Finance (No. 2) Bill

Alan Reid Excerpts

Tuesday 1st April 2014 Commons Chamber

[Danny Alexander]

I am told from a sedentary position that the Opposition voted against that measure. They voted against the whole Finance Bill, of course.

The Bill also introduces three new tax reliefs to support employee ownership. The Deputy Prime Minister has rightly given a high priority to employee ownership, and the measures in clause 238 will introduce a capital gains tax relief, an inheritance tax relief and an income tax exemption for employee-owned companies. This will make the sale of a business into an employee ownership structure much more attractive. It will give employees of indirectly employee-owned companies an income tax relief of £3,600 a year on their bonuses. That will help to encourage more firms to become employee-owned in the years to come and, therefore, to improve the structure of our economy.

It is also worth reminding hon. Members of some of the other measures this Bill introduces that will support specific UK industries: it legislates to reform the banding of air passenger duty; and it includes a measure that will help make the Glasgow athletics grand prix a success this summer, putting in place a tax relief for athletes competing in that competition, which is an immediate predecessor to the Commonwealth games. Having tax reliefs for both the Glasgow grand prix and the Commonwealth games will help to ensure, as the UK Government rightly should be ensuring, that the world’s best athletes are encouraged to come to compete in the Glasgow 2014 Commonwealth games. Everyone, in all parts of this House, hopes they will be an enormous success for Scotland and for the whole UK.

The Bill also includes a package of measures to support oil and gas exploration in the UK continental shelf; it introduces a new allowance to support early-stage investment in shale gas; and it reduces the tax on beer by a penny a pint and freezes the duty on spirits, rightly offering particular support to the Scotch whisky industry, as Scotch is one of this country’s most successful exports. Those measures will support not only our pubs, but brewers and so on. All those measures, taken together, cut the costs for business, support innovation, boost exports and show that this Bill will help British businesses to help the British economy grow.

[Mr Alan Reid (Argyll and Bute) (LD)]

I wish to congratulate my right hon. Friend on including in the Budget a measure that will help voluntary groups that support the rescue boats on Loch Lomond and Loch Awe. Removing the VAT that such groups have to pay on fuel is a big help to them.

[Danny Alexander]

I am grateful to my hon. Friend for his comments. The House should note that he drew these matters to my attention in the preparation of the Budget, and he has campaigned assiduously to ensure that those important bodies are treated similarly to other emergency services in that respect.

Having set such competitive tax rates—rates designed specifically to support businesses—everyone in this House rightly expects those taxes to be paid, and this Bill continues the Government’s firm action against the persistent minority who continue to seek out unacceptable ways to reduce or delay paying the taxes they owe. We are tackling avoidance by large businesses by taking action in this Bill to close down avoidance schemes involving the transfer of profits among group companies and closing a number of other loopholes.

--- Later in debate ---

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move,

That this House declines to give the Finance (No. 2) Bill a Second Reading because it fails to address the cost-of-living crisis which will see working people worse off at the end of this Parliament than at the beginning; because while working people are £1,600 a year worse off it prioritises a tax cut for millionaires of on average £100,000; because it offers a marriage tax allowance which will help only a third of married couples, rather than a 10 pence starting rate of tax which would help millions more families; and because it fails to set out measures to tackle rising energy bills, get young people into work, boost housing supply and help families with childcare costs within this Parliament.

You would not know it from hearing the Chief Secretary, Madam Deputy Speaker, but this Finance Bill is a massive missed opportunity when much more is needed. It has so many pages—the document I have in my hands is only half of it—yet it is a minor Bill when we need major reforms to address public concerns. The annuities changes diverted attention from the shortcomings of the rest of the Budget, and that short-term approach reflects the short-term ambitions of the Chancellor and the Government at large.

We will seek to improve the Bill in Committee, but it is important that we reflect on its contents and on those things that ought to have been in it but were not. That is why we propose that the House declines to give the Finance Bill a Second Reading this evening: it fails to address the cost of living crisis that, as my hon. Friends recognise, will leave working people worse off at the end of this Parliament than they were at the beginning, as the Office for Budget Responsibility has predicted. While working people are £1,600 a year worse off, it prioritises a tax cut for millionaires of typically about £100,000 and offers a marriage tax allowance that helps only a third of married couples rather than, for example, a 10p starting rate of income tax that would genuinely help millions more families. It also fails to set out measures to tackle rising energy bills, get young people into work, boost housing supply and help families with child care costs. Those are the priorities that we believe ought to be in the Bill but are not.

[Mr Reid]

The hon. Gentleman refers to the cost of living. Does he not understand that by next year, under his party’s policy, my constituents would have been paying 20p a litre more and those on the islands would have been paying 25p a litre more for their fuel than they are under this Government? That would have been a disaster for the cost of living of my constituents. Will he apologise to them for wanting to make the cost of fuel 25p a litre higher in their area?

[Chris Leslie]

We are not opposed to the measure that the hon. Gentleman mentions, but he ought to be straight with his constituents. That is only one aspect of the tax burden that they face. Of course, his constituents have suffered many other tax rises and cuts in benefits since the general election, and as we start to walk ourselves through the Bill we can explore some of his priorities. We just need to consider the first set of clauses, under which he will be voting to give millionaires—the richest in society—and those who are fortunate enough to earn £150,000 and above, which can of course involve significant amounts of money, a tax cut to 45p from the 50p rate that his Government abolished. He willingly went along with that.

As well as the personal allowance change that Government Members often trumpet, we should have a 10p starting rate of tax. Government Members have supported at least 24 tax rises and principally the change to VAT, which has taken hundreds of pounds from the constituents of the hon. Member for Argyll and Bute (Mr Reid), perhaps by stealth. Perhaps they have not petitioned his constituency office and perhaps, with that little wry smile on his face, he has been counting the coins that he has been taking by stealth from the wallets and purses of his constituents, but that is a significant amount of money and he should be honest with his constituents about the VAT increase, the so-called granny tax, the child benefit reductions, the tax credit cuts and all the other changes.

[Mr Reid]

rose—

[Chris Leslie]

Perhaps the hon. Gentleman would like to take the opportunity to tell the full story.

[Mr Reid]

I am grateful to the hon. Gentleman for giving way again. What is Labour’s policy on VAT? If Labour is elected, is the plan to keep it at 20p or will his party promise to reduce it?

[Chris Leslie]

I love it when Liberal Democrats start talking about VAT. Of course, the hon. Gentleman promised to oppose the VAT bombshell, and my hon. Friends will remember the picture. I do not know whether he was driving the van that went round Parliament square at the time; perhaps the Chief Secretary was in the driving seat. Yet the hon. Gentleman has the temerity to ask what our position is on VAT. I cannot promise to get rid of the VAT increase that they have put in place, contrary to the manifesto on which he stood—yet another Liberal Democrat broken promise. When Labour makes promises in our manifesto at the next general election, we will make sure that they are fully funded and that the sums add up. If we do make promises, everybody will be clear where the money will come from—[Laughter.] Government Members do not like that idea, because it is so foreign to them. They are so used to making promises that they do not recognise the concept of trying to be honest and straight with the electorate.