Alison Seabeck
Main Page: Alison Seabeck (Labour - Plymouth, Moor View)Department Debates - View all Alison Seabeck's debates with the HM Treasury
(11 years, 7 months ago)
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Chris Leslie
It is absolutely incumbent on Ministers, but this is a Government who just cannot think things through properly. They have set off down the road with a particular design. We have been asking questions for weeks and weeks. My hon. Friends will remember that the Chief Secretary to the Treasury astonished the House when he still could not rule out that the scheme would be used for supporting second home purchase, and there might be a number of reasons for that. For example, if the scheme is supporting remortgages, and a household decides to remortgage, how can the Government have a covenant on how any equity withdrawn from that remortgage process will be used by that home purchaser? That is presumably the obstacle that Ministers are banging their heads against now, and they probably have to look at various covenants and all sorts of legal arrangements for those participating in the schemes.
There are other anomalies in the process. Perhaps the Minister would elaborate on this point: can foreign buyers be subsidised by the UK taxpayer for the purchase of second homes—not just other EU residents, but non-EU residents as well? What is the exclusion in the scheme? Will he clarify that?
Alison Seabeck (Plymouth, Moor View) (Lab)
I declare an interest in the interests of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), as usual. Does my hon. Friend have concerns that although ostensibly the scheme may say that there can be no foreign investment, there will be means and mechanisms for foreign investors to set up companies in the UK in order to cover their tracks? Does he have any confidence that the Government are looking at whether there are potential loopholes?
Chris Leslie
We hoped that the Liberal Democrats’ plan relating to property values of £2 million was a well-worked-through basis on which we could build and develop a policy. We even tabled a suggestion that the OBR should have some options for how this mansion tax would work in detail. There are bound to be issues on the margins that need to be resolved, and I accept we should definitely be talking about those, but the principle could be established. The Bill has 50 or 60 clauses relating to what are known as enveloped dwellings. The Government do not dare call it a mansion tax because Conservatives do not like it, but they have introduced a scheme to enforce a certain number of stamp duty requirements where an annual charge can be placed on properties worth more than £2 million, but only if they are owned by a company in a corporate tax wrapper. It is therefore entirely feasible and plausible to consider whether that scheme could be extended into a mansion tax proper, and the Government have well-worked-through plans on the books, on which they have been consulting, which could be the basis for a mansion tax. This is not something that has not been thought through by the Government.
The Opposition believe that any revenues from this need to be given back to lower and middle-income households through a 10p starting rate of tax. When the economy is flatlining and tax rates are rising in so many other ways, particularly VAT, we must do more to help those 25 million basic rate taxpayers. It is incredibly important that we do that, and we will be giving this Liberal Democrat, and any others who happen to be in the building, the opportunity to express their views on it when we finish this debate. I commend new clauses 1 and 5 to the Committee.
Alison Seabeck
In speaking to new clause 1, I wish to pursue issues that have been touched on by my hon. Friend the Member for Nottingham East (Chris Leslie) and other Opposition Members and to highlight my concern that the Help to Buy scheme might well become a second home subsidy, rather than a scheme, as was intended, to help many first and second-time buyers on to the housing ladder.
In housing, as in so many other areas of policy, the Government have been found badly wanting. I remember the chutzpah the right hon. Member for Welwyn Hatfield (Grant Shapps) displayed on entering government, saying repeatedly that he would outperform the previous Labour Government when it came to house building and getting first-time buyers into the market. As Housing Minister, he failed rather magnificently. He seemed to ignore the fact that Labour built 210,000 new homes before the market crashed. We started to see an increase in the number of homes being built in the run-up to the 2010 general election as a direct result of measures taken by the Labour Government. Indeed, some of the homes that this Government have taken credit for building in 2011 are in fact the hangover from Labour’s new-build programme. We are now seeing a slump in house building.
Jack Dromey
The former Housing Minister claimed that the Government would build 170,000 affordable homes. The National Audit Office then produced a report stating that 70,000 of those homes had been commissioned and paid for by the previous Labour Government.
Alison Seabeck
My hon. Friend is right. I think we have to take the figures offered by the Government with a huge pinch of salt. Although I support any measure, as I am sure he would, to kick-start the housing market and enable young people, such as my daughter, to get on the housing ladder, I, like my Front-Bench colleagues, have serious concerns about the scheme.
Andy Sawford
My hon. Friend makes the point that we need to kick-start the housing market, and I think that all Labour Members agree. She talked about the chutzpah of the Government’s first Housing Minister, whom she challenged at the time, when she led for the Opposition. Is there not a contrast between the urgency of the measures that were rushed through Parliament when the coalition Government took office and the delay in the measures that they now say will make some kind of difference, which will take us through to January?
Alison Seabeck
My hon. Friend is right. There is a significant gap that will lead to a further trough in house building. It will certainly not lead to the boost that the Government expect as a result of introducing the scheme. Frankly, the scheme looks like another idea drawn up on the back of a cigarette packet, and we have seen too many of those. I think that this one, like others, whether in welfare, education or health, will have a number of unforeseen consequences.
Following the Budget, we now know that the Government’s mortgage scheme will not exclude people buying second homes. Although it might get some movement into the market, it will not solve the underlying problem and could well be abused. In areas such as the south-west, where we have a glut of second homes and where affordable homes are a rarity in some areas, introducing measures that could increase the opportunity for people to purchase second homes, as well as risking pushing up prices, is extremely dangerous. That could create severe price volatility in those areas and lead to the exact opposite of the intended outcome.
In Plymouth and the South Hams, we have the prospect of around 5,000 new homes in Sherford, all close to some of the most beautiful countryside and coast in the country. Many people will want to buy those homes, which opens the door to second home ownership. How many of those purchasers will want to buy to let? The Government say that they do not plan on the scheme being used by people who want to buy to let, but by using subterfuge it will be entirely possible for them to do exactly that. Will the Minister explain exactly what type of bureaucracy will need to be set up fully to ensure that the scheme is not abused by people who want to buy to let?
Jack Dromey
Is my hon. Friend aware of anything in the Bill that would prevent Russian billionaires, Greek tax exiles or dubious Australian spin doctors from buying homes on the back of the scheme?
Alison Seabeck
That was wonderfully well put, as usual. No, I am aware of no such thing, and that bothers me hugely. It ought to worry Ministers; it will be interesting to hear what they have to say on the matter.
My constituents are struggling under the pressure of the spare room subsidy. They rightly want to know why it is fair for the Government potentially to offer a spare house subsidy of up to £600,000 to people who already have a home. That sum would buy a mansion in Plymouth.
Graham Jones (Hyndburn) (Lab)
Startlingly, the previous scheme had a limit of £280,000. Why have the Government increased the ceiling to £600,000? Surely homes of £600,000 are not affordable.
Alison Seabeck
No, indeed. Someone looking at the issue from the outside, rather than from the Government Benches, could cynically suggest that the Government are seeking to build houses and support house building in the south-east rather than in the rest of the country. The figure has far more resonance in terms of trying to get people into the market in the south-east. The issue is not clear.
Sheila Gilmore
The figure might be more consistent with house prices in the south-east, but even there someone still has to have a very substantial income to afford a mortgage, even if it is discounted by a shared equity or mortgage guarantee scheme.
Alison Seabeck
My hon. Friend is right and has flagged up yet another unfairness about what is proposed.
We have an example of the Government bearing down on the less well-off—those who are suffering because of the bedroom tax. Those people could probably never afford a mortgage, however desirable an ideal that might be. The Government are effectively expecting those people on low incomes to fund and support other people to buy new homes.
Jim Shannon (Strangford) (DUP)
I thank the hon. Lady for being gracious enough to give way to everyone who has wanted to intervene. Does she feel that there should be an incentive for parents or grandparents who either have savings or could remortgage their homes to provide a deposit for their children or grandchildren? Could that not enable first-time buyers to get on to the ladder in their 20s rather than at 37, as was mentioned earlier?
Alison Seabeck
The hon. Gentleman makes an interesting point, and I will briefly touch on it later. I suspect that it could be possible for parents to buy for children.
People struggling to get a mortgage and those who want to own their first home must be a priority for help, not the small number of people who can afford to buy a second home. What checks will be introduced to prevent abuse of the scheme, so that people are prevented from applying in the names of their sons and daughters, cats and dogs?
The key fact is that not enough homes are being built. The Government must focus on that issue and on listening to the voices of those who understand the market. They should not simply dismiss out of hand the Opposition’s new clause, which would enable the public to have a better understanding of who benefits from the scheme. Is it foreign investors, parents buying second homes for their children or people seeking to rent the property in the long term?
What checks will be put in place if somebody applies to the scheme saying that they are not going to let the property, then sits on it for a time and subsequently opts to rent it out? Perhaps people could use the scheme for a straightforward holiday home purchase, as I mentioned in relation to Plymouth and the South Hams. Where are first-time buyers in the process? For me, they are singularly missing.
Alison Seabeck
My hon. Friend is right. He reinforces a point I made about not only the potential for price volatility but the inability of certain people to access the housing that is so desperately needed, and the clear need to build more homes, which this Government are singularly failing to do.
Jack Dromey
Does my hon. Friend agree with the hon. Member for Spelthorne (Kwasi Kwarteng), who said in a recent interview, commenting on the Government’s proposed scheme, that
“giving mortgages without increasing the supply will lead to asset price inflation”?
Alison Seabeck
That is a very interesting comment, is it not? In quoting it, my hon. Friend makes the point very clearly.
House building is falling, rents are rising, home ownership is becoming a harder goal for young families to achieve, and homelessness has risen. That, frankly, is not a record to write home about. This Budget measure, first, needs to be fully explained; secondly, needs to be fully scrutinised, which is why the new clause is important; and thirdly, shows that the Government have got their priorities wrong, because they need to be building more homes.
Stephen Williams
Thank you for calling me, Mr Hoyle. I am being called rather sooner than I imagined; indeed, I did not even necessarily imagine that I would be making a speech in full detail, but making use of my House of Commons Library notes I have hastily prepared something, particularly on new clause 5, which is a welcome innovation in many ways.
Chris Leslie
That is the other crucial part. We are often criticised by the Government, who ask, “Where are your policies? What are you proposing to do about the economic situation?” but here is a pretty good suggestion for them. Let us learn from their mistake of scrapping the new deal and the future jobs fund, which my hon. Friends will remember, and do something to help to get young people in particular back to work. There is a separate issue with the long-term unemployed. We have talked separately about changes to the highest rate of pension relief, which could help to fund something for the long-term unemployed, but we could use the bank bonus tax to help to get young people back into work. It is essential that we get people back into the habit of working and paying taxes, and if they turn down those job opportunities, they should forfeit benefits as a result. The proposal has to be part of a tough policy, to ensure that we always focus on work as the best antidote to an inflated welfare budget, but to get our economy moving again too.
Alison Seabeck
Picking up on the point made from the Government Benches about some of our measures taking money out of the economy, is my hon. Friend concerned that the local economy in Plymouth, for example, is losing £16 million because of the Government’s benefit changes? Does he not see some contradiction in that?
Chris Leslie
The study commissioned by the Financial Times which showed the massive impact of the extreme austerity being pursued by the Government will bring home to many communities where some of the poorest people live the fact that that money and those resources are being taken out of their local economies.
Geraint Davies
I do not want to be drawn into talking about football, because there is a rivalry between Swansea and Cardiff, and Cardiff, to be fair to them, have just been promoted. I feel that people who earn more should pay more towards the public good. Whether or not the cut-off point is £250,000, we all have a contribution to make and those with the widest shoulders should pay more and at a greater rate. There is a debate about what that rate should be, but certainly those people who advocate a poll tax that would mean the poor paying the same as the richest for local services are at the far extreme of reasonableness. Most of us, I would like to think, want the rich to pay more.
Sadly, what we saw in the Budget was the poorest paying most to pay for the bankers’ recklessness, so that a certain amount of money could be thrown to the squeezed middle in order to buy votes. That is not the way forward. We need a unity of purpose to grow in prosperity for a future that cares and a future that works. On that point, I must sit down, because I know that colleagues and others want to speak. Thank you, Mr Amess, for indulging me.
Alison Seabeck
It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies), who gave an absolute tour de force. I rise to support amendment 2. We have heard it said repeatedly, both in interventions and in my hon. Friend’s speech, that bankers who earn large sums of money in this country continue to receive huge bonuses, irrespective of whether the institutions they work for have improved their performance, and meanwhile unemployment persists and the Government attempt to create full-time jobs. It has failed.
Indeed, in a week when we saw low-paid working families affected by the bedroom tax—or spare room subsidy—we also saw large numbers of top bankers awarded obscenely large bonus payments and, in some cases, benefiting from the tax cut for millionaires. Some have deferred paying income tax until this financial year to avoid paying at the 50% rate, thereby making additional gains on the back of the poor, a point that was terribly well made by my hon. Friend the Member for Swansea West.
That is yet another Government economic plan that has been poorly evidenced. It is part of an endless package of ill-thought-through policies. The Government had 13 years to work up those policies. We expected them to have worked up deliverable policies, but clearly they have failed miserably. They do not even have a plan B for the economy—the one that the International Monetary Fund now suggests they switch to—which is shocking.
In the financial year 2010-11, the bankers’ bonus tax introduced by the Labour Government raised around £3.5 billion. It was a sensible tax on the country’s top earners. It was scrapped within weeks of the coalition Government taking office and replaced by a bank levy, which the Prime Minister has consistently claimed would raise £2.5 billion a year. The simple truth is that it has not done that, so one could say that the Prime Minister’s accuracy at the Dispatch Box has been found wanting. Members should not take my word for it—the Office for Budget Responsibility evidence, published alongside the Budget, confirmed the figures. The OBR has said that the coalition’s bank levy will bring in just £1.6 billion from the last financial year—almost £1 billion less than the Prime Minister said it would, and less than half that raised under Labour’s bank bonus.
Andrew Gwynne
My hon. Friend is right to highlight the differences between the Prime Minister’s statements and reality. May I give her a third example: the cut to corporation tax. We were told by the Prime Minister and Chancellor of the Exchequer that the banks would not benefit from that cut and that there would be some offsetting arrangements. Yet we now learn from Her Majesty’s Revenue and Customs that the banks have benefited to the tune of £200 million.
Alison Seabeck
I thank my hon. Friend for flagging up what is factually correct and can be substantiated, rather than something resulting from living in some fantasy land of figures, as Government Members seem to do.
The amendment seeks simply to have a review in six months’ time on whether a bank bonus tax within the bank levy would raise significant additional income that could then be reinvested in creating jobs—especially among young people, who have been so hard hit by the Government’s economic failure.
Richard Graham
The hon. Lady will have heard the hon. Member for Swansea West (Geraint Davies), her colleague, refer at the end of his very long speech to his belief that people in his constituency are paying more tax as a result of the recent Budget. First, does the hon. Lady believe that her constituents are paying more tax? Secondly, does she know how many people in her constituency are now paying less tax as a result of the changes made in Budgets since 2010? The figure for my constituency is 43,969; I am sure that she knows the figure for hers. Thirdly, how many people in her constituency have been taken out of income tax altogether as a result of the Budget? The figure for Gloucester is 5,000 people; the one for Plymouth will be similar.
Alison Seabeck
That is an interesting question and I am delighted that the hon. Gentleman is so well informed about his constituents. However, he seems conveniently to forget that my constituents, like his, are also being hit by increases to VAT, which takes a significant chunk out of their incomes. Furthermore, particularly if they are low-paid workers, they are being hit by a flat-rate pay freeze and in turn by housing benefit changes. I am talking about working members of my constituency. If someone was to knock on the doors of Plymouth, Moor View, that person would find that people said they were significantly worse off and finding life very hard indeed.
Geraint Davies
I had better intervene, because the rendition given by the hon. Member for Gloucester (Richard Graham) of what I was meant to have said was completely inaccurate. I did not say that tax had increased for people but that the working families tax credit had been massively cut, as well as other opportunities.
The average person would lose £14 a week under the bedroom tax because their children had grown up and they had an empty bedroom. That is the same as the £13.50 that somebody might get from the raising of the tax threshold to £10,000. There are swings and roundabouts. Only £400 million will be saved from crushing the poor but it will cost £12 billion to put up the tax threshold. The judgments are difficult, but the Tory instinct is to crush the poor and help the squeezed middle, while ours is to help everybody. However, I made no insinuation that tax was being increased.
Alison Seabeck
My hon. Friend has put his position on the record, so I will not take further interventions on that point.
I come back to the amendment and its call for a review.
Huw Irranca-Davies
My hon. Friend has raised the issue of the disparity between the £2.5 billion that the Prime Minister said on repeated occasions would be raised by the bank levy and the nearly £1 billion that is now missing. Does she share my hope that when he responds the Minister will identify where that £1 billion a year is? If we could find it, it could go towards the job creation schemes that we are talking about. Some £1 billion is being nicked from the Treasury every year.
Alison Seabeck
My hon. Friend is absolutely right in suggesting that if there is a £1 billion gap, it should be explained. I am sure that the Prime Minister would like to know, given that he has repeatedly stood at the Dispatch Box using that figure, which seems to have been plucked from the sky.
Huw Irranca-Davies
It would be completely remiss of anybody in the House even to suggest that the Prime Minister was in any way misleading the House when on repeated occasions he cited the figure of £2.5 billion a year. But could it be possible that he has been misled inadvertently by Treasury officials or other Ministers?
Alison Seabeck
That is exactly my point. Has the Prime Minister been given duff information? If he has, that is pretty shocking. Ministers should take responsibility if that is the case.
I come back again to my point. The amendment is calling for a review, which is absolutely right. The hon. Member for Bristol West (Stephen Williams), who spoke in the previous debate, is not in his place, but I hope that this time the Liberal Democrats will not pursue the line taken by the hon. Gentleman, which was that it is unreasonable for the Treasury to carry out a review—of a mansion tax, in the context of the previous debate. He seemed to have forgotten that the Government are carrying out a review, at taxpayers’ expense, into the future of Trident. Obviously, that is basically a review for future Lib Dem policy. As I said, it is a shame that the hon. Gentleman is not here, because there was a bit of a contradiction between the two positions from the Liberal Democrats.
In Plymouth and the rest of the south-west, we are still lagging behind the rest of the country when it comes to finding the full-time jobs that young people desperately need. The number of unemployed is still higher than in 2010 and the number of long-term unemployed is growing. Although the Government keep telling us that more people are employed—the mantra has come from them again today—their figures hide the simple fact of the contrast with the position in 2008.
Then, when people were asked whether they felt they were working excessive hours, the answer came back as a resounding yes; people felt that they were working more hours than was reasonable. Now that figure is different—in large numbers, people are seeking more hours to work. It is estimated that there is a shortfall of 20 million working hours, which equates to a real unemployment figure that runs closer to 3 million. Questions have also been asked of people who work part-time and want to work full-time. The number who want to switch from part-time to full-time is 1.5 million—that is just in the three months running up to February.
There is clearly a problem. People are working part-time; indeed, some are trying to hold down two or three part-time jobs, as was evidenced during a street surgery that I held in Whitleigh a couple of weeks ago. Some people have used their redundancy money to set up as self-employed, and those figures are slightly skewing the evidence on what is happening on the ground. Some people have been transferred from the public sector to the private sector, often on reduced hours. That shift partly explains the rise in the number of jobs in the private sector; they are not new jobs but simply transferred jobs.
The tax proposal in the new clause would fund a job for every young person who had been out of work for a year or more. That number is up, year on year, by 37%. They would have to take up that job or risk losing their benefits. This is no soft touch but a serious attempt to give hope to young people and to help them get a foot on the ladder and contribute to society. Unemployment among young people is higher in this country under this coalition Government than it was at any time under Labour. The number of people claiming jobseeker’s allowance in my constituency remains above the national and regional average. Reinstating Labour’s bank bonus is therefore the right thing to do.
Mike Thornton
The hon. Lady seems to be saying that one of the problems is that there are no jobs in the economy while at the same time proposing a policy to find jobs for people—jobs that are presumably not there. How does she reconcile talking about finding a job for somebody with saying there are no jobs?
Alison Seabeck
The hon. Gentleman has completely misconstrued my remarks.
We need to invest to grow jobs. We need to grow our economy, and as we do that, there will be more jobs. People want to work, but the evidence is that the jobs are not there. People are having to work part-time, even to have multiple part-time jobs, in order to keep body and soul together. We need an economy that is growing, and we are not getting that from this Government. We need Labour’s bank bonus to invest in jobs, to tackle unemployment across the country, and to help young people.
Sammy Wilson
Although we have not heard many speeches by Government Members, I am a bit surprised by the attitude they have adopted to this proposal in view of one of the Government’s declared objectives in the Budget book. Under the heading, “Fairness”, it states:
“The Government’s economic and fiscal strategy is underpinned by its commitment to fairness”.
I would have thought that anyone looking at the proposal would find it very difficult to say that it does not have a core of fairness within it. It is directed towards an industry, the banking industry, which was partly responsible for the economic crisis we face, the impetus for which was people in that industry being given incentives to behave in a reckless way that led to the kind of borrowing and lending that created our current difficulties. They were bailed out by the taxpayer, with bonuses then being paid out of that bail-out. I would have thought that on the grounds of fairness alone, Government Members would see at least some merit in the arguments for the proposal which have been advanced.
I have often heard it said, not only by Labour Members, but particularly by Government Members who are close to small businesses—perhaps many of their supporters are small business owners—that the banking industry has strangled those businesses in the middle of the recession, refusing to lend to them even when there are good, viable propositions and putting the squeeze on them when they most needed liquidity. I would have thought that Government Members would have some sympathy for a proposal that said to them, “We cannot reward people at the top of an industry who are destroying, squeezing and making it difficult for the businesses that many of you would regard as your supporters”, yet they seem to be opposed to it.
Sammy Wilson
Yet the situation continues. Despite all that, we do not see any change.
Some of the arguments advanced by Government Members, mainly through interventions, as to why the proposal is a bad idea, have become increasingly desperate as the debate has progressed. I believe that this should be done, first, on the basis of fairness, and secondly, because it has some potential for changing behaviour, and that ought to be given serious consideration.
The first argument was to say, “If we do this, we will be taking money out of the economy.” What do these people who get the bonuses do with them? Are they generating additional expenditure in the economy? If someone gets a bonus of £1 million, are they likely to spend it? We all know, and it is well evidenced in economic theory, that the more money we get, the higher the proportion of that additional income we tend to save—it does not contribute to the economy. During the Budget, the Chancellor said that the poor performance in the economy was because consumer spending had been suppressed and was not what had been anticipated. When I hear the argument that discouraging these bonuses, or taking them back in the form of tax, removes spending power from the economy, I find it rather bizarre.
Alison Seabeck
The hon. Gentleman is reinforcing a point that I touched on earlier. In Plymouth, we are losing £16 million a year in benefits, and the people who usually get those benefits are poor and would spend the money in their local areas, not on foreign holidays or by putting it into bank accounts.