Scotland would steal from the north of England, can the hon. Gentleman not accept that the total number of tourist visitors could grow?

[Mr Jones]

I agree, but if air passenger duty were zero in Scotland and the same as it is now in Newcastle, Scotland would clearly have an advantage. I do not want to get on to how much Scotland is able to devote to its tourism promotion budget, something that we need more of in the north-east.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

The hon. Gentleman seems to be setting out the most attractive form of tax competition. If Scotland gets rid of air passenger duty, there will be real pressure on the Chancellor to abolish it for the rest of the United Kingdom, and the whole economy will grow. It is marvellous to see the whole House moving in such a right-wing direction in its economic debates.

[Mr Jones]

On this very rare occasion, I agree with the hon. Gentleman. I would abolish APD altogether; it is a tax that, as the Scottish Government have recognised, stifles economic development. A PwC report says that the number of overseas visitors would grow by 7% if we abolished it altogether and that more money would come in from other taxes.

Scotland, for her own, sensible reasons, could halve and then abolish APD, leaving Newcastle at a great disadvantage. That would cost jobs; it has been anticipated that up to 1,000 jobs could be lost by 2025 if the situation remained the same, along with £400 million gross value to the economy of the north-east. One of the poorest regions in the UK cannot afford to be at such a disadvantage.

As my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, there seems to be a bit of confusion over the Government’s approach. He read out the Chancellor’s comment at the Treasury Committee sitting. The Chancellor seemed to be sanguine, giving the impression that if Scotland reduced its APD, airports such as Newcastle could happily soak up a 10% loss in traffic. I am sorry, but I have been a director of the airport and I know the management team well—I know how hard they have to work to attract every single flight and new route to Newcastle. A clear 10% loss would not be acceptable. My hon. Friend mentioned another point. The Chancellor also said that his personal view was that tax competition should be allowable. If that means putting the north-east at a disadvantage, the Government have to address that.

There has been some confusion. During the general election, the Prime Minister was asked by a local newspaper about unfair competition affecting Newcastle airport and—we should not forget the other airport in the north-east —Durham Tees Valley airport. He was questioned about reducing rates of APD for north-east airports to match the reduction in Scotland, as the Labour party in the region had been arguing. He said that that could be a positive suggestion.

What we need now is clear action. We have a new Minister for the northern powerhouse, the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton). I understand that his constituency includes Durham Tees Valley, so whether he can persuade the Treasury to do something about the effect of the clause on the north-east economy will be an interesting test of his power. We hear a lot about the northern powerhouse. Those of us in the north-east think that it ends in Manchester.

It is important that the effect of the clause is addressed. If it is not, this unfair tax will not only cost jobs in one of the poorest regions of the UK, but stifle one of the few economic drivers in the north-east in Newcastle airport, which can grow not only business, but competition. As I said in an earlier intervention, Newcastle airport is important not only for passengers, but for cargo revenues. It enables companies in the north-east to export around the world. The direct flight to Dubai has meant that a lot of local businesses have been able to export products there directly and to grow.

I am interested to know the Government’s approach to this issue. If the clause is passed, we cannot have a lag that leaves regions such as the north-east being hit by the tax competition which the Chancellor seems to think is acceptable, but which the Prime Minister clearly wants to do something about. The ball is firmly in the Government’s court to ensure that this anomaly is put right.

[Alex Salmond]

I am grateful to the hon. Members for Blackley and Broughton (Graham Stringer) and for North Durham (Mr Jones) for the way that they have spoken about this issue. I am unconvinced by the argument that they had to table an amendment to delete the devolution of air passenger duty in order to make speeches. Speeches could be made on clause stand part. None the less, whatever the flow of logic, I am delighted that they have confirmed that they support the devolution of APD. I will be very supportive, in return, of some of the arguments that they have made.

As I have been through this issue in one guise or another over the past few years, I thought that it might be useful to remind the Committee of a little bit of history. The devolution of APD was proposed by the Calman commission. For Members who were not in the House at that time or who are not fully up on these matters, the Calman commission was the response of the Unionist parties to the SNP’s breakthrough in the 2007 election. We are still debating the devolution of APD because it disappeared from the legislative programme arising from Calman that was enacted in the last Parliament. It was proposed again by the Smith commission, which was the response of the Unionist parties, through the vow, to try to deflect the yes campaign in the final days of last year’s referendum.

Both those events, incidentally, have been overtaken by the fact that 56 Members of Parliament now adorn these Benches for the Scottish National party. No doubt, at some occasion in the not too distant future, we will be back debating the Government’s response to that latest political development. Surely history tells us—the hon. Member for Blackley and Broughton referred to this—that it would have been far better to have been more extensive and generous with devolution in the first place, and that we should not repeat the mistakes that the Government and the Unionist parties made in the past.

I had a meeting with Howard Davies a few years back when he was asked to chair the Airports Commission. I will be generous and say that it was set up to address the under-capacity and congestion at airports in the south-east of England—or perhaps it was to bash Boris’s proposal for an island airport. The point was to reconcile between Heathrow and Gatwick. We can be absolutely certain about two things in respect of the proposals that will come from the Howard Davies commission. First, we can be certain that, whatever the final adjudication, it will be some considerable time before either Heathrow or Gatwick emerges as the winner from the process. Secondly, we can be certain that, whatever emerges from the process, considerable amounts of public money, running into many billions of pounds, will be devoted, by one means or another, to expanding the capacity of those airports, which are severely congested at the moment.

The reason I mention this is that when I had my meeting, as First Minister, with Mr Davies—it might be Sir Howard Davies now, for all I know—[Interruption.] I am told that he is soon to be ennobled—other people have more information on these things than I do. Anyway, when I had my meeting with Sir Howard, I said, “Given that, whatever happens, your proposals will take some time to be enacted, would it not be a grand idea for you to propose, in the meantime, measures to relieve some of the congestion in the south of England airports? Perhaps reducing air passenger duty in Scotland, Northern Ireland and the north of England and, pro tem at least, diverting some of the business from those airports would relieve some of the extraordinary pressure on them.”

I was very disappointed when, in his interim report, Sir Howard made clear his belief that such a move would constitute a “distortion of competition”. I thought that that was a magnificent argument in its way—magnificent in terms of brass neck. It was clearly not a distortion of competition to propose the expenditure of billions of pounds of public money on investment—financed by all of us—in increasing the capacity of the south of England airports, but it somehow would be a distortion of competition to reduce the taxation and increase the revenues generated by airports in the north of England, Scotland and Northern Ireland.

[Mr Kevan Jones]

Does the right hon. Gentleman agree that Scotland and the north-east, for instance, are losing business not just to London but to parts of mainland Europe? At Schiphol, for instance, air passenger duty has been abolished.

[Alex Salmond]

I do agree with that, but I also think that we must consider the motivation for the introduction of what appears to be a remarkably foolish tax. Any Chancellor looking at Heathrow, for example, would see a fully congested airport and an air passenger duty with an effective collection rate of 100%, whereas any Chancellor looking at the north of England, Northern Ireland or Scotland would see airports with substantial capacity where a reduction in APD could increase business, and, given increased revenues from VAT and other taxation, would see the magic formula for a Laffer curve emerging. I was going to turn to the hon. Member for North East Somerset (Mr Rees-Mogg) at that point, but when I mentioned the Laffer curve, he was busy having a conversation, just when he could have reached a peak of excitement.I think that it would be possible to achieve that Laffer curve, reducing the tax and increasing the revenue, and it seems that my view is shared on both sides of the Committee.

--- Later in debate ---

[Mr Gauke]

Again, the hon. Gentleman is making a particular case. There are particular circumstances applying to that flight to the US, especially the competition that existed from the Republic of Ireland, which was why steps were taken on that point. As I say, we will be setting out options—

[Mr Kevan Jones]

Is the Minister telling the House tonight that the Chancellor has changed his views? When he went before the Treasury Committee last year, he talked about the effects on Newcastle, which he said would be about 10%. He said:

“That was work carried out a couple of years ago, but in Newcastle’s case, its traffic was up 12% last year, so I think these are manageable.”

Is the Minister now giving a commitment that this will be looked at or is the Chancellor sticking to his position that a reduction of 10% would be acceptable and “manageable” for Newcastle?

[Mr Gauke]

Let me repeat what I said earlier: there are potential impacts of devolution on regional airports, the Government are reviewing options for supporting regional airports in the light of those effects and we will publish a discussion paper later in the summer. I understand that the hon. Gentleman, who has campaigned consistently on this matter, may be a little impatient, but if he will just bear with us for a little longer—

[Mr Jones]

I understand the constraints and I would not expect the Minister to criticise his boss. He said a discussion paper will be coming out, but what is the timescale going to be? Clearly if the Scottish Government move to reduce APD as quickly as they get the powers, that will have a direct effect on places such as Newcastle. What timescale is he looking at?

[Mr Gauke]

Again, that will be set out in the discussion paper, and I think the hon. Gentleman would expect me to say nothing else on the point.

Landfill Tax (No. 2)

Lord Beamish Excerpts

Tuesday 16th June 2015 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I welcome the Minister to his portfolio. I had several meetings with his predecessor on this subject. I do not object to what is proposed in the motion, but I think it will be practically impossible to enforce. The Minister said that he had been to a landfill site, and I welcome that, but how is the provision to be enforced? In my experience, landfill tax fraud is one of the largest scandals that we have yet to address in this country. We must ensure that the policy works to reduce the amount that goes to landfill. We should all support that; I certainly do. In practice, however, there are no controls whatever. The jurisdiction over what goes into landfill falls between the Environment Agency and Her Majesty’s Revenue and Customs. The Minister said that he had visited a landfill site, and it was obviously one that was well run. He should ask his officials to show him some that are not so well run.

The level of enforcement by both HMRC and the Environment Agency is woefully inadequate. There is also no control, or any onus, on those who are producing the waste either to ensure that the waste meets the targets or to bear any responsibility once it goes to a waste transfer station. What happens in a large number of cases is that the waste gets mixed with other waste. The waste then goes into landfill sites and is deemed to be at a lower rate than it is because no tests take place at some of the more unregulated sites. Worse than that, what is happening in practice is that when the waste arrives at the site—some large companies own a number of sites—it goes past the weighbridge and no landfill tax is paid on it at all. That requires close examination.

If we are to ensure the good intentions of this policy—and there are good intentions—we must ensure that the rules are enforced. I do not disagree with what my hon. Friend the Member for Wirral South (Alison McGovern) said about the cuts at HMRC, but this is more to do with a confusion between the Environment Agency and HMRC. I urge the Minister to ask his Department how many waste operators have been fined for landfill tax fraud. I asked that question last year, and I think that there had been one. There is no enforcement at all, or even an appetite to deal with something that is depriving the taxpayer of huge revenues.

Another issue that is worrying for the long-term environmental sustainability of our country is what is going into these sites. High level waste is being mixed with, in some cases, dangerous and low grade waste. In some cases, we do not what is going into these sites.

The Minister only has to look on the internet or ask his officials to dig out some press cuttings to see some of the horror sites, which are up and down the country, that have been overfilled. No action has been taken to recover the landfill tax, which has been avoided, or to study the environmental impact. Although I do welcome this measure, the Minister needs to look at the matter in greater detail, as massive fraud is taking place. Some of the people involved in that fraud know exactly what they are doing and are making money out of it. There are numerous examples of operators going to customers with prices that are completely impossible to meet if they were paying the landfill tax charges. The industry knows that and somehow turns a blind eye to it. In some cases, the livelihoods of decent operators who are paying the landfill tax and are following the system are being threatened by people who are avoiding paying the landfill tax by not declaring what they are putting into their sites.

I ask the Minister to have a serious look at this whole area. Although the policy is well intentioned, it does not work in practice. Will the Minister also ensure that, because the changes do not apply to Scotland, we do not have a transfer of waste across the border? I know that that is not the intention of the policy, but the lag in the change of legislation in Scotland could mean that that happens. If the Government want to crack down on tax avoidance, this is an area they should be looking at.

--- Later in debate ---

[Damian Hinds]

There is probably no fool-proof or fraud-proof system of taking samples. People will seek to get around the regime, but the challenge in compliance is to interrupt that activity and stop it. In the past 15 months HMRC has accelerated its response to tax aspects of waste crime. It has a range of responses, including criminal and civil investigations, and the national waste sector task force takes cross-tax approaches.

[Mr Kevan Jones]

How many prosecutions have been taken forward?

[Damian Hinds]

I may get inspiration on that point before I sit down. If not, I will not have to write to the hon. Gentleman because I will be able to update him on Thursday.

In the 2015 Budget the coalition Government provided a further £4.2 million of funding to the Environment Agency specifically to tackle waste crime. That will enable it to take action against more illegal waste sites and illegal waste exports. HMRC always acts on information indicating non-compliance. For legal reasons, it generally does not comment on specific allegations of tax evasion and fraud. It fully engages with key partner agencies, most notably the Environment Agency, to ensure that compliance and enforcement activity is properly co-ordinated.

On the question about Scotland, the hon. Member for North Durham will know that this is a devolved tax, but it is set at the same rate on both sides of the border so there is no incentive to cross the border to take advantage of a lower rate. HMRC is, of course, in close, regular contact with Revenue Scotland, and the same is true of the two relevant environmental agencies on each side of the border.

We have had a useful debate. I hope I have covered Members’ concerns adequately and I commend the order to the House.

Question put and agreed to.

Finance (No. 2) Bill

Lord Beamish Excerpts

Tuesday 1st April 2014 Commons Chamber

[The Chief Secretary to the Treasury (Danny Alexander)]

I beg to move, That the Bill be now read a Second time.

The Bill is certainly substantial—602 pages, 295 clauses and 34 schedules—but it is packed with measures that will help British businesses invest and create jobs, help British households work and save, and help ensure that everyone in Britain pays their fair share of tax. It takes forward the Government’s long-term plan to create a fair, competitive and transparent tax system that is enforced effectively, in stark contrast to the uncompetitive and leaky regime that we inherited from the Labour party.

I will begin by talking about the measures that boost growth and investment, deal with those that cover avoidance and aggressive tax planning, consider those that help working people and savers, and finally come to pensioners.

[Mr Kevan Jones (North Durham) (Lab)]

Will the Chief Secretary tell the House at what point in the last Parliament he, as a Liberal Democrat, objected to the Labour Government’s spending targets?

[Danny Alexander]

I cannot put a time and date to it, but I recall several occasions when I and my Front-Bench colleagues, particularly my right hon. Friend the Member for Twickenham (Vince Cable), objected to the Labour party’s plans. Labour Front Benchers, when they were in government, ignored warnings from the Liberal Democrat Benches for a number of years before the financial crisis, and that led, to a considerable extent, to the mess that was made of the economy when the Labour Government finally saw what was coming.

[Mr Jones]

The right hon. Gentleman obviously has a problem with his memory. Let me help him. Will he name a policy area—for example, health or local government —on which the Liberal Democrats said we should spend less money?

[Danny Alexander]

I am tempted to say that we are wandering slightly from the Bill. I can draw the hon. Gentleman’s attention to several measures in the 2010 Liberal Democrat manifesto that proposed reining in excessive expenditure by the Labour Government.

I note that Labour Members have tabled a so-called reasoned amendment. I point out that we are investing in new technology and new energy sources because of the Labour Government’s failure to tackle rising energy bills; because of their failure to get young people into work, we have created the conditions for more than 1.5 million new jobs in the private sector; because of their failure to boost housing supply, we have had to cut back hundreds of pages of planning laws, and because of their failure to help families with child care costs, we have taken bold steps to introduce tax-free child care. In short, because of Labour’s failure to create jobs and growth and build homes, the British public asked the coalition to clear up the mess. The Bill takes further steps to do that. A Labour party that stands in its way is a blockage on the road to recovery.

--- Later in debate ---

[Danny Alexander]

The way that universal credit is structured means not only that we have a much simpler system, but that most people in the benefits and tax credits system will keep more of their additional earnings as they progress in work than they would have done under the extremely complicated, confusing system that we inherited from the hon. Gentleman’s party. The work incentive clearly has a positive effect overall.

[Mr Kevan Jones]

rose—

[Danny Alexander]

I will give way one more time, and then I will make some progress.

[Mr Jones]

The Chief Secretary to the Treasury says that he is proud that the idea of an increase in personal allowance came from the front page of the Liberal Democrat manifesto. Will he explain why his party, which campaigned on not increasing VAT, increased VAT when it entered the coalition, affecting some of the lowest and most poorly paid people in this country?

[Danny Alexander]

I am glad that the hon. Gentleman gives me an opportunity to repeat the fact that this policy came from the front page of the Liberal Democrat election manifesto, and I welcome his confirmation of that point. He should recognise that the coalition Government came together to sort out the catastrophic economic mess that was made by his party in the previous few years. When we came into office, we were borrowing £150 billion a year—for every £4 we were spending under his party, £1 had to be borrowed—[Interruption.] I draw his attention, if he is interested, to the distributional analysis of fiscal consolidation that was published alongside the Budget this year, which shows that the wealthiest in this country have made the largest contribution to the fiscal consolidation.

[Mr Jones]

rose—

[Danny Alexander]

I will not give way, because I want to make progress. The increase in the personal allowance will mean that a typical basic rate taxpayer will pay more than £800 less income tax per year than in 2010-11. That is real action to support the millions of people on low and middle incomes. It helps them to keep more of what they earn and rewards those who want to work hard. This Government and this Bill also recognise that people who rely on their savings income have been hit particularly hard by low returns in recent years. It is for that reason that we are cutting tax on savings for the lowest earners. From April 2015, the 10p starting rate of tax on savings will be abolished and a 0% rate will be extended to the first £5,000 of savings income above the personal allowance. That will benefit 1.5 million people with low earnings from some savings, and more than 1 million people will no longer pay any tax on their savings income at all.

It is no exaggeration to say that this Government have achieved sweeping reforms on pensions. Under the excellent leadership of my Liberal Democrat colleague, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), our simplifications and reforms of the pensions sector will be one of this Government’s most enduring legacies. Automatic enrolment will see nearly 6 million people enrolled in workplace pension schemes by the end of this Parliament. The single-tier pension will provide millions of individuals with a firm foundation to support their saving, and it will particularly benefit those groups that, under the current system, have tended to build up low amounts of savings. I am talking about women with broken work records, the low paid and the self-employed. The triple lock has helped to protect the most vulnerable members of our society, and the recent Budget announcements provide us with the final thread of this coalition’s web of pension reforms.

From April 2015 we will allow individuals much greater choice about how they access their defined contribution pension savings. Individuals will be able to access their defined contribution as they wish, subject to their marginal tax rate, and no one will be forced to take out an annuity if they do not want to. We are well aware that this is the biggest shake-up of pensions in almost a century—since Lloyd George was the Liberal Minister in the Treasury. As such, we recognise that it is absolutely crucial that we get it right. We are consulting on the detail before making further announcements later this year.

In the meantime, the Finance Bill will make some initial changes to deliver greater flexibility with immediate effect. We are reducing the minimum income requirement for accessing pension savings flexibly from £20,000 to £12,000. We are increasing the annual withdrawal limit for individuals in a capped drawdown arrangement from 120% to 150% of an equivalent annuity. We are increasing the total pension wealth that can be taken as a lump sum from £18,000 to £30,000, and we are increasing the size of a pension pot that can be taken as a lump sum—regardless of other pension wealth—from £2,000 to £10,000. Taken together, these changes mean that more than 400,000 people will be able to access their pension more flexibly in the financial year 2014-15.

--- Later in debate ---

[Chris Leslie]

If the hon. Gentleman wants to trade statistics, I am more than happy to do so. In my constituency there is a significant problem with unemployment, long-term youth unemployment and youth unemployment generally, and it has worsened significantly since the general election. He talks about the past 12 months. Let us hope we are turning a corner in aggregate levels of unemployment because it is about time that happened. The tax and benefit changes and their impact on our constituents are very significant indeed. I hope to have an opportunity to focus on a few of them.

[Mr Kevan Jones]

I asked the Chief Secretary to the Treasury whether he could remember any time when the Liberal Democrats opposed the Labour Government’s spending commitments. Does my hon. Friend agree that Conservative Members have amnesia, in that they agreed to our spending targets right up until the banking crash in late 2008? If at that time we had followed the proposals of the present Chancellor of the Exchequer and the present Prime Minister in relation to things such as Northern Rock, that crisis would have been a lot worse.

[Chris Leslie]

Trying to get inside the heads of the Liberal Democrats could take quite a long time. The Chief Secretary is enjoying being at close quarters with the Conservative party a little bit too much. The Conservatives have captured him—it is called capture bonding. Sometimes he even starts to view the abuse or the lack of it as rewarding. That is not coalition; that is Stockholm syndrome.

--- Later in debate ---

[Chris Leslie]

Conservative Members love to bash what is going on in Wales. They have an anti-Welsh attitude to these things, but it is one of the great success stories of devolution, making sure that they focus on a meaningful back-to-work scheme, particularly for those who have been out of work for a prolonged period. That is what we need to have, and I wish Ministers would learn from that.

Chapter 4 deals with annuities and pensions. Obviously, as we have said, in general those annuity changes are to be welcomed. Annuities are an outdated product and they failed too many pensioners, but it is important to reiterate the tests that we have. What sort of advice or comprehensive guidance will be put in place for those reaching retirement and potentially having to make calculations of income perhaps over a third of their lifetime to come, and what will happen to the annuities market for those who do wish to purchase such a product to have a steady stream of income in perpetuity?

[Mr Kevan Jones]

Does my hon. Friend also think that the Government should publish their modelling on the proposal to see what effect it will have, not only on the annuities market but on the cost to the taxpayer in the long term, in terms of matters such as housing benefit and future care costs? Producing that modelling and making it transparent for all would allow people to see whether the policy will have a long-term implication for the taxpayer.

[Chris Leslie]

It is vital that we have serious consultation on those measures. We support flexibility in principle, but the changes cannot be made without taking into account the wider implications, so it is important that we have that level of information and analysis in the Treasury projections. I do not know whether the Government were motivated by the desire to benefit the population more broadly or by the short-term opportunity, following the annuities changes, to bring in a vast amount of tax revenue from pensioners much earlier than would otherwise have been the case. All I know is that the Chancellor used the annuities issue to provide a veneer of long-termism over what was otherwise an exceptionally short-term Budget and what is an exceptionally short-term Finance Bill.

Clauses 112 and 113 deal with the old question of the bank levy. My hon. Friends will be familiar with the Government’s track record on the bank levy. We will scrutinise those clauses very closely indeed, because The Daily Telegraph, among others, has reported that they could mean a secret tax cut for the banks. Last year Barclays paid £504 million in levy charges and HSBC paid £544 million—the most of any bank. But under the draft proposals the Chief Secretary is bringing forward in the Bill, Barclays’s bill would have been £129 million lower and HSBC’s would have been £169 million lower. What is going on? Given that the levy was supposed to catch up with the lack of collection in previous years—it was supposed to increase by 20% this year—it seems very strange that these clauses might give the banks a very significant saving indeed.

The purpose of the bank levy, of course, was to allow the Government to take £2.5 billion every tax year. It was an unusual tax because they set the amount of revenue to be raised and the methodology revolved around that. In its first year, the levy brought in £1.8 billion, which was a significant shortfall. Things got worse the next year, because in 2012-13 it raised just £1.6 billion. My hon. Friends know the attitude Her Majesty’s Revenue and Customs takes to our constituents if an amount of tax they are asked to pay is not forthcoming, but that is not the case when it comes to the banks. It has gone soft in collecting the money the levy was supposed to raise.

We read in the small print of the Office for Budget Responsibility’s report that accompanied the Budget that in 2013-14, for the third year running, the bank levy is projected to raise only £2.3 billion, which falls short yet again. The combined shortfall from the past three years is now a very significant £1.8 billion. We could pay the salaries of 60,000 nurses with that sum.

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[Chris Leslie]

We do not oppose the Help to Buy scheme unless it is not accompanied by a help to build scheme. The supply of housing is key. Housing policy must revolve around affordability. We now have the lowest level of house building since the 1920s; the Government cannot just turn a blind eye to that problem. Affordability has to be at the heart of our approach. It is all very well helping people on to ever-higher mortgages chasing ever higher prices, but unless something is done to supply new buildings, we will not deal with the problem of affordability.

[Mr Kevan Jones]

I am not sure what nirvana the hon. Member for Hexham (Guy Opperman) lives in if he thinks that the housing market in the north-east is booming. Average house prices in the north-east are still £5,000 lower than in 2008; that compares with an increase of about £77,000 in London. The hon. Gentleman also fails to recognise that 16% of people in the north-east are still in negative equity. The idea that somehow the housing market in the north-east is booming is wrong. We have a two-speed Britain—a booming south-east and London, and a stagnating north.

[Chris Leslie]

For all the Government’s talk of a balanced, sustainable recovery, we see no action. Most of our constituents and most businesses would recognise that supply and demand have to be part of the picture. Everybody recognises that except, it seems, for the Chancellor and Chief Secretary, who do not recognise the fundamental problem in their approach.

There needed to be tough decisions, such as the 50p rate, in the Bill to make sure that there was fairness in dealing with the deficit and that we tackled the Government’s failure to keep their promise about balancing the books. That has not come to fruition. We need to help with business rates; we should be cutting them rather than simply focusing help on 2% of companies.

The Government are not ensuring a sustainable and balanced recovery. Consumers are having to dip into their savings at an alarming and increasing rate. The OBR even predicts that growth may well slow in future, when those savings run out. Exports are not predicted to contribute a thing to the economy for the next five years and nothing in the Budget tackles the country’s productivity crisis that has emerged in recent years.

Instead, the Exchequer Secretary and Chief Secretary have convinced themselves that cutting public services and raising taxes have helped economic growth. They believe their own propaganda about expansionary fiscal contraction, which was the philosophy of the right in British politics. It used to be the opposite of the Liberal Democrats’ view, but of course they have now bought into the concept.

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[Mark Field (Cities of London and Westminster) (Con)]

It is usually a pleasure to joust with the hon. Member for Nottingham East (Chris Leslie), but his comments were unremittingly negative. It is amazing that he contrived a speech lasting no fewer than 46 minutes about a Finance Bill that supposedly had so little in it.

For almost the past four years, the British electorate have, perhaps grudgingly at times, recognised that the coalition’s avowed economic plan—the elimination of the structural deficit in the course of this Parliament—has been the right path in response to our grisly economic inheritance.

Key to the plan was consistent growth. The Office for Budget Responsibility’s predicted compound growth of 2.7% to 2.9% for the duration of the Parliament accounted for more than half the deficit reduction programme. As the hon. Gentleman rightly pointed out, that has not been achieved, but the international capital markets have maintained their confidence in the coalition despite its first three years having being characterised by somewhat sluggish growth. Fears that excessive borrowing on the scale that became necessary between 2010 and 2013 would lead to higher interest rates have proved entirely unfounded.

[Mr Kevan Jones]

I know that 2010 seems a long time ago, but does the hon. Gentleman remember that when this Government came to office the economy was growing and we went into decline only because of the sucking out of demand and investment in the economy during their first two years?

[Mark Field]

The hon. Gentleman will be well aware that it is in the power of any Chancellor to orchestrate something of a pre-election boom. The VAT reduction certainly assisted in that, such that there were two or three quarters of unsustainable growth in the period from the end of 2009 to 2010, as became apparent fairly quickly.

We have seen some very significant growth. The first glimpses that came a little over a year ago in spring 2013 have turned into healthy, consistent growth that has in many ways surprised even economic experts. This has been maintained, alongside a very strong performance in employment, and barring unforeseen economic shocks it should continue for the rest of this year and beyond.

After the frenzy of Labour’s energy price freeze promise, the early new year period has allowed the Government to regain their footing and reset the important message that we are following a long-term economic plan that will benefit hard-working people. If, in the coming months, we can overlay this sober foundation with a sense of upbeat optimism and positivity about our nation, we will have a solid base from which to bat away unremittingly negative political attacks of the kind that we heard earlier. To complement consistent messaging on the deficit, we must also give the electorate a feeling of hope about life under a future Conservative Government. Nevertheless, the Treasury has been right to be wary. A giveaway Budget implemented by this Finance Bill would have sent out entirely the wrong signals. If money were found for substantial tax cuts, our opponents would question the need for further reductions in the welfare budget, and this at a time when the Institute for Fiscal Studies calculates that we are only two fifths of the way through the total planned spending cuts.

In the months ahead, the Chancellor might perhaps borrow some tricks from the Bank of England. While the notion of forward guidance has hitherto proved something of a mixed success for the Governor of the Bank of England, Mark Carney, it might prove a useful tool for the Treasury. Unlike some of my hon. Friends, I have always doubted the wisdom of promising instant and substantial tax cuts, as that puts in jeopardy our central mission of restoring order to the public finances. However, there is no doubt that reducing the tax burden should always be part of a Conservative offering, not least as we approach a general election. I hope that in a future autumn statement the Chancellor will offer his own brand of forward guidance, giving a clear signal that when progress has been made on reducing the deficit, and that progress breaks past a certain point, a series of tax cuts will kick in. In that way, the electorate will know full well that while our priority is, and must remain, stability, our ultimate aim will be a low-tax, competitive economy.

The Opposition’s messaging over the past six months, as in the course of this debate, has blended naive populism with flagrant opportunism. Their appeal has rested not on their practicality but on their exploitation of a deep sense of unease among many in the electorate that the current system does not deliver for them. The Government’s response has at times been too erratic and confusing, and has lent greater weight to policies that should rightly be dismissed as dangerous and unworkable. What voters need from us, and what this Finance Bill offers, is a sense of consistency and simplicity.

Rather than blowing us off course, the Bill implements a Budget that has been designed to cement our position as a calm and rational team slowly and patiently getting the UK economy back on track and the public finances under control. Substantial or radical reductions in tax should sensibly come only when that mission has been accomplished. Perhaps understandably, this sober message was not the headline-grabbing element of the Budget. Rightly, the proposed liberation of pensions will now be subject to extensive consultation. These ground-breaking reforms will need to be assessed to ensure that any potential unintended consequences are properly analysed before any new pensions regime is put in place.

I want to put on record some specific concerns about the tax avoidance regime that may differ from those raised by the hon. Member for Nottingham East. I addressed these last Friday in an article in The Daily Telegraph about the operation of Her Majesty’s Revenue and Customs’ disclosure of tax avoidance schemes—DOTAS—regime. I have been struck by the number of financial advisers and investors, large and small, from across the country who read my piece and have responded over the past few days by outlining their own cases of particular concern.

Last year, for the first time, aggregate investment in UK-based film production topped £1 billion. This has been aided by a crucial tax break that has attracted huge sums of private cash into the British film industry, which we can be proud of and which is recognised on the global stage with the success of many British films at the Oscars. In last month’s Budget, the Chancellor introduced a theatre tax break to match similar provisions for high-end TV, film, and televised animation. I warmly welcome this energy from the Government on behalf of our crucial creative industries. As well as being home to the much-maligned banking industry, my constituency is also the traditional home of many of our great, globally competitive creative sectors in Soho and Covent Garden. I campaigned for some three years to get the animation tax credit that was successfully announced in the 2012 Budget and agreed on in all parts of the House.

Last month, however, I heard a tale of woe from a group of experienced private investors who have found themselves squeezed awkwardly between the coalition’s ambitions for the creative industries and its other understandable priority—a clampdown on tax avoidance. Their experience should be a warning sign to any investor who has sought to engage in an open and transparent relationship with HMRC. It should also give Treasury Ministers pause for thought—not least the Exchequer Secretary, who is in his place, as he aggressively pursues the Government’s anti-avoidance agenda in the months ahead. Some years ago, the group who came to see me had approached HMRC with their model for private investment in the UK creative industries. After extensive discussion on its structure, they were not only given the green light but told that their vehicle was exactly the sort of thing that the Government were envisaging. On the basis of this understanding, the group proceeded to invest more than £1 billion of risk capital into the British film industry, leading to the production of more than 60 home-grown films.

Given the discussions they had had, HMRC considered these legitimate investors to be firmly “inside the tent”, but as a precautionary measure they elected to place themselves on the DOTAS register. Because tax avoidance measures are now so widely drawn, it has been common practice to err on the side of caution by signing up to HMRC initiatives of this sort. The investors thought nothing more of the DOTAS registration until a flurry of high-profile scandals, or so-called scandals, came to light whereby film investment vehicles had been used by celebrities to slash their tax bills. Rather than sifting through the egregious examples of so-called aggressive avoidance through legitimate investment vehicles, HMRC threw a blanket of suspicion on to any DOTAS-registered scheme. Keen to establish their vehicle’s legitimacy as swiftly as possible, and exhausted by HMRC’s consistent mismanagement of their case, as they see it, the investors elected to put their scheme before an independent tax tribunal.

Currently, if the UK tax authorities wish to challenge the legitimacy of a DOTAS-registered scheme in court, the taxpayer is permitted to hold on to the disputed tax while the case is being resolved. This was discussed earlier by the Chief Secretary. Because the Government believe that this incentivises scheme promoters to sit back and delay resolution, they now propose to extend the accelerated payments measures to existing DOTAS-registered schemes. This means that disputed tax will be paid up front to HMRC and returned only if a scheme is subsequently found to be legitimate. However—this is where the Government need to rethink their understandable enthusiasm for clamping down on tax avoidance—no exception is proposed in cases where taxpayers have demonstrably not sat back and delayed as long as possible. My investor constituents are desperate to get their dispute settled by an independent arbiter as a matter of urgency. In their case, it is HMRC that is stalling progress. Legitimate investors understand the need to deal quickly with the tens of thousands of outstanding mass-marketed avoidance cases currently clogging up the courts. They simply propose an exception in the case of existing DOTAS-registered schemes whose promoters have taken all reasonable measures to enable a dispute to be brought before the statutory appeals tribunal.

It strikes me as a shocking breach of faith that the Government are now attempting to impose a requirement on such individuals to pay a disputed up-front sum when it is an agent of the state—in this case, HMRC—that is deliberately and actively delaying the sitting of the tribunal. Worse still, I fear, is the general message being sent to other private investors, who stand to be deterred from any future investment in the UK film industry.

DOTAS was designed with the best will in mind—something you may well remember, Madam Deputy Speaker, as the system came into play under a previous Administration. It was designed, rightly, to promote openness and transparency in investors’ relationships with HMRC—in principle, a welcome step. However, DOTAS is now in effect helping to produce retrospective legislation, with DOTAS declarations being used as a stick with which to beat legitimate investors who never planned on having liquid assets to meet disputed liabilities. I fear that augurs ill for the Government’s broader, much vaunted anti-avoidance plans, as set out in the Bill, and their overarching plan to make Britain entirely open for business.

It is useful at this juncture to highlight some of the letters I have received in response to my article of last Friday. One constituent, a small-scale investor in the scheme, advised me:

“HMRC has previously offered us full relief on our cash contributions if we forgo relief on the loan element. We haven’t agreed to this. Now they plan to make us pay all the tax in the autumn. Many will feel pressured to settle on the basis of HMRC’s earlier offer as that will reduce the cash to be found by some 37%. This is harassment, which if conducted by a loan shark would rightly have you and your colleagues legislating. HMRC has no case and is relying on intimidation and extortion instead.”

A correspondent from further afield wrote:

“I am an ordinary, law abiding person who has never knowingly cheated anyone, least of all HMRC! But their endless delays and apparent moving of the goal posts make me feel almost like a criminal.”

Another wrote:

“The cries of protest highlighting this radical shift in power seem to have fallen on deaf ears of government officials. I represent hundreds, if not thousands of similar professionals that are on the brink of ruin as a result of the changing of the goal posts by HMRC whose unchecked powers seem to be morphing.”

That concern was shared by many others. There is concern that the decision process lies solely in the hands of a designated officer—some relatively anonymous HMRC official, acting as judge and jury, with no independent or proper safeguards. That does not seem right, as pressures on individuals to act in the best interests of a Department that is failing to collect taxes as quickly as it would like will be immense.

I know we discussed this matter in the House in the context of retrospective legislation last year, but we need to give serious thought to how Parliament can properly control such Executive power. There seem to be no checks or balances on a Government Department, and that does not seem the right way to address our tax policy.

In my view, if the Treasury wishes actively to encourage investment via additional tax credits, we must be assured that legitimate investors’ previously agreed, transparent vehicles are not at some point going to be subject to unplanned for, up-front tax liabilities in the event of a sudden change to the rules by HMRC. As the Exchequer Secretary will know, I have consistently pressed for Government efforts on tax evasion to go hand in glove with the creation of a comprehensive pre-clearance regime. That would allow firms and their tax advisers to road-test proposed taxation schemes with HMRC officials. Ideally, if that were to work efficiently, no new scheme would be permitted to be marketed until such time as approval had been given.

I am sorry to speak on a slightly negative note, because as I have said I support much of the Bill, but it is important to put on record some of the concerns about how the anti-avoidance process is working. Alarm bells should be ringing throughout Parliament as we preside over this unprecedented transfer of power to HMRC. This agency of the state is being empowered not only to apply the law but to a large extent to rewrite it. In summing up, will the Minister provide assurances on the steps that he is putting in place to ensure that incorrect seizures are avoided and that hardship will not follow as a consequence?

The Government’s aims to encourage investment in British industry and to clamp down on aggressive tax avoidance and evasion should not be incompatible. I trust that during the full consideration of the Bill we will further highlight some of those unprecedented powers to rewrite the laws and ensure that Parliament and, above all, the Treasury take a step back, so that we have a system that, as far as possible, promotes the sort of investment that all of us crave, not just in the creative industries but throughout the UK economy.

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[Bridget Phillipson]

I agree entirely with my hon. Friend’s point. I was about to come on to look at the Labour Government’s record on the automotive industry and on industrial strategy. It is simply not right to begin looking at the sector only from 2010. A lot of work went in, over a long period of time, with the work force and the trade unions as well as through Government, to make sure there were the right skills and the investment needed for the industry to compete in the future. The Labour Government took that seriously; I hope this Government will take that forward.

[Mr Kevan Jones]

I agree with my hon. Friend about the long-term strategy that was put in place. Also, when help was needed at a crucial time in the downturn, the vehicle scrappage scheme helped work forces not only at Nissan but in the constituency of my hon. Friend the Member for Coventry South (Mr Cunningham). It may have been a short-term stimulus, as the hon. Member for Cities of London and Westminster (Mark Field) said, but it certainly helped at that time.

[Bridget Phillipson]

My hon. Friend makes the point that I was just about to come to, about the car scrappage scheme. There was also the enterprise finance guarantee. During the downturn that was crucial in keeping people in work and keeping the plant productive. My hon. Friend has no doubt visited Nissan and will know that it is crucial for a plant to keep staff numbers up, to be able to compete and to attract contracts. Nissan is very competitive internally, and Nissan in Sunderland continues to have to compete with plants in Europe and across the world. It is crucial to maintain core staffing levels so that when contracts come up internally, we can bid for them in Sunderland. The car scrappage scheme was crucial in making sure that we kept people in work at the plant and in the supply chain.

Ministers cannot afford to be complacent about the degree of success we have been enjoying and about ensuring that it is maintained. Continued success is not inevitable. A constant concern that is raised with me is that talk of Britain leaving the European Union and all that would follow from it creates massive risk and uncertainty about investment in Nissan. Nissan has rightly warned against that and Government Members should be mindful of the fact that continuing to engage in a Back-Bench debate about the future of Britain in the EU could have damaging consequences for areas such as mine, which rely so heavily on our ability to export to Europe.

A report published just yesterday outlined that the north-east and the midlands would be hardest hit by Britain leaving the European Union. That is no doubt linked to the automotive industry in both regions and our ability to export to that single market.

[Mr Jones]

I concur with my hon. Friend, but it is not just the automotive industry in the north-east that would be affected. Investment in Komatsu, which employs a lot of people in my constituency, and the new, welcome investment in Hitachi would also be affected. The chemical industry on the Tees also relies heavily on European markets.

[Bridget Phillipson]

That is absolutely the case. One of the ways in which Sunderland has diversified its economy has been to move towards software. The number of new small software firm start-ups is among the highest in the UK. Many of them are looking to expand into and open offices in Europe and I have no doubt that they do not find helpful the constant discussion we are having about Britain’s role in Europe. They want to expand what they export and their role in Europe by opening offices there. They do not want to have a pointless debate about Britain’s role; they just want to get on, create jobs, invest in our region and continue to diversify our economy. I have no doubt that my hon. Friend, like me, will recognise the fact that there was a big shift in the north-east economy in the 1980s and ’90s. We have transformed our industries, although that has not been entirely of our own choosing—we had to transform them. In fact, given the transition that had to take place, we have been remarkably successful. The fact that the software sector in Sunderland continues to grow, including in Rainton Bridge in my constituency, shows what we are capable of in the north-east, but we need the Government to work with us to achieve it.

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[Richard Harrington]

I respect the hon. Gentleman’s view. I described my experience of the last scheme and he has spoken of his personal experience. I am in favour of that kind of scheme. When I was very young and starting out in business, I was able to take on one person under the old youth training scheme, which was much maligned by the Labour Government afterwards. I paid her £30 a week and the Government made up the balance. It was a very simple scheme and not as sophisticated as the schemes that we have today. That person is still in employment, although I am no longer anything to do with the company. She was 17 at the time and is now 40. That shows how old I am, but it also shows that such schemes can work for people. In my experience, the jobs that were provided under the last scheme would not otherwise have existed. It did not subsidise a job that would have been there anyway. However, I am perfectly happy to accept his point and his experience.

[Mr Kevan Jones]

I do not think that the hon. Gentleman has looked very closely at what we did in government. The scheme that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) referred to is more akin to the scheme that the last Labour Government had. The alternative is that people are sat at home doing nothing. I agree with the hon. Gentleman that if people do not get a work ethic early on, but have two or three years sat on the dole, it is even harder for them ever to get into work.

[Richard Harrington]

The hon. Gentleman is absolutely right. There is a consensus that it is not acceptable if people who are on jobseeker’s allowance do not have to do anything towards getting a job. We can deal with that either by the Government providing a job through a direct subsidy, as the Opposition suggest, or through the current system.

[Mr Jones]

Will the hon. Gentleman give way?

[Richard Harrington]

If the hon. Gentleman will bear with me, I will make a bit of progress first.

The system means that people are effectively signing an employment contract when they sign on—I have seen such contracts, and the purpose is to get people looking for work. It is a programme of looking for work and taking up initiatives that have been derided by the Opposition, such as the work experience programme, the Work programme and other things. But I have seen the system work. It provides a lot of jobs in my constituency. However, the principle of what the hon. Gentleman says, which is that people should not be allowed to rot and do nothing while on jobseeker’s allowance, is right.

The hon. Member for Houghton and Sunderland South (Bridget Phillipson) made a good point that was pertinent to her constituency, and she has met people who have applied for hundreds of jobs and been unsuccessful. I accept that and have heard of similar cases. I cannot compare my constituency with that of my hon. Friend the Member for Cities of London and Westminster (Mark Field), or with Kensington and Chelsea, but in Watford—as the shadow Chief Secretary to the Treasury, who is not here, would know as he is a frequent visitor, for which I am grateful—jobs are available. I am not saying there are jobs everywhere, and it is difficult for anyone to get a job, but I accept that in the hon. Lady’s constituency things are completely different.

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[Stephen Doughty]

The hon. Gentleman fails to note that the average worker has become £1,600 worse off since his Government came to power. I am sure that he is doing relatively well, but many people in his constituency, and certainly in mine, are not. Small businesses in my constituency are struggling with energy bills and business rates.

Hard-working people across my constituency are £1,600 worse off since the Government came to power. The increase in the personal allowance is often paraded by Government Members, but that is dwarfed by the 24 tax rises that have hit hard-working people. At the same time, the Chancellor has given a tax cut to millionaires. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) is not in his place, but he spoke on that earlier. The economic adviser to the leader of Plaid Cymru has apparently also supported that recently.

[Mr Kevan Jones]

Does my hon. Friend agree that there is the problem of insecurity, even for those who are in employment? Zero-hours contracts and a lot more part-time work make it difficult for many people to get credit, or even to dream of getting on the housing ladder.

[Stephen Doughty]

My hon. Friend makes an excellent point. Indeed, I will come on to the value of high-paid and well-paid work later in my remarks. That is one of the reasons I am such a strong supporter of the living wage. I am not surprised that Government Members will not give us an answer, when asked about the job figures, on how many of them are part-time, zero-hours contracts and minimum wage jobs. That is deeply revealing.

Businesses across my constituency are still struggling to get competitive financing to grow, yet bank bonuses are rising again. The Chancellor is using his time in Europe to fight on the bankers’ behalf, rather than looking at how we regulate our banks and financial sector in a sustainable and fair way that will drive real investment and real jobs in our economy.

What affect businesses in my constituency just as strongly, and 2.4 million businesses across the country, are energy price rises. They have hit the cafes I visit in Grangetown as much as they have hit the hard-working nurse or police officer who is struggling to pay their energy bills in places such as St Mellons and Penarth in my constituency. Energy bills have risen by £300 a year since the election. The Government constantly try to con us into believing that they are cutting bills, but the bills continue to rise. The Government remain unwilling to agree to an energy price freeze, although this week one of the major energy companies agreed to freeze its prices.

Earlier, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) spoke passionately about visiting food banks in her constituency. I meet people who are struggling to get by: people who have been in work and have been looking for work, but who are now experiencing the indignity of having to go to food banks for emergency help.

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[Mr Kevan Jones]

Such as the right hon. Member for Wokingham (Mr Redwood)?

[Stephen Doughty]

Indeed, indeed.

As my right hon. Friend the shadow Chancellor pointed out today, it was Labour that supported, and indeed beat down, successive cuts in the main rate of corporation tax, which fell from 33% in 1997 to 28% in 2010. Given that the rate today is 21%, however, we cannot justify another cut for bigger businesses when so many small and medium-sized businesses are under pressure. We want to see a cut that would benefit 1.5 million businesses throughout the UK, and in Wales we are already leading the way in that regard.

A moment ago, I mentioned the success of the Jobs Growth Wales scheme. I want to highlight that success, because there is a big contrast between it and, say, the failures of the Work programme introduced by this Government. As I said earlier, the Government cut the future jobs fund when they came to office. We in Wales, under a Labour Government, chose a different way, without which far too many young people would otherwise be missing out on opportunities for growth, development and experience. They would be sitting idly at home, rather than being out there developing skills and contributing to the economy.

My hon. Friend the Member for Airdrie and Shotts (Pamela Nash) has recently done some excellent work on youth unemployment and highlighted that 900,000 young people throughout the country receive unemployment benefits for more than a year—a figure that has doubled under the Government. Again, it is a tale of two approaches. Obviously, we want the jobs guarantee to be funded by a bankers bonus tax, learning from the example of schemes in Wales.

I have strongly supported a living wage for some time. I congratulate Cardiff council, which has introduced a living wage and Cardiff university, which took the bold step of introducing the living wage following campaigning by many organisations such as Citizens UK to bring people’s wages up so that they can earn more and cope with the cost of living, and ultimately contribute more to the taxation system and the economy. I am disappointed that the Bill does not make any plans to boost wages such as the Opposition’s proposals to incentivise firms to pay the living wage by giving a 12-month tax rebate of up to £1,000 for every low-paid worker who gets a rise. Increased tax and national insurance contributions raised from employees receiving higher wages would fund that scheme. That is about a race to the top. It is about building people up and getting them off social security and into better paid jobs, rather than the Government’s race to the bottom.

Tax avoidance generated some strong remarks from the Chief Secretary when I mentioned it. This morning, we heard that the Business Secretary has lost taxpayers billions in the Royal Mail fiasco. We need to look increasingly carefully at the Government’s great claims about tax avoidance and how much they will get back in various deals and schemes. I only wish that they had spent as much time in the past three years on measures to stop people avoiding tax as they have on cutting taxes for the richest.

I want to respond to the Chief Secretary’s comments. Despite the Bill’s numerous clauses and instruments on tax avoidance, which, I am sure, will be interesting to debate, the amount of uncollected tax rose last year. The Swiss tax deal will raise only a quarter of what the Chancellor claimed when he added it to his autumn statement. Many Opposition Members will treat with scepticism any future big claims about billions that will come from such deals when they are not delivered.

Tax avoidance is significant for the country’s finances and is also regularly raised with me locally. Ordinary taxpayers and businesses throughout the country are concerned about companies and individuals engaging in aggressive tax avoidance and tax avoidance schemes, and about individuals who fritter away this economy’s wealth in tax havens and through other loopholes, rather than contributing.

I will examine the provisions closely and follow the debates with interest. I am unlikely to serve on the Finance Bill Committee this year, although I enjoyed it greatly last year. [Hon. Members: “Shame!”] Indeed, it is a shame. We need to continue to hold the Government’s feet to the fire on tax avoidance. Many of our constituents would want us to do that.

The general anti-avoidance rule has been introduced and there are new schemes about accelerating receipts, but will they generate more money for the Exchequer? It is all well and good to introduce them faster—we all want that—but will more money be raised? A recent report in the Financial Times stated that the Office for Budget Responsibility originally hoped that the tax system would collect revenues worth 38.8% of national income in 2014-15, but that figure has been progressively revised down to 37%. We have to treat some of the Government’s claims about tax revenues and receipts with great caution.

This Finance Bill does nothing to tackle the cost of living crisis that many of my constituents are facing. It does very little to support the small and medium-sized businesses that are crying out for help, and it is continuing with out-of-touch policies such as millionaires tax cuts. Instead of learning from the economic and employment successes of the Labour Government in Wales, this Government are continuing to attack and to smear that Government. They would do far better to learn from them.

[Ian Swales (Redcar) (LD)]

This Finance Bill represents another step in clearing up the mess left by the previous Government. Most of my constituents know that a standard of living that depends on borrowing from the bank and running up credit card bills will eventually be reduced when people have to start paying off the debts. That is what we had under the previous Government. The Opposition are trying to con the public—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Ian Swales]

Just a moment; I have only managed a couple of sentences. The Opposition are trying to con the public into believing that the cost of living can remain the same, regardless of the history and of the amount of money that was left behind.

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[Mr Jones]

I put this question to the Chief Secretary to the Treasury earlier. Can the hon. Gentleman tell us whether the Liberal Democrats ever opposed the previous Government’s spending plans? Did they ever say that we should have been spending less?

[Ian Swales]

Unfortunately, I was not here during the last Parliament, but I have read a great deal of what my right hon. Friend the Member for Twickenham (Vince Cable), now the Business Secretary, said at the time. He was warning of the difficulties many years before they actually arose. I am quite certain that our party was watching the situation carefully, and that it could see what was happening.

There is a growing myth, which was repeated by the hon. Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place—[Hon. Members: “He is here.”] My apologies; he is in a different place. That myth has also been repeated in the Opposition’s reasoned amendment, which states that

“working people are £1,600 a year worse off”.

Even the Institute for Fiscal Studies would admit that that is to do with gross income; it is not to do with net income, and it is not the amount by which people are worse off. Even the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie) pointed that out in his speech. One reason why people are not worse off by that amount is that there has been a large cut in income tax. That was a high priority for the Liberal Democrats, and I am delighted that in a few days’ time people will have experienced a £700 tax cut since the general election. The Bill includes another £100 for basic rate taxpayers.

--- Later in debate ---

[Ian Swales]

Everyone is in a different situation, but it is certainly not true to say that, for more people, the Government have given with one hand and taken away with the other. The hon. Lady should know that.

The Opposition’s reasoned amendment also mentions a “tax cut for millionaires”. This is from a party whose former Business Secretary said that he was

“intensely relaxed about people getting filthy rich”.

And it showed in what the Labour Government did for 13 years: the top rate of income tax was 5% lower than it is now until 6 April 2010, the very last day Labour Members sat on the Government Benches—until then they cut taxes for millionaires every year they were in power; capital gains tax was 10% lower, meaning that hedge fund managers in the City had a lower tax rate than those cleaning their offices; tax relief was available on pension contributions of £250,000 a year, whereas the current figure is £40,000—the difference is £100,000 in tax; and VAT was 2.5% lower, making a top Ferrari £5,000 cheaper—that is what was actually happening for millionaires.

[Mr Kevan Jones]

What about Lamborghinis?

[Ian Swales]

It was the same for Lamborghinis.

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[Julie Hilling]

The hon. Gentleman should continue to listen to what I have to say, because before the crash we did not have the structural deficit that he is talking about.

[Mr Kevan Jones]

The hon. Gentleman just referred to a “record structural deficit”, but according to the OBR in 2010 it was 7.7%. In 1998, it was more than 8%.

[Julie Hilling]

I thank my hon. Friend for that intervention. I will come on to some of the details in just a moment.

Before they say that Labour should have done more to regulate the banks, Government Members must show some humility. The Conservatives wanted less regulation. Yes, Labour responded by boosting public spending and borrowing to offset the catastrophic collapse in private sector spending, and the £90 billion spent on the bank bailout plunged the public sector into record annual deficit, but what would they have done? Would they have allowed the banks to collapse and allowed us to go into a depression worse than that in the 1930s? Would they have allowed thousands, if not millions, to lose their houses, their pensions and their jobs? Yes, we bailed out the banks, we cut VAT and income tax and we gave 150,000 businesses more time to pay their tax bills. We put in place measures that helped 300,000 people stay in their homes and we set out how we would halve the deficit over four years once the recovery was in place.

Do Conservative Members agree with those who were on their Front Bench at that time? They opposed the fiscal stimulus and the measures to support the economy and families. They pushed for the deregulation of the mortgage market even as the crisis began and they voted against the Bill that became the Banking (Special Provisions) Act 2008, which would have let Northern Rock fail. Where would families and businesses be now if the Tories had got their way then?

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[Charlie Elphicke (Dover) (Con)]

It is a real pleasure, as always, to follow the hon. Member for Bolton West (Julie Hilling). Listening to her speech, and indeed that of the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), I was reminded, given recent events in Ukraine, of the charge of the Light Brigade in the first Crimean war, which we fought some years ago. They were very game, very determined and, in complete denial of the situation in which they found themselves, carried on regardless. It was fascinating to listen to the shadow Chief Secretary’s amazing negativity about the changes the Government have made. The Government have turned around the very difficult situation that they inherited.

The hon. Member for Bolton West seems to have a somewhat short memory, to put it gently. She was quick to blame the problems on everyone else, but slow to acknowledge any responsibility on the part of the previous Government. It is important to remember that there were problems in the UK’s banks due to the extremely poor and dislocated regulatory system put in place by the previous Prime Minister. There were problems with this country’s finances, and not just since the 2008 recession, because the previous Government ran a structural deficit from 2002 onwards, which left this country massively exposed. They said that they managed the crisis so well, but the UK, as some of us recall, had one of the largest budget deficits in the developed world. They spent the good years introducing more welfare and more spending, rather than controlling welfare and spending and making sure the UK’s finances were in a good state while the sun shone.

[Mr Kevan Jones]

The hon. Gentleman, who was not a Member in the House at that time, belongs to a party that throughout that whole period was calling for less banking regulation, not more. I know that he is one of the new Members who have been programmed to think that way by Tory central office, but the facts are that the GDP debt in 1997 was 42% and by 2008 it was down to 35%. Those are the facts, irrespective of what Tory central office tells him. He cannot deny the facts.

[Charlie Elphicke]

The hon. Gentleman knows perfectly well that his Government ran a budget deficit for a very long time. Running a budget deficit is understandable when coming out of recession, but not in a time of economic success. The previous Labour Government’s irresponsibility left this country badly exposed.

[Mr Jones]

I am sorry, but the hon. Gentleman must look at history. The previous Conservative Government ran a budget deficit for about 16 of their 18 years in office. In 1997 the deficit was nearly 8%. He has to look at the facts. The previous Tory Government ran a deficit even in good times.

[Charlie Elphicke]

Let us talk about those good times. Before the downturn in the ’90s, the national debt was at least 10 points lower than before the latest crisis.

--- Later in debate ---

[Charlie Elphicke]

Indeed.

There was Labour’s crash. We hit the wall in 2008 and were left overexposed in a bad place with an economy that had been run very badly for a long time. Then the Labour party has the cheek—

[Mr Kevan Jones]

rose—

[Charlie Elphicke]

I have given way quite a lot. I think we have heard enough from the hon. Gentleman for a minute. Will he allow me to develop my points?

The Labour party, having learned nothing and forgotten nothing, has the gall to say that when we woke up in spring 2010, with a new Government, everything should immediately have been fine. Recessions are not like that; they continue for some time. It takes time to fix the car after it has been driven into the ditch. The absence of any sense of responsibility from the Labour party for the difficulties that it left and the toxic legacy that the Government inherited is, frankly, extraordinary. Government Ministers have done great work to turn things around and fix things. We cannot hand back the keys to the people who crashed the car when they remain in denial as the Labour party does today.

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[David Rutley]

My hon. Friend says, from a sedentary position, that it is a great place.

These are, of course, challenging times, but things are improving. The reason for having a Budget that is useful and important for business is that it is through business and the private sector that we create jobs to enable people to take care of their needs and those of their families. The hon. Lady will know—as will, no doubt, Mr Deputy Speaker, although he cannot comment—that under the Labour Government 100,000 public sector jobs were created in the north-west over a period when net new jobs in the private sector came to approximately 18,000. Surely, that is completely unsustainable.

[Mr Kevan Jones]

The neo-cons of the Conservative party think that public service jobs—nurses or cleaners in hospitals—are somehow worth less than private sector jobs. I do not subscribe to that. I put it to the hon. Gentleman that the growth in jobs he refers to was achieved through spending that his party agreed to throughout all that time.

[David Rutley]

Public sector jobs are vital, but I am talking about the need to get the balance right between private sector jobs and the size of the state. That is what we are seeking to balance. On the comment that he has made repeatedly throughout the course of the debate, I was not in this Chamber prior to the general election.

[Mr Jones]

The Chancellor was.

[David Rutley]

That is true, and so were the Prime Minister and others, but I was not. I was working in the world of commerce and had severe reservations, like other Members no doubt, about the policies of the Labour Government. Let us look at the results: the bust that was created after the boom. We are clearing up that mess.

It is a pleasure to speak about the Bill, and a pleasure to speak about the way in which it builds on the Budget. Not only does it make Britain more competitive on the world stage, but, crucially, it reduces the barriers to competition and consumer choice here at home. It is vital to our residents as well as to our businesses. It is a sensible, responsible Bill from a sensible and very responsive Government. It is a Bill for enterprise, intended to rebuild trust in our economy and in our public finances, and also to rebuild the trust that this Government are on the side of the consumer, taxpayer, the saver and, of course, the entrepreneur. That is necessary, because confidence in the economy and in the free-market system can be regained only by increasing the power of choice and market knowledge among consumers. The crisis of confidence—the trauma of trust—that we inherited was a natural reaction to the failures of the Labour Government, and threatened to damage wider belief in prospects throughout the market economy itself.

It was not just a market problem that we faced; it was the problems of yet another Labour Government that we were having to clean up. A great deal of good has already come from the reversal of Labour’s policies on tax, and their disposition to micro-manage and, of course, to mis-spend. This Government have been opening up the economy to transparency and to competition—not least in banking—and putting the consumer and opportunities for new entrants to markets first. It has been a long, hard road, and there is more to follow. The global race is a marathon, not a sprint. We inherited the extraordinary deficit that many Labour Members want to deny, which amounted to 11% of GDP between 2009 and 2010, but will be halved to 5.5% of GDP next year.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[David Rutley]

Of course, if the hon. Gentleman will agree that it is a good thing that we have been able to reduce the deficit to 5.5% of GDP.

[Mr Jones]

If the hon. Gentleman reads the OBR report published in, I think, March 2012, he will see that the figure was 7.7%, not 11%. I think that he should get his facts right rather than constantly regurgitating figures as if they were fact when they are clearly not.

[Jacob Rees-Mogg]

I think that the hon. Member for North Durham (Mr Jones)—

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[David Rutley]

I thank my hon. Friend for that clarification.

[Mr Kevan Jones]

You said “the deficit”.

[David Rutley]

I did: absolutely. In fact, as Hansard will record, I referred to “the extraordinary deficit” that had been created by the Labour Government.

A budget surplus is now in our sights. We are likely to see it in 2018-19. According to the International Monetary Fund—which is often quoted by Labour Members—the UK is achieving a larger reduction in both the headline and the structural deficits than any other major advanced economy in the world. Unemployment is falling, growth is up, and we have a record number of businesses and a strengthening culture of entrepreneurialism and self-employment. Those are clear results from a Government with a clear sense of direction.

This Bill will doubtless be remembered for years to come for the great work that it is doing to help to promote the interests of savers and pensioners through the reforms that it introduces in clauses 39 to 43, which we will debate in Committee.

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[Mr Kevan Jones (North Durham) (Lab)]

The hon. Member for Cities of London and Westminster (Mark Field), who is unfortunately no longer in his place, said that the Budget gave him a feeling of “upbeat optimism”. We have also just heard the hon. Member for Macclesfield (David Rutley) say that we should all be smiling, as though the Budget were to be the salvation of our nation. The Conservative party will clearly go into the next election using “Happy Days Are Here Again” as its theme tune.

[Jacob Rees-Mogg]

The hon. Gentleman will recall that “Happy Days Are Here Again” is traditionally a Democrat theme tune. I think it unlikely that the Conservatives would borrow from the left in America.

[Mr Jones]

I would not put anything past the new Conservative party, although I know that the hon. Gentleman is part of the ancient—even prehistoric—Conservative party. It is clearly part of the Conservative party’s strategy to try to give the impression that we have turned the corner and that the sunlit uplands are now before us. The public are neither so stupid nor so naive as to believe that, however, because they are living the reality of what this Government are doing to this great nation of ours.

[Ian Swales]

rose—

[Mr Jones]

I will give way to the “Conservative” Member for Redcar (Ian Swales).

[Ian Swales]

I thank the hon. Gentleman for giving way. The North East chamber of commerce said recently that its members’ business outlook was the most positive since 1995. Does he disagree with that? I accept that business is not everything, but surely he can welcome that.

[Mr Jones]

I have great respect for the North East chamber of commerce, but it represents only a certain section of the business community—it does not represent all the business community—and I have never seen it disagree with any Budget, because, understandably, it likes to keep in with the Government of the day. The “Conservative” Member for Redcar is clear in giving an upbeat assessment of his own constituency, but it is not one that I recognise and neither do many Members representing north-east constituencies.

The hon. Member for Macclesfield said that the Government had a clear sense of direction and the hon. Member for Dover (Charlie Elphicke) said that they had a clear plan, unlike the Opposition. Let us look at this clear plan and sense of direction. The narrative goes as follows, and before any Government Member says differently, these things are not invented by the Opposition; they are what this Government did when they came to power. We should recall that in 2010 our economy was actually growing. Why did it go into recession? It did so because of what happened during their first few days, including the measures on investment, which my hon. Friend the Member for Nottingham East (Chris Leslie) mentioned. What the Government did sucked money straight out of the economy, so demand went down. We have had the longest recession and recovery in history. On the Conservative party’s and the Chancellor’s own figures—these are not my figures or the Labour party’s—by now we should have seen 8.4% growth, whereas we have actually seen 3.8% growth. We were supposed to have got rid of the deficit by 2015, but we are actually borrowing another £190 billion more than we were planning to borrow.

That is the Chancellor’s supposedly successful plan. People would think that he would apologise for that, but that is about as likely as the hon. Member for North East Somerset (Jacob Rees-Mogg) walking into the Chamber wearing a pair of Wrangler jeans. The fact is that the Chancellor’s plan has not been working, with the root cause—the Liberal Democrats have been going along with this—being an ideological Conservative party, which is not just about deficit reduction, but is actually about small state Conservatism. The headlines in last week’s Budget were clearly designed around things such as the pension measure, which I will discuss in a moment, but tucked away were another £1 billion of cuts, which the Chancellor made permanent for future years. So that is more pain for Departments across Whitehall and communities across our country.

The Budget headline was clearly on pensions, and much has been said about the freedoms that the measure is going to give. I do not usually agree with the hon. Member for Watford (Richard Harrington), but he made some interesting points in his contribution and I share his fear about people’s ability to get proper financial advice about what to do with their pensions. I take his point that we are dealing with relatively small sums in terms of pension pots of £20,000 to £25,000 and the costs of giving that advice would be astronomical. Are we, however, going to avoid the chaos we had—many of us remember seeing it in the 1990s—when the vultures descended on workplace pension schemes, advising people to take money out and put it into all sorts of products, which led to people making bad investment decisions?

The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), who is responsible for pensions, says that he is not really bothered if someone wants to go and blow it all on a Lamborghini. Hon. Members might not be surprised to learn that I do not know a great deal about Lamborghinis, but I was a bit disappointed that he did not use an example of a British car, because it would have been a good idea to boost the British economy if he really wanted to give an example of an expensive car. Today, I looked up the cost of the cheapest Lamborghini and found that it is £300,000—that represents quite a big pension pot. The problem arising out of that policy is that the Government have not published the modelling on what the effects will be on the public purse. They need to do that because hidden issues need addressing. It is right to give people choice and freedoms, but the Chancellor did nothing at all to affect the charges, fees and so on that small pension pots are attracting, which can be substantial, not only at the time of buying an annuity, but over the lifetime of the pension. That would be a thing to do.

I have serious concerns. For example, if a pensioner uses their £300,000 plus to buy a Lamborghini—or possibly a Bentley, which would at least boost jobs in this country rather than in Italy—what do they do when they have no money left? The Pensions Minister says, “Well, that’s fine because it has all been taken care of by the new generous state pension.” He forgets that there are other things. There is no mention, for example, of care costs or of housing benefit. Those things need to be explained. It helps the Chancellor; he has a figure in the Red Book for the amount of tax he will raid out of pensions in the short term. There will clearly be a boost if people spend their money in the economy. I am not usually a great fan of the Association of British Insurers, but a serious issue has been raised about the future of the annuities market. Insurers do not just get in money and sit on it; they invest it, so we are talking about long- term investment that is being taken out of projects and businesses. To make a full assessment of the effects of this move, we need to understand the modelling of the scheme, and that has not been forthcoming. It will be interesting to see whether the Government will produce it.

The other issue is the increase to £15,000 a year in the allowance for individual savings accounts. Like the hon. Member for Macclesfield, I speak to my constituents. It is laughable to suggest that they may have £15,000 lying around to invest each year. I think that most people are in the same position. As my hon. Friend the Member for Glasgow North East (Mr Bain) said, people are not investing the money; they are actually spending it to live in their old age. Some 8 million people in this country have no savings whatever, and another 32% have less than £1,000 in savings, so the proposal will not help anyone. It may help some who have £15,000 to invest. Should we welcome that? Possibly, but the idea that it will help most of my constituents, or most of the constituents of my hon. Friends, is frankly not right. On Saturday, when I was out at an event in Chester-le-Street in my constituency, someone said to me, “Who’s got £15,000 lying around to invest in that type of savings plan each year?”

When the Chief Secretary to the Treasury opened the debate, my hon. Friend the Member for Nottingham East said that he was suffering from Stockholm syndrome, because he has actually become part of the Conservative party. Indeed, having heard the speech and the comments of the hon. Member for Redcar, I think that he also has a very bad dose of the syndrome.

I asked the Chief Secretary at what point in the previous Labour Government did his party say that spending was too high. I then gave him another chance and asked him whether the Liberal Democrats had called for reduced expenditure in any area—whether it be in the NHS or anywhere else. There was not one single area. At least the Conservatives could say that they ditched the pledge around 2008-09. The Liberal Democrats kept going right into the last general election. To hear the hon. Member for Redcar now, we might think that he had long been there calling for fiscal responsibility and less expenditure. The Liberal Democrats may trumpet it now, but that was not the case back then.

The Chief Secretary to the Treasury said that he was proud that the increase in allowances was straight from the last Liberal Democrat manifesto. It might have been, but the commitment on VAT—he was challenged about what happened to that—went the same way as the commitment on tuition fees. Remember the VAT bombshell? It was the first thing they did and the Liberal Democrats could not even claim at that stage that they had been affected by Stockholm syndrome, as they were only in the early days of captivity. And what did they do? They increased VAT. The hon. Member for Redcar says that the increase in VAT is a progressive form of taxation. I am sorry, but it is not. All the indications show that it is a regressive form of tax that hits some of the poorest in our communities, including in Redcar.

[Ms Margaret Ritchie (South Down) (SDLP)]

Is my hon. Friend aware that in Northern Ireland we have a particular problem with VAT and our land border with the Republic of Ireland? Our VAT is levied at 20% for tourism products and in the Republic of Ireland they have been able to retain it at 9% as of today. They also have air passenger duty at 0% from today.

[Mr Jones]

I agree. Some particular issues that appertain to Northern Ireland need to reflect the common land border with the Republic of Ireland.

As we have heard several times this afternoon, the Liberal Democrats are trumpeting as a great thing the fact that we have increased the personal allowance. The people who gain from it most are not the poor but those on middle incomes. MPs—quite apart from some Government Members who earn a lot more than their parliamentary salaries and who will gain even more—will gain more than the low paid.

[Jacob Rees-Mogg]

The hon. Gentleman must bear it in mind that nobody gains more than the £700 and that in the early stages the higher rate taxpayers were not included in the increase in the lower rate threshold. It was clawed back from them, so what he says about MPs is actually not correct.

[Mr Jones]

I was referring to some of the hon. Gentleman’s colleagues and I do not know whether he is included, as I did not look up his figures. The right hon. Member for Wokingham (Mr Redwood), who was in the Chamber earlier, earned £213,000 last year on top of his salary. He will therefore gain from the tax cut that the Government have given him. The Conservative Member with the highest figure earned something like £800,000 a year.

VAT, the cuts to housing benefit, the bedroom tax and the changes to tax credit have all affected those individuals. My hon. Friend the Member for Glasgow North East also mentioned national insurance, which affects those who are on very low pay. As for the idea that the increase in the personal allowance is somehow a great gift to the low paid, it is, as somebody said earlier, simply about giving with one hand while taking away with the other.

One missed opportunity in this Budget is that of putting investment into our economy. Clearly, the narrative is about a small state and the Conservative party wants as small a state as possible. The view expressed by the hon. Member for Macclesfield gave the game away and that is, basically, that the only people who create wealth in this country are entrepreneurs and business, that somehow public expenditure is a bad thing and that spending money on services does not create any wealth at all. In the early days of this Government, the one thing that sucked more money out of the economy than anything was the cuts to public services and local councils. Councils do not sit on money, they spend it in their local communities. I know that many small businesses, including one small building company in Chester-le-Street, nearly went to the wall because their main contracts were with the local authority.

The hon. Member for Redcar used a comparison with maxing out credit cards, but the idea that the state is like an individual’s personal bank account is complete nonsense. Clearly, if the state invests in infrastructure and other things, we get growth in the economy.

[Philip Davies (Shipley) (Con)]

On a point of order, Mr Speaker. I hope the hon. Gentleman will accept my apology for interrupting his flow. When I opposed the ten-minute rule Bill earlier today, I had intended to start by referring Members to my entry in the Register of Members’ Financial Interests. Having read Hansard, it appears that I failed to do so, so I wanted to come to the House at the first opportunity to correct the record and refer Members to my entry in the Register of Members’ Financial Interests. That is my purpose in doing so now; it was not intended to interrupt the hon. Gentleman’s flow.

[Mr Speaker]

I am grateful to the hon. Gentleman for that point of order. His courtesy in the House is well known, as in general terms is his interest in the sector concerned. His omission was inadvertent and he has put the record straight at the first opportunity, and I thank him for doing so.

[Mr Jones]

The hon. Gentleman has not broken my flow, but I thank him for the little breather to give my larynx a rest.

If one follows the logic of the hon. Member for Macclesfield, business should not get any subsidies whatever. But we all know that that is complete nonsense. The Government are now increasing investment allowances, but they cut them in 2012. We are now told that this is a great achievement of the Budget, but we are only back to where we were in 2012.

I am seriously concerned that we have a two-speed Britain. We have a housing market that has clearly been stoked in London and the south-east, and we have a stagnant north. The hon. Member for Hexham (Guy Opperman) described Hexham, which is a nice constituency, and in the north-east, but he is living in some type of parallel universe if he thinks that the north-east economy is booming. Well-paid jobs in the public and private sectors have been replaced by low-paid zero-hours contracts. Four out of five of the new jobs that have been created are low paid and in the service sector, not in the long-term sectors. Added to that—as a north-east Member the hon. Member for Redcar is voting for this—is a movement of the limited public finance that there is from the north-east and other areas to the south. For example, we have already seen the record level of cuts in public expenditure for councils in the north-east. Durham county council has lost 40% of its budget. Contrary to what the Secretary of State for Communities and Local Government says about 40% of a budget somehow being saved by cutting down on pot plants or the fripperies, that is not possible. It has to be done by cutting back on services and people.

As if that was not bad enough, there is more to come. In the Budget and as part of the process, Durham county council will now lose another £13 million. Gateshead council will lose nearly £8 million. Newcastle city council will lose a further £14 million. South Tyneside will lose £7 million and Northumberland nearly £4.2 million. That will take money out of the economy and redistribute it to those in the south. The cut per dwelling in South Tyneside is £101.50. In Sunderland, it is £90.45. Meanwhile, Wokingham—people will think I have a thing about Wokingham—has an increase of £55, and Surrey an increase of £51. The hon. Member for Redcar, the great champion of the north-east, is voting for these things, redistributing money from the north and north-east to the south of England. That is having an effect on jobs.

The hon. Member for Macclesfield might think that public sector jobs are not important, but I tend to think that they are. When one needs the NHS, people must be there. When home care is needed from a local authority, people must be there. If there is no money and deprivation indices have been removed, not only are those services being removed, but money is being taken from the local economy. That will have an impact on exactly the businesses that the hon. Gentleman argued earlier we should be supporting and growing.

[David Rutley]

The record will show that I did not say that public servants do not do a useful job, because I think that they do. Where do the interests of the taxpayer fit into the hon. Gentleman’s world, because I have not heard that mentioned in anything he has said? He seems to think that money grows on trees, rather than coming from taxpayers.

[Mr Jones]

The hon. Gentleman’s naive and simplistic approach is that the only way to grow the country’s economy is to sit back and wait for the great entrepreneurial spirits he talks about to grow up, as if by magic, and rescue the economy. Governments have a role to play in generating economies and delivering good, local public services. The idea that Durham county council, or any council, sits on that money is ridiculous; it spends the money in the local community, as do the people who work for it. It should come as no surprise to anyone—it might to him—that taking money out of an area, including the spending power of local authorities, public services and local people, will have an effect on private businesses, whether shops or services, because people do not sit on their money at home; they spend it in their local communities.

[David Rutley]

Whose money is it? It is not the state’s or the council’s. It is the taxpayers’ money, and there is a responsibility to spend it wisely.

[Mr Jones]

I totally agree. The hon. Gentleman should look at my record on Newcastle city council, because I always ensured that we got value for money. But there is a big difference between getting good value for money for the taxpayer and his suggestion that local authorities and public services spending money will somehow not have an effect on local economies. It should come as no surprise to anyone that taking money out of people’s pay packets, whether in local councils or public services, will have an impact on private sector jobs in local communities.

[Jacob Rees-Mogg]

The point that the hon. Gentleman is missing is that the money that is taken out of the taxpayer’s pay packet is tax in the first place, so this is merely changing the money from being spent in one part of the country to being spent in another; it is not creating new money.

[Mr Jones]

I disagree. Were we to build a new motorway or railway line, such as HS2—I am sure that the hon. Gentleman is a great advocate of that vanity project—the increased speed with which people would be able to move around and do business would have an impact, so it cannot be said that that will not have an effect. We come back to the idea that somehow Governments cannot have an impact on what is happening.

Last week my hon. Friend the Member for Middlesbrough (Andy McDonald) raised with the Prime Minister the disproportionate amount of money spent on transport in London, compared with the north-east. Interestingly, the Prime Minister rattled off four transport projects that he claimed this Government had delivered for the north-east. He was very confident about his facts, which did not surprise me, because his public school background means that he can be very confident even when talking complete nonsense—it does not really bother him, because that is the way he has been brought up. He mentioned the Tyne and Wear Metro and the Tyne tunnel—I cannot remember what the third and fourth projects were. They were all agreed by the previous Labour Government. In fact, the Tyne tunnel was finished before this Government came to office. The idea that this Government are somehow leading on those big infrastructure projects, which are desperately needed in the north-east, is ridiculous, because clearly they are not.

Housing is an issue that could be completely missed in the Budget. The way forward is clearly to encourage people to buy their own homes, and I have no problem with that, but if someone is in low-paid work on a zero-hours contract, and possibly having to work two part-time jobs, as many people do, the idea that they will ever get the credit worthiness to own their own home is complete nonsense. What we need, certainly in the north-east and in my constituency, is affordable housing for rent. The easy thing that the Government could do—it would not cost them any money—is give housing associations the borrowing requirements they need against their assets to build houses. The Government could do that, but they are not. Instead, they are creating an artificial bubble in the housing market. Look at the difference between the north-east and the south. Prices in the north-east are still £5,000 lower than in 2008; in London and the south-east, they are 77% higher. Ridiculously, housing is completely unaffordable for most people in London and parts of the south-east, with average house prices of £400,000. Even people with reasonable standards of living find it hard to buy a house.

I turn to youth unemployment, one of the great tragedies of the Government. I fear that there will be a repeat of what we saw in the 1980s—a completely lost generation of young people. They have no opportunity for a job, not only in the short term but in the longer term. Why is that important? If someone meets us for the first time, they usually ask us two things: our name and what we do for a living. Some people cannot answer the second question about a fundamental part of who they are. Some say that there are lazy people, but I am sorry—there are hard-working people struggling to make ends meet.

I will give two examples from my constituency. I met someone on a zero-hours contract working in a store, which I will not name, in the Metrocentre—that great cathedral to Thatcherite free market enterprise.

[Ian Mearns]

In Gateshead.

[Mr Jones]

In Gateshead. This 17-year-old on a zero-hours contract, who lives in Stanley, told me that he turned up at the Metrocentre one morning only to be told that there was no work and he should go away. He had paid his bus fare to get there, went back home and was then rung up to be asked back for two hours that afternoon. If he said that he could not do that, he would be sanctioned as one who was not trying hard enough. As was said eloquently earlier, for the Government the issue is a job at any cost. That man was getting out of bed every morning to try to work.

I met another young lad in Stanley last week. He had applied for well over 150 jobs and been on umpteen courses. The scandal about the Work programme is that the Government are lining the pockets of private sector suppliers. This lad was desperate. He said he wanted to set up his own business. I am sure that Government Members would think, “Brilliant! This great entrepreneur needs to go forward.” He went to the jobcentre to ask for assistance in getting his driving licence. They told him no, although they could send him on a course to do everything else. That is the trap for some of these young people. There is no hope for them and they feel neglected.

The issue goes further than that. The older generation look at their grandsons and granddaughters and see no hope. We needed hope in the Budget for those young people, but there was none. We need to give them hope. Labour has a commitment to get people into work. The hon. Member for Dover was disparaging about the previous Government’s attempts to do that, but it is important to get people into the ethos of work, because not having that place in the world is difficult. People can get into a cycle and give up hope.

The young people I meet in my constituency are working hard and trying. As I said, some are treated like hired help—paying out of their own pockets to get to work and being told to come back later when there might be hours. That may be the type of society that the Liberal Democrats and Conservatives want, but I do not. The next election must be about a very clear message not only about standards of living but what type of society we want to live in. Do we want to live in a society where people are on zero-hours contracts with uncertainty about whether they are going to get work, and youngsters are not going to improve their life chances as others did? The hon. Member for Macclesfield talked about a global race—well, it is. This Government have a clear policy: a global race to the bottom. This is not the high-skilled and forward-looking country that I want to live in.

As my hon. Friend the Member for Bolton West (Julie Hilling) said, if we are the sixth richest country in the world, it is a scandal that people who are not sat idle but going out to work are reliant on charity to live and put food on the table for their children. That makes me very angry. This is not the society I want to live in. The Budget does nothing for those people. In areas such as the north-east—my hon. Friend the Member for South Down (Ms Ritchie) mentioned Northern Ireland—there needs to be a clear plan for getting those regions working again: a new deal that has real investment behind it as regards infrastructure and making sure that young people have the opportunities they need.

Next May, I will make sure that I always remind people of one thing: that not a single one of this coalition Government’s horrendous, horrible policies, with the torture they have inflicted on many thousands of our citizens, as we expect from Tories, could have been introduced without individuals such as the hon. Member for Redcar and other Liberal Democrats who have voted for them all.

--- Later in debate ---

[Jacob Rees-Mogg]

I am grateful to the hon. Gentleman for that intervention. The thing about corporation tax is that a lot of corporations can be taxed almost anywhere in the world. That is why I think the Government are absolutely right to bring down the rate of corporation tax. It will help businesses to be headquartered in the United Kingdom, which is good for the UK in terms of employment and, indeed, tax revenues, by which I mean not just corporation tax revenues, but the other tax revenues paid by companies, namely business rates and employer national insurance contributions, as well as the taxes paid by their employees. We get a larger, more successful economy if we are relatively generous to corporates.

Northern Ireland Members have spoken of the particular circumstances there and the competition Northern Ireland faces from the Republic of Ireland. That is a very good case of tax competition between neighbours and it can be seen very bluntly in Northern Ireland because of the land border. We see less of it on the mainland of the United Kingdom because we do not cross borders quite so easily and we do not necessarily focus on it as much as we should. I think that the Government are absolutely right on corporation tax and that they should continue down that line.

The Government have also been right on the raising of thresholds and I hope they will continue with it. It makes sense, as my hon. Friend the Member for Redcar (Ian Swales) has said, because it is not logical for people on the minimum wage to be paying taxes. There is no point in taxing people who are low earners merely to pay them benefits with their own money. Although it was a Lib Dem policy in the last election and they deserve credit for that, it was suggested earlier by Lord Saatchi and Peter Warburton in a booklet they produced for the Centre for Policy Studies. The Conservative antecedents of the policy are pretty good and solid. It is a Tory policy in origin and it ought to continue.

The aim of the Government in the long run should be that people on the minimum wage should pay neither tax nor national insurance. In that way, the amount of benefits that needs to be paid to them will be very significantly reduced, as will the administrative burden. Roughly speaking, tax collection costs 1% of the amount collected, and benefit payments cost about 2% of the benefits paid out, so if we tax people to pay them benefits, the overall cost will probably be about 1.5% of the total amount paid and received. The policy is very good and welcome.

Another policy that must be welcomed is the change to pensions. Questions about pension funds came up when my right hon. Friend Chief Secretary to the Treasury spoke. What the Government are doing is very simple: they are allowing people to keep their own money. That is not very popular among Labour Members, who seem to have the view that it is the Government’s money and should be distributed as they, rather than individuals, wish. Conservative Members and, indeed, Liberal Democrats who still have some residual liberal attachment believe that the money belongs to the individual taxpayer.

The policy has a very clear advantage for the tax authorities, because it clarifies the idea that pension saving is nothing but a tax avoidance boondoggle. It is about taxing people once, rather than twice. People are taxed when they withdraw the money from their pension fund, with a 25% exemption, rather than taxed when they put it in. It is worth bearing in mind that if that was at any point reversed, the withdrawal would be taxed as a capital gain rather than as income, and the rates that applied might be very different from those that currently apply to withdrawals from pension funds. Any Government who intend at any point—whether at the higher or the lower rate—to withdraw the benefits of saving through a pension fund should consider the ultimate pay-out, and how the policy is a fair means of taxing people and ensuring that they are not taxed more than once.

As my hon. Friend the Member for Dover (Charlie Elphicke) said, this was a “steady as she goes” Budget. It is very impressive. The Government have not gone for cheap gimmicks, as parties sometimes do before elections; they have gone for continuing the work, which they started in 2010, of getting the country back on track. They are doing so in a way that benefits the least well-off in society the most. It is absolutely striking that the real incomes of every decile other than the highest-paid decile will rise by more than prices this year, as they did last year.

That Government achievement is helping where help is most needed: it is helping business to allow it to invest; doing more to help exporters; helping to rebalance the economy for the long term; and—gloriously, splendidly and rejoicingly—it is doing something to ensure that people have their own money. What a fine Conservative principle that is. We believe that the individuals and their families who build up society have the greatest wisdom about how they spend their money, not the tax authorities that dish it out. What is being done with pensions is the clearest statement of that. Yes, if people buy Lamborghinis, Bentleys or Porsches, they will spend it unwisely—

[Mr Kevan Jones]

Buy British.

[Jacob Rees-Mogg]

None of them is British, unless people buy Aston Martins. We could say, “Let us all buy Aston Martins with our pension funds to save the British car industry.” If we decided to do so, we would at least be spending our own money to support Britain. If we ended up sleeping in the Aston Martin, we would have nobody but ourselves to blame; it would not be the nanny state, the socialist state or the “Let’s tell you what to do” state that had taken charge. For that, we should rejoice at the Budget and the Bill.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

Growth up, unemployment down, inflation down and, certainly in my region and constituency, a very positive response to the Budget. The North East chamber of commerce held an event, to which I went with the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) 10 days ago, to assess and review the Budget. The response was overwhelmingly positive. I accept that it is only a chamber of commerce, as some Members have said—the hon. Member for North Durham (Mr Jones) was rather disparaging about the North East chamber of commerce—but it has 3,000 members, all of whom are SMEs and businesses in the north-east. They said:

“The NECC is pleased to see recognition of some of its key priorities in the Budget and that these figures demonstrate that increased business confidence, as reflected by the NECC quarterly economic survey, is manifesting into real growth and jobs.”

I welcome the fact that the jobs situation is improving in the north-east. [Interruption.] As always, it is good to hear the hon. Member for North Durham chuntering from a sedentary position. His speech was one of those where the glass was either half full or half empty. From HS2, Adonis and the job situation, the glass was evidently definitely half empty, but the figures—these are not my figures, I hasten to add, but the House of Commons unemployment by constituency JSA figures—indicate that in North Durham the number of JSA claimants is down 21.8%. The 18 to 24 claimants are down 22.4%, the 50 and over claimants are down 14.8% and the claims of 12 months duration are down 13.3%.

[Mr Kevan Jones]

The hon. Gentleman is looking at claims rather than unemployment, which is the important thing. That is the point my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. He should talk to people who are not on the claimant count and people who are being sanctioned by the Government. The idea that claimant count is a reflection of economic activity in North Durham is complete nonsense.

[Guy Opperman]

Let us try to be nuanced about this. We all accept that there are isolated examples of genuine distress and difficulties of the kind that the hon. Gentleman describes. No one disputes that; such circumstances exist in all our constituencies. However, as the hon. Gentleman knows, I spend more of my time in Newcastle than in Hexham—

[Mr Jones]

I am sure that they are pleased in Hexham.

[Guy Opperman]

The claimant counts in Newcastle are down as well, as are the claimant counts in virtually every constituency in the north-east. Suggesting that individual examples take care of all 21% is fatuous.

[Mr Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

Not at this stage. I want to make some progress. I had the great pleasure of listening to the hon. Gentleman for 42 minutes—

[Mr Jones]

Good!

[Guy Opperman]

And, sadly, I shall not be burdening him with 42 minutes myself.

[Guy Opperman]

It is great to be applauded by one’s Whip.

Let us look at the bottom line. Corporation tax is down from 28% to 21%, and employment allowance will reduce employers’ national insurance bills by up to £2,000. Anyone who visits any high street in any town or village in the country will find that that is a massively popular policy, and anyone who wanders into the premises of any small and medium-sized enterprise will find that everyone there is talking about it. Larger businesses will benefit particularly from the doubling of the annual investment allowance, and nearly every business will pay no tax up front when it invests in the future. That is fantastic.

The north-east is the only region in the country with a positive balance of payments. We export more than we import. I welcome the fact that manufacturing is being turned around and being supported by this Government, after struggling under the last Government. The number of apprenticeships is doubling in our area, and the number of traineeships is also increasing. I cannot stress strongly enough the difference that traineeships are making in the brave new world in which we are living.

I visited a company called Release Potential, which is in Stocksfield, in my constituency, and which is giving young people the opportunity of becoming trainees. Once they have done that, they have a much better chance of securing apprenticeships and jobs. We should be supporting that, and, as always, encouraging employers to take on apprentices and trainees. I should make a declaration at this point: I am the first Member of Parliament to hire, train, retain and, now, employ an MP’s apprentice. She is not an apprentice MP; she is an office manager, although some people often say that she would do a better job as an MP. The honest truth is that if I can do that when running a small business with a relatively low budget and very few staff—as all MPs do—I see no reason why other SMEs cannot do the same.

What else is there to welcome in this outstanding Budget? [Laughter.] Labour Members laugh from a sedentary position, as they always do, but Newcastle airport has sought a change in the air passenger duty rules for ages. When I went to see the Chancellor, he listened to my representations and to those of Members from Manchester and Bristol, and I am grateful to him for that. The changes in APD rates, including the abolition of the two highest rates, will be fantastically helpful, and—again—will be welcomed by the chambers of commerce, not just in my constituency but throughout the country. Anyone who travels on an international route to try to promote trade overseas will welcome it.

As chair of the all-party parliamentary group for air ambulances, I should declare an interest in the subject. I also made use of one or two air ambulances when I was a very bad jockey and required their assistance. For many years, since the presentation of a petition signed by 155,000 people—and the Hexham Courant’s small but very weighty petition—we have been trying to get rid of VAT on the fuel used by air ambulances. In the north-east, the Great North air ambulance service led the campaign, and is a massive beneficiary of it. The cut announced in the Budget will save air ambulances a huge amount. It will allow more missions to be flown, and there is no doubt that lives will be saved. There is immense support for the measure in all the air ambulance services in the country,

The Chancellor said in his Budget statement:

“I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities”,

but added that he would also

“extend that support to our search and rescue…and provide £10 million of support to our scouts, guides, cadets and St John Ambulance.”

His intention was best expressed by this simple expression:

“1…want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values.” —[Official Report, 19 March 2014; Vol. 577, c. 786.]

That is absolutely outstanding, and offers support to all the individual charitable and voluntary organisations that are the bedrock of our communities.

There were also announcements on school funding. Anyone who, like me, has taken part in the F40 fair funding campaign will greatly welcome the announcement from the Minister for Schools, and the support from the Treasury. F40 budgets will be increased, be it in Northumberland, Durham or in other rural areas. The consultation going forward is an outstanding and important contribution. If we can change the way our schools are funded, they will have a genuine possibility of surviving.

I could talk about fuel duty, which, as we all know, the previous Government raised remorselessly—well over a dozen times. I am pleased to say that the Chancellor, with great difficulty and in very difficult times, has managed to cancel the fuel duty escalator that the previous Government sought to include in future Budgets.

I have some outstanding breweries in my constituency, such as the Hadrian Border Brewery, Allendale and Matfen. I can assure you, Madam Deputy Speaker, that when you holiday in God’s own county of Northumberland, you will want to visit the various beer festivals that will take place there this summer, where the further reduction in beer duty will be welcomed. That reduction supports not just the person who wants a pint of bitter, but the brewers, because it allows them to invest and to create jobs. It provides genuine support for businesses that struggled desperately under the previous Government, and they are extremely grateful.

On housing—unlike the hon. Member for North Durham, I am having to condense my 42-minute speech into approximately 10 minutes—those who visit Humbles Wood, in Prudhoe, in my constituency, which is a new-build housing estate, will find that 85% to 90% of all purchases there are made with Help to Buy. It has utterly transformed the ability of a relatively low-paid local community in one of the smallest towns in my constituency to access housing. It is a massive help, and not just there. To answer the point made earlier by the hon. Gentleman, when I spoke to the various estate agents in West road, Newcastle, they too reported the massive difference that Help to Buy has made in what is—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

One last time, just to give the hon. Gentleman an extra minute or so.

[Mr Jones]

I am sorry that the hon. Gentleman spends so much time in Newcastle, rather than Hexham, which I agree is a beautiful constituency. The figures for average house prices in the north-east show that they are still worth £5,000 less than they were in 2008.

--- Later in debate ---

[Ian Mearns (Gateshead) (Lab)]

It is a pleasure to follow my near neighbour, the hon. Member for Hexham (Guy Opperman). There has been a north-east persuasion to the debate today: we have heard from North East Somerset and Glasgow North East—as well as Edinburgh East—and I represent the central, northern and eastern parts of Gateshead, which is in the heart of the north-east of England. I have to say, however, that my part of the north-east of England is quite different from that of the hon. Member for Hexham. From my perspective, he is way out west.

From the perspective of many of my constituents, the Budget and the Finance Bill come across as complacent, smug and somewhat self-serving. The Chancellor painted a rosy picture of recovery in his Budget statement, but for those who represent many of the constituencies outside London and the south-east, the picture is very different. I have to defend my region and my constituency, where real incomes for most are falling not rising, where living standards for most will be lower in 2015 than in 2010, and where the number of working poor is rising, with many in insecure work now being paid a low hourly rate for part-time or combinations of part-time jobs. There has also been slower growth and a higher continuing deficit than expected, and the overall debt has grown dramatically.

We are a diverse country. We have regions of relative prosperity with pockets of poverty, but we also have regions of relative poverty with pockets of prosperity. The north-east of England is a region of relative poverty with pockets of prosperity, and the north-east economy is still in recession. In my own constituency of Gateshead, the pace of economic recovery is painfully slow, if not non-existent. The negative impact of welfare reforms, the lack of central Government investment and the cuts to local government are having a profound and damaging impact on our economy and on people’s lives. They are also having a profoundly negative impact on the business community in parts of the north-east. The policies and priorities of this Government show a total disregard for the people and the region of the north-east.

This Finance Bill is another missed opportunity. The Chancellor has made it clear that public sector cuts and austerity will continue for the foreseeable future, but local government budget cuts are sucking the spending power from local economies. Since 2010, my local authority in Gateshead has suffered cuts of £75 million, with the loss of over 1,200 employees. That is 1,200 people who no longer have the wherewithal to spend money in their local shops and communities or to support local businesses. In 2014-15, we will suffer a further reduction of over £15 million, with a reduction of a further £24 million in 2015-16. In total, by the end of 2015-16, Gateshead will have suffered a 37% reduction in its grant from central Government. That figure is in line with that for all 12 local authorities in the north-east, all of which have suffered cuts of more than 30%.

Such cuts are 10 times the figure suffered by authorities serving affluent areas in the south-east and the south, where average cuts in grant support have been less than 3%. Needless to say, we top the league not only in cuts for local government, but in cuts for welfare benefits—it is a shame our football teams are not topping the league. When the current welfare reforms have come into full effect, they will have taken nearly £19 billion a year out of local economies, which is equivalent to about £470 a year for every adult of working age in the country. Of course the impact on the poorest—on those in most need—will be greatest, and the impact varies greatly across the country. At the extremes, the worst-hit local authority areas lose about four times as much per adult of working age—as much as £910 per working adult—as the authorities least affected. The three regions of the north of England alone can be expected to lose about £5.2 billion in welfare benefit income. That money is being sucked out of the spending power in local economies.

[Mr Kevan Jones]

Does my hon. Friend agree that this is about not just cuts in local authorities, but cuts in welfare? For example, in Wokingham the number of people affected by the bedroom tax is only 237, whereas I am sure the figure for his constituency is much higher.

[Ian Mearns]

I could not agree more.

Again, on employment, we have to wonder whether the Prime Minister and Chancellor are on the same planet as we inhabit in the north-east of England. Whereas unemployment figures for the UK are hovering around the 7% mark, unemployment in the north-east has only just dipped below 10%. That is the claimant count figure; it is not the count of people who are economically inactive, which is a much greater figure for a region such as the north-east of England. I baulk at the complacency from Government Members in the face of that, because it is having a dramatic impact on people’s lives.

[Ian Mearns]

Those figures are interesting. It has to be said that economies such as the north-east of England look at the JSA figures and see that they have removed from them people sanctioned because of their benefits. The last estimate I saw was that almost 1 million people on JSA were in receipt of a sanction in the last counting period. In addition, some 600,000 people, on a conservative estimate, are now employed on zero-hours contracts. Our regional economy suffers from not only unemployment, but significant amounts of under-employment.

Despite the Government pledge to ensure that it is always worth working, it will be those in work who will most feel the squeeze of this Government’s policies. Average weekly earnings and gross disposable income in the north-east are the lowest of any English region. According to the latest Real Life Reform report, which has been conducted by the Northern Housing Consortium, the average spend on fuel among the study subjects has risen by 8.5% since only December and by more than 30% just since last September, and is now at an average of £32.62 per household per week in that study, which is of people on very low and modest incomes.

The Chancellor has made much of his personal allowance increase, but the Government continue to ignore the negative impact of their 24 tax rises between 2010 and 2015. I am not a natural bedfellow of the TaxPayers Alliance, but it believes that there have been 254 tax rises, particularly the hike in VAT in January 2011 from 17.5% to 20%. Even the Prime Minister accepts that VAT rises impact on the poorest, and he always knew that they would. On 5 January 2011, he said:

“If you look at the effect”—

of VAT—

“as compared with people’s income then, yes, it is regressive.”

In Exeter in 2009, the right hon. Gentleman, as the then leader of the Opposition, said of VAT:

“You could try, as you say, to put it on VAT, sales tax, but again if you look at the effect of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you.”

[Mr Kevan Jones]

Like me, was my hon. Friend shocked when the “Conservative” Member for Redcar (Ian Swales) said that VAT was not a regressive tax?

[Ian Mearns]

Given the statements that I have just read out, which are attributed to the current Prime Minister, I am flabbergasted by the attitude of the “Conservative” Member for Redcar.

In his Budget statement, the Chancellor proudly championed the rise in the minimum wage to £6.50. However, given that his entire experience revolves around his coterie of millionaires—including the majority of his Cabinet colleagues—it is little wonder that he has absolutely no idea how difficult it is to raise a family on £6.50 an hour. How can one invest £15,000 a year in an ISA on a salary of £6.50 per hour? The Finance Bill does nothing to help my region and nothing to reverse any of the damage inflicted by this Government over the past four years.

The Government’s proposed cuts to the public sector—the Institute for Fiscal Studies estimates that, outside of the NHS and schools, they could result in a 40% cut in the public sector workforce—will disproportionately affect my region. Cuts to local government expenditure will also have the heaviest impact on the most vulnerable who rely on the provision of services by their local councils. We are letting down the most vulnerable in our society.

The Chancellor’s much-heralded recovery is, to be honest, little more than a rise in consumer spending, fuelled by a false confidence based on rising house prices in the south-east of England, which have been stoked by the Government’s Help to Buy scheme.

When the Chancellor of the Exchequer announced the pension pot release scheme, I am sure that he was not actually expecting the vast majority of recipients to buy a Lamborghini, but I am pretty sure that he was hoping that enough pensioners would spend their lump sums—even if it is only 10% or 15% of it—on things such as cars and home improvements, and thus help fuel a consumer-led recovery.

The Government’s stated aim was to “rebalance the economy”. So far, I see little evidence that the massive losses to public sector jobs in the north-east are being offset by private sector job creation. That needs to be addressed urgently.

A representative of the Federation of Small Businesses told me that the north-east has some 136,000 private sector businesses, which sounds very positive, but he went on to say that only 1,000 of them had more than 50 employees, and 100,000 of those businesses are sole traders. When we are sucking out money from people’s pockets and from their spending power, we are bound to impact on the private sector in an economy that has so many small businesses.

The north-east is very different from London and the south-east. Having suffered savage and disproportionate cuts, the region has experienced severe impacts on its small business sector as the Government have deliberately gone about the business of shedding jobs and sucking out spending power and disposable income from the region’s economy.

Let me highlight the difference in investment in different parts of the country. I do not understand how Government Members who represent our region can be so complacent about this matter. We all know the facts about how much has been invested on transport infrastructure in London and the south-east per head of population in comparison with the north-east. It is in the order of magnitude of 500:1—£500 more spent in London and the south-east per head of population than in the north-east. That is severely affecting travel to work mobility in the north-east. According to the Institute for Public Policy Research, it is quite unsustainable from a regional economic perspective.

High Speed 2 will not help us in the short to medium term. It will take until 2033 for HS2 to reach the north-east, seven years after it reaches the west midlands. As I have said on several occasions, 20 years ago I could travel from Newcastle to London in two hours and 38 minutes. After £50 billion of investment and 40 years, our journey time will have reduced by 20 minutes. From the perspective of the people of the north-east of England, is that a good and sound investment? Even the chairman of HS2 believes that it is a bad deal for the north-east and has said in the press today that if people in the south-east of England had the transport infrastructure and trains that we have in the north-east, there would be riots in the streets. That is the chairman of HS2.

This is a complacent Budget that does nothing to rebalance the economy. I urge Members on the Government Benches to think again, because I can tell them that the hon. Members for Redcar and for Hexham will be severely tested come the next general election.

Trident Alternatives Review

Lord Beamish Excerpts

Wednesday 17th July 2013 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I have to say at the outset that I have a little difficulty here, because the Chief Secretary to the Treasury either has a different report in front of him or he has read the report and not understood it. The Government commissioned the alternatives review into the future of UK nuclear deterrence back in 2011. It was part of the agreement in the shotgun marriage between the Conservatives and the Liberal Democrats following the 2010 general election. As he said, the Government’s stated position was to “maintain Britain’s nuclear deterrent”, but the Liberal Democrats had an opt-out in that they could be allowed to make the case for alternatives. So, more than two years later, we have finally been presented with those alternatives.

[Sir Edward Leigh (Gainsborough) (Con)]

Will the Labour party confirm its admirable commitment to continuous-at-sea deterrence in any coalition negotiations? Will the hon. Gentleman say that in Labour’s view this is non-negotiable?

[Mr Jones]

My position is very clear: I am working for a Labour victory at the next general election. But on the issue of continuous-at-sea deterrence, my answer is yes. Even though the report was commissioned by Her Majesty’s Government, its first line has the strange disclaimer:

“This…is not a statement of government policy.”

This must be the first time ever that the findings of a Government policy review have been abandoned at birth.

[Tessa Munt (Wells) (LD)]

Will the hon. Gentleman explain why today’s edition of The Times carries a headline that reads “Labour could cut Trident fleet after review suggests this would save £1.7bn”?

[Mr Jones]

I am not sure where that came from, first, because the figure that the hon. Lady cites is not correct—this would not be the first time that a newspaper had failed to do its sums—and, secondly, because we agree with what the Defence Secretary says. If changes in technology make the nuclear submarines more reliable, meaning that we can go down to three, we will consider that.

Many Labour Members have waited anxiously to see the report’s conclusion but, 26 months later, the review to make the case for the alternatives, which had the full weight of the Government’s resources behind it, presents us with no conclusions, makes no recommendations and does not even support adopting any of the alternatives put forward by the Chief Secretary. Only the Liberal Democrats could envisage an alternatives review that rejects all the alternatives. It is the equivalent of starting a journey to discover the ark of the covenant only to end up where we began with the conclusion that it does not exist.

The Liberal Democrats’ 2010 manifesto said:

“At a cost of £100 billion over a lifetime”

Trident

“is unaffordable, and Britain’s security would be better served by alternatives.”

If that was the case in 2010, given that those alternatives have not been identified in the review, surely it is not too much to ask that the Deputy Prime Minister and his Liberal Democrat colleagues admit that what they claimed in 2010 was wrong. One by one, each of the alternative platforms to Trident are rejected in the review. Heavy bombers, fast jets, low-orbit vehicles, land silos and maritime surface vessels are all discredited for not offering sufficient capability while costing more.

The review even dismisses the Liberal Democrats’ most favoured option of replacing Trident with nuclear-armed cruise missiles. Page 45 of the document states that cruise missiles

“offer a much reduced level of destructive and second-strike capability and an increased level of operational complexity”.

Page 6 states:

“Maintaining the same level of assurance that the UK deterrent can overcome an adversary’s defences is…likely to be harder with a cruise missile-based system.”

Page 8 points out that the cost of developing a nuclear-armed cruise missile would more than double the cost of Trident missiles and would take some 24 years. In support of that argument, the Deputy Prime Minister told Andrew Marr in 2010 that the UK

“could use Astute class submarines and use cruise missiles.”

It is true that they are alternatives but, as the report says, they are not only very expensive, but not very good.

The review totally discredits the Liberal Democrats’ previous policy decisions. In fact, some of the more ludicrous suggestions were not considered in the report because exploring them was deemed to be a waste of civil service time and energy. Page 16 dismisses some of those more wacky ideas, such as using helicopters, unmanned air vehicles or space-based platforms. Hand-held devices on the ground were also excluded

“as they would not meet several constraints, including in particular credibility and absolute range.”

The report is therefore credible, as even the most far-fetched suggestions put forward in the outer reaches of the Liberal Democrat world have been addressed.

[Sir Menzies Campbell (North East Fife) (LD)]

The hon. Gentleman is right that not all parties have been entirely consistent on this matter, but may I remind him that, prior to the 1992 election, the Labour party refused to commit to a fourth submarine, but suggested that one way of maintaining employment at Barrow-in-Furness would be to turn the submarine into an underwater oil carrier?

--- Later in debate ---

[Mr Jones]

I had not heard that one. I thought the Liberal Democrats might come forward with a proposal to turn one of the submarines into an underwater famine relief vessel, or some such nonsense.

[John Woodcock]

The right hon. and learned Member for North East Fife (Sir Menzies Campbell) has a point, but does it not prove that we have learnt from our past mistakes and clearly the Liberal Democrats have not?

[Mr Jones]

I could not have put it better myself. I will move on to discuss my hon. Friend’s constituency in a minute.

[Sir Menzies Campbell]

Will the hon. Gentleman give way?

[Mr Jones]

I think that the right hon. and learned Gentleman has had enough time, and the time is limited.

There was another option that was deemed unworthy of examination by what is otherwise a thorough and forensic document: sending two unarmed submarines out on patrol with the intention of stepping up our posture in a time of crisis. That is the policy the Chief Secretary has just proposed.

[Dr Julian Lewis]

I read that report in The Times, and it seems to me that what was being said was that the Labour party is committed to continuous-at-sea deterrence and the only question is whether it can do it with three submarines or whether it would have to do it with four. The one thing that is absolutely certain from the report is that it cannot be done with two, yet the Chief Secretary’s position is that if a crisis arose they would step up their performance. How could we build a third or fourth extra submarine in time to step up our performance if a crisis arose?

[Mr Jones]

I know that the hon. Gentleman has studied this subject thoroughly and is an expert. I totally agree with him. As I said, the Chief Secretary clearly has not read his own report because, as the hon. Gentleman rightly says, it outlines the problem with having only two submarines.

The Liberal Democrats briefed the newspapers earlier this week that the two-boat option would be a way forward, and the Chief Secretary has just re-outlined that ludicrous policy. My right hon. Friend the Member for East Renfrewshire (Mr Murphy) hit the nail on the head yesterday when he said that it was a little like installing a very expensive burglar alarm on one’s house with no batteries and putting up a sign saying, “Burglars, come in.” The only difference is that this would be a multi-billion pound deterrent that would not deter.

[Caroline Lucas]

I am sure that the hon. Gentleman, and indeed the Government, would pride themselves on adhering to international law, so can he explain how maintaining an arsenal of nuclear weapons for decades to come is in line with the UK’s obligation under the nuclear non-proliferation treaty, which is

“to pursue negotiations in good faith on… nuclear disarmament”?

[Mr Jones]

It is very consistent, and I am very proud of the Labour Government’s record on reducing our nuclear stockpiles, as we reduced the number of WE177 bombs and the number of warheads. I disagree with the hon. Lady’s position, but I respect the fact that she has one, which is a lot more honest that the Liberal Democrats.

However, credit should be given where credit is due. I think that the Chief Secretary should get some credit, because he managed to do something yesterday that I thought was remarkable, although I am sad that it was not reported more in this morning’s newspapers: he got the Prime Minister and Len McCluskey, the general secretary of Unite, to agree with one another, on this occasion on the Liberal Democrat proposals. That was some feat. If he is able to bring two individuals with such diametrically opposed views together, clearly he should turn his attention to the middle east peace process. Quite rightly, Unite described the Liberal Democrats’ position not only as reckless, but as a farce and a fudge, and that is exactly what we have here—[Interruption.] The Chief Secretary says that if Len McCluskey agrees with it, it must be a nonsense position, but he agrees with the Prime Minister, so is the Chief Secretary suggesting that the Prime Minister’s position is ridiculous?

[Duncan Hames (Chippenham) (LD)]

If wishing to end a continuous deterrent is such a reckless position, how does the hon. Gentleman think our other NATO allies in Europe can possibly cope with their current situation? Is he recommending that they should escalate their own nuclear posture?

[Mr Jones]

The hon. Gentleman has got to try better. The fact of the matter is that France has a continuous-at-sea nuclear deterrent. Our deterrent is part of the nuclear umbrella for NATO. He and his Liberal Democrat colleagues would have more credibility if they came out and said that they were unilateralists, because that is a defendable and credible position, unlike the nonsense they are putting forward.

The importance of the nuclear programme to this country’s submarine-building capability has been overlooked in the Liberal Democrats’ proposals. My hon. Friend the Member for Barrow and Furness (John Woodcock) is right to point out its importance not only to his constituency but to constituencies in Derby and to the wider supply chain in the United Kingdom. If we are to maintain our sovereign capability, we have to do it by building submarines, and we cannot do that if we follow the Chief Secretary’s suggestion.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

Perhaps the hon. Gentleman will also recognise that 25,000 people in Devonport’s travel-to-work area are dependent on defence, and this would have a very damaging impact on the local economy, which is a low-skills, low-wage economy.

[Mr Jones]

The hon. Gentleman makes a good point. No doubt at the general election he will remind his constituents and others of the Liberal Democrats’ position. We have some indication of what they think of people in Barrow and Furness because the hon. Member for North Devon (Sir Nick Harvey) suggested that they could move to the Bahamas to find work if we killed off the submarine-building industry there.

[Sir Nick Harvey (North Devon) (LD)]

indicated dissent.

--- Later in debate ---

[Mr Jones]

But I have the quote here:

“The idea that you should produce weapons of mass destruction in order to keep 1,500 jobs going in the Barrow shipyard is palpably ludicrous. We could give them all a couple of million quid and send them to the Bahamas for the rest of their lives , and the world would be a much better place, and we would have saved a lot of money.”

If that is the Liberal Democrats’ policy, I am sure that the people of Barrow and other places in the supply chain will have a clear view on it. He will have a chance later to tell us whether he has changed his position on sending my hon. Friend’s constituents to the Bahamas.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

I must chide my hon. Friend. If he reads the reports on alternatives to Trident, he will see that even the one on the future of Barrow-in-Furness makes the very important point that no one should ever argue for making weapons of mass destruction on the basis of employment, because there are alternative places for people to work. Both reports produced so far have said that alternative work could be found if we invested properly in other things. It is wrong to argue that employment is a reason for having weapons of mass destruction.

[Mr Jones]

I am not saying that; I am saying that we cannot dismiss the fact that these industries do not just employ people. I am proud of the high-technology industries in this country that support the nuclear programme. If the Liberal Democrats are not proud of that technology and the individuals involved in it, then that is their position, but I am certainly proud not only of their skills but of the wealth they create for many communities across the UK. I agree that that is not the only reason we should have the nuclear deterrent, but it is a very important one.

[Sir Gerald Howarth (Aldershot) (Con)]

I commend the hon. Gentleman for the strength of his argument. Let me point out—I am sure that he shares this view—that we came perilously close to losing this country’s submarine-building capability. That is a strategically important capability that we need to maintain, and it looks as though the Liberal Democrats are prepared to sacrifice it.

[Mr Jones]

I did not want to go down this road because obviously the Conservative Government have learned the lessons from the mistake that they made in the 1990s which created the current problems with Astute. We cannot turn these vital skills on and off like a tap when we need them. I have heard various people say, “Is this a justification for Trident?” No, it is not, but we have to take it into consideration when forming policy, and the Liberal Democrats’ position set out in the review document clearly does not do that.

[Mr Alan Reid (Argyll and Bute) (LD)]

The hon. Gentleman said that the Labour party may reduce the number of successor submarines from four to three. What would be the implication of that for Barrow?

[Mr Jones]

I did not say that, actually. I said what the Defence Secretary has said—that in thinking about the new nuclear submarines, we should consider whether it would be viable to have three. That is an option worth looking at. We would then have to bring forward the successor programme for Astute. If we deleted two boats—[Interruption.] The hon. Member for North Devon says, “It’s all right if we do it.” The fact is that if we went down to two we would have a deterrent that is absolutely useless. It would not save the £4 billion that the Chief Secretary suggested because unless we had mass lay-offs in the submarine-building programme, we would have to bring forward more work, including on the successor for Astute.

[John Woodcock]

Is that not the exact point? Would it not be helpful if the Chief Secretary made clear whether he wants to save that £4 billion over 30 years and decimate Barrow and the submarine-building industry, or whether he will bring forward the work and eliminate all those savings?

[Mr Jones]

My hon. Friend makes a very good point. These are questions that the Liberal Democrats and their nonsense policy have to answer.

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

The hon. Gentleman is making a very important point as part of what appears to be a shift in the official Opposition’s position on continuous-at-sea deterrence. I would be grateful if he would confirm what I think he is saying. Is it the case that he wants to maintain a minimum deterrent capability, which would most likely be four boats unless technological change suggested that it could be maintained with fewer than four boats?

[Mr Jones]

That is exactly the case, and I think that the Defence Secretary has said the same thing. It will be achieved not by sticking a finger in the air and thinking of a policy, but by thinking about what we need to keep our nuclear deterrent credible and by maintaining the important continuous-at-sea deterrent.

As has been said, we are convinced that the only credible way forward for a minimum nuclear deterrent is a continuous-at-sea deterrent; otherwise, the UK would be vulnerable. The Chief Secretary’s suggestion would not only make the UK more vulnerable, but lead to a situation where we would not possess first strike or even second-strike capabilities. It would also be a significant escalatory factor if the UK stepped up its armed CASD posture. It is simply not credible and it is also very dangerous.

There are options that the alternatives review did not consider, so why are the Liberal Democrats set on the proposals outlined by the Chief Secretary? I think it is the old Liberal Democrat trick—many of us who have dealt with them in local government have seen this over many years—of trying to ride both horses at the same time. They want to appease the party’s unilateralist wing and persuade them that they are scaling down the nuclear ladder, while simultaneously claiming to the electorate that they have a credible nuclear policy, but they have been found out by the alternatives review.

The Liberal Democrats have commissioned a review in Government time, using taxpayers’ money and resources, in order to supplement their own party’s policy manifesto for 2015. I tabled a written question to the Chief Secretary yesterday asking how much the review cost, and I await his response. The Lib Dem plans have been found wanting and they are now scrambling around frantically for a bizarre policy solution in order to advance their much-heralded differentiation strategy, through which they are trying to place themselves between the Labour party and their coalition partners.

We have all waited for the publication of this report and I think we all genuinely thought it would suggest a credible alternative. Our position is clear: we are committed to the minimum, credible independent nuclear deterrent, which is why we put that policy to the House in 2006. I completely disagree with the Chief Secretary’s comment that this is the most thorough review undertaken. That is complete nonsense, because that review was done in 2006. He should also look at the three comprehensive reports commissioned by the Defence Committee, which covered all the issues.

[Mr Ainsworth]

We consulted on it.

[Mr Jones]

As my right hon. Friend reminds me, we also consulted on the issue and did not conduct our review behind closed doors, as was the case with this one.

We also believe that the best way to deliver the nuclear deterrent is through a continuous-at-sea deterrent. The review does not appear to suggest anything to the contrary. In fact, it reinforces our point.

[Danny Alexander]

How much longer have you got?

[Mr Jones]

The Chief Secretary asks how much longer I have left. It is taking time to get through the nonsense he has come up with, but I will draw my remarks to a conclusion. I know that this is not very comfortable for the Chief Secretary, but he is going to have to sit there and listen.

[Sir Menzies Campbell]

This is a serious subject.

[Mr Jones]

It is a serious subject. I just wish that Liberal Democrats would treat it seriously, rather than coming up with the nonsense that they keep peddling.

The alternatives review reinforces my point. On page 5, it states:

“The highest level of assurance the UK can attain with a single deterrent system is provided by SSBN submarines operating a continuous at sea deterrence posture.”

On page 10, it states:

“None of these alternative systems and postures offers the same degree of resilience as the current posture of Continuous at Sea Deterrence, nor could they guarantee a prompt response in all circumstances.”

I could not put it better myself. Breaking CASD would involve an unacceptable downgrading of our capabilities.

To return to the issue of cost, we have been told by the Liberal Democrats that the alternatives to Trident would be cheaper, but their review shows that to be complete nonsense. We were told by the Chief Secretary yesterday that the review was not about savings, but about the nuclear deterrent.

In conclusion, the Liberal Democrats’ review has not only unmasked their political posturing, but reinforced the case for the policy voted for by this House in 2006. [Interruption.] I am sorry that the right hon. and learned Member for North East Fife (Sir Menzies Campbell) is muttering. When he is put under detailed examination, he will have to explain the nonsense that he peddled in the run-up to the last general election, which his party’s review has completely discredited. Perhaps he has not read the report. The Liberal Democrats must want to have some credibility. I know that it is not unusual for them to look both ways and ignore the truth, but the report clearly discredits most of the things that he has said over the past few years.

The alternatives review has looked at the alternatives and come forward with the conclusion that we all thought it would reach: the minimum credible nuclear deterrent for the UK is submarine-based continuous-at-sea deterrent. [Interruption.] Well, that is what it is saying—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. That really is enough. It is impossible for Hansard to keep a proper record of this debate when senior Members keep shouting across the Chamber and the Member on their feet then replies. Either we have interventions or we do not. We are up against the clock and I would appreciate it if we could get on to the Back-Bench speeches.

[Mr Jones]

Thank you, Madam Deputy Speaker. I await the examination of the report by the right hon. and learned Member for North East Fife and his justification of his comments over the past few years on this subject.

The standards that we set in this area are important not just in terms of cost. I know that the Opposition and the Government are conscious of the need to ensure that we not only get value for money, but we have a—

[Stephen Lloyd (Eastbourne) (LD)]

Will the hon. Gentleman give way?

[Mr Jones]

Oh, go on then.

[Stephen Lloyd]

I thank the hon. Gentleman for giving way. Given that he is suggesting that we should retain a like-for-like deterrent, what cuts to conventional services is the Labour party proposing? Would it cut the destroyers or the joint strike aircraft?

[Mr Jones]

Oh my God! Sorry, Madam Deputy Speaker, but I am getting a bit frustrated with these people who clearly do not know what they are talking about. If the hon. Gentleman looks at the equipment programme, he will see that the deterrent is in there now. He and his colleagues are peddling the nonsense that we can have either Trident or something else in the defence budget. Is he suggesting that if we cut Trident, the money would be ring-fenced for defence? That would be the first time that the Liberal Democrats have been proactive in support of defence matters.

The alternatives review has discredited the alternatives completely and exposed the reckless policy of the Liberal Democrats on this issue. We await the clear examination of their policy at the Liberal Democrat party conference, where they will no doubt look both ways—portraying themselves as unilateralists while at the same time arguing that they are strong on the nuclear defence of this country.

[Several hon. Members]

rose—

--- Later in debate ---

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for North Devon (Sir Nick Harvey), even if I think it is regrettable that he did not take this opportunity to clarify the remark about sending Barrow workers to the Bahamas, which caused real offence in my constituency. I do acknowledge, however, that he has spent a lot of time over the past two years on this review, even if I find his conclusions completely wayward.

This was supposed to be the Liberal Democrats’ opportunity to show that they could be trusted with the defence of the realm, and I have to say they have blown their chance spectacularly. Smashing the hegemony of a blinkered defence cartel that silenced any debate on the deterrent was heralded as one of the great Lib Dem wins from the coalition negotiations. We can imagine Lib Dem Members reassuring their concerned activists: “Yes, we’re more unpopular than we’ve ever been. Yes, we’re breaking our promises to students. Yes, we’ve given up any hope of being called the progressive party for a generation. Yet we bring you a referendum on the alternative vote, and we will challenge the tyranny of Trident renewal that has bewitched the two other parties.” It has not gone very well, has it?

[Mr Kevan Jones]

As I understand it, now the Liberal Democrats’ position is pro-Trident. It might be because of the fact that they are only going to have two submarines, but is that not a major change from the last general election?

[John Woodcock]

I would describe it as a complete collapse in the Liberal Democrats’ position. Two years on, we have a taxpayer-funded document—how much did this process cost the taxpayer, by the way? The document basically confirms what we duped fools have been arguing for years—that unless people show their true colours and come out as unilateral disarmers, and in doing so advocate a path that we strongly believe would make the horror of a nuclear war more likely, there is no credible, cost-effective alternative to the fundamentals of the existing plan to replace our fleet of deterrent submarines.

The alternative review rejects as unworkable and even more expensive what had long been the Liberal Democrats’ preferred option—some sort of mini-deterrent. Then the fall-back plan of halving the number of replacement Vanguard submarines to two, fervently briefed to the newspapers over the weekend, turns out not to have been considered by the review at all. Would anyone like to explain this? Have Liberal Democrats realised that every idea they have put forward so far has collapsed under scrutiny? Did they come to a view that it was best not to test this one in the official review, lest those pesky facts and figures ruin it like all the others?

--- Later in debate ---

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I wish to begin by paying a couple of tributes, the first of which is to the hon. Member for North Devon (Sir Nick Harvey), who, despite my disagreements with him on this issue, was a superb Defence Minister. It baffles me why the Deputy Prime Minister sacrificed a Liberal Democrat voice in defence and foreign affairs in order to play some pavement politics for the next general election. I hope to dismantle some of the hon. Gentleman’s arguments in a little while, but it is worth noting that he was a very good Minister.

I also pay tribute to my hon. Friend the Member for Barrow and Furness (John Woodcock). I hope that the hon. Member for New Forest East (Dr Lewis) will not take it as an insult when I say that my hon. Friend has demonstrated again why he is now the House’s leading expert on the importance of the deterrent. All Labour colleagues would acknowledge that he has been a champion at ensuring that Labour Members fully understand the importance of the role his yards play in securing our nation’s future.

The hon. Member for North Devon claimed that the world was safer now than it was during the cold war, but I have absolutely to disagree with him. We are in a multipolar world where there will be emerging powers in the next 40 years, and the certainties we had in the cold war about the Soviet bloc no longer exist. It has been said several times, so I will not labour the point, but we are being asked to try to guess what the situation may be in 30 or 40 years’ time. It is not a criticism of the national security strategy from 2010 that it could not see the Arab spring coming less than 12 months ahead. Can he honestly tell us why he is so confident about the state of the world in 30 or 40 years’ time?

The Chief Secretary to the Treasury, who has scuttled off, I suspect to cry somewhere in the corner, has claimed that this is a comprehensive document. I tabled about 35 parliamentary questions to the Deputy Prime Minister earlier this year and was astonished at some of the answers that were revealed. There was no discussion with the United States, at any level, about the role of CASD. The Chief Secretary quoted President Obama at length, but he did not even have the courtesy to approach the United States embassy, the Pentagon, the State Department or the White House. There was no discussion with our NATO colleagues. There was no discussion with the French or any other international allies, and there were no discussions with the defence industry, save for cursory visits, I think, to Aldermaston and Barrow. There were no discussions with the local authorities that would be affected, and none with the Defence Secretary, except on one occasion during the two-year process. The Chief Secretary to the Treasury does not even have a pass for Main Building, which goes to show how little credibility he had. It is worth noting that he was flanked at all times by two heavies from the Ministry of Defence to ensure that he did not stray too far—[Interruption.] I think that they were heavies, albeit in the nicest possible way.

[Mr Kevan Jones]

Has my hon. Friend heard the rumour—it might be untrue—that the Chief Secretary was not given access to the UK’s targeting policy?

[Thomas Docherty]

If that were true, I would be absolutely astonished, but then nothing in this review and the work that was carried out by Liberal Democrat Ministers is credible.

The hon. Member for North Devon set out an argument that I have heard before that neither Russia nor China operates a CASD policy. I accept the premise of his argument, but he failed to mention—I am sure that it was inadvertent, not misleading—that both those countries have other platforms, so they maintain a continuous deterrent. We are the only one of the five that operates a single platform, so CASD is a continuous deterrent for us—there is no back-up plan.

I have a great deal of respect for the hon. Gentleman because after spending two and half years telling us why the Astute boat option would be sensible, he has at least had the courage to come to the Chamber and face up to the fact that he called that wrong. He argues that the problem was not a technical issue, but if his defence— pardon the pun—is that this is something that would cost billions and take decades to introduce, how is it not a technical problem?

--- Later in debate ---

[Caroline Lucas]

I want to make some progress.

Rather than pursuing that particular argument, I want to argue that it is now time to shift the emphasis of the defence debate and that the best deterrence of all is to work with other nations to solve global threats such as fossil fuel-induced climate disruption, transnational trafficking of weapons and drugs, and the poverty and desperation that fuel conflict, hunger and violence around the world.

That is why it is deeply worrying and, indeed, the height of irresponsibility that both the 2010 strategic defence and security review and this review of an alternative to Trident have not explored the full range of options. The Prime Minister trumpeted the review as “neutral” and “factual”, but I would argue that it is biased and empty of essential facts. That means that there is a risk that any parliamentary votes taken in 2016 will be ill-informed and hung up on a cold war era that has long gone.

The decision that should be taken is one based on what would genuinely contribute most to the security of the British people. There is a real argument that says that by not replacing Trident we could improve national security and allow the Ministry of Defence to spend the more than £100 billion saved over the lifetime of any successor nuclear weapon system on an appropriate response to the real security threats and challenges of the 21st century. The 2010 national security strategy identified these as organised crime, cyber-warfare, pandemics and, of course, climate change. Scientists, former US Presidents and, indeed, former UK Prime Ministers, among others, have all agreed that climate change is in fact the greatest threat facing humankind, and every pound spent on Trident is a pound not spent on more appropriate responses to the real dangers linked to climate change.

If that is the case, let us explore how that money could have been better spent. The £80 billion to £100 billion price tag for Trident could have been spent on energy efficiency, energy conservation and renewable energy, all of which represent an investment in a positive future and the opportunity to be world leaders in an area of rapidly advancing technology, as opposed to a cold war past. Just £16 billion would insulate the 16 million homes in Britain that are currently uninsulated, saving 4% of UK carbon emissions and helping to prevent 20,000 annual cold-related deaths, and £30 billion would provide 3,500 offshore turbines, supplying 15% of UK electricity use. Crucially, positive investment in a greener future would make us more secure by reducing the impacts of climate change and ending our dependence on foreign oil—a key root cause of global terrorism.

The national security strategy also highlights the ongoing need to tackle terrorism, but as Tony Blair himself said in October 2005:

“I do not think that anyone pretends that the independent nuclear deterrent is a defence against terrorism”.—[Official Report, 19 October 2005; Vol. 437, c. 841.]

A group of senior military officers, including the former head of the armed forces, Field Marshall Lord Bramall, reached much the same conclusion in a letter to The Times in 2009:

“Nuclear weapons have shown themselves to be completely useless as a deterrent to the threats and scale of the violence we currently face or are likely to face, particularly international terrorism.”

As one commentator has recently put it,

“confronting the threats of today with nuclear weapons is as archaic as attempting to fight tanks with a blade attached to the barrel of a rifle would have been 70 years ago.”

The bottom line is that the UK does not need Trident; nor can we afford it. An independent and strategic assessment of risk does not justify spending tens of billions of pounds on Trident when we have, for example, troops on the front line who are not getting the equipment they need. Alternatively, and in this time of austerity, we might also question whether or not the initial estimated £25 billion could pay instead for 60,000 newly qualified nurses or 60,000 new secondary school teachers for the next 10 years. That is why I say that to use the amount of money suggested on a project that will make Britain and the world less, not more, safe is politically irresponsible, morally bankrupt and economically obscene.

Moreover, this Government, like the last, have committed themselves under the non-proliferation treaty to

“make special efforts to establish the necessary framework to achieve and maintain a world without nuclear weapons.”

The UK committed to multilateral disarmament when it signed the NPT in 1968 and agreed to negotiate the elimination of all nuclear weapons. So far, Britain has not played a particularly constructive role in that process.

[Mr Kevan Jones]

It has.

[Caroline Lucas]

Let me give an example. When 132 states gathered in Oslo in early 2013 to discuss the humanitarian impact of nuclear weapons, the British Government were not even there. Replacing the Trident system means committing the UK to maintaining an arsenal of nuclear weapons for decades to come. Expert opinion indicates that that is not in line with the UK’s obligations as an NPT signatory to pursue negotiations in good faith on nuclear disarmament.

--- Later in debate ---

[Mr Jones]

I cannot answer for the present Government, but it is a matter of fact that the last Labour Government reduced the number of warheads and got rid of the WE177 freefall bomb, so it is not true to say that the Labour Government did not make moves to reduce our nuclear weapons arsenal.

[Caroline Lucas]

What I said was that Britain has so far not played a particularly constructive role in the process. I have described what happened in Oslo earlier this year. Irrespective of the firepower, the message that we are sending to other states is that the way to be secure is to get more nuclear weapons. That is likely to make us less safe, not more safe. I do not know how we will be able to argue that Iran should not get nuclear weapons, as I deeply hope it will not, if we are perceived to be enhancing our nuclear weapons.

[Mr Jones]

Will the hon. Lady give way again?

[Caroline Lucas]

No I will not, because I have more to say.

Moral and diplomatic leadership is required in multilateral disarmament initiatives such as the global nuclear abolition treaty and the UN’s proposed weapons of mass destruction free zone in the middle east. How can the UK participate constructively in multilateral negotiations on a treaty to ban and eliminate nuclear weapons when it is perceived to be doing the opposite at home?

Moreover, if we keep and upgrade our nuclear weapons, we will send a signal to countries in the rest of the world that they should go out and get nuclear weapons as well. Remaining nuclear-armed for at least another half century will encourage other states to take the nuclear road and ensure that we face the very threats in decades to come that we least want to see. As Kofi Annan has put it:

“The more that those states that already have”

nuclear weapons

“increase their arsenals, or insist that such weapons are essential to their national security, the more other states feel that they too must have them for their security.”

The more countries there are that have nuclear weapons, the more risk there is that they will be used. We cannot preach non-proliferation to countries such as Iran and expect it with any conviction while we are perceived to be maintaining and increasing our own arsenal. It is a very odd insurance policy that makes us less safe, not more. For those who are worried about our status in the international community if we do not have Trident to sit astride, Dr Hans Blix, the former UN weapons inspector, points out:

“Japan and Germany seem respected even without nuclear weapons.”

In conclusion, the economics, the evidence and the ethics all point in one direction. What happens next is a game changer, because any decision about the future of Trident will shape the future that we face. I believe that we need to show leadership and courage. We are on the brink of committing a huge amount of money to a system that might well make us less safe, not more. The signal that it will send to the international community is that the way to be safe is to acquire more nuclear weapons. As more countries do that, our own security will be further undermined. That is why we ought to use this historic opportunity to begin seriously the effort of disarmament by not replacing Trident and by using the money in a far more creative way.

Finance (No. 2) Bill

Lord Beamish Excerpts

Thursday 18th April 2013 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

I rise to support the proposals in the names of my hon. Friends.

On the one hand, Government Members accuse Labour Members of always wanting to clobber the rich, but on the other they accuse us of not introducing the 50p rate early enough. We had a vibrant economy, but everything changed with the enormous banking crisis in 2008. In response, we had to introduce a deficit reduction plan, part of which was the perfectly logical introduction of the 50p tax rate.

I make no apology for Labour’s firm commitment to the redistribution of wealth through the taxation system. The majority of citizens in western European democracies share that view. The taxation system is not the only redistribution mechanism. Other mechanisms include the minimum wage, which the Labour Government introduced. I hope the Government retain the minimum wage and increase it year on year in line with inflation. It worries me that it is going up by only 1.9% this year, while inflation races ahead. It is important that we have such mechanisms, but taxation is an important mechanism in the redistribution of wealth. The vast majority of people in this country recognise the need for all to contribute to the many public services we enjoy, and the need for some redistribution through the taxation system.

The economic argument that my hon. Friend the Member for Wrexham (Ian Lucas) advanced about money going back into local economies is extremely strong. People on the lowest incomes tend to spend money immediately, so it goes immediately back into the local economy and helps the local high street. Local businesses are going bust because people simply do not have the money to spend. They are struggling. They are turning to food banks—they are unable to buy food, never mind Christmas presents, clothes and the rest of it.

Local economies are struggling enormously. We have heard from many wise sources that the Chancellor needs to get his act together on stimulating the economy, and putting the money in the pockets of people who have the lowest incomes, who will then use it immediately in the local economy, is one way of doing so. That is not happening, which is why the Opposition are so angry about the cut in tax from 50% to 45% when there is an enormous squeeze on those on lower incomes.

One of the most insidious changes is the change to tax credits. They are difficult to explain because they have been designed to suit each individual household, which makes it more difficult to speak about them in a more general sense. Nevertheless, let us look at the changes. First, there has been an increase in the tax credit clawback. The whole point of tax credits is that they are an incentive for people to work if they can find it. Many who are on low incomes cannot get more hours, and the maximum amount that many can be paid for the hours they work in a full-time week still qualifies them for tax credit. Any reduction in that tax credit is therefore counter-productive—it does not help people at all.

The child care tax credit has also been reduced. That is another seemingly mad policy. The money is desperately needed to help people to work. The family element of tax credit has been abolished, as has the 50-plus element, and the working tax credit has been frozen. Given current inflation, the proposed cap of 1% on increases in working tax credit and child tax credit is effectively another cut—it is a cut in what lower-income families can buy with the money they have, with the catastrophic effect that all hon. Members see in our local economies and high streets.

In Wales alone, the tax credit measures will suck some £794 million—much-needed money for lower-income families—out of the economy. The whole point of tax credits was that they were calculated on what it was reasonable for a family to live on, which helped those whose earnings did not meet that rate to keep going.

[Mr Kevan Jones (North Durham) (Lab)]

In communities such as mine and that of my hon. Friend, the poor spend money—they have no saving capability. Does she agree that the measures therefore have a double impact on local shops and economies?

[Nia Griffith]

My hon. Friend makes a good point. That is the iniquity of the cut from 50% to 45%. Effectively, a cut in one place unfortunately means that people suffer in other places. Those on the highest incomes can afford to cushion themselves and do not need to spend money straight away. Even someone who earns just £10,000 above the £150,000 mark will benefit significantly. Instead of paying £5,000 in tax, they will pay £4,500. They will have a gain after tax of £500. Most people do not see anything like that increase in their income—incomes are frozen. If someone earning £50,000 has even a 1% increase, they will not get that £500 because it would be taxed. With all the different changes that are being imposed on them, families are losing far more—they are losing, on average, £895 per year.

Cyprus

Lord Beamish Excerpts

Monday 18th March 2013 Commons Chamber

[Greg Clark]

I applaud the work that my hon. Friend does as chairman of the all-party group on Cyprus. The proposal that has been made would certainly protect his constituents who have deposits in those banks, and the final terms are being discussed in the Cypriot Parliament. Certainly, those banks that have subsidiaries in the UK are governed by the UK regulators and subject to the UK financial compensation scheme.

[Mr Kevan Jones (North Durham) (Lab)]

The Minister has mentioned members of the armed forces, but clearly no scheme is yet in place. What advice is being given to members of the armed forces currently serving in Cyprus, and has the Ministry of Defence stopped the payment of wages and expenses into Cypriot bank accounts?

[Greg Clark]

The arrangements for advice on implementation of the commitment to compensate members of the armed forces cannot proceed until the Cypriots have decided on the final arrangements, which will be in the next few days. Having made the commitment to ensure that pensions are not paid into bank accounts to which access might be questionable, I will discuss the hon. Gentleman’s point with my right hon. and hon. Friends to ensure that similar arrangements are considered for the MOD.

Finance Bill

Lord Beamish Excerpts

Monday 2nd July 2012 Commons Chamber

[Sheila Gilmore]

The policy on the higher tax rate is, in effect, an endorsement of tax avoidance, which worries me greatly. Some of us sat through the Finance Bill Committee and heard Government Back-Bench Members say how much they disapproved of tax avoidance, but throughout this episode we have heard people argue that because some people have taken steps to avoid tax, we should reduce it. That is highly unsatisfactory to the many people who, on pay-as-you-earn, have little ability to avoid tax. They are gobsmacked by all this.

If part of the problem was due to people forestalling, which is the technical term, in the first year of the new tax, perhaps—and this is a thought for the future too—we should have introduced it with immediate effect, as happens with some other taxes. For example, tobacco duty is generally increased on the day of a Budget, so that people do not rush out to fill their shopping bags—or whatever they do. Perhaps that would have been a way around it. I know it is not traditionally done with increases in tax rates, but if that is how people respond to these things, perhaps we should treat higher earners like we treat people we think will fill their bags with cheap booze or cigarettes, and forestall them, rather than letting them forestall the rest of us—because that is what they are doing to the communities in which they live. Unfortunately, in a year’s time, we are likely to hear Government Members saying “We told you so” even more. The reduction has been postponed for a year, but it will still happen, and a lot of people will no doubt do the same thing in reverse when it does.

It has become something of a mantra to say that no money was ever raised from the 50p rate of tax, but that is not true: £1 billion was raised, even in the year in which people were apparently forestalling. If we had let it run for somewhat longer, the situation could have been even more different. However, as the Institute for Fiscal Studies pointed out, to rush to judgment on this matter so quickly, because that suited the way in which the Government wanted to go, was not justified. We are, in effect, saying to people that it is all right to avoid tax.

I started to tell a little story earlier, and I hope that it will be seen to be relevant. I am fascinated by history, and particularly by housing, and—unusually, for me—I watched a television programme last night. It was entitled “The Secret History of Our Streets”, and last night’s episode was about Portland road, in London. It had been made long before the current debate on the Budget. A young, brash banker got up and said that the value of the property on that street had gone up even further since the taxpayers had bailed out the banks. Did we really think, he asked, that the banks were going to start lending to small businesses? No, they were going to give people like him an increase in income so that they could pay even more for those houses. He might have been one of those boastful types, but that was nevertheless an insight into the mindset of the kind of people in our community who think that tax avoidance is absolutely legitimate. There is a great deal of wealth in this country, as that example showed, and many ordinary people find this whole debate offensive and difficult to swallow.

At the other end of the tax issue, we have the question of raising the tax-free allowances. The Government keep saying how kind they are being to people on low incomes, but we should remember that once those people have had their tax allowance raised, they will get no further advantage in subsequent years because they are already out of the income tax regime. Other people, however, have gained considerable advantages from the raising of the basic tax threshold. Many people on considerably higher earnings—although not necessarily paying higher rates of tax—have gained from the measure.

It has been easy—for the Liberal Democrats in particular, as this is one of their favourite lines—to say that raising the tax threshold is all about helping the very poorest. However, the very poorest were already outside the income tax regime, and people on considerably higher earnings—particularly two-earner families without children—have benefited substantially from the raising of the threshold. We must also take into account what people on the margins who have been taken out of tax have lost. When we look at the details, we see that as a result of the measure, they could lose tax credits and, in some cases, housing benefit. Their gain is therefore very much less than has been suggested.

[Mr Kevan Jones (North Durham) (Lab)]

A lot of the people my hon. Friend is describing are actually in work, and the Government seem to forget that a lot of low-paid workers get housing benefit and other benefits. Does she agree that it is those individuals who will be hit the hardest?

[Sheila Gilmore]

Indeed, people who are working and who are, or were, paying tax stand to lose considerable amounts, particularly in the light of the way in which the tax credit system has been eroded as part of this process.

There are those who say—again, this is one of those things that keeps getting repeated as if it were true—that the Labour Government were not bothered about getting people into work or making work pay, but the whole thrust of tax credits, including child care tax credits, was indeed to make work pay. What this Government have done, by reducing the amount that can be claimed for child care, by taking away tax credits and, most inappropriately in my opinion, by taking away tax credits from some of the lowest-paid couples because they are deemed not to be working enough hours, more than detracts from the gains made by raising the tax threshold. Being realistic, these poor people whom the Liberal Democrats think they are standing up for have, particularly if they have children, lost out because of the combined effect of the Government’s measures.

I do not think there is any proof for the idea that if we lower tax rates, people will somehow invest. Let us look at what the Office for Budget Responsibility said about investment. It is predicting that the amount of investment going into business in the coming years will be much less than was previously thought. Despite what Government Members believe, if the people apparently not even paying this tax are not investing in the economy, is it clear where they are putting their money? Yes, they are clearly putting it into very expensive properties, but that does nothing to improve job prospects for young people.

[Mr Jones]

I suggest that those people are also putting their money into the Conservative party, whose largest donors are often hedge fund managers or financial services companies.

[Sheila Gilmore]

That may well be the case.

What we need to do is to find ways to invest in our economy that will genuinely benefit not just those who are unemployed, but those who are under-employed. The Government like to suggest that the rate of growth in the private sector has increased slightly in the last few months, but most of the jobs created over the last couple of years are part-time jobs. As a result of that, these very people are simultaneously losing tax credits and have to claim other benefits. The housing benefit bill has risen substantially in the last year, despite the Government’s changes, and that is because many people in part-time jobs are having to claim. What we saw in May, for example, was that the tax take had dropped and expenditure had risen, particularly on various kinds of welfare benefits.

Taken as a whole, this policy is simply not working. I would have greater respect for the Government if they were now saying, “We must look at why it is that some people are seeking to avoid the additional rate of tax. We must find ways—perhaps it is nudge, perhaps it is enforcement—to make them pay.” As others have said in this and previous debates, we seem to say to one group of people that if we take their benefits away they will work harder, while we say to another group of people that we have to give them more money through tax breaks so that they will work harder. It does not make a great deal of sense, and it is profoundly unfair.

Some of the differentials in our society now are huge. If the proportion—not necessarily the amount—of tax being paid by the top 1% of earners has risen, it might well be because their incomes have risen so much further than those of the rest of the community. The gap between the top earners and the rest has widened hugely over the last few years, which creates a profoundly unequal society.

--- Later in debate ---

[Jacob Rees-Mogg]

No, I do not. I do not believe that taxation is a matter of morality. I believe the law is a matter of morality and it is immoral to break the law, and therefore I divide very firmly between tax evasion and tax avoidance, which is the historical position of this Parliament—and, indeed, of English law. Tax evasion is criminal and should be prosecuted to the full extent of the law. I think the scheme used by a comedian, whose name momentarily escapes me but who is quite famous, was almost certainly unlawful, and that scheme should be prosecuted.

[Mr Kevan Jones]

I know the hon. Gentleman lives in a rarefied world, but does he not understand the anger felt not only by low-paid workers, but middle-earners, who pay their tax through pay-as-you-earn and have no opportunity to avoid tax, unlike the footballers to whom he referred? This situation cannot be fair in any society.

[Jacob Rees-Mogg]

It is very important, once again, to differentiate between avoidance and evasion. If we have passed laws that allow people, for example footballers, to sell the rights to their name and corporatise that, we can change the law, and the fact that this Parliament has not changed the law means that people are entitled to do it.

[Mr Jones]

Does the hon. Gentleman get it? Does he not understand the anger of even middle-income earners, who pay their taxes, work hard and cannot use any schemes such as those he has been suggesting which are open to those on ludicrous sums of £250,000 a week? Many people in Somerset must be in this category?

[Chris Heaton-Harris (Daventry) (Con)]

rose—

--- Later in debate ---

[Jacob Rees-Mogg]

Oh, he is behind me. My hon. Friend the Member for Amber Valley said that the effect of the amendment from our Labour friends would be to bring the tax rate down to 40p. I am not sure that it was wise of him to say that, because those of us who were listening may be tempted to go into the same Lobby as the Opposition later, to help them achieve that objective.

I want to talk about the other great aspect of the Budget, and to give full credit to our Liberal Democrat friends for twisting Conservatives’ arms to get them to do something that they have always wanted to do anyway: get as many people out of taxation as possible by raising the thresholds. As the thresholds are raised, so the incentive to work becomes greater. The hon. Member for Edinburgh East (Sheila Gilmore) said that we wanted to make the out-of-work work harder by cutting their benefits, and the in-work work harder by cutting their taxes, and thought that was illogical. Of course it is not, because a person does not get unemployment benefit for working; if a person works, they lose their benefit, and if we encourage people to work, they have more money. Likewise, if we cut people’s taxes, they have more money, so they are likely to work harder.

When we raise the threshold, we find that many millions of people are able to work more easily. They will be taken out, to some degree, of the poverty trap, which is one of the most crushing and pernicious taxation and benefit traps that anyone has to face. The move, in stages, to a £10,000 threshold is a very bold thing to do in a time of economic difficulty, but it may have some of the greatest social benefits of any of the policies that the Government are following. It really is a noble approach to taxation—an objective that is fundamentally worthy.

[Mr Kevan Jones]

I have listened carefully to the hon. Gentleman, but I am not sure that he realises that a large number of my constituents, and possibly his, who are in low-paid jobs claim council tax benefit, housing benefit and tax credits. However, all of those have been cut by the Government, and that counters the encouragement to work, in terms of the increase in the threshold.

[Jacob Rees-Mogg]

I am always grateful for the hon. Gentleman’s thoughtful interventions, but one of the greatest mistakes that Governments make is to have this merry-go-round of taxation and benefits, whereby we tax people and then pay them back their own money in benefits, with a cut taken for administration in between. It is much more sensible to take people out of tax altogether. I would like the threshold to be raised considerably higher, basically towards average earnings, so that the bulk of people do not pay tax at all on what they earn, but do, of course, pay in other ways, through other taxes—through indirect taxation. That takes away the major disincentive to go into employment, and lets people benefit from the fruits of their labour. That is an important proposal that has come forward, and it is popular throughout the country, though I would not say that there was literally cheering in the streets.

Unemployment (North-east)

Lord Beamish Excerpts

Wednesday 20th June 2012 Westminster Hall

[Mr Wright]

I absolutely agree with my hon. Friend. I mentioned the fantastic facilities and the great companies we have in my constituency. Gamesa, a Spanish wind farm manufacturer, was hoping to relocate to the UK. It looked at Hartlepool, but chose to go to a Scottish port precisely for the reasons set out by my hon. Friend. We need to come to terms with that and ensure that we have a Government who are fighting our corner in the north-east. I am not convinced that we have that at the moment. We do not even have a Minister to respond to the debate. That is deeply worrying and shows contempt for the people of the north-east.

Despite the huge potential in my constituency and the wider north-east, the unemployment situation is bleak. I know that in his response, the Whip will cling to the argument, like a dying man to a life raft, that today’s statistics show that employment in the north-east has increased by 3,000 on the previous quarter, and that unemployment in my constituency is down by 15, month-on-month. That is welcome news, but I would never say, as the Secretary of State for Energy and Climate Change did on a recent visit to Newcastle, that the unemployment rate was not as bad as it could be, or as it seemed. Again, that is deeply insulting to everyone in the north-east who has lost a job and is desperately looking for work. It shows a Government who are grossly out of touch with what the people of the north-east want and need.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend think that that is in stark contrast to 2009 and 2010, when, because of the economic stimulus introduced by the Labour Government following the economic crash, employment in the region actually rose by 24,000 in one year?

--- Later in debate ---

[Mr Wright]

There seems to be no connect between public and private sector and no connect or coherence between Departments. The Department for Communities and Local Government demands local authority cuts of 20%, which is having a profound impact on unemployment, not just directly in terms of council jobs.

Hartlepool borough council cut its bus subsidy, so Stagecoach has stopped operating bus services early in the morning and late at night. People are unable to travel to early shifts or late periods of work in the night-time economy. They are less likely to go out for a meal or to the town hall theatre or the borough hall, or to the pub for a few pints, so there is less economic activity and fewer jobs. The reality is stark: a lack of joined-up thinking in the Government is increasing unemployment in my area. What can the Whip do about it?

[Mr Kevan Jones]

Does my hon. Friend agree that there is also a great disconnect between what Liberal Democrats say at Westminster and what they are saying in the north-east? In the House, they are quite happy to vote with the Conservatives for some of the most drastic cuts that we have seen for generations in the north-east; but in the regions, they are somehow trying to explain to or convince the public that that has nothing to do with them.

[Mr Wright]

I am sure that we will see a “Focus” leaflet in due course saying that everything in the garden is rosy and that the Liberal Democrats are fighting hard. The reality—my hon. Friend is right—is that where they can make a difference by going through the right Division Lobby, they are failing to stand up for the north-east and for the people who need jobs and investment in our area.

The Government’s determination to depress demand before the economy has had a chance to recover from the global financial crisis is wrong. The effects of such a policy are a double-dip recession made in Downing street and an increase in unemployment. The Federation of Small Businesses in the north-east told me that the ability of small business to offer jobs is suffering directly because of falling sales, as the public sector reduces investment, confidence collapses and firms sit on cash. It is clear, as businesses recognise, that the Government’s policies are making matters worse. Does the Whip not understand that? Can he not see that if the Government pursued a more active role on jobs and growth, there would be more people in work, paying taxes, more companies paying corporation tax, a reduced benefits bill and the deficit being paid down faster. By sticking to an economic plan that is not working—that is clear to all and sundry—the Government must borrow £150 billion more than originally anticipated.

--- Later in debate ---

[Ian Swales]

That was never party policy, but it was a remark made by the Business Secretary. I think everyone recognises that One North East was the best of the regional development agencies. My point was that giving money to every region will not rebalance the economy. I salute the bravery of our Government in not giving money to regions that do not need help.

A month or two ago, I said in this Chamber that in the two years before the general election, the RDA approved 96 projects, worth £148 million, in which One North East directors had to declare an interest. Of those, only eight projects and £6 million related to the Tees valley. The Tees valley got a poor deal from One North East. Experian assessments place Hartlepool, Middlesbrough, Redcar and Cleveland in the weakest 10 economic areas of the country, so I welcome the local enterprise partnership and its work.

The LEP is doing a lot of good work, part of which is defining clusters—we have process industries and automotive clusters, and we are now developing a steel cluster. The welcome news is that Sahaviriya Steel Industries has bought the Redcar steelworks, and is now producing; Tata is still in the area, and opened a new research centre just two weeks ago, which had some Government support; Siemens has its worldwide centre for steel processing development in Stockton; and Teesside university is opening up a new department, so a good cluster is developing there. We also have clusters in green technology, and I welcome new initiatives in renewables, with the industry forming the Energi Coast group—20 companies getting together to exploit the new market jointly—and Narec has been included in the new technology innovation centre for renewables. Clusters attract like-minded companies. Global Marine Systems has just relocated from Essex to Middlesbrough, and last month it hired the Riverside stadium to recruit people.

Manufacturing is having some success in the area. International trade is booming with record exports— the best ever—from the region during the 12 months to March, including 20% growth in exports outside the EU. Jonathan Greenaway, a partner at PricewaterhouseCoopers in Newcastle, recently reported those successes and said:

“This is a great time of opportunity for manufacturers, and…UK companies are really rising to the challenge.”

We have some problems with the public sector, to say the least, with job losses and so on. I believe that taxpayers expect efficiency in public services and that they do not see them as job creation exercises, but there has been a worrying trend of relocation of jobs, certainly out of the Tees valley. Under the previous Government, the ambulance service was lost—it still baffles me that an area of 750,000 people is not deemed capable of running its own ambulance service, but that was moved out of the area. We also lost the office of Her Majesty’s Revenue and Customs in Middlesbrough, and thus 400 jobs. There are other potential problems, such as the Insolvency Service office in Stockton. I urge the Whip to reverse that trend and to move jobs to hard-pressed areas in the north-east such as Teesside.

I note that some agencies are looking at Yorkshire and the north-east as a region. I point out to them that the Tees valley is exactly the midpoint—I measured it this morning—and an ideal location for headquarters. The regions are massive, however: Sheffield in South Yorkshire is as close to Southampton as it is to the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).

For 13 years, the north-east had a Labour Government—almost all MPs and councils were Labour—but between 1997 and 2010, the number of unemployed people in the region went up by 7,000, and the rate remained approximately the same, despite the unprecedented amount—

[Mr Kevan Jones]

The hon. Gentleman is being selective. I was going to say that it is a pleasure to hear him speak, but he seems to be saying that everything in the garden is rosy. In fact, between 2009 and 2010, 24,000 extra jobs were created in the north-east, and over the longer period from 1997, unemployment went down, not up.

[Ian Swales]

I checked the figures with the Library this morning, and 7,000 more people were unemployed in 2010 than in 1997, despite the unprecedented amount of grants and unsustainable borrowing that were pumped into the area.

Big problems remain. Unemployment is way too high, especially in constituencies such as Redcar, and it remains my No. 1 priority. The hon. Member for Hartlepool said that the north-east was once the workshop of Britain. It can be again, and in fact already is to some extent—even today, it is the only region with a positive trade balance—but a lot more can be done. I agree with the hon. Gentleman that we need a clearer industrial policy. We also need consistency on renewables and public procurement. There are opportunities for further investment in infrastructure—I do not want to steal the thunder of my right hon. Friend the Member for Berwick-upon-Tweed, because I am sure that he is about to give an example.

I welcome the Government’s attention to the north-east. We have a regular troop of Ministers coming through, and it is good to hear that the Employment Minister will be meeting the Teesside business community on 10 July. I look forward to hearing the response from the Whip today.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

I congratulate my hon. Friend the Member for Hartlepool (Mr Wright) on securing the debate. I would like to pick up on a point that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) made about the lending by banks. The Government’s approach is somehow to reduce the size of the public sector and to grow regional businesses, but as has already been said eloquently by many hon. Members, the two are interlinked.

I will give a specific example from my constituency. A company called Ambic is based in Chester-le-Street, on the Stella Gill industrial estate. It is run by a very dynamic and clever individual, David Potter, who is an engineer by trade. The company produces very high-quality furniture for schools. Clearly, with the downturn in the budgets of schools, it has seen demand drop. It had been a profitable business until the downturn in 2009. In the following year, it made a loss. By changing the way in which the business is marketed and run, it has slowly increased its profitability again.

Three years ago, just before the recession, the company moved into a brand-new factory. It took out a loan from the Bank of Scotland/NatWest for the expansion of the business. It has been successful, in that it has employed some 40 people locally, including apprentices; it is run by an individual who is strongly committed to the local community. But, lo and behold, two weeks ago it received a letter from the bank saying that, because it had revalued the property, which it says now is worth not £1.2 million but £750,000, the company’s borrowing rates will now be between 6% and 15%. That means that any profit that it makes will be wiped out overnight.

I have written to the Secretary of State to raise the matter. It is a good example: if someone wants to kill off a business, that is the way to do it. The company owner is quite angry about the situation. Like me and others, he thinks that this is a bank that has received billions of pounds of public money. If he has to, he will just shut up shop, but that will be 40 jobs gone from the local community, which will cost the taxpayer a hell of a lot more and ruin a very successful business. It has never been late in paying for any of its borrowings and, as I said, is committed to the local community.

I ask the Whip to respond to what I have said. I have not had a response yet from the Secretary of State. I have raised the problem with him personally in the Tea Room and asked him to look at it. If it is not sorted out soon, the business will have to close, which will cost the taxpayer more and is not in line with the Chancellor of the Exchequer’s argument that we are trying to grow and support local businesses. That is an example of a bank that will cripple and close a very successful local business. That would be a shame not just for the individuals involved, but for Mr Potter, who is committed not just to Chester-le-Street but to the region and to developing a small business and employing local people.