Finance (No. 3) Bill

Alison Thewliss Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[David Linden (Glasgow East) (SNP)]

It is always a pleasure to follow the hon. Member for Walsall North (Eddie Hughes), although I sometimes wonder how one can follow that. It was certainly very interesting.

I want to touch on a point made by the hon. Member for Thirsk and Malton (Kevin Hollinrake). I congratulate him on receiving Royal Assent for his private Member’s Bill. It was good to see in the Red Book that the Parental Bereavement (Leave and Pay) Act 2018 is moving forward. He spoke at length about business; I know he is a doughty champion for that. He would do well to look at what the SNP Government in Scotland have done in lifting 100,000 small businesses out of business rates since 2008. They have been doing that for 10 years, so the Scottish Conservatives can come north on occasion to see that.

I rise to support the reasoned amendment in the names of my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) and other hon. Friends from the Scottish National party. As the Bill derives from the Chancellor’s recent Budget, I want to make a couple of comments more widely about the Budget—and what was missing from it—before moving on to talk specifically about clause 5.

One minor benefit of not being able to speak in the Budget debate was that I had time during the weekend that followed to take the temperature of my constituents concerning the Budget. The general feeling on Shettleston Road is that austerity is far from over, and that is something that my hon. Friends and I hear week in, week out at our Friday surgeries. The Budget in fact prolongs austerity. The Prime Minister said that austerity was coming to an end, but the Budget failed every single test when it comes to the claim that the end of austerity is now in sight.

For example, there were no transitional measures to support the WASPI women, such as Anne Dalziel from Garrowhill. Anne received no notice from the DWP about the changes to her state pension age and is one of the many women in this country who have been shafted time and again by the British Government. To give an example of just how arbitrary the changes are, Anne has friends who were also born in 1953 and they received their state pension in 2016, but because Anne was born on 23rd December, her pension age was deferred three years to 2019. There were no measures in the Budget to help Anne Dalziel, and it is little wonder that the WASPI women in the Gallery staged their protest in the way they did. They have wholehearted support on these Benches.

Likewise, there were no measures in the Budget to halt and fix the roll-out of universal credit, which is due to be unleashed on my constituency next month and will undoubtedly cause social and financial misery just in time for Christmas. The amazing work that has been done by my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) on Inverness, where universal credit has already been rolled out, shows the deep damage it has caused. The fact that the Government will not listen to my hon. Friends and halt the roll-out of universal credit in Glasgow, especially at Christmas, shows how mean they are.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend’s constituents, like mine, visit Shettleston job centre. Does it concern him as much as it concerns me that someone making a claim there on the first day universal credit rolls out—5 December—will not be entitled to any money until 9 January?

[David Linden]

My hon. Friend is absolutely right. Of course, one reason that we share that jobcentre is that the British Government, in their wisdom, closed Bridgeton jobcentre in her constituency, in addition to closing Parkhead jobcentre and another six jobcentres in the city of Glasgow. Although Conservative Members paint a rosy picture about the work they are doing in their local communities, the work we see in Glasgow shows that they are absolutely out of touch and are pulling the rug from under our constituents’ feet.

Clauses 61 and 62 address gaming duty. My hon. Friend the Member for Inverclyde (Ronnie Cowan) has campaigned on fixed odds betting terminals. Like other hon. and right hon. Members, I was genuinely sorry to see the hon. Member for Chatham and Aylesford (Tracey Crouch) resign from the Government, but she was right to do so. The reality is that fixed odds betting terminals have become a massive public health issue in our constituencies. I see that in Baillieston Main Street, where we have three betting shops lined up next to each other. The proliferation of these terminals is undoubtedly one of the worst things for public health. Whether it is the knock-on effect of depression, debt or even suicide, it is clear that fixed odds betting terminals need to be considered through the prism of public health, and not Treasury revenue.

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[Bill Grant]

I am happy to join you.

Some 2.4 million households will keep an extra £630 of income per annum, and I am sure that those who need support will continue to receive it. It is no longer a wicked system where if someone wants to work beyond the 16 hours, they lose money.

[Alison Thewliss]

The hon. Gentleman says that it is no longer a wicked system, but it is a wicked system for those who have more than two children. Why does he think it is justifiable to take so much money out of the mouths of kids in his constituency?

[Bill Grant]

The system is set, and it is what is affordable to the taxpayer. You have to plan your children and what you can afford to bring up, as I planned—[Interruption.] It is not a crime to plan—[Interruption.] It is not a crime to plan your children and how you manage those children, and whether you have one—[Interruption.] That is the choice of the individual; it is not the choice of Government.

[Alison Thewliss]

Is the hon. Gentleman aware that this benefit will apply to all children, regardless of when they were born, and could not reasonably have been planned for from next year? Is he also further aware that the social security system is supposed to be a safety net for us all and not meant to punish people for the circumstances they are in?

[Bill Grant]

I thank the hon. Lady very much for that intervention—I do not agree with what she says. It is a safety net—it is a security net. My family have benefited from it. Nobody is saying they want to dismantle the welfare system. It has to be a manageable and affordable welfare system for the taxpayer and it must support the individual, as it does—[Interruption.] Thank you very much.

I have previously in this House expressed my delight at the freezing of duties for beer and whisky. That was agreed on, and we certainly found common ground across the Floor. We all like a dram and I am delighted that duties were frozen, particularly given that businesses in Scotland, not least in the whisky industry, will benefit from that freeze.

Having been a smoker, I was among those who noted an increase in duty, but I believe that this increase is fair. Together with the introduction of a duty on heated tobacco, this may guide people and cause them to reflect on their smoking or vaping habits in future, with the obvious health benefits. As one who has given up, I would advocate giving up smoking, whether vaping or conventional smoking, and that way the Chancellor will not get people with the extra duty. I realise that for many, that can be challenging, but giving up smoking is the best way to avoid tax on cigarettes. [Interruption.] It is lawful tax avoidance, as the hon. Member for Glasgow South West (Chris Stephens) said.

Similarly, the modest increases in vehicle excise duties for cars, vans and motorcycles to bring them in line with RPI inflation from 1 April 2019 may cause people to think about the type of vehicles that they own. People do not need to drive a gas-guzzler that consumes a lot of fuel, and there is the cost of fuel. They could improve the environment and increase the amount of money in their pocket. It would have a positive effect on the environment. The freeze on heavy goods vehicle excise duty for 2019-20 will, however, assist many small and medium-sized businesses throughout Scotland and the UK.

Opposition Members have sought to criticise the Chancellor for the suggestion that the Budget may need to be revised upon our leaving the EU. I do not see any logic in a notion that a reappraisal would be unhelpful after our country has left the EU. Surely such a reappraisal is entirely sensible and pragmatic, if it is indeed needed. The Opposition seem to concentrate on the same old chestnuts, but I would prefer that we concentrated on the little acorns in the Bill—for out of these little acorns, oak trees will grow. They will help the UK to flourish and austerity will indeed become a thing of the past, if we are all self-disciplined and unite behind the Chancellor, his Budget and this Bill.

Finance (No. 3) Bill

Alison Thewliss Excerpts

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

Secondly, the minimum wage that is in place still discriminates on the basis of age. It is not fair that those under 25 are paid less than those over 25, yet the UK Government are backing this age discrimination. I do not believe that an over 25-year-old can live on the minimum wage as it is set, and neither does the Living Wage Foundation. I also do not believe that a 16-year-old who might reasonably have the same outgoings as somebody over 25 can live on £4.35 an hour. It is also depressing to note that 16 and 17-year-olds have had an increase of only 3.6% in their minimum wage while the rise for those aged over 25 is 4.9%. I do not understand how the UK Government can justify that, and I think they should remove the age discrimination in relation to the minimum wage so that everybody is paid a fair wage and the minimum wage is enough to live on, instead of being at a level that people cannot live on.

[Alison Thewliss (Glasgow Central) (SNP)]

I of course support my hon. Friend’s point on increasing the minimum wage for under-25s. Is she aware that the gap between the rate for 16 and 17-year-olds and the higher rate has widened over the past three years?

[Kirsty Blackman]

I am not surprised that that has happened, because any Government who believe that a 16-year-old can live on less than an over 25-year-old are not going to make rational decisions in relation to pay for those at the younger end of the age spectrum. It would be a very good move if the UK Government were to change their policy and move to a situation where 16 and 17-year-olds, and those all the way up to 25, and in fact those over 25, were paid an amount they could actually live on, rather than an amount that does not enable them to buy the day-to-day essentials.

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[Debbie Abrahams]

My hon. Friend is totally right. Those budgets were ring-fenced to start with, but they are now absolutely emaciated. This is stopping us doing the prevention work that we should be doing. We made massive investments in public health, and they were having a real impact in terms of health gain. I am afraid that that is now going by the bye.

We know that there are 14 million people living in poverty in the United Kingdom, 8 million of whom are working—the highest level ever. It is fine for Conservative Members to speak on a positive note about employment rates, but they should be asking themselves why we have such high levels of in-work poverty. That, too, brings shame on us. Two thirds of the 4 million children living in poverty are from working households. How on earth are young people expected to learn and to excel at school if they are constantly hungry?

[Alison Thewliss]

The hon. Lady might not have had a chance to read it yet, but the all-party parliamentary group on infant feeding and inequalities, which I chair, produced a report that came out last week. It found that even working families are now struggling to meet the cost of infant formula, so they are having to stretch it out, to the detriment of their children’s health. So this problem is starting even before children go to school, because babies are not getting the nutrition that they need.

[Debbie Abrahams]

That is absolutely right. I will come on to some of the really worrying figures about how, from birth, our children are being affected because of the poverty that they are experiencing.

What about disabled people? Disabled people are twice as likely to live in poverty as non-disabled people because of the extra costs that they face around their disability. We have seen their social security support become absolutely emaciated. Given that we are the fifth richest country in the world, that is shocking—absolutely shocking. Four million disabled people are already living in poverty, with many now continually finding that they are becoming more and more isolated in their own homes.

Since 2015, as analysis from the Institute for Fiscal Studies and others has shown, those who are in the lowest income decile have lost proportionately more income than any other group as a consequence of personal taxation and social security changes. That is the important thing. My new clause is not just about taxation. We cannot see that in isolation from how we then ensure, as a country, that we are supporting people on low incomes—and that support is completely inadequate. What was put forward in the Budget does not go anywhere near repairing the damage that was done in the summer Budget of 2015.

Last month’s Budget produces only marginal gains to the household income of the poorest, while reducing the number of higher-rate taxpayers by 300,000. The Government’s regressive measures have done nothing to reduce the gap between the rich and the poor. When cuts to household incomes are combined with the cuts to public spending and services, the impact is even more dramatic, and again with disproportionate cuts to Government funding to towns and cities across the north, as evidence has repeatedly shown.

The effects of all this on life expectancy are now being seen, with health gains made over decades now falling away. Life expectancy has been stalling since 2011, and it is now flatlining, particularly in older age groups and for older women. In the same week—the very same week—that these data came out last year, the Government actually increased the state pension age. We know that our life expectancy is flatlining. For women—think about the 1950s-born women—it is going backwards, yet we are still putting up the state pension age. What is going on?

On top of this there are regional differences in how long people will live, with these health inequalities reflecting the socioeconomic inequalities across the country. Life expectancy for men in Windsor and Maidenhead stands at 81.6 years, while in my Oldham and Saddleworth constituency it is 77. Even within these areas, there are differences in how long people will live. Again, in the Windsor and Maidenhead local authority area, the life expectancy gap is 5.8 years for men and 4.8 years for women, while in my constituency it is 11.4 years for men and 10.7 years for women. These health inequalities are reflected right across the country. The gains Labour made in reducing health inequalities are now being reversed.

Similarly, the Royal College of Paediatrics and Child Health reported last month that infant mortality has started to increase for the first time in 100 years. Four in 1,000 babies will not reach their first birthday in the UK, compared with 2.8 in the EU. These are the unacceptable consequences of austerity. I welcome the Department of Health and Social Care commissioning Public Health England to investigate the causes of this declining health status, but it is very late in the day. Public health specialists—renowned epidemiologists such as Professor Sir Michael Marmot, Professor Martin McKee and many others—have been calling for this for the past 18 months. We already know from the work that they have been doing that they are pointing the finger towards austerity. It is imperative that in addition to stopping austerity, and the misery and poverty that is being wrought, we tackle the inequalities within and between regions and communities.

An analysis of the effects of the Budget’s personal taxation measures is part of this, but it should not be seen in isolation. This would be outside the scope of the Bill, but the Government should be doing an analysis of their social security and public spending cuts. Reducing the gap between the rich and the poor is not just good for the economy. As evidence from totemic reports such as “The Spirit Level” shows, life expectancy then increases, as well as educational attainment, social mobility, trust, and much more. Fairer, more equal societies benefit everyone. Inequalities are not inevitable—they are socially reproduced and they can be changed—but to tackle them in all their forms takes commitment, it takes courage, and it takes leadership.

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[Jack Brereton]

I thank my hon. Friend for his comments.

As I was saying, allowing taxpayers to keep more than it would have been possible to do previously is combined with inflation coming back under control and wages rising again in real terms. The lowest paid have not only been taken out of income tax altogether but enjoy an increased national living wage, thanks to this Government. We are seeing the lowest paid paying less tax but also bringing home more money. The annual earnings of a full-time—

[Alison Thewliss]

Does the hon. Gentleman not accept that the national living wage is not actually a wage that one can live on, and that it does not apply to those under the age of 25? In fact, the gap for those aged 16 and 17 has been going up every year.

[Jack Brereton]

The national living wage is a critical part of ensuring that some of the lowest paid in our society earn much more and take home more pay. Earnings for a full-time minimum-wage worker will have increased by £2,750 since it was introduced in April 2016.

Finance (No. 3) Bill

Alison Thewliss Excerpts

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

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend is making a very good point about the public health impact. Does she agree that people in some of the communities that she and I represent are already struggling with multiple deprivation, and gambling being concentrated in their areas only makes that worse and worsens their life chances?

[Patricia Gibson]

Absolutely. There is a correlation between multiple social deprivation factors and problem gambling, which is why certain communities have a higher concentration of betting shops housing these machines—the crack cocaine machines of gambling—than there otherwise would be.

I say to the Minister, and I know he is listening, that we absolutely and urgently need a review of the public health effects of gaming provisions. On that basis, I urge the House to support new clause 12—

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[Kevin Foster]

I have certainly heard my right hon. Friend the Chancellor talking about ensuring that Britain has competitive tax rates, that Britain is a competitive and good place to do business, and that we have a fair balance between raising taxation to pay for our public services and also ensuring that our tax system encourages rather than stymies economic activity in this country.

We heard earlier about the reactions of the EU27. I would point to the Republic of Ireland, which has a lower corporation tax rate than us. If we were to move towards the Republic of Ireland’s rate, it would be somewhat strange for it to say, “How dare you copy us.” This is not about encouraging a tax competition. States in Europe, whether they are inside or outside the EU, will look to provide the conditions for growth in their countries, and it is absolutely right that that is what the Chancellor and Treasury team in this country are looking to do. I certainly praise them for that. This is not about becoming a tax haven, although we might reflect on the fact that, judging by the actions of the Scottish National party and the Scottish Government, they are trying to turn England into a tax haven by shoving up tax rates in Scotland.

With that, I will draw my remarks to a close. I welcome what I see in this Budget. I do not think that the Opposition amendments and new clauses are necessary, for the reasons the Minister outlined at the Dispatch Box. This welcome Bill will bring in more tax, deal with avoidance and, at the same time, help to push our economy forward.

[Alison Thewliss]

The renowned Nobel laureate in economics Joseph Stiglitz has said that what we measure shapes what we strive to pursue. I tabled new clauses 14 and 15, in my name and the names of my hon. colleagues, to ensure that we are effectively striving to pursue the reduction in the tax gap and to consult fully on the provisions of this Bill. I support very much what the hon. Member for Oxford East (Anneliese Dodds) said and support her new clause 5 and amendment 23. She made some excellent points, most of which I fully agree with and endorse. I will not repeat what she said, however, as she made her points very clearly; she did a fantastic job in putting across the Labour party’s view.

It was bizarre to watch Government Back Benchers tie themselves in knots yesterday in opposing new clause 7, tabled by my hon. Friend the Member for Aberdeen North (Kirsty Blackman), in relation to entrepreneur’s relief. If the UK Government are confident that their policies are effective, they must not be afraid to review them. Indeed, reviewing them is all we can do under this Bill; as the hon. Member for Oxford East said, we are limited in what we can do here. So we do propose a review on that.

Likewise on the provisions on tax avoidance, we must gauge our progress by continually measuring the value and effectiveness of those policies. The hon. Member for Torbay (Kevin Foster) mentioned the Dutch sandwich. I am sure that was sensible when proposed and I am sure that the Dutch Government then looked at it and decided that actually it was not working. They then will have reviewed the policy and looked at the detail and clamped down on that loophole; I am sure they must have done that as otherwise it would still be an issue. Likewise, this Government should do better at reviewing their policies, testing them, seeing how effective they are and making changes as a result.

Our proposal is in the spirit of achieving better, more robust policies in the future. We should also look to the world to see where the best polices are and see what we can do to adapt them, and we should collaborate with our near-neighbours in Europe, particularly to make sure we are not allowing companies to move around at will seeking the best policies to save money, rather than paying the taxes that they ought to.

There are many reasons why HMRC does not always collect the tax that it ought to be paid, whether through criminal activity, through evasion or avoidance or just through human error, and there is much more that can be done to address that. While a greater focus on the non-compliance of corporations is welcome, there is still ample opportunity to avoid paying into the system, and we need to look at that very seriously.

The SNP has long argued that the tax system is unnecessarily cumbersome and complicated. There are layers and layers of regulations and exemptions, which lead to loopholes appearing. The system seems to get more complex every year when we look at the Finance Bill, and there also appear to be armies of tax avoidance specialists seeking to exploit whatever gaps they can find.

[Chris Stephens]

Was my hon. Friend not astonished when the Minister admitted that no data is held on any of the higher-rate Scottish taxpayers who are registering themselves elsewhere in the UK, as peddled and promoted by the Scottish Tories last week?

[Alison Thewliss]

That is indeed astonishing, and if it is a problem, the Government ought to be looking at it. People living in Scotland should pay the appropriate amount of tax, because that is the price we pay for living in a civilised society. That is what the Minister said in his speech earlier. We also have to look at what we get for our taxes in Scotland. We get a better, fairer society, which is good for us all. All the academics in this field recognise that a fair society is better for us all.

Last year, this Government opposed my amendment to the Sanctions and Anti-Money Laundering Bill that would have increased the transparency of Scottish limited partnerships by ensuring that those partnerships had bank accounts. We are still waiting for a response from the Department for Business, Energy and Industrial Strategy on the consultation that closed on 23 July this year.

[Hannah Bardell (Livingston) (SNP)]

I served on that Bill Committee with my hon. Friend, and the work that she did was excellent. Does she share my concern about the damage being done to Scotland’s reputation by Scottish limited partnerships? The partnerships are nothing to do with the Scottish Government, they have not been legislated for in Scotland and we have no power over them there, but they are doing serious damage to Scotland’s reputation internationally, and the UK Government need to act.

[Alison Thewliss]

This Government absolutely do need to act on this issue. It cannot be right that something we have no control over becomes a noose around our neck when it comes to our reputation internationally. I expect this Government to come forward with something on this soon, because their not doing so allows this to continue to happen. The Herald, whose journalist David Leask has been a constant campaigner on this issue, has reported that

“in the year to March 2016, 95% of SLPs were set up by offshore tax havens.”

That ought to ring alarm bells for this Government, given the likely sums of money involved in these tax havens. I have tabled more parliamentary questions on this today, but the last time I checked, no fines had been issued to those SLPs that have not yet registered a person of significant control. Even pursuing those fines against SLPs could have brought large sums of money into the strapped Treasury coffers, never mind dealing with the underlying lack of transparency surrounding SLPs.

It is no secret that SLPs are being abused to carry out crimes abroad and launder money and that the anonymity they provide enables all this, but this Government are simply not doing enough to stop it. There was some progress after the Salisbury attack, and there was talk of clamping down specifically on Russian dirty money, but we have not yet seen that happen. We need to know what the Government’s plans are, because we cannot allow this to continue. I commend to the Minister the investigation on Uzbekistan by David Leask and Richard Smith, because the sums of money and levels of corruption involved are absolutely hair-raising.

The SNP has put forward many sensible proposals to crack down on tax evasion and avoidance, but they have been rejected by this Government time after time. No action has been taken on enforcing the people of significant control rules governing SLPs. No action has been taken on the alternative investment market loophole that allows families to register homes as business properties, effectively overriding inheritance tax. No action has been taken to make online retailers liable for tax avoidance when they falsely classify their goods as gifts. And no action has been taken to create a legal framework to combat tech firms who avoid corporation tax by registering implausibly low profits in the UK.

[Hannah Bardell]

On top of all that inaction, does my hon. Friend share my concern about the centralisation of HMRC offices? Highly skilled staff will lose their jobs because of this Government’s centralising agenda. In my constituency, more than 1,000 jobs are being moved from West Lothian to Edinburgh, which will create huge issues.

[Alison Thewliss]

I agree that that loss of expertise is a huge issue. I have a constituency interest, because many of these centralised offices end up being in Glasgow Central, but this also comes at a significant cost to the taxpayer. It is no secret that city centre office space in Glasgow is expensive, and there would be greater benefits in keeping those services in areas such as the Clyde Gateway, which is also in my constituency but much cheaper, or in Livingston. That would provide better value for money for the taxpayer than having them all in city centre offices.

[Luke Graham]

I thank the hon. Lady for giving way. She is making some good points about decentralisation. Would the SNP join me in looking at some of the Scottish Government’s new powers? Instead of basing offices in Dundee, offices should be located in more affordable areas, such as Clackmannanshire or Perth and Kinross.

[Alison Thewliss]

Dundee is affordable. There is a balance—[Interruption.] The hon. Gentleman is not listening, but there is a balance here. We need local infrastructure, transport and so on to support such things, but there is an argument for doing all that. It used to be UK Government policy to decentralise large office blocks, but they have cut that back over the years, and offices are now disappearing. He can give me no lectures about that. There are countless examples of the UK Government cutting offices. So many jobcentres in the city of Glasgow have been cut that my constituents now have to take two buses just to get to one, and I do not see any Scottish Conservatives standing up for that.

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[Patricia Gibson]

My hon. Friend makes an excellent point. I am just about to go on to talk about not only the crumbling PFI schools that we are now left with and which the local authorities are paying for—there is no transparency and accountability on these contracts—but alleged criminality that has taken place around these contracts in my constituency of North Ayrshire.

[Alison Thewliss]

I share my hon. Friend’s frustration with this. When I was a councillor in Labour-run Glasgow City Council, if we wanted to see a contract, we had to go and sit in a room and read the contract; we could not even take it away. When the council discovered that the company had managed to build IT and home economics rooms without ventilation, it cost the council a fortune to reopen the contract and get those things put right.

[Patricia Gibson]

Again, my hon. Friend points to the lack of accountability and the hotchpotch—the rushed contracts put together by PFI, which benefited somebody, but did not benefit our local authorities or our children, and they do not benefit the patients in hospitals.

There is no better example of the need for new clauses 14 and 15 than North Ayrshire Council in my constituency. This Labour-run council had a PFI process that was severely flawed and was uncovered by local journalist Campbell Martin. Some have even insisted that criminal activity was involved, since while the council appeared to have two bids for construction projects—therefore seeming to provide the genuine competition required by EU procurement rules—in fact, the evidence suggested that one of those bids was from a subsidiary of the other company submitting a bid, so there was actually no competition at all. The Labour council was made aware of this before the contracts were awarded, but awarded them regardless. In the opinion of one ex-detective, the evidence showed

“criminality from start to finish.”

Another former officer stated that a common law crime of forgery and uttering should have been pursued. Right there we see the need for more transparency. I for one would like to see more transparency on the tax arrangements of such companies, as this is very much in the interests of the UK’s public finances.

All this information relates to a public-private contract now costing taxpayers over £1 million every month in North Ayrshire. Add to that the schools that are crumbling across cities such as Edinburgh, and we have real questions about these PFI firms. For projects of a capital value of £4 billion in Scotland, we will repay £22 billion, with our schools spending 8% of their budgets on paying off these Labour PFI debts. Can we really allow any lack of transparency around the tax affairs of such companies?

It is absolutely essential that there is more transparency around how UK public finances finance public sector projects. The tax affairs of these companies and their wider financial affairs need to be open to scrutiny because they build or have built our public assets. I urge the Committee to support new clauses 14 and 15.

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[Luke Graham]

I refer the Committee to my entry in the Register of Members’ Financial Interests.

Several provisions in the Bill will help to deal with money laundering and tax avoidance, and I want to touch on a few of them, as well as on some of the comments that have been made by Labour and SNP Members, but first I would like to echo some of the Minister’s comments about tax in general. Conservative Members pride ourselves on having a low-tax but fair system that rewards work and enterprise, but ensures, in all things, that when someone has a tax liability, they should indeed pay it.

Tax should be low right across the United Kingdom. One of my Scottish colleagues referred to charges for higher-rate taxpayers in relation to the movement of residency between Scotland and England. As I am sure that SNP Members will appreciate, it is not just higher-rate taxpayers who are affected. As has been well documented over the past few months, anyone earning over £26,000 in Scotland is now worse off than if they were anywhere else in the United Kingdom. In fact, it had to be confirmed by one of the senior generals in the British military that because of the SNP’s changes, men and women in the British armed forces would pay more tax in Scotland than they would anywhere else in the world. These changes are disadvantaging my constituents and companies.

The counter-argument is that somehow those tax changes will make things fairer for my constituents, that they are providing huge opportunities, and that we should be ashamed of ourselves for not doing more. As my hon. Friend the Member for Walsall North (Eddie Hughes) said, the tax changes introduced by this Conservative Government have increased constituents’ income by £1,250. The tax changes made by the SNP in Scotland have given my constituents 38p a week. That is it—all this change, all this cost and all this disadvantage for 38p a week. If the SNP Government are going to make changes, they must make real changes that make people’s lives better and follow some of our copybook.

A key point has been raised about Scottish limited partnerships. I sat on the Committee that considered last year’s Finance Bill, and when we discussed that matter with several Opposition Members, I voiced my support for changing these partnerships. We saw a change in the law in 2017, and there are now disclosure requirements for those in a limited partnership, but I want to ensure that the context of these partnerships is understood. They were originally enabled under the Partnership Act 1890, and then confirmed again in 1907 by Scottish, English, Welsh and Northern Irish MPs, so this measure was not somehow imposed in Scotland.

[Alison Thewliss]

Does the hon. Gentleman acknowledge that the regime of persons with significant control has not been enforced to any extent? SLPs owe the UK Government £2 billion in fines. Would he not welcome that money for his constituents?

[Luke Graham]

I thank the hon. Lady for her intervention. Whenever we have made a law, we should enforce it. I recognise the Government’s contribution through investing more money in HMRC, but another key area is Companies House, where a lot of this information is held. I would argue that it certainly could do with extra resources to ensure that things can be properly cross-referenced. A number of issues in my constituency have revolved around significant control and ownership of different corporate entities across the United Kingdom. Companies House would benefit from additional resourcing to help to tackle some of these issues.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) talked about PFI schemes. She was very critical of Labour’s schemes when it was in administration in Edinburgh. It is important that the SNP takes some responsibility for the fact that it has been in power for over a decade, as the implementation and management of a number of these PFI schemes was overseen by the SNP. Although they have now converted to the PPP scheme, there are still a number of criticisms, including of the healthcare facility in North Ayrshire. It is right to be critical, but that criticism should be even-handed.

[Alison Thewliss]

Will the hon. Gentleman give way?

[Luke Graham]

I will just make a bit more progress.

The successes that we have seen from this Government include lowering corporation tax, which has led to record income from corporation tax, and collecting an additional £185 billion of revenue since 2010, which we would not have been able to achieve were it not for the Government’s tightening of tax and tax avoidance measures.

The Conservative party prefers to have a low-tax and fair system. Some of the measures in the Bill are specifically fit for purpose in this more globalised and complicated economy. For example, schedule 4 is on profit fragmentation, which means that Government can focus on where profit is earned rather than getting caught between the different jurisdictions in which corporate bodies lie.

Clause 83, on international tax enforcement, is particularly important. Before I came to this place, I worked in international finance. With multinational companies, it is very difficult to track where income is earned and where it will finally end up, and that may not be due to deliberate action by such companies. New tax enforcement measures that give HMRC and the Treasury additional powers of disclosure will be very valuable and will increase transparency in our tax system.

The hon. Member for Oxford East (Anneliese Dodds), who is no longer in her place on the Labour Front Bench—

--- Later in debate ---

[Alison Thewliss]

The problem is that it is not being comprehensively enforced. About £2 billion is due in fines from SLPs. If the Government are not going to collect £2 billion, why on earth are they putting forward austerity cuts? They could have that money easily.

[Chris Philp]

It will not have escaped the hon. Lady’s notice that by the fifth year of the five-year period there is a fiscal loosening of £30 billion—that is hardly austerity—and that the NHS will receive a huge amount of extra money, including the NHS in Scotland via Barnett consequentials. I think that we can say very clearly that this was not an austerity Budget. I agree, however, with her more serious point. As my hon. Friend the Member for Ochil and South Perthshire said, where a law is passed, it should be properly enforced, and if there is more scope to enforce this law, it should certainly be done.

A further legislative measure was announced over the summer in relation to transparency. By 2021, we will start recording the ultimate beneficial ownership of property owned by companies, which is an important measure, because some properties, particularly very expensive, high-end properties, are often owned in offshore companies, but there is currently no transparency in respect of who owns those companies. As of 2021, we will know who the ultimate beneficial owners are, and that will also create an interesting taxation opportunity that I strongly commend to the Financial Secretary.

At the moment, when an ordinary property is bought or sold by an individual, it triggers residential stamp duty, but when a transaction takes place whereby the company owning the property is sold, no residential stamp duty is paid, because, as far as the Land Registry is concerned, no change of ownership has taken place. At the moment, we have no visibility over any change of ultimate beneficial ownership, because it is not registered, but from 2021 we will, because that change will have to be registered. I suggest, for a future Budget, that a change of ultimate beneficial ownership should trigger a stamp duty charge as though for a direct change of ownership, as would happen if any of us bought a property. That would yield significant extra residential stamp duty.

I will give an example. I am aware of a transaction in Belgravia, not far from here, that took place two or three years ago. It was a collection of luxury houses developed by an offshore company—based in the Cayman Islands or British Virgin Islands—and sold to a Chinese gentleman for £110 million, but he did not buy the property and therefore no stamp duty was payable. He bought the offshore company and no stamp duty was paid. Had that change of ultimate beneficial ownership been registered and had stamp duty been payable, a stamp duty charge of about £16 million would have been crystalised for the Exchequer’s benefit.

I suggest we collect that sort of money in the future. Of course, that property is liable for annual taxation on envelope dwellings, because it is held in a company, but that only levies at a rate of £226,000 a year, so the payback period is 73 years, and most of these properties are traded more frequently than that. I challenged the hon. Member for Oxford East earlier to come up with some ideas for raising revenue and combating non-compliance. There is my idea. I hope that a future Budget adopts it and takes it forward.

I will conclude—I know the shadow Chancellor wants to hear more, but I have to disappoint him—by briefly addressing Government clauses 15 and 16 on intellectual property charges and charges in relation to fragmented profits. This is an extremely important area, because a number of large corporates are using intellectual property charges to spirit away profits attributable to UK operating activities.

Most notoriously, Starbucks used this about five or six years ago. It managed to extract almost all its UK profits by levying an intellectual property charge in relation to its beans. It said the beans were special beans and had a very high charge on them, and it managed to register pretty much zero UK profit. That is precisely the kind of intellectual property charge that these measures are designed to combat. An arm’s-length, third-party intellectual property charge cannot possibly result in zero profit for the company paying that charge, and it is right that the Government are taking further action.

Multinationals take their profits out of the UK and into, typically, the Luxembourg, Swiss or Caribbean jurisdictions, and intellectual property charges are more often than not the means by which they do so. I strongly commend clauses 15 and 16 for taking direct action to prevent avoidance measures that have undoubtedly cost the Exchequer. I think that I have spoken long enough about these clauses, which I shall be extremely happy to support if there are Divisions in 10 minutes’ time.

[Paul Masterton]

It is a pleasure to follow my hon. Friend the Member for Croydon South (Chris Philp), although, as ever, the problem with following him is that he has done such a thorough and detailed job of going through the minutiae of pretty much every single piece of the Bill that there is not a huge amount left for me to say. However, I will do my best and raise a few points that I know are particularly important to people and businesses—particularly small businesses—in East Renfrewshire.

One reason why these measures are so important comes back to the perception of fairness. Action to deal with tax avoidance and evasion is important because people often perceive that they are playing by the rules and doing everything right, while other guys—often the big guys with lots of money, who can afford to pay the “big four” huge sums—are able to find clever ways of reducing their tax liability.

There have been many examples of companies diverting profits, in a way that is not fair and is not right, to other jurisdictions with much lower tax levels to save themselves money. They are taking money that was produced when taxpayers in this country went into their shops and bought their goods, supporting them and their products, but that money is not being kept in our economy or reinvested in our economy. It is being shunted offshore to other jurisdictions, where it is swept up and often manoeuvred around other areas, particularly when a global business is moving it around to prop up less competitive and less successful parts of that business offshore.

Since 2010, an extra £180 billion or so has been brought in as a result of some of the measures that we have introduced. That is a huge amount, which is being reinvested in the country in which it was produced. It means more money for our schools, hospitals and small businesses—the sort of money that can give people a bit of a break.

I want to touch briefly on the new clause tabled by the hon. Member for Glasgow Central (Alison Thewliss). She talks frequently, and with a great deal of knowledge, about Scottish limited partnerships—rightly, I think, because they are being increasingly scrutinised and are coming under the spotlight. They have been around for a long time, and previously no one paid much attention to them—no one really understood what they were being used for. They fall within a slightly odd grey area in terms of the Companies Act 2006. In my former job as a pensions lawyer, they were used as a vehicle to allow companies to put an extra step between them and an investment. They helped companies to reduce their tax in relation to employer contributions that they had made through the sweeping round of funds.

That was a legitimate funding mechanism, but there is no doubt that because of where Scottish limited partnerships sit in relation to the wider tax system, they are being used pretty unscrupulously. A lot more stuff has been coming out about them, and I think that the hon. Lady is right to go on probing and testing to establish whether their proper use is being properly enforced and checked.

[Alison Thewliss]

I am glad that the hon. Gentleman agrees with me about Scottish limited partnerships. Does he also agree that the whole scope of the issue needs to be investigated, and that the Government need to bring their consultation report back? It is clear that when one loophole is closed another opens, and there seems to be some evidence that people are now moving to Northern Ireland to try to get around the rules. The Government must do something very soon before people jump over and do something else.

[Paul Masterton]

The hon. Lady has highlighted the key point that I made at the beginning of my speech about highly trained and well-paid accountants. The Government are always playing catch-up because she is right: what happens is that a loophole is identified, it takes quite a long time to get a measure to close it through the process, and by then everybody has already moved on to the next thing. We need to get better at pinpointing—almost like in a game of chess, thinking two moves ahead and saying, “If we close this down, where are they going to move next?” These people working in the private sector are able to find these money-saving methods, so there is no reason not to have people working in government thinking along the same lines.

I support what the Government are doing to reduce the tax gap. It is important to bring in the extra money that is properly due in this country by closing loopholes and stopping the feeling that the big corporate guy is getting away with something while I, the guy struggling with my own small business, am paying what is due. There is a real sense of unfairness in the practices that these measures are designed to tackle, and I look forward to supporting them in four and a half minutes’ time.

Finance (No. 3) Bill

Alison Thewliss Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Peter Dowd]

My hon. Friend is right, and the reality is that we are not going to get it from the Conservative party—it is as simple as that. It seems incapable of doing anything that is in any way constructive for the social fabric of our country.

The Government now pick and choose whichever target provides cover for their devastating treatment of children across the UK, including—when it suits them—using the very targets that they themselves scrapped. That is why new clause 1 is so important. The Government can no longer be allowed to ignore the plight of millions of children across the country.

The statistics do not lie. They show quite clearly that, prior to the Conservative Government coming to power in 2010 with their Liberal Democrat partners, child poverty in the UK was falling. The new Social Metrics Commission, which draws on the widest possible set of poverty measures, states concretely that there are now half a million more children living in relative poverty than there were just five years ago. The whole country knows that austerity is to blame, and we all know who introduced austerity—it was the Government.

[Alison Thewliss (Glasgow Central) (SNP)]

I completely agree with the point that the hon. Gentleman is making. Does he agree that the two-child cap, which will apply to all new universal credit claimants from 1 February this year, and other measures that the Government are pushing mean that up to an additional 3 million children will apparently go into poverty?

[Peter Dowd]

The hon. Lady is right. The Government appear to want to put misery upon misery on families and children.

Despite the claims from Conservative Members, austerity was not some necessity nobly chosen by the Government of the day, but a political and ideological choice—it is as simple as that. If it was the only option, why did the United States not embark on a similar venture? Why did the likes of Germany and France not undertake a similar level of spending cuts, or Japan, or, for that matter, Australia? [Interruption.] Conservative Members are chuntering, but those are the questions that we need answering.