UK Film Investment (Tax Relief)

Barry Sheerman Excerpts

Tuesday 16th December 2014 Westminster Hall

[Sir Nick Harvey (North Devon) (LD)]

I am delighted to take the opportunity today to draw the House’s attention to the serious and widespread misapprehension about the current status of the tax affairs of those who, between 1997 and 2007, invested in the increasingly successful UK film industry, at the encouragement and incentivisation of the British Government. There is a general perception, perpetuated by the media and encouraged by Her Majesty’s Revenue and Customs, that all those who invested in UK film between those years did so for the purposes of tax avoidance, rather than as genuine investments.

On 22 October this year, I raised the matter at Prime Minister’s Question Time, and the Prime Minister gave a telling response. He said that

“the things…being investigated are abuses and were known to be abuses at the time when people entered into them.”—[Official Report, 22 October 2014; Vol. 586, c. 899.]

I find that rather a worrying statement. It rather suggests that the Government have made up their mind on these partnerships, on the basis of very little evidence and next to no attempts to engage with those involved. If it is ultimately ruled that the schemes are not in order, many investors could find themselves liable for tax bills of up to 10 times their original investment. The financial stress caused by sudden and unexpected demands from HMRC is proving ruinous in some cases. I have heard accounts of marriages breaking down and people becoming sick with worry, and the consequences should be clearly understood by all those involved.

There has been no engagement with the partnerships to discuss the situation nor any attempts to engage in meaningful settlement talks, despite a settlement opportunity letter being issued to partners at the beginning of last year. Today, I would like to ask the Minister to look again at the situation and urge HMRC to bring this business to a conclusion. The lack of information and engagement has been woeful, and I would hope that in many cases, investigations can be concluded or dropped outright, or at least, that a settlement can be reached.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I congratulate the hon. Gentleman on securing this debate. We desperately need investment in entertainment, culture and the arts. The one bright light of the recent autumn statement was the expansion of the enterprise investment scheme up to the full level of private investment. The opportunities for investment in film, theatre and all sorts of productions in a time of austerity is wonderful, and it would be a pity if what he is pinpointing ruined all that.

[Sir Nick Harvey]

I entirely agree with the hon. Gentleman. This takes us back to 1997, in the midst of the “Cool Britannia” era, in which stars of film and pop attended parties at Nos. 10 and 11 Downing street and the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), introduced a full tax relief on investment in small-scale British films in order to encourage investment and promote growth in the British film industry.

Encouraged by a report called “A Bigger Picture” from the UK film policy review group, the Government established a 100% write-off for tax purposes on the completion of films with budgets of £15 million or less. In real terms, that meant that sale and leaseback deals for smaller films would become financially viable, vastly stimulating the market. Those reliefs were known as section 42 relief, in place from 1992, and section 48 relief, in place from 1997. They lasted for 10 years until 2007 and were arguably a large success: the size of the industry increased from £1.7 billion in 1997 to £3.2 billion in 2008; the number of films made in Britain doubled over the period and 46,000 new jobs were created.

In the Budget in March 2004, the then Chancellor was able to report on the successes of the reliefs. He said that “a minority of” third parties had abused them, but he did not see the need for an “anti-avoidance rule”, saying simply that he thought that “loopholes” needed to be closed. However, other partnerships, including the 74 Movision film partnerships, applied the terms of the Films Act 1985 and the Financial Services and Markets Act 2000 scrupulously.

The Movision film partnerships were established between 2002 and 2004, entirely in accordance with the law and with significantly different arrangements from the “minority” that was commented upon by the then Chancellor. Furthermore, the Movision film partnerships, which were established with approximately £50 million of subscription capital raised from approximately 500 partners, with an average investment of £50,000 a head, produced 13 British films and acquired another 14 British films. Those films would not have been made without the involvement of the Movision film partnerships. In the end, the partners did exactly what the Government had asked them to do; they invested in British films and claimed their tax reliefs.

[Mr Sheerman]

The hon. Gentleman is making the point brilliantly clearly. I was born in Shepperton and when I was a youngster, my family worked in Shepperton studios, and I am passionate, as he is, about the film industry. The people who misused the tax relief were a tiny minority. Most of them have done really good stuff. “The Scottsboro Boys” is a big success at the moment—one of my constituent’s sons is a star of it. This is how that production was done. Small films and big films are being produced in this way. I beg the Minister: please do not spoil that, because this is the future of the film industry in Britain.

[Sir Nick Harvey]

I entirely agree with what the hon. Gentleman says. I think that this policy was a success and that one can visibly judge the tangible uplift in small film producing in Britain during the period that the tax relief existed. I think that the then Chancellor was right in March 2004 when he observed—this is widely recognised—that a minority of partnerships were abusing the tax relief, but they were a minority. This is the point: it is completely inexplicable and totally unacceptable that 10 years later, HMRC is treating the whole lot of them as though they were crooks, and when the Prime Minister gets up to respond at Prime Minister’s questions, he has in his folder a brief that says that all those involved were involved in abuse, and that they knew at the time that they were engaged in it. That is completely different from the experience of the Movision partners to whom I have talked and of my own constituent on whose behalf I have taken an interest in the subject.

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[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship, Mr Crausby. I thank my hon. Friend the Member for North Devon (Sir Nick Harvey) for securing the debate. It had two key and linked themes: investment in the film industry and concerns about tax avoidance. On both those issues, the Government have a strong, clear message. We of course strongly support the UK film industry and want to encourage genuine investment in film, but equally—and unapologetically—we condemn the use of tax avoidance schemes. We want low taxes and a competitive regime, but we expect those taxes to be paid.

We have in the United Kingdom a vibrant and successful film industry, of which we should be proud. In the past three years, employment in the creative industries has grown at five times the rate of the wider economy. The past year has seen film and television production in the UK boom, with, to pick names at random, “24” being filmed in London, “Outlander” in Scotland, “Da Vinci’s Demons” in Wales and “Game of Thrones” in Northern Ireland.

It is right that as a Government we lend our support to those who want to invest in the industry. We now have a robust corporate film tax relief, which was expressly designed to minimise the risk of tax avoidance and which has been in place since 1 January 2007. The new relief goes straight to those making films—in other words, it is the production company that gets the direct benefit of the regime.

The new regime has proved very successful in attracting inward investment. It is highly popular with film-makers and has helped to make the UK one of the top film-making destinations in the world. Since the film tax relief was introduced in 2007, 1,680 film productions have become eligible to claim the new relief, and total production expenditure by films claiming the relief was £7.8 billion, of which 72% was incurred in the UK.

As a Government, we have made the relief even more effective. From 1 April 2014, we increased the rate of relief for larger budget films, reduced the level of minimum UK expenditure and modernised the system of film tax relief qualification. To ensure that our creative industry flourishes across sectors, we announced in the autumn statement that we would introduce tax relief for children’s television and for orchestras.

With regard to the concerns raised by the hon. Member for Huddersfield (Mr Sheerman) and by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron), I should say that we have a successful record in this country. The existing film tax relief is working well and continuing to attract investment to the UK. I am pleased to confirm that there has been no reported avoidance activity with the new film tax relief.

[Mr Sheerman]

I hope the Minister takes the point that those of us who have spoken in the debate do not agree with tax avoidance, which is carried out by a minority. We are at a critical stage, having had such good news in the autumn statement—Opposition Members do not often congratulate the Minister on such things—about raising the social investment tax relief scheme to a much higher level, and about the seed investment scheme. The Minister knows that I am very keen on crowdfunding and crowdsourcing, and we are seeing a new beginning when it comes to vibrant theatre and social investment across our country. The Minister must not send a message in his response to the debate that some of that might be seen as tax avoidance. We are talking about social investment and investment in our arts, and it is to be welcomed.

[Mr Gauke]

The hon. Gentleman is nothing if not consistent; I have never known him to fail to take the opportunity to extol the virtues of crowdfunding and some of the other measures that we are taking. The point that I am making is that we have a film tax relief system that is working well and attracting investment. Nothing in what I am about to say should undermine that.

Our system is working, but I cannot, unfortunately, say the same about all investment under the film relief that was in place before 2007. The old relief was heavily exploited by partnerships of wealthy individuals. Typically, they sought to obtain tax relief out of all proportion to their economic investment. Many schemes used artificial and contrived arrangements to create excessive tax claims. In short, investors abused the relief to try to dodge paying their fair share of tax.

My hon. Friend the Member for North Devon argued that the old legislation was working well. The previous Government took significant legislative action over a number of years to try to prevent the various forms of abuse that were occurring, but they concluded in 2007 that they had to scrap the old regime and replaced it with a much better scheme that now works. HMRC is actively investigating and countering schemes under the old regime about which it has concerns.

[Mr Gauke]

HMRC is not taking a blanket approach to all such schemes, and I will return to that point in a moment.

It might be helpful if I set out some of the problems with the old regime. At the extreme, the situation was so bad that some films were produced solely for the purpose of avoidance schemes, and they were never destined for release beyond the minimal qualifying requirements. Other schemes involved genuine commercial films, but the structure of the financing was designed to generate tax relief in excess of the scheme user’s genuine economic investment. Alongside the schemes that used the relief, other avoidance schemes were created that happened to use films as the avoidance vehicle of choice, even though they did not rely on the specific film relief.

Everyone should be clear that the use of films for tax avoidance is bad for the reputation of the UK film industry. I suspect that there is no dispute among us on that point. Such avoidance is unfair on the vast majority of the public who pay their fair share of tax, and it is correct for HMRC to tackle avoidance in whatever form it takes. HMRC has a strong track record in the courts, winning about 80% of tax avoidance schemes that go to litigation. In 2013-14, HMRC’s 30 wins protected some £2.7 billion of tax. HMRC has a strong track record of defeating film schemes in court. It is right for HMRC to challenge avoidance schemes, because that is its job, but it has not taken a blanket approach of opposing all schemes that involve the old film tax relief. If someone believes that HMRC’s view on a scheme is wrong, they can take the matter to the courts for a decision.

My hon. Friend the Member for North Devon has raised the concern that HMRC has not always worked the case properly. I cannot comment on specific cases or schemes, but let me reassure him that the resolution of existing tax avoidance schemes is a top priority for HMRC. During the past year, HMRC has created a dedicated counter-avoidance directorate, bringing together technical, policy and operational expertise from across the Department in one place to concentrate focus on tackling marketed tax avoidance. The Government have consistently supported HMRC’s work to counter marketed tax avoidance by introducing new legislation and investing in its resources.

That brings me to this year’s Budget, in which the Chancellor announced that from 17 July 2014, individuals and businesses involved in tax avoidance schemes must pay HMRC the disputed amount of tax up front while the dispute is being resolved. That new power, which is called accelerated payments, came into force as part of the Finance Act 2014, and it removes the cash flow advantage that those who deliberately try to bend the tax rules by avoiding tax previously had over the majority of taxpayers who pay their tax up front.

I am pleased to say that the collection of tax from avoiders has accelerated enormously since the introduction this year of accelerated payments, and avoiders have already agreed to pay more than £30 million since Parliament introduced that measure. It is quite right that the users of avoidance schemes involving films or film relief should also pay up front.

[Mr Sheerman]

Can we send the message to HMRC that although it must catch the rascals and make them pay, it needs to be more discriminating? If it is not, we on the Back Benches will put a lot of attention and focus on to making sure that it becomes so, to ensure that people who have innocently invested are not picked on. We have many powers, through Select Committees and from the Back Benches in Question Time, to keep our eye on HMRC and ensure that it does the job properly.

[Mr Gauke]

I am sure that that point has been noted, and I do not disagree that HMRC must pursue those who have engaged in tax avoidance and not pursue those who have not. However, an important part of HMRC’s role is to pursue tax avoidance thoroughly. It would be inappropriate for me to comment on any ongoing litigation, but I stress that neither accelerated payments nor any other HMRC action to tackle avoidance will stop genuine investment in UK films.

The UK film industry goes from strength to strength, supported by a successful, avoidance-free film tax relief that goes directly to film producers. We want to continue to support investment in the UK film industry so that it can grow. Tax relief, properly due, has an important place in helping to provide that support. As the hon. Member for Huddersfield has made clear, further announcements of such support were made in the autumn statement. Tax avoidance has no place in a modern film-making environment. The UK has a hard-won reputation for world-class creativity, but we want that to be expressed in the creation of films, not in the creation of tax avoidance schemes.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 9th December 2014 Commons Chamber

[Mr Gauke]

It is right that we have reduced the corporation tax rate. Next year, it will give us the lowest rate in the G20. That is resulting in greater investment in the UK. It would certainly be a mistake to reverse that policy, as the Labour party intends. In terms of the diverted profits tax, I would point out that it will help to deal with aggressive tax avoidance. We will publish the draft legislation on that tomorrow, setting out the full details of how it will operate.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The House knows that I am an avid listener of the “Today” programme. Did the Minister hear the interview this morning, which showed how ineffective it is to have this great gap between the rich and the poor in our country? The tax system is increasing that gap, not helping it. What is he going to do about it, because it makes our economy less efficient?

[Mr Gauke]

As it happens, the distributional analysis shows that our policies have narrowed the gap. The point is that we have made changes to our tax system to ensure a greater contribution from the wealthiest in terms of stamp duty land tax and capital gains tax. We have reduced some of the reliefs and exemptions that meant some high earners did not pay taxes. I am afraid that the idea that a 50p rate was effective in achieving such objectives—including raising revenue—is simply wrong.

The Economy

Barry Sheerman Excerpts

Wednesday 26th November 2014 Commons Chamber

[Chris Leslie]

I will come to the hon. Gentleman in a moment, but it is not just on the deficit that we have seen difficulties, as there is a second aspect of the Chancellor’s promises back in 2010. He promised that by this financial year, he would

“get debt falling as a percentage of GDP”—[Official Report, 29 November 2010; Vol. 519, c. 532.]

Yet it turns out that he has failed on that, as well. In fact, he is now saying that debt is not going to start falling as a percentage of GDP until some time in the middle of the next Parliament. It is really important to pin down the Chancellor’s promises and the failure to deliver on them.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Will my hon. Friend give way?

[Chris Leslie]

If my hon. Friend does not mind, I said I would give way to the hon. Member for Dover (Charlie Elphicke) first.

[Chris Leslie]

When it comes to the nature of our recovery, the fact is that most people are not feeling the great benefit that the hon. Gentleman espouses. The vast majority of people—confirmed in opinion polls just last week—are reporting that, as far they are concerned, life is getting harder and their living standards are falling, not rising.

[Mr Sheerman]

Did my hon. Friend hear John Humphrys interviewing Jim Rogers, one of the leading American investment gurus? When asked why he would not recommend investing in the UK, he said that it was a country with a Government who keep on borrowing and printing money.

[Chris Leslie]

I listen avidly to the “Today” programme, but I did not hear that interview. It is important that we pin these Tories down on their failure to deal with borrowing and the deficit. This situation is going to continue well into the next Parliament, and we need to address it in a serious way, not with more of the politicking that we have seen from the Chancellor.

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[Chris Leslie]

My hon. Friend is right: the labour market is changing, and not always for the better. The instability, short-term assignments and zero-hours culture that are now much more prevalent add to the insecurity experienced by so many of our constituents.

[Mr Sheerman]

I do not usually chide my hon. Friend, but I am going to do so today for being too generous and kind to the Chancellor of the Exchequer. My hon. Friend has not mentioned the appalling performance of this country on productivity. We are 20% below our competitors. What is the Chancellor doing about that? My hon. Friend has to be tougher and nastier to the Chancellor.

[Chris Leslie]

All my hon. Friend will get from the Chancellor is the hollow slogan about the Government’s plan, but their plan contains nothing to tackle the productivity crisis in our economy. My hon. Friend hits the nail on the head. We need a plan that deals with those infrastructure challenges and with getting bank lending back on its feet again to help enterprises make the next move into growth and innovation. We must tackle the skills problem. They are all factors that would represent a genuine plan to tackle the productivity issue.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 4th November 2014 Commons Chamber

[Mr Osborne]

I do not think any one area is the same as any other area. There is a specific model for Greater Manchester, and of course the Greater Manchester councils had worked well together as a combined authority. Clearly Birmingham city council is much larger than Manchester city council alone, so I would like to have a conversation with the hon. Lady, and with Albert Bore and other civic leaders in Birmingham, about whether we can move to a mayoral model, perhaps just in the city. That is a discussion to be had with local people, however.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I must congratulate the Chancellor of the Exchequer on his organisational brilliance by peppering us with all these planted questions on this subject, but I tell him, as the co-chair of the Yorkshire group of MPs, that we are a bit canny in Yorkshire; we are a bit worried about this northern powerhouse. We agree with it and support it, but it is a bit close to the general election. Where has he been for four and a half years, and where is the money coming from? We have not seen any resources for it.

[Mr Osborne]

We have already made investments over the last four years in things such as the northern hub and the electrification of the trans-Pennine railway, which of course will have helped the hon. Gentleman’s constituency. I welcome his support for the northern powerhouse. This agreement with Greater Manchester was struck with Labour leaders of Manchester councils as well as the Conservative leader of Trafford and the Liberal Democrat leader of Stockport. I want to work across party divides with local Labour civic leaders and local Labour MPs to see what we can do for Huddersfield and other towns in the north of England so that they are connected to the northern powerhouse.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Andrea Leadsom]

I am grateful to my hon. Friend for his announcement of what is going on in his constituency. It is fantastic news that so many new businesses are starting up. As we know, that is creating millions of new private sector jobs, and that, of course, is the way for our economy to recover.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

19. I hate to contradict the Minister, but Ministers from the Department for Business, Innovation and Skills tell me that they do not think that banks are lending to small business. Could the Minister do even more—I know the Chancellor has done something on this—to encourage crowdfunding as a method of getting more money to start-ups countrywide?

[Andrea Leadsom]

The hon. Gentleman is quite right: more needs to be done. The problem is not solved. This Government are doing a great number of things to try to help facilitate not only bank lending, but crowdfunding and peer-to-peer lending. We are putting crowdfunding possibilities into individual savings accounts, as the Chancellor announced at Budget time. We are also taking great steps to improve the availability of new challenger banks, to ensure that banks provide postcode-level lending data so that new challengers can look for new opportunities and to ensure that banks share credit histories via credit reference agencies. All those measures are being taken to try to improve the availability of funding to small businesses. There is certainly more to be done and I would be happy to hear any ideas the hon. Gentleman has.

Oral Answers to Questions

Barry Sheerman Excerpts

Thursday 3rd July 2014 Commons Chamber

[Sajid Javid]

I have visited Bletchley Park a number of times, as I am sure all hon. Members have done, to look at its vivid story and see how that is brought to life. I would be more than happy to do so again. It is a fitting tribute to the remarkable men and women who worked there, including a wonderful woman in my own constituency, Betty Webb, who served there. I am delighted that Bletchley Park has received funding from the Heritage Lottery Fund for its restoration. My hon. Friend is right to give credit to John Major, as he has done in the past, for setting up the fund.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The Secretary of State may know that as chair of the John Clare Trust, I have been the beneficiary of quite a lot of Heritage Lottery funding. I am delighted with it and would like more for projects going forward in my constituency, but will the right hon. Gentleman remember that it does not replace a Government committed to culture and heritage?

[Sajid Javid]

I am pleased to hear that the hon. Gentleman supports the work that the fund is doing for the causes that he holds dear, which are very good causes. The principle of additionality is very important and the distributors must adhere to it at all times.

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[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I forgot to welcome the Secretary of State, so I do so warmly and ask whether he will support our all-party effort to get at least 150 MPs to read a poem of the countryside, and raise funds to get kids from poorer parts of our country out to the countryside this year?

[Sajid Javid]

I certainly will; that is an excellent initiative. Since A. E. Housman came from my constituency, that would be a good start.

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[Nicky Morgan]

When I speak to counterparts overseas, I always engage with the lessons Britain can share and what we can learn from other countries. I am proud to represent Loughborough university, which has, I am told, the highest number of female engineers in the country. I understand that last night the hon. Lady was at the Royal Academy of Engineering awards, where more than one half the rising stars awards went to female engineers. There is, however, more progress to be made.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

We want young girls to achieve and to travel the world. Many young girls want to get into business and to travel. If they do not have science and maths as a basis for getting into business and getting good careers, they will not succeed.

[Nicky Morgan]

I entirely agree with the hon. Gentleman. I assume that he supports the EBacc and that he welcomes the work of the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), who I think has done more than anyone else in recent years to triumph and to talk about the importance of all students, particularly girls, studying science and maths. [Interruption.] I am glad to hear the hon. Gentleman was there supporting her, too.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 24th June 2014 Commons Chamber

[Mr Osborne]

My hon. Friend has done some fantastic work with local businesses to increase jobs in Nuneaton and to ensure that small businesses expand. He is absolutely right that the Opposition’s plans for an increase in corporation tax, which they talk about openly, and for a jobs tax, which they talk about secretly, would be a double whammy that would put people out of work in his constituency.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is the Chancellor aware that most people do not mind paying tax if it is fair and transparent and if everyone pays their fair whack? When will he ensure that those people who avoid taxation actually pay it?

The Economy and Living Standards

Barry Sheerman Excerpts

Thursday 12th June 2014 Commons Chamber

[Mr Osborne]

I will make a little progress and then give way.

That speaks to a broader point. The shadow Chancellor is not a naturally retiring type. He likes to get out there and meet people. He likes to go to supermarkets and shake people’s hands. The truth, however, is that he has gone quiet in recent months and we do not see him so much on the television or hear him on the radio. I think that is because he knows—or rather his party leadership knows—that they have lost the macro-economic argument. He is now losing the micro-economic argument within his own party. The Leader of the Opposition does not want to talk anymore about Labour’s spending and borrowing plans, because he knows they are very unpopular. Instead, there is a whole series of populist initiatives on price controls, incomes policies, bans on foreign investment, renationalisation, and wars on business and enterprise. The truth is that the shadow Chancellor actually spent a considerable period of time, in Opposition in the 1990s and then in office, trying to get his party to reject these kinds of things. He knows that they will lead to higher prices, lower incomes, less investment and fewer businesses.

In fact, the shadow Chancellor makes no secret, if we read between the lines of his speech today and his article in the New Statesman, of the fact that he is not in favour of trying to restrict the open economy, and that he values foreign investment coming into the country. The problem is that the message being given out by the leader of the Labour party is the complete opposite of that—it is in a completely different direction. He jumps on every single issue to make the argument, essentially, that we need a more closed economy and that there is a dangerous race to the bottom. The truth is that I think the shadow Chancellor and I agree that it would be a disaster for Britain to head down that route.

The shadow Chancellor has a macro-economic argument, which is that Britain should be borrowing and spending more, and, if necessary, increasing taxes to pay for it, but the Labour leader will not allow him to make that argument anymore, so he has gone completely silent. Normally, he is there right behind the leader of the Labour party, right behind his shoulder blades waiting to support him. Instead, he has learned a trick from his old friend the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): when the Labour party is doing badly, losing by-elections and the like, stay quiet and disappear. That is what he has attempted to do in the past couple of months. The truth is that the threat that his economic approach represents—higher taxes, and borrowing that would destroy our public finances and push interest rates up—does not go away just because he goes away. That is the plan he would put into practice were he ever to walk through the doors of the Treasury again.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Before the Chancellor moves on, he was giving us a history lesson earlier but could we have some proper history? He was criticising the shadow Chancellor for the period when the Chancellor alleges things went wrong with the banks and lending. He himself, the present Chancellor, was urging less control and less regulation. Let us get that history right. Will the Chancellor address one issue: why is productivity failing to improve?

[Mr Osborne]

I agree with the hon. Gentleman that productivity is one of the challenges for the British economy. I have to say that if offered the choice in the early stages of a recovery between productivity improvements and increased job numbers, I would take increased job numbers because of the considerable human damage and the potential serious long-term economic damage that high unemployment can cause. I am enormously proud of the record of the British business community in creating those jobs, and of the people who have got those jobs and are holding them. I agree that we want to make our economy more productive. We do that by having an open economy where we welcome investment, support enterprise and support business. The Labour party’s policy proposals on prices, incomes, new restrictions on foreign investment, higher taxes on business and a higher corporation tax are all the wrong approach and would make our economy less productive.

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[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

One of the things that my constituents do not like is the sort of debate that we have had today. They watch it on television and think, “What on earth is going on?” We live in one of the wealthiest countries in the world; we have the sixth largest economy; and we are highly successful in so many ways, under both the present Government and the previous one. My constituents look at the Queen’s Speech, but do not see how it relates to the reality of their existence.

As a social and economic entity, we have changed vastly over the years. This year, we remember the wasted lives of the 1914-18 war, when 16 million young men died. Since that time, and since the second world war, this country has changed dramatically. Nationally and in my constituency—we in Huddersfield are the average—about 8% of people now make anything in manufacturing. The manufacturing sector is very small but highly efficient. It is growing, but as it does so, it increasingly uses sophisticated machinery and fewer skilled workers.

We have an hourglass economy, with a large number of very skilled people who are doing very well, but many people with traditional jobs and a fair number of skills who have been squeezed out of such occupations, while people with few skills are having a bleak time and will have a bleaker time in future.

So much of this Queen’s Speech fails to address the fact that so many Members of Parliament, especially Opposition Members, but—let me be generous—Government Members as well, came into the House to get a good life for people. Many people in our country are not getting a chance to have a good life; they are certainly not doing so in Huddersfield. What we need to have and what should have been in the Queen’s Speech is an emphasis on the difficult things, such as homes and housing. A whole bunch of cowards on these Benches—I say this nicely, because I do not want to be brought up before the Speaker—will not face the fact that nimbyism and the green belt are preventing houses from being built so that people can have a decent place in which to live. When are we going to recognise that?

When will we invest more in skills, putting real investment in our further education sector and in genuine apprenticeships that last longer than a year and fit people for future jobs, not present ones? The fact is that we have a good skill base, but it is not big enough. If we are not careful and if we are not brave and courageous, we will not have the skills relevant to keep our companies in the premier league.

Our constituents do not like the argy-bargy that we have all the time. We would be much better agreeing on lots of the stuff that comes before the House for us to discuss. Universities are an example. We must settle on the fact that the present way of funding our universities is putting them all in danger. They are absolutely the jewels in the crown of our skill base and our educational system, but they are under threat.

In this Queen’s Speech debate and during the last year up to the election, we must prioritise skills, education and homes. I could write the Labour manifesto. That is what we need to do. It is what this Queen’s Speech is missing, and what we will replace in a year’s time.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 29th April 2014 Commons Chamber

[Mr Osborne]

I absolutely agree with my hon. Friend. The fact that the Labour party had nothing to say in response reflects the muddled approach: it did not support the measure, but it did not know what to do with a popular Budget proposal. We are absolutely clear that we reject the patronising view, pursued by the previous Government, that the state knows better than individuals how to spend their money. Trusting people, reducing taxes, supporting savers—that is this Government’s approach.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Chancellor agree that the traditional financial services sector has let down savers and borrowers? Is it not time that he gave more encouragement to the crowdfunding sector, which is flexible and gives a much better deal?

[Mr Osborne]

The hon. Gentleman has asked me about that matter at previous Treasury questions and I know that he takes a keen interest in it. He wrote to thank me for the measure in the Budget to include crowdfunding vehicles in individual savings accounts. That is an important step to support this new sector.

Oral Answers to Questions

Barry Sheerman Excerpts

Tuesday 11th March 2014 Commons Chamber

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

At this point in the year, all I can say to my hon. Friend is, “Let me take that as a further Budget submission.”

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Chief Secretary agree that to have a successful financial services sector we must have bankers, lawyers and accountants whom everyone trusts, and that we need a new value system of trust in these institutions? If so, will he have a careful look at the behaviour of Grant Thornton and the way in which it treats clients and businesses in this country?

[Danny Alexander]

I certainly think that a new culture is needed in the banking sector. That was the basic reason why the Parliamentary Commission on Banking Standards was established. It produced a very wide-ranging report, and many of its recommendations were taken forward by this House in the Financial Services (Banking Reform) Act 2013. I think that that will lead to a better culture. I suggest that the hon. Gentleman raises his specific concerns with the Department for Business, Innovation and Skills.