Social Security

Debate between Alison Thewliss and Paul Masterton

Monday 4th March 2019 Commons Chamber

[Paul Masterton (East Renfrewshire) (Con)]

The greatest achievement of the modern capitalist system has been its ability to consistently deliver rising living standards across the globe. With higher living standards come longer lives, and that is absolutely something to be celebrated. Many of us can now look forward to living healthy and fulfilling lives into our 70s, 80s and, God forbid, possibly even beyond.

[Alison Thewliss (Glasgow Central) (SNP)]

The hon. Gentleman is making a point about life expectancy. Is he not aware that recent figures suggest that life expectancy is now rolling backwards and that a good deal of that could well be attributed to Tory austerity?

[Paul Masterton]

I should point out that I spent 10 years as a pensions specialist before coming into this place. The hon. Lady is not actually correct. What has happened is that the increase in life expectancy is slowing down. That is not a UK-only phenomenon; it is happening right across the western world because of very large advances. It is not unreasonable or linked to austerity. Longer lives mean that there will be an increasing number of older people in our society; the proportion of people aged 85 and over is projected to double over the next 25 years.

Finance (No. 3) Bill

Debate between Alison Thewliss and Paul Masterton

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

[Chris Philp]

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

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

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

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

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

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

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

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

[Paul Masterton]

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

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

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

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

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

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

[Alison Thewliss]

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

[Paul Masterton]

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

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

Immigration Rules: Paragraph 322(5)

Debate between Alison Thewliss and Paul Masterton

Wednesday 13th June 2018 Westminster Hall

[Alison Thewliss]

I agree. That chimes with many of the stories I have heard. We must think particularly about the impact on children, who do not know why their parents are not allowed to work all of a sudden. Some people have not been able to access medical care for their children, which is deeply worrying.

[Paul Masterton (East Renfrewshire) (Con)]

The hon. Lady is aware of my constituent, to whom this rule was applied. In many ways, the biggest impact was on his wife, because NHS Scotland removed her access to medical services, even though she was eight months pregnant. Although NHS Scotland and Home Office staff have very difficult jobs in highly stressful situations, mistakes can have serious consequences that are hard to unpick.

[Alison Thewliss]

I thank the hon. Gentleman for that intervention. I had cause to meet his constituent, and I was so concerned about his situation that I wrote to the Cabinet Secretary for Health and Sport in Scotland to ensure that all GP practices in Scotland understand that they cannot just take people off their lists in such circumstances. Certainly, women who are eight months pregnant need medical care and should not lose it due to Home Office errors.

European Union (Withdrawal) Bill

Debate between Alison Thewliss and Paul Masterton

Committee: 4th sitting: House of Commons
Monday 4th December 2017 Commons Chamber

[Paul Masterton]

I am grateful to have the opportunity to speak, as a Scottish Conservative MP and as a member of the Scottish Affairs Committee, on what I believe is being termed devolution day. I draw Members’ attention to the Committee’s—in my biased view—exceptional report, which our Chair, the hon. Member for Perth and North Perthshire (Pete Wishart), may well highlight at some point. The report was unanimous, and it draws on huge amounts of common ground between Scotland’s two Governments. That suggests that despite some histrionics, consensus exists on this area of the Bill, and that consensus will enable us to improve the Bill.

We must recognise that the debate takes place in the context of active, and now constructive, talks between the UK and the Scottish Government. That makes it a little difficult to debate the words on the page, because there are so many moving parts, but I will focus my remarks on where I believe clause 11 needs to end up and the route that the Scottish Conservatives envisage for getting there.

As has been addressed, several provisions of the Bill fall within the scope of the Sewel convention; in other words, the Scottish Parliament and Welsh Assembly have been asked to give their consent to the Bill. The Scottish and Welsh Governments have signified that, unless the Bill is substantially amended, neither will recommend that consent be given. The UK Government’s position is, I believe, the right one. They are committed to working to obtain a legislative consent motion and expect to achieve one.

As Scottish Conservatives, we are committed to ensuring that the Scottish Parliament can give its consent to the passage of the Bill. As Members may not all be aware of the timescale, I will explain that the plan is for the Scottish Parliament to vote on whether to grant a legislative consent motion ahead of the Third Reading of the Bill in the other place. It is not an all-or-nothing event; it is perfectly possible for an LCM to be initially denied, and then for another vote on granting an LCM to be taken and passed at a later date.

Although, as readers of The Daily Telegraph will be aware, I have a number of issues with the Bill, by far the biggest concern regarding devolution is clause 11. It is my view that if we can fix clause 11, most of the other issues regarding the Bill’s impact on devolution will fall away. On Second Reading, I said that I would not allow legislation to pass that undermined the Union or the devolution settlement, and that remains my position today.

There are 111 powers currently exercised at EU level that do not fall within reserved competence under the Scotland Act 1998 and are therefore, under the scheme of the Act, devolved. Clause 11 will effectively hold those powers at Westminster level. Although that is a sensible interim measure, as the Scottish Affairs Committee heard in evidence during its enquiry, the interim phase has given rise to the “power grab” melodrama that we have heard from the SNP.

[Alison Thewliss (Glasgow Central) (SNP)]

Would the hon. Gentleman like to tell us how interim interim is?

[Paul Masterton]

If the hon. Lady will bear with me, I am coming on to talk about that.

Clause 11 provides that the 111 powers that I have mentioned will be released to Scottish Ministers on a case-by-case basis once UK Ministers are satisfied that it is safe to do so. There is no timescale for that, and the process is unilateral. Under clause 11, the powers, once repatriated from the EU to the UK, are for UK Ministers to exercise or to devolve, as they see fit.