North of England: Economic Support

Miriam Cates Excerpts

Wednesday 11th November 2020 Westminster Hall

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I congratulate the hon. Member for Barnsley Central (Dan Jarvis) on securing this important debate. So much has rightly been said about levelling up and the need to spread wealth and opportunity more fairly across the nation. Following the pandemic, during which the north has suffered disproportionately, there will be an even greater need to support our northern economy, so I welcome Sheffield city region’s renewal action plan.

The plan identifies three key areas where support should be targeted—our people, our employers and our places. Our people certainly need support, with unemployment rising and the future job market uncertain. The key to attracting productive, high-skilled jobs is surely to ensure that we have a productive, highly skilled workforce. That is why I welcome the Prime Minister’s lifetime skills guarantee. We also need to support our employers as they adapt to a new post-covid economy. I commend the Government for their ongoing support for businesses during the pandemic, and I welcome Sheffield city region’s plans to help our employers adapt to digitisation. Of course, we must support our places, particularly the infrastructure that connects us. That is why I have submitted a bid to restore the Stocksbridge to Sheffield railway line and am working with local groups to improve rural bus services. Perhaps the Minister could provide an update of what the Government are doing specifically about northern transport.

Our people, our employers and our places all need support, but when we are thinking about our northern economy it is tempting to focus on what we lack—the jobs, productivity and opportunities that we do not have. If we are talking about investment into the north, perhaps instead we should start with what we do have. Investment is about finding an opportunity, spotting potential and catalysing growth by building on existing strengths. We certainly have a lot of strengths in the north. We have strong communities with healthy intergenerational ties. People are proud of where they live and value their relationships with families, friends and neighbours. We even talk to each other on the bus. I tried it on the tube; that did not go down well.

We can build on that strength of community to unlock economic potential. We have a proud history of manufacturing, which is a strength we should build upon. Just as in the north we were at the forefront of the first industrial revolution, we have the potential to lead the fourth industrial revolution—if we focus on growing our own talent, enabling tech investment and engaging with even the youngest children to inspire them to take part in our northern industrial future.

We also have world-class universities, whose expertise we can harness to invest in our local economy. I welcome the work that Sheffield and Sheffield Hallam universities are already doing in that area, but we need to think more about how the universities can reach into our more rural areas to foster talent in our towns and villages.

Yes, we have been left behind in the north; yes, we need financial support to level up our economy and opportunities, but let us also acknowledge what we do have, our significant capabilities, and look to invest in our strengths.

Productivity: Rural Areas

Miriam Cates Excerpts

Wednesday 14th October 2020 Westminster Hall

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I congratulate my hon. Friend the Member for North Cornwall (Scott Mann) on securing the debate.

Rural productivity is an issue of great importance to my constituents in Penistone and Stocksbridge. I recently visited a dairy farm in the constituency where farmers are working hard to improve productivity by introducing new technologies that will increase milk yields. Such technologies require the collection and processing of real-time data from cattle, and this in turn requires reliable, high-speed and affordable broadband. All businesses are becoming more reliant on broadband, and there is now a direct relationship between internet speed and how much productive work can be done. In the rural broadband survey that I am currently conducting in my constituency, however, nearly 60% of respondents tell me that their broadband is slow or very slow, so it is hardly surprising that rural productivity is falling behind.

Businesses and people working from home do not require broadband just for sending emails or online shopping. The nature of work has changed, and high-tech solutions and high-quality virtual meetings require a high-quality connection. There are no easy answers to these problems, and we need community power as well as support from central Government in order to seek innovative local solutions.

Of course, broadband speeds are not the only factor limiting rural connectivity. Poor bus and train services restrict opportunities to travel to well-paid work in the local area, in stark contrast with vastly better services in urban areas. Again, I believe there is an opportunity for community power to improve transport connectivity. South Pennine Community Transport, a fantastic local community interest company near my constituency, is trialling a new regular bus service between rural villages and Stocksbridge town. The service will connect people to jobs and leisure services and could be financially self-sustaining in under two years. Many millions of people live in rural communities in this country, and it is not just for economic reasons that we need to level up. Rural life, culture, tradition and values are a valuable part of this country’s history and our future, and we need to make sure that young people are able to stay in those communities and have productive jobs.

[Ms Nusrat Ghani (in the Chair)]

I thank Mr Warburton for swapping seats with Ms Jones so that she can contribute.

Covid-19 Economic Support Package

Miriam Cates Excerpts

Wednesday 14th October 2020 Commons Chamber

[Rishi Sunak]

The job support scheme was widely welcomed not just by businesses groups such as the CBI and the Federation of Small Businesses but by the TUC, which I was happy to work closely with to design the scheme. However, she is right. That is not the only thing that we will do to support jobs, which is why we have put in place the £2 billion kickstart scheme to provide fully funded job placements for those young people most affected by this crisis and most at risk of unemployment. Thousands of those young kickstarters will be starting their new jobs this autumn.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Does my right hon. Friend agree that, while we all want simple solutions to this crisis—whether that is the Opposition suggesting full lockdown or an unlimited extension to furlough—there are no simple solutions. This is a highly complex problem. Every intervention and every support scheme will be nuanced and will have to be regionally effective There are no simple solutions. We should not be looking for simple solutions; we should be looking for the right ones.

[Rishi Sunak]

As ever, my hon. Friend is spot on. It is not leadership to shy away from the hard choices and real trade-offs that these decisions take. She is absolutely right.

The second part of our winter plan is to support businesses that are legally required to close, and we heard about that previously. Those businesses will now be able to claim a cash grant of up to £3,000 per month depending on the value of their property. Those grants can be used for any business cost and will not need to be repaid. I have also guaranteed £1.3 billion of funding for the Scottish, Welsh and Northern Ireland Administrations so that they can choose to do something similar. The hon. Member for Oxford East asked whether other areas had received that support, and was under the impression that none other had. I can correct the facts. Bolton is the only other area that has faced hospitality restrictions in that way and Bolton Council has received, at the last count, I believe almost £200,000 of support to compensate its businesses because they have been closed in a similar way.

Oral Answers to Questions

Miriam Cates Excerpts

Tuesday 15th September 2020 Commons Chamber

[Bim Afolami (Hitchin and Harpenden) (Con)]

What fiscal steps his Department is taking to support businesses affected by the covid-19 outbreak.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

What fiscal steps his Department is taking to support businesses affected by the covid-19 outbreak.

[Holly Mumby-Croft (Scunthorpe) (Con)]

What fiscal steps his Department is taking to support businesses affected by the covid-19 outbreak.

--- Later in debate ---

[John Glen]

Obviously, the scheme has helped 1.2 million employers, and that involves 9.6 million jobs. I am happy to engage with my hon. Friend on the specific example he raises. No appeal process is available for those who have made administrative errors, but if a mistake has been made by Her Majesty’s Revenue and Customs, a complaints procedure can be followed. I will follow up on this with him personally.

[Miriam Cates]

This Government’s support for businesses throughout the pandemic has been wide-ranging and delivered at speed. Without the real-time information held by HMRC, it would have taken significantly longer for those grants to reach employers and many more jobs would have been lost. Digital tax administration not only helps HMRC, but cuts costs to businesses, so what is the Treasury doing to build on those successes and make the UK one of the most digitally advanced places in the world to run a business?

[John Glen]

My hon. Friend is right; it is incumbent on the Government, in all Departments, to look at how we can refine the way we operate, to be more effective. That is why in July my right hon. Friend the Chancellor published a 10-year tax administration strategy, setting out our vision for a modern system, which will involve extending making tax digital to more taxpayers. That is a first step, and we hope it will bring us to a world-leading situation in this country.

Protection of Jobs and Businesses

Miriam Cates Excerpts

Wednesday 9th September 2020 Commons Chamber

[Sam Tarry]

The hon. Gentleman makes a very good point. Like him, I have had many constituents get in touch to raise exactly that point. Clearly the Government have been found wanting on that issue.

The Bank of England estimates that ending the furlough system before businesses have recovered from the first phase will lead to a total of 4.5 million unemployed. To put that into context, that is worse than the great depression of 1930s and will have a catastrophic effect on our nation’s finances. With half a million of those job losses predicted in Conservative-held seats, I am sure that Members on both sides of the House will join me in urging the Government to extend the supportive measures that are already in place.

We have already seen that our economy was the worst hit of all the major economies in the OECD. With both the CBI and the TUC calling for the furlough scheme to be continued to avoid such mass unemployment, will the Minister and the Government now listen to the united voices of business and unions, bosses and workers and change course before it is too late? This is not an unrealistic expectation; it is a practical necessity. Other European nations have already committed to long-term furlough schemes, which will give their economies a much better chance of bouncing back from the negative spiral they are already in. For example, Germany and France have both committed to supporting their workers up until 2022, so why cut our own jobs lifeline after just eight months?

This Government’s rationale—we have heard it from some colleagues on the Conservative Benches today—is that the furlough scheme has cost too much. We have invested only—in my view—£35 billion, which is a fraction of the £500 billion that was used to bale out our banks during the global financial crisis. The social and economic costs in many now Conservative-held seats would be catastrophic and incalculable. History shows us that once good skilled jobs are lost, they do not return in this country.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Will the hon. Gentleman give way?

[Sam Tarry]

I am sorry, but I will not on this occasion.

That is why we need an industrial strategy that protects jobs and enables businesses to recover while we restructure our economy to function in a way that benefits all of society and protects our environment. In that way, we can protect British jobs and give the people of this nation real hope for a better tomorrow, which is sadly lacking from this Conservative Government.

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[Anthony Browne (South Cambridgeshire) (Con)]

I want to join my colleagues on the Government Benches and, indeed, the Opposition Benches in congratulating the Government on their generous and nimble support for industry in this economic crisis. It has been an extremely difficult time, but it would have been far worse if the Government had not intervened in the way that they have. As the trend is to give figures for our constituencies, I will tell the House that South Cambridgeshire has had 13,600 jobs furloughed—saved—and nearly £90 million in grants and loans to businesses. We also beat Warrington South, with 122,000 meals eaten out and enjoyed by people, including myself. I know from the emails and the talks I have had with businesses and pubs in my constituency that, for many of them, this support made the difference between them failing and thriving. Many of them are now looking forward to the future—we are not out of it yet, but people are a lot more positive.

It is a feature of crises that it is far more difficult politically to get out of them than to get into them, whether the lockdown restrictions or the economic support package. The Labour party has called for continued subsidies, but it will not say when those would end. That means that it is calling for subsidies without end, which means borrowing without end. I do not believe in borrowing without end, because we have to pay off the debt at some point, whether it is us, our children or our grandchildren.

[Miriam Cates]

None of us wants to see mass unemployment at the end of furlough scheme, but given that none of us knows how long this crisis and the restrictions will last, is it not better to shift our support from helping those who may otherwise lose their jobs to creating new jobs, taking advantage of the opportunities in our economy right now?

[Anthony Browne]

I absolutely agree—my hon. Friend has taken the words right out of my mouth. I believe, and the Conservative party believes, in sustainable national finances. Do the Opposition parties believe in that? If they do, they have to explain how they want to get there.

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[Alison McGovern (Wirral South) (Lab)]

Thank you, Madam Deputy Speaker—I appreciate that intervention! I am grateful for the opportunity to contribute to this debate on a very important subject.

We are living through unprecedented times with a massive health crisis. The economy will of course adapt and change, as the hon. Member for South Cambridgeshire (Anthony Browne) said, but the question is what steps we ought to be taking to make sure that we protect people. Conservative Members have talked about sound finances and not extending debt too far, and the Thatcherite principles of the Conservative party. I have to tell them that they have not been paying attention, because the seats that the Conservative party won in December, particularly those in the north of England where I am from, were not promised a return to Thatcherite economics—they were promised redistribution. So I would say to the Conservatives: get with the programme.

[Miriam Cates]

The focus of the Government’s response has been largely towards those in the lowest income brackets represented by many of us. In fact, the group of people who have most benefited from the Government’s help are those in the lowest income decile. We have seen a huge redistribution of our country’s resources during this crisis.

[Alison McGovern]

Well, the hon. Lady should listen up, because if she thinks redistribution is important, then she should be aware that in the new seats that the Conservatives won at the election in December, there are half a million jobs at risk. If the Conservatives think that they can turn away from this issue as those people end up on the scrapheap, then they are very much mistaken.

We have heard London Tory MPs saying, “London is the powerhouse of the country—make sure London is all right and everyone else will be okay.” Again, I thought that the Conservative party was not about that any more; I thought that the Conservatives had mended their ways. Well, let us see: are they really going to vote to ignore those half a million jobs in the seats they won only in December? I would say to the hon. Member for South Cambridgeshire: beware headline statistics, because the employment rate, as he well knows, cannot describe the situation for places that went through wave after wave of deindustrialisation, and where the previous rounds of high levels of unemployment impact today on people’s skill levels, income and ability to mobilise capital in those places.

My greatest fear right now is for young people, because the labour market has memories. When the labour market has a negative shock like this that impacts on people who are working today and experiencing it, they will feel that shock for the rest of their career. According to the Institute for Fiscal Studies, employees aged 25 and under are about two and half times as likely to work in a sector that is now shut down as other employees. Those young people will live with this shock for the rest of their career. I say to the Minister: those young people in our country today will never, ever forget what this Government did. The Federation of Small Businesses has said that kickstart is disappointing and we need much better for young people.

Finally, on rebalancing, what should that really look like? Where I am from in Merseyside, devolution has been worth it for us and it is going well. Merseyside’s chief economist, Aileen Jones, has come up with a credible recovery plan that ought to be supported by the Government. Whether it is innovation or the new digital economy, we can do it. We just need the Tories to do what they said they would.

Stamp Duty Land Tax (Temporary Relief) Bill

Miriam Cates Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Will the hon. Lady give way?

[Siobhain McDonagh]

No.

The measure allows us to believe that we can change the housing market by tinkering at the edges, but we know that tax forgone is money that cannot be spent on something else.

Owner occupation has reduced since 2000 from a height of more than 70% to 62%, while private renting has gone up by 20%. People aged between 35 and 44 have seen a three times increase in their private rents. I say to hon. Members, from a south London perspective, that no good comes from that. The families I see in private rentals will never escape into owner occupation, as I and my parents had the opportunity to do.

The only way to solve the housing market is by building more homes of all tenures—renting and buying. It is not just me, a Labour MP, who believes that. Sir John Armitt, the chair of the National Infrastructure Commission said only last week that the planning system was not the main obstacle to affordable homes and that there was no point hoping

“somebody’s going to decide that they’re going to build lots of homes, even though there isn’t a market for the homes or they’re not going to make a profit…The last time we built 300,000 homes plus was in the 1960s and 1970s, 50 per cent of those were private sector homes, 50 per cent delivered by local authorities…To get to 300,000 personally, I don’t see how we get there in a meaningful way without some sort of government intervention with local authorities, or with the housing associations, to deliver more affordable homes on a large scale.”



When first-time buyers come to us as Members, they will talk to us not about the fact that stamp duty is going up, but about the fact that they cannot get a mortgage: that the banks and building societies are requiring deposits not of 5% or 10%, but of 15% — increasing deposits, and at increasingly high percentages to get those mortgages. Let us contrast that with the situation for private landlords: a bank is more happy to lend, as they have more equity and more money, so they are a safer bet.

With an employment market that is going to be so difficult in the autumn, and with young people being disproportionately impacted by losing their jobs, there is a real problem. I say this not to score political points, but because I am personally worried that the divisions in our society will undermine our society. If we make it harder for people to own, they will resent those who do so. If young people cannot get on to the property ladder because they cannot save or keep enough to pay their rent and also save for a deposit, they will resent their grandmother or grandfather for their ability to live in their house, and that does not help anybody.

I would like to end by talking about the people who cannot even be part of this debate, who come to my advice surgery, as they probably go to other Members’ advice surgeries: people who are living in one room in a shared house with their children. I do not know whether it is a London or south-east phenomenon, but I wish others could join me on a Friday to talk to people who work as carers, in shops and in the hospitality trade, and who are disproportionately from black and ethnic minority communities, who have their family in one room and share that house with perhaps four or five other families. Not for them the ability to protect themselves from coronavirus by using their own bathroom and having access to their own kitchen; they are never, ever going to have a bathroom and kitchen of their own, in the 21st century.

These are people who strive and work, who get up early in the morning, who come home late at night to earn what none of us would go out to work to earn, and who live in conditions that are truly appalling. These people will never get access to housing because their landlords are not going to evict them. Their landlords are making loads of money from them, so why would they evict them? Nevertheless, if we want these people to believe that there is hope—that there is a better future, that there is a reward for work—we must give them some opportunity to buy their home or rent a decent place at a price they can afford.

We talk about mortgages that are two and a half or three times people’s salaries. I see people who are paying 70% or 80% of their take-home pay to keep their accommodation. Their hopes for their kids and their hopes for their futures are dampened. We can all pretend that this does not matter, that we live in a stable society and that it will be okay, but it will not be okay, because coronavirus has shed so much light on how unfair and unequal our society is, and those of us who have are threatened as much by that as those who do not have, because we cannot sustain a democracy in that environment.

So this stamp duty measure is, in the overall picture, a small issue, but if it goes to those who already own their home or want to buy a bigger and better home at the expense of the young people trying to make out in life, we will all suffer. We need to look at this situation and be broad-minded and ask how we solve this problem forever.

I want to leave Members with a statistic. One in 10 adults in this country owns a second home while four in 10 adults own no home. That is not a sustainable future for our country, for our democracy or for the families in that position.

--- Later in debate ---

[Miriam Cates (Penistone and Stocksbridge) (Con)]

It is a pleasure to follow the hon. Member for Westmorland and Lonsdale (Tim Farron), who made a very passionate speech.

The health of our housing market is an indicator of the health of our whole economy. Buying a property or moving house does not just involve the exchange of money and the transfer of deeds; it supports other associated industries, as has been said widely already, and a large number of jobs in many trades such as plumbers, builders and electricians. During the acute phase of covid-19, many sectors of our economy were forced to grind to a halt, including the housing market, where in May 2020 property transactions were down by 50%. Other sectors have received welcome relief on a sectoral basis from the Government’s measures to boost our economy, such as grants for the retail, leisure and hospitality businesses, and the eat out to help out scheme, which was announced last week. The housing market also needs a stimulus to catalyse its restart, so I welcome the temporary relief to stamp duty land tax, which will do just that.

In normal times, when the market is in equilibrium, stamp duty should be paid just like any other tax. Right now, however, as we emerge from a period of sharp decline in housing sales, the market is far from equilibrium and it is right to take most property purchases out of stamp duty to encourage transactions to return to normal levels. A cut to stamp duty is, of course, a response to the covid-19 economic slowdown, but it is also the first of many measures that the Government will introduce to fix our housing crisis. Any action to reduce the cost of moving will be welcome to my constituents in Penistone and Stocksbridge where, as elsewhere in the country, many local people cannot afford to own their own home or to move up the property ladder as their family grows. Parents and grandparents are worried that the next generation will not be able to afford to stay local and will instead have to leave our towns and villages and our wonderful communities.

The measure we are debating today will provide a welcome short-term reduction to the cost of moving, but it will also encourage older people to downsize, releasing larger properties for growing families. The hon. Member for Mitcham and Morden (Siobhain McDonagh) rightly said earlier that there are many properties outside London and the south-east that may not necessarily benefit from the cut, but even though the average house prices are a lot less—in Penistone and Stocksbridge I think the average house sale last September was £172,000— there are always, at the top of the chain, properties that are subject to stamp duty land tax. They are often the properties that are the hardest to shift and take the longest to sell. Any reduction in the price of those properties to get them moving and get them shifted will affect the whole chain right down to the bottom to the first-time buyer.

As well as a short-term measure to restart the housing market, there is strong consensus across the House that to fix our housing market in the longer term we must build more homes. I am pleased, therefore, that the Government intend to bring in reforms of our planning system that will enable more houses to be built more quickly. That is particularly necessary in cities like Sheffield, where the local authority still has no local plan, or even a draft local plan, which means there is no evidence-based understanding of or consensus on where and what types of housing should be built. That puts greenfield sites in danger when brownfield sites are still available.

We need to increase the supply of housing and evidence suggests that we need to build over 300,000 new homes each year, both to keep up with demand and to address the backlog. We are all aware that there has been a sharp increase in the number of young people who are living with their parents—a rise of nearly 50% in 20 years. As has already been said, in many cases that is because not enough affordable homes are available. The Government’s housing reforms and the Prime Minister’s £12 billion affordable homes programme will rightly address that issue and give young people the opportunity to own their own homes, with all the benefits of security, pride and a feeling of rootedness that home ownership brings.

I take a moment to consider another less welcome reason for the increase in demand for housing. Over the past two decades, the number of people living alone in the UK has risen by 20%, and the number of 45 to 64-year-olds living alone has increased by 53% over the same period. One of the principal reasons for the increase is the number of middle-aged men who live on their own, largely as a result of relationship breakdown. When marriages and partnerships end, one household becomes two, property costs can double, children no longer have the benefit of both parents under one roof, and, for those adults left living alone—often fathers—loneliness and its associated effects on wellbeing can follow.

Inevitably, of course, not all marriages and cohabiting relationships will last. When there is irretrievable breakdown, new households must be formed, but if relationship breakdown is one of the key drivers for housing demand, we must address the causes of such breakdowns, not because of the impact on housing but because of the impact on people. Relationship breakdown is costly—emotionally, psychologically and financially—and it has a huge impact on children. As we look to address one of the UK’s greatest challenges—a lack of housing—let us also focus our efforts on addressing another one and consider how Government, local authorities, the voluntary and faith sectors, and local communities can better support couples and families to stay together.

Throughout the crisis, my right hon. Friend the Chancellor’s timely measures have acted as a shock absorber, lessening the impact of the most significant economic event of modern times. The temporary relief on stamp duty will give the housing market a much needed boost and pave the way to deeper, more long-term and more holistic reforms to end our housing crisis.

Finance Bill

Miriam Cates Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Dr Huq]

I think that is the point. The Minister should recognise that this has cross-party support. I started by praising the right hon. Member for Sutton Coldfield; I am ending with the Metro Mayor, the John Lewis man. These are all reasons why the Minister should adopt this measure forthwith. It is time to act. The time is now.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I just want to get that image of “The Simpsons” out of my head.

As a new MP, I was very grateful for the opportunity to sit on the Finance Public Bill Committee. It was a fascinating experience, during which I learned a great deal, including how the progress of a Public Bill Committee can be compared so poetically to the stages of “The Pilgrim’s Progress”.

I would like to speak briefly about the amendments tabled to part 2 of the Bill, namely new clauses 5 and 33, and amendments 18 and 19, all of which pertain to the new digital services tax. I very much welcome the introduction of the new tax on some of the world’s largest digital service companies. Economies evolve, and it is right that from time to time we act to address imbalances and unfairnesses that arise as a result of that evolution. Over the last few years, and particularly the last few months, we have become more and more reliant on social media companies and online marketplaces. Many of us now use these services every day of our lives, sometimes against our own better judgment. I have no interest in condemning the success of these companies. The reason why they have been so successful is that they have harnessed technology to provide something that consumers want. Surely that is the aim of every business in a free market economy where there is healthy competition.

However, multinational companies have grown rapidly in recent years and tax systems around the world have not caught up. As has been said, many digital service companies now enjoy unfair advantages when it comes to competing with traditional, offline businesses. They usually face lower property costs and business rates, and their multinational nature means that they can move profits around the world to reduce the burden of taxation. That is unjust. This new tax seeks to address this unfairness.

The introduction of the digital services tax is especially timely as we emerge from the coronavirus pandemic, during which offline businesses have been even more disadvantaged and many consumers have made the switch—perhaps permanently—to online shopping. I note that the digital services tax generally has cross-party support, as it did in Committee, with Members on both sides of the House welcoming this new measure to address unfairness in our tax system and generate revenues for the Exchequer, which will, of course, be used to strengthen our public services. The amendments therefore do not aim to alter the tax in itself and how it is applied or collected. Rather, they seek to force through a reporting regime that I believe could be counterproductive or futile.

New clause 5 would require the Government to make an assessment of tax revenues following the introduction of the DST and lay it before the House within six months of Royal Assent. Similarly, amendments 18 and 19 seek to press the Government to report on the DST within 12 months and annually thereafter. The amendments do not take into account the fact that there will be little data of any value to report within that short timeframe. Clause 51 states:

“Digital services tax in respect of an accounting period is due and payable on the day following the end of 9 months from the end of the accounting period.”

This means that many companies that become liable for DST following the passage of the Bill may have a significant proportion of their financial year remaining, and then another nine months following that, before DST contributions become payable.

[Chris Evans]

The hon. Lady is making a fantastic speech; she is a lot more confident than I was when I entered the House. I have a word of warning for her: she said that she enjoyed the Finance Bill Committee. I was like her once—I said that, and I ended up sitting on six in a row. Even the most enthusiastic Member can get weighed down after a while. The real concern for the digital high street is how we can ensure that the burden of the digital tax bill is not being rested on the shoulders of the millions upon millions of small digital traders. How does she think the Government can guard against that happening?

[Miriam Cates]

I did not enjoy the Committee that much; I want to put that on record. The hon. Gentleman makes a good point, but I will say two things. First, we are only talking about the very largest businesses here—those with £25 million of UK revenues, though I appreciate that for some companies that may be split. Secondly, we are one of the first countries in the world to introduce a tax such as this, and it will take time to record, report and analyse its exact effects. As a number of Members have said, we are hoping for international co-operation in the long term, and hopefully this is a short-term measure where the UK is acting alone. I think things will become clear over time.

For companies that do become liable for the tax following the passage of the Bill, it may be some time after the 12-month period following Royal Assent before they actually pay the levy, and some businesses will only be paying the amount due during the part of the year that the Bill was enacted. That means that there will be little, if any, meaningful data within six months or even 12 months of the Bill being enacted, so the amendments add little value to the Bill.

New clause 33 would require all groups subject to the DST to publish a group tax strategy with a country-by-country report, including information about the group’s global activities. While I have no doubt that this is a well-intentioned amendment, I fear that it may have some unintended negative consequences. We need to remember that the DST will affect only the very largest companies—those with over £500 million of international revenues and over £25 million of revenues from UK-based activities. Companies like this will think nothing of rearranging their activities to avoid this kind of enforcement, so UK mandation alone could push businesses offshore. We want to encourage voluntary compliance, and I know that my right hon. Friend the Financial Secretary to the Treasury and his colleagues have worked hard to ensure that this new tax will not deter UK trade. At this point, especially given that the UK is one of the first nations in the world to introduce such a tax, and given how mobile these companies are, it is prudent to ensure that the administrative burden is as light-touch as possible.

It has been a great opportunity to serve on the Finance Bill Committee. My hon. Friend the Member for Aberconwy (Robin Millar) said how much fun it was. I am not sure that I would go so far as to say that it was fun, but it has been a privilege, particularly given the opportunity to discuss a groundbreaking new measure that will level up our tax system and help to restore a level playing field in our UK economy.

[Kevin Hollinrake]

It is a pleasure to follow my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates), who made some very important points. She made the critical point that the digital services tax is a temporary, short-term measure, and we need something more encompassing to replace it. That is why I want to speak to new clause 33, which proposes a radical reshaping of how tax affairs would be disclosed. If we are going to tackle this fundamental problem, it is essential that we have country-by-country reporting. I therefore do not secretly support this new clause; I openly support it, even though it is not going to be pushed to a vote today. The principle behind the clause is absolutely right, and I pay tribute to my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and the right hon. Member for Barking (Dame Margaret Hodge) for their work on it and in many other areas to tackle tax avoidance and corruption.

The other key element of the digital services tax is that it tries to level the playing field in corporation tax, but it does not level the playing field for business rates. That is a completely different discussion and it is one that we definitely need to have.

When I first came to the House, I attended one of those breakfasts; I think it was run by the Industry and Parliament Trust, of which I am a trustee. The subject of that seminar was the values of business—I have been in business for 30 years, and in my view business is a force for good in the vast majority of cases—and it was addressed by a vice-president of Kellogg’s, who talked about the values of business to the economy and the inherent values of some businesses. As examples, he talked about the great values and corporate social responsibility of businesses such as Facebook, Google and Amazon.

While the speaker was addressing us I googled, “Do Kellogg’s pay corporation tax in the UK?” My search came up with a Daily Mail article saying that Kellogg’s turns over £650 million in the UK and does not pay any corporation tax. When he got to the end of his comments, I asked him, “How can you square the circle—saying that you have great corporate social responsibility policies and put money into good causes in the UK, which might cost you a few pence or percentage points in terms of cost and contribution, when you are not paying corporation tax? Your customers are taxpayers. You are trading and turning over a significant amount of money in the UK. And yet you are not contributing back to the bills and the vital public services that your customers rely on. I think it is a cynical approach.”

This Kellogg’s vice-president was clearly quite stunned by my question. I quoted to him that Kellogg’s is one of those companies that does not pay corporation tax. When pressed for an answer, the only one that he could come up with was, “Well, we’ve got a duty to shareholders to minimise our tax burden.” That is an old chestnut. I hear lots of big shareholders of big companies in the US—people such as Warren Buffett—absolutely reject that notion. In my mind it cannot be right that businesses seek to avoid fair taxation rates in this world and, as many hon. Members have said, we have a duty to stand up for small and medium-sized enterprises that cannot benefit from these kinds of devices. The vast majority of us pay tax through pay-as-you-earn anyway, so we pay our fair share of tax—and most people do so willingly.

Finance Bill (Ninth sitting)

Miriam Cates Excerpts

Committee stage & Committee Debate: 9th sitting: House of Commons
Thursday 18th June 2020 Public Bill Committees

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The issue of off-payroll working has attracted much attention in the House and beyond. Clearly, there are some problems to solve, but they are not easy problems to solve.

In some cases, the issue is straightforward. People work for one employer for prolonged periods up to several years and they really are employees, because they do similar jobs to colleagues and use company equipment, but they do so on different terms. It may be that they are better paid in terms of headline salary than their immediate work neighbours, but the situation is more complex, because they are not paid for holidays or potential pension contributions and so on.

Some workers may have been put under pressure to become self-employed by less scrupulous employers who have sought to save money on things such as NI payments. I have read of cases—I am sure we all have—where the imbalance of power that can exist between an employer and an employee has seen pressure on people to choose a particular route. That is not satisfactory for those employees or taxpayers generally as revenue for public services is missed.

While some may have been pressured into becoming self-employed, vast legions in our economy have chosen the self-employed route because they enjoy the challenge of that type of work or they want to be more in control of their own destiny, which being your own boss can achieve, or many other personal reasons.

That is to be really encouraged, because the flexibility that self-employed workers, often on contracts, provide has been a great boost to our economy. It is one of the ingredients that has contributed to the recent economic progress that we have enjoyed. Being swift of foot in response to commercial opportunities gives a competitive advantage. It has allowed companies to bring in extra resource where they need to boost operational capacity. It has allowed extra skills to be brought into a company when needed. Many people I have met or corresponded with in my Harrogate and Knaresborough constituency have highlighted to me that they have built careers adding real value to their clients.

There are some sectors where the use of contractors is more prevalent than others. We have just been hearing about the oil and gas sector, but that includes IT and technology more broadly, as well as marketing and the creative industries, sectors where the UK is strong, and where I worked before coming into this place. This is about bringing skills and capacity into a company when needed but when there is not enough work for long-term permanent employment. There is also the issue of the growing sector of interim managers.

I see a balance to be struck here in the way the issue is taken forward by Ministers between protecting some employees and recognising that the vast majority have chosen self-employment and are providing real value. We need to balance employment rights and protections between the employed and self-employed, while ensuring that the rules do not have a sclerotic effect on our economy. Flexible, nimble companies responding to customers, adding value, creating wealth and grabbing opportunities is how economies grow and jobs are created. Ensuring that is preserved is critical to the operation of these rules. That is something the Minister must consider as he takes this forward.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I refer hon. Members to my entry in the register of Members’ interests. This is clearly a contentious issue, but the majority of employers and contractors I have spoken to agree that some kind of reform is necessary.

Our tax system must be fair, but it should also support those who take risks to grow businesses and innovate in a way that benefits our whole economy. It should not offer advantages to those who are using PSCs to create wealth only for themselves. I am certainly not saying that it is wrong to create personal wealth, just that our tax system should not offer particular advantages in doing so and tax should not be avoided as a result. We must balance flexibility with fairness and it is not fair that two people doing the same job in broadly the same conditions pay different rates of tax. We must recognise that those who are genuine contractors do not have the same benefits as employees—they do not have the same job security—but where someone is to all intents and purposes an employee, they and their employer should pay their fair share of tax and national insurance.

I have personal experience of running a small business in the tech sector and I believe that current practices discourage people from becoming employees in some sectors. For example, in the tech industry, people with certain programming skills can command such high day rates as contractors that there is very little incentive to become an employee in a small company. That is a particular issue in a sector where there is a shortage of talent and a great demand for skills.

While there is and always will be a role for contractors, contracting costs can be prohibitively high for start-ups and scale-ups, and those businesses find it difficult to recruit employees with the right skills. Start-ups and scale-ups need employees—people who are committed to the company, who can help shape its culture and, importantly, who can pass on their knowledge and skills to new employees as the company grows. Labour market flexibility has to work for employers and employees. At the moment, the very businesses that we most need to grow and innovate are struggling to recruit skilled employees, especially in areas outside London and the south-east, such as Sheffield and Barnsley, which I represent.

I believe that the reforms will make employment and the benefit that it brings more attractive. As I said, we should be using the tax system to support those who create wealth not only for themselves, but for our whole economy. In that way, any tax saving to an individual or company is an investment for the taxpayer, not just lost revenue. A great example of that is the research and development tax reliefs, which I am delighted have been increased in the Bill and will encourage the kind of innovation that the UK really needs to boost growth and productivity. They are incentives that help to create wealth for us all.

In contrast, using a personal service company to reduce an individual’s tax burden does not benefit the taxpayer. The individual’s income tax and national insurance savings are not used to create other jobs or to invest in technology or create products, and so the taxpayer does not receive any return on the lost revenue. Where a worker is genuinely self-employed, facing additional risks, with none of the benefits of employment, there should be no change, but where someone is to all intents and purposes an employee, improving compliance should make sure the taxpayer does not lose out.

I understand that any changes bring risks and uncertainty and I am pleased that the changes to IR35 have been delayed for a year to give our economy some chance to stabilise after covid-19, but fairness should be the foundation of our tax system and properly applied, the regulations will help to achieve that aim.

[Jesse Norman]

I will respond to the many important points raised by hon. Members, who I thank for raising them.

My hon. Friend the Member for Penistone and Stocksbridge is absolutely right to highlight the importance of making employment attractive. It is vital that best practice be spread throughout the economy as rapidly as possible and if the effect of that is to create a more level playing field between two sides of a particular divide, that would be a very valuable thing. The Government’s concern is that there is an unfairness in that someone can be, as it were, latently employed, although working for a personal service company, and that is the concern that the Government seek to address.

My hon. Friend the Member for Harrogate and Knaresborough is absolutely right to emphasise the importance of having a flexible and nimble economy. He is right, and the hon. Member for Ilford North is right, to focus on the effect of the self-employment and self-employed contractors in making this happen. For reasons I will come on to, this reform does not tax the self-employed. It does not tax anyone. What it does is to change the determination for people who are not self-employed but who are in fact employed, and to determine whether they are or not.

The hon. Member for Aberdeen South made a series of comments that I am afraid are simply not true. He was very rude about the Government’s decision to introduce this via a separate resolution, but the details of the change were announced as part of the Budget resolutions. They were not moved. They could and may well have been discussed—I do not recall the details—during the Budget debates. Therefore, it was perfectly open to the House to scrutinise those details, although the resolution was not itself moved. If the resolution had been moved, it would not have been possible for us to legislate with anything like the same straightforwardness for the move to an April 2021 deadline. That was the purpose of delaying moving the resolution. The effect was that the resolution was debated on the Floor of the House of Commons in and of itself—given a separate debate to that resolution in order to discuss that. Therefore, the idea that there has been any short-circuiting of due process is entirely wrong.

Of course amendments can still be tabled on Report, and the hon. Gentleman may seek to do that. He was very rude about the reform, saying it would lead to zero-hours contractors, and calling it shocking, but is he planning to support it? Will he vote in favour of it or against it? That will be the true measure of his and the SNP’s position on this important reform.

Finally, the hon. Gentleman talks about the Lords Economic Affairs Committee, but of course he is entirely wrong about that. We have yet to respond to the Lords Committee—we will do so in due course—but we have engaged very closely with it on a whole variety of different areas. If he speaks to Lord Forsyth, he will know that I approached Lord Forsyth personally, having just become Financial Secretary, to reopen the relationship and make it flourish. Indeed, I volunteered to appear in front of the Lords Economic Affairs Committee last year precisely to hold myself and the Treasury accountable in this area.

Finance Bill (Seventh sitting)

Miriam Cates Excerpts

Committee stage & Committee Debate: 7th sitting: House of Commons
Tuesday 16th June 2020 Public Bill Committees

[Wes Streeting]

This debate is particularly timely, given last night’s Adjournment debate, which was led by my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who told the House that Hull is the capital of caravan manufacturing. Along with my hon. Friends the Members for Kingston upon Hull North (Dame Diana Johnson) and for Kingston upon Hull East (Karl Turner), she has been a doughty champion of the industry. That industry has been particularly hard hit by covid-19 because it relies so much on the leisure and tourism industry, which is still effectively shut down. Industry bodies and users were looking for this change, so I am happy to indicate that we support the clause.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I welcome the measure. The Moto-Trek manufacturer in my constituency makes exclusive hand-built motorhomes, so I know that the clause is very much welcomed by the industry. It certainly makes sense to tax motorhomes as vans, since they are mostly built on van chassis and do not do many miles, although they do, of course, emit carbon dioxide. It is right that we incentivise the manufacture of low emission vehicles, but motorhome users are very much committed to UK holidays and do not fly as a result, which is very positive for the environment. As we come out of covid, it is really important that we do everything that we can for UK manufacturers, for UK motorhome vehicle sales and, of course, for tourism. I therefore very much welcome the clause.

Question put and agreed to.

Clause 84 accordingly ordered to stand part of the Bill.

Clause 85

Exemption in respect of medical courier vehicles

[Alison Thewliss]

I beg to move amendment 12, in clause 85, page 72, line 33, after “supplies” insert “, including human breastmilk”.

This amendment would ensure that vehicles carrying human breastmilk would benefit from the exemption from Vehicle Excise Duty.

I am delighted to continue my personal journey to ensure that breastfeeding is mentioned in every possible place in this House. I am chair of the all-party group on infant feeding and inequalities, so I declare that interest up front.

The measure I seek to add to the Bill would cost the Government very little, if anything at all, but would send a very strong signal that the Government support and recognise breast milk banks across the UK. Sub-paragraph 2(b) of proposed new paragraph 6A to schedule 2 to the Vehicle Excise and Registration Act 1994 refers to

“medicines and other medical supplies”.

I am not quite sure whether that would capture breast milk. I seek clarification from the Minister on that, because I do not think it is clear enough, which was why I tabled the amendment.

Human breast milk banks exist across the UK. Some do not exist quite to the size and scale that we would like, so the amendment would help to encourage them that there is Government support for what they are doing. I mention the Human Milk Foundation, the Northwest Human Milk Bank, Hearts Milk Bank and Milk Bank Scotland, which is based in Glasgow and the one that I know best. Having spoken to Debbie Barnett, its donor milk bank co-ordinator, I know that Milk Bank Scotland does not have its own vehicles at the moment, but relies on the Glasgow Children’s Hospital Charity volunteers, who transport the milk, after picking it up from donors, and take it out to those who need it. Having its own vehicles would be something for a future point, but the amendment would certainly support the milk bank, and others across the UK, in doing that.

Like blood, breast milk has to be properly processed, and there are procedures in place for doing so. Like blood, it needs special carriage to take it from donors to the milk banks for processing, and back out again. The National Institute for Health and Care Excellence guideline 93 on donor breast milk banks says that, when transporting milk to the milk bank, critical conditions for transport include

“temperature and time limit, to ensure that donor milk remains frozen during transport.”

The guideline also states that donor milk should be transported

“in secure, tamper-evident containers and packaging”

and that a range of procedures are in place for achieving that.

In chapter 33 of its guide to the quality and safety of tissues and cells for human application, on the distribution of and transport conditions for human milk, the European directorate for the quality of medicines states:

“During transport, milk should remain frozen and dry ice may be used for this purpose.

The use of validated, easily cleaned, insulated transport containers is recommended.

The transport procedure should be validated, and the temperature of the transport container monitored during transportation.”

All those measures are relatively similar to how blood and other blood products are transported around the UK, and would fit quite well with the medical courier vehicles exemption set out in the Bill. Many of these organisations are charities, and they would very much appreciate support in moving milk around the country.

I appeal to the Government to accept the amendment, which is uncontentious—and indisputable, really. Doing so would send a good signal that the UK Government support milk banks, the people across the UK who wish to use them, and the science behind them. They are particularly important in supporting premature babies in their earliest days. The World Health Organisation recently indicated the significance of breast milk during coronavirus, and that women should be supported whenever possible to feed their babies with human breast milk. Covid-19 is not present in breast milk, and the milk is therefore of huge benefit in supporting babies in their earliest days. I encourage Ministers to take on the amendment, if they can take on anything at all, and to show support for milk banks across the UK.

Finance Bill

Miriam Cates Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con) [V]]

May I refer the House to my entry in the Register of Members’ Financial Interests?

The context of this debate is substantially different from that surrounding the Budget statement on 11 March. We are now facing significant economic challenges and we do not yet know the full financial impact of covid-19, but the reasons for introducing the measures in the Bill have not changed. We must make Britain the best place in the world to set up and run a business and we must level up our economy with more innovation outside London and the south-east to grow high-skilled, well-paid jobs in areas that have been left behind.

It has been wonderful to see the outpouring of gratitude across the nation to our NHS and care workers, who are on the frontline of the battle against covid-19. It is absolutely right that we recognise their bravery and dedication and the key part that they are playing in keeping us safe. But I also want to pay tribute to the millions of businesses in this country whose hard work and innovation have generated the tax revenue that funds the NHS as well as our schools, our roads and our railways.

The risks of setting up and running a business are considerable. Indeed, many fail. Many small business owners are now facing the toughest financial challenge of their lives. The coronavirus small business grant scheme, business rate holidays and loans, including the bounce-back loans announced today, have been a lifeline to these companies, but some still will not make it through this crisis and many lifetimes of hard work and investment, and jobs, will be lost.

When we emerge from this pandemic, we need our businesses to recover, to grow and to be profitable. That is the only way in which we will be able to continue to afford to invest in our NHS and public services, but we also need our businesses to innovate, to increase our productivity and to build on the UK’s reputation as a leader in science and technology, so I welcome the plans to increase spending on research and development to £22 million a year and the £200 million boost to our life sciences industry. Right now, we are seeing the immediate importance of research and development with the ongoing search for an effective coronavirus vaccine. The UK’s scientific community has already made important breakthroughs, including introducing a new swab test to overcome global reagent shortages, but it is important to remember that research and development does not only take place in our universities. Businesses up and down the UK are creating new technologies and making scientific advances that benefit all of us. The nature of R&D, as we can see from the vaccine trials, is that we cannot tell when a breakthrough will come. This presents a significant risk to businesses, which continue to pay their staff and fixed costs, whether or not the breakthrough has been made.

The increase in R&D tax credits in the Bill is an enormous boost to businesses in this position and will give them the confidence to continue to innovate and invest in new technologies. I know at first hand how vital this is from the small software company that I own with my husband. As we have worked to deliver technical advances, we have had some years when R&D credits have made the difference between staying in business and not.

Since 2010, British businesses have created over 3 million jobs, although, undoubtedly, employment levels have been negatively affected by coronavirus. But as we emerge from covid-19, we must make sure that we are creating productive jobs—skilled jobs—by capitalising on the knowledge and talent of our scientific and technical communities. Support for R&D will help our growing tech sector to continue to lead the world and to create the kind of well-paid jobs that present real opportunity to our young people.

We must also make sure that growth and innovation are spread equally across the country. As my right hon. Friend the Prime Minister has said, talent is spread evenly across this country, but opportunity is not. In my constituency of Penistone and Stocksbridge, there is a lack of skilled, well-paid jobs and too many young people are forced to leave the area to seek opportunities. This Government’s plan for infrastructure investment, a towns fund and investment in further education will help to rebalance our economy and make sure that skilled jobs can be created across the UK. In the past, manufacturing in the north of England was the powerhouse of the UK economy. Every manufacturing process, cottage industry and new factory was born of innovation and risk. In the north, we need a revival of this drive to start new, innovative businesses, and the measures in the Bill—particularly the support for research and development—will be crucial to our economic recovery.