Budget: Pre-announcement of Provisions

Alison Thewliss Excerpts

Tuesday 26th October 2021 Commons Chamber

[Mr Speaker]

That is a matter of judgment.

[Alison Thewliss (Glasgow Central) (SNP)]

I do not know whether to congratulate the Minister on his promotion, as he has come here to give us the Budget a day early. What he has not given this House is an apology. He should not be announcing things on Twitter; we should be waiting for the Budget to see the full detail. This has been going on since September—it is not new. There have been daily announcements drip-feeding the entire Budget ahead of time. Of course, the Government hold all the cards, along with the Office for Budget Responsibility, because we cannot tell what the detail actually means. For Scotland, we cannot tell what the Barnett consequentials —if, indeed, there are any—will be.

We know what is going to be in the Budget speech and we know what is not going to be in it, because the Government have not done things such as carbon capture and storage in Scotland. Of course, none of it is what the Government and the Chancellor should be doing in the Budget speech. They should be reinstating the £20 universal credit cut; scrapping the national insurance tax on jobs; tackling the spiralling cost-of-living crisis; and supporting hospitality and tourism with a VAT cut to see them through the winter months and into next year.

If the Government cannot be responsible with the powers that they hold and if they cannot be trusted to give us the actual truth on Budget day tomorrow, all the financial powers—I call for this again—should be given to the Scottish Parliament so that we can make the decisions that are right for the people of Scotland.

[Mr Clarke]

I thank the hon. Lady for her remarks. I think that we are much stronger as one United Kingdom. The OECD has reaffirmed that we are expected to have the fastest growth in the G7 both this year and next and that is something that we are achieving as one country together. She asked about the Barnett consequentials. Those will be set out very clearly in the Budget tomorrow. (Interruption.) I can assure her that, of course, we consider this very closely and we will be in a position to give good news for Scotland as part of a strong United Kingdom tomorrow. I had productive conversations about the future of the fiscal framework with the Scottish Finance Minister, Kate Forbes, just last week. I can commit that I will be speaking to her in accordance with the usual Budget conventions tomorrow morning, ahead of the statement.

Working People’s Finances: Government Policy

Alison Thewliss Excerpts

Tuesday 21st September 2021 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

This could not be a more timely debate. My constituents and people across the country are looking with great apprehension at the winter to come, fearful about how they will make ends meet. I welcome the Minister to his post, and I appreciate what he said about the economic support offered, but that is not unique to this Government or any other. Governments around the world have sought to support their citizens through this pandemic, and many have done so more compassionately and more competently than those sitting across from us on the Tory Benches.

Many have done that from a better starting point, too, without public services stripped bare from a decade of austerity and a welfare state that punishes people for their circumstances, and without the worst inequality in north-west Europe. And none of them has embarked upon a project so thoroughly deficient and self-defeating as Brexit, which has left businesses carrying higher costs, shelves empty, and skilled people—our neighbours and friends—leaving this island in their droves because this UK Tory Government have made them feel so unwelcome. Scotland voted for none of this.

To the here and now, Madam Deputy Speaker. We have food shortages and price rises, inflation increasing, cuts to universal credit and tax credits, the end of the pensions triple lock, a regressive national insurance hike, the end of furlough and the self-employment income support scheme—for people who were lucky enough to be eligible for that scheme rather than excluded from it—and now the prospect of spiralling energy bills as we head into the depths of winter.

[Alex Cunningham]

The hon. Member has just mentioned energy prices. I do not know whether she saw that Torsten Bell of the Resolution Foundation said:

“The autumn is looking like a cost of living crunch.”

He added that four in 10 households

“will see their energy bills rise by 13% (£153 a year) at exactly the same time as their income falls by 5% (£1000 a year).”

He also mentioned inflation, which is expected to get to 4%. What does she think that will mean for the poorest people in our society?

[Alison Thewliss]

The hon. Member is perfectly right to point that out and to refer to the words of Torsten Bell. He came to the Treasury Committee to give evidence about some of the things that we are facing in the months ahead. Many constituents will just not be able to cope with this. They will become more indebted, they will struggle to get by, and they will find it difficult to get back out of that debt, get on with their lives and be productive members of society. This is a significant crisis, which this Government are ignoring and making worse by their inaction.

This Tory Government have already created the perfect storm: a cost-of-living crisis atop an already weak and stagnant economy. Citizens Advice Scotland found that more than 1.4 million people in Scotland ran out of money before payday at least once in the last year. Sarah Arnold, senior economist at the New Economics Foundation, found that 2.5 million working families on low incomes will lose £1,290 a year because of the double whammy of the cut to universal credit and the increase in national insurance contributions. That is utterly unjustifiable.

It may not mean much to those on the Government Benches, but that is an enormous amount of money to many people across this country, which cannot be made up through a few hours’ work, as the Work and Pensions Secretary appears to believe. It is the difference between just getting by and not coping at all, between being able to put food on the table or relying on the food bank, between keeping the lights and the heating on or disconnecting from the power supply.

I am an honorary vice-president of Energy Action Scotland—I refer Members to my entry in the Register of Members’ Financial Interests—which has found that one in five households with a prepayment meter regularly self-disconnects because they simply cannot afford to top it up. Of those households, 88% contain a child or someone with health issues. Those on prepayment meters will struggle the very most in the months ahead—they always do—and this UK Government do absolutely nothing to support them. The stress of watching the meter eat what little money has been put in it is an experience that I am sure few on the Government Benches will understand, but I have had constituents shivering, living in one room under blankets and duvets, because no matter how much money they put in that meter, they cannot keep their home warm.

There is a significant impact on older people, carers and people with disabilities, whom this UK Tory Government have often completely ignored. That is a group whose energy bills are higher. My constituent Rob McDowall is among many already worrying about how to keep warm this winter. Like Citizens Advice Scotland, he is advising people to seek assistance and advice right now. While I fully support attempts to seek advice, this UK Tory Government should take their responsibilities seriously too.

Energy costs will increase more in Scotland due to our geography. This is a life and death issue. Living in a cold home causes illness, and Energy Action Scotland has found that there are around 2,000 excess deaths in Scotland each winter as a result. That is a scandal in energy-rich Scotland, but it is a reflection of how broken the energy system is—a system entirely reserved to Westminster. Around 25% of energy bills is the cost of UK Government levies and policy choices, as well as VAT. That disproportionately hits those on low and middle incomes. The Treasury must do something now to alleviate that burden. That is in its hands.

[Alan Brown]

Is it not the case that even the schemes that are meant to help the poorest, such as the warm home discount, the eco scheme that helps with some energy-efficiency measures, are paid for by other energy users, so they are actually regressive? Those who can least afford their energy bills are paying to try to support other people, so it is a circular argument that goes nowhere. Is it not also outrageous that in the highlands of Scotland, people pay up to £400 more a year as a levy on their electricity while exporting energy to the rest of the UK?

[Alison Thewliss]

My hon. Friend is absolutely right to point that out. That is an unfairness in the system that the Government have shown no compulsion to tackle at all. We must look at that unfairness, particularly for those in the most rural parts of Scotland who find it hardest to afford their energy bills.

I seek an assurance from the Government that those who have money sitting in their energy accounts just now will see that swiftly transferred over to any new company, as people tend to pay in more over the summer to meet their bills in the winter. In his statement yesterday, the Secretary of State for Business, Energy and Industrial Strategy could not guarantee that the warm home discount would be paid to customers transferring. I also want to know what assistance will be possible for those transferred customers who are living with existing arrears. It is an uncertain and very worrying time for them all.

As an aside, my hon. Friends the Members for Kilmarnock and Loudoun (Alan Brown) and for Aberdeen South (Stephen Flynn) have been pursuing the ridiculous transmission charging regime, which makes it more expensive for us to connect the clean, green energy produced on our doorstep in Scotland to the national grid. It feels as if Ministers could not be less interested in fixing that disproportionate scandal.

We all know households that already struggle to pay their energy bills. Households relying on electricity for their energy needs pay £600 more on average than households with both gas and electricity. In the areas that are off the gas grid completely, particularly those relying on liquefied petroleum gas, those costs can be even higher.

In addition to food banks, fuel banks are springing up around the country to meet this need, but given the soaring fuel prices we face, it will just not be enough. The price of food in the shops is also going up. Inflation stood at 3.2% in August, which I understand is the highest month-on-month increase since records began in 1997. Some have predicted that it might reach 4.5% by November. The Bank of England target is 2%. That means that goods in the shops will get ever more expensive. There is the prospect, too, of the national insurance hike being passed on to consumers. The Institute of Chartered Accountants in England and Wales has suggested that companies may try to cover the increase on employers’ costs by passing it on to consumers, so as well as being a tax on jobs, this is a tax at the till.

In addition to having an impact on people’s food bills and their ability to feed themselves, this cost increase is having an impact on charities that are already trying their best to support those in need. Audrey Flannagan at the Glasgow South East food bank in my constituency tells me that food donations to it are down 30%, at a time when she is planning for an influx of people due to the cuts to universal credit. I say “cuts” because, for many who claimed benefits for the first time during the pandemic, they have known nothing else. Audrey tells me that people she has spoken to have been horrified to receive a letter from the Department for Work and Pensions informing them that their money is getting cut, because for them it is not an uplift; it is quite simply what they have been managing on for months now.

The Minister talked about living wages, but his living wage is not a real living wage, as set by the Living Wage Foundation; it is a pretendy living wage. It is not enough for people to live on, and it is not available to everyone. As he knows well, age discrimination is baked into the living wage. Younger people, who face the same bills at the checkout and on their energy and rent, are getting short changed by this Government through their pretendy living wage.

The impact on families of this cut has been well repeated, but I would like to mention the impact on single people. Twenty pounds is around a third of a single person’s income on universal credit. Glasgow South East food bank has seen a significant drop in single people coming for emergency food assistance in this past year, from 601 people in January to March 2020, to just 151 people in the same period this year. Audrey Flannagan believes that the additional £86 per month—UC is paid monthly—was enough to make a difference to those people. It pays for the gas and electric, it puts food on the table, and without that £86 a month, many will return to her service in just a few weeks’ time.

Many people have been in touch with me, as they have with my colleagues, to protest the cut to universal credit, but I want to read this email from John, because he puts it so well. He says:

“I wanted to write you a short note to tell you that cutting back on the U.C. uplift is going to have a very hard consequence on me. I was laid off at the start of the pandemic when the company I was working for closed down. With the uplift I’m receiving about £300 to last me nearly 5 weeks! The government talks like this was a favour done us! Firstly, I and all those on Universal Credit are not responsible for a pandemic! Secondly, the pandemic is not over yet! There could be further strains and further lockdowns! What then for people like me! Also benefits did not go up before the uplift for years and years, while prices and the cost of living have. This therefore is actually a benefit cut! It will be the difference for me between just getting by and crushing poverty!”

That choice will be faced by people up and down this country. Every single person in this House has a responsibility to think of each and every one of them when we vote on this issue, because it is the difference between just getting by and crushing poverty, as my constituent John pointed out.

There are global issues, of course, driving the cost-of-living crisis, but the political choices being made by this UK Tory Government are making it worse. Yet again, they have chosen to balance the books on the backs of the poor—to repeat the mistakes of the previous crash by choosing austerity over stimulus. My constituents did not choose this. The people of Scotland did not choose this. Even many Tory voters did not choose this, as those on the Government Benches break promise after promise to their own supporters. The first duty of Government is to protect its people, and this UK Tory Government have failed repeatedly on all counts. There is no Union dividend, only a Union dead end. Scotland needs the full powers of a normal independent country, to look after all of our people and seek a fairer, just and more prosperous recovery for everyone.

[Mr Speaker]

We now come to the maiden speech of Jill Mortimer. I remind people that they cannot intervene.

--- Later in debate ---

[Miriam Cates]

The hon. Lady makes an excellent point. While, overall, on a macro level, having more jobs available for British workers will push wages up, it is of course the case that certain sectors will need specific interventions to save them, and I would support any such measures.

While there are concerns like the one the hon. Lady has raised, and concerns in the wider economy, our plan for jobs is working and the future is optimistic. None the less, there are some long-term structural issues with the cost of living and threats to living standards that must be addressed, and this is the moment to do so. We must find a solution for the sake of future generations.

First, housing affordability is a key driver of problems with the cost of living. Solving the housing crisis will unlock many issues, such as generational inequality, and it will reduce the cost of living. I am delighted that the Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend the Member for Surrey Heath (Michael Gove), has been appointed to look at this specific problem, because it is very important. Many of the serious issues that Members have raised in this House today would be much aided by a reduction in the cost of housing.

Secondly, we also need to look at fairer finance for families. Again, much has been said about the changes to universal credit, but I want to consider what we could do in our taxation system to make life fairer and cheaper for families. Unlike many countries, the UK has an individualistic tax system. We tax individuals rather than households, which means that we do not take into account the number of dependants in a particular house, and that can make life very expensive for families. Some families on low and middle incomes can end up paying around 30% more tax than individuals living on their own. When we couple that with the way that benefits are clawed back as people earn more, some families can effectively face a marginal tax rate of 75%, making it very difficult for them to get out of poverty. We must recognise the importance of raising children not just for the nuclear family, but for our whole society. We need to look at how we can make it less expensive for families to exist and to raise their children.

[Alison Thewliss]

The hon. Member is making an interesting point about support for families. Does she agree that the UK Government’s two-child benefit cap punishes those who have a larger family and puts them in a position where they cannot work their way out of poverty?

[Miriam Cates]

What is far more significant is the way in which we tax individuals—potentially spreading people’s income tax allowance and things like that—rather than looking at household income; that would give families far more choice about how they spend their income and organise their lives, and make family life much more affordable.

Thirdly, we have to address the long-term affordability of our public spending commitments. The welfare state that we have today was designed 80 years ago, when life was very different. Demographics were different then. There was no paid-for childcare or paid-for social care. Most women did not work. There was a huge amount of free care and community living going on that we just do not have, or that there is not nearly as much of, today. Of course, people then also spent a far higher percentage of their life working, whereas now people spend much longer in education and much, much longer in retirement, which means that proportionally, over the course of someone’s life, they are spending far less time paying tax and paying for insurance—paying for the benefits that we all want to enjoy.

The Office for Budget Responsibility forecasts that public sector net debt could rise to 300% of GDP by 2070. We just cannot continue in the way that we are now. We need a reset. We need to redesign our public spending and welfare state for modern life and modern demographics. I think we have already established that we cannot tax our way out of this. Of course, we should be trying to grow our way out of it, but we also need a fundamental redesign of the welfare state and public spending.

We also need much more emphasis on community solutions and prevention. It has been an honour to be part of the early years review of my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), whose start for life recommendations look at the importance of the first 1,001 days of a child’s life. If we get that period right, we can prevent so many problems that destroy people’s lives in the long term and which are incredibly expensive for public spending. We must spend more and invest in the early years and health prevention. About 40% of the NHS budget is spent on preventable and lifestyle diseases. We have to tackle those things if the state is going to be affordable in the long term. Of course we should innovate, use technology and look at what other countries are doing to address these issues.

We should be concerned about the cost of living. Families up and down the country are struggling, and there are families that are not able to take advantage of opportunities in jobs and higher wages. But this Government have taken action on jobs over the last 18 months, and that is bearing fruit. As our economy is reset, we now have an important opportunity to solve some of the structural issues that we face.

Health and Social Care Levy Bill

Alison Thewliss Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

To start where the right hon. Member for South West Surrey (Jeremy Hunt) left off, in the Bill before us this afternoon we have the lack of a proper plan. We have a means of raising taxes, but absolutely no detail whatsoever on how the money is to be spent.

Let me start with a useful note sent round by the Hansard Society, which says:

“Parliament’s scrutiny of financial matters is generally poor, and the treatment of the new Health and Social Care Levy demonstrates many of the worst aspects of both the financial and legislative scrutiny processes: acting at speed with insufficient policy detail available for MPs to consider; important constitutional questions brushed aside; and broad powers delegated to Ministers with a lack of clarity about how they are to be used in future.”

I agree with every single word of that.

Scrutiny and accountability are absolutely key to this issue, because we have been presented with a huge additional spending commitment but no detail whatsoever as to how it will actually be spent on the other side. I know that there are Conservative Members who are extremely nervous about this levy; far be it from me to agree with them, but I am right to agree with them on that, because we do not know how this money is going to be spent. People are incredibly nervous that health and social care will be at the back of the queue when the money is to be spent.

As the hon. Member for Basildon and Billericay (Mr Baron) pointed out earlier, we are considering this Bill in unseemly haste. Is this to do with the election cycle, testing the loyalty of Government Back Benchers or making sure that people are loyal in the run-up to any reshuffle? We cannot see the real reason for this haste. If we could wait, we could see a little more detail as to exactly why we have to proceed in this way. There is also a difficulty in scrutinising the spending of the levy because it is outwith the usual estimates process and the usual Budget process. We cannot have any real clarity in that respect.

Most worryingly of all, the Government have—as they have done in so many different ways—taken back control only to give all the power back to themselves and their cronies. A lot of the work in respect of the Bill will be done through regulations. Clause 4 gives the Government very wide scope to make regulations on this matter later, which means we will lose all sense of scrutiny from this place. It will all go to civil servants rather than to Parliament. That is entirely undemocratic and wrong. Yet again, there is a wide-ranging power grab from this place and in respect of our job as Members of Parliament here. I cannot see the justification for that in the Bill; it would be interesting to hear why Ministers intend to do that.

We on the SNP Benches demand urgent clarity about every penny of Barnett consequentials that will be given to the devolved Administrations. In line with our manifesto, any additional money that Scotland gets will be spent on health and social care, but there must be no attempt by the UK Government to sell Scotland short by clawing back our share through cuts in other devolved policy areas. It would be just like Government colleagues to give money with one hand while pinching money out of our back pocket with the other. The UK Government must give urgent assurances that we will get every penny we are due—as should Wales and Northern Ireland.

Last week, the Secretary of State for Health and Social Care told “Good Morning Scotland” that, ultimately, it will be for the Scottish Government to decide how the money raised is spent, but that is not what the Prime Minister said. In his statement last week, he said:

“Although Scotland, Wales and Northern Ireland have their own systems, we will direct money raised through the levy to their health and social care services.”—[Official Report, 7 September 2021; Vol. 700, c. 154.]

To direct money would be to override the devolved settlement. It would override our Scottish Parliament and our Scottish Government. It is also unclear where it is intended that that money should go. Will it go to NHS Scotland or to the health boards, the integration joint boards or the health and social care partnerships that sit underneath? Will the formula by which funding is distributed in Scotland be disrupted?

We need certainty as to how the money will be spent, and the Bill currently does not give that. All the Bill says is that money will be paid

“in such shares as between health care and social care, and in such shares as between England, Wales, Scotland and Northern Ireland, as the Treasury may determine.”

That means more power for Treasury Ministers, which I am sure they will enjoy having, but less power for this Parliament and even less power for the devolved institutions. It is their right to know how that money is to come to them and how it is spent. We should not get one penny less than we were due.

Many analysts have pointed out that other parts of devolved spending have been cut because of, for example, the Barnett consequentials of the cuts to local government or to justice. Such cuts mean that we get less money coming through, even if the Government like to pretend, through things such as this levy, that there will be more. It is unclear in the documentation published by the Government exactly what the Barnett consequentials will look like. Their plan for social care says that the Barnett consequentials will be £2.1 billion in 2022-23, drop to £1.7 billion in 2023-24 and be £1.9 billion in 2024-25. If the money that comes is going to jump about by such significant amounts over those years, we will not know exactly how things are going to look, what the certainty is and how we can plan. The Scottish Government deserve certainty so that they can plan for services.

Let me highlight some of our other major issues with the proposals, which are a tax on the poorest working people in this country. They are completely unjustifiable on that basis. The levy is disproportionate and unfair. There is a bit of brass neck from Government Members: they howled when Scotland put money on income tax—a progressive system in which those at the wealthier end of things paid a little more into our system for our services in Scotland. They said it was terrible and awful, yet today there is not a peep out of them to complain about the lack of progressive taxation and the fact that Scotland will have to pay for England’s social care crisis, which is completely unjustifiable. This is also a tax on jobs and the recovery. Reflecting on the ONS figures that show that the recovery is now stalling, the Federation of Small Businesses says that this tax on jobs will mean 50,000 more people becoming unemployed. That is 50,000 people losing their jobs as a result of this Government’s incompetence in taxing jobs and the recovery. We really could not make this up. From every angle that we approach this tax, it makes absolutely no sense whatsoever.

I will talk in greater detail about our amendments when we come to the Committee stage, but my reflection for now is that we have Scottish taxpayers paying for England’s health and social care crisis, and an undermining of devolution in Scotland, Wales and Northern Ireland and of the services that our Parliaments are democratically elected to provide.

[Christine Jardine]

Can the hon. Lady explain how Scottish taxpayers, of which I am one, are paying for this levy? I am confused by the thinking. We either agree with the fairness of the levy or we do not. In Scotland, we would get more than we paid in, so I am confused by her thinking.

[Alison Thewliss]

The point is that we do not know what we will get out of this. We do not know because it is not clear in the documentation that has been provided. We also do not know what will happen on the other side of that equation—money in other devolved areas could be whipped away from us at our expense. Organisations such as the British Association of Social Workers have pointed out that cuts to local government will fundamentally undermine the social care provision in England. Authorities will not receive anything for three years, which will also have an impact on the money that we have to spend in Scotland.

These moves tax the poorest. They come at the same time as £20 a week is being removed from universal credit. Some 2.5 million people across the UK will be affected by both of those policies at a time when they can least afford it. The tax on jobs will stifle the recovery. Rather than being a Union dividend as Ministers like to try to claim, this is a Union dead end.

[Madam Deputy Speaker (Dame Rosie Winterton)]

In order to try to get everybody in, I will reduce the time limit to five minutes, and I have been able to warn the next speakers of that. If people do not get in, let me remind them that there is a Committee stage to follow and they might like to bear that in mind.

Health and Social Care Levy Bill

Alison Thewliss Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[Jesse Norman]

I do not know whether the hon. Lady heard, but I was talking about the NHS and that has been a founding principle of the NHS, one the Conservative party have always adhered to, and rightly so. What we are doing with the levy is funding an expansion and a development of an existing set of arrangements, and, as I have discussed in relation to the question from my right hon. Friend the Member for Gainsborough (Sir Edward Leigh), the potential to expand that through the use of other mechanisms of support, now that these catastrophic risks have been removed, or will be removed, from people’s lives.

Let me turn to the amendments tabled by the Scottish National party and Plaid Cymru which look to require a joint agreement between the Treasury and the Governments of Scotland, Wales and Northern Ireland as to how the levy proceeds are to be shared between the four parts of the UK, and between healthcare and social care. As for how the levy revenue will be split between the four parts of the UK, this legislation mirrors existing legislation on how NHS allocation is divided between England, Scotland, Wales and Northern Ireland. It is right and appropriate that we should follow that established precedent. The Government will work closely with the devolved Administrations on the implementation of the levy, including on the process for allocating revenues across the UK and on the split between health and social care from April 2023 onwards. It is also worth bearing in mind that the devolved Administrations’ overall funding will continue to be determined by the Barnett formula, so that this process will just determine the element provided by the levy. I hope that the Members concerned will not press their amendments, for the reasons I have outlined.

[Alison Thewliss]

I do not know whether the Minister has read the note from the Hansard Society on this, but it is concerned by some of the implications for the devolution settlement. It says:

“There is also no requirement in the Bill for the Treasury or the Health Secretary to consult the devolved administrations about any aspect of the process.”

Is that not a cause for concern?

[Jesse Norman]

The Treasury already consults the devolved Administrations very closely on many aspects of tax policy and there is no reason to think, and the Bill does not suggest, that there should be any other reason for handling this. On the contrary, following an existing hypothecation gives direct support to devolved Administrations that they will be able to receive the Union dividend, which is generated and delivered by this policy.

Clause 2 creates a legally binding obligation to use the funds raised by this levy for the purposes of health and social care, and sets out that HMRC will direct funds to the Secretary of State to be used for the cost of health and social care in England, Wales, Scotland and Northern Ireland. The funds from the levy will be shared between healthcare and social care, and will be shared between each nation in a proportion determined by the Treasury. The Treasury has used the long-standing Barnett formula to fund devolved Administrations and will continue to do so for the proceeds of this measure. Clause 2 goes further and ensures that any interest or penalties that can be attributed to the levy will also be used to fund health and social care. However, any expenses incurred by HMRC in collecting the levy will be deducted from the proceeds, which ensures that HMRC has the ability to collect and police this levy properly. I therefore ask Members to allow clause 2 to stand part of the Bill.

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

Let me first take the opportunity to thank the Clerks, who give us so much support in putting together amendments to the Bill, which arrived at such short notice. I thank Scott Taylor and Salma Saade in our research units, who also helped, and my hon. Friend the Member for Aberdeen South (Stephen Flynn), who did so much in Committee.

This is a Bill and a tax without a mandate, in Scotland or even in England, since it is a breach of a Tory manifesto pledge—a pledge reiterated by the Chancellor at the time of the Budget. The Health Secretary has said that it is for the Scottish Government ultimately to decide how money is spent, but the Prime Minister said that the UK would direct money raised by this levy to the devolved institutions, and the Chancellor is on record as saying that the UK Government have the right to do this. The truth—the legal truth, because it is in the Bill—is that the Treasury may determine how this money is spent in Scotland. That is a fundamental undermining of the devolution that we fought so hard to get. Within the Bill, Ministers can even change what they like in regulations later, so even what we agree today may not be the principles that the Government will go by later on.

This is a tax on the people of Scotland to pay for England’s social care crisis. It is a tax on young people and lower earners to pay for the wealthy. It is a tax on jobs, undermining recovery at a time when we need to be thinking about getting people into work, not making it harder for businesses to employ them. It is also a tax on the many who have been completely excluded from UK Government support throughout the pandemic and who are now going to be hit by this increase. It is also a power grab. It is another Tory power grab on devolution. This is not a Union dividend; it is a Union dead end, and we on the SNP Benches will not support this new Tory poll tax.

Question put, That the Bill be now read the Third time.

Health and Social Care Levy

Alison Thewliss Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I would like to start by giving the UK Government some credit: they are absolute masters of illusion and deflection. Trying to get them to simply answer a question is like pinning jelly to a wall. Their Ministers are astonishingly unperturbed by going out to argue for policies that entirely contradict the cast-iron promises they made when they stood for election. We on the Scottish National party Benches are clear that raising national insurance is a blunt tool to fund social care, likely to disproportionately hit young people and lower earners. Our SNP amendment (a) would have forced the UK Tory Government to come clean on the distributional impact of this policy.

We would love to be able to amend the motion more broadly, but as the hon. Member for Rhondda (Chris Bryant) pointed out, we have limitations on our ability to do so this afternoon, which is hugely frustrating. Our amendment therefore covers the impact by age, because we know that young people will be affected worst; by income, because we know that national insurance is regressive and will hammer lower earners; by wealth, because those with unearned incomes stand to be the big winners and the key political motive here appears to be for the Tories to bail out their well-heeled voters against losing their inheritance; and by place of residence, because this is a UK tax for an English policy crisis and, within England, the Resolution Foundation is clear that this policy will benefit the south-east the most. It is of no surprise to me that the UK Tory Government’s national insurance hike and the “back of a fag packet” plan announced yesterday are already drawing criticism from all sides—from The Daily Telegraph, the Daily Mirror, the Cabinet and Back Benchers.

[Joanna Cherry (Edinburgh South West) (SNP)]

My hon. Friend is making a number of very important points. An anonymous member of the Cabinet is quoted in The Daily Telegraph as being very critical of this policy:

“If you get all your income from investments and property you don’t pay a penny but if you work your guts out for minimum wage you get clobbered.”

Can my hon. Friend hazard a guess as to what the Tories have against taxing unearned income?

[Alison Thewliss]

I would be very curious to know why that is. I was going to read out that very quote, because even three former Conservative leaders, including a former Prime Minister and three more former Chancellors, have spoken out against this move. To complete the quote that my hon. and learned Friend mentioned, this person, an anonymous member of the Conservative party, said:

“Putting up National Insurance would be morally, economically and politically wrong.”

They went on to say:

“After all that’s happened in the last 18 months they can’t seriously be thinking about a tax raid on supermarket workers and nurses so the children of Surrey homeowners can receive bigger inheritances.”

Well, yes indeed they are.

[Dr Whitford]

Is it not the case that the talk is about making life better for social care staff, but actually, they are exactly the people who will lose £1,000 a year in the universal credit cut and will now face this extra cost?

[Alison Thewliss]

My hon. Friend is absolutely right. They are the people who can least afford it and who have worked the hardest through this pandemic, who this Government should be thanking, not taxing.

We are being asked to vote today on measures that the Institute for Fiscal Studies has described as “better than doing nothing”, which is about as charitable an analysis as is possible of this policy.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

Will the hon. Lady give way?

[Alison Thewliss]

In a second. Very few people would dispute the need for action on health and social care in England. However, an increase to national insurance contributions is not the fairest way to go about it. I would be interested to know why the hon. Gentleman thinks it is fair for his constituents.

[John Lamont]

The hon. Lady made reference to the IFS. She will know that the IFS has noted that over the past 10 years the health spend in Scotland has grown by 1.2%, whereas in England it has grown by 3.6% on a like-for-like basis. Surely it is astonishing that she would vote against £1 billion of extra investment for Scotland’s NHS.

[Alison Thewliss]

What the hon. Gentleman fails to understand is that we are starting from very different points. He does not acknowledge that, and he does not understand it.

The response from equality and anti-poverty groups has been absolutely damning. The Women’s Budget Group has said:

“We believe there is a fairer way to fund social care. This is because, as they currently stand NICs are more regressive than income tax—with a lower threshold at which payments start, and a higher rate threshold beyond which employees pay a lower rate.”

The Resolution Foundation has described the policy as “generationally unfair”. Paul Johnson of the IFS has said:

“Remains the case pensioners will pay next to nothing for this social care package—overwhelmingly to be paid by working age employees”.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

There are many ways in which this policy could have been made progressive, one of which would have been to look at the upper threshold for national insurance, which has not been addressed. A young graduate will now have a marginal tax rate higher than a rich Conservative on the Government Benches.

[Alison Thewliss]

The hon. Gentleman makes an excellent point. For young people who have perhaps struggled through this year, who have graduated and who are going out into the world of work, it is a real hammer blow to their prospects.

Many families are already facing a historic £1,040 cut to their annual incomes and are staring down the barrel of impending cuts to universal credit and working tax credit. The Joseph Rowntree Foundation has described the new levy as adding “insult to injury”. The New Economics Foundation has calculated that 2.5 million working households will be affected by the £20 a week cut to universal credit and the increase in national insurance. On average, they will lose out by £1,290 in the next financial year. Working households are doing their very best to put food on the table and support their children, and this cruel UK Tory Government caw the legs from under them.

[Mr Steve Baker (Wycombe) (Con)]

rose—

[Alison Thewliss]

If the hon. Gentleman can explain why that is fair to the families who have been working so hard, I will be glad to give way.

[Mr Baker]

I wonder whether the hon. Lady has popped out to the Vote Office and picked up the distributional analysis that the Government have published, which shows the impact across the deciles of income in this country: it just does not bear out what she is saying. I encourage anybody out there to pick up that analysis and have a look.

[Alison Thewliss]

I have seen a different analysis from the New Economics Foundation; I urge the hon. Gentleman to look at it, because it gives a very different picture from the one that the Government are presenting today, which is why we need more analysis of the policy before the Government go forward with it.

The policy will also have an impact on our recovery from the pandemic. Businesses, which have weathered such a challenging year, have spoken out against it in the strongest terms. The Federation of Small Businesses has called the national insurance hike

“anti-job, anti-small business, anti-start up”,

pointing out that the increase to national insurance will

“stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.”

[Dame Angela Eagle]

Is the hon. Lady worried that the Government appear to be increasing taxes at a far earlier stage of the economic recovery from the pandemic than similar economies?

[Alison Thewliss]

The hon. Lady is absolutely correct. The Government have learned nothing from the austerity that caused so much damage with the last crash. They are about to repeat their mistakes, and those on the lowest incomes will be hammered most, again.

The Institute of Directors has called the hike “political opportunism” and has highlighted the tax on dividends, which will hit sole traders and small company directors, many of whom were completely and unjustifiably excluded from UK Government support during the pandemic. It really does rub salt in the wounds.

[Matt Rodda]

I am grateful to the hon. Lady for giving way on that excellent point. In my constituency in Reading, many of the same families will be affected; she is wise to point that out, and I reiterate that point. It appears that the same very hard-working groups of people, many of whom are key workers or are with small businesses, are being affected disproportionately by this unfair tax rise. At the same time, it is not solving the fundamental problems with social care.

[Alison Thewliss]

Absolutely. It does nothing to resolve either issue, and it makes it all the harder for people who have suffered so hard during the pandemic and been excluded from support to get back on their feet and bring money back into the economy. It makes no economic sense whatever.

Of course, the unjust effect of the national insurance hike will be compounded in Scotland because the Prime Minister is proposing that Scottish tax contributions be used to fund England-only policies. My constituents and people across Scotland are generous people, and I am sure that very few of them would begrudge the principle of funding the NHS and fixing social care after the pandemic, if indeed they had any faith that this Government were capable of fixing anything. But as things stand, the Scots, Welsh and Northern Irish stand to be taxed twice: first for the health and social care system that they actually receive from their own Government, and then for the NHS and social care in England, for services that they do not have access to, where money more often than not appears to be squandered on dodgy contracts and cronyism scandals.

We know from the United Kingdom Internal Market Act 2020 and other Tory Brexit legislation that we cannot trust Government Members to respect our hard-won devolution. I am not reassured in the slightest by all the talk yesterday from the Prime Minister about directing money raised from the new levy into health and social care services in Scotland.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

The hon. Lady is making a very important point. Is she aware of any discussions having been held between Treasury Ministers and SNP Scottish Ministers or Labour Ministers in the Welsh Government? It seems to me that the British Government are using a UK-wide tax to fund English priorities.

[Alison Thewliss]

The hon. Gentleman is absolutely correct on that front. These are not our priorities; we already have these services in our own nations.

[Several hon. Members rose—]

[Alison Thewliss]

If Conservative Members will just calm down for a little minute, I will try to bring them in at some point. I want others to get in to make their speeches—gie’s peace.

It is not for the Prime Minister or anybody else in the UK Government to direct how devolved budgets are spent. The Ways and Means resolution ties the money to NHS Scotland, not to our democratically elected Scottish Parliament and Government—a further undermining of decision making, showing a lack of understanding of how services are provided in Scotland. We have had no assurance from the UK Tory Government about the extent of the Barnett consequentials that will be generated from the spending. I seek clarity on that today.

SNP Members cannot support measures that are so manifestly unfair to our constituents and whose financial consequences amount to a pig in a poke. The Resolution Foundation has pointed out that while health spending may go up, spending on other areas such as local government has gone down compared with pre-pandemic plans. [Interruption.] Local government, of course, provides a significant proportion of the social care that Tory Members, who would do better to wheesht and listen than to chat away in the corner, claim to care about.

[Mr Richard Holden (North West Durham) (Con)]

rose—

[Alison Thewliss]

The hon. Gentleman has done more talking than listening in this place. It would be useful if he sat down.

The spending cuts will have an impact on Barnett consequentials. It would be just like this UK Tory Government to appear to give with one hand while picking Scotland’s pockets with the other. A new Tory poll tax that punishes those on the lowest incomes is being forced upon Scotland by a Government we did not vote for.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

rose—

[Alison Thewliss]

If the hon. Gentleman wants to explain that to his constituents, I would be very glad to hear it.

[Andrew Bowie]

The hon. Lady is making a serious speech with lots of very pertinent points, many of which I disagree with, but the fact is that we have come to the crux. This action by the Government will actually deliver more than £1 billion of extra funding to Scotland’s national health service. The real reason SNP Members oppose the motion is that they would rather Scotland’s NHS were poorer than that Scotland benefited from being a part of this United Kingdom. That is the fact.

--- Later in debate ---

[Alison Thewliss]

We already spend more per head on the NHS than is spent in England. We already have better services in Scotland than in England. This policy is an entirely regressive form of taxation that does nothing for the hon. Gentleman’s constituents and does nothing for mine.

[Dr Whitford]

Scotland already spends 43% more per head on social care, which allows us to be the only nation that delivers free personal care and has extended it to people under 65. That was why we raised the extra 1p on tax, for which Scots are already paying and from which they are already gaining. That should be controlled by the Scottish Parliament.

[Alison Thewliss]

My hon. Friend speaks the absolute truth. There is a huge contrast between what the Government propose and what is already being delivered in Scotland.

Some have said, “What’s your alternative?” Well, fixing England’s social care crisis is not for the SNP to decide, quite frankly. Having heard evidence when I sat on the Select Committee on Communities and Local Government some years ago, I know that successive UK Governments have failed to act and have ignored the evidence as difficulties mounted. Now the Prime Minister has come to this House in haste, shamelessly using covid as cover.

[Kevin Hollinrake]

Will the hon. Lady give way?

[Alison Thewliss]

I will, because we served on the Communities and Local Government Committee together.

[Kevin Hollinrake]

I am very grateful. In respect of the sufficiency of Scottish social care budgets, there is now an 11-week wait in parts of Scotland for discharge from hospital into a care home. Is the hon. Lady honestly saying that she does not need extra resources for Scottish health and social care?

[Alison Thewliss]

The hon. Gentleman should look at the comparative figures in his own constituency. I am not saying for one second, and I would never say, that everything in Scotland is perfect, but we are making good progress on that, and we intend to make more progress.

The social care funding announced by the Government may in the end amount to as little as 20% raised by this tax hike, and not even for a few years. The British Association of Social Workers has said that this raises more questions than answers, and that it needs the funding for services right now, not at some point in the future. The early analysis across the board today demonstrates that the sheen is already coming off this policy. In contrast, the SNP has used its time in government to introduce health and social care integration, self-directed support and the Carers (Scotland) Act 2016. We have health and social care partnerships on the ground working away to deliver more integrated services to our constituents. Free personal care has been available in Scotland for adults aged 65 or over since 2002, extended in 2019—as was pointed out by my hon. Friend the Member for Central Ayrshire (Dr Whitford)—to people of all ages who require it. Yesterday the Scottish Government’s programme for government set out the timetable for establishing our national care service, the most significant public service reform since the creation of the NHS.

This is a Westminster power grab on devolved healthcare and the democratic institutions of Scotland, Wales and Northern Ireland. The Government are taxing our people to pay for their chaotic mishandling of health and social care in England. They are undermining our recovery by putting a tax in employers. They are punishing working people on low pay by cutting their universal credit and hiking taxes on their meagre wages. This is no Union dividend, as the Prime Minister likes to claim; it is a Union dead end, and the people of Scotland must have the choice to take the fastest road out of here to independence.

--- Later in debate ---

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

I very much welcome the fact that the Government are taking action to properly fund social care and the NHS in this country. As my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) said, previous Governments and previous Prime Ministers have recognised the challenge of funding social care and the NHS, but it is this Prime Minister and this Government who are taking the brave step of bringing forward concrete proposals to address it.

We have heard much over the past few days and the past few hours from those on the Scottish National party Benches about how horrified they are by these proposals to increase funding for Scotland’s NHS. Astonishingly, they seem to oppose the billion pounds of extra funding that Scotland’s NHS will benefit from this year. It is astonishing. I just do not understand how they can possibly explain that to their constituents and justify such an irrational decision.

[Alison Thewliss]

Will the hon. Gentleman give way?

[John Lamont]

I am happy to hear from the hon. Member why she has made that choice.

[Alison Thewliss]

As the hon. Gentleman well knows and as has been made clear to him in the remarks I made, funding for the NHS is not the issue here; the issue is raising taxes disproportionately on the backs of his and my poorest constituents. I would be interested to hear what he will tell his constituents when they come to his surgery about it.

--- Later in debate ---

[Steve Barclay]

I listened very closely to the hon. Gentleman’s speech, because he is a very informed and knowledgeable commentator on these issues. He rightly pointed to paragraph 36, where we are being very clear about the role in terms of demographic and unit pressure. As he well knows, part of the discussion at a spending review is to look at local government pressures in the round. That is in the context that local authorities are getting an additional £2.2 billion of funding. I remind the House, in terms of the adult social care flexibility that was allowed for councils this year, that out of the 152 local authorities, less than two thirds actually used that flexibility. That is part of looking at these issues in context.

Let me come to the central point put forward by the Scottish National party, which was very well demolished by my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont). All parts of the United Kingdom need a long-term solution to fund health and social care. The Scottish Government’s independent review of adult social care recently noted—[Interruption.] I am quoting from their own review. I thought they would want to hear that. It stated that

“Scotland’s ageing demography means that more money will need to be spent on adult social care over the long term”—

and its recommendations to the Scottish Government are that this would

“require a long-term and substantial uplift in adult social care funding.”

In fact, in 2002, John Swinney said that a 1% increase was

“progressive taxation…required to invest in the health service in Scotland”.—[Scottish Parliament Official Report, 18 April 2002; c. 8005.]

[Alison Thewliss]

Does the right hon. Gentleman accept that that was 18 years ago and that things have changed? Since that time, national insurance has not been reformed in any way to protect the poorest, as income tax has been.

[Steve Barclay]

Obviously, what SNP Members regard as progressive has changed. The point is that if they disagree with this, they can adjust their Barnett consequentials, spend that and reprioritise their spending accordingly. Indeed, likewise, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—I hold him in great affection and he speaks very powerfully in the Chamber—said that these are “English priorities”. Clearing the covid backlog and addressing the challenges of social care are not English priorities. They are United Kingdom priorities, they are this Government’s priorities, and they are the people’s priorities.

This levy will enable the biggest catch-up initiative in the history of the NHS, a comprehensive long-term solution to the social care challenge and a significant long-term investment that will directly improve people’s lives.

Those are things that I think my hon. Friend the Member for Wellingborough (Mr Bone) values, and I hope he will support them.

The Prime Minister said yesterday:

“You can’t fix the covid backlogs without giving the NHS the money it needs; you can’t fix the NHS without fixing social care; you can’t fix social care without removing the fear of losing everything to pay for social care”.—[Official Report, 7 September 2021; Vol. 700, c. 155.]

This plan addresses those problems. I commend it to the House.

Oral Answers to Questions

Alison Thewliss Excerpts

Tuesday 7th September 2021 Commons Chamber

[Mr Speaker]

I am not quite sure if that related to the original question, so we are going to have to watch out for that in future.

[Alison Thewliss (Glasgow Central) (SNP)]

Scottish hospitality and generosity is world-renowned, but could the Minister explain to us why he thinks that Scottish taxpayers should pay for England’s social care crisis?

[Steve Barclay]

It is a slightly odd question, because through the broad shoulders of the United Kingdom, it is Scottish jobs that have been protected through the furlough, it is Scottish businesses that have been supported through the self-employment income support scheme and it is the block grant that has provided additional funding to the Scottish Government. The oddity is that they are choosing not to use those uplifts in the Scottish grant to prioritise the things that they come down to Westminster and say they care about.

[Mr Speaker]

Can I just suggest to the Minister that it might be easier if he speaks through the Chair?

[Alison Thewliss]

It would be good if the Minister answered the question, as well. The Prime Minister’s hike in national insurance has been roundly panned, not least by his own Back Benchers and the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride). People in Scotland are already feeling the pain of a decade of Tory austerity cuts and the harms caused by Brexit, with the devastation of the £20 a week cut to universal credit still to come, none of which they voted for. Why should my constituents pay for the Prime Minister to break his manifesto pledge with a new poll tax on the poorest who can least afford it?

[Steve Barclay]

It may be helpful for me to remind the House of the uplift in funding that the Scottish Government have received as a result of the ability of the UK Government to act across the UK. Baseline funding of £28 billion last year with an additional £8.6 billion of funding—that is £36.6 billion in total—has increased to £40.9 billion this year, so the Scottish Government are getting additional funding. As a result of covid, they have received an additional £14.5 billion, but they are choosing not to prioritise that extra money or to use the additional powers they have on tax or welfare to target the issues they say they care about.

Oral Answers to Questions

Alison Thewliss Excerpts

Tuesday 22nd June 2021 Commons Chamber

[Steve Barclay]

My hon. Friend is right to draw attention to the success of the film insurance scheme, which has protected over 45,000 jobs and £1.6 billion of spend. On the specific issue he raises, that is exactly why my right hon Friend the Chancellor announced the additional £300 million of support at the Budget. He anticipated the fact, in going long with that support, that there would be the risk of further delays to the covid row-back, so that was part of the announcement of an additional £300 million that he set out at the Budget.

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

The live events sector continues to be hard hit by covid-19. UK Music and We Make Events have called for additional financial support, an extension of the VAT reduction and Government-backed covid-19 cancellation insurance. Just now, it is impossible for those running concerts and festivals to plan, and some, including Kendal Calling, have had to postpone again until 2022. Can the Minister tell me why the UK Government have left this sector and the many thousands who work in it without the additional support they are calling for?

[Steve Barclay]

I fear that the question came before my previous answer. I had just mentioned the £300 million of additional support, over and above the £1.57 billion of support that has been announced. Indeed, the hon. Member frequently raises the plight of those individuals who have been hit, and again that is something we very much recognise. Again, however, that is why my right hon. Friend the Chancellor has set out the wider package of support, such as the time to pay arrangements, loans, business grants and the universal credit uplift. This is about looking at the totality of support within the £352 billion that my right hon. Friend has set out.

--- Later in debate ---

[Rishi Sunak]

My hon. Friend is absolutely right, and I briefly pay tribute to him for his work last week on tech net zero. We launched the UK Infrastructure Bank last week in Leeds. Capitalised with £12 billion from the Government, it will unlock £40 billion of investment into tackling both levelling up and our net zero ambitions, and the team there are fantastic. I want to take this opportunity to say an enormous thank you to Chris Grigg for his superb leadership. It is brilliant that we can attract people of his calibre to lead these organisations, and I feel very confident about the UK Infrastructure Bank’s future progress.

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

Concerns have been raised that the narrow criteria of the Business Banking Resolution Service have left far too many ineligible, and also that not enough banks are participating in the scheme. With many businesses now at risk with covid-19 debt, can the Minister tell me what he intends to do about the situation?

[Rishi Sunak]

The hon. Lady is right in the sense that many businesses have taken on debt to get through the crisis, which is why we have implemented something called Pay as You Grow. More than 1 million businesses took bounce back loans, and they now have the ability, at their option, to turn those loans instantly into 10-year loans, doubling the term and reducing their monthly payments by around half, and to take further six-months holidays or interest-only repayment periods. They can take any of those options and it will not have any impact on their credit score, because we recognise the burdens on cash flow and we want to do our bit to ease them and support our recovery.

Economy Update

Alison Thewliss Excerpts

Wednesday 16th June 2021 Commons Chamber

[Steve Barclay]

My right hon. Friend draws attention to exactly why the attack from the Opposition is misplaced and why the furlough taper is justified—because there is demand for labour from businesses. He also knows that it is part of the wider package of support. As a former Secretary of State, he has done a huge amount to champion the need to support people looking for work. That is what the doubling of the number of work coaches is doing. We announced a further £2.6 billion of additional support for the Department for Work and Pensions in the spending review, alongside further specific measures such as the restart scheme, to tackle the situation of those who have been unemployed for over a year. Over 1 million unemployed people on universal credit will have access to that scheme.

This is about a combination of the furlough, which is providing much-needed support but needs to taper, and a wider plan for jobs, including the restart scheme, the kickstart scheme, the tripling of traineeships, and the increase in the apprenticeships incentive to £3,000—a whole package alongside the doubling of the number of work coaches.

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

My thoughts are also with the family and friends of Jo Cox.

Over the past 15 months, companies in sectors such as tourism, travel, hospitality, events, the arts, the night-time economy and weddings—and their supply chains—have been building up debts and have not even gotten close yet to breaking even. It is shameful that not an extra penny of support is being announced for them today. The debt incurred by businesses could take a decade to pay back and will be a drag on recovery. The Treasury Committee was told last week by the British Retail Consortium and UKHospitality that their estimate of commercial rent arrears alone stands at over £5 billion. The Minister has extended the moratorium today and spoken of legislation, but what is his plan to deal with this debt? He asks businesses to start paying back, but with what?

Under the Treasury’s furlough scheme, businesses must pay an additional 10% of their employees’ wages on 1 July, rising to 20% in August, before the scheme is due to end in September. When this happened last year, businesses could not cope with the costs and people lost their jobs. Kate Nicholls of UKHospitality has called this situation unsustainable, and the Federation of Small Businesses has called for urgent additional support.

So will the Minister delay the furlough increase, and will he now extend furlough and the self-employment income support scheme for as long as they are required? Will he act to support those like the Blue Dog employees in Glasgow, whose employer’s behaviour has meant that they have not received the payments they were entitled to? Will he finally—finally—put things right for the millions unjustifiably excluded from UK Government support schemes, such as those on short-term pay-as-you-earn contracts? Many have faced absolute financial ruin through no fault of their own, and it is high time they got support, and an apology from the Minister. Will he make the VAT cut to 5% permanent to give hospitality, tourism and events a much-needed boost into next year, and extend it to the hair, beauty and personal services sector? Will he keep the universal credit uplift and make an increase to sick pay?

The UK currently has the lowest stimulus package of any G7 country despite suffering the worst economic slump. We now need to boost it like Biden with a major fiscal stimulus of at least £100 billion. There is so much more that Scotland would do with the economic levers if we had access to them—so if the Minister will not act, will he give Scotland the power to do so?

[Steve Barclay]

The Scottish Government are still not using all the powers available to them on tax and welfare, and I always feel that before they seek further powers it would be useful for them to use fully the ones they already have. I found it slightly odd that the hon. Lady said that not a penny of support had been announced, because the whole point of the package that was announced was the extensive support going on until the end of September. She seems to be ignoring that and suggesting that everything should start afresh from today.

The hon. Lady mentioned business rates, which I picked up on earlier. This financial year, over 90% of businesses in the retail, hospitality and leisure sector that benefited from the 100% business rates holiday last year will receive a 75% cut in their business rates for the full year to March 2022. Let me just put that in context. In that last year, that tax cut cost £10 billion. This year, it is an additional £6 billion. The hon. Lady says that not a penny has been announced, but there is a further £6 billion of tax cuts on business relief this year in addition to last year. I think it is worth remembering the wider picture of the £352 billion of support.

The hon. Lady mentioned universal credit. We have been very clear from the start that it was a temporary uplift; my right hon. Friend the Chancellor set that out at the time. She also mentioned delaying furlough. As my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) mentioned earlier, there are good reasons why it is not in people’s interests to be on furlough for extended periods of time if their job has disappeared and is not going to come back and if there are other businesses that want to employ that labour. The furlough has achieved its main purpose in retaining the link between labour and business and allowed businesses to bounce back better as a result. So before asking for new powers, the Scottish Government should be focusing on the delivery of their response to covid and recognising the fact that we have been able to respond in this way because we have the strength of one United Kingdom. It is through this wider resilience that we have been able to put together a package of the size that the Chancellor has done.

Finance Bill

Alison Thewliss Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

Thank you, Madam Deputy Speaker. I am sure the House will benefit from your strictures towards my speech, and I welcome the opportunity to make a short contribution on the amendments. As the hon. Member for Ealing North (James Murray) rightly says, the OECD-Biden proposals are an attempt to ensure a multinational, legal framework to ensure that multinational countries pay tax in the countries from which they derive that revenue. Unlike him, I think any sensible look at history will show that this Government have led the way on this since 2010. There can be no suggestion that they have not led the way on ensuring that multinationals should not be able to shift profits to avoid taxation. They have tried to lead the arguments on securing, over many years, a multinational, multilateral agreement on where revenues and profits are derived and how those are taxed. Across the House, we ought to recognise that the Government have been trying to achieve that and that they support it. It has been true since 2010. One of the former Chancellors, George Osborne, led the way on the matter.

The OECD proposals, as the hon. Gentleman put it, are in two pillars, as we all recognise. Pillar one rightly seeks to address the matter of base erosion, as the UK Government have done historically and continue to do. Pillar two, however—I think he failed to recognise this point—would go well beyond what is normally considered to be within the ability of national states, in terms of using the flexibility of fiscal policy to ensure that investment and incentives are properly rewarded within their economies, and may well have some perverse effects on a number of multinational industries, such as the insurance industry. Given your strictures, Madam Deputy Speaker, I shall not give my long peroration on that matter.

However, the key point is that there is a difference between what the Government have been trying to achieve—a multilateral, multinational agreement on the need for a combined approach, which I have no doubt that the Prime Minister and the Chancellor will wish to speak about at the G7—and a legal, minimum international tax rate. It is right that Governments still retain the ability to set fiscal measures according to their economic circumstances. Therefore, I wholeheartedly support—as the Government do—the international agreed approach to ensure that we tax multinational companies on where they derive their revenues and profits.

The problem with new clause 23 is that it talks about a review of the impact of the global minimum tax, but in reality, it is superfluous, because many of the consequences of setting a tax rate of 21% can easily and readily be calculated. The OECD discussions on the precise nature of the agreement are still under review. Therefore, speculating about how that might assess and impact on different economies could hinder the global efforts to achieve that aim.

Finally, as I am sure the Financial Secretary will wish to assure the House, the Government have already agreed that as, when and if there is a global agreement on minimum taxation, they will—when they are a party to that—ensure that the Office for Budget Responsibility assesses the impact for the UK economy and globally. So while this new clause is an interesting amusement for the House tonight, it is superfluous and I wholeheartedly encourage the Government not to accept it.

The hon. Gentleman spoke a bit about the need for investment and for addressing the historical UK underperformance in that area. We all agree with that. As we seek economic recovery post-pandemic and, in the longer term, as we build a cleaner, greener and stronger economy, clearly, the problem of underinvestment has to be addressed on a long-term, sustainable basis. However, it is clear that what the Chancellor has done, with what is popularly known as a super deduction, is likely to bring forward investment in the economy at just the time it is needed. There is an element of saying that, of course, we want to concentrate that on any number of small businesses that may not benefit from investment relief and this may or may not be at the margin, but it may or may not be at the margin that it has the greatest impact. I think the super deduction, which the Opposition seek to criticise, will do exactly that. They want the OBR to assess the impact in other areas of the Finance Bill, but the OBR has already made an assessment of this particular measure in the Bill, which is that it will derive at least 10% extra investment in the UK economy. At this stage of our economic recovery, that seems to me to be fundamentally important, so I hope that the Government will push ahead with the super deduction, as they are doing in this Finance Bill, and even consider it on a longer-term basis as well, because it is hugely important that we address the under-investment in both physical and human capital. Therefore, Government amendment 2 to clause 9, which will allow leased buildings to qualify for that super deduction, seems to be eminently sensible.

Given your stricture, Madam Deputy Speaker, although I could share with the House another 15 minutes of brilliance, I shall now sit down.

[Alison Thewliss (Glasgow Central) (SNP)]

I will also bear in mind what you have said, Madam Deputy Speaker, and keep my comments fairly brief.

I wish to start with the words of the US Treasury Secretary, Janet Yellen. She said:

“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids…It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

That is something that this Government ought to be getting behind, as it makes absolute sense. It is exciting to see that the Biden plan for a global minimum corporation tax rate is gathering pace. It is reported that the G7 is close to a deal, perhaps paving the way for an OECD deal later on in the year. The action is described in the Financial Times as

“the largest shake-up in corporate taxation for a century.”

As the shadow Minister set out, the Government have been ducking questions on this and ducking responsibility. It feels to me at the moment that an agreement will take place in spite of the UK Government’s hesitancy—less global leadership, more like pulling teeth. Why would the UK Government be in favour of the types of profit shifting that this international co-operation is trying to stamp out? Why would they let our businesses be undercut? Why would they forgo valuable tax revenues?

Our new clause 12 is asking the UK Government to prepare a report on an OECD agreement, which seems very much like the direction of travel, as it would cover 135 countries and the largest corporations in the world. It is important that the UK Government fully understand the impact of such an agreement on each and every part of these islands: on business investment, employment productivity, GDP growth and poverty. The impact of not reaching a deal has been included in new clause 12, too, as it is important that we can fully understand the impact should the UK pursue some kind of crazy isolationist stance against this global growing consensus.

The SNP has great sympathy with new clause 22 and amendment 31. Those using tax havens and with a history of corporate tax avoidance should not seek to obtain benefit from schemes intended to support businesses that already pay their fair share. I ask Treasury Ministers what safeguards they intend to put in place if they do not accept these sensible and logical amendments.

I am glad that, in Government amendment 2, there is some recognition of the issues facing those who have background plant and machinery in leased properties, allowing them to qualify for the super deduction. I remain hugely frustrated that there is yet to be any wider support and any wider recognition of the many businesses both involved in leasing and those that lease machinery themselves. I seek assurances from Ministers that they will continue to hold the door open on this issue and to look at it, because there are so many companies that would benefit from the super deduction if it were not for the fact that they have always leased machinery. They contribute hugely to the productivity of this country and there should be some recognition of that within the Government’s proposals.

[Dame Margaret Hodge (Barking) (Lab) [V]]

I wish to speak to amendment 31, which stands in my name and in the names of hon. and right hon. Members from across the House. I shall try to keep my comments brief, too. I will go back to first principles and try to convince Ministers that what we propose is simply fair, just and practical.

Eighty-five per cent. of the British public pay their tax without question through the pay-as-you-earn system. For many of those hard-working taxpayers really struggling to keep their families going, particularly after the pandemic, it is simply unconscionable to watch the big corporations that have made so much money during the pandemic—the Googles and the Amazons—continue to create financial structures that have no other purpose than to help them avoid paying corporation tax. Shifting their profits simply to avoid tax is not only unfair but utterly immoral.

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What is clear above all is that while that option is not a great outcome, it is much better than the existing outcome. We cannot keep this failed status quo. The Treasury and HMRC’s confused approach to the whole sector enabled the shameful loan charge scandal with thousands of people in financial ruin, families torn apart and seven people so trapped that they tragically ended their own lives. Failure to act on the mis-selling and illegitimate operation of umbrella schemes risks another scandal on a similar scale. That cannot be allowed to happen. We have a duty to act. Just as our key workers have protected us over the past year, it is time we started protecting them.

[Alison Thewliss [V]]

I rise to speak to new clauses 9, 10, 11, 13, 14, 15 and 16, which are in my name and those of my colleagues. It is certainly a very large grouping of amendments, and I will not speak to all of them, you will be glad to hear, Mr Deputy Speaker, but I will highlight a couple of them.

First, I want to speak about the very large amendments and new schedules concerning Northern Ireland and VAT. It concerns me greatly that we are looking at this huge new swathe within the Finance Bill that has not been considered at any other point in the Bill’s passage and that we have been given very limited time to delve into it at very short notice. That speaks to some of the complexity that Brexit has imposed on Northern Ireland. There needed to be a great deal more scrutiny of the measures prior to now, and the Government should not be bringing forward huge swathes of new schedules at this very late stage of the Bill.

I am very keen on new clauses 4, 5, 8 and 21, because Finance Bill scrutiny is limited after we have passed the Bill. We do not really think very much about the environmental impact, the equalities impact, the public health impact or the impact on poverty, and we do not think very much about the significant impact on the environment of the measures in the Bill. We do not do enough within Finance Bills to understand the full impact of the measures we have, and I would support a full range of other mechanisms to do so, which I will come back to on Third Reading.

I want to touch on the worthy amendments that those on the Labour Front Bench have tabled. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) talked knowledgably about the issues around financial crime. Some of the evidence we heard in the Treasury Committee during our inquiry highlighted the fact that that is a hugely under-investigated and under-prosecuted crime. There is still very little progress by the Government in closing loopholes in Scottish limited partnerships or in other areas. As she pointed out, we had pre-legislative scrutiny of the draft Registration of Overseas Entities Bill in the Joint Committee with the Lords. Now the Bill has disappeared, but the problem has not. There are still huge numbers of people using the UK, within the property sector in particular, to launder dirty money. The Government are not acting on it. The longer it goes on without action, the more we have to ask who is benefiting if the Government are choosing not to act.

On our new clause 9, I was in a meeting earlier with representatives of Lloyds Banking Group where Philip Grant, one of its representatives, made an excellent point about the asymmetric economy that we are currently in. There are some who can restart their businesses and some who cannot yet get restarted. Some of those will not be restarted for quite some time yet to the point where they do not know if they will be able to break even. The economy has not restarted and opened up for everybody. Many sectors of the economy will not be back to normal for quite some time.

Our new clause 9 calls for a report on the extension of the self-employment income support scheme and the coronavirus job retention scheme until September and until the end of the year respectively. For those who are watching and are unfamiliar with Finance Bills, if they are wondering why we keep talking about reports and reviews, the rules of Finance Bills are such that we cannot just ask for the extension in a simple way. We are not allowed to do that—it is part of the restrictions that these Bills have—so we ask for reports. However, we do very much see merit in asking for action rather than just reports.

Some sectors have been able to modify and their staff are working as they were before the coronavirus pandemic, while some are working partly or entirely from home. Yet, as we all know, there are other sectors that are still waiting—culture, hospitality, conferences, events, weddings, tourism and travel. Employers who may already be carrying a significant burden of debt and arrears without having their cashflow back to normal still have to pay more of their employees’ wages, eventually tapering off to nothing at all coming from a Government contribution. Many businesses may decide that it is just too much of a cost and that they cannot continue to employ those people or cannot continue with their business. We know that the scheduled end of the schemes last year caused job losses. The Treasury must not make the same mistakes again, and at least carrying out such a report would help us to understand the consequences of the UK Government’s actions in this area.

We are not out of the woods yet with this pandemic, and it is vital that the UK Government take all the steps they can to strengthen support rather than pulling it. We in the SNP cannot forget, although the UK Government clearly have, about the millions of people excluded from support schemes altogether. It is unjustifiable that the year has come and gone with so many people left without a single penny piece in Government support, many in sectors that have not yet come back and may not for some time.

Further to this, we call again in our new clause 10 for a review of the extension of the 5% reduced rate for hospitality and tourism. This was a call that we made before the Chancellor announced it last year. The VAT rate for tourism has been too high for too long, and this year, when we are being strongly encouraged to holiday at home, it makes absolute sense to extend this provision, which many people have not had sufficient opportunity to benefit from. The provision would also cover events, including funfairs, which have had a very tough year, with many traditional fairs up and down the country being cancelled. Maintaining the VAT reduction could help to provide a much-needed stimulus to an events, tourism and hospitality sector that is crying out for such a boost. I am sure that if we had this power in the Scottish Parliament we would be using it, so I encourage the Minister to act or to devolve the power and let us get on with the job.

On our new clause 13 on stimulus, we agree with the principle of boosting it like Biden. One of the mistakes of the crash is that it was used to set us on a course of austerity. This has had a huge and devastating impact on all our constituents. We need to know from the UK Government what will be the impact of future austerity plans they might have compared with investment. While this Government have the levers in their hands, they should be clear about the impact that their action or inaction will have.

Our new clause 14 returns to some of the issues that we have with the technicalities of the plastic packaging tax. We are trying to be helpful to the UK Government in this regard. I genuinely hope, against previous experience, that they will at least listen to these concerns and make provisions that will maximise both the recyclate and the tax take. Not all plastics are equal, and the Government should recognise that in the provisions they put forward. Some lend themselves more to being recycled and can be brought to 100% reusable content, and some are very far away from that. We should not treat them all the same.

On our new clause 16, we have been concerned for some time about problem gambling, and my hon. Friend the Member for Inverclyde (Ronnie Cowan) has campaigned doggedly on the issue, along with the all-party parliamentary group for gambling related harm. It would therefore be useful to understand the impact of clause 104 on the volume of gambling and whether further fiscal measures are required to tackle the harm that is done to people.

I would like to touch on some of the amendments tabled by the right hon. Member for Haltemprice and Howden (Mr Davis) on the loan charge and related issues. The loan charge continues to be a running sore for many, and I ask the UK Government to consider the merits of the amendments and what more can be done to support people. Stopping the malpractice of umbrella companies would be another step forward in closing loopholes and protecting those who may be tempted to sign up to, or coerced into signing up to, such schemes in the future. Those promoting such schemes always seem to be a step ahead, and the Government should not let them get further steps ahead and become a dot on the horizon.

There are many amendments in the group that I would like to speak to, and many have significant merit and should be considered by the Government. The flaws in this process mean that many of them will not even be considered or voted on tonight, but I urge the Government to take up those that they can.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I rise to support the amendments standing in the names of my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), myself and my colleagues.

Let me start by making it very clear, as my right hon. Friend—wherever he is—did so well earlier, that we have a problem here, and I am surprised that the Government do not really want to recognise it and are avoiding it. The unacceptable practices of umbrella companies have now become very clear. Contractors are being forced into schemes and are being forced by recruitment agencies to use umbrella companies, which they may not wish to do and may be concerned about. Opting out of the conduct of employment regulations is often mandatory, which removes the rights contractors had as agency workers. We are seeing kickbacks, problems over holiday pay and the skimming of the assignment rate. We are also seeing mini umbrella companies, which some contractors sign up to, believing them to be compliant, only to then discover that they are employed by a company with a different name and owned by a director in, say, the Philippines—my right hon. Friend mentioned “File on 4”, which has raised this issue.

The problem is that the worse the level of malpractice, the greater the rewards and kickbacks for the agencies, reducing the revenue for the Treasury. I have huge respect for my right hon. Friend the Financial Secretary, who is on the Treasury Bench and who will respond to all of this, and I am sure he and his colleagues in the Treasury are alert to this issue and understand that it is a major problem, but I cannot quite understand why we are not using this Finance Bill to start putting some of this right.

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[Alison Thewliss]

I want to begin, as others have done, with a few thank yous. I thank the Minister for so politely rejecting all our amendments. I thank those on the Opposition Benches for the good spirit in which they conducted themselves during the Bill. I thank our research team in Westminster—Scott Taylor and Jonathan Kiehlmann—and Mhairi Love in my office. I thank my hon. Friends the Members for Glenrothes (Peter Grant) and for Gordon (Richard Thomson), and I thank the Clerks of the Committee, Chris Stanton and Joanna Dodd, for their patience. I want to pay particular thanks to George Crozier, the head of external relations for the Chartered Institute of Taxation, the Association of Taxation Technicians and the Low Incomes Tax Reform Group, for being a continual source of support and advice, and for his patience in explaining many of the tax measures to those of us who are not as well versed in the tax system as he is.

This Bill fell short in a number of ways. The Government are always keen to talk about the power of the Union, but it is the power of the Union not to extend support schemes, not to cover the excluded, not to keep the universal credit uplift going, not to extend the VAT reduction to hospitality and tourism, not to provide the support and stimulus that this country so dearly needs, rather than further austerity coming down the road, and not to tackle the scourge of dirty money in our country—the ongoing scandal of tax avoidance and evasion. Instead, we would like to see more of Scotland’s priorities delivered by a Parliament closer to home—priorities to build a sustainable green recovery, to provide a much needed stimulus and to give us the full range of levers over our economy so that we can make a real difference to the lives of the people we are proud to have working and living in Scotland, wherever in the world they have come from. All of these things require Scotland to have the full power of independence, which is why I hope it will not be too much longer before we have all those controls in the Parliament in Scotland.

Question put, That the Bill be now read the Third time.

Oral Answers to Questions

Alison Thewliss Excerpts

Tuesday 27th April 2021 Commons Chamber

[Rishi Sunak]

I would say two things to my right hon. Friend. First, he will know that in the Budget we recently froze the inheritance tax thresholds for four years, which will provide some alleviation on the concern that he mentioned. Secondly, I believe that the best way to drive social mobility in our society is to provide everyone with the skills and education they need to make a better life for themselves, which is what this Government are committed to delivering.

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

The Tories’ two-child limit, and the rape clause, which stands part of it, are having a devastating impact on living standards, with the Child Poverty Action Group and the Church of England estimating that 350,000 families and 1.25 million children have been affected so far. Scrapping the two-child limit would be the easiest and most cost-effective way of reducing child poverty in the UK, so will the Chancellor scrap it or will he push more families into poverty?

[Rishi Sunak]

Since 2010, over 1 million fewer people are now living in poverty, thanks to the actions of this Government and the coalition, and 300,000 fewer children are living in poverty. That is something to be celebrated, but of course there is work to do and we remain committed to making those improvements.

[Alison Thewliss]

It is interesting that the Chancellor ignores the findings of the Church of England and the CPAG, which tell a very different story from that which he is willing to tell. In Scotland, the Scottish National party is committed to doubling the Scottish child payment, a new benefit described as a “game changer”, to £20 a week; providing free school meals to all primary children; and extending wraparound childcare. All of those are a huge help to the families that this Tory Government choose to ignore. Does this not demonstrate the choice of two futures: more austerity and more child poverty under the Tories, or a Scotland working hard to be the best place for a child to grow up?

[Rishi Sunak]

I am glad that the Scottish Government are able to use the over £3.5 billion of Barnett consequentials that have been provided by the UK Government over the next year. Child poverty is of course an important issue and one that we remain committed to, which is why initiatives such as the troubled families programme are making an enormous difference to those families. Crucially, we also know that children growing up in a workless household are five times more likely to be in poverty, which is why this Government are committed to helping people find work and find well-paid work. That is something we have an excellent record of doing.