Finance Bill
Angus Brendan MacNeil Excerpts(7 years, 10 months ago)
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Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I hope to be helpful, but the right hon. Lady said that companies would have to publish their tax information on their websites. What if a company does not have a website? Could that give the company a loophole, or would there be a way around that if a company did not have a website?
Caroline Flint
I hope that the companies that we are talking about would be big enough to have a website; if not, we might get an opportunity to discuss that later. My goodness, in terms of their reputation, if they do not have a website, they are on a hiding to nothing.
The Minister tried to suggest that the amendment would relate only to UK companies, but it is in line with HMRC guidance that already affects the reporting strategies that the whole House has supported and includes multinational enterprises over a certain turnover. In that sense, we are working with the grain of how the Government have proceeded in these important areas.
There is widespread concern in the House, across all parties, that multinationals operate by different rules from the majority of hard-working, tax-paying businesses, large and small, in the UK. The greatest weapon of multinational enterprises is that their tax arrangements are shrouded in secrecy. The problem is that, in today’s world, as leaks emerge and information comes out, it is death by 1,000 cuts, whereas the amendment is about getting businesses and their reputations back on track. Not only would this be good for business, but it would ensure that those businesses that are playing fair have a chance to set out their claim and what they are doing in a very public way.
Governments across the world face a particular problem with multinationals. The common factor is that revenues are shifted to countries with poor governance, poor monitoring and low or no corporate tax rates. Why in 2010 did Bermuda have total reported corporate profits that were the equivalent of 1,643% of its actual GDP? Could that be because that country has a zero rate of corporation tax? Is there not something odd about a company—let us say, Google—that has huge numbers of sale staff in one country, but all the revenues reportedly received in another? It would surprise no one to find that the revenues are recorded in a country that has a corporate tax rate of 12.5%, as opposed to the UK’s 20%.
The House can take a stand against this entirely lawful but—I think we would all agree—unethical manipulation of different countries’ tax rules. As the OECD has rightly pointed out in its work on base erosion and profit shifting, the impact is to create unfair competition. Multinational enterprises that transfer profits to low-tax dominions gain a competitive advantage over, say, a UK rival, which pays 20% tax on its profits. We can seek to level that playing field today.
The whole House supported the Chancellor’s legislation to require financial reporting to HMRC from UK-based multinationals with revenues in excess of approximately £600 million and UK units of such companies where the parent company is based in a country that does not yet agree to country-by-country reporting. That reporting, in accordance with the guidelines that I have mentioned, would include showing for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued, and their total employment, capital, retained earnings and tangible assets. They would be required to identify each entity within the group doing business in a tax jurisdiction and to provide an indication of business activities within a selection of broad areas in which each entity engages. That information must already be provided to HMRC. We are saying, “Let’s go public.” I want the HMRC to be armed with all the necessary information to secure fair tax contributions from these companies, based on their UK activity, but we need more than the HMRC to have a confidential look; we all deserve to see the bigger picture, and by publishing, we will see that.
Publishing is one way to persuade some of these companies to restore their corporate reputations. Was it because of the extraordinary focus on Google that Facebook announced a welcome change to the recording of its profits in the UK? I believe so. If a company is reporting profits in tax havens where they have only a PO box and a name plate but no apparent staff or activity, do we not want to know that? Let us follow our convictions; let us do what we know to be right. Let us shine a light on the activities of these large multinationals which—let us be honest—run rings around revenue and customs authorities around the world. Let us not flinch, play for time, and hope that some international agreement will eventually be reached by the EU or the OECD.
I remind Members that so often during the referendum on the UK’s EU membership, we heard a lot from both sides about our Parliament’s sovereignty and our power to make laws and to tackle issues big and small. Well, this is the test. Is Britain still a leader or are we followers? This amendment is a pro-business measure. If we adopted it, Parliament would be saying that every business big and small must play by the same set of rules. The tide of opinion is changing in the business world. I am delighted that this week I have received support from SSE for the principle of public country-by-country reporting. I am delighted when major firms such as the cosmetics company Lush, which operates in 49 countries, sign up to the Fair Tax Mark and pledge never to use tax havens. I welcome the fact that since 2014, a quarter of the FTSE 100 companies have published information about their tax arrangements, with long-standing British firms such as Barclays foremost among them.
I commend the Minister for the steps that have been taken in the past six years to improve the level of transparency and for the clampdown on the secretive tax deals that have thwarted fair taxation for so long. In our hearts, do we not all know what the Googles of this world will be hoping? They will hope that we sidestep this issue and duck the opportunity for Britain to set a standard, to lead and to demand more openness. This House knows what those who want fair taxes from large and small businesses alike will want. Every right hon. and hon. Member knows what their constituents would say about these firms shifting their profits to low-tax and no-tax dominions. Let us spare a thought, importantly, for the developing countries, which reportedly lose as much in lost tax revenues as they receive in aid each year. That cannot be right.
Finally, in February, the Chancellor told an international meeting of Finance Ministers:
“I think we should be moving to more public country-by-country reporting. This is something which the UK will seek to promote internationally.”
I hear what the Minister says, but there comes a point when we have to show leadership. Much of our tax rules and other rules affecting companies are not applied worldwide. They are British home-grown rules that seek to provide fairness as well as competition.
I welcome the EU’s activities in this area, although I am not sure where we will fit in. We might have to accept whatever the EU says if we are part of the single market. That is a debate for another day. Unfortunately, the present state of the EU’s negotiations does not tackle the problems of those developing countries that lose out. As I understand it, some of the European discussions have not included the publishing of information on the activities of EU-based companies in developing countries. That does not go as far as what we require from companies reporting to our own tax authority, which we are asking to be put in the public domain.
The change that I am calling for would be part of the Minister’s and the Chancellor’s legacy—a chance to lead where other countries are sure to follow. Let us ensure that the age of secrecy is gone. Let us force the multinationals into the light. I humbly request a Division on this amendment, and I urge the Minister and Conservative Members to join right hon. and hon. Members from nine parties in the Lobby with me today to make a historic change. In years to come, we will ask ourselves why we did not do this earlier. Today is the day. Let us stand up for fairness. Today is a day for lions, not lambs. Let us see the British Parliament roar. I urge the Committee to support this amendment.
Oral Answers to Questions
Angus Brendan MacNeil Excerpts(8 years ago)
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Damian Hinds
Indeed. Were it only the case that the sun would always shine. Under Labour, we had the highest dependency on fossil fuels in the G8 and the lowest contribution from renewable energy of any major EU country. As I said earlier, the deployment of solar power has been a great success story since 2010.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
One of the big things this Government could do to help solar and, indeed, all renewables is to remove the double charge on storage, whereby storage is charged when it takes on the power and charged again when it gets rid of the power and puts it back in the grid. Will the Treasury consider changing its approach and helping storage? It could do so with a stroke of a pen and it would make a huge difference. I urge the Treasury to stroke that pen and make sure that that change happens.
Damian Hinds
The tariffs are designed to make sure that there is a reasonable and appropriate return to investors. They have to be adjusted periodically when costs come down. Of course, one of the great parts of the success story of solar is the fact that costs have come down by about two thirds since 2010.
Iraq Inquiry Report
Angus Brendan MacNeil Excerpts(8 years, 1 month ago)
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Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is an honour to speak in the debate, but I take no pleasure in doing so. I do not think that we should be having this debate, because the Chilcot report should have been published by now.
Time has been a huge issue since the genesis of the report. We should particularly bear in mind that Sir John Chilcot promised that the report would be delivered by 18 April, or the week commencing 18 April, and I understand that he will honour his word. Also, the Prime Minister promised to have it security-cleared within a fortnight, which would be by the week beginning 2 May. The promise that I seek from the Minister is that the Government will keep their word, and that a fortnight after Sir John Chilcot has delivered his report, we shall see it published.
As many have said, and as was said at the press conference, publishing a report is not a difficult matter these days. It is no longer a matter of “cold lead”. It is, as we heard from the right hon. Member for Haltemprice and Howden (Mr Davis), a matter of pressing “send” and the thing is published. People have waited far too long for this report, and further delays are only adding to the pain of the families who are looking for closure. Delays also add to the ever-increasing time during which we have failed to learn the lessons of Iraq, which we should have learned several years ago.
There are further timelines relating to the Chilcot report. On 29 January last year, there was a debate—also hosted by the right hon. Member for Haltemprice and Howden—on a motion calling for the report to be published by 12 February 2015. There was uproar in the House during Prime Minister’s questions and at other times when it was suggested that the report could be delayed beyond the general election of May 2015. We are now in April 2016, and again there is uncertainty about the report.
This report was kicked off in 2009, but there was another timeline before that of impatience for the report. I remind the House of a cross-party debate held here on 31 October 2006, when I was quite a new MP, having been here for about a year and a half. It was led by Adam Price, the then hon. Member for Carmarthen, East and Dinefwr. It is instructive to go back and look at the words that Adam used at the beginning of his speech. He said:
“It is about accountability. It is about the monumental catastrophe of the Iraq war, which is the worst foreign policy disaster certainly since Suez, and possibly since Munich. It is about the morass in which, regrettably, we still find ourselves. It is also about a breakdown in our system of government—a fault line in our constitution that only we, as Parliament, can fix. Fix it we must, if there are not to be further mistakes and other Iraqs under other Prime Ministers, in which case we shall only have ourselves to blame.”—[Official Report, 31 October 2006; Vol. 451, c.163.]
Those words still ring true today.
There was another debate, to which Tony Blair refused to come, despite saying a few weeks earlier to a Conservative Member that he would come at “any time” to a debate on Iraq. Part of the defence for that was that soldiers were in the theatre of operation, but that was admirably dealt with by Douglas Hogg, then a Conservative MP and now Lord Hogg. He said during world war two, the debate on the Norway debacle was led by his father, and that took place when troops were in action. The key moment of the Norway debate—I am not certain about the name of the inquiry—led to the removal of Chamberlain and the installation of Churchill, which may have been instrumental in changing the course of world war two, because this Chamber had shown that it was not afraid.
Mr David Davis
The House needs to address this idea that we cannot debate or investigate anything when troops are in the field. When I have spoken to our troops in the field, they have said that they want our democracy to work properly. They want to feel that they are fighting for an honourable cause. In future, we should dismiss this idea that we are undermining our troops; we are standing up for something that will ensure that their lives are not wasted in the future.
Mr MacNeil
The right hon. Gentleman is quite right. People, and especially troops, want to feel that this place is not on auto-pilot. They want to know that it is living, functioning, thinking and reacting to lessons. As was said, to commit troops to a morass and refuse to learn lessons is an absolute abdication of the House’s responsibility.
Mr Graham Allen
To pick up on the point made by my right hon. Friend, if I may call him that, the Member for Haltemprice and Howden (Mr Davis), once we have committed troops to action, should not the default position of the House be that there will be an inquiry, either in the midst of the action or once it is concluded? These are very serious matters; people die and there are very serious foreign policy issues involved. Should that not be the case, rather than the Government saying, “Oh, we might take a decision to have an inquiry if we think it is really necessary”? This House—the legislature—should have a default position that there is automatically an inquiry when we have committed people to war.
Mr MacNeil
The hon. Gentleman is very right. We expect the military to do its job when we commit it to war. I use the word “we”, but I was not an MP at the time and, like most of the rest of the citizens of the UK and Scotland, I did not support the action in Iraq. When we ask the military as a collective to do a job, we should be prepared to do our job and deliver change if necessary. We should not run away or be scared of such decisions. We must remember that there was a Butler inquiry in 2004, which the Evening Standard branded a whitewash on its front page. When the Government thought that they could get inquiries of a certain type, they were quite willing to have them.
Mark Durkan (Foyle) (SDLP)
The hon. Gentleman and other Members have made very important points. Is it not hugely important that we remove this false parliamentary rubric of having no inquiry while troops are in the field? Otherwise, Governments will have a perverse incentive to keep troops in the field in a possibly disintegrating and changing conflict situation, and will be suspected of doing so, in order to avoid an inquiry?
Mr MacNeil
I am very grateful to the hon. Gentleman for making that point. He probably knows that I am a great admirer of his thoughts and ideas. He makes a very good point about this perverse incentive that a Government can have to keep a war going to avoid an inquiry. Hopefully, that is not a reality, but given the machinations of politics, we can never know. There may be a desire to get over another couple of weeks or another month, or to kick the can down the road that little bit further. The can was certainly kicked down the road a decade ago. A pivotal thing changed between 2006 and 2009—the Prime Minister of the day changed, from Tony Blair to Gordon Brown. People can draw their own conclusions from that, but I do think that was significant. I will wait for the inquiry to see just how significant it was.
As hon. Members have said, we cannot have this Parliament running away from the reality of what it committed other people to doing. Ultimately, the Iraq war cost 179 UK lives. As the hon. Member for Newport West (Paul Flynn) said, that does not take into account those who were wounded in body or mind, or the knock-on effects on families, loved ones, and those dealing with people wounded in body or mind. The war has taken quite a toll on people in the UK, and it has cost the lives of 4,800 allied soldiers. Sadly, those figures, terrible as they are, are dwarfed by those for civilian casualties in Iraq. The lowest estimate is 134,000, but the number is possibly four times higher than that. The war also created 3.5 million refugees. For goodness’ sake, there are lessons that we must learn about what we got ourselves involved in, and what we might do again if we do not have the courage to face up to what was done.
Mr Graham Allen
The hon. Gentleman is very generous to give way again. He talks about the figures when peace was declared; what a disastrous and unprepared peace that was. Will he take into account that there have probably been at least as many casualties again since then, because of the opening up of the rift between Shi’a and Sunni Muslims, which allowed opportunities for an internecine warfare that is spreading into international guerrilla warfare? If he includes those numbers, will he not find an absolutely enormous death toll, running into the millions, and to who knows how many in the future?
Mr MacNeil
The hon. Gentleman is absolutely right; I agree with all he said. To that, I add the other fallout from the Iraq war, which, we must remember, was demonstrated against by more than a million people on the streets of the UK. If a million people were demonstrating, we can be sure that many, many more—several factors more—were in support of them. I add to that the creation of Daesh or ISIL in the camps of Iraq. There was a myth at the time that America went into Iraq because al-Qaeda was there; that was part of the myth-making in America around regime change. The reality was that al-Qaeda was not there until the Americans went in, and then the Americans created something far worse in those camps. The responsibility for what was done there—the loss of lives, the costs and the terror created—hangs very darkly over the Iraq war. That is something from which we must learn. We must ensure that we get this report published fairly soon, because time is of the essence. Time is the big factor here. Kicking the can down the road even further is not acceptable.
On 29 October 2015, the Prime Minister seemed to be very unequivocal on clearance taking two weeks, which is the point of this debate today. He said:
“In relation to National Security checking, the Government will aim to complete the process as quickly as possible. As you know, National Security checking for the Savile Inquiry took two weeks to complete. It would certainly be our plan and expectation to take no longer than this, and we will look to complete the process more quickly.”
We need to do that for the families who are expecting closure. This inquiry should have started many years earlier.
In the debate of 31 October 2006, to which I referred, there was already frustration that it had taken so long to get the matter in front of this House of Commons. We used an Opposition day debate, but in those times, Scottish National party and Plaid Cymru Opposition day debates were few and far between. Thankfully, it is not like that today. This was before the creation of the Backbench Business Committee, which we should thank today.
Brendan O'Hara (Argyll and Bute) (SNP)
Has my hon. Friend considered the reputational damage done to the United Kingdom by the series of earlier delays? If it is the EU referendum that is causing the current delay, does he agree that the reputational damage to the UK is in danger of becoming ridiculous?
Mr MacNeil
I am grateful for that intervention. As was said earlier, the UK risks becoming an international laughing-stock because of this infinite, eternal delay with this report. My hon. Friend is absolutely right, and the delay is annoying many people. It is certainly not to the satisfaction of the families, many of whom would concur with what he said about the EU referendum. Roger Bacon, whose son Matthew Bacon was killed in Basra in 2005, said:
“To allow the referendum to get in the way of it seems to me to be completely wrong and smacks of political manoeuvrings that should not be taking place really.”
Interestingly, the former member of the Foreign Affairs Committee and former Labour Member representing Thurrock, Andrew Mackinlay, called for the publication of Chilcot not to get lost in the case of the European referendum. He said:
“It would suit the security and intelligence services and some people in high places for it to be ‘lost’ in the flurry…of final days of the referendum campaign”,
so let us have it soon at the beginning of May. That is when this report should be out, on the Government’s word. We are looking for the Government to keep their promise and for John Chilcot to keep his. The families certainly deserve that.
Mark Durkan
Some of us know John Chilcot and have worked with him, because of our backgrounds and roles. When he was appointed to carry out this inquiry, I was accused of being uncharitable in saying that although he had many attributes, I did not think he would be found in the “Yellow Pages” under I for independent or C for challenging. Perhaps he will prove otherwise. He conducted the review after the Castlereagh raid, and what he did then was what my party and I predicted he would do—come up with an outcome that would entirely suit the security services and be more about their interests. That shows that this man is well attuned and sensitive to the interests, demands and requirements of the security services. The idea that he has written a report that will need serious national security checking is somewhat preposterous.
Mr MacNeil
Those are interesting words from the hon. Gentleman. That brings us back to the Prime Minister’s statement that the national security checking for the Saville inquiry took two weeks, and that the expectation was for the Chilcot inquiry to take no longer than that. I expect—and it is the expectation of this Chamber—that the report will be published in the week commencing 2 May. We cannot have anything other than that.
The failure to publish this report has, I think, left us uninformed about other engagements that took place subsequently to Iraq. The UK’s military action since Iraq has, it can be argued, been a chaotic mess. That certainly seems to have been the case in Libya, where we led a bombing campaign costing 13 times more than the amount spent on the rebuilding of Iraq. Had Chilcot been published, we might have had some hard lessons set out in black and white to guide any Government planning any military adventures or interventions in the future to plan for the peace afterwards, not to leave a vacuum and not to leave an opportunity for terrorists to move in and destabilise a state. We were selling ourselves short and other countries particularly short when the launch of the report was delayed, and we are doing so now through the interminable delay to its publication.
Let me conclude with the words of a woman I greatly admire—Rose Gentle from Glasgow, the mother of the Royal Highland Fusilier Gordon Gentle, who was killed 12 years ago in Basra at the age of 19. She said that she was “disappointed” by the latest news from the inquiry, and added:
“We thought it should be out a lot sooner than this. I thought it would be out by the end of the year, because they have everything there. It’s another let-down. It’s another few months to wait and suffer again.”
That was said on 29 October 2015, nine years after the initial debate on Iraq in this place. Bereaved parents such as Rose Gentle should not wait a day beyond the first week of May 2016 for the publication of the Chilcot report.
Budget Resolutions and Economic Situation
Angus Brendan MacNeil Excerpts(8 years, 1 month ago)
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Mr Wright
I would suggest that the approach on capital gains tax is contrary to having a long-term economic plan, as it encourages short termism—people do not scale up, but sell out quickly. That is a major structural concern.
To a large extent, the Chancellor has done positive things in this Parliament to encourage investment. In particular, the changes to the annual investment allowances are very welcome and will allow firms to invest with greater certainty. Other countries, however, are doing much more, and Britain risks missing out. Addressing the huge disincentive in business rates for firms wanting to invest in new plant and machinery should have been at the very top of the Chancellor’s list, and although the changes to business rates for small businesses were welcome and constituted the largest tax cut of this Budget, it seems ridiculous that the Chancellor did not resolve the ludicrous situation whereby a firm faces a larger tax bill in the form of higher business rates by choosing to invest in new plant and machinery. For a Government who pledged to do all they can to rebalance the economy towards manufacturing and specifically, in the past six or seven months or so, to help the hard-hit British steel industry, the omission of that single measure from the Budget was a significant blow for industry, particularly the steel industry, which wanted the Government to give a favourable signal to invest.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It seems that there is only one club in the Conservative golf bag for tackling productivity, and that is tax alone. The Conservatives have to face up to infrastructure, to the low-wage economy and to the lack of housing. Owner occupancy is at a 20-year low and house building is low as well. Workers need houses, and if that growth does not happen, combined with infrastructure, productivity will remain low.
Mr Wright
The hon. Gentleman makes an important point about infrastructure, and there was very little in the Budget to address that. Earlier, I mentioned the possibility of rebalancing. In 2012, we were promised an export-led recovery, and the Government announced proudly a target of £1 trillion of exports by 2020. I am all for ambition and for stretching targets, but given the Government’s limited ability to shift the needle on the value of exports by companies, that ambition seemed at best somewhat misplaced and, at worst, even very foolish.
The OBR stated last week that the Government will miss its target by 36%, which is £357 billion, and that net trade will actually be a drag on economic growth for every single year of this Parliament, but there was nothing in this Budget to boost exports. The word “exports” did not even pass the Chancellor’s lips in his statement on Wednesday and it was not mentioned again this morning. Does that mean that the Government have shelved that target? Will Ministers consider providing assistance and encouragement in the form of export vouchers so that firms from Britain can invest and export?
A further way to boost productivity is by investing in skills, and the flagship skills policy of this Government is the target of 3 million apprenticeships by 2020, funded through the apprenticeships levy. Now, only 2% of larger firms will pay that, so what will happen to the other 98% of firms, as well as the detail of the levy? We were promised by the Minister for Skills in the run-up to the Budget that all would be revealed, including this new shiny model, in the Chancellor’s Budget statement, but for a Budget billed as putting the next generation first, there was precious little detail about how the apprenticeships levy—only 12 months from its start—will operate in practice. As with exports, the word “apprenticeships” was not even mentioned by the Chancellor.
Mr Jackson
I will not at the moment, but I might later.
The previous Labour Government, in very benign economic circumstances—mainly driven, of course, by debt and borrowing—failed to take those decisions.
I welcome the Budget in general terms—of course, I took issue with the Chancellor’s comments about Brexit, and I think the OBR’s anodyne comments on Brexit were misrepresented. However, there were some good things in the Budget, which was not a redistributive Budget from poor to rich, but largely a redistributive-neutral Budget, as the Institute for Fiscal Studies said.
Mr Jackson
I will not at the moment.
I welcome the lifetime ISA. I welcome the tax crackdown on offshore property developers and transfer pricing. It was good to see the changes in the personal allowance, which will take many of my constituents out of tax.
Indeed, my constituency is in a very fortunate position, and I pay tribute to the Chancellor for delivering nothing short of a jobs miracle. We have seen the largest reduction in youth unemployment in the history of my seat—and probably in England as a whole—at over 70%, and there has been a more than 60% reduction in adult unemployment. We also have record numbers of apprenticeships. That is taking people out of poverty. That is the great record of this Government.
The decision to resile from the commitment on PIP was absolutely right. There is a moral, social equity issue—[Hon. Members: “A U-turn.”] It is a U-turn—that was well spotted by Labour Members. However, it was absolutely right to make that decision. It was right for my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) to point up the juxtaposition of tax reductions for well-off people and the change in PIP. However, it ill behoves Labour Members to lecture the Government, when they voted against every welfare change in the last Parliament. What would they have done, and what would they do now? It is incumbent on the Opposition to come through with a coherent, comprehensive alternative on fiscal policy, public expenditure and tax.
Let me raise two issues that have caused me some concern with the Budget. The problem the Government have encountered, which we have discussed over the last few days, has given rise to a proper debate about intergenerational fairness. We need to look again at pensioner benefits. We cannot discuss welfare without looking at things such as the triple lock and pensioners benefits. I rarely agree with my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), but he is absolutely right that we cannot see these things in a vacuum, and it is important that we look again at means-testing and pensioner benefits. It is morally wrong to make large transfers of wealth from the young to the old. There has to be a consensus on this issue.
One suggestion I would make is that, if we are going to means-test pensioner benefits, we should perhaps link that to the most acute societal issue we have at the moment, which is adult social care. We should have co-ordination and integration between acute district hospitals and the provision of care and housing for older people. I think there are older pensioners who would understand that, and it is something the Treasury needs to go forward with and look at very seriously.
The second concern is that, as we speak, Cambridgeshire County Council—it is not my local authority, because Peterborough City Council is a unitary authority—is looking at the devolution plans for East Anglia. At the moment, those do not stack up. We have not had enough information—in some senses, I am reprising the comments of my hon. Friend the Member for North West Norfolk (Sir Henry Bellingham) yesterday—and we need more. The proposal has been rushed to get it in the Budget statement. It needs to be finessed. We need to carry businesses with us. Neither local enterprise partnership agrees with it. The majority of councils are, at best, ambivalent, and that includes Cambridge City Council, which has rejected it. We need to look at this proposal again.
Budget Resolutions and Economic Situation
Angus Brendan MacNeil Excerpts(8 years, 2 months ago)
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Tom Elliott (Fermanagh and South Tyrone) (UUP)
It is interesting to witness the Budget unfolding in the Chamber today, because, in years past, I have watched the Chancellor deliver his speech from the comfort of my own home, or read about it in the papers the next morning. There is almost a sense of anti-climax this afternoon. I remember huge controversies around the Budget, particularly some years ago when there were huge increases in income tax, but I do not see that so much now, as we seem to have a slightly more settled economy. We have seen much less controversy in the Budget not just for this year, but for the last number of years, and if we look at some of the empty Benches in the Chamber, we can see that perhaps there is something in that. Like all financial statements, there are some good parts and some bad parts, and that has been recognised even on the Opposition Benches.
First, let me highlight some of the significant investments that are going into the English regions. I guess that much of that will not be a huge benefit to Northern Ireland, or indeed to Scotland or Wales. Of course, those regions are getting some of their own financial benefits as well.
One aspect that I have been looking at is the £700 million that has gone into flood defences in England. I just wonder whether there will be Barnett consequentials around that for Northern Ireland, or indeed for Scotland or Wales, as those regions have suffered significantly from flooding as well. In my constituency of Fermanagh and South Tyrone, one person sadly lost their life in the flooding this winter. Many people in my constituency were severely affected by the flooding, and I am sure that it was equally as bad in other areas. I am keen to know whether there will be Barnett consequentials around that £700 million that will come to the Northern Ireland Executive.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman raises a good point. The Barnett consequentials are a consequence of a need in England. If there is a need in Northern Ireland, Wales or Scotland, the Treasury does not react to that need. We have to wait until there is a need somewhere else before we get the money. It is our taxes as well. When we have a need, we should get the money. If there is a need in Northern Ireland, the consequentials should follow to the other nations, but that never happens. It is always about need in England, and the rest will take what comes of that.
Tom Elliott
I appreciate the hon. Gentleman’s intervention. Perhaps he is explaining some of the Treasury’s rationale on this. I do not know whether there has been any co-operation on this, but he does seem to be offering some kind of explanation.
The devolution of corporation tax to Northern Ireland has been a live issue for at least eight years, perhaps even longer. I assume that the proposal for a reduction in corporation tax to 17% in the UK, will mean that, with our 12.5% rate in Northern Ireland, we will have a lower overall reduction in our block grant. Some argue that if the UK decides to leave the European Union in the forthcoming referendum there may not be any reduction at all in the Northern Ireland block grant to reflect the fact that our corporation tax is devolved, simply because the Azores ruling does not come into effect. I am interested to hear the debate about that, because it is an issue that we have already raised with the Prime Minister.
One measure that I really welcome for Northern Ireland is the £4 million investment in an air ambulance. I have personally lobbied for that for quite a long time. Northern Ireland is the one region in the United Kingdom that does not have an air ambulance and that support mechanism. I thank the Treasury for that. It will be a great memorial for the family of the late Dr John Hinds who lost his life campaigning for an air ambulance. He was a great motorcycle enthusiast, and his campaign will hopefully now come to fruition. It is also good news for those currently involved in the air ambulance campaign, including my constituent, Mr Rodney Connor, who has been a great campaigner in that respect.
Wes Streeting (Ilford North) (Lab)
It is a privilege to speak on the first day of the Budget debate. This has been a fascinating journey, following the Chancellor as he has brought us to this point. Following the Chancellor on the economy has been a bit like following a drunk driver on the road, swerving all over the place as his description of the state of our economy has moved from the sunny uplands that lie ahead to the stormy weather of the global economy. Instead of focusing on the long road ahead to our national recovery, he seems to be more interested in the short walk next door to No. 10. So keen is he to avoid any focus on his record as Chancellor for the past six years that we have been reduced this afternoon to talking about fizzy drinks. Like the very worst fizzy drinks, this is full of fizz and leaves us with a bad aftertaste.
Let us start with the Chancellor’s own performance. Who would have thought that six years into his term as Chancellor, growth would be being revised down, national debt would be continuing to rise and he would have failed to meet his targets for deficit reductions once again?
Mr MacNeil
The hon. Gentleman talks about growth, and it is interesting that the Chancellor has talked about major advanced economies as though that was a very narrow club. Our neighbours in Ireland have growth treble that of the UK and those in Iceland have double that growth, so the Chancellor is not performing well at all, even by his own measurements.
Wes Streeting
I certainly agree with that assessment. This year, growth has been revised down from 2.4% to 2%. It will be down next year, the year after that, the year after that and the year after that. We were promised that he would eliminate the deficit during the course of a single Parliament, but he is doing nothing of the sort. In fact, it is very hard to imagine how we will eliminate the deficit by the end of this Parliament. A close look at the figures produced by the Chancellor in his Red Book shows that in order to achieve his forecast surplus in 2019-20, he would rely on moving from a £21.4 billion deficit in one year to a £10.4 billion surplus the next. These are fantasy figures, which possibly explains why he has failed to meet them every other year—debt revised up every year during the course of this Parliament; £40 billion more borrowing over the course of this Parliament.
On productivity, once again the outlook has been revised down, and productivity is still below pre-crisis levels. The Chancellor has been in office for six years—what on earth has he been doing? Maybe we should start looking at his productivity to explain why the productivity of the economy is still so weak.
I welcome the investment in Crossrail 2, but net public investment will fall during the course of this Parliament to £32 billion by the end of the decade, when we would be investing if this were genuinely a long-term economic plan. Exports are falling and nowhere near hitting the Chancellor’s £1 trillion target. Although he prides himself on being the low-tax Chancellor, the tax burden, at 36.3% of GDP, is higher than at any point during the last Labour Government. So it seems we cannot even rely on the Tories to cut tax any more.
I very much welcome what the Chancellor said about Britain’s membership of the European Union and all the benefits it brings, but the Chancellor has a problem because, right as he is on that issue, he cannot carry his party with him. In fact, even as the Governor of the Bank of England has remarked that leaving the European Union is Britain’s single biggest domestic risk, of the Tories that have bothered to turn up this afternoon—they have run out of speakers to talk up the Chancellor’s Budget—many have turned up to trash the Chancellor on Europe. [Hon. Members: “Where are they?”] Indeed, where are the Conservatives flocking to defend the Chancellor’s position on Europe? In fact, to borrow a phrase, the fact that the majority of the Conservative party would take us out of the European Union makes them a threat to our economic security, our national security and “your family’s security”.
Let us look at the impact on households. Almost half of the gains from income tax cuts in this Budget will go to the richest fifth of households. The amount that the Chancellor is cutting in capital gains tax would offset the cuts that he is imposing on disabled people in this very Budget.
The Chancellor claims to be helping the next generation. This is a Chancellor who trebled university tuition fees, abolished the education maintenance allowance, cut student grants, imposed tuition fees for student nurses and midwives, and proposes to scrap the NHS bursary, and look at the state of careers education in our schools. Even with the measures in this Budget to encourage saving and home ownership, we should listen to Brian Berry, the chief executive of the Federation of Master Builders, who says:
“We are nearly 12 months into the current Parliament and the Government is already falling well behind on its targets”
to build new homes. He also says that,
“these announcements are limited in scope and won’t signal the…change…we need to see.”
In fact, the Office for Budget Responsibility has revised its forecasts to show an increase in house prices as a result of the introduction of the new lifetime ISA, which will fuel demand, but it has lowered its estimate lower projected investment in new builds because of the impact of Budget measures on housing associations. I think it is cruel to encourage people to want to own their own homes but not provide the investment, the support and the economic plan to ensure that those homes are in plentiful supply, and that people from ordinary backgrounds can get on the housing ladder, rather than Conservative MPs who are using the Help to Buy ISA not only to buy their first home but also, it seems, to buy extra homes for members of the family as well.
Finally, I want to talk about the Budget’s impact on local government. For the past six years, local government has been absolutely clobbered. These are not just any services; they are front-line services. The majority of my council’s public funding from central Government has been lost. When the Conservatives talk about a tax on sugar to encourage fitness, they should explain why they have cut public health funding in-year and time and again. If they want a healthier nation, they must invest in tomorrow today.
We should look at the other services that are being cut and the tax rises that are being imposed by the Chancellor, such as the new social care precept. As my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) pointed out, even an increase in social care funding through the precept will barely cover the cost of introducing the national living wage and certainly will not meet the social care crisis. That is why so many councils are struggling and so many councillors have to vote to put up council tax. Even in Labour-run Redbridge, the Conservative Redbridge opposition voted in favour of a 2% increase in council tax through the social care precept, and also for an increase of just under 2% in council tax, because they understand the pressure that this Government are piling on to local authorities. The Government went even further today by cutting business rates, knowing full well that that will not be the Chancellor’s headache—it will be the job once more of local councillors to balance the books because we are paying the price of his failure.
So I am not impressed by today’s Budget. It is nothing like a long-term economic plan. It is long-term fantasy figures from what will prove to be a short-term Chancellor, and I certainly will not be supporting it.
Oral Answers to Questions
Angus Brendan MacNeil Excerpts(8 years, 2 months ago)
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Mr Osborne
Absolutely. We will give careful consideration—as I always do—to the proposals that my hon. Friend comes forward with to support North Lincolnshire and his own constituency. We have been able to make investments in new roads, reduce the tolls on the Humber bridge, and introduce enterprise zones. I would love to hear of any new ideas that he has.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Happy St David’s day to you, Mr Speaker.
The Chancellor often talks about repairing the roof when the sun is shining. Norway, a country the size of Scotland, managed to amass £810 billion in an oil fund when the sun shone. Just how much have the broad shoulders of the UK saved for a moment such as this to help north-east Scotland? Is the figure indeed zero?
Mr Osborne
We are providing support to Scotland, and that support is entrenched in the fiscal framework that we have agreed with the Scottish Government. The hon. Gentleman cannot duck his responsibilities. He wanted Scotland to be independent on 24 March—this month. If we had gone ahead with that—if the Scottish people had voted for it—there would have been a fiscal catastrophe in Scotland, because oil revenues have fallen by more than 90%. We had a question earlier from a Scottish National party Member—[Interruption.]
Oral Answers to Questions
Angus Brendan MacNeil Excerpts(8 years, 5 months ago)
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Mr Speaker
On the subject of Welsh, rather than Gaelic, I call Mr Angus Brendan MacNeil.
Mr MacNeil
Tapadh leibh, Mgr Speaker, airson an cothrom seo a thoirt dhomh. May I ask that the respect being shown to Welsh also be shown to Scottish Gaelic?
Robert Halfon
It is always a pleasure to answer the hon. Gentleman. He will be pleased to know that the Cabinet Office does the same for the whole UK.
Points of Order
Angus Brendan MacNeil Excerpts(8 years, 5 months ago)
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Mr Speaker
The short answer is that it does have to be tabled by the close of business tonight and, yes, that motion will be amendable. I hope that is helpful.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Further to that point of order, Mr Speaker. First, for your information, let me say that the fleet-of-foot Scottish National party is already tabling an amendment to the motion. I have two points about order that I hope you can help me with. First, have Prime Minister’s questions been cancelled at such short notice before? Secondly, does such a step need the consent of the House?
Mr Speaker
The short answer to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil)—I am advised by the right hon. Member for Gordon (Alex Salmond) that I have pronounced that correctly, and I would not dare argue with him on that matter—is that, yes, such a proposition from the Government of course requires the assent of the House and that motion 6 is before the House, so I think we are fairly clear about that. The hon. Gentleman asks me whether this has happened before. He is quite an experienced denizen of this House and he will know that there are precedents for most things. The short answer is that, yes, Prime Minister’s questions have been cancelled—relatively recently, in fact—at relatively short notice before. He can consult the record, but I think it related to marking the unsurpassed tenure of Her Majesty the Queen. That was the occasion, at least most recently; there are precedents for these things.
Oral Answers to Questions
Angus Brendan MacNeil Excerpts(8 years, 5 months ago)
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Mr Osborne
We have put a huge amount of investment into Cambridge, including of course the renovation of the famous Cavendish Laboratory, and I congratulate my hon. Friend on the strong start she has made in recent months in championing her constituency. That has been continued today with a big bid for the A10, which I will take a close look at.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Chancellor promised twice—at the Scottish referendum and in his manifesto—to have carbon capture and storage at Peterhead. Why has he broken that promise?
Mr Osborne
As I have said, investment in renewables will double over the next five years, and much of that investment will go into Scotland—[Interruption.] Look, the Scottish nationalists have a choice now. They have got some extra money and increased capital spending, and if they want to invest in carbon capture and storage in Scotland they can do so. It is called devolution.
Tax Credits
Angus Brendan MacNeil Excerpts(8 years, 6 months ago)
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Scott Mann
I accept the hon. Gentleman’s point, but we are looking to increase the living wage to ensure that people are better off in work than out of work.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Surely the Government are tackling the problem the wrong way round. They should have got incomes up before they cut people’s wages. What they are doing is cutting people’s earnings now, and in four years’ time they may introduce what they call a national living wage, which in fact is not a living wage.
Scott Mann
I thank the hon. Gentleman for his contribution. I will deal with that as I continue my remarks.
The proposals presented by the Opposition over the past few days would maintain the status quo. They believe that we should not change the £30 billion tax credit bill at all. [Interruption.] I do not accept that. They have offered no credible plan to take this burden off our children. [Interruption.] I was elected on a manifesto to reduce the welfare bill and I hope we will do that. We on the Government Benches know that we have to take the difficult decisions that lie ahead in order to bring about spending reductions. It is all very well for the Leader of the Opposition to ask six questions on tax credits yesterday, but a policy that affects 3 million families cannot be changed on a whim. I welcome the Chancellor’s announcement that he will deal with the matter in the autumn statement.
Bob Blackman (Harrow East) (Con)
It is a pleasure to follow that thoughtful contribution from the hon. Member for Arfon (Hywel Williams). I, too, congratulate the right hon. Member for Birkenhead (Frank Field) on securing this debate, and the Backbench Business Committee on its wisdom in granting it—I had the pleasure of chairing that meeting. This is the first opportunity I have had to contribute to a debate on the vexed issue of tax credits.
It is a great shame that the right hon. Member for Birkenhead was unable to convince his party when it was in government of the wisdom of transforming the welfare system in this country, but we are where we are. My big criticism of the previous Labour Government is that instead of reforming the welfare system, every time a new problem arose they set up a new benefit. The system therefore became unwieldy and unworkable. When I was elected in 2010, a series of people came to see me about the hugely complicated financial arrangements they faced, both with working tax credits and child-based tax credits.
Mr MacNeil
The hon. Gentleman says that when the previous Labour Government had a problem they increased tax credits. The real problem is low wages. This Government are weakening trade unions and undermining the right to collective bargaining, which is what allows workers to strive for higher wages, and that will not help the situation at all.
Bob Blackman
That is not quite what I said. I mentioned the welfare system and said that we had a series of different welfare benefits. Whatever the problem was, the Labour Government set up a new benefit, whether a tax credit or another arrangement. During a period of relatively high employment they failed to deal with the fundamental issue, which, as the hon. Gentleman rightly points out, is low wages.
This debate was billed as the last chance to review what the Government are proposing before it became fact, but events in the other place mean that we are now in a position to make alternative proposals. Contributions this afternoon will therefore be helpful to the Chancellor in deciding what to bring forward in his autumn statement. Clearly, we have to strike a balance. The Conservative party manifesto laid out that we were going to save £12 billion in welfare. The challenge is therefore to come forward with alternative proposals on how welfare savings of £12 billion will be found. Some £4 billion of savings are envisaged from this change.
I start with sympathy for the people affected. When we reduce people’s benefits, they will always complain. When we increase the tax threshold so that they pay less tax, they will be quite happy and will not complain. When their wages are increased, they will not complain. But if we take benefits away, they will squeal. We clearly must look at the effect on individuals in the round. We must have the utmost sympathy for those people who are working full time and have no alternative but to receive tax credits to top up their wages. What can they do? They suffer a loss of income, and that will have an impact on their families. Therefore, the first thing I would like the Chancellor to do is examine the measures so that people in full-time work suffer no impact whatsoever, because this is grossly unfair on them.
Equally, we face a challenge in both the public and private sectors. Over time the Government have quite rightly reduced business taxation to encourage businesses to grow and to locate within the United Kingdom. That has got to be good news, because it has created jobs. However, they have also kept wages artificially low, and that has to change. Therefore, I greatly support the principle of a living wage, but clearly it is far too low at the moment. We need to see it increase dramatically so that work pays, instead of relying on the taxpayer to subsidise work in private industry, which cannot be right. I hope that the Government will look at that, in particular, so that we can encourage businesses to pay their staff more for the work they do. That has to be the right way to demonstrate that work should always pay.
We hear constant criticism from the Labour party about the creation of large numbers of part-time jobs in this country. One of the reasons for that is the fact that a large number of people know that if they take on a part-time job, perhaps working 16 hours a week, they will still have access to a large range of benefits. That is a lifestyle choice.
Sammy Wilson
That issue will be addressed if we deal with it as I have suggested, by which I mean that the safety net is not removed until the issue of wages has been dealt with. That is the first important principle.
The second proposal is that we must be sure that we have identified all the groups that are likely to be affected during the transition. The one group I have mentioned time and again in debates includes those who will not be affected by the national living wage—the under 25s. Many of them will have families. If we set the pattern that work does not pay at the very beginning of their working lives, they will stay in that pattern. Therefore, it is important that we address the needs of that group.
Then there are the families with children. On that point, I would appreciate some answer from the Minister on the childcare allowance and the extra childcare funding that is available. It is a devolved issue in Northern Ireland, but will there be a Barnett consequential so that the same arrangements could be put in place as the Chancellor has suggested for England and Wales?
Thirdly, there must be recognition that different sectors in different regions are at different points in the cycle. There are some places where the labour market is buoyant, and where profits are increasing. In those sectors and regions, an increase in the national living wage can be afforded. However, there are other sectors and other regions where that may not be the case. There is no point in simply treating everywhere as if it were the south-east of England and the IT or banking industry and then imposing burdens on them. Small businesses and retail sectors have been identified here today. It is important that cognisance is given to the fact that there is uneven performance across the economy.
Mr MacNeil
We must also pay some attention to the larger picture. In the United States of America, for example, the top 0.1% have as much wealth as the bottom 90% and the gains of productivity go to those at the tops of firms, who get 350 times what the average worker in the firm can get. Certain people are taking the most and leaving the crumbs for everyone else.
Sammy Wilson
That brings me to my last point, which is how we fund all this. It is a reasonable question, and the Chancellor and the Prime Minister ask it all the time. Are we simply going to keep on borrowing or should we find other ways to fund it? There is one thing that I do know. I had the pleasure of being the Finance Minister in Northern Ireland for four or five years—I cannot count, which was not a help. In my first year as Finance Minister, the previous Government took over and that July 5% was taken off our budget, three months into the financial year. It was still possible to make the changes required because necessity required that. We are now talking about two thirds of 1% of the total UK budget that has to be found. No one can tell me that with planning that is not possible. Many suggestions have been made and different people will have different political priorities for the cuts, but I believe that it is doable if we have the will.
My fear is that because the Government are cocky at the moment and because the Opposition are perhaps not in the shape that they should be—I will not start making points about that, but they are not in the best shape—the temptation will be to use that disarray to try to force things through. We have heard time and again that the Government have a majority for their measures in the House of Commons. That does not matter. The question is whether their actions will be perceived as fair. If they are not, they will not have support across the country, regardless of what happens here in the House of Commons. My fear is that the Government, which taunts Labour time and again with being unelectable, might well annoy and anger people so much that the unelectable become electable. People can judge whether that is a good or a bad thing, but if the process of making that happen means that the strivers in society suffer or that the low paid workers suffer, I do not believe that it is a price worth paying.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Member for East Antrim (Sammy Wilson) was right to talk about the rush to get involved in a policy. It is a pleasure to be in the Chamber today for that rarest of treats, where we all furiously agree on the right thing to do, which is to make a radical change to the approach. It is like seeing people who have been slumbering at the back of the bus awakening to see that the driver is about to drive them straight into a lorry that is coming the other way. The tone of the contributions has been terrific, and it is worth repeating as it is so rare in this environment. I was cynical and sceptical before I was elected, but it is great to be in the Chamber for this debate.
Let us talk about the basics. A lot has been said today that makes sense. We all know that there must be a change, as the policy means that more families will be driven below the poverty line and more children will be in poverty. There is a clear dawning of awareness that the minimum wage—what Government Members are calling the living wage, which it clearly is not—will not bridge the gap. It especially is not going to bridge the gap that will be created for people under the age of 25, who will not have the comfort of getting even the diminished living wage or minimum wage that is coming in, because it will not apply to them.
The right hon. Member for Haltemprice and Howden (Mr Davis) talked about the minimum wage cutting crime, and my hon. Friend the Member for Dumfries and Galloway (Richard Arkless) spoke about the effect of it on changing people’s circumstances. If we create a bigger division in earnings between young people and those over the age of 25, we may well find there is a problem. We should be aware of that. I do not believe that the outcomes that will be created by the Government’s policy have been taken into account by certain Members in this House.
The Office for National Statistics has provided the Scottish Government today with figures that show that in Scotland 250,000 families will lose £1,500 a year right away. As we heard earlier, that rises to £3,000 when the measures are fully implemented. The Centre for Social Justice already puts household debt in the UK at £34 billion. That devastating cocktail is a possible outcome if we do not make a change to the policy.
When families are put under pressure, the effects can be devastating, with overwhelming stress affecting mental health and work performance. We should be aware of the impact on productivity further down the line. The strain on personal relationships resulting from the measure could provide some of the stepping stones for more children going into care and so on. We will see the effects of these measures when they hit people. None of us will have to stare into an empty cupboard. None of us will sit in the cold in our own homes because we have no choice. None of us, as a result of the Government’s measures, will look at a pile of bills, afraid to open them.
My constituency of Inverness, Nairn, Badenoch and Strathspey has a unique problem of being a low-wage, low-unemployment community. Perhaps that is not unique, but it is a particular problem for us. In my constituency, 7,100 children will be pushed further into poverty. Low wages, coupled with the increased cost of living, will push 210,000 children in Scotland into poverty. In the highlands we have had a drain of young people over the decades. We have encouraged people to stay and to have larger families, yet the two-children cap is going to punish highland families disproportionately. I know that will affect other constituencies in exactly the same way, so our big family tradition is being attacked. We heard China mentioned earlier. This is an effect almost amounting to population control for us.
The limit to two children will cost £7.2 million, the removal of the family element £4.02 million, and the taper increase £7.77 million. We heard from my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) about a range of measures that could be taken to put some money back into the system. It does not all have to come from the welfare budget. That is an ideological approach. We can make sure that we are not wasting money where we do not have to waste it.
It is an obscenity—it has to be repeated—an obscenity to seriously consider spending £167 billion on weapons of mass destruction that we can never use because if we do, what follows is mutually assured destruction. It is mad to consider using them.
Mr MacNeil
My hon. Friend hits on an interesting point about the waste of money on the weapons of mass destruction programme of the British Government. They wrap themselves up in patriotism and speak of great Britain. The patriotism is never ending, but the sad fact is that we are dealing here with a time when all Britons cannot live greatly. Some Britons will be in terrible poverty, but the Government’s patriotism goes only to weapons of mass destruction. O that their patriotism would reach the people and the poor of the country as well!
Drew Hendry
I could not agree more. When we look at the choices that we are asked to make in this place—this was mentioned earlier—we see that the effect will be on people further down the line. That kind of nonsensical excess, when we are talking about people looking into empty cupboards or sitting in the cold, is simply obscene.
I am grateful that the motion in the House of Lords on Monday night has allowed us to have this debate, but it only delays the measures—one swallow does not make a summer. If we want savings that can make a difference, and if we want a better system of democracy in this country, we must get rid of the other place. We should not have an inflated second Chamber, with people claiming £300 a day while other people are having their benefits and tax credits cut.
Mr MacNeil
I am grateful to my hon. Friend, who is being generous in giving way. Was he as surprised as I was to learn from a Twitter feed that seven Labour peers—perhaps at one time there were signs of socialism in their lives—voted with the Tories for these obscene welfare measures?
Drew Hendry
That was incredible, and it is worth repeating that fact in this House today.
There are lots of measures that the UK Government could take. They do not have to continue down this ideological path by squeezing the money out of the people who can least afford to pay it in order to ensure that other people enjoy the finery that they have had over many years. The words that have been spoken across the House today have been worth listening to. I hope that the Minister will take into account the thoughts he has heard expressed across the House, including from his Back Benches, and persuade the Chancellor to come back with something that is radically different and that supports the people in our constituencies who will otherwise be badly affected if this is not changed dramatically.
Ian Blackford
The hon. Gentleman often speaks up, rightly, for those in BME communities, for which I thank him. He is absolutely right: those in disadvantaged communities will feel the brunt of the cuts—and not only them, but those in constituencies up and down the land. This must be stopped to protect people throughout the whole of the United Kingdom, regardless of where they come from.
We keep hearing that we cannot afford tax credits. This is bunkum. The reverse is true: we cannot afford to impact families in the way these measures will. We all want to reduce the deficit and the national debt. We need to drive sustainable economic growth in order to drive up tax receipts and improve our financial position. We cannot do that by taking £4.4 billion out of the economy.
It is the failure to deliver sustainable economic growth that constrains our ability to reduce the deficit and the debt. If the Government’s fiscal policy had been working, the Bank of England would not have intervened to the extent it has had to during the past few years by establishing an asset purchase programme—so called quantitative easing—to the tune of £375 billion. When we talk about our debt crisis and the need to reduce spending, we seem to airbrush away the fact that we owe £375 billion to ourselves—debt created by ourselves. SNP Members understand that quantitative easing was necessary. I might add that the financial markets have benefited massively from this injection of liquidity. The FTSE 100 index was at 3,700 in March 2009 when the programme started; today it is at 6,370—a gain of 73% over six and a half years. The Bank of England has acknowledged that those with financial assets have benefited enormously from the quantitative easing programme over the course of the past six years, and 40% of the benefits of higher asset prices have gone to the top 5% in society. Do not talk to us about all of us being in this together.
This is important because the outcome—I am being charitable in using that word—of fiscal and economic policy has been to enhance inequality, and today we are being told that the poor, particularly the working poor, must pay the price of the Government’s desire to balance the books. That is unfair and it is wrong.
In yesterday’s Prime Minister’s questions, the Prime Minister said:
“printing money, hiking up taxes—we see that it is working people like Karen who would pay the price.”—[Official Report, 28 October 2015; Vol. 601, c. 340.]
I gently point out to the Prime Minister that it is his Government who, through quantitative easing, have in effect been printing money and that the tax credit cuts are in reality a tax increase for Karen and millions of others.
The point is that this is about political choice. Those who have benefited enormously from the quantitative easing programme are now getting an additional bonus for the changes to inheritance tax. The poor are getting their income cut. Where is the social justice in that? Where is the social cohesion that we should be striving to deliver going to come from?
In the spirit of co-operation, let me help the Government.
Ian Blackford
Indeed they do. The Public Accounts Committee report on fraud and error stocktake, which was published yesterday, states:
“High levels of benefits and tax credits fraud and error remain unacceptable. Overpayments cost every household in the UK around £200 a year and waste money that government could spend on other things…Since 2010 both departments”—
the Department for Work and Pensions and Her Majesty’s Revenue and Customs—
“have made progress in reducing headline rates of fraud and error, particularly HMRC in tax credits. However, in 2013–14, DWP and HMRC still overpaid claimants by £4.6 billion because of fraud and error”.
The fact that in 2016-17 the Government are expected to save £4.4 billion from tax credit changes just goes to show that if the DWP and HMRC were not making errors in overpayments, that money could be used to protect those low-income families who are reliant on tax credits, if the proposals were reversed.
I say to the Chancellor and his colleagues on the Treasury Bench: cut out the mistakes and fraud inflicted on HMRC and you will achieve the savings. Do not go after the poor. Eliminate fraud and mistakes and it’s job done.
The Government’s economic policies have created inequality, and the coup de grâce is that the poor are having to pay again. Before Christmas, letters will be delivered to our constituents who receive tax credits, informing them of the cuts they will experience from next April.
Ian Blackford
As my hon. Friend says, happy Christmas from Ebenezer Osborne!
We will all be faced with constituents writing to us and coming to our surgeries in despair about how they are going to make ends meet.
Let me turn briefly to the proposals of the right hon. Member for Birkenhead (Frank Field). I commend him for seeking a way out of the difficulties the Government face. His alternative tax credits plan would involve introducing a secondary earnings threshold, which would be paid for by a steeper withdrawal rate for those earning above the new minimum rate. We do not agree, however, that only those earning less than £13,000 should be protected from the cuts. Everyone in receipt of tax credits ought to be protected.
It is admirable that, under the right hon. Gentleman’s proposals, those earning very modest amounts would be protected, but those on modest means would still be hit. For example, a family with two children and gross earnings of £20,000 would still lose £1,656. Simply put, that is not acceptable. The tax credit cuts in their entirety should be stopped. They must be reversed, and reversed in full.