Spring Statement

Alex Chalk Excerpts

Wednesday 13th March 2019 Commons Chamber

[Mr Hammond]

I have never been afraid to acknowledge that, as far as the economy is concerned, Brexit uncertainty is a distraction, and it is something we need to get lifted as soon as possible. I think I said that at the beginning of my statement. The sooner we can do that, the better. It will help us to grow faster, and it will help us to raise productivity more quickly, and that means higher wages across the economy.

On the issues that the hon. Lady mentions, we are putting £1.2 billion into addressing homelessness and rough sleeping. We are consulting on an additional 1% stamp duty levy on properties bought by non-UK resident owners, with the whole of that money ring-fenced to address the rough-sleeping challenge in our cities. In relation to poverty, she knows the figures. We have over 3.5 million more people in work, with 665,000 fewer children living in workless households. However much Opposition Members may not like it, it remains the case that work is the best sustainable route out of poverty.

[Alex Chalk (Cheltenham) (Con)]

I congratulate the Chancellor on his statement. If we do get the orderly Brexit that I know he and I want, may I urge him to consider schools funding in the spending review? Schools in my constituency are doing enormously important work, but they are facing increased challenges, particularly with pupil volatility, pupil complexity and rising demands. They are having to do more, and I invite him to ensure that they have the resources to match.

[Mr Hammond]

As my hon. Friend knows, we put £1.3 billion into the schools budget in 2017, and we have protected per pupil real funding since then. He will also know that there is a significant variation in the level of funding between schools and authorities across the country, which is now being addressed through the fair funding formula. I understand that there are pressures in the system until we have that rolled out and operational, having delivered the result throughout the system. However, I can confirm to him that schools funding will be considered in the spending review, along with all other areas of departmental spending in the round.

Sport in the UK

Alex Chalk Excerpts

Monday 4th February 2019 Commons Chamber

[Mims Davies]

I hear the hon. Gentleman. Indeed, my officials and I have had conversations about making sure that we do not forget our links to Northern Ireland. In the sports cabinet, it was said very clearly that we cannot forget to focus on areas where there may not be that push right now. I will take that away as an action, and I am very happy to continue to look at that area.

[Alex Chalk (Cheltenham) (Con)]

Will the Minister join me in paying tribute to the army of volunteers who support mass participation in sport? In Cheltenham, we have a parkrun every Saturday in Pittville park—it is a 5k run—but it simply would not be possible without the volunteers who make it happen. Will she join me in paying tribute to their valuable contribution?

[Mims Davies]

I am being given a workout with the interventions this evening and I have absolutely no problem with that. I thank my hon. Friend for raising Parkrun. I will come on to that later in my speech. There are junior parkruns and local parkruns. Frankly, by half past 9, people can get their weekend exercise done because of volunteers, rain or shine—or snow, as we have seen recently. It is absolutely right that we thank our local volunteers for that.

Equitable Life

Alex Chalk Excerpts

Thursday 31st January 2019 Commons Chamber

[Bob Blackman]

It is clearly a view that people are not saving in the way in which they used to. Young people are being discouraged from saving as a result of what they see as the scandals that took place.

[Alex Chalk (Cheltenham) (Con)]

I join others in commending my hon. Friend on the extraordinary campaign that he has led. Does he agree that not only is this a debt of honour, but that the Treasury can take comfort from the unique circumstances of the case in terms of the fault that was found with the Government and other regulators to know that this would not open the floodgates? The matter stands on its own terms, and the Government can do the proper thing of compensating people without fearing that that will have some enormous knock-on effect.

[Bob Blackman]

Not only that, but if the compensation was paid out, because the people involved are vulnerable and retired or likely to retire soon, the Treasury would see the money repaid and put into the economy straightaway, not put away for a rainy day.

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[Fabian Hamilton]

I thank the hon. and learned Lady for that intervention. The story of her constituents is reflected up and down the country, in every constituency represented in this House, and I hope that we will get some answers from the Minister at the end of this debate.

[Alex Chalk]

Does the hon. Gentleman agree that the approach being taken seems inconsistent with the approaches taken in different contexts? For example, if someone is the victim of a crime, they can be compensated by the state for something that is not the state’s fault at all, and yet the state is more reluctant in circumstances where there was complicity, or certainly fault, from the state. Does he agree that is a troubling inconsistency?

[Fabian Hamilton]

Indeed, and if I am able to complete my contribution this afternoon, I will add to the hon. Gentleman’s point.

At the core of the problem is the fact that Equitable Life simply could not meet the obligations that it had made for itself, because it had made no provision for guarantees against low interest rates on policies issued before 1988. It declared bonuses out of all proportion to its profits and, indeed, its assets. Following the House of Lords ruling in July 2000, the society stopped taking new business in December that year, which effectively spelled the end for Equitable Life. More than 1 million policyholders then found that they faced cuts to their bonuses and annuities, which caused a huge loss of income on which many small investors had depended. After all, the average investment for the 500,000 individual policyholders was just £45,000 which, according to EMAG, even at its height would have yielded no more than £300 a month.

The then Labour Government unfortunately failed to introduce any ex gratia compensation scheme and refused to follow the recommendations of the parliamentary ombudsman. Reacting to the Government’s lack of response to the ombudsman’s report, the then Conservative Opposition stated their determination to introduce an Equitable Life (Payments) Bill early in the next Parliament should they form a Government after the forthcoming general election of 2010.

One of the coalition agreement’s plans for legislation did indeed include such a Bill, which became the Equitable Life (Payments) Act 2010. It was introduced early on in June 2010, shortly after the new Government took office. On 10 November, I tabled an amendment to the Bill in Committee that would have included the pre-1992 trapped with-profits annuitants—WPAs—who had been specifically excluded, as the hon. Member for Harrow East said earlier, from the proposed compensation scheme. The Bill offered 100% compensation to all with-profits annuitants who took out their annuities after 1 September 1992, and 22.4% to every other policyholder. Many right hon. and hon. Members on both sides of the House felt that that was inherently unfair, because the 1 September 1992 date was somewhat arbitrary. Many of the policyholders would unfortunately not even live to enjoy the compensation were it to be paid.

I tabled another amendment to that Bill, which read:

“Payments authorised by the Treasury under this section to with-profits annuitants shall be made without regard to the date on which such policies were taken out”.

The amendment took just over two hours to debate and the vote was lost by 76 to 301, but it strongly set out the case for including the pre-1992 with-profits annuitants. Although that amendment failed in 2010, I still believe that it is vital to give equality of treatment to those who took out with-profits annuitant contracts before 1992 and who are still alive. As we have heard, those people are the oldest and the most vulnerable victims, and the cost could be met from the £140 million underspent from the £1.5 billion originally allocated by Parliament.

Rectifying the injustice would cost in the region of around £100 million. The lifetime payments to the post-1992 WPAs are 11% less than forecast, and there is no reason to expect that the total amount of £620 million allocated for those payments will ever be needed, let alone exceeded. That means that the separate contingency fund should now be released and distributed to victims, rather than remain in Her Majesty’s Treasury’s back pocket. Will the Minister confirm this afternoon that every last penny of the £1.5 billion already allocated by Parliament will reach victims as intended?

The Bill received Royal Assent in 2010, and the compensation scheme was set in motion. It was slow at first, but it began to pick up over subsequent years. By 31 August 2016, when the scheme’s final figures were published, over £1.2 billion had been paid out to 932,805 policyholders, although more than 107,647 have still to be paid but cannot be traced. Tragically, 15,516 policyholders have died, and their estates did not claim the payments despite attempts by the scheme to contact them. In addition, 894,507 non-with-profits annuity investors have been issued with lump sum payments totalling £751 million.

To conclude, when we examine the compensation paid to investors following the collapse of the Icelandic banks in 2008, for which every investor received up to £50,000 of their losses in full and quickly, the Equitable Life scheme looks rather less generous. Given that the average policy involved a total sum invested of £45,000, it seems rather unfair to me and to Equitable Life policyholders that they did not receive more, which is why EMAG continues to campaign for full compensation for all policyholders and why so many Members on both sides of this House support that view. I urge all Members—this is the last bit, Mr Deputy Speaker—current and future to take up the cause of Equitable Life policyholders to try to restore their faith in the ability of this House, as the elected representatives of the people, properly to secure compensation for the victims of one of the greatest financial scandals of our age. We have a moral duty and should not be afraid to carry it out.

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 29th January 2019 Commons Chamber

[Elizabeth Truss]

We do fund the core courses that are going to help people get work and get on in life, but we also provide adult learner loans so that people can help shape their own future. In 2017-18, we spent £220 million on those loans.

[Alex Chalk (Cheltenham) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

My principal responsibility is to ensure economic stability and the continued prosperity of the British people. At this juncture, the best way to achieve that objective is to support a negotiated Brexit, ensuring a smooth and orderly departure from the EU.

[Alex Chalk]

Cheltenham’s Government-backed future cyber-park will deliver jobs and opportunities for local people. What role will the Government’s university enterprise zones play in ensuring that this project is backed to its full potential?

[Mr Hammond]

I welcome the work that is going on in Cheltenham to build on the magnetic effect of GCHQ and to attract innovative cyber-based firms to the area. In autumn Budget 2018, I announced £5 million to support proposals for university enterprise zones, which will encourage collaboration between universities and businesses, promote knowledge and skills exchange, and deliver a boost to local productivity. The funding will allow excellent institutions such as the University of Gloucestershire to develop locally led proposals to build on strengths like cyber-security, technology and engineering.

Balanced Budget Rule

Alex Chalk Excerpts

Wednesday 23rd January 2019 Westminster Hall

[Lee Rowley]

Before we went to vote I was talking about the moral case for low debt and ensuring that the servicing of that debt was as minimal as possible, to retain and support our ability to ensure economic activity in the future. It was not for nothing that Herbert Hoover intoned sarcastically:

“Blessed are the young, for they shall inherit the national debt.”

In this context, perhaps we can bestow a few less blessings on them in the future.

Putting aside the morality of debt, the key issue, which should drive all politicians regarding the accretion of Government debt, is the year-on-year cost of servicing and holding it, as mentioned earlier. The proponents of unfunded spending may highlight how the markets are not that concerned with relatively high borrowing so long as it can be funded. That may be the case. Let us hope, for all of our sakes, that we do not enter a period of high interest rates in the coming decades when national debt is to be rolled over.

The opportunity cost of that funding, on an ongoing basis, is much less understood in this place than in public discourse. It comprises a tax, year on year, on today’s generation for yesterday’s spending. Unlike the total debt to GDP ratio, which has oscillated wildly in the last century due to wartime spending, the cost of servicing the UK’s debt has been on an upward trajectory for the last century. Adjusted for inflation, the cost of servicing that debt has risen from an average of £12 billion per annum between 1900 and 1960 to nearly £30 billion at the turn of the 21st century. Since 2009, that average has hit £43 billion every year. In total, since 1900 the UK has spent something like £2.5 trillion just on servicing its debt. About half of that has been spent since I was born—I still like to think of myself as being relatively young.

The bad news is not likely to stop there. With the continuing running of deficits until well into the 2020s, the annual cost of servicing that debt is projected by the Office for Budget Responsibility to hit more than £50 billion by the start of the next decade. In this Parliament alone, debt servicing costs are projected to be about a quarter of a trillion pounds over the five years. The sums are huge and growing. They represent a significant opportunity cost to the UK as a whole.

[Alex Chalk (Cheltenham) (Con)]

My hon. Friend is making a powerful point. To put it into sharp focus, does he share my concern that the annual cost of servicing the United Kingdom’s national debt is more than we spend on schools? As a matter of morality, we need to keep debt under control so that we can truly allocate resources where they are most valued.

[Lee Rowley]

I could not concur more with my hon. Friend, as I will address in my next paragraph. Putting this into context, about 8% of all current Government spending is diverted towards debt servicing. In 2015, that made interest payments the joint fourth largest proportion of spending by the UK after health and welfare, and on a par with defence. Spending on education, the police and transport pales in comparison with the budget allocated to debt interest. That budget could be used, as my hon. Friend has just outlined, for myriad other more socially useful activities, such as paying for a hospital to be built every four days, or for approximately 2,500 nurses, police or teachers to be hired every day throughout the year. For those of us with a more centre-right political outlook, the £45 billion spent on interest costs in 2015 could even have been used to reduce the size of the state through tax cuts, perhaps as large as 8% or 9% in the standard rate of income tax. If the populace actually knew that such a significant chunk of the taxes they paid every year was being used to pay for spending chalked up 20, 30 or 50 years ago, would they be content doing the same or worse for their children, given the sacrifices and opportunity costs involved?

We know what the problem is, so why do we not just do something about it? Why do we need a legislative solution for this issue? The problem is that we as a country are not that good at stopping adding to our debt. Our Labour friends—who have temporarily deserted the Chamber—have a tendency to spend money without a huge amount of regard for the implications. My party usually ends up having to clean up the mess. Even on my side, there are not insignificant number of people who cannot resist the temptation to spend when it comes down to it.

Our parliamentary system and representative democracy are excellent at pushing the cause of individual spending requirements, many of which, I do not contest, are no doubt noble. Yet there are few people who will exercise proper restraint or promote proper fiscal responsibility to ensure that all of these myriad pots of money are truly paid for. It is always tomorrow’s problem. Mañana, mañana, as they say. The numbers show just that: over the last century, the United Kingdom has consistently increased its national debt and its deficit spending. Both in absolute terms and as a proportion of GDP, the UK’s debt burden has grown significantly since the turn of the 20th century. The recent political consensus in the UK demonstrated a clear disregard—if we are honest—for the consequences of deficit spending.

Prior to the second world war, deficit spending tended to be closely correlated with war and national defence. In more than half the years between 1900 and 1939, the UK ran an absolute surplus, including during much of the late 1920s, during economic crisis. Since 1945, however, the achievement of a surplus in the UK’s national spending has been relatively rare. Only 13 out of 71 years saw the deficit being reduced, and on only two separate occasions—the late 1980s and the late 1990s—has the UK run surpluses for more than a couple of years at a time.

If all that sounds like one long criticism, it is not intended that way. It is just a statement of fact. Whether poverty or plenty, feast or famine, there is one almost universal constant: the Government spend more than they take in. That is not unique to the United Kingdom, but a feature of western democracy: red ink reigns supreme. The main variable in western liberal democracies is whether they overspend by a little or a lot. France has never run a Government surplus as a proportion of GDP since the 1970s, nor has Italy. The United States has managed to do so only once since 1960. Even Canada, one of the more enlightened in tackling public debt, has only managed to run surpluses in less than one third of financial years since the 1970s. The Maastricht protocol on excessive debt procedure says that countries should not exceed a 3% borrowing ceiling. Just think on that for a moment: there is a protocol that automatically sets an expectation of overspending—just that it is not excessive. And we wonder why debt has significantly increased in most western democracies over the past 30 years. There is an urgent requirement, over the long term, to address this inherent deficit bias in democracies.

The idea that we need to take more drastic legislative solutions is not that new; it is just that we have never properly applied it to national spending before. Sure, the Government have their charter of budget responsibility and an equivalent office creating the data and watching what is happening. Yet the charter requires people only to identify that they are changing policy. It does not really hold people to account or limit them.

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[Alex Chalk (Cheltenham) (Con)]

It is a pleasure to say a few words in this debate, Mr Stringer, and I begin by congratulating my hon. Friend the Member for North East Derbyshire (Lee Rowley) on securing it.

This is such an important issue, yet looking around this Chamber—in which there are only a few people—we could be forgiven for thinking that it is somehow a dry, bookish or niche issue. However, the reality is that what Governments of all stripes do in respect of the public finances resonates in people’s lives, including the lives of people who might be some of the most vulnerable in our community. If we lose control of the public finances, it is not the rich and the powerful who suffer, but the poor, the sick and the vulnerable. That is why it is so important that we engage with this issue, and I congratulate my hon. Friend on doing so.

However, part of the problem with discussing this issue is that we as a political generation fail to communicate about it properly. That is because if people are anything like me, once a figure gets above, say, £50 million or so, it just sounds like a very big number, and what we sometimes fail to do is to put these figures in context. How many Members of Parliament would be able to tell people the total budget that we spend every year as a nation? I suspect fewer than half. As a matter of fact, it is something in the region of £840 billion. That is an important figure to keep in mind, because it puts in context what has happened to our national debt over the last 10 years. Back in 2007, our total national debt—the total pile that we had to service as a nation—was about £500 billion or so. Now it is £1.8 trillion, and as my hon. Friend indicated that debt burden has to be serviced in some way.

Again, it is all very well to say, “Oh well, it costs roughly £50 billion a year to service that debt pile”, but that is a meaningless figure unless we place it in some sort of context. As has already been said, that sum is higher than the total schools budget. People like me, who represent places like Cheltenham, go and speak to headteachers about the pressures they face in their schools, where they might be looking to increase the high needs budget, which is about £6 billion. However, the reality is that we spend about eight times more on debt interest than we do on high needs funding, which supports special schools in our country, and more indeed than we spend on defence.

To put things further into context, the mighty United States is currently in shutdown because of the inability to agree on how to pay for the US President’s border wall. The sum required is about $6 billion. To put things another way, every year we spend, on debt interest alone, a sum equivalent to about 10 of Trump’s border walls. It is a huge sum of money.

The reason this issue is important is because it has an impact on people’s lives. Here are two things that I think are axiomatic. First, there is no national security without economic security. In other words, unless we live within our means, we cannot be sure that our military and indeed our intelligence agencies, such as GCHQ, which is in my constituency, can rely on the knowledge that they will have the resources they need to keep our country safe into the future. Secondly, we cannot have economic security without fiscal security. In other words, unless we keep control of our finances, when economic shocks come, which they will, the nation will be ill-prepared to deal with them. Put bluntly, the cupboard will be bare.

That is precisely what happened in Greece. That nation had a debt to GDP ratio of about 90% to 100%, and when the storm came it was unable to deal with it. As a result, as I indicated before, it was the poor, the sick and the vulnerable who suffered, with Greece’s equivalent of NHS funding being slashed by half. The reason why that is so sobering is that the UK’s debt to GDP ratio is in the high 80s; it is not a million miles away from where Greece was 10 years or so ago. That is an important point to raise, and as a political group we need to do better in explaining its impact, but I say respectfully to the hon. Member for Bootle (Peter Dowd) that the Opposition need to be straight with people as well. It is easy enough to say, “We are going to spend £1 trillion”, but in the same sentence, Labour ought to explain the costs that will entail each and every year so that people can understand what that offer means.

The reality is that if Labour wants to spend another £1 trillion, that is absolutely fine for my generation—no doubt there will be more money for the NHS, and so on and so forth—but the next generation will suffer, because before they can pay for a single soldier, nurse, doctor or teacher, they will have to pay vastly more in debt interest. If that argument is made, people can make their choices, but everyone who does so has to be straight with the British people. I regret to say that that has not always been quite as transparent as it might be. There is a moral case for living within our means, and my hon. Friend the Member for North East Derbyshire has done an important service by making that case today. I am grateful to have had the opportunity to say these few words.

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[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr McCabe. I thank the hon. Member for North East Derbyshire (Lee Rowley) for securing this debate, which gives us an opportunity to brush aside some of the myths that he referred to. I also thank the hon. Member for Southport (Damien Moore), the hon. Member for Dundee East (Stewart Hosie), who spoke eloquently and sensibly, and the hon. Member for Cheltenham (Alex Chalk), who referred to the Greeks. I remind him that Thucydides said that

“while the strong do what they will, the weak suffer what they must.”

That is precisely what the Tories have done. They talk about the poor all the time, but it is the strong that they stick up for, and they do it time after time.

The hon. Member for North East Derbyshire forgot to mention that the global financial crisis that the Tories use time and again started in the United States. [Interruption.] The hon. Member for Cheltenham can sit there and pretend to snore, but that is the reality: until the Tories accept that fact, we will not be able to move on. There is a danger that there could be accusations of dishonesty and disingenuousness—I am not making those accusations, Mr McCabe—until those on the Government Benches begin to acknowledge that.

The issue is not just about fixing the roof before the rain comes through; we were all in it together at the time, and we all know that we have not been in it together under Tory policies. The poor have been getting a stuffing year in, year out. The Tories have also missed every target they have set. Talk about a moving target! The situation was supposed to be sorted out years ago. The hon. Member for Cheltenham said there was a debt of £800 billion, but the Tories have doubled the debt since they came into power. They have borrowed more money than Labour ever has.

[Alex Chalk]

We have this extraordinary situation where on the one hand Labour complains that the national debt has gone up too much, and on the other it complains that the Conservatives are not spending enough. That kind of illogicality would embarrass a 10-year-old. Surely the hon. Gentleman can do better.

[Peter Dowd]

Of course I will do better. At the end of the day, it is about priorities. As the hon. Member for Motherwell and Wishaw (Marion Fellows) said, the Tories have spent the money in the wrong way. The hon. Member for Southport effectively accepts that. We have had £15 billion wasted on the introduction of universal credit by the Tory party, so let us get a little bit real.

I am sick to death of talking about how useless the Tory party is, so I will speak about Labour’s fiscal credibility, which I am sure will get a certain amount of unanimity in the Chamber, and the issue of balancing. [Interruption.] I am happy to deal with it. We could have discussed the issue in a mature and grown-up way with adults in the room. Yanis Varoufakis wrote a book called “Adults in the Room”, but there are not many in the Chamber today. I suggest Members have a read of that book; it will show them what happened to Greece.

Following discussions with our advisers, including Professor Joseph Stiglitz, on 11 March 2016, the shadow Chancellor announced a fiscal credibility rule, which has five key elements. I am happy to set that out in the symposium that hon. Members are here to attend. First, Labour committed to closing the deficit on day-to-day spending within five years. Secondly, we committed to excluding investment from that commitment so that we can borrow to invest, which is important. Thirdly, we undertook that Government debt as a proportion of trend GDP would be lower at the end of a five-year parliamentary term than at the start.

Fourthly, we committed to giving the Monetary Policy Committee of the Bank of England the power to suspend the rule if it determines that interest rates are not having their usual effect due to the lower bound. That would allow stimulus action to step in when monetary policy is ineffective. Fifthly, we would shift the reporting requirements of the Office for Budget Responsibility so that it reports to Parliament, rather than the Treasury, and ensures ongoing Government compliance, to which the hon. Member for Dundee East referred. All the facts are there, so let Parliament have them. The elements of the rule mean that a Labour Government would not need to borrow to fund our day-to-day expenditure.

[Alex Chalk]

The United Kingdom last lived within its means in 2001. Under a Labour Government, when would it next do so?

[Peter Dowd]

If the hon. Gentleman listens to what I have to say, he will find out in due course. [Laughter.] The hon. Gentlemen laugh and snigger. Meanwhile, millions of people suffer under their policies. They should stop their sniggering and listen. I know that the Tories think they have some divine right to rule and some divine economic ability, but they have not. They need to show a little humility occasionally and listen to other people.

Unlike the Conservatives’ different, haphazard and unsuccessful attempts to achieve fiscal credibility, our fiscal credibility rule has three criteria for good economic policy. I know that economic good in economic policy is an alien concept to the Tories, but they might learn one or two things if they listen to what I have to say. The three criteria are: responsibility in economic management; recognition of the value of long-term public investment; and flexibility for changing economic circumstances. A Government trying to bind themselves into a model that has palpably failed all over the world are not particularly helpful. There has to be some flexibility.

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[Alex Chalk]

Will the hon. Gentleman give way before he sits down?

[Peter Dowd]

I have finished—I am sorry.

[Alex Chalk]

He did not answer my question.

[Steve McCabe (in the Chair)]

Order. Have you finished, Mr Dowd?

Oral Answers to Questions

Alex Chalk Excerpts

Tuesday 11th December 2018 Commons Chamber

[The Chief Secretary to the Treasury (Elizabeth Truss)]

The changes to public sector pensions have resulted from increases in contributions that will ultimately benefit lecturers retiring from university and retiring teachers. We are looking, through the Augar review, at the question of higher education funding overall, but ultimately it is for universities to find that extra money.

[Alex Chalk (Cheltenham) (Con)]

T4. On Saturday in my constituency I met Tom, a student at the University of Gloucestershire, who shares my concerns that online digital marketplaces, social media companies and search engines should pay their fair share of tax. What steps are being taken to ensure that they do precisely that?

[The Financial Secretary to the Treasury (Mel Stride)]

I thank my hon. Friend for that very important question. The Government recognise that the current international tax regime is not fit for purpose when it comes to taxing certain types of digital platform-based businesses—the types to which my hon. Friend has referred—and we are therefore working with the OECD and the European Union to arrive at a multilateral solution to ensure that the right tax is paid. However, we have made it clear, and the Chancellor made it clear in the Budget, that in the event that we do not secure a multilateral agreement, we will move ahead unilaterally by 2020 to ensure that those businesses pay a fair share of tax.

European Union (Withdrawal) Act

Alex Chalk Excerpts

Thursday 6th December 2018 Commons Chamber

[John McDonnell]

The backstop could remain permanent. We have had confusion this morning on the advice from the House of Commons Library and the Chancellor about how it could be ended or a transition deal extended in some form. There is absolute confusion at the moment, and we are now undermining the relationship with one of our biggest trading partners as a result.

One organisation, the National Institute of Economic and Social Research, has estimated that by 2030 we could see a £70 billion reduction in national GDP, in 2016 prices, as a result. Once the Prime Minister accepted our argument for a transition period, she argued that it was right because it would mean only one change for British businesses. Now we face shifting from a transition period to a backstop arrangement, and then to a free trade deal. This is not what was promised. We do know, however, what the Chancellor thinks of the backstop arrangement because he has said so:

“I’ve been clear from the outset that I do not like the backstop. I don’t think the backstop is a good arrangement for our economy, I don’t think it’s a good arrangement for our union.”

I fully agree.

[Alex Chalk (Cheltenham) (Con)]

In fairness, the right hon. Gentleman is absolutely right, and it is perfectly legitimate to shine a light on the issue of the backstop, which causes a lot of us concern, but can he help me to understand something? Under his proposal, if the United Kingdom were to remain in a customs union, would there not still need to be a backstop in any event, because we would be outside the single market? Is there not a concern that it does not really solve the issue? I ask that respectfully and in a spirit of inquiry.

[John McDonnell]

I believe that under a comprehensive customs union agreement, it is so much more unlikely that there would be any need for that fall-back position, and we would be able to offer permanency in an agreement rather than something that is a defective insurance policy.

Others may agree with the Chancellor on his initial assessment, and, in that case, I cannot see why this arrangement—

Finance (No. 3) Bill

Alex Chalk Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 20th November 2018 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

Not just companies but entire sectors and industries might be attracted to come here. The UK film industry is so buoyant and world-leading in very large part because of the benign tax environment that it can enjoy.

[Chris Philp]

My hon. Friend is right to draw attention to the way in which very favourable tax systems can indeed attract companies to this country. We should be proud of the fact that we are attracting the world’s leading companies to the United Kingdom.

I am sorry to refer to the speech by the hon. Member for Oxford East so often, but it was a very full speech and there was a great deal to reply to. She suggested that the Chancellor of the Exchequer said that our plan was to become a tax haven. He never used the words “tax haven”, but he did say that we could be a tax competitive economy. There is nothing to apologise for in saying that we will be a tax competitive economy and attract companies to locate here. If there is a tax haven in Europe, it is Luxembourg, so the hon. Lady should reserve her ire for that jurisdiction.

2019 Loan Charge

Alex Chalk Excerpts

Tuesday 20th November 2018 Westminster Hall

[Mr Baker]

My hon. Friend makes a very good point. I hesitate to trespass far beyond my expertise, but I make the point that it is often thought that the opinion of a QC determines the truth. That is not the case. QCs and barristers argue among themselves in court, and the court determines the facts. I am often struck by people relying on the opinions of lawyers when what they actually need is the judgment of a court.

[Alex Chalk (Cheltenham) (Con)]

On the judgment of courts, does my hon. Friend share my concern that individuals are sometimes effectively left without a remedy, because the person who gave them that advice so many years ago no longer continues to trade? There is then effectively no remedy for the individual and no ability for them to claw back their significant losses.

[Mr Baker]

My hon. Friend raises an important point. In concluding my remarks, I shall allow what he says to stand.

I really think that it is perfectly natural for people to want to pay less tax, but I would be failing in my duty if I did not say to all those paying attention to the debate that, when something seems too good to be true, it probably is. We ought not ever to allow ourselves to be lured into schemes that offer absurdly low rates of tax. However, I save my strident condemnation for the promoters of these schemes, who, in their advertisements, seek to persuade people that this is legitimate activity and to create the impression that DOTAS registration conveys some kind of legitimacy or endorsement by the state. That is an outrage, because of course it encourages people to participate. These promoters are, frankly, wicked. It is a great evil to encourage people into these schemes and to leave them in misery afterwards.

Finally, we must insist on the rule of law. Notwithstanding the wicked conduct of promoters, the greater wickedness in the end is to undermine the rule of law—the certainty that comes from someone knowing that if their actions were lawful at the time they were carried out, they will not subsequently be challenged through retrospective legislation. I feel most strongly about that, as I have throughout my time in Parliament. I urge the Government, whatever evils have been done by the promoters of these schemes, to abandon the practice of retrospective legislation.

--- Later in debate ---

[Ross Thomson]

My hon. Friend is absolutely right and I could not agree with him more. For many, this option seemed to be the obvious choice. The retrospective nature of this decision is causing great distress. As has been said, there is a huge human cost. I want to take this opportunity to share with the Minister and hon. Members the stories of my constituents.

One constituent wrote to me and said:

“It’s been going on for a few years now and taking its toll on my family. As we are unsure where we’ll get the money to pay any outstanding tax, their bullying tactics in getting you to sign up to pay and the fact they demand you to reach a settlement with them, even though when we have done everything they ask, they have still not come back with any settlement figures.

Not only that, they are saying even if you settle or pay back the loans, there’s a strong possibility it won’t end there, so we go back to their scaremongering tactics they’ve deployed for you to pay up front and ask questions later, it’s totally unjust for our future as being a democratic society”.

Another constituent said:

“I like to think I understood the risk I was taking and had every confidence in the scheme I was using, I did not entertain the prospect that the Government would be prepared to violate the core principle of the rule of ‘legal certainty’ by introducing retrospective legislation going back 20 years…This weekend I have received my settlement ‘offer’ under HMRC’s settlement offer and am currently in the process of deciding whether or not to accept their terms. Whilst I sincerely would like to settle and move on, I am deeply concerned that their CLSO2 is extremely unfair and punitive.”

[Alex Chalk]

My hon. Friend is making a powerful point. Does he agree that the fundamental unfairness is that HMRC is going after the easiest of targets, namely the individuals, rather than those who may be the most culpable?

[Ross Thomson]

I could not agree more. It seems to be easy pickings for HMRC. It is not going after those who are truly culpable. That is why such great distress is being expressed in our surgeries.

My constituent continued:

“This whole sorry affair has imposed life changing levels of stress on both me and my family, especially with the backdrop of the recent downturn in the oil and gas industry where I have been out of work for about 50% of the past two years.”

Another constituent wrote:

“This is a complicated situation, however fundamentally, HMRC have closed down the opportunity to use these ‘loan’ schemes.”

My constituent accepts that it is a positive move to end ambiguity.

“The retrospective nature of this legislation is going to place a large number of contractors under extreme financial duress. Bearing in mind HMRC’s failure to sort this situation out sooner”.

Another constituent—this is the last example I will give—emailed me to say that he was emailed by a company stating that he could retain 78% to 80% of his salary legally. He wrote:

“The scheme was QC approved and top tax counsel advised it was sound… I learnt during the latter part of last week that my retrospective tax charge is very likely to exceed £230,000. As for HMRC’s so-called ‘Impact Assessment’ apparently finding that such sums would lead to few, if any issues for those being expected to pay such, I can only comment that they must assume that we are all multi-millionaires. Of course, they know full well that we aren’t.

It’s very daunting when the full weight of government makes demands with threats of the law being brought to bear when, according to the law, no law has been broken. I doubt very much that I can simply ignore threats, be taken to court and stand there and say such. Thus individuals are placed in the position of hiring lawyers with costs running into six-figures and this will be beyond the means of most, if not all of us.”

This particular constituent says that he is single and has

“never had a second income from a partner to assist with cost of living”.

He is facing serious financial distress.

It is right that we condemn those who sold on and encouraged such schemes. It is deeply unfair that we seek to do this retrospectively. It absolutely violates the core principles of the rule of law. I could not agree more with colleagues who have already expressed that frustration. I think that this particular measure is disgraceful. I will go further-I think it is dishonourable and should be stopped.

Finance (No. 3) Bill

Alex Chalk Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

I should make another point about reducing the advanced rate to £80,000. The amount of money that that would raise would be negligible, if not actually negative, and the number of spending commitments tied to that proposal are disproportionate to any sort of potential income that could be raised, even in the best-case scenario. So the tax allowances as they stand in respect of the basic rate and the advanced rate strike the right balance for our economy in the future.

[Alex Chalk (Cheltenham) (Con)]

My hon. Friend talks about the incentives created by reducing the tax on individuals, but does he agree that this has an impact on businesses, too? Where high street businesses such as my local ones in Cheltenham now have a lower tax burden, with one third coming off their business rates, that provides an incentive for them to take on new employees, grow their business and deliver a more prosperous high street?

--- Later in debate ---

[Peter Dowd]

Quite simply, it is shameful—it is as simple as that.

New clause 2 would require the Treasury to undertake an equalities impact assessment of the changes to the personal allowance and its impact particularly on child poverty. This assessment will include households at different income levels, groups protected by the public sector equality duty and the regions and nations—this is the Labour party speaking for the whole of the United Kingdom.

Such an assessment is needed now more than ever. The Social Metrics Commission recently found, as I indicated before, that 4.5 million children are living in poverty in the United Kingdom. That is shameful. The Government claim that none of this matters as long as parents are finding work, which ignores the fact that work is no longer a sustainable route out of poverty. Indeed, the Joseph Rowntree Foundation found that more than two thirds of children in poverty live in a working family.

We know that the assessment set out in new clause 2 will further justify the United Nations special rapporteur’s investigation into this Government’s policy of austerity last week. The poverty envoy found that the policies of austerity had inflicted “great misery” on our citizens, and he went as far as to say that the “fabric of British society” is falling apart as a result. That is absolutely damning.

[Alex Chalk]

The hon. Gentleman is talking a lot about the politics of austerity. The United Kingdom last lived within its means in 2001. Under a Labour Government, when would the United Kingdom next live within its means?

[Peter Dowd]

I do not accept the premise of these trumped-up ideas from voodoo economics presented by the Tory party. The reality is that the report was absolutely damning. It was absolutely devastating, and Government Members should be ashamed that somebody from the United Nations should come to this country and objectively lay out the facts as they are.

Sadly, in true Trumpian style, the Government chose to ignore the UN special rapporteur. Live on “Channel 4 News”, the Financial Secretary to the Treasury buried his head in the sand, saying

“there is a…strong push to reduce poverty”.

Well, it is not getting pushed hard enough. The Financial Secretary refused to acknowledge that there are 1.5 million people living in destitution, despite repeated questioning. A cursory look at this Government’s policies demonstrates that, for eight years, they have felt it was reasonable to punish the poorest to let the bankers off the hook. How can this Government be so out of touch?

I now turn to new clause 3. According to HMRC’s own statistics, over £400 billion a year is spent in tax reliefs. Entrepreneurs’ relief costs £2.7 billion a year alone, and benefits only 52,000 people.

[Alex Chalk]

The hon. Gentleman is very generous in giving way a second time. If Labour Members were to get back into power, would they change the tax system so that people had to pay tax from £6,750, as in 2010? Does he agree that that would cost working people an additional £1,000-plus a year?

[Peter Dowd]

I suggest that the hon. Gentleman reads the shadow City Minister’s article on LabourList, which sets that out very clearly.