Non-domicile Tax Status

Debate between Anthony Browne and Aaron Bell

Tuesday 31st January 2023 Commons Chamber

[Aaron Bell (Newcastle-under-Lyme) (Con)]

It is a pleasure to follow the hon. Member for St Helens South and Whiston (Ms Rimmer). On the wording of the motion, I cannot really add much more to the comments from my right hon. and learned Friend the Member for Northampton North (Michael Ellis). The Opposition know perfectly well that analysis from officials is confidential for a very good reason: to make sure that Ministers have the best possible advice without second-guessing what that might look like in the public domain and potentially affecting markets.

Turning to the substance of the non-dom situation, I really think this is a case where Labour is chasing a mirage. The Government could do with raising more tax if that low-hanging fruit, that £3.2 billion, was really out there, because of the present fiscal situation as a result of the money we have spent protecting people’s livelihoods during covid, through the furlough scheme, and on supporting people with high energy bills this winter. We could do with raising more tax easily, if it was really there.

The hon. Member for St Helens South and Whiston spoke about the LSE and Warwick research, but I do not find that figure of 0.3% very credible because it refers to fewer than 100 people who would consider leaving because of all that additional tax on them. That figure has been extrapolated from the behavioural response to the previous changes, but those changes were more modest. They were modest because the Government took their decision for the same good reason that the previous Labour Government did: looking at the issue in the round, they concluded that this would not be a revenue raiser and it would not be good for the economy overall if we drove people abroad.

The shadow Minister, the hon. Member for Ealing North (James Murray), said that when people make their home here they should pay all their tax here, but those non-dom people would not make their home here —they would not come and invest in this country or employ people in this country—if they had to pay tax in that way. That is the key point. We cannot assume that all that low-hanging fruit is out there without assuming the behavioural responses that would follow.

Talking about non-compliance more generally, as the shadow Minister did in his speech, this Government have tackled non-compliance consistently since they came to power, with more than 150 measures since 2010. The estimated avoidance gap under Labour in 2005-06 was £4.8 billion. It was down to £1.2 billion in 2020-21 under this Government. That is already more than the £3.2 billion the Opposition are claiming is available.

The wealthiest have been paying more under this Government and we have been taking the poorest out of tax altogether, contrary to what we have heard from the Opposition. The personal allowance that we inherited in 2010 was £6,475; it is now £12,570, and we have raised the national insurance level as well. We have taken many people out of tax altogether and at the same time ensured that the poorest—the least well-off—are earning more when they are working because we have consistently raised the national living wage. Those are Conservative principles in action: real changes rewarding work and letting people keep more of their own money to spend as they see fit.

Labour obviously aspires to government, about which there have been increasingly cocky briefings in the press, but government is not about easy slogans. It is about taking decisions in the best long-term interest of the UK. It is not about soundbites, party management and trying to buy off the people in Momentum. I might have thought Labour would learn from the last Labour Government. People like Gordon Brown, who considered a five-year cap but abandoned it. People like Alistair Darling, who said that

“such a charge could discourage men and women—doctors and nurses, business men and women—from coming to this country…and we do not want to turn them away.”—[Official Report, 9 October 2007; Vol. 464, c. 171.]

People like Ed Balls, who said:

“I think if you abolish the whole status then probably it ends up costing Britain money because there will be some people who will then leave the country.”

I am sure the shadow Minister admires all those former Labour Ministers, and I am sure he and the shadow Chancellor aspire to the jobs they once held, so why are they going down this road? Because it is an easy, if inaccurate, response to the question they cannot answer: how will they pay for whatever fresh commitment they have made in any given week?

[Anthony Browne]

My hon. Friend is making an excellent speech. Does he agree that Labour is playing the classic Labour game of class war as a mirage to try to gather votes from the left?

[Aaron Bell]

The right hon. and learned Member for Holborn and St Pancras (Keir Starmer) has a difficult balancing act, because he has to hold his party together. He made a lot of promises to the left to win the leadership, and he has junked them all, so he is giving them a little red meat on non-dom status to try to keep them on board. I am sure there is a lot of party management happening on the Labour Benches.

Labour has already committed the supposed revenue from this policy to multiple policies. First, it was breakfast clubs, and then it was midwives, nurses and health visitors. The shadow Health Secretary had to admit that, even on Labour’s questionable estimates, the funds supposedly raised would not be enough to cover its NHS reforms. Time and again, Labour Front Benchers and Back Benchers alike hide behind this dubious policy, which I fear is a mirage in terms of the money it would raise, to justify yet more uncosted pledges. Labour has made so many uncosted commitments already: £150 billion of spending and less than £60 billion of revenue rises. We have heard £90 billion of uncosted commitments from Labour in this Parliament, which would cost each household more than £3,000.

That is what we get under a Labour Government, which is why we need to stick with a Conservative Government. Labour has never left office with unemployment lower than when it came to power and, of course, it cannot be trusted with the public finances, as we know from the note left by the right hon. Member for Birmingham, Hodge Hill (Liam Byrne): “there is no money.”

We will get the debt down, we will halve inflation and we will get growth going again. Voting for Labour would put all that at risk.