Andrew Gwynne
Main Page: Andrew Gwynne (Labour (Co-op) - Gorton and Denton)Department Debates - View all Andrew Gwynne's debates with the HM Treasury
(11 years, 7 months ago)
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Chris Leslie
It could almost be said that there have been more announcements than new homes constructed under the present Administration. Let us consider a few of the schemes that they have announced.
My hon. Friend will recall the new homes bonus, which was part of the Government’s so-called localism agenda, because he and I have spent some time examining that particular set of policy options. The scheme, which the Government announced in 2010, was supposed to unleash growth and build at least 400,000 additional homes, but it has totally failed to deliver. The number of housing starts fell by 11% last year, to below 100,000—less than half the number required to meet housing need.
Andrew Gwynne (Denton and Reddish) (Lab)
How confident can we be that this new initiative will be any more successful than the others that my hon. Friend is beginning to outline? He will remember, as we do, the NewBuy scheme, which the Prime Minister promised would make 100,000 new properties available to people. In fact, only 1,500 people have secured new properties as a result of that initiative.
Chris Leslie
My hon. Friend has hit the nail on the head. Imagine announcing such a scheme, and then delivering only 1.5% of the goal that the Government set out so confidently at the inception of that project, which has clearly failed. We want to see the careful and detailed thought, piloting, workings and evidence that the Government have put into this latest venture.
Andrew Gwynne
Was my hon. Friend as amazed as I was at the corporation tax figures produced by Her Majesty’s Revenue and Customs? We were told—indeed, the Chancellor informed the House—that the corporation tax cut would be offset by the Government and that there would be no benefit to the banks.
Chris Leslie
This is the curious thing about the Government’s approach to the bank levy. They have consistently said, “Don’t worry, we’ll set the rate”—let us bear in mind that the levy is a charge on the balance sheets and a proportion of a certain set of liabilities—and said that it was designed to yield £2.5 billion, so it has taken some doing for the Treasury to have managed to net only £1.6 billion in the past year and to get the bank levy so wrong. If it had been my hon. Friend’s constituents who were due to pay a certain level of tax through PAYE or national insurance, does he imagine that the taxman or Treasury would have been so lax and said, “Oh, don’t worry, we’ll let you off that massive liability for the time being”? That is essentially what the Minister and his colleagues in the Treasury have been doing and saying to the banks.
Andrew Gwynne
My hon. Friend is absolutely right. Had it been my constituents who owed HMRC any sum of money, HMRC would have been down on them like a ton of bricks, whether they were businesses or individuals. Is not that the inherent unfairness? The Government say that the banks will not prosper from these changes, but clearly that is not the case.
Chris Leslie
I am afraid that the situation is even worse than my hon. Friend thinks. It is not only the past financial year in which the Minister and his colleagues took their eye off the ball on the bank levy: they did so in the financial year before that, too. In 2011-12, the combined shortfall from the bank levy, netting in £1.8 billion or so and added to the corporation tax cut, was £800 million less than Ministers promised. It is not good enough to say, “Oh well, this is an aberration, and it is something that we can tweak and correct.” Ministers are not going back as far as they should and correcting that shortfall in the steps they are taking in the Budget. It is just not good enough. They have not thought through the design of the bank levy carefully enough.
It is not as though Ministers were not warned. I am sorry that the Exchequer Secretary is not in his place, as I warned him in a debate in July 2010—it seems like only yesterday, but it was nearly three years ago—when I said, “The bank levy is too weak. It will not work and it will not have those yields.” It does not give me any satisfaction to say, “I told you so”, but I did tell them so, and Ministers cannot therefore claim that it was something that happened by chance.
Chris Leslie
No—that is a preposterous suggestion. The hon. Gentleman also needs to recognise that all banks have benefited from the implied guarantee of the taxpayer, even if they did not need to be bailed out. He knows very well that the whole banking sector has benefited for a long time, and continues to benefit, from the market expectation that, should a retail bank get into difficulty or become insolvent, the taxpayer will come to its rescue. That is an implied subsidy, for which the banks ought to compensate the taxpayer. That is part of the argument I am happy to make.
Andrew Gwynne
My hon. Friend is incisively highlighting that the Government have effectively given the banks a tax cut, because of the levy’s failure to bring in the resources they initially said it would. Moreover, bankers themselves are still receiving these eye-watering bonuses, while at the same time the Government are giving them a tax cut—the tax cut for millionaires. Is that not absolutely why we need this bank bonus tax to sit alongside the bank levy, so that we can reinvest that revenue in a jobs programme? Have we not shown that a bank bonus tax works?
Chris Leslie
Exactly, and never let Government Members claim again that we do not have a positive approach that would get young people off the dole and back into employment. This is the route that needs to be taken, and the choice presented to the public which they can see most starkly, particularly on a day when unemployment is rising.
Geraint Davies
That is right, and there would be widespread support for that across our communities and probably in the banking community. People are taking home an extra £1 million and asking themselves whether they should be paying income tax at 45p or 50p, at a time when we hear cases of people earning, say, £20 a week. As I mentioned at Prime Minister’s Question Time, a constituent who recently came to me was a chronically ill man who had £20 a week after paying his utility bills and his bus fare. This month he is down to about £14 a week due to benefit cuts. If such cases were brought to the attention of some of those wondering whether to buy their second yacht, I do not think they would mind paying a little more.
It has been insinuated that a 50p rate would discourage such people and be so painful for them that they would all get in their yachts and go off and live somewhere else, but in Britain today many people already pay more than 50p. Anyone who is earning more than £32,000 and less than £42,000 is paying 40% tax plus 12% national insurance. That is 52%. The only reason that they have to pay more than 50p and the millionaires do not is that they do not have their own personal accountants. That is not fair, is it?
These are sustainable levels of marginal taxation and it is right that they should be paid. It is right that members of the banking community, who have their backs covered, should pay more than their fair share. It is also right that the Government should get their act together to stop abuse by many members of that community who are taking the mickey.
Yesterday I had a meeting with a lawyer who specialises in giving advice to people facing charges of insider dealing and the like from the Financial Services Authority, which is now the Financial Conduct Authority. We were talking enormous amounts of money that people are trying to avoid paying. The point that she made to me is that the people in the FSA, now the FCA, do not have the resources and the clout, and have to deal with dozens of cases, while the defence lawyers deal with only a few cases because the amounts of money are so great. What is more—the Minister might want to do something about this—there is no system of precedent.
If the FSA says to a bank, “You have committed this offence and we are going to charge you £1 million”, which is small change for a bank, the FSA cannot set a precedent. The banking community knows that, if they do it, they will be charged; the FSA has to rehearse the same action again and again. I hope the Minister will look into this as it comes from the horse’s mouth—from people who are giving advice to people who are being defended. They also poach staff from the FSA or the FCA to work for them. They say, “We’ll give you three times as much. You’ve been charging us and you’re very good at it. You’re not paid enough for your success. Come over to our side. Have some of our bonus and we can do some insider dealing. The people at the Exchequer are making cuts at the tax office to save money, so we can have more.”
Andrew Gwynne
My hon. Friend should be a little more charitable towards the Government. There has been a thread of consistency in their approach. Had he been present for the first debate, he would have heard my hon. Friend the Member for Nottingham East (Chris Leslie) say from the Front Bench that the Prime Minister promised that under the Government’s New Buy scheme, 100,000 families would be helped and only 1,500 families were eventually helped through that scheme. In this debate we heard that the Prime Minister said that £2.5 billion would be raised by the bank levy, whereas we heard from my hon. Friend on the Front Bench that £1.1 billion was raised. Is there not a degree of consistency here? The Government are consistently incompetent.
Geraint Davies
That certainly would be a charitable way of putting it. If financial targets are set and are under-achieved, the Government clearly need to redouble their efforts to deliver those targets. We need to continue to focus on generating joined-up systems to ensure that the money that is available delivers economic outcomes such as opportunity and jobs. The amendment is designed to create imaginative ways of generating opportunity and jobs for the future by using the money that is recovered. We should join together to do that. It is a modest amendment that we should all agree on. We should work together to build a stronger Britain.
I fear that the Government will say, “Oh no, we can’t possibly consider that.” That, alongside their failure to raise the money, would show that they do not have the focus to ensure that those with the broadest shoulders pay their way towards a more prosperous Britain. I fear that the Government will go back to the old Tory ways and say, “Let’s use this as an opportunity to crush the so-called undeserving poor” and pretend that there are workers and shirkers, whereas people just want to get out and get a job. Let us move forward and create a united Britain—a one nation Britain, dare I say—to create a future that works and a future that cares.
Andrew Gwynne
My hon. Friend is right to highlight the differences between the Prime Minister’s statements and reality. May I give her a third example: the cut to corporation tax. We were told by the Prime Minister and Chancellor of the Exchequer that the banks would not benefit from that cut and that there would be some offsetting arrangements. Yet we now learn from Her Majesty’s Revenue and Customs that the banks have benefited to the tune of £200 million.
Alison Seabeck
I thank my hon. Friend for flagging up what is factually correct and can be substantiated, rather than something resulting from living in some fantasy land of figures, as Government Members seem to do.
The amendment seeks simply to have a review in six months’ time on whether a bank bonus tax within the bank levy would raise significant additional income that could then be reinvested in creating jobs—especially among young people, who have been so hard hit by the Government’s economic failure.