Customs and Borders
Matt Western Excerpts(6 years ago)
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Matt Western (Warwick and Leamington) (Lab)
I thank my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) for securing the debate. This is clearly not an abstract debate; it is extremely serious, given the impact that this policy will have on us.
The question of the customs union is important because it strikes at the heart of our trade policy, our business exports and imports, and the strength of the UK economy. The prospect of our not being part of a customs union poses, I believe, an existential threat to the UK car industry, and therefore to the wider UK economy. What businesses in that industry and those more generally are calling for is certainty, clarity and, of course, urgency. Their representatives—the CBI, the Institute of Directors and the Federation of Small Businesses—are doing the same.
We know that many businesses have complex supply chains and production processes that are integrated across Europe, with parts and assembly travelling back and forth across the continent. Frictionless trade is essential to those operations, and a customs union helps to facilitate that. We also know that increased customs checks could lead to delays. We have heard about—we saw them for ourselves—the eight-minute delays on the US-Canada border. We have heard about delays of up to 15 minutes at the Norway-Sweden border and the additional costs that are incurred. We know about the infrastructure—the huge X-ray machines that check every few vehicles to confirm their contents—and, of course, we know that Northern Ireland relies on a frictionless border for the continuation of peace. The symbolism of a manned or marked border between Northern Ireland and the Republic puts at risk the peace secured by the Good Friday agreement. For all those reasons, it is vital that we remain in the customs union.
As the Member of Parliament for Warwick and Leamington, which is at the heart of the car industry, I cannot stress enough how critical this issue of the customs union is, and how costly our departure from it will be for the sector. Some 79% of all components used in the UK car industry come from Europe or other countries abroad. If WTO rules are applied, there will be an incremental cost of £1.8 billion for our exports and £2.7 billion for our imports. It is no wonder that the Japanese invested in the UK in the 1980s. That happened because we were part of the customs union, and we very much welcome their investment here.
I believe that we can remain part of the customs union at the same time as increasing our trade with and exports to markets outside Europe. That is what we should plan to do, and that is why I support the motion.
Mr Speaker
Order. The winding-up speeches of up to eight minutes each will begin now.
Spring Statement
Matt Western Excerpts(6 years, 2 months ago)
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Mr Hammond
It did. My hon. Friend is right. It is precisely because we have seen the devastating impact of being unprepared for a serious economic downturn following a financial crash that we are determined to ensure that the UK economy is robustly prepared for the next normal cyclical downturn, whenever it occurs. Such things are normal, they happen in everyday economic life, and we must be able to ride through them without damage to our economy and without the poorest in our society paying the price. The poorest always pay when Labour’s model fails.
Matt Western (Warwick and Leamington) (Lab)
Following the global financial crash, the American Recovery and Reinvestment Act 2009, introduced by Obama, saw $800 billion of investment pumped into the US economy, leading to the most sustained period of growth. By contrast, the UK embarked on a sustained period of austerity, and UK growth is now half that of the US and the eurozone. Which was the right ideological choice?
Mr Hammond
The United States is in a different position from the United Kingdom. Sadly, we no longer operate the world’s reserve currency and are no longer able to borrow under the same conditions as the United States. Decisions on the United States economy are for the United States Administration. This Government have made the right decisions for the UK economy, and the benefit of those decisions—the outcomes that we are now beginning to see—demonstrates the case for them.
Finance (No. 2) Bill
Matt Western ExcerptsWednesday 21st February 2018
(6 years, 2 months ago)
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Mel Stride
Perhaps we can get into the nitty-gritty of this offline.
The average revenue from the bank levy between its introduction in 2011 and 2015-16 was around £2.6 billion. As a result of this package, however, yield from the surcharge and the levy in 2022-23 is forecast to be £3.2 billion. By 2023, as I have said, we will have raised around £44 billion in additional bank taxes since the 2010 election.
Opposition Members have also suggested that our bank levy is set at a low level compared with other countries. In fact, not all financial centres have a bank levy. The USA, for example, chose not to introduce one at all, and while several EU countries introduced bank levies following the financial crisis, it is not possible to make direct comparisons between these levies as the rules for each are different.
We have heard the argument this afternoon that we should reintroduce a tax on bankers’ pay. One of the aims of the changes to bank taxation announced in 2015 and 2016 is to ensure a sustainable long-term basis for taxing banks, based on taxing bank profits and the bank levy. By contrast, the bank payroll tax referred to in new clause 3 was always intended as a one-off tax. Reintroducing it would be ineffective and unsustainable compared with the package of banking tax measures that we have introduced. Even the last Labour Chancellor pointed out that it could not be repeated without significant tax avoidance.
Opposition Members also propose that HMRC should publish a register of tax paid by individual banks under the levy. Taxpayer confidentiality is rightly a core principle for trust in our tax system and HMRC does not publish details of the amount of tax paid by any individual business. While the Government continue to consider measures to support transparency over businesses’ tax affairs, we must balance that with maintaining taxpayer confidentiality in order to maintain public confidence in our tax system.
Matt Western (Warwick and Leamington) (Lab)
Does the Minister accept that the transparency that is being sought is down to the public, demanding it? After all these years of difficulty, and at a time when so many communities face council tax increases of 5%, there seems to be an inherent unfairness in the tax system.
Mel Stride
I just do not accept that. This goes back to my point about the balance of measures that we are taking. The Opposition are understandably focusing on the bank levy, which is indeed declining over time, but I point to the additional 8% surcharge, which is 8% more on corporation tax than other non-banking businesses are expected to pay. As I have said, the banks are also not permitted to carry forward interest rate charges to the same degree as other businesses, and they are not allowed to offset against tax the compensation payments that they have been making. All those things add up to additional tax and by 2023 will have raised an extra £44 billion since 2010 compared with what would have been raised from non-banking businesses.
Matt Western
At the same time as corporation tax is being reduced overall—I accept the point about the bank surcharge—does the Minister not accept that we are seeing a significant increase in council tax for the public?
Mel Stride
As my hon. Friend the Member for Croydon South (Chris Philp) pointed out, as we have reduced the overall level of corporation tax from 28% to 19%—corporation tax, of course, applies to banks as it does to non-banking businesses—we have seen the tax take increase by some 50%. We have actually been raising more revenue as a consequence of those changes.
Finally, new clause 5 would require the Government to publish further analysis of the impact of the Bill’s bank levy re-scope. The Government have already published a detailed tax information and impact note on the proposed changes, and we have published information, certified by the OBR, on the overall Exchequer impact of the 2015 package of measures for banks. It is important to legislate for such changes now in order to give UK banks certainty on their tax position so that they can plan effectively for the future.
The changes in clause 33 and schedule 9 complete a package of measures that raises additional revenue from banks in a way that delivers a tax regime that is more sustainable, more aligned with regulation and more supportive of the competitiveness of UK financial services. We should pass them without amendment.
In her amendments, the hon. Member for Walthamstow (Stella Creasy) calls for a windfall tax on private finance initiative companies. I pay tribute to my hon. Friend the Member for Stevenage (Stephen McPartland), who outlined his vigorous work in this area in support of his constituents.
There are approximately 700 operational projects that originated under the initial PFI, representing £60 billion in capital investment. The vast majority of those projects were signed between 1997 and the 2010—620, or 86%, of all PFI projects in the UK were signed under the last Labour Government.
This Government have taken action to ensure that PFI contracts deliver better value for money for the taxpayer. That is why in 2011 we introduced the operational public-private partnership efficiency programme, which has reported £2 billion of savings. Even where it is not possible to find savings in a project, we are working with Departments and procuring authorities to improve day-to-day effectiveness and management of contracts. We have also made improvements through PF2 to offer taxpayers better value for money on new projects.
The hon. Member for Walthamstow argues that a windfall tax on what she sees as the excess profits of PFI companies would help to fund public services; I am clear that it would not. A retrospective windfall tax would instead do damage to any private investment in public services and would tax local authorities and NHS trusts rather than the providers it is intended to target. Even aside from those flaws, her amendments would not work as she intends, and I will set out why in more detail.
First, a windfall tax would cost this and future Governments who try to sign contracts with businesses, whether in PFI or in another area. This country has a hard-won reputation for tax certainty, and that important principle would be undermined by a retrospective tax targeting businesses that have legitimately entered into a contract with the Government. There would be extra cost for the taxpayer whenever the Government next needed to engage the private sector.
Secondly, as the hon. Lady knows, PFI contracts—she said that she has read many—are long-term agreements that typically include anti-discriminatory clauses. This means that when legislation is passed that targets PFI companies without applying to similar projects undertaken by other companies, the tax owed can be recovered from the procuring authorities. A windfall tax would therefore only be a tax on local authorities, NHS trusts and Government Departments that hold such contracts, which I am sure is not the outcome she seeks.
Amendments 1 and 2 propose that the bank levy could be extended to PFI groups, but PFI groups are not banks. Instead, they borrow money to finance projects and earn a return on them, in exactly the same way that many other businesses do. It is simply not possible to bring PFI groups within the scope of the bank levy. Most of the design of the tax could not be applied to such groups.
The changes proposed by amendments 3 and 4 also would not work as a windfall tax. The last Finance Act introduced corporate interest restriction rules to limit the amount of interest expense that a corporate group can deduct against its taxable profits. The amendments propose modifying those rules by limiting the ability of corporate groups to carry forward and offset their unused interest allowance against future profits. The limitation would apply only where the group contains a PFI company that has previously made profits that are deemed to be “excessive,” by reference to a statutory test. The changes proposed in the amendments are convoluted. As I have said, it would fall to the public bodies holding the PFI contracts to pay the extra tax resulting from these changes. But even if one could impose additional tax liabilities on PFI providers, this would not be a sensible way to proceed. It would be unlikely to change the tax paid by the PFI company, but would instead sometimes penalise other companies in the same corporate group. More likely, groups would simply restructure to avoid the tax.
Trade Bill (Third sitting)
Matt Western ExcerptsThursday 25th January 2018
(6 years, 3 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 25 January 2018 - (25 Jan 2018)
Iain Stewart
Q
Sarah Dickson: For us, 10% of our exports go to those countries and benefit from them. I cannot give you an overall figure, but obviously, if you are not paying the tariff, you are not paying the tariff and you do not have that cost. It would make a difference to about 10% of our exports, and our exports were £4 billion in 2016.
Elspeth Macdonald: I do not have figures in front of me, but I think the document the Scottish Government published recently, “Scotland’s Place in Europe”, about business, jobs and the economy, touched on exactly those issues and put some economic analysis around some of that in terms of trade.
Gary Stephenson: All I can say is that I think about 37% of exports of food from Scotland are to non-EU countries, but we have not quantified exactly what the impact would be and how much of that is going to countries with a free trade agreement. I cannot give an exact answer, but it will have an impact.
Matt Western (Warwick and Leamington) (Lab)
Q
Gary Stephenson: There has to be deep consultation. The people with the expertise are the ones shipping the products, so they need to be consulted in detail on those provisions, which are very specific. You mentioned phytosanitary; obviously seed potatoes are a big product for Scotland, and they are highly dependent on phytosanitary requirements.
Matt Western
Potatoes are?
Gary Stephenson: Yes.
Sarah Dickson: Our experience is that we are often the ones working with the EU to draft the provisions on whatever it might be—labelling, or other requirements that would be needed for a mutual recognition—so we currently work closely with the EU negotiators to provide them with the advice and support that they need.
Elspeth Macdonald: There is a more fundamental issue from my perspective. There are specific exemptions from reservation through the Scotland Act that make it a devolved function for technical standards to be set in relation to food. There is a fundamental question above: it is about not just the Government, but Governments having those discussions with businesses.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q
Gary Stephenson: I think it is critical, particularly looking at some sectors, that the devolved Governments consult with sectors, and that there is a unified approach. This is too important to get parochial about. It is an important issue for the whole UK, but there is a higher impact in some sectors, particularly in Scotland and Wales; I am thinking of hill farming products and that type of thing.
Alan Brown
Does anyone else want to add to that?
Jonathan Hindle: The furniture industry has a similar exposure to migrant workers. We have a high degree of Polish migrant workers in the industry, particularly with sewing and upholstery skills. The unknown quantities about all of this have meant that some of them are leaving, so there is concern in the industry to provide some clarity, once again, about how we would deal with migrant issues for industry.
Gordon MacIntyre-Kemp: Again, some of our members have expressed concerns. In particular, highland hotels are saying that 65% to 70% of their staff during the summer are EU nationals and so on. There are significant issues in Scotland. I think that this shows, in terms of the overall remain vote, that immigration is seen radically differently in Scotland in terms of an opportunity to engineer the age of our society and bring skills to Scotland.
Matt Western
Q
“Make provision about the implementation of international trade agreements”.
To elaborate on the point you were making earlier, what do you understand that to mean?
Gordon MacIntyre-Kemp: What do I understand the “international trade agreements” to be?
Matt Western
Q
Gordon MacIntyre-Kemp: Sorry. What do I understand “international trade agreements” to mean? They are basically agreements between countries that facilitate trade, such as TTIP and CETA and so on, and they have significant impacts on the different sectors, in terms of what sectors are opened up to particular trade deals. Now, regarding the EU, it already has trade deals with South Korea, Canada and so on. I think that is kind of basic.
However, there could be difficulties if there is not an exact definition in the Bill of what a trade deal is; I refer to evidence from legal experts on this issue, as well. It could mean that deals that are not specifically seen as trade deals can come under the remit of the Bill.
Matt Western
Q
Gordon MacIntyre-Kemp: More open than it possibly should be; not as restrictive as it—
Matt Western
It could be open?
Gordon MacIntyre-Kemp: Yes. It could be seen that way. I am just asking for it to be tightened up a little bit.
Matt Western
Q
Jonathan Hindle: Fairly limited, inasmuch as when most people look for certificates of origin in tendering processes and evidence of supply chain in that regard, they ask for either an EU reference or a UK reference. If we were to devolve to a UK reference as a source of origin, it would carry equal weight in the minds of those in the particular markets that I am familiar with who often require that evidence.
Regarding the quantities coming out of the EU versus the UK, normally we are asked to make a judgment on a split and err towards the country of origin being where the majority of the material originates or where the bulk of the manufacture occurs. There are some guidelines that we tend to follow, along those lines. I am not hearing any concerns from our industry that that will present any problems. We continue to adhere to the current remit for declaring origin.
Matt Western
Q
Jonathan Hindle: Offhand, I cannot see it impacting the ability to trade effectively, or our competitiveness, or how we are perceived in any way; no, I cannot see that and I am not getting anything from our industry, as we poll it, to suggest any specific concerns on that particular point.
Of course, we have all the problems that we have had with a weak currency and all the inflationary impact that that has had, because most of our industry relies for a large part of its materials on continental Europe and elsewhere in the world. Weak sterling has had an impact and countered, if you like, the benefits that we might otherwise have enjoyed as an exporter from having a weaker currency on the other hand. It has been a double-edged sword in that regard.
Matt Western
Q
Jonathan Hindle: Very much so, yes. We would certainly welcome having someone on that TRA that understands our sector and all the nuances and complexities that have been alluded to—absolutely.
Barry Gardiner
Q
Gordon MacIntyre-Kemp: Yes, exactly, and as food safety is a devolved issue in Scotland—
Trade Bill (Second sitting)
Matt Western ExcerptsTuesday 23rd January 2018
(6 years, 3 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 23 January 2018 - (23 Jan 2018)
The Chair
We are having trouble with time and scrutiny as well. We have only two minutes left for Matt Western.
Matt Western (Warwick and Leamington) (Lab)
Q
Professor Winters: Because the roll-over is not straightforward. Maybe you can say that this is an implicit recognition that it is not entirely straightforward and that there will have to be changes. Some might be purely technical, but some are clearly going to be substantive.
It is precisely because it is difficult, contentious and requires negotiations, that the Henry VIII powers are so important, because it is the Minister, their designated authority or delegate who will make those decisions.
Matt Western
Q
Professor Winters: The division of tariff-rate quota on cheese into Canada, or which bit of law financial services access to Korea will refer to. There are, I have no doubt, plenty of others.
Matt Western
Q
George Peretz: I am not sure I have much to add to that very complete answer to the question.
Does it require Henry VIII powers? It probably does require them because you have to amend primary legislation. The questions about the degree of scrutiny and so on, are, I think, questions for you, but the need for a pretty fast procedure to amend our law to deal with what will quite often be technical points that involve changes seems fairly clear.
Alan Brown
Q
Michael Clancy: When I get elected?
Judith Cummins
Q
Cliff Stevenson: In principle, I think it is not necessarily a bad idea—that if you have an organisation full of trade expertise, you might use it for other purposes as well. I mentioned Canada earlier. The Canadian international trade tribunal, the independent entity that makes determinations on injury, can also be given other tasks and produce expert reports. So I do not think it is a bad idea in principle that the TRA may do other things. The concern would be about resourcing.
Trade remedy investigations are highly resource-intensive. They are incredibly detailed. Gareth mentioned earlier about the dumping calculation being easy. In a sense, what he was saying is that it is straightforward, the steps are very clear—but it is a massive calculation with thousands of data entries on a spreadsheet or in a model. To the extent that there would be a concern, it would be to ensure that there was sufficient capacity ring-fenced for the different functions. Principally, it seems to me that the Trade Remedies Authority’s purpose is the administration of the trade remedy regime. That would be the only issue I would raise.
Matt Western
Q
Tom Reynolds: One example I can give you is from MTRA partner sectors, the chemicals fertiliser sector, around the long-term implications for the consumer if adequate trade remedies are not installed. In Ireland, for instance, the domestic manufacturing industry for fertilisers sadly went by the wayside, because the anti-dumping measures were not introduced in time to provide a defence for their industry. As it became a less attractive market because of less competition, the prices started to rise for all the previously dumped exports, so the lack of competitive environment in Ireland ended up costing farmers more for their fertilisers.
Cliff Stevenson: Obviously, it depends on the product, because when you are talking about products used in another industry, such as in the case of steel, even a fairly substantial anti-dumping duty, if you work it through to the final price to the retailer of the downstream product, is going to have a much smaller effect. Obviously, in the case of a consumer product, where the product goes directly to the consumer, the impact of the duty would be exactly at the level of the duty, so that is certainly true.
It is important always to consider what the purpose of trade remedies is. They are about remedying a distortion, an anti-competitive situation or a subsidy. In that way, any time you increase a duty the users, the importers, or the consumers of that product are going to face the negative impact of the increase in duty. What is really important to remember about trade remedies is that they are not about protecting domestic industry, I do not believe. They are about restoring effective competition. That is a key point. Even if a consumer product does increase in price, in the long term the consumer is better off if effective competition is maintained.
The Chair
Are there any questions? No. May I thank you both very much for your very useful evidence? I am sorry that a Division disturbed the middle of your session—these things happen in Parliament. It was very kind of you to come, so thank you very much. If the next witnesses are here, perhaps they would like to take the stand.
Examination of Witnesses
Anastassia Beliakova, Stephen Jones, William Bain and Edward Bowles gave evidence.
Public Sector Pay
Matt Western Excerpts(6 years, 5 months ago)
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Matt Western (Warwick and Leamington) (Lab)
This was before my time, so correct me if I am wrong; a few years ago it was voted through that Members of Parliament would receive a pay increase. If the principle was right then for MPs and it was seen to be appropriate, why is it not appropriate for all our public sector to receive a pay increase?
Andrew Jones
The hon. Gentleman is perhaps not absolutely correct about the process. That also predates my time in the House and goes back to the expenses crisis in 2007 and 2008. Any hon. Members who have been here a bit longer are welcome to jump in, but I think that at that point, Parliament basically gave all responsibility for its pay rises to an independent body. Since then, I do not think that it has voted on the matter. I have certainly never voted on Members’ pay. I recognise that that is a contentious point, but Parliament is no longer responsible for its pay.
Andrew Jones
I accept that—I was actually quoting the shadow Chancellor. Let me press on. The pay review bodies will consider evidence from stakeholders, including employers, Governments and unions, and they will make their recommendations in spring and summer next year. Secretaries of State will use the recommendations to inform the final pay awards in the normal way. The PRBs’ recommendations will recognise the wider economic context. The need remains for continued fiscal discipline, and Departments will take that into account when making any decisions.
Many Members have mentioned the NHS, which I want to spend a bit of time discussing. First, the Government are entirely committed to the NHS. Funding for the health service is at record levels. [Interruption.] Opposition Members may mock, but funding is in fact at record levels. They should be doing what we are doing, which is backing the service.
We know that pay restraint has been challenging and we are listening to the concerns of NHS staff and their representatives. We recognise that the NHS now faces greater pressures than at any point in its history, and the reasons for that are an ageing population, which is a significant challenge for western economies, and the greater demand that we are therefore seeing for NHS services.
