Finance Bill

Alison Thewliss Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP) [V]]

I welcome the shadow Chancellor to her role. She is the first woman ever to do the job. I wish her all the best and look forward to working with her.

Time is tight, so my remarks will not cover all my thoughts on this 186-page Finance Bill. It seems to me that each Finance Bill tries to fix the errors of those that preceded it, and this is no different. It would be useful to have the opportunity to take public evidence on the Finance Bill, because if ever there was a time to ensure that the measures and reliefs proposed by the UK Government are appropriate, it is now. If we are to believe that austerity is over, this Finance Bill must be followed by a recovery package that grows our economy in an inclusive way and protects the most vulnerable.

The UK Government continue to short-change Scotland. We are seeing the limitations of the Barnett formula writ large. The UK promised £242 million for regional deals in the Budget, but we have not yet made up for the £400 million shortfall relative to the money that the Scottish Government are putting in. Scotland is still waiting for Scotland’s £5.8 billion of the DUP’s Brexit bungs and the £175 million of VAT owed to Police Scotland the Scottish Fire and Rescue Service.

Clause 12 gives Ministers the power by regulation to exempt certain social security benefits from income tax, which is fair enough, but far more extensive measures are required to address the flaws in the social security system. The welfare cap set out in the Budget is surely now set to be breached, and instead of setting a new cap, as he is required to do, the Chancellor may want to consider whether it is a useful tool in the first place.

People who have never had to rely on benefits to put food on the table and meet their rent are suddenly finding out just how pitiful the UK social security system is. A letter from 50 campaigners led by the Child Poverty Action Group and the Bishop of Durham has highlighted the fact that tens of thousands of the 1.5 million households that have applied for universal credit will lose out due to the size of their family. I have been saying, ever since the two-child limit was proposed in 2015, that no one can predict their circumstances. The letter states:

“Even in normal times, no parent can be sure that their financial security will withstand unpredictable events such as illness, bereavement or redundancy. Certainly no parent could have had foresight of Covid-19, and so planned their family size accordingly.”

I urge the Chancellor and the Financial Secretary to the Treasury to bring forward measures to remove the two-child limit and end the unfairness being meted out to families in need.

This UK Government have failed to go far enough for workers. The cut to employers’ national insurance goes only a third of the way that we demanded towards the £2,500 in the Tories’ own manifesto commitment. Younger workers will continue to suffer state-sanctioned age discrimination, and this is really a missed opportunity to introduce a real living wage for all. The Chancellor previously claimed that he would do whatever it takes to help people affected by the coronavirus crisis, and the UK Government must follow through on that commitment and strengthen welfare provision so that people get the help they need now. They must scrap the five-week wait, turn the loans already given into emergency grants and ensure that all new claimants are given automatic grants to prevent millions being plunged into debt and poverty. If the UK Government had listened to our calls to introduce a universal basic income at the start of this crisis, the huge difficulties people are now facing could have been avoided.

I also support the calls from the Low Incomes Tax Reform Group, Age UK and the TUC for action on the net pay pensions issue. Due to a flaw in the tax system, around 1.7 million lower-income workers, mostly women, are being unfairly charged 25% more for their pensions as a result of the way in which their employer pension scheme operates. I ask the Government to look at this.

Firms are already finding it difficult to access cash, not least because of the limitations of the UK Government’s coronavirus business interruption loan scheme. Part 4 of the Finance Bill lays out plans to grant HRMC preferential status in insolvency procedures from December this year, and measures to make directors personally liable for a company’s tax liabilities where HMRC considers avoidance is taking place or where there is evidence of phoenixism or tax abuse via insolvency. I very much want to see companies and their directors take their responsibilities seriously and to avoid phoenixism wherever possible, but I am not alone in questioning whether this is the correct approach. R3, the Association of Business Recovery Professionals, wrote to the Chancellor last September:

“While extra money for HMRC in insolvency procedures may appear positive, it means less will be going back to trade creditors, pension schemes, and consumers. This will hurt the economy in the long run. Poor returns from insolvency procedures can jeopardise the health of other businesses, can make creditors more likely to vote down rescue proposals, and can trigger further insolvency. The government’s policy increases the chances of this happening.”

Coronavirus has brought this issue into sharp focus. UK Finance estimates that this policy could hit lending by at least £1 billion per annum. Furthermore, if HMRC gobbles up the largest amount first, there will be very little left for unsecured creditors such as small and medium-sized enterprises. Examples include the contractors and clients of a building company, food suppliers and parents who have paid upfront for a nursery that has gone bust. Why should creditors—real people in the real economy—lose out on much-needed pay-outs because of the vague notion of giving value to the taxpayer? The City of London Law Society also highlighted, in a letter in September last year, that this proposal erodes protections and would put the UK at a competitive disadvantage, so I urge the Chancellor and the Financial Secretary to the Treasury to give further thought to this measure. What would help to prevent phoenixing would be to tackle this matter at Companies House, giving it the full powers under anti-money-laundering legislation to carry out due diligence, rather than simply nodding companies through. This would protect consumers and other businesses that end up losing out.

The Scottish National party welcomes the Bill’s attempts to counteract tax avoidance laid out in clause 64 on anti-avoidance. The UK Government must urgently introduce a robust and transparent system of company registration in order to combat money launderers’ attempts to register entities for illicit and avoidance purposes. The UK Government must act to tackle the ongoing improper use of Scottish limited partnerships through a proper reform of Companies House. In reference to clause 72 of the Finance Bill, relating to properties and trusts, will the Chancellor also update the House on what has happened to the Registration of Overseas Entities Bill, which seems to have disappeared?

The SNP will support a fit-for-purpose digital services tax. We agree that it is unfair that huge multinational online firms pay less in tax than small high street businesses, but the devil will be in the detail, as the shadow Chancellor laid out. Firms may seek to get around measures, which is where good evidence comes in. The UK Government must be a step ahead of, rather than several steps behind, those companies that seek to evade paying their fair share. It is regrettable that the UK has failed to implement the measure alongside international partners, despite countries such as France, Spain and Italy seeking to introduce similar measures.

The Finance Bill is another example of the Tories yet again failing to support the oil and gas sector when it needs support to transition to a greener future. The oil and gas sector has generated £334 billion in net tax revenues to the Government since 1970-71, but the Tories have failed again to support it in its time of need. Promising a sector deal within the term of this UK Parliament is just not good enough; the sector needs fiscal support, and it needs it right now. OGUK chief executive Deirdre Michie has said:

“OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”

I urge Government Front Benchers to listen carefully to that plea.

I also encourage UK Government Ministers to do all they can to finally deliver justice for the former Roadchef workers who have been waiting for decades for their employee benefit money. My hon. Friend the Member for Airdrie and Shotts (Neil Gray) has offered one solution via early-day motion 268; the other solution would be for HMRC to act reasonably in recognising that the employee benefit trust was non-taxed at its establishment and negotiating positively with the trust to allow payments to happen quickly.

Our economy does not need Ministers to be given trade war powers. To protect jobs, we believe that the Brexit transition should be extended by two years. Clause 94, “International trade disputes”, will amend the Taxation (Cross-border Trade) Act 2018 as follows:

“In section 15(1)(b)…(import duty: international disputes etc), for ‘is authorised under international law’ substitute ‘considers that (having regard to the matters set out in section 28 and any other relevant matters) it is appropriate’”.

What that amendment means, in short, is giving the UK Government the right to abrogate from international agreements and engage in trade wars at the whims of a Brexiteer Government, which is really not what we need right now. The Government need to decipher whether that is really what they mean by the clause.

The UK Government should ask the EU today for the maximum two-year extension to the transition period. An extended transition will keep the UK as close as possible to the EU and provide an opportunity to rethink the future relationship. The Scottish economy just cannot afford the double hit of covid-19 and the growing likelihood of no deal, or at the very best a hard Brexit deal, in eight months’ time.

The SNP seeks to work constructively with all parties on the Finance Bill. We know that voting will be a challenge and that proceedings will be very different this year. The UK Government have a majority, but they do not have a monopoly on wisdom. They should listen carefully to ideas from every part of this House and from people across the country.

Economic Update

Alison Thewliss Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

I thank my right hon. Friend for his thoughtful support. I can tell him that we are working on those proposals urgently and plan to have answers for both him and the House in the coming days, ideally next week, with an early thought of what we can do. As I said, designing these schemes will take an appropriate amount of diligence and care. That is what we are focused on urgently as we speak. He is right: this is about hours, not days and weeks.

[Alison Thewliss (Glasgow Central) (SNP)]

I thank the Chancellor for the action and the extra money that he has announced this evening. I put on record my thanks to health staff, volunteers and everybody working at the forefront of this crisis. I also mark my sadness at the second death that was recorded in Scotland today.

We want to work across the economy and across society, because fundamentally this is about people’s lives. The Chancellor is right that nothing should be spared when it comes to that. Can he tell me precisely what the Barnett consequentials will be from today’s announcement? He says that the Scottish Government knew in advance. I do not make the point to be party political, but my understanding is that the Scottish Government were only notified by letter at 5.30 pm yesterday of the previous set of Barnett consequentials from last week’s Budget. [Interruption.] I hear hon. Members saying that that has been the same for Wales.

The Scottish Government want to act swiftly. They must not be behind the curve of what England is doing. The Chancellor must pick up the phone to Kate Forbes, the Scottish Cabinet Secretary for Finance, to let her know exactly what is coming, so that she can take action for Scotland’s businesses and individuals across the country.

The Chancellor mentioned that the loans will be on attractive terms. Can he tell us more details? Businesses will be nervous about taking on more debt at this time, and interest free for six months is perhaps not good enough for businesses that are struggling and questioning their very future. His flexibility on the next steps is also welcome, but we expect those measures to come before the House if at all possible.

Will the Chancellor take a stake in the airlines to guarantee that money for the future? In any intervention for airlines, will he make sure that staff are protected first, including support staff in airports and in the supply chain, not just airline staff directly? They are all worried about their jobs.

Cash grants for small businesses are welcome, but I gently suggest that the £3,000 announced last week was not enough. Today’s announcement of £10,000 shows how short that was. The hospitality sector in particular needs urgent clarity about what is going to happen for events, for pubs and right across the sector. The Government need to be absolutely clear: if people are to stay away from pubs, pubs need to know that and have the Government’s backing if they close. That applies across the hospitality sector, including for hotels and lots of small businesses in the supply chain.

The Association of British Insurers has suggested that many businesses will not have a policy that covers pandemic. Will the UK Government stand as an insurer of last resort, as Professor Sir Charles Bean suggested at the Treasury Committee today, saying,

“Big early action is better than half-hearted action that’s late”?

I urge the Chancellor to think on that. Can the insurers cope if they are asked to pay out on all those policies? Will the Government stand behind the insurers if need be?

What protection has been given to pregnant women around maternity entitlement? Lots of women have been asked to take their maternity leave early, which will affect how long they can stay off at the end. They need to know that the Government will back them on that and that they will not lose out on their maternity leave because of the coronavirus.

The Chancellor made no mention of private renters, particularly young people who are more likely to be in insecure employment. He is giving a break to those paying mortgages, lots of which are buy-to-rent mortgages where people rent the accommodation. If the mortgage holders are getting a break, that must be guaranteed for renters as well. It must be passed on, and passed on quickly. If the Chancellor looks at Twitter, he will see that people around the country are losing their tenancies and do not know whether they can get a new one.

There has been talk in the US of $1,000 being given to Americans, and in Italy €500 being given to the self-employed. Will the Chancellor consider such direct schemes for individuals who may be struggling to cope? Will he also look at the situation for asylum seekers and those with no recourse to public funds who cannot claim benefits and are particularly vulnerable? The services, food banks and voluntary action that they rely on will disappear. They need direct payments as well if they are to live through this crisis.

I note that France is moving to the direct payment of bills. Will the Chancellor look at that measure? That is a different mechanism that stops money being taken out of people’s pockets, rather than putting money into them. Has he spoken to the energy companies about that?

Turning to the vulnerability of people in the economy just now, the Fraser of Allander Institute has said that only one in four under-25s has enough savings to cover one month of income. The under-25s are incredibly vulnerable, so will the Chancellor consider specific measures to tackle issues for those young people? Only 42% of households in the bottom income decile have enough savings to cover one month. People will not get through this crisis with the money they have in the bank, because a lot of them have no money in the bank. He needs to consider how he will ensure that people can put food on the table. That need is particularly pressing for families, because if the schools do close and parents cannot work, there will be no money coming in. He needs to think about how those families will put food on the table for those children during this extended period.

I agree with everyone who has said that statutory sick pay is woefully inadequate to deal with this crisis. The Government have suggested that people should apply for universal credit, but they seem to be forgetting that for many people universal credit is far less generous even than statutory sick pay, so will the Chancellor urgently increase the amount that people can get through the universal credit system? Will he uprate that so that people can get enough money to survive the crisis? Will he consider extending the period for universal credit advances, or ideally get rid of the advances and pay people straight away? Will he ensure that the Department for Work and Pensions looks carefully at the implications of people claiming universal credit for their entitlement to legacy benefits, because people might lose out on their legacy benefits if they jump into universal credit just now? Will the Department protect that for all claimants so that they do not lose out in the long term?

This is a crisis. I welcome all action that the UK Government will take on this, but the questions this evening will be legion, and people will have so many questions in the days ahead. I ask the Government to listen and to react as quickly as possible to all the questions that honourable colleagues will raise this evening, and in the weeks and months ahead.

[Rishi Sunak]

I thank the hon. Member for her comments. I can reassure her that I am listening. I welcome all the suggestions that she has made, and indeed all those that other hon. Members will make. We are listening intently to hon. Members, and to businesses and others, to ensure that we provide the support required.

Let me answer the hon. Member’s specific questions. The Barnett consequentials resulting from today’s package will be about £3.5 billion. I understand that my right hon. Friend the Chief Secretary to the Treasury will be speaking to the Scottish Finance Secretary tomorrow to explain in more detail how that will work. Earlier this week we released the Barnett consequentials to the devolved authorities before the money has been drawn down in England, as would be typical, in order to provide advance on the Barnett consequentials to all devolved authorities in recognition of the circumstances that everyone is grappling with, so that they can plan appropriately. I hope that will be welcomed.

Obviously, it would not be appropriate for me to comment on specific interventions in any particular company, whether an airline or anything else, but I agree with the hon. Member that in general we are interested in protecting people’s jobs. When I stand here and talk about supporting businesses, I am keen to support businesses because that is the best way to protect jobs, and ultimately that is the best way to protect people.

The hon. Member asked about cash grants. In thinking about the scale of the grants and how significant they might be, let us take the £10,000 grant available for anyone currently in receipt of small business rate relief. The typical rateable value on one of those properties would be approximately £7,000. That is a good proxy for a year’s worth of rent. A £10,000 cash grant is therefore reasonably significant in covering what is probably a business’s biggest fixed cost. When we look at what the average income of one of those smaller businesses might be, again we see that it will be significant.

The hon. Member talked about pubs and the leisure sector. Not only will there be a business rates holiday for the sector for the next 12 months, but for all businesses in the sector, regardless of their rateable value, there will be a £25,000 cash grant for businesses up to £51,000.

The hon. Member asked about insurance. The statement is welcome on insurance. With regard to retrospectively changing insurance policies, she rightly identified that that would most likely cause solvency issues with insurance companies, so it is perhaps not the most appropriate course of action, which is why we have several other measures for providing support directly to businesses in those circumstances. She will probably be aware that very few businesses actually have the requisite insurance in any case, so although the steps set out today are welcome, it is important that we think more broadly about direct support.

I welcome the hon. Member’s question on maternity pay, which I will discuss with my right hon. Friend the Secretary of State for Work and Pensions and reflect on. With regard to renters, as I said in my earlier answer, my right hon. Friend the Secretary of State for Housing, Communities and Local Government will shortly announce further measures to protect renters.

The hon. Lady talked about other countries, and about fiscal responses and individual measures. Every country is doing this slightly differently, but, broadly, are trying to do the same things through different means. I think that the best way to judge us is by the total scale of our fiscal response, and on that metric, as a percentage of GDP benchmarked to nearly all developed countries, we have what is to date one of the most comprehensive and significant packages of scale—which, as I have said, underlies our commitment to doing what it takes to get the country through this.

VAT (Listed Properties)

Alison Thewliss Excerpts

Wednesday 4th March 2020 Westminster Hall

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to see you in the Chair, Sir Christopher.

I thank the hon. Member for South Thanet (Craig Mackinlay) for securing this debate, which is on an issue that is overdue for some action. I certainly hope that the Government will take it on board.

The SNP has argued for a reduction in VAT for energy improvement measures in homes. We asked for reductions in VAT for more modern buildings, those affected by the cladding scandal. I agree with the hon. Gentleman that there is a strong argument to do that for listed buildings as well. Research by the Federation of Master Builders demonstrates that cutting VAT for energy-efficiency improvements, for example, would significantly boost the UK economy and generate thousands of jobs, bring empty properties back into use, improve the energy efficiency of our housing stock, reduce the incidence of fuel poverty, and protect consumers and legitimate businesses by significantly reducing the competitive advantage of rogue traders.

The hon. Gentleman went into some of the history of the measures we are debating and how they came about. In 2012, when the then Chancellor proposed levying VAT on listed properties, the Scottish Government Culture Secretary, Fiona Hyslop—I note she is still in her post, despite the UK Government being on their fourth Chancellor since then—said in a written answer to a parliamentary question in Holyrood:

“The UK Government’s proposal is clearly a deeply regrettable step in the opposite direction from the approach that the Scottish Ministers advocate.

Maintaining the VAT relief on alterations to listed buildings, and reducing the VAT rate applicable to repairs and maintenance, would be important positive steps which would stimulate economic activity in a sector worth around £2.3 billion gross value added”—

to Scotland’s economy alone—

“a significant proportion of which is attributable to construction activity.”

At the time, she wrote to the Chancellor,

“urging him to withdraw from this policy”,

but, as we know, that is not always taken on. However, there is always an opportunity for the Government to reflect on the error of their ways—perhaps they would be wise to do so.

There are many arguments around the subject, and rationales about Tudor swimming pools and the like have been given, but this is not about people in big mansions getting their houses repaired. The reality is that half of listed properties in this country are occupied by people at the very low end of the socioeconomic distribution. This is not necessarily about attacks on the wealthy or just about protecting glorious listed buildings; this is about the homes that people live in.

There are 1,840 derelict sites and buildings in Glasgow city; 126 of those are in the listed buildings at risk register. It is no surprise that many are concentrated in areas of higher deprivation. People in those areas are three times more likely to live near vacant derelict land, but they are the same people who benefit most from having those buildings repaired and brought up to standard.

[Hywel Williams]

There is a particular issue where there is a high concentration of listed buildings in poor condition and low incomes. The market in general has a chilling effect on the provision of specialist labour, as the hon. Member for South Thanet (Craig Mackinlay) mentioned. There is a more general effect of the amplification of housing deprivation when one compares the many hundreds of thousands of new builds, particularly in urban and suburban areas in the south-east, which are free of VAT, with buildings such as those in my constituency, where 20% VAT is paid.

[Alison Thewliss]

The hon. Gentleman is correct; it is a perverse incentive that a building could be perfectly fixable, but it is more cost effective to demolish it and build something new. We want to incentivise people to keep those buildings. In Glasgow, huge swathes of the city have been demolished and replaced with newer and less adequate buildings, which in turn have been demolished, rather than investing in the original buildings. In the areas where we still have a dense tenemental stock, there would be a real benefit to incentivising people to repair those buildings and keep them, because they are fundamentally good and we should have them for the future.

Within the city of Glasgow there are 25 different conservation areas. In my constituency there is Central, Park, East and West Pollokshields, Dumbreck, Strathbungo, Bridgeton, Hazelwood, Walmer Crescent and St Vincent Crescent. They all have different characters: the working-class neighbourhoods of Bridgeton have a beautiful cross, which would see the benefit of further repairs. It is very different in character from West Pollokshields, where there are bigger houses.

All those areas need repair and maintenance, because times have changed since the Victorians built them. They need continual maintenance and repair to avoid dramatic tenement collapses, which do happen on occasion in the city. That is because, despite the best efforts of organisations such as the Glasgow City Heritage Trust, which pays out building repair grants, development grants and grants that go towards those traditional skills, they are just papering over the cracks of a larger problem of the maintenance of tenement stock. My hon. Friend the Member for Glasgow East (David Linden) has also made the argument in the House that we need to look at these issues and find ways of tackling the burden on cities. Reducing that 20% VAT rate as low as we can would have a huge impact on our ability to deal with that.

The social cost of derelict and damaged buildings is huge. They are deeply uninspiring for people who live next to the sites and look out on them. They are a drag on aspiration and motivation, and they often serve a visual reminder to many people of a distant, out-of-touch Government who neglected the industrialised communities over generations and left them to rot. The Scottish Government have made some progress in reversing the situation through the Community Empowerment (Scotland) Act 2015, which gives community groups the option to repurpose derelict buildings for the good of the people who live in those communities. The funding to do so comes from the Scottish Land Fund. Those are community-led, focused actions, instead of the top-down approach that has often failed communities and left them behind.

From a policy perspective, investment in high-deprivation areas makes economic sense. People in those areas are much more likely to spend their money locally, and repurposing buildings to create jobs or businesses has a high multiplier effect. Will the Minister look at the issue from that point of view, as a good endeavour to incentivise people in those areas?

There are plans afoot in my constituency to refurbish the old St James Primary School in Calton, to provide a brand-new primary school—a much-needed facility that will, if it goes through, specialise in Gaelic education, to become the next Gaelic school in the city of Glasgow. The building was built in 1895 but, sadly, stood derelict for 10 years after it was closed by the Glasgow Labour administration. At the time, I was a councillor fighting to save it, because it was very much the heart of the community. Without it, the community has no hub—all people see when they walk past is a derelict building with trees growing out of its roof. The council at the time said that it was too difficult to run and too expensive to repair: too expensive to get the energy efficiency measures that were needed; too expensive to fit a boiler to replace the old coal boiler that the janny had to haul coal into. Making the VAT rate for those kind of improvements more incentivised would be a good thing to do.

In addition, there is a lot to do with identity and the importance of those buildings in communities. I urge Minister to take action. As hon. Members have said, the excuse of the EU is finished with, sadly—I agree with the hon. Member for Bath (Wera Hobhouse) on that. As the hon. Member for Arfon (Hywel Williams) said, some of this has been of our own making, but it is now up to the Government to put that right.

Tax Avoidance and Evasion

Alison Thewliss Excerpts

Tuesday 25th February 2020 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

The tax system in the UK is hugely complex. Every Finance Bill that comes along adds layers of complexity, leaving a taxation system that is unwieldy and difficult to understand, and even more difficult for the Government and HMRC to control. It leaves loopholes that incentivise tax avoidance and evasion. My SNP colleagues and I have long argued for a root-and-branch review of the entire system, and I am grateful for the opportunity to repeat those calls today.

The Scottish National party will continue to lead the fight against tax avoidance and evasion at Westminster. In the last Parliament, we were proud to secure the House’s support for a Finance Bill amendment seeking a review of the impact of UK tax avoidance measures. We forced the UK Government to accept the need to tackle the abuse of Scottish limited partnerships as money-laundering vehicles, and supported cross-party efforts by the right hon. Member for Barking (Dame Margaret Hodge) and her colleagues to drag the UK Government into the 21st century by adopting Magnitsky powers to sanction overseas officials guilty of human rights violations.

The SNP has just won a landslide of Scottish seats on a manifesto demanding tougher action on tax avoidance, including a review of the closure of HMRC offices in Scotland and across the UK; immediate action, including reform of Companies House, to uncover the beneficial ownership of SLPs and other companies and trusts; measures to improve the transparency of tax paid by international companies to ensure that they make a proportionate contribution to tax revenues; multilateral efforts to address tax challenges resulting from the digitisation of the economy; further action by the UK Government to tackle international tax avoidance; the full implementation of the fifth money laundering directive; a fit-for-purpose online retailer tax; a review of the tax rules governing intermediaries—known as the IR35 tax rules—and problems with implementation of the loan charge; and a comprehensive inquiry into the digitisation of tax, to uncover the reasons for HMRC and UK Government delays which mean that we still do not have the 21st-century tax payments system that could help to tackle avoidance and evasion.

We have heard a great many well-meaning arguments from the official Opposition this afternoon, but, unfortunately, this is a situation to which Labour contributed when it was in power. Instead of simplifying the tax system, it introduced policies such as the IR35 tax rules, which have made staffing extremely difficult for the NHS and other public sector organisations.

While some very welcome action has been taken, no UK Government have yet created a comprehensive anti-avoidance rule. Legislation has come to shut down loopholes as quickly they have appeared, and then, as night follows day, new schemes have emerged to circumvent the law. We saw then, as we do now, plenty of tinkering at the edges of the system but no meaningful action to align taxes for different kinds of workers. Successive Chancellors have passed up opportunities for radical reform, and have simply added layers of bureaucracy and complexities to the existing system. There are now ample places in which those who do not want to contribute can hide within the system.

Last year, Tax Justice UK published a report on the worrying scale of loopholes in, for example, inheritance tax. On the basis of HMRC figures, it states that the vast majority of those tax breaks go to properties worth more than over £1 million; and that is over and above the usual inheritance tax allowance. Instead of benefiting small farms or family businesses, the tax breaks constitute a massive tax giveaway to those who are already very wealthy. The report’s findings only highlight what we know to be true: that this UK Tory Government have ensured that the rich get richer, while at the same time the poorest people in society have experienced real cuts in their incomes, and are less likely to benefit from policies such as the increase in the income tax threshold.

I appreciate that the new Chancellor has not yet had time to outline his plans, and I hope that he will take a different approach. However, the accounts of his professional background by the shadow Chancellor and in this week’s Private Eye lead me to hae ma doots. Extremely worrying noises have been coming from the Government in respect of the post-Brexit regulatory landscape. Already this year we have seen the UK inch closer to the world’s top 10 countries for financial secrecy, rolling back progress made in previous years on increasing transparency. We have all heard talk of a ”Singapore-on-Thames” approach to the City of London. That would be bad news globally, but also for the people who live here.

With a Tory Government full of Thatcherites, who have no interest in creating a level playing field on tax with the EU, there is a real risk that the Prime Minister has set the UK on a race to the bottom on tax avoidance. Just weeks after the UK left the EU, the European Union has added a British overseas territory, the Cayman Islands, to a list of tax havens. Markus Ferber, of the group of the European People’s party (Christian Democrats), has said:

“The UK would be well advised to take note that EU finance ministers put a British overseas territory on the blacklist of tax havens.

This sends a clear signal that the idea of turning the UK into a tax haven will not be acceptable to the EU.”

The Minister who will wind up the debate should explain exactly what he is doing to address that blacklisting as a matter of urgency.

There are already significant holes in the system preventing dirty money from being moved around. My former colleague Roger Mullin and I have spoken on numerous occasions in this place about the problems surrounding Scottish limited partnerships, which still freely allow people to hide and move dirty money between countries.

[Hannah Bardell]

Scottish limited partnerships have a real human impact. Is my hon. Friend aware that money is being laundered from, for instance, Moldova through SLPs? That is having a hugely detrimental impact. One human rights defender whom I know from Moldova has been driven out of her own country, and is having to live elsewhere.

We must bear in mind that human impact, but we must also bear in mind the reputational impact on Scotland. Scotland wants no part of schemes of this kind, and the UK Government should clean up their act.

[Alison Thewliss]

I totally agree with my hon. Friend. Anyone who thinks that moving money around in this way is consequence-free should look very carefully at what actually happens to the proceeds of these funds when they are moved around.

SLPs have their own separate legal personality, which means that a firm can contract and own assets without lifting the veil to see who is really buying them. In 2016 the UK Government obliged SLPs to register a person of significant control, but there is virtually no enforcement and virtually no consequences for people who fail to register companies in the proper way. Last time I checked, thousands of partnerships had failed to register a person of significant control. I should be interested to learn from the Government how many fines have been recovered, and the value of those fines.

This scandal is still having an impact, despite legislation being in place. The dogged investigative journalist David Leask revealed in January that SLPs had been implicated in the payment of mercenaries in a private air war in Libya. If the United Nations is taking an interest in the abuse of SLPs, this UK Government should be taking action urgently. A quick Google search reveals umpteen companies advertising their services in setting up SLPs from abroad and extolling the virtues of this tax-free, opaque way of conducting nefarious business. There is no comeback for firms protecting those who will not register a person of significant control, and no comeback for the perpetrators either. It is well known that SLPs are being used for criminal activity and have been linked to international scandals, not least the Azerbaijani laundromat, in which £2.9 billion was laundered through four UK companies, which were able to file paperwork disguising their true ownership without any flags being raised.

At the heart of this is the gaping chasm in our regulatory system that is Companies House. Companies House is obliged only to register companies, not to carry out any verification or due diligence. This must change urgently, because it undermines the credibility of the UK. It is farcical that the only person convicted for filing false information has been a whistleblower, Kevin Brewer, who did it to highlight the nonsense of the registration process. I ask the Minister: what has changed since that prosecution? Why will the Government not reform a system that is open to such flagrant abuses? If I want to do my tax return online or get a passport, I would require to use the UK Government’s Verify scheme. If I want to set up a company, I can do so online for £12 with absolutely no checks. Why do the UK Government insist that people pay so much for driving licences, passports or UKVI applications but so little to set up a company, especially when those companies can go on to facilitate tax avoidance and evasion? It is high time the Tories sat up and took stock of the scale and extent of the tax avoidance and criminal activity linked to the lack of proper checks by Companies House and the abuse of SLPs. Only by doing so can they put forward a practical and effective solution that will adequately tackle the problem.

HMRC highlighted a loss in 2016-17 of between £1 billion and £1.5 billion on digital sales through VAT fraud. I note that the Association of Accounting Technicians has called for online platforms to be made liable for the collection and remittance of VAT. That money is going uncollected. We know where the goods are going—they are going into people’s houses and through retailers—so there is a digital chain there that we can follow. The UK Government should deal with this VAT avoidance.

I also ask for an update on the registration of overseas entities Bill, on whose pre-legislative joint scrutiny Committee I sat. Property is yet another way in which money can be hidden and taxes avoided, and that Bill will be a vital tool to clamp down on the flow of dirty money. The Committee also noted the abuse of trusts—as we close one loophole, another opens—and the Government must look into that as well. Trusts are being used as a means of hiding the true ownership of property and companies.

[Hannah Bardell]

My hon. Friend mentions the Bill on whose Committee we both sat. She led, admirably, for the SNP on that Committee. Does she recall that it was not until the attack on UK soil, in Salisbury, that the Government really sat up and took notice of the genuine issues that were raised in the Sanctions and Anti-Money Laundering Bill? It should not take an attack on UK soil for the Government to act on these issues.

[Alison Thewliss]

My hon. Friend is absolutely right. The change of tone during passage of the Sanctions and Anti-Money Laundering Bill was palpable. It really does say something that the Government only really took the issue of dirty money seriously when it arrived on their own doorstep. We cannot wait for that to happen again; we must take action now.

Another area where the UK Government are taking entirely counterintuitive action is in closing local HMRC offices. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) had an Adjournment debate in January on the closure of the Cumbernauld office, and I know that other colleagues share those concerns about the imminent closure of offices in Aberdeen, Bathgate, Livingston and other locations. While I have something of an interest, as the local Member for the proposed Glasgow regional centre, I cannot see the logic in cutting staff numbers and losing not only jobs in communities but the important local knowledge that can be brought to bear. My hon. Friend the Member for Livingston (Hannah Bardell) mentioned that a House of Commons Public Accounts Committee report last year criticised the Government’s lack of robust business planning ahead of the decision to base local HMRC offices in “expensive” cities. It is a colossal waste of public money to move offices into city centre locations where the rents will be significantly higher and the benefits will not be seen.

[Hannah Bardell]

On the matter of the movement of offices, another important issue is accessibility. A number of members of the union who have spent time in that new, expensive office in Edinburgh have said that the accessibility for people with disabilities is very poor. I wrote to the Government about this before the election last year but I got a very poor response. Does my hon. Friend agree that these new, expensive offices should at the very least be accessible, and that they should not have been moved in the first place?

[Alison Thewliss]

I agree. There is a strong argument that the value of the local offices in communities such as Livingston and Cumbernauld is significant. It is much easier for people to get to work there rather than commuting, which of course adds to the environmental damage. It is much better to have a shorter commute to work. The PCS union has also criticised the move and called into question HMRC’s rationale, as has my hon. Friend the Member for Glasgow South West (Chris Stephens), who may have more to say on these things later.

All of this comes at a time when the head of HMRC says that the authority may need to hire an extra 5,000 staff to deal with the logjam at the border because of Brexit. This is a time of growing complexity, and investment in staff and expertise is crucial. Without that expertise, the UK Government are leaving themselves open to a further loss of tax revenue and further potential evasion and avoidance as we head into Brexit.

It is only right that people should pay the taxes that they owe, but HMRC’s botched implementation of the loan charge is nothing short of a disgrace, leaving many people facing the prospect of bankruptcy. The UK Government must, of course, pursue vigorously the organisations that have facilitated those loans, and they must work constructively with those who are seeking a responsible and reasonable repayment plan—one that recoups the unpaid tax while avoiding the unacceptable risk of bankruptcy and homelessness. If HMRC cannot deliver that, an independent arbitration mechanism should be used.

This is not some kind of academic argument. This issue has implications for the real world, for the money available to our public services and for the growing gap between rich and poor. The shadow Chancellor set out the limitations of HMRC’s estimate of the tax gap at some £35 billion. There is a real implication here for all our constituencies when we see cuts coming down the line. Paying tax is a duty. It is the price of a fair society, not a burden to be avoided. Those who seek to avoid and evade their responsibilities, and those who facilitate their behaviour, need a strong message from the UK Government. The Government must explain why they are failing to stop the siphoning away of money that could be paying to educate children and care for the elderly. The SNP is committed to clamping down on tax avoidance and evasion, but we do not yet have the full economic levers to do so as they are still held by the Treasury and HMRC. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) has pointed out on many occasions that small countries are much better and more efficient at gathering tax, so I suggest that if the UK Government will not act, they should devolve the powers to Scotland and let us get on with the job of building a fairer society.

Oral Answers to Questions

Alison Thewliss Excerpts

Tuesday 11th February 2020 Commons Chamber

[Sajid Javid]

The hon. Gentleman needs to get his facts right. The EU has not ruled out equivalence. Indeed, it agreed in the political declaration to work at speed on an equivalence decision by the end of July this year, and that is welcome.[Official Report, 13 February 2020, Vol. 671, c. 12MC.] We are working very carefully and closely with the EU on having a broad agreement that will mean that our financial services continue to thrive—not only for our benefit, but for its benefit.

[Alison Thewliss (Glasgow Central) (SNP)]

Figures released this morning by the Office for National Statistics show that GDP was flat in quarter four, growth is at one of its slowest rates since the financial crisis, the service sector is stagnating, and manufacturing has been particularly hard hit. When will the Chancellor accept the reality that these Tory Brexit plans are playing havoc with the economy, and damaging the wellbeing and prospects of all our constituents?

[Sajid Javid]

The hon. Lady will know that growth would have been hit by the uncertainty created in this Parliament before the general election. Since the general election, confidence is back because this country has said no to Marxism and has got on with Brexit.

[Alison Thewliss]

The Chancellor puts forward a ridiculous prospect of the choices facing this country, because Brexit is the real and present danger for the economy. Just-in-time manufacturing is a critical part of the economy. Elizabeth de Jong of the Freight Transport Association has said of the revelation that the Chancellor of the Duchy of Lancaster’s smart border will not be ready until 2025:

“Frictionless trade has been kicked to the touchline… It’s going to be really costly for business.”

Can the Chancellor tell me what impact four years of Brexit chaos at the border will have on the UK economy and jobs in manufacturing in all our constituencies?

[Sajid Javid]

The hon. Lady talks about the importance of manufacturing. Since the change in Government in 2010, we have seen 58% growth in auto manufacturing and 22% growth in aerospace manufacturing. Again, because of the recent general election result, a survey of manufacturers carried out by the CBI a few weeks ago saw the biggest increase in confidence in the history of that survey—in more than 60 years.

Lloyds, HBOS and the Cranston Review

Alison Thewliss Excerpts

Tuesday 4th February 2020 Westminster Hall

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute to the hon. Member for Thirsk and Malton (Kevin Hollinrake) for his diligence and for his role in the all-party parliamentary group on fair business banking, and for bringing yet another debate. I also pay tribute to Heather Buchanan for her diligent work behind the scenes.

If this process has taught us anything, it is that we need urgently to look at reforming the banking system into an ethical model that works for customers, whether they are private individuals or businesses, because this scandal has evaded every safeguard that ought to protect customers. As the hon. Member for Strangford (Jim Shannon) said in hope, there should now be a positive influence on the behaviour and attitude in banks, but an awful lot still needs to change. As he also mentioned, this is much bigger than only Lloyds and HBOS, and we need to look more widely at the issue.

Customers were defrauded of millions of pounds, and there was nothing short of a corporate strategy within Lloyds to cover that up. There is evidence that the bank’s own compliance officers were involved in the cover-up. The scandal was not uncovered by a regulator but by whistleblowers such as Sally Masterton, who was treated appallingly by Lloyds—as the hon. Member for Thirsk and Malton laid out—and put on enforced leave for her part in bringing the issue to light. She was even prevented from working with the police to bring about an end to the scandal. If we cannot rely on whistleblowers to be supported through this process, we have a serious problem. The hon. Gentleman also mentioned the Turners, and we should pay tribute to them for their 10-year battle through this as well. It should not take 10 years for people to get a reasonable response and to get justice when they have been wronged.

The independent Griggs review was supposed to deliver compensation to the victims, but this too fell short of expectations. The role of the independent reviewer was to oversee cases to ensure that they were fair. However, customers criticised the process, owing to the unaccountability of the reviewer, who would often fail to disclose what information had been provided to them from the bank. Some described it as corrupt, and many have reported it as being a thoroughly awful experience. Cranston himself described the banks as confrontational and, at times, forceful, which is completely inappropriate, regardless of the situation. Customers had no way of knowing what was fair or of seeing the working behind it. As the hon. Member for Thirsk and Malton mentioned, there is an inherent power imbalance within this, with people having to go to court and pursue this over many years, which many could not afford to do.

I know that Members across the House will be grateful for Sir Ross Cranston’s diligent work in his review of this fiasco, and we thank him for that. Particularly welcome is his recommendation that customers should be released from egregious settlement agreements, which many customers agreed to as they were offered on a take-it-or-leave-it basis by the bank; customers often felt that they had no other choice.

Sir Ross Cranston also recommends that the bank must arrange for the reassessment of direct and consequential losses by an independent body. In his report, he says that

“this part of the Customer Review, both in structure and in implementation, was neither fair nor reasonable… Other inconsistencies also resulted in unfairness… The general failure to communicate in a sufficiently clear and transparent way caused confusion”.

The bank did not make a single redress payment for direct and consequential losses to any business individual affected by the scandal. This could cover such damage as loss of opportunity, loss of profits, reputational damage, and claims for the impact of the scandal on a customer’s personal life. Given the time period over which this took place, it is clear this could have had a huge impact on the lives of the victims of this scandal.

It is unfortunate that banks cannot always be relied on to act in the best interest of their customers without adequate enforcement of the rules. We cannot allow them to mark their own homework. I urge the Minister to investigate the possibility of creating a permanent commercial financial dispute resolution platform, which would allow a streamlined process for consumers to hold banks to account and go some way towards alleviating the suffering of victims of mis-selling.

Although there is no doubt that some individuals went to great efforts to bring justice to the victims of this scandal, there is still no straightforward recommendation for redress for customers, for them to achieve the fairness and justice they deserve. We have seen people lose their businesses and livelihoods before any justice was served. People such as those mentioned by the hon. Member for Strangford, who have suffered through ill health or who have aged in the intervening years, need to see that soon. For many people, those opportunities may be lost forever. The Treasury must act to ensure that a scandal of this magnitude cannot happen again. The legacy of this saga must be change across the board.

My hon. Friend the Member for East Renfrewshire (Kirsten Oswald) mentioned Clydesdale and Virgin Money. We know other issues are brewing out there. I ask the Minister to take those into account. Again, I thank Sir Ross Cranston for his report, and the significant pressure for change, which leaves it to us and the UK Government to act.

National Productivity

Alison Thewliss Excerpts

Wednesday 22nd January 2020 Westminster Hall

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to see you in the Chair, Mr Paisley, and I thank everybody who has come to contribute to today’s debate and try to resolve the productivity issue that is plaguing the UK economy. The hon. Member for Barnsley Central (Dan Jarvis) pointed out that there is a real need for investment in skills, research and development, creating a balanced economy and infrastructure, and also a need to tackle the deprivation that holds back so many people in so many communities from accessing and participating in the economy.

Since the Scottish National party came to power in Scotland, productivity there has grown three times faster than in the UK—a rate of 1% a year, compared with the UK average which, as the hon. Member for Barnsley Central said, is 0.3%. When we consider that we have done that against the backdrop of austerity, and more recently against the backdrop of Brexit, it is all the more impressive. We are doing things such as encouraging businesses to sign up to the Scottish business pledge. According to its website, 722 businesses have now signed up to that pledge, including firms of all different sizes, large and small, from multinationals such as Coca-Cola and Deloitte to The Good Spirits Co., which is a small shop in my Glasgow constituency. Hearts football club has also signed up to that pledge, so a range of different organisations have signed up to it.

The Minister will be interested to hear that the Scottish business pledge has three core elements: payment of a real living wage, not the Chancellor’s pretendy living wage but one that people can actually afford to live on; action on the gender pay gap; and no inappropriate use of zero-hours contracts within the companies that sign up. Once companies have met those three core pledges, they are encouraged to work towards further elements of the Scottish business pledge, including environmental impact, having a skilled and diverse workforce, workforce engagement, innovation, internationalisation, community and prompt payment, all of which are important to businesses of all sizes.

I encourage the Minister to look at that pledge; I believe it has been a hugely important factor in improving productivity rates in Scotland, because businesses are being asked to sign up to something that will make them, or encourage them to, act responsibly. That pledge also has a wider effect on the economy, as those businesses spread the good word and encourage more and more people, including those in their supply chains, to sign up to it. This is not just an issue of business growth, but of the wellbeing of employees, which has a huge impact on productivity and how people feel when they turn up to work in the morning. The Minister needs to look at that further as well.

The Scottish Government are taking other measures, such as the Scottish National Investment Bank legislation which, excitingly, passed unanimously in the Scottish Parliament yesterday. The Scottish National Investment Bank seeks to increase innovation, give support to small and medium-sized enterprises and build an inclusive, high-tech economy, which is incredibly important. We can see how investment banks such as KfW, which was set up post-war in Germany, have changed, worked for and invested in their economies; for example, KfW has changed housing so that investment in that sector works towards greener standards. There are real things that we can learn, and it seems bizarre that the UK Government at that time set up an investment bank in Germany but never thought to set one up for itself, when we could use it so much.

The hon. Member for Barnsley Central mentioned the importance of R&D. The Scottish Government have invested £37 million in R&D and have a target of doubling business investment by 2025, which should go some way to make sure that people are investing in the businesses, technology and infrastructure that they have, as well as in people. We have a green new deal that will harness the power of that Scottish National Investment Bank, including a £3 billion green investment portfolio and a green growth accelerator to attract green finance to Scotland and bring the inward investment that will help drive its economy. We in Scotland have also recognised the importance of inclusive growth, and have been recognised internationally for our approach to inclusive growth. If an economy leaves people behind, it cannot be a particularly good or productive economy, never mind a happy one.

The Scottish Government are reviewing measures to tackle historic disparity. It would be useful to hear whether the Minister has any further information about things like the shared prosperity fund, because European money has been absolutely crucial to addressing that historic disparity in a number of ways. In areas of Scotland where we have been working so hard over so many years to try to correct that post-industrial Thatcher legacy, European money has been crucial, not just for constructing buildings and other things, but putting money into training programmes, universities, colleges and infrastructure. During last week’s education debate, my hon. Friend the Member for Glasgow North West (Carol Monaghan) mentioned the importance of college education in Scotland. I have City of Glasgow College in my constituency, which now has two campuses in the city centre, and looks and feels like a beacon that will attract people to enter. It does not sit, up on Cathedral Street, with any less dignity than the University of Strathclyde, which neighbours it, and that is important for how people feel when they are accessing those education institutions.

Our lack of control over wages in Scotland is a real challenge to productivity. I have already mentioned the Chancellor’s pretendy living wage; I am yet to hear a reasonable explanation as to why a 16-year-old starting in the same job and on the same day as a 25-year-old is worth over £4 less, which is all they are entitled to. The majority of people in those low-paid jobs will be women, and they will be in part-time work as well, which makes it very difficult for those women to bring more money in to support their family and to bring along the next generation. They will be struggling. As the hon. Member for Wirral South (Alison McGovern) said, it is crucial that we look at women as part of this productivity issue.

I attended the graduation ceremony at the Open University, which plays a huge role in enabling people who might not have been able to access more traditional forms of degree to obtain skills. At the end of the graduation ceremony, the participants in the room who were receiving their degrees were asked to put up their hands if they had children, had a disability, had caring responsibilities, or were working while they were doing their degree. Hands went up everywhere. I am pretty sure that no other graduation ceremony would look like that, so I ask the Minister to consider the importance of the Open University in ensuring that productivity is increased.

I also ask the Minister to review the mechanisms that are currently holding people back, particularly universal credit. Universal credit makes it incredibly difficult for people to change their job and improve their circumstances, because they are penalised when they try to do so. For example, the two-child limit traps working families who perhaps started off in life with three children, and were working quite well until something went wrong. It makes it incredibly difficult for them to get back on track when they cannot get enough money to feed their family; they end up in a trap that they cannot work their way out of. The childcare element of universal credit should be paid up front, rather than in arrears, because that is a barrier to families taking on work. It makes it very difficult for families to access employment when they have to pay those childcare fees themselves and claim them back. Other elements of universal credit, such as conditionality, sanctions, and the fact that if a woman is added as a second earner in a household it automatically has an impact on household benefits, also make it difficult for those families to improve their circumstances.

Other hon. Members have mentioned entrepreneurship, self-employment and skills shortages, all of which are important to addressing productivity. Looking ahead, all those things will be made worse by Brexit. I disagree with the hon. Member for Strangford (Jim Shannon); he always views things with great optimism, but I am afraid that I do not share his optimism about Brexit, because it will have an impact on investment and on skills. At the moment, skills shortages are filled by EU nationals’ being able to work and travel freely. I fear that the absence of those people, who are running businesses and are in our schools and our education system, will have a significant impact on our ability to improve the productivity of this country, and that impact will continue for many years to come.

Interestingly, the Chartered Management Institute sent a briefing to the debate. Its research, which is backed by the Bank of England, mentions

“a long tail of poorly managed and unproductive organisations”—

a real issue, which the Minister would do well to address. It gives a figure of 2.4 million “accidental and unskilled managers” and has worked on management apprenticeships to try to ensure that firms do not just put people into management roles without that support. An interesting aspect of the debate is to ask what more can be done to support those managers—those people who end up in positions of influence—and make sure they understand that their roles are important, that they are well supported, and that they can play an important and active role in their organisation to make it more productive.

In Scotland we look to the experience of the Scandinavian countries, which have happier and, by all definitions, more productive and equal societies. I look at them with envy, because they have the full set of economic powers that small independent countries can have and they do well for their people—not just for their economies—as a result. I imagine what Scotland, as an independent European nation, could do with the full set of economic levers to move towards being a more inclusive, fair and prosperous country for all our people. That is very much something to aspire to, but which we cannot fully reach at the moment in the UK.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr Simon Clarke)]

I begin by echoing the thanks of all Members to the hon. and gallant Member for Barnsley Central (Dan Jarvis) for calling today’s debate on an issue that goes to the heart of so many of the issues facing our economy and our society. I congratulate him on his key role in progressing the devolution deal for South Yorkshire, which we all hope will help to unlock significant productivity benefits for the people of his region. I know he shares this Government’s view that devolution across the nations and regions of the United Kingdom can boost productivity across the country, and we look forward to working together to achieve that.

Giving power to local people on the ground is undoubtedly the best way to make the most of every area’s unique strengths and to confront their unique challenges. That is why since 2014 the Treasury has led negotiations with several city regions across the country to strike landmark deals with eight places as part of a devolution revolution. The slogan might have changed, but the metro mayors are now delivering on local priorities. Tees Valley, where I live, is home to the South Tees Development Corporation, which is regenerating the former SSI site at Redcar. Manchester, the home of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), has a focus on trams. We are talking about Northern Powerhouse Rail connecting up the regions better. Liverpool has its rail networks, as the hon. Member for Wirral South (Alison McGovern) alluded to, which are key to driving the benefits that we all want. Our commitment to enabling local people, who know their areas best, to be the masters of their own economic destiny could not be stronger.

We saw further progress just last week, as South Yorkshire moved forward with its own deal that agreed £900 million of new Government funding over 30 years for investment in local priorities identified by the Mayor and his combined authority, not by Westminster. I will be travelling to Leeds next week to hold talks with West Yorkshire’s leaders on a mayoral devolution deal for Leeds city region. We are determined to build on Leeds city region’s strengths in digital, financial services and the creative sectors, as we level up and share the success of the opportunities ahead. We will put our money where our mouth is for the right agreement. I will go to Leeds next week in search of that deal.

We know that Britain is currently too centralised and that solving the productivity puzzle will need us to think differently. We cannot just sit in Whitehall, pull a lever and cross our fingers—I completely understand that. People want control over their lives to come up with their own plans and, crucially, to be able to put them into action more quickly than the machinery of central Government sometimes allows. We need to give them that. We are hugely committed to making devolution to Sheffield city region a success. We look forward to continuing to work closely with regional leaders to build an economy that works for everyone by improving connectivity, strengthening skills, supporting enterprise and innovation and promoting trade to ensure that the people of South Yorkshire benefit from the powers and investment envisaged in the deal.

Clearly, such issues transcend the borders of England. The hon. Member for Strangford (Jim Shannon) referred to Northern Ireland, and I am delighted that we have managed to get devolution back up and running at Stormont. It is crucial to ensuring that all parts of the community in Northern Ireland feel the benefits of renewed growth and renewed control over their own destiny. I very much look forward to picking up talks with the new Ministers there as part of our efforts to make sure that our policies and theirs work as closely as they can for our shared benefit.

In her powerful speech for the SNP, the hon. Member for Glasgow Central (Alison Thewliss) mentioned the UK shared prosperity fund. Obviously, we are determined to make sure that that is delivered correctly; we need to take the time to get that right. I confirm that we will be setting out our full plans at the comprehensive spending review later this year. That will be the moment when we start unveiling how that will work and give people the clarity that they need to make the investment decisions over the course of the years ahead, as we transition out of the European Union.

[Alison Thewliss]

The Minister says “correctly”. His definition and interpretation of that might be slightly different from mine. Will the Scottish Parliament and the Scottish Government have full control over the purse strings and decision making for the shared prosperity fund?

[Mr Clarke]

I am afraid the hon. Lady will have to wait for the publication of the consultation at the comprehensive spending review. The key point is that we want to make sure that this gives the Scottish Government meaningful control over key aspects of resources. She mentioned European funding in her remarks. The point I would submit is that that money was fundamentally UK money that was recycled back to this country, with conditions attached. We should be clear that we want to devolve control of that funding to the lowest possible level, and we will inevitably want to do so in a spirit of genuine concord with Holyrood.

The Government will set out further information about our plans here in an English devolution White Paper this year, which will outline our strategy to unleash the potential of our regions, level up powers and investment and give power to people and places across the country. Alongside that, we will publish a refreshed northern powerhouse strategy, building on the successes of the existing strategy in bringing together local leaders to address key barriers to productivity in the regions.

As the hon. Member for Islwyn (Chris Evans) said, productivity is not a concept that always commands headlines, but it goes to the heart of national prosperity. It is the best way to boost wages, improve living standards and enhance economic growth across the country, regionally as well as nationally. We are working hard to build a stronger and fairer economy—dealing with the deficit, helping people into work and cutting taxes for businesses and families. There are 3.7 million more people in work, and the hon. Member for Wirral South alluded to the record rate of women in employment, which is worth highlighting. More than 60% of the increase is in regions outside London and the south-east, but we need to go further and we need to be candid about the extent of the productivity challenge we face. Productivity growth slowed globally in the aftermath of 2008, but the slowdown has been particularly acute here. The Government are committed to tackling that challenge as we enter a new decade in which we are less under the shadow of the financial crisis and the impact on our public finances.

The key will be an ambitious programme of investment. Infrastructure is a key driver of productivity—it is not sufficient in itself, but it is an absolute good. It links people to jobs and products to markets and supports supply chains, encouraging domestic and international trade. It affects daily life: speeding up internet connectivity means less time staring at blank screens; improving roads and trains, which the hon. Member for Stalybridge and Hyde rightly mentioned, means less time stuck waiting to get to work and more time to play; decarbonisation means cleaner air for us all to breathe and more efficient energy. When the national infrastructure strategy is published alongside the Budget on 11 March, that will be a core moment in this piece. We will set out further details of our plan to invest £100 billion to transform our infrastructure and achieve a real step change. The strategy will set out our long-term ambitions across all areas of economic infrastructure, including transport, local growth, decarbonisation, digital infra-structure, and infrastructure finance and delivery.

Alongside that investment in our physical capital, it is essential to focus on and improve our human capital, as the hon. Member for Wirral South, whom I had the pleasure of serving alongside on the Treasury Committee, rightly said. I know that from my constituency. The hon. Member for Barnsley East (Stephanie Peacock) is right to say that talent is evenly spread across this country, but opportunity is not. We know that, which is why our recent manifesto pledged a national skills fund—I was briefed on it yesterday, and it is exciting, bold and visionary. We all know that it needs to happen, because there has been profound personal, human dislocation as part of our transition from one era of industrialisation to a new one. That has had uneven consequences across England, let alone across the UK. We will seek to give a leg up to people looking to get onto the career ladder, support those wanting to switch careers, and support growth by ensuring firms can get access to the skills they need.

The hon. Member for Stalybridge and Hyde referred to Be the Business. I had the pleasure of meeting it last week, and it is hugely impressive. I heard first-hand from several of the entrepreneurs it has helped about how targeted interventions and upskilling have helped them to be better business leaders. We need more of that to create a culture of entrepreneurship, which, as the hon. Member for Islwyn said, is not always common in all parts of the United Kingdom.

Increasing our productivity also means innovating. The hon. Member for Barnsley Central referred to the AMRC in Sheffield. That is precisely the kind of thing that we want to see more of. That is why we are committed to meeting our target of raising investment in research and development to 2.4% of GDP by 2027, ensuring that the UK remains at the cutting edge of science and technology. One of the great frustrations of recent decades is that the UK has so often come up with brilliant ideas but has not had the opportunity to build them out at scale. That needs to change. If we do that correctly, there is so much good that we can unlock and economic potential that we can unleash. We are increasing public spending on science and innovation by an additional £7 billion by 2021-22, which marks the biggest increase in 40 years.

The point that the hon. Member for Wirral South made about human capital, and in particular women, was well made, and I take it to heart. It is something I have been talking to my officials about. The Government are seized of the cost of childcare and the need to resolve fundamentally the problem we face with social care, which has so many spillover consequences for our health service and our economy, and we will be coming forward with proposals. Particularly on the social care piece, we genuinely welcome constructive engagement with the Opposition as we try to build a settlement that has lasting legitimacy. We want to do it right for successive generations, which will doubtless encompass Governments of both colours.

On female entrepreneurship, my predecessor—the current Secretary of State for Housing, Communities and Local Government—and I are working with Alison Rose to develop the Investing in Women code, which will help to pioneer work. We are looking to increase lending to female entrepreneurs to increase the possibilities. Clearly, if someone cannot even make the time to work because of competing priorities, that constrains them. I genuinely take the hon. Lady’s point to heart, and I will continue to work on it with officials.

Economy and Jobs

Alison Thewliss Excerpts

Monday 20th January 2020 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I rise to support amendment (b) in my name and the names of my hon. Friends, and I will start where the Chancellor left off—with claims of having a mandate. Well, he certainly does not have a mandate in Scotland, where his manifesto was rejected wholeheartedly and where the Tories lost more than half their MPs; he has absolutely no mandate to preach to Scotland on his austerity plans. In the last few weeks, we have had a new year, a new Prime Minister and a new UK Government. Under any normal circumstances we would be looking at some kind of fresh start, but for the people of Scotland it is the same old situation: a UK Government who they did not vote for, dragging us out of the UK against our will and sidelining the Scottish Government at every turn.

The Scottish Finance Secretary, Derek Mackay, wrote to the Chancellor looking for clarity on the Budget process on 22 December, but I raised this at Treasury questions on the first day back. I am not sure that the Chancellor even knew what I was asking about, never mind coming up with any kind of response. The Scottish Finance Secretary should not be finding out the date of the UK Budget in the media along with everybody else. It reeks of disrespect, and I think the Chancellor has yet to apologise. This comes after a November Budget that was cancelled so that the Chancellor could avoid any OBR scrutiny in the run-up to the general election.

The Scottish Government and local government in Scotland now face the prospect of writing a budget blindfold, and the stakes could not be higher. I urge the Chancellor and his team to do all they can to make amends for this and to work co-operatively to ensure that the Scottish Government can make the best of this situation. If the non-domestic rates order or the income tax resolution were not passed on time, Scotland could face having to take millions of pounds out of public services. It would be catastrophic, and the blame would lie squarely at the door of this UK Government and this Chancellor. Even if everything does go as smoothly as it can through this process, Scottish councils are being left in the unprecedented position of providing the vital services that the public rely on, without having certainty about their budgets. Should the council tax need to go up, for example, the very practicalities of issuing the necessary direct debit notifications will add time and difficulty to the process for councils across Scotland.

On funding, we welcome the Green Book review that the Chancellor is proposing, but we seek clarity on exactly what this will mean for Barnett consequentials, because in Scotland we still have not seen the £3 billion we are due as the share of the DUP’s bung from the previous Government. We still have not seen the £140 million that we were due from police and fire VAT. We need to know exactly what is going to happen with this Green Book process and how the Scottish Government will be involved in it.

The Chancellor has followed the Prime Minister’s lead in showing a total disregard for the people of Scotland. We voted against this hard Tory Brexit at every available opportunity, and again we are being sidelined. The Chancellor was keen to talk about the immigration Bill and how much that will matter, but in fact immigration is something that we need, and value, very much in Scotland. I have people at my surgery, week in, week out, complaining about this Government’s hostile environment, and all I see the Government doing is making it harder for everyone. They are not making it any better for anybody; they are making it even harder with a further hostile environment being rolled out to EU nationals.

Not only are this UK Government charging ahead with a withdrawal deal worse than the one that the previous Government and the previous Prime Minister came up with, but, as we saw in his interview with the Financial Times, the Chancellor is engaging in a race to the bottom when it comes to regulatory standards. He skated over the issue of equivalency, but we need to have a lot more detail on what he actually means by this. His predecessor knew well how important alignment was, and this Chancellor needs to explain why he has decided unilaterally to rip this up. Businesses are concerned that they are going to face tariffs, price rises and the loss of competitive advantage—particularly for Scotland losing out to Ireland. The Government are doing nothing to assuage these fears. This is particularly significant for services, which make up 81% of the UK’s total economic output.

The Chancellor needs to confirm what his statement means for equivalency in financial services. What is outcome-based equivalency and what exactly does he mean by it? Without equivalency, the UK faces losing access to European markets. For those working in services, the Chancellor must confirm that he still intends to guarantee mutual recognition of professional qualifications, without which they cannot work and move across Europe.

This withdrawal deal threatens economic growth across all the nations of the UK. For years after this Brexit, businesses will find it more attractive to take their investment moneys to other countries—to Germany, to the Netherlands, to Denmark and to Sweden. This is not my opinion; it is the opinion of David Blanchflower, the former member of the Monetary Policy Committee at the Bank of England. It is not just those nations that will benefit; we are seeing investment in Ireland booming. That is particularly clear to those of us watching in Scotland. Ireland has gained more than 4,500 jobs from international firms as a result of Brexit-related investment. IDA Ireland, the country’s foreign investment body, said that its annual results had gone up. Moreover, according to the European Commission, Ireland’s economy grew by 5.6% in 2019—the highest in the EU—while the UK’s growth dropped to its lowest since 2012. That is no coincidence.

The value of being in the EU in a partnership of equals is not lost on my constituents and those across Scotland. I am sure that it will be more pronounced as we see the increasing negative effects of Brexit—because, after all, we have not left yet. The Centre for European Reform says that Brexit has already cost £70 billion, or £440 million a week—something the Chancellor has yet to put on the side of a bus. More and more people in my constituency and elsewhere are realising that this place cannot be trusted with safeguarding Scotland’s interests. The little growth we have seen has been attributed to businesses stockpiling in case of no deal, while investment has stalled since the EU referendum and does not show any signs of recovering soon. Companies cannot be expected to sit on investment for three years; they will move it elsewhere if they can. All the investment lost since 2016 will have an impact on wage growth and job creation for years to come, even if, by some miracle, we can avoid the harshest of hard Brexits. We are already seeing effects creeping into the labour market. The Fraser of Allander Institute estimates that a hard Brexit such as the one that we might face at the end of the month could cost Scotland 100,000 jobs.

Of course, the Prime Minister and his cronies will say that this is all tosh and they are going to get Brexit done—abracadabra and off we go! I am afraid that the Chancellor knows just as well as I do that our relationship with Europe cannot be formed using a three-word magic incantation, no matter how many times it is said. There will be no getting Brexit done this month. There are still years of negotiations ahead. I cannot reassure businesses in my constituency what our relationship with Europe will look like, and I do not think the Chancellor can either.

Turning to other measures in the Queen’s Speech, the Chancellor knows that I have long criticised his pretendy living wage, which fails to meet the aspirations of young people in particular. The gap for young people who will not fall into his pretendy living wage is growing. I do not know—and he cannot explain—why a 16-year-old starting the same job on the same day as a 25-year-old is worth £4.17 an hour less. Why is that? He is extending it to 21-year-olds; can he not see the injustice in not extending it to everybody? He must make it a real living wage. The Living Wage Foundation currently sets the living wage at £9.30 an hour. The Scottish Parliament Information Centre suggests that by 2024, it will stand at £10.90—far short of what the Chancellor is suggesting. He cannot justify that age discrimination in the minimum wage, and no Chancellor has been able to justify it yet. The fact remains that women are more likely to be in part-time, low-wage work, so there is a disproportionate effect on women, who often have families to support. They deserve and are entitled to better than the Chancellor is offering.

I turn to the financial services legislation. Can the Chancellor provide a bit more clarity on the progress of the fifth anti-money laundering directive, which we have to implement, regardless of our leaving the EU at the end of the month? We in the SNP want to see reform of Companies House to uncover the beneficial ownership of Scottish limited partnerships, which were in the papers at the weekend, and other companies and trusts. We want to increase transparency, and we want to ensure that UK company information rules no longer allow illicit businesses to funnel millions of pounds of dirty money from all around the world, using British companies, and specifically SLPs. I wonder, is it any coincidence that in the first four weeks of the election campaign, the Conservatives accepted £567,000 from four companies with links to offshore tax havens in Luxembourg, Guernsey and the British Virgin Islands? I sat on the Joint Committee on the Draft Registration of Overseas Entities Bill. When will we see some progress on that Bill? It has been sitting there for some time, and we have not seen much movement.

It would be neglectful of me not to challenge the Government on their austerity agenda—on issues such as the welfare cuts, the two-child limit, the rape clause and universal credit, which is causing so much pain to so many people across the country.

[Drew Hendry]

My hon. Friend is making a powerful speech. Does she share my dismay that, more than six months after the UK Government said that they would hold a review, Marie Curie and the Motor Neurone Disease Association reckon that over 2,000 people have died before accessing the benefits they should have had through being classed as terminally ill? Is it not time that that scandal was addressed? The Government could take a simple measure to sort that out for these people and their families.

[Alison Thewliss]

I welcome my hon. Friend’s intervention and the work he has done on this issue. The Government have had their eye off the ball on universal credit and so many other welfare measures on which the courts have found against them. We are still waiting to know what they will do to remedy the situation for so many of our constituents who are waiting for their money back from the Government.

Another group of people who are waiting for their money back are the WASPI women. The Government have no plan for the WASPI women, who are entitled to their pension and should not have lost out as a result of successive Governments’ actions. The Chancellor is not even listening to this point, which is a disgrace. There are thousands of women up and down this country who deserve their money back, and this Government need to find a way of addressing that injustice, because these women cannot wait much longer.

This Government need to be a lot more ambitious in tackling climate change, investing in green infrastructure and making real changes that will last for generations to come. They need to look at the way the energy system is set up, so that those who are producing energy in rural parts of Scotland are not penalised because of geography. With the transition away from oil and gas coming up—I understand my hon. Friends will be speaking about that later—we need to be making sure that that is a fair and just transition, meaning that communities will not be left behind, as they have been in the past.

I am pleased to welcome COP26 to my constituency of Glasgow Central next year, but what has to come with that is investment from the UK Government to make sure that that event works as well as it should do: as a beacon to show what can be done and to highlight the very real achievements of the Scottish Government, who have made great strides in tackling climate change. In fact, a lot of the UK Government’s targets are actually being boosted by the actions of the UK Government, and that should absolutely be recognised.

With all of these things in the Queen’s Speech, opinion in Scotland is shifting. People are seeing the difference between what is happening at Westminster and the potential of Scotland as an independent European country—a country where the welfare state could be restored from the tattered, damaged safety net that Tory Governments have left it to a system with a safety net that is full of dignity and has respect for everybody at its core; a country where the Government have all the levers to build an inclusive economy, built on participation and making sure that everybody feels as though they have a part in the economy; a country more equal for women, disabled people and ethnic minorities, where they can play a full part and not feel as though they are being penalised and left behind; and a country where we do not have to rely on mitigating broken Westminster promises. I am determined, as are all my colleagues, that Scotland should have the choice and a right to choose its own future, and to choose it before much more damage is done by this Tory Government.

[Several hon. Members rose—]

Oral Answers to Questions

Alison Thewliss Excerpts

Tuesday 7th January 2020 Commons Chamber

[Sajid Javid]

We should never forget that the Labour Government gave us the deepest recession in almost 100 hundred years, and the British people were clever enough not to allow them to do it again. Now, they throw stones at the firefighters who put out the fire that they set in our economy. That is what they do. We will not take any lessons from the Labour party.

[Alison Thewliss (Glasgow Central) (SNP)]

May I first pay tribute to the economist Professor Andrew Hughes Hallett, who passed away on Hogmanay?

The Bank of England has said that pessimism and uncertainty around Brexit have had an impact on investment and productivity. That uncertainty has been compounded in Scotland by the fact that our Government found out only today in the media that the UK Government will finally be setting their budget, yet they have absolutely no certainty over whether that budget will include the £1.2 billion in Barnett consequentials promised by the Prime Minister during the election campaign. When does the Chancellor intend to meet the Scottish Finance Secretary to apologise?

[Sajid Javid]

I welcome the hon. Lady to her new position as, I think, Treasury spokesperson for her party.

When it comes to productivity, it is important that the Scottish Government play their role. They should examine their own policies, especially those on tax and infrastructure and skills, and see how they have let down the Scottish people time and again.

[Alison Thewliss]

It is a huge disappointment. The Chancellor does not even have the dignity to apologise to Derek Mackay for making this announcement only in the media. Furthermore, the right hon. Gentleman may not be aware, but 11 March is the date by which councils in Scotland legally have to set local tax rates. The Convention of Scottish Local Authorities has described this delay as extremely worrying. Its resources spokesperson, the Conservative councillor Gail Macgregor, has said that this will significantly impede local authorities and disadvantage Scotland’s communities. Will the Chancellor tell me whether he thinks it is fair that Scottish local government must set its budgets blindfold without any notion of what its block grant will be? Is not the truth that he has given absolutely no thought to Scotland at all?

[Sajid Javid]

In the election that we have just had, we talked time and again about the need to unleash the potential of the entire United Kingdom, and of course that includes all of Scotland. Scotland has been let down time and again by the SNP Government, who are charging Scottish people the highest taxes in the United Kingdom and providing the worst public services.

CAPITAL REQUIREMENTS (AMENDMENT) (EU EXIT) REGULATIONS 2019

Alison Thewliss Excerpts

Monday 7th October 2019 General Committees

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to see you in the Chair, Mr Bailey. I very much agree with what the hon. Member for Stalybridge and Hyde said; the SNP shares the official Opposition’s suspicions about areas related to the Financial Services (Implementation of Legislation) Bill, which—as hon. Members will remember—did not even reach Report.

The regulations flag up the fact that this will be an ongoing issue. As the EU continues to make changes, we will have to make changes here to get any type of equivalence with it. I remind the Minister that equivalence determinations are akin to building a house on sand: they are very much at the discretion of the Commission and can be withdrawn at very short notice. If we do not match the EU’s regulations, that equivalence may end up being withdrawn, to the detriment of our financial services industry in the UK—particularly in Scotland, which did not vote for this but is being left to deal with the consequences and chaos that result from it. The Minister said that the regulations reflect a new piece of EU legislation that has recently become applicable. I suppose that that is part of the chaos that we now face: the EU is moving on without us, and we are left picking up the pieces.

On the financial services Bill and the suspicions of the hon. Gentleman, I must ask the Minister: are the regulations a workaround for the Bill? Are they a means of escaping the scrutiny and the amendments that I supported for the greater regulation that we need?

Will the Minister tell us more about the powers that are going to the FCA and the PRA and away from this House? How will the House maintain scrutiny of those institutions and of the rules and regulations? There will be a need for adaptation and change; how will he make sure that the House is given a full part to play—not just a statement or an update—in administering the regulations in the years ahead?

This all highlights our lack of voice and influence in future EU reforms. We will be abiding by the rules, because otherwise we will lose the opportunities for our financial services market, but we will not necessarily have influence in making them—in areas in which for many years we have had the advantage because we have a large majority in the types of industry that will be affected. We will end up in a weaker situation than we are in at the moment, particularly in a no-deal Brexit in which we cannot guarantee that we will have the equivalence or access to markets that we require.

Further to that sense of weakness, we have yet to see from this Government a full picture of what the financial services framework will look like. I have asked for that on all the Committees that I have been on, because we need to know what the framework will look like. This is being done with a hasty, piecemeal approach. We are being asked to come here not quite at the last minute, as the Minister pointed out, but with 24 days to go till Brexit, when we may end up with no deal. There are Committees sitting all the way along this corridor this afternoon and later this evening to get these last-minute preparations done, but we do not know what the picture will look like in the year ahead.

To give some degree of stability in planning to the organisations, institutions and people in the financial services industry, I urge the Minister to bring forward some kind of clear framework so that we can see where we are going. This piecemeal approach, this last-minute chaos of bringing things forward, this move towards more Brexit red tape rather than less, as I am sure the Brexiteers would want—none of it is adequate or particularly seemly. I urge the Minister to do a lot better on this, because it is absolute chaos.