Oral Answers to Questions

Lord Soames of Fletching Excerpts

Tuesday 26th June 2012 Commons Chamber

[Danny Alexander]

That is an astonishing question from the party that made the mess in the British economy that we are trying to clear up, and the party whose plans wanted this Government to borrow even more. That just goes to show what would have happened to the UK economy if we had been unfortunate enough to have the Labour party stay in power.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that protectionism is the enemy of economic growth? What steps will he take to re-energise the Doha round?

[Danny Alexander]

I wholeheartedly agree with my right hon. Friend. It is a very important point that, in times of economic stress worldwide, some countries may seek a protectionist approach. That is why at the forthcoming European summit the Prime Minister will again be arguing for measures within Europe to strengthen the single market and to increase free trade within the EU, and for measures for the EU to take to build on the free trade agreements that, collectively, we are signing with a number of other important economies in the world. We need to keep up the momentum of that process in order to help support the world economy.

Business and the Economy

Lord Soames of Fletching Excerpts

Monday 14th May 2012 Commons Chamber

[Mr Umunna]

I say to the hon. Gentleman that I am proud to be a shadow Minister for a party that saw 1.1 million new businesses created during its time in government. I am proud to be the shadow Business Secretary for a party under whose Government Britain was rated the best place for doing business in Europe and fourth best in the world. I must also remind him that the UK has fallen from fourth to seventh place on his watch.

[Nicholas Soames (Mid Sussex) (Con)]

Would the hon. Gentleman accept that the Foreign Secretary was saying that we have to do better with our exports? We have done much better this year, as the Secretary of State pointed out, through our commercial diplomacy, and the hon. Gentleman is wrong to sneer at that. It is a fact that we do not export nearly enough from this country, or nearly as much as we could.

[Mr Umunna]

If only the Foreign Secretary’s comments had been limited to those that I have just cited. There was more, however. Asked whether they amounted to a modern-day call to our people to get on their bikes, echoing the call from the noble Lord Tebbit back in the 1980s, the Foreign Secretary said:

“Well no, it’s more than that. It’s ‘get on a plane, go and sell things overseas’…It’s much more than getting on the bike. The bike didn’t go that far. ‘Get on the jet.’”

I know that senior members of this Government have a penchant for hanging out with people who own yachts and jets, but most business people in this country do not have those things or mix in such company. Chris Romer-Lee, the director and co-founder of an award-winning architecture practice here in London, said to me yesterday that his firm is working flat out and has been doing so through these bad economic times. He said that

“to suggest we could work harder is insulting.”

That is what a business person said to me yesterday.

--- Later in debate ---

[Nicholas Soames (Mid Sussex) (Con)]

I start by wholly agreeing with the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) about House of Lords reform.

It is a great privilege to speak in this debate on the Queen’s Speech in the year of Her Majesty’s diamond jubilee, when all of us across this wonderful country will have an opportunity to celebrate the Queen’s exemplary attention to her duties over the past 60 years, when the Olympics will come to London, and when there will be vast opportunities for Britain to place itself at the centre of world interest.

I am sorry that the principal spokesman for the Opposition, the hon. Member for Streatham (Mr Umunna), has left the Chamber. What he said was really foolish and profoundly ignorant. Anyone who has had anything to do with UK Trade & Investment in the past year will know that it is functioning probably better than it has ever done. Let me tell the House a story. The other day, I went to speak at a dinner in Scotland. It was an international gathering of the whisky industry, and the chairman of probably the biggest company in that industry said to me, “I think you should know that the Government’s export efforts have never been better run, and that the attention from the diplomatic service and our embassies abroad is quite outstanding.” The Government deserve credit for that.

I pay tribute to the work of Lord Green, Lord Marland, and Lord Sassoon, who have led tremendously successful trade missions all over the world—missions that have secured contracts and goods for this country that we have never secured before. Our exports are up £50 billion on previous years. The hon. Gentleman will find that he has done himself no good by speaking as he did of UKTI.

[Barry Gardiner (Brent North) (Lab)]

rose—

[Nicholas Soames]

I hope that the hon. Gentleman will forgive me, but I have only six minutes, and I have a few points to make.

I support and endorse the Queen’s Speech. Much in it deserves and commands support at this very difficult time. The Government are right in their determination to drive the economy forward, to bring the UK’s productivity and growth up to world standard—they are not at that standard at the moment—and to focus on getting the big things right and resolving the stubborn, difficult and often politically very unappealing challenges that have long kept the UK’s economy from fulfilling its true potential. Our national problems are serious. Many of the causes of Britain’s plight cannot justly be blamed on Greece, Brussels, or even the banks. There is the dire state of too many of our schools and thus, through no fault of their own, the poor skills of too many young people; there is the decline in size of our manufacturing industry—an industry that the Germans sustain so well—and there is the plight of small businesses, which are still groaning under oppressive bureaucracy and employment law. We really need to get on and fix those problems. This country remains, on its good days, a wonderfully civilised place, but there is no contradiction in recognising that our traditional national values will not suffice to support us through this century unless they are allied to harder work, vastly improved skills, and a drastic reality check about the standard of living that we have for so long taken for granted.

I wholly endorse the views that my right hon. Friend the Foreign Secretary expressed yesterday in a really interesting, punchy interview in The Sunday Telegraph. He set out clearly the great opportunities for British trade and the great efforts being made to secure them through our outstanding commercial diplomacy. The success of our economy locally, nationally and globally will depend on how we build our economic growth around a tapestry of skills, with science, finance and sound regulation working together. In many ways, the Queen’s Speech sets out a way forward on that. It is worth remembering that growth, as a public policy, can achieve a great deal. It can create jobs and it reduces welfare dependency, but it is not an end in itself.

I am trying to develop an idea that takes advantage of the south of England’s local geography and opportunities. Starting with the south of my constituency, I want to develop an international technology hub between Burgess Hill and Brighton, and between Brighton and Southampton. The work required to deliver improvements to the A27 must happen, and I do not see why that should not be carried out by a public-private partnership of some sort. We need to get on and develop the sort of creative clusters that are essential for economic growth, making the most of the university of Sussex and the brilliant Brighton university, through to Portsmouth and Southampton—an area with ample office space and housing. The advantage of such a scheme is that it contains all the conceptual ideas that begin with the creation of jobs and extend to kick-start a knowledge-based economy. One of the points that the Gracious Speech makes—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Time is up.

Finance (No. 4) Bill

Lord Soames of Fletching Excerpts

Wednesday 18th April 2012 Commons Chamber

[Mr Ben Bradshaw (Exeter) (Lab)]

I rise to support new clause 7 in my name and those of several other right hon. and hon. Members.

The upkeep of our beautiful and historic buildings is vital to the preservation of Britain’s unique cultural heritage, and it is often done, particularly in the case of churches, thanks to tireless fundraising by volunteers. Raising VAT from 0% to 20% on alterations to our churches and other historic buildings, at the same time as the Government are making fundraising harder with their cap on philanthropy, represents a double whammy to our heritage sector and a dreadful blow to our historic churches—and cathedrals, in particular.

Our great churches and cathedrals are not just historic piles of bricks and mortar or even just places of worship for the few. They are among our most important tourist attractions, bringing thousands of overseas visitors to Britain every year, and well-run major churches and cathedrals, such as the stunning cathedral in Exeter, open their doors constantly to the local community and provide a vital public service. They are our greatest physical symbol of the big society.

I can think of countless occasions in Exeter—for example, a service of thanks for the work of the Royal Marines in Afghanistan, or a funeral for a local teenager tragically murdered—when the cathedral has been packed to the rafters with local people in celebration or in grief. It is a unique service not provided by any other institution.

[Nicholas Soames (Mid Sussex) (Con)]

I wholly support the point that the right hon. Gentleman is making, and does he agree with me that the issue is about not just cathedrals, but small village churches with, in many cases, small congregations, who go to great efforts to raise large sums of money to make their facilities more usable for the rest of the community? Does he agree also that the proposed change is a pretty poor advertisement for the big society?

[Mr Bradshaw]

I absolutely agree.

The Government, in their consultation document, claim that the impact of the change on churches will be small, but that is not the case. Some 45% of grade I listed buildings in England are maintained by the Church of England, including 42 cathedrals. Their upkeep is incredibly expensive, and there are no central funds available for building maintenance.

A very large proportion of the alterations made to churches are about making them easier for the community to use, including, for example, installing disabled toilets, kitchens and so on, but the charge will also hit traditional skills and crafts, such as bell hanging and organ building. About £100 million is spent on those works annually, and imposing 20% VAT on them will add £20 million a year to those bills. In reality, much of the work will simply stop, and that will hit local churches, local communities and the building trade—and it will not raise a single extra penny for the Treasury.

The Prime Minister said earlier today at Prime Minister’s questions that the Government would be giving churches the money that they need to make up the loss, but that is also not the case. The compensation being offered in the Budget by extending the listed places of worship grant scheme, which currently refunds the VAT liable on repairs, is a wholly inadequate way to meet the extra cost that the VAT rise will create.

The Government have already cut the listed places of worship grant scheme by a massive two thirds, from £23 million to £7 million a year, and it already covers less than half the cost of current repairs.

--- Later in debate ---

[Mr Marsden]

It would be absolutely appropriate, not least because there seems to have been scant consultation with any of the Churches or other religious groups or places of worship on this issue. Perhaps the Government would like to start taking notice of the e-petition on this issue, which already has more than 16,000 signatures. Anne Sloman, chair of the Church Buildings Council, wrote to the Chancellor last week stating:

“a very large proportion of the alterations to these buildings…are concerned with making these buildings viable for use by the wider community by installing meeting rooms, lavatories and kitchens. This is the Big Society in action. The imposition of 20 percent VAT…means…most of it will simply stop.”

In conclusion, this is a nonsensical policy. At the end of holy week, the Prime Minister piously talked about the Church in action, but at the same time he let this howler through in a Budget that he claimed to have read line by line. I appeal to the Treasury Front-Bench team, if it is worth appealing to them on this matter, to take notice of what is being said across the Committee. They ought to do a little more line-by-line consideration of this proposal’s perverse effects if they want to dissuade people from the general judgment often passed—possibly very cynically—that some officials and others in the Treasury do indeed know the price of everything and the value of nothing.

[Nicholas Soames]

I believe that there is a great deal in the Budget to applaud and support, but on this issue I wholly agree with the hon. Member for Blackpool South (Mr Marsden), who has just sat down, and the right hon. Member for Exeter (Mr Bradshaw), who put it very well. I also know that my hon. Friend the Member for Banbury (Tony Baldry) has written a powerful letter about this matter.

--- Later in debate ---

[Richard Graham (Gloucester) (Con)]

Does my right hon. Friend agree that the churches and the cathedrals across the land play a vital role in regeneration, growing the economy and tourism, and contribute to our community in a number of different ways, which makes it essential that the Treasury looks on VAT for alterations with great compassion?

[Nicholas Soames]

They do all those things, but they are also places that represent the spirit of England down the centuries. To trifle with them in this way is really not a sensible thing to do, either for the nation at the moment or for the future.

I beg the Treasury Minister to consider whether it would not be worth while laying this measure aside and considering how better it might be to come up with a different scheme. As the right hon. Member for Exeter said, the listed places of worship grant scheme could not possibly compensate for the kind of money involved in imposing a 20% VAT rate on alterations. I urge my hon. Friend the Minister to view this issue with great care, to pay attention and to understand the feelings in this House and elsewhere in the country among people who give of themselves to keep such places going. They mind very much indeed, and their views should be heard and considered.

[Ian Lucas (Wrexham) (Lab)]

I wish to speak in support of new clause 2, which stands in my name. It deals with a long-standing campaign that I have undertaken alongside a charity in my constituency, Chariotts, which offers dial-a-ride-type services to disabled people and has been established for a number of years. It has become more and more successful, transporting people in wheelchairs and those with severe disabilities across the constituency.

The problem in recent years is that as the charity has grown, so has the likelihood of its becoming registrable for VAT in the near future. A VAT anomaly exists that is relevant to Chariotts, as well as other organisations across the country, which is that there is an exemption from VAT for public transport vehicles with 10 seats or more, but not for those with fewer than 10 seats. That means that a disabled passenger undertaking a journey in a small vehicle will have to pay VAT on the journey. When the charity becomes registrable, there will be a 20% increase for disabled passengers, which is extremely serious for individuals on fixed incomes.

I have raised this issue on many occasions in the Chamber, as well as with the Exchequer Secretary elsewhere. He told me in a written answer:

“No estimates have been made of the cost of extending this zero rate as long-standing formal agreements with our European partners prevent us from unilaterally extending the scope of our existing zero rates or introducing new zero rates.”—[Official Report, 28 November 2011; Vol. 536, c. 718W.]

That was quite a categorical no to extending the exemption, to go alongside the statement that European policy was preventing it from occurring. Imagine my astonishment, therefore, when I learned on Monday that the Budget introduces an exemption—a further VAT concession—for small cable-based transportation systems. Ski lifts and the like will benefit from a tax cut from 20% to 5%. There is to be a reduced rate of VAT for skiers on the piste. We have already heard about pasties and caravans. Now, for reasons that are unclear, the Government are giving a tax cut to people having a luxury holiday.

North Sea Oil and Gas

Lord Soames of Fletching Excerpts

Wednesday 25th January 2012 Commons Chamber

[Nicholas Soames (Mid Sussex) (Con)]

Thank you, Mr Speaker, for allowing this short Adjournment debate on North sea oil and gas taxation. It is a very serious and important matter. It is not one with which I have previously been concerned, but I think the Economic Secretary should know that I was invited to a briefing the other day, given by the oil industry, on the impact of taxation changes in the North sea and it excited my interest. I had always been aware of what a very substantial business it was but had no idea of how very important it is to the United Kingdom economy on the scale of employment and other matters, and I thought it right to bring the matter to the attention of the House. I am therefore, as I said, very grateful to you, Sir, for allowing the debate.

The United Kingdom is indeed fortunate to be endowed with significant resources of oil and gas. Over the years, hundreds of millions of pounds of hard-earned, always risky and sometimes very courageous investment and endeavour have allowed the nation to realise these resources, and for the British people to enjoy the substantial benefits of employment, sophisticated and high-level skills at all levels of the skill chain, tax revenues and balance of payments, and to develop a leading position in the global oil and gas supply chain—all of which has stood this country in good stead down the recent years.

Figures for 2011 show that around £16 billion was spent by the oil and gas industry on exploration, development and operations. This included £8 billion in new capital investment, an increase of 25% over 2010. I know that the Economic Secretary will agree that in anyone’s terms these are massive numbers, and thus once again make the oil and gas sector the single largest investor of all the industrial sectors in the United Kingdom.

The positive benefits of this remarkable industry are not confined to Scotland. They extend throughout the United Kingdom, supporting employment for more than 400,000 people, and those jobs are widely distributed throughout the whole country. Unsurprisingly, of course, a substantial proportion—45% in fact—are in Scotland, but that means that 55% of the jobs, which is the majority, directly benefit employment throughout the rest of the UK.

The taxes forecast to be raised from the industry in 2011-12 include some £6 billion in income tax, national insurance contributions and corporation tax paid by the supply chain companies, with an additional £11 billion from taxes on production itself. That amounts to 25% of all the corporation tax received by the Exchequer. The production of indigenous oil and gas improved the balance of payments by £35 billion in 2011, thus halving the trade deficit, and the supply chain added another £5 billion to £6 billion with exports of oilfield goods and services. Incidentally, that aspect of the industry is doing extremely well here and overseas, and it is flying the flag for Britain effectively.

At a time when Britain above all else needs growth and the energetic encouragement of inward investment, I regret to have to say to the Economic Secretary that all is not well in this crucial sector that is so important to our economy. Production declined by 17% from 2010 to 2011, which was the biggest fall seen by the industry in the past 40 years. As a result, future tax receipts will decrease rapidly without new investment. Receipts for 2011-12 have already suffered a £2.3 billion downgrade due to lower than expected production.

[Jim Shannon (Strangford) (DUP)]

I understand that the reduction in North sea oil production is due to many factors, but one of them is maintenance. There have been many maintenance programmes over the past 12 months. Is the fact that production is down, because maintenance is up, one reason why taxation is down?

[Nicholas Soames]

The hon. Gentleman raises an important point. I am sure that it is germane, but the decrease that I am highlighting is, in my judgment, due to the taxation regime.

The United Kingdom already imports around 10% of its oil and almost 40% of its gas, and such imports will increase rapidly without the benefit of new investment. The Government’s decision in March 2011 to increase tax rates on the industry, which increased the top tax rate to 81% and the corporation tax rate to 62%, is inevitably and regrettably having a chilling effect on the leading indicators of investment.

While total capital investment this year has increased to about £8 billion from £6 billion in 2010, that was largely due to development momentum from previous years. Worryingly, just nine new fields accounted for 40% of the total capital invested and all the development projects were well advanced prior to the tax increase.

The signs of lower investment in the future are already apparent. Indeed, my hon. Friend the Economic Secretary will see from the Department of Energy and Climate Change’s latest energy trends analysis a significant impact on drilling activity, with exploration wells down 50% in 2011.

It is from that exploration drilling that the future large capital investments will flow. The March 2011 tax increase reduced the value of future projects by 25% overnight. My hon. Friend knows that the future development of the North sea depends in large part on clever, technical solutions at the very forefront of what is manageable for marginally economic fields, but the increase in the tax rate has rendered many of those future fields uneconomic to develop. That serious matter for the country must be addressed.

I gather from the estimates of Oil & Gas UK, the industry’s trade body, that investment of at least £12 billion in more than 1 billion barrels of oil and gas resource will not occur without some stimulus. That is 60,000 jobs that will not be created and a loss of a benefit of £15 billion to £20 billion to the budget deficit as a result of the tax increase.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

I remind the House of my entries in the Register of Members’ Financial Interests to do with the oil and gas industry. I intervene to reinforce the right hon. Gentleman’s point about the industry’s importance not only to the north-east of Scotland, but to the whole of the United Kingdom. I thank him very much for bringing the spotlight to bear and bringing the message south that it is the whole United Kingdom that would benefit from tax reform.

[Nicholas Soames]

I am grateful to the hon. Gentleman, whose championship and knowledge of the industry are well known. He emphasises the important point that this is a United Kingdom industry, relevant to the whole country, and therefore even more important than might otherwise be the case.

Oil & Gas UK estimates that a further 1.7 billion barrels of the UK’s oil and gas resource would be recovered if the uncertainty about decommissioning reliefs—a very difficult subject—was resolved.

In an industry with highly mobile capital, investment will flow to other, more attractive destinations. We must not let that happen. Further repeated change in the taxation regime of this vital UK industry is causing great uncertainty in the boardrooms of both the international and the home-grown companies involved in all sectors of the industry. That inevitably has a further unhelpful impact on inward investment, at a time when we should be doing all we can to attract that investment, as well as the jobs, the tax receipts and the balance of payments benefits that come with it. I am sure the Economic Secretary agrees that doing that is even more important given the Government’s genuine determination to generate greater growth in the economy, without which many of the difficult problems we face cannot be dealt with.

I am aware that discussions are ongoing between the Treasury, the Department of Energy and Climate Change and the industry to try to find ways to stimulate investment, and I welcome that. I ask the Economic Secretary to confirm that she understands—I know she does—the serious impact on inward investment being caused by the tax increase and other adverse changes in taxation, and the damage to the future tax base and future tax receipts. Further, will she confirm that the Treasury will give serious and detailed consideration to measures to protect future investment through extensions to tax allowances and giving certainty on decommissioning reliefs, and see to it that those measures are enacted or headlined in the Budget, to the greater advantage of the British economy in the years to come?

Oral Answers to Questions

Lord Soames of Fletching Excerpts

Tuesday 10th May 2011 Commons Chamber

[Danny Alexander]

No, I do not; I think that that was the right decision. The balance of policies that we are putting forward—on enterprise zones, local enterprise partnerships and the regional growth fund—is designed to ensure that ideas that come from the regions have a much greater chance of success. Our decision was the right one, and the hon. Gentleman will have noted that inequality among the regions actually grew during Labour’s 13 years in office.

[Nicholas Soames (Mid Sussex) (Con)]

11. What steps his Department is taking to promote economic growth.

[The Chancellor of the Exchequer (Mr George Osborne)]

As my hon. Friend knows, we inherited an economic mess, we have restored economic stability and we are promoting economic growth by cutting business taxes, encouraging investment, expanding exports, improving and investing in skills, and creating jobs. The whole House will be pleased to know that 400,000 private sector jobs have been created since the Government came into office.

[Nicholas Soames]

I warmly welcome the excellent record of this Government, led by my right hon. Friend the Prime Minister, and the admirable work done by the Chancellor. Does he agree that, in addition to all this work to encourage growth, the deregulation of the economy continues to be extremely important and that it is not proceeding at as fast a pace as it should? Will he do everything he can to encourage his colleagues in the Government to get on with the deregulatory programme?

[Mr Osborne]

I certainly am doing that. We announced in the Budget the deregulation of £350 million-worth of business regulation, and we also imposed a moratorium for the coming years on regulation on small businesses. On the first anniversary of this Government, it is worth reflecting that 400,000 extra jobs have been created in the private sector, 89,000 fewer people are on the unemployment count, manufacturing output is up by 5%, business investment is up by 11%, exports are up by 12%, our credit rating has come off negative watch, our market interest rates are down and, as I say, economy stability has been restored.

Amendment of the Law

Lord Soames of Fletching Excerpts

Monday 28th March 2011 Commons Chamber

[Nicholas Soames (Mid Sussex) (Con)]

I draw the House’s attention to my entry in the register.

I warmly welcome the Budget and my right hon. Friend the Chancellor’s broad judgment of the economy. I particularly commend him for sticking to the plans he had outlined earlier, so that—painful though it may be, and mindful, as we must be, of the difficulties—we can deal properly and speedily with the appalling state of the economy bequeathed to the Government by their thoroughly irresponsible predecessors. Measures are now firmly in place to repair the economy, to ameliorate the gross waste of public money, to pay down the deficit and to put in place the architecture for a growing and expanding enterprise economy, with all the opportunities for jobs, increased competitiveness, substantial improvement in the effectiveness of essential and greatly valued public services and support for wealth creation.

Clearly major challenges and difficulties lie ahead, but the Chancellor has set out a clear vision for growth, with the aim of creating in the United Kingdom the world-class businesses of the future, of all sizes and in all activities, and consolidating a way ahead for all our industries and commerce. I was taken today with a letter in the press from some of Britain’s most successful business men that said that the steps taken

“will be a massive boost for start-ups, and will help entrepreneurs to secure finance to get their ideas off the ground.”

That is just so. It is exactly what is required.

Of course, I welcome the announcement on apprenticeships, but as I have made consistently clear to Ministers on many occasions, all the good will in the world cannot replace the over-bureaucratic burden currently in place that often makes it difficult to take on apprentices. If these targets are to be achieved, the process must be made a great deal easier. These are matters with which the Department concerned must deal with great vigour. The opportunities to expand the skills of our young work force are real and vital, and I hear from businesses on all sides their desire to get on with this matter in a speedier manner. To this end, I strongly urge my right hon. Friend to pay careful attention to the views of Professor Alison Wolf, who has developed some very good ideas on these matters, and the excellent work done by my right hon. Friend Lord Baker of Dorking.

I welcome the steps taken on deregulation, and I was pleased to see that the Government’s earlier work has been built on in the Budget in a number of areas. However, those steps are nowhere near good enough yet, and progress across Whitehall is extremely patchy. For my part, I believe that greater authority and impetus should be given to the war on unnecessary, debilitating and grinding red tape, which holds back so many of our businesses and infuriates so many of our best people, who have great ambitions that they cannot fulfil because of the burden that the state places on enterprise.

[Helen Goodman]

Will the hon. Gentleman give way?

[Nicholas Soames]

No, I am very sorry; I am afraid that I cannot.

I call on the Chancellor and the Prime Minister to bring back Lord Young, who understands such matters well, knows the grislier ways of Whitehall and is ideally qualified to lead a tough, cross-departmental effort to enforce the measures needed to reduce onerous administrative burdens, particularly on our small and medium-sized businesses. I know that many Ministers are aware of the importance of doing that, but from the Back Benches making progress often feels like wading through very deep mud. The sometimes apparent weakness of the civil service, judicial activism, thickets of regulation, and an infantilised and often financially illiterate press can all make it impossible to progress. The Government need to make a big effort to move on the issue.

On taxation I need say only this. A more competitive, simpler and more stable tax system will be better for everyone, rich and poor alike. Such a system would also go a long way towards restoring our badly lost international competitiveness, to which the last Government did such terrible damage.

Finally, let me briefly say a word about banks and the language of relentless negativity that is doing great harm to the City of London, which is one of the greatest assets that this country has. That language—particularly of the Opposition, but also of much of the press—is self-defeating, illiterate and often infantile. It needs to stop, and the debate needs to grow up. Many new jobs in banks headquartered in London are now being located overseas. That is very bad news. The Chancellor has averted a fiscal calamity. I am optimistic about the future of this country, but we face a long, hard slog.

HM Revenue and Customs

Lord Soames of Fletching Excerpts

Wednesday 2nd March 2011 Commons Chamber

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We have had a valuable debate, and I congratulate my hon. Friend the Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee. We have had the benefit of his expertise and that of other Committee members, including my old friend, the hon. Member for Leeds East (Mr Mudie) and my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). We also heard from a member of the Public Accounts Committee, my hon. Friend the Member for Redcar (Ian Swales).

We have heard about the experiences of the constituents of my hon. Friend the Member for Witham (Priti Patel) and had the benefit of the considerable tax expertise of my hon. Friend the Member for Dover (Charlie Elphicke). We have heard about some of the difficulties of a border area from the hon. Member for Foyle (Mark Durkan) and also heard from the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), whose constituency has the largest tax office in the UK. We have also heard from the hon. Members for Luton North (Kelvin Hopkins) and for Hayes and Harlington (John McDonnell), who both have a long-standing interest in the matter.

There is clearly a consensus across the House that HMRC is a hugely important organisation that has a valuable role to play through the service it provides to taxpayers and tax credit claimants and its contribution in dealing with the difficulties in the public finances. We have heard articulated a widespread concern about a number of aspects of its performance. As the hon. Member for Leeds East pointed out, that has been a consistent concern for a number of years. We have heard a little about some of the causes of the problems. The hon. Member for Hayes and Harlington, among others, talked about the difficulties of the merger, and my hon. Friends the Members for Chichester and for Dover talked about tax complexity. The hon. Member for Luton North talked about the challenges created by the introduction of tax credits and HMRC’s responsibility in that area. Those issues have contributed to a number of the problems.

In the time available, I will touch on the various issues that have been raised. A number of Members mentioned staff morale. The survey numbers are pretty shocking, as HMRC does very poorly on that. My hon. Friend the Member for Chichester referred to HMRC staff as the salt of the earth, and talked about their dedication. I visit a lot of HMRC offices and find that the staff are very dedicated and committed to their jobs. The problem is that they do not feel a strong connection with HMCR or the sense of loyalty and affection to the organisation that they might, but there is a desire to do their jobs very well.

There is sometimes a feeling that HMRC staff are kicked around a bit and that some of the criticism is unfair—happily, I can exclude all Members who have participated in the debate from that charge. To be balanced and fair to HMRC, we should acknowledge some of its successes. Just over a month ago, for example, they successfully dealt with a record number of self-assessments by the self-assessment deadline.

[Nicholas Soames (Mid Sussex) (Con)]

I wholly support what the Minister is saying. It strikes me that what HMRC staff need most is to feel valued, because they do an extraordinarily important job for this country.

[Mr Gauke]

My hon. Friend is absolutely right, and it is right for us to put that point on the record.

On PAYE reform, there is no doubt that there were real problems with the introduction of the national insurance and PAYE service—NPS—computer system. The system does improve how PAYE works, but last year we saw significant problems with tax codes. So far this year we are more than halfway through the tax code process, and it seems to be going well, but these are still relatively early days. There has been a concern about the introduction of NPS, and a considerable concern about the end-of-year reconciliation process. PAYE has always involved an end-of-year reconciliation, but the numbers revealed in September were shocking. We have enormous sympathy with those who face an unexpected tax bill, and we want to do everything we can to ensure that they are treated fairly and sympathetically.

The fundamental problem is that the PAYE system has failed to keep up with changes in working patterns: people tend to move jobs more often, and they often have more than one source of income. We are taking steps to address that by introducing real-time information to the tax system, and we believe that that can address the real causes of the problem. I am aware of the concerns that the hon. Member for Leeds East raised about the timetable, and we are looking closely to ensure that we can deliver to it.

My hon. Friend the Member for Dover was entirely right to mention contact centres and their slow responses. The current service is not good enough, and in the long term we will solve that by getting things right first time and ensuring that the tax system is simpler so that people do not need to phone up. As a temporary measure, however, HMRC will employ between April and September—a particularly busy time for HMRC—1,000 additional contact centre advisers to ensure that we see an improvement in performance.

Several Members raised the issue of the tax gap. The £42 billion figure that HMRC produced—the other figures that have been thrown around lack credibility—is a big number, and although it compares well internationally we are determined to do what we can to bring it down. The figure is made up of several factors, including the hidden economy, written-off debt and so on, and there will always be a tax gap, but we are determined to reduce it.

That brings me to the spending review. Let me be very clear: during the usual communications that take place between Opposition spokesmen and senior civil servants in the run-up to a general election, we said to HMRC, “If you have proposals for areas where additional expenditure could result in substantially increased yield, we want to look at them,” because all too often the previous Government did not listen or even attempt to address that matter.

We were very pleased when HMRC came up with proposals for spending £900 million over the course of the spending review period, and it believes that that could really deliver. I cannot supply the full profile, but by the end of that period HMRC should be raising an additional £7 billion as a consequence of strengthening its compliance capacity, increasing the number of people working in compliance and enforcement, and tackling tax evasion. That is an important step to take.

We have had a useful and valuable discussion within a wide-ranging and interesting debate about an incredibly important issue. Across the House, we recognise that HMRC is a very important organisation. It is right to focus its efforts, as the right hon. Member for Delyn (Mr Hanson) said, on collecting taxes and getting the yield in, and that is what we are doing.

We recognise that savings have to be delivered, that services have to be maintained, that performance must be improved and that revenues must be increased to help tackle our nation’s record deficit. We are determined that HMRC will deliver, and that by the end of the Parliament it will be a far better department, and one that is more efficient, cost-effective and better tailored to the needs of modern Britain.

Question deferred (Standing Order No. 54(4)).

Independent Financial Advisers (Regulation)

Lord Soames of Fletching Excerpts

Monday 29th November 2010 Commons Chamber

[Mr George Mudie (Leeds East) (Lab)]

I congratulate the hon. Member for Wyre Forest (Mark Garnier) on securing the debate and on putting the case so comprehensively, in such detail and so fairly. This matter is a great problem, but it had gone under my radar as a Member of Parliament until a constituent of mine who is an independent financial advisor came to my surgery and explained what is happening. He falls into the category of being someone in his 50s who for the first time in 30 years is required to study for an examination to keep his job, regardless of how long he has been in the industry with a complaint-free record. I find that amazing.

As a member of the Treasury Committee, I have tried to aid the hon. Member for Wyre Forest—although he does not need aid—or at least stand alongside him to press for an investigation. I find it worrying that decisions can be taken by a regulator without recourse to the House, and almost without recourse to anyone. Last week, as the hon. Gentleman mentioned, both the FSA and the Governor of the Bank of England came before the Committee, which was an opportunity—although we had a full agenda—to press the matter and question them.

The background against which the decision has to be judged is interesting. The FSA, rightly, admitted to many mistakes in the operation of its light-touch regulations. It was probably more open than the Bank of England, but that is another story. After Northern Rock, the FSA was very straightforward in meeting after meeting; it came clean and accepted criticism about light-touch regulation. However, Hector Sants decided in a policy speech to project a new image—from where, I do not know. He stated that in future financial firms would fear the FSA, but there is a pendulum effect. If something is released it tends to go too far in the other direction, and I rather fear that the FSA, in attempting to salvage its reputation—if it had one—has moved too far to demonstrate that it is not a soft touch as well as a light touch.

Members may think that I exaggerate. The FSA is undertaking two reviews; retail distribution is one and the hon. Member for Wyre Forest mentioned the other—the mortgage market review. If Members have not received many letters and e-mails about the RDR, there will certainly be anguished people contacting them when the full power of the MMR comes into effect and young first-time buyers who are self-employed find it difficult to get a mortgage.

[Nicholas Soames (Mid Sussex) (Con)]

It is not just that the FSA has not listened to the industry or its professionals, which will undoubtedly damage the profession. Does the hon. Gentleman agree that the really foolish thing, which is just as serious, is that it will profoundly damage the interests of the consumer? Yet the FSA seeks to protect the consumer.

[Mr Mudie]

I completely agree.

I forgot to congratulate the hon. Member for Wyre Forest on securing the debate and on introducing it. I also congratulate all Members in the Chamber. It appears that the only thing we can do is to come to the Chamber and voice our anger and concern. When the Committee discussed with the Bank of England the new powers of the new regulator, it was the British Bankers Association, of all people, who raised the democratic deficit. The point was made that we were handing so much power to the regulators and the banks that there was great danger that they would be pronouncing and taking action on matters that affect us as representatives of our constituents —matters relating to employment and standards of living. In our humility and generosity, we are passing great power to the regulators on matters for which we will be accountable—perhaps not in law, but in the view of the public. We will be accountable for the actions of the regulators, so a rethink is very necessary.