Finance Bill

Lord German Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Lord German (LD) [V]]

My Lords, I will make two points about measures in the Finance Bill. These are extraordinary times, and the only certainty is uncertainty—and, unfortunately, greater unemployment. As other noble Lords have said, local firms and UK chains have faced a real battle competing with online companies based overseas which do not have the same overheads as physical shops and services.

The Government’s digital services tax plan in this Bill is a mouse of a measure compared with the huge profits made by American big tech companies. The Government need to co-operate closely with the European Union, which is devising an international tax with much greater teeth so that these big tech companies will pay their fair share of tax. We need a much more sustainable, long-term solution, with a broader international base.

What impact is the demand for trade deals having on this measure? British bookstores and other businesses should not face a higher tax rate than Amazon. The Chartered Institute of Taxation points out that this part of the Finance Bill is not aimed at stopping profits arising in the UK being shifted by multinationals out of the UK to tax havens. These disrupter companies play an essential role in our economy, but they use complex ways of moving and hiding the money that we pay them. They have thrived during the pandemic as our high streets have suffered. Their business has grown as demand has shifted online. Surely their tax bills should be at least comparable with those of other retailers—it is a very uneven playing field, and the limited measure in this Bill will do little to rebalance the tax paid. The jobs in this sector are the most fragile. Those who can work at home are higher paid, and it is the lower-paid, face-to-face jobs that are being most challenged.

My second point concerns small and medium-sized enterprises in the manufacturing sector. The Government’s infrastructure announcements are welcome, but the Chancellor has performed an Aladdin sleight of hand—not “old lamps for new” but “old money for new”. The IFS has crunched the numbers and the £5.5 billion announced for transport and infrastructure is old money repurposed. My point is that this money would have been circulating in the economy anyway and does not represent a real boost to companies seeking to rebuild their order books. With half of UK manufacturing companies seeking to make redundancies in the next six months, we have to make sure that there are skilled jobs left, because they are going to be lost right across the country and all sectors of manufacturing.