Finance (No. 2) Bill

Abena Oppong-Asare Excerpts

2nd reading
Tuesday 16th November 2021 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to respond to this debate for the official Opposition. It is noticeable that the Government could convince only one of their Back Benchers to turn up to defend their Finance Bill. This has been a short but good debate, with many thoughtful speeches, and I thank all the hon. Members who have taken part—in particular, my hon. Friends the Members for Bethnal Green and Bow (Rushanara Ali) and for Brentford and Isleworth (Ruth Cadbury), and my right hon. Friend the Member for Hayes and Harlington (John McDonnell), as well as the hon. Members for Glenrothes (Peter Grant), for Gordon (Richard Thomson), for Edinburgh West (Christine Jardine) and for Broadland (Jerome Mayhew).

The hon. Member for Broadland highlighted the importance of local communities. I look forward to scrutinising the details of the alcohol duty changes in due course.

My hon. Friend the Member for Bethnal Green and Bow spoke powerfully about the Bill’s failure to boost growth, increase living standards and tackle the climate crisis. I will return to those points shortly. She also made a very important point about wasteful Government spending and the dodgy contracts that have been given out during the pandemic.

My right hon. Friend the Member for Hayes and Harlington made a number of important points, including about fairness in the tax base, the Government’s reforms to the tonnage tax and local authority finances. I hope that the Minister can answer the specific questions that he asked about reforms to local government funding.

My hon. Friend the Member for Brentford and Isleworth spoke passionately about the cost-of-living crisis and how she has spoken to many constituents about the hardship that they face. She talked about the reality of what the Government are doing on universal credit and the shameful food and poverty crisis in this country. She also made important points about the loan charge, and I hope that the Minister will respond properly to the points that several Members made on that issue.

This Finance Bill is a product of the Government’s economic failings over the past 11 years. At the Budget, the OBR forecast growth averaging just 1.3% in the final years of the forecast period, which follows a measly 1.8% in the decade leading up to the pandemic. As my hon. Friend the Member for Ealing North (James Murray) said, we can compare that with Labour’s record of growth of 2.3% a year when we were in power. The Conservatives are a party of low growth and the Government have no plan for growth. Working people are paying the price for that failure. They are paying the price in increased national insurance contributions and the freeze in income tax personal allowances. They are paying the price through the cut to universal credit. They are paying the price through lower wages, with real wages on course to be more than £10 an hour lower in 2026 than if the pre-2008 trend had continued. And they are paying the price through inflation that is hurting family finances, with food, heating and petrol all more expensive.

Yesterday, a member of the Bank of England’s Monetary Policy Committee told the Treasury Committee that consumers are spending an increasing proportion of their incomes on food and energy. They made the point that businesses may struggle with the rising cost of materials and labour because consumers will not have additional disposable income to spend. Does the Finance Bill include measures to help people with the cost-of-living crisis? Does it reduce the burden of taxes on those who can least afford to pay? Does it encourage investment and boost growth? The answer is no. Like the Budget that it stems from, the Bill has no plans to tackle the cost-of-living crisis, no plan to grow our economy and no plan to help businesses to succeed.

Instead, the Government’s priorities in the Budget and the Bill are to cut taxes on the banks and make domestic flights cheaper. It is beyond belief that in a Budget just days before COP26 began in Glasgow, the Chancellor chose to cut domestic air passenger duty. I am afraid that that is yet further evidence that the Treasury is not serious about our net zero commitment. Clause 6 will slash the corporation tax surcharge for banking companies from up to 8% to 3% and will raise the surcharge allowance from £25 million to £100 million. Those are the wrong priorities for an increasingly out-of-touch Government.

Labour’s priorities are different. We would use the Finance Bill to bring down energy bills with a cut in VAT on domestic energy; to tackle the climate crisis, rather than making it worse; and to fundamentally reform business rates to help businesses in every part of the country.

With the transition to net zero, the Government seem intent on leaving individuals and businesses to meet the costs on their own, without recognising the opportunity for growth and jobs. Labour knows that investment can unlock good jobs across the country, while helping households to cut bills and keep their homes warm. On business rates, Labour has put forward proposals for fundamental reform, while the Government have broken their promise to do so.

This week, research by the Resolution Foundation found that business investment in the UK lags behind that in countries with higher productivity. Business capital investment in Britain was 10% of gross domestic product in 2019, compared with 13% on average in the United States, Germany and France. There are many reasons for that, including the Government’s patchwork Brexit deal, but the Bill does nothing to help to boost investment.

Labour’s plan for replacing business rates will introduce a system that will incentivise investment, reward businesses moving into empty premises and encourage environmental improvements. Our climate investment pledge will encourage billions in private finance, and unlike Government Ministers, we have a real plan for growth.

No doubt at further stages there will be considerably more to say about other clauses, but I would like to make a few points now. On the residential property developer tax in part 2, we support the principle of taxing the largest developers to pay for the cost of removing unsafe cladding, but we are concerned that the levy alone will not be enough. The Select Committee on Housing, Communities and Local Government estimates that there is a gap of £13 billion between the £2 billion that the levy is expected to raise and the £15 billion cost of works—and it has been reported that the rising cost of works as a result of the Tory supply chain crisis will wipe out much of the £2 billion.

Can the Exchequer Secretary confirm who will meet the gap? Labour is clear that it should not be the leaseholders. The Government must ensure that those who are responsible for putting dangerous material on buildings pay their fair share. Time and again, the Government’s handling of the cladding crisis has left leaseholders on the hook. The Government must finally get a grip on the problem and help the thousands of people who, shamefully, are still living in unsafe accommodation.

My right hon. Friend the Member for Hayes and Harlington raised the measures on tax avoidance. We support the principle behind the new economic crime levy, which will raise funds to pay for measures to tackle money laundering. Can the Exchequer Secretary tell us more about how the levy will be spent? Does she think that it will be enough to implement the measures in the economic crime plan?

My hon. Friend the Member for Ealing North made several critical points about other measures to fight economic crime. Will the Exchequer Secretary confirm exactly when the Government will introduce the vital legislation on the register of overseas entities? “When parliamentary time allows” is simply not good enough, when the Government first announced the policy in 2016. As my hon. Friend for Ealing North said earlier, it is notable that the momentum to implement the measure seems to have disappeared since the current Prime Minister took office. We know that this Prime Minister is no fan of transparency or of playing by the rules, but we are facing a crisis of dirty money and corruption—and not all of it is in relation to the Cabinet. The Pandora Papers show how many shell companies are laundering money in this country and buying up luxury properties. We will use the further stages of the Bill to push the Government to do more about economic crime and tax avoidance.

This is a Finance Bill that fails to rise to the challenges we face. It contains nothing to make up for the years of low growth over which this Government have presided, nothing to tackle the climate crisis or to unlock opportunities that the transition to net zero brings, and nothing to ease the growing tax burden on working people. Indeed, the Government have used this Finance Bill to cut taxes on banks rather than cutting them for working people.

The truth is that the Government’s failure on growth means less money for public services while the Government increasingly take more from people’s pay packets. In contrast, Labour has a plan to grow the economy, to invest sustainably in the jobs of the future, and to make our tax system fair. It is for this reason that we will not support the Bill tonight, and I urge all hon. Members to vote against it.