Income Tax

Angus Brendan MacNeil Excerpts

Wednesday 5th November 2014 Commons Chamber

[Frank Dobson]

No, I will not, because others wish to speak.

Let me make it clear that the Labour Government did not bring down the top rate of income tax to benefit the richest and at the same time freeze the pay of nurses, freeze the pay of doctors and freeze the pay of teachers, while at the same time the bankers got their bonuses. At HSBC, which lost £27 billion in the credit crash, Barclays, which lost £8 billion, and Lloyds, which lost £5 billion, bankers’ bonuses have risen, in 2012 and since then. At HSBC, 239 people are currently receiving £1 million or more a year. The worst off received a £40,000 tax benefit, and most will have received £100,000. For example, Mr Stuart Gulliver, chief executive of HSBC, apparently receives £32,000 a week in what are described as “special allowances”. I do not even know whether he pays tax on those special allowances, but that means that he receives, each week, an amount that is close to the national average annual income that is over and above his pay, yet Members on the Government Benches object to the idea that he should pay 50p in the pound tax on that. All I can say is that, following his and his predecessor’s efforts, he obviously has to spend a lot of time trying to minimise the amount of money he has to set aside to pay off for swindling exchange rates and to pay off for the consequences of money laundering and what happened with LIBOR and, generally speaking, in organising an outfit that might be described as the tax avoiders’ alliance.

We have heard talk of behavioural change reducing the possible income from a 50p rate of tax, but these bankers are really good at behavioural change. They do nothing else. They organise all the way around the world, helping people to avoid tax. With the exception of Lloyds, more than 30% of the subsidiary companies of these banks—in some cases these companies exceed more than 1,000 in number—are located in tax havens, and they are not located in tax havens just because the weather is better; it is because they are involved in promoting tax avoidance.

Bankers also say that their pay is a compensation package. I have checked the Oxford dictionary and compensation means recompense for loss, injury or suffering. What have any of these bankers experienced in the way of loss, injury or suffering? It is the rest of us who have had to experience loss, injury or suffering as a result of their stupidity leading up to the financial crisis. Their incompetence and greed inflicted loss, injury or suffering on the rest of us. I thought at one point that it was a perversion of language to use the word compensation in such circumstances, but I actually believe it is a perversion of mindset. They have obviously concluded that they should be compensated for inflicting loss, injury and suffering on the rest of us.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Will the right hon. Gentleman give way?

[Frank Dobson]

No, as I shall finish shortly.

None of these people would have any difficulty finding an extra 5p or even 10p in the pound on their income tax.

--- Later in debate ---

[Mr Browne]

I do not understand why so many Members of Parliament have such an antagonistic attitude towards people who start up businesses, create wealth and employ people.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Mr Browne]

In a moment—the hon. Gentleman has only just come into the Chamber. It seems to me that those people should be lauded and celebrated for their achievements, and they should pay a reasonable amount of tax—and they do under this Government—but they should not be reviled by politicians. The reason why unemployment is falling and the economy is growing is that we have more wealth creation, and that is what we need to do more to encourage.

The Labour party—not just Labour; there are others, I am sure, Madam Deputy Speaker—seems to me to have an extremely narrow, parochial focus. There are economies right around the world that are expanding and are wealthier than ever before. Hundreds of millions of people in Asia are being lifted out of material poverty because those countries are embracing the basics of free-market economics and wealth creation. Those countries are seeing the benefits of improved health care systems, improved life expectancy, reduced infant mortality and improved education outcomes. We must not allow ourselves to adopt an approach of insular socialism in just this one country. That approach involves a belief that we can continue to penalise a small number of wealth creators for being successful, which is completely counter-productive.

We need to step back and ask ourselves what a country would do if it wanted to be competitive in a globalised economy. What could we do to encourage businesses not to locate to France, Germany or the United States or, increasingly, to Mexico, Brazil or India? What could we do to encourage them to locate here? Could we ensure that we had competitive levels of corporation tax? I congratulate the Government on achieving that. Could we ensure that we had competitive levels of personal taxation? In my view, we are in a reasonable place on that. We would be in a worse place if the gist of this motion were accepted.

Perhaps we could ensure that the percentage the state took from overall GDP was sustainable. At the moment, the Government spend a much bigger proportion of GDP than they did in any of the 10 years that Tony Blair was Prime Minister, and in my view that is too much. It is unsustainable. Could we ensure that we were not borrowing too much and living beyond our means? At the moment, we are clearly living beyond our means. These are all straightforward propositions for a country that wants to be successful in a global marketplace.

[Mr MacNeil]

I am almost sorry to interrupt the hon. Gentleman’s sermon in favour of inequality. Why, according to this Government, do the poor have to be punished and the rich have to be incentivised? The only thing that the bedroom tax, VAT and the millionaires’ tax have in common is that Labour abstained on all those issues, which were designed either to punish the poor or to incentivise the rich. The hon. Gentleman seems to believe that the poor must be punished and that the rich must be incentivised. Why?

[Mr Browne]

I have not the faintest idea what the hon. Gentleman is talking about. It seems like complete nonsense. I am not in favour of punishing anybody. If people can keep a higher proportion of the product of their labour, they will be incentivised to keep working and be productive. That applies to people who are earning £20,000, and who have seen a big cut in their income tax under this Government, but it also applies to people who are earning £220,000 and who might have set up successful companies employing 150 people in the hon. Gentleman’s constituency or in mine. I am not seeking to punish people. I am not one of those politicians who believes that we can make some people happy only by making others unhappy. I want us to be a harmonious country in which everyone is incentivised to work and can see the product of their labour.

[Mr Browne]

I do agree with that, although I do not always agree with everything put forward by those on the Government Front Bench. For example, it is important—as the hon. Member for Wyre Forest said—that we should remain a member of the European Union. I know that some Conservative Members are uncomfortable with that, but we are part of the world’s biggest single market. It is an attraction to investors from outside the EU that they can invest in the United Kingdom not only because it is the sixth biggest economy in the world but because we can act as a stepping stone into the largest single market.

We also need to adopt a broadly liberal approach to migration. It is extremely important for our country that we can attract high-talent people from outside the European Union. We see quite a lot of that in London, with people coming to our capital city as well as to the other parts of the United Kingdom to invest and to grow businesses. That is important for our national prosperity.

I take an economically liberal approach across the board, but it is important that we have an enterprise economy for all the reasons that I have stated. An enterprise economy is important if we are to fund public services, for example. Many Members will have travelled widely. I would simply recommend that they try out the public services in countries that have had a heavy dose of socialism. After all, people were only escaping over the Berlin wall in one direction. They were not trying to escape from the west to the east in search of a better quality of life or better public services. A lot of the dysfunctional countries with real social problems are those that do not raise enough money to be able to fund decent public services. In no country in the world do politicians want to have bad hospitals and bad schools. Some countries do not have good hospitals and good schools because they cannot afford to fund them, and that is because they do not have an economy that raises enough revenue to do that. That is because they keep deterring wealth-creating entrepreneurial behaviour. It is all so straightforward that it feels frustrating having to explain it to people.

My philosophical and concluding point is this: all the money we are talking about is being earned by individuals working; it is not our money, the Government’s money or the Leader of the Opposition’s money. When he talks about giving money back, as if he were some sort of Santa Claus figure who is there to decide how much of your own money you are allowed to have and we should be extremely grateful to him, or to the shadow Chief Secretary, for benevolently allowing us to keep a bit of it—

[Mr MacNeil]

rose—

[Mr Browne]

Let me finish this point. The crucial philosophical problem I have with a 50p tax rate is the underlying presumption that the state co-owns your income with you, and that when you work you are in a 50:50 shareholding relationship and for every extra hour of work you do, half the money belongs to the former Member for Shipley and half belongs to you. It is as though it is good of him that he is letting me keep half my cash; I do not accept that as a basic philosophical argument.