Tax Avoidance and Multinational Companies

Caroline Flint Excerpts

Wednesday 3rd February 2016 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

The hon. Member for Spelthorne (Kwasi Kwarteng) might have commanded a little more respect if he had listened with respect to the views of my right hon. Friend the Member for Barking (Dame Margaret Hodge). This debate is about Google, but it is also about so much more. We know that Google is currently valued at $524 billion, and that its profits in 2015 alone were £11 billion, an increase of £1 billion in a year, based on revenues of more than £52 billion. The Daily Mail has reported that Google has more than 5,000 UK-based employees, which is about a 10th of its total worldwide workforce. That figure includes 279 of its European, middle eastern and African directors, compared with Dublin, where it has 79 such directors. As colleagues have said, Google is constructing a new headquarters worth £1 billion near King’s Cross, in addition to its five other offices in the UK.

I do not want to get into a blame game. I want us to get the way we recover tax in this country right, but I believe that certain factors did not help to ensure focus on this growing problem. The public finances were healthy up to 2008. In the year before the crash, the Treasury netted nearly 30% of its corporate tax receipts just from financial services. That figure had fallen to about 17% by 2009. Also, at that time, the online giants of today were largely below the radar. Many floated before they had made a penny profit. Let us look at the corporate giants of today. Twitter, which floated in 2013, was valued at $18 billion on the day of its flotation yet it had never made a profit up to that point and did not do so for another year or more. Likewise, when Google first floated in 2004, its valuation was $23 billion but it was not turning the kind of profits that we are talking about today. Google’s circumstances are somewhat different today, yet after six years and with all the benefits of hindsight, this Government have achieved a payment of only £130 million, and we do not know how much of that is interest or penalties. We have to do more on this.

We can add other household names to the list of companies that paid no corporation tax in 2014: Shell, Lloyds Banking Group, AstraZeneca, SAB Miller, Vodafone and British American Tobacco. Those six companies made a combined profit of £30 billion in 2014, yet they are notionally making no money in the UK.

[Anna Turley]

Does my right hon. Friend agree that initiatives such as the Fair Tax Mark, which is a bit like the fair trade stamp, should encourage more companies to demonstrate publicly their tax liabilities and responsibilities, and that they should consider it a badge of pride that they are paying their full tax?

[Caroline Flint]

Absolutely. I think that there is cross-party support for more transparency.

Given that Google, HMRC and the Chancellor were quick to publicise the outcome of their negotiations, surely they should be open about how they arrived at the figure of £130 million. We need to know what sort of benchmark this is setting not only for Google but for other companies as well. The Government make the rules and HMRC enforces them, and it is about time that we had more openness. To be honest, if I worked for Google and I were advising it, I would say, “Volunteer to give the information, because this situation is not doing your company any good whatsoever.” This is important not only to reassure public opinion but to restore the confidence of those UK-based businesses that have much lower revenues than these giant corporations yet pay considerably more tax, including 20% corporation tax.

We cannot content ourselves with companies appearing to decide whether or not to pay any tax, as though it were discretionary or some kind of charitable payment to the UK. If the broadest shoulders are to bear their share of the burden for funding public services and our pension system, I am afraid that the Government will have to raise their game. We will support the Government on that. Our Labour motion might not receive a majority in the vote today, but this problem will not go away. I, for one, am looking forward to next week when, as a member of the Public Accounts Committee, I shall hear directly from Google and HMRC about what they have to say.

HMRC and Google (Settlement)

Caroline Flint Excerpts

Monday 25th January 2016 Commons Chamber

[Mr Gauke]

The information is in the public domain that HMRC launched an inquiry into the tax affairs of Google in 2009. This is a complex matter, but I am pleased that that inquiry has reached a conclusion. It would be fair to say that the progress made on bringing in a diverted profits tax and the reforms involved in the base erosion and profit shifting project appear to represent a shift in the behaviour of a number of companies, which is to be welcomed.

[Caroline Flint (Don Valley) (Lab)]

I am sure that my other colleagues on the Public Accounts Committee will be looking forward to hearing from Google and HMRC about this deal. The inquiry into the tax situation that many of these companies seem to be applying to what they should pay in a fair way to the UK public purse was started under Labour, and yes, it continued over the last five years, but last year, in the Budget before the general election, the Chancellor said that he would not tolerate this behaviour, declaring:

“Let the message go out”—[Official Report, 18 March 2015; Vol. 594, c. 772.]

and claiming that there would be an end to this sort of play. Given the £24 billion-worth of UK revenues over this period, experts have said that Google should have paid taxes of almost £2 billion, so does £130 million really meet the test of no tolerance?

[Mr Gauke]

I want to address this point and engage seriously with Members on the calculations that we have seen in the press, suggesting some of these very large numbers. As far as I can see, those calculations are based on looking at the profits attributed to the sales in the United Kingdom, and there is a very important distinction between profits attributed to sales versus profits attributed to economic activity and assets. The UK is a country that is very creative. We have a very strong scientific base. As a country, much economic activity goes on here that is involved in then exporting goods and services, and the profits from those exports should, I believe, be taxed in the UK where the economic activity occurs, not in the countries where the sales may occur. If we accept that principle, it does, I have to say, rather discredit the claims of a 3% tax rate.

Spending Review and Autumn Statement

Caroline Flint Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

My hon. Friend is right. I am delighted that she has had success in campaigning on behalf of her constituents in Fareham to deliver a fairer funding formula for her local schools and the pupils whom she represents. She is absolutely right that we would not be able to deliver the kind of protection to the schools budget that we have announced today if we did not have a strong economy. The economic security that a strong economy brings is the bedrock of everything else we are achieving.

[Caroline Flint (Don Valley) (Lab)]

Creative though it may be, I never thought that I would see the day when my sex was fined for having a period.

The Chancellor made a lot of the fact that he was phasing out grants to local government. Then he said that there were different ways in which local authorities could raise money for social care or, for that matter, for policing under the police and crime commissioners. I believe in fair funding, and I am sure that he realises that, in more prosperous areas, the take from that sort of raising of funds is higher than for communities such as Doncaster and elsewhere, and it may not be able to meet the challenges on our doorsteps. Is he prepared to carry out an impact assessment on this matter to ensure that funding goes to the areas of greatest need?

[Mr Osborne]

I hope that the right hon. Lady welcomes the decision that we have taken on the money that is raised from the tampon tax—the VAT on sanitary products. The truth is that we have not been able to change the European Union rules. The previous Labour Government tried. Indeed I remember the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), when she was in the Treasury, standing at the Dispatch Box saying that she was trying to get the rules changed. What I have done is provide the best interim solution, which is to set up a fund to support women’s charities. As with LIBOR money, I have been able to help charities that Members from across the House have proposed. Hopefully, we can carry that forward.

On local government, the right hon. Lady makes a very fair point about the regional economic disparities. What I said was that business rates would be retained 100% by local government. There is already a re-allocation of business rates through a tariff system. I propose that, on day one, those tariffs are set in stone. Thereafter any growth in business rate income in that area can go to the local council. An area such as Doncaster—I do not have the details here—might well be already receiving some additional money from the re-allocation of business rates from, say, central London. Thereafter, it would be up to Doncaster council, the local enterprise partnership and the elected mayor in South Yorkshire to ensure that they are doing everything they can to grow the area and get in the investment. I am sure that the right hon. Lady will welcome the investment in small modular reactors, which will be a big boost to that industry in South Yorkshire, which is a world leader in that field.

Tax Credits

Caroline Flint Excerpts

Thursday 29th October 2015 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb). He makes a very important point about how little people keep for every £1 extra they earn. I seem to recall that the Prime Minister once took Gordon Brown to task on that very issue. It is on film and it can be seen on YouTube. In making work pay, it is very important for people to feel that for every extra hour they work they are making a difference to their progression in their working lives.

The starting point for this debate is the Chancellor’s ill-formed proposals to reform working tax credits. The truth is that the distribution aspect to the tax credit cuts is severely regressive. The Institute for Fiscal Studies has shown that the national living wage, touted by the Government as a solution for that, at best undoes 27% of the damage.

Today, I would like to start with how the story really began. In 1997, when Labour came to power, the only help for families was child benefit, married person’s tax allowance and a child personal allowance as part of income support and income-based jobseeker’s allowance. A small number of people with disabilities also received a disability working allowance. The then Government found high rates of poverty among families with children. Tax credits were thought to be a new mechanism to support those families into work, which was the best route out of poverty. The evidence is strong that the more far-reaching tax credits and the introduction of help with childcare costs transformed prospects for millions of families. One outcome was that the lone parent employment rate rose. In 2014, it was at the highest rate on record: 65.7%. That is amazing. Of course, the vast majority of lone parents are women. Another outcome was that tax credits reduced child poverty. The Department for Work and Pensions confirmed that in the first decade of tax credits, up to 2010, child poverty fell dramatically as 1.1 million children were lifted out of poverty.

Tax credits give a benefit to employees. They are not simply a state handout to bad employers. When most employers set wages, they are blind to the private tax credit details of their employees. What is more, they cannot pay one worker one wage and the next person on the production line a different rate just because they claim tax credits. In most cases, the employer does not know. As the Resolution Foundation reported this week in evidence to the Work and Pensions Committee, if the Government remove tax credits the employer will not immediately step in to fill the void, regardless of the rises in the national minimum or living wage. The Government must know that, and it is wrong to suggest that the only beneficiaries of tax credits are bad employers.

We must challenge and address the Chancellor’s claim that the cost of tax credits has risen from £1 billion to £30 billion today. This summer, the Chancellor stated:

“The original tax credit system…cost £1.1 billion in its first year. This year, that cost has reached £30 billion.”—[Official Report, 8 July 2015; Vol. 598, c. 334.]

That claim is simply bogus. Articles by Declan Gaffney and Tim Blackwell in the New Statesman and by many others show that the £1.1 billion figure relates to the first reforms, which began only in October 1999, halfway through the tax year and covering only three months of tax credit payments for a typical claimant. Indeed, in its first full year, 2000 to 2001, the cost was more like £10.5 billion, not £1.1 billion.

That brings me to the question of why the tax credits bill increased. First, tax credits wrapped up within them a number of previously separate benefits. They were more generous—I acknowledge that. The tax credits we refer to today, however, include the childcare costs introduced in 2003, which no previous Government had ever met. Yes, tax credits were about challenging poverty pay. However, as my hon. Friend the Member for Darlington (Jenny Chapman) mentioned, they also aimed to address the issue facing many families, particularly lone parent women: even if they were on a reasonable wage—whatever “reasonable” is—they still could not afford to work, because of the amount of their wages that would have been spent on exorbitant childcare costs.

[Ms Karen Buck (Westminster North) (Lab)]

My right hon. Friend is making a very powerful case. Does she agree that the important element of tax credits was that they were a means of getting lone parents in particular into work? Gingerbread, among others, has calculated that a 5% rise in employment among lone parents saves the Treasury £436 million. Getting lone parents in particular into the workplace therefore benefits the wider economy.

[Caroline Flint]

I absolutely agree with my hon. Friend. Missing from the debate is a consideration of the impact of the changes on other sectors of the economy, and the wellbeing and economic opportunities they provide to people by being in work. As I said, the employment rate for lone parents went up to 65.7% in 2014, which is brilliant. The worry is whether it will go back down, rather than improving further.

The total tax credits that families receive relate to their income. The 2008-09 recession had a dramatic effect on wages. As wages fell, many families either qualified for tax credits or saw their tax credits rise. It is notable that during the John Major recession unemployment rose to a peak of 10.7% by 1993, whereas in the recession of 2008-09, many employers reduced hours or did not increase pay to keep staff in work. I understand why they did that. In the House, we had debates in which we said that we appreciated that employers were trying to deal with a difficult situation and were trying to hold on to people in work. As a result, however, more people either claimed tax credits or received a higher amount.

As I said, unemployment during the John Major recession rose to a peak of 10.7%. In the 2008-09 recession, as a result of a number of factors, including employers keeping people in work, unemployment rose to only 8.5%. Recent figures show that the number of employees earning less than the living wage has risen by 45% since 2009. Combining the two, it is clear that people remained in work but needed more support through tax credits. That is not a conspiracy; this is the reality of an economy adjusting to finding itself in difficult situations, and families finding themselves in difficult situations and the state being there as a safety net to help them. Without tax credits, the rise in unemployment in that most serious recession, which we all experienced, could have been much worse. I think that that goes a long way to explain the cost of tax credits today.

This week, given the vote in another place, the Chancellor says he is in listening mode. We must address how we support people into work and to stay in work, so that they can make progress on improving their living standards and the life chances of their children. I agree with everything my right hon. Friend the Member for Birkenhead (Frank Field) and other colleagues from across the Chamber have said. I will not repeat that, but let me add a final few points.

To move forward, a number of things have to happen. First, the Government must be straight about the figures relating to tax credits. Only then can we have a sensible conversation. Secondly, the Chancellor needs to provide a proper assessment of the impact of any new proposals on incentives or disincentives to work for those who receive tax credits. I asked the Chancellor on Tuesday why, if he stood up for working people, a proper assessment had not been not published with his last proposal. He did not answer. I am afraid that I feel that that was because he is afraid to face the facts. Thirdly, the Chancellor needs to ask what impact the new proposals will have on child poverty. Fourthly, we need to look more widely across Departments at what support actually helps people to get into work, stay in work and make progress in work. I founded the first all-party group on childcare 18 years ago, when I came into this place. The childcare offer has improved, but it is still not good enough for many working families. Those are the questions I need answers to for the 5,300 Don Valley families who are really worried about the future of their tax credits and their ability to hold their head up high and say, “I am in work. Help me to support my children.”

--- Later in debate ---

[David Morris]

I disagree with my hon. Friend on the debate in the other place, because I think it was unprecedented that that motion was passed. However, I have my own words to say about that in another context, which he will probably read about over the weekend.

We were in a position where almost everyone was on a tax credit. They were a stepping-stone to gainful employment. The right hon. Member for Don Valley (Caroline Flint) said it right: employers do not know if their employees are on tax credits. I know that; I employed over 100 people and some were claiming tax credits, but I found that out only down the line in certain circumstances. So it is mainly a hidden benefit.

I applaud what the Chancellor is trying to do. I do not think this idea of a £1,300 average loss to 3 million households stacks up, because it is based on estimates. We do not know what is going to be in the spending review. However, we do know what has already happened by raising the personal tax allowance to £11,000 in April, with the aspiration for it to be £12,500 in 2020. That will help out and create a tax break worth about £1,000 to people all across the country. We are also offering 30 hours of free childcare, which amounts to £5,000. Fuel duty has been frozen, too, and the economy is on the up.

[Caroline Flint]

I hear what the hon. Gentleman says about 30 hours of free childcare, but I think most people listening in the Gallery or outside will think that is for all children in any form of childcare. We need to have an honest debate. That is 30 hours of free childcare only for those three and four-year-olds in nursery education. That does not begin to help those families that have different-age children, and the cuts to working tax credits fundamentally affect families who get access to support with their other childcare costs to enable them to take up a job and stay in work.

[David Morris]

I thank the right hon. Lady for her eloquent intervention. She demonstrates that there is confusion in the whole sphere of tax credits and child tax credits. When tax credits were brought in, they helped families who were struggling in a time of great austerity. It has to be acknowledged that we are still in a time of great austerity, but the economy is now on the up and we are seeing projections that we are starting to come out of recession mode and that we will move into a lack of deficit within the next five to 10 years.

What do all these figures mean? Put simply, they mean that we have to balance the books and we have to look at every possible way of doing so. We have to think the unthinkable, as my right hon. Friend the Member for Birkenhead—I keep calling him my “Friend”—did all those years ago. I do actually have faith in the Chancellor. I know him personally, and he is a good, decent, caring man, despite what we read in the newspapers and despite what is said about him. I know that he will be watching this debate and hearing what we are saying. He will be thinking about this. Yes, nine out of 10 people were claiming tax credits. My right hon. Friend the Member for Birkenhead said that these measures could benefit eight out of 10 people, but we must care for the other two people in every 10 and ensure that we get the right deal for them.

Oral Answers to Questions

Caroline Flint Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Osborne]

I visited with my hon. Friend a number of the very successful businesses in his constituency; they are exactly the kind of small and medium-sized businesses that are the backbone of the British economy. They need help with their training, and Halesowen college can help to provide that training to the young people in the area, so they can get the jobs that are being created in his area.

[Caroline Flint (Don Valley) (Lab)]

The Chancellor claims he is on the side of working people but, as far as I can see, he has been afraid to publish an impact assessment of changes to working tax credits on people taking up or remaining in work. Will he guarantee, given last night’s decision and the delay, to look at that and that, in any proposals, he will include an impact assessment on people taking up work, increasing their hours or staying in work and how that affects employment levels?

[Mr Osborne]

We have published an impact assessment, an equalities assessment and a distributional analysis of the measures we produced in the Budget. None of those were ever produced by any Labour Chancellor, so we continue to provide the information that people seek. What matters above all is getting the central judgment right about fixing our economy, making sure we deal with our deficit, and going on delivering economic security for the people the right hon. Lady represents.

Finance Bill

Caroline Flint Excerpts

Tuesday 8th September 2015 Commons Chamber

[Nigel Adams]

I could not agree more with my hon. Friend and neighbour. Whoever is in charge of ensuring that we have security of supply must ensure that they have robust numbers, and I am sure that my hon. Friend and I will be asking serious questions of them over the forthcoming weeks.

It saddens me greatly that this is not an isolated event. Many Members have communities that have been affected in some way by similar announcements in recent months: Longannet in Scotland, Didcot in Oxfordshire, and Ferrybridge, right next to my constituency in west Yorkshire. The Chancellor is rightly keen to create a northern powerhouse, and so am I, but I would rather see a northern powerhouse with some power in it. I do not want to see a no-power house.

There are no easy answers left on energy policy. I urge those hon. Members in opposition and in government who believe otherwise to think again, or to visit areas such as mine and talk to the constituents whose livelihoods are being put at risk. This is a commercially challenging time for the energy sector. Wholesale electricity prices are at the lowest level in years, in no small part due to the crash and the glut of oil in the global marketplace. That makes the investment case for any energy project, be it biomass, nuclear, gas or wind, incredibly challenging.

It is at times like these that our constituents and the energy industry look to Government for genuine leadership, and it saddens me greatly to say that on this issue the Government led by my party appear to have fallen short. “Investor confidence” is a phrase that is readily thrown around in debates like this and is perhaps too easily taken for granted, but when an esteemed member of the investment community such as Neil Woodford is quoted in a national newspaper in the days following the Government’s announcement on this issue as saying:

“If Government cannot be trusted to fulfil its long-term commitments then it will have to accept that it cannot rely on support from institutional investors”,

it would be irresponsible of me and other hon. Members not to heed his words.

It seems sensible to me that at a time when the energy sector is in such a sensitive and precarious place, policy decisions should be taken in the round rather than in isolation. The Government have already made public the saving they believe they would accrue as a result of removing the CCL exemption, but what about the consequences, intended or otherwise?

Drax Group, an energy company of which Members will be aware and that is based in my constituency, has invested hundreds of millions of pounds in recent years to become the largest renewable generator in the UK. It lost £425 million of its value on Budget day—£425 million in one day, a third of its total value. To me, it is incredible that a Conservative Government have effectively done that to a company that has done all that has been asked of it. The superb management team at that station has delivered Europe’s largest decarbonisation project. It is producing the lowest-cost renewable power available when we take into consideration full system costs, and it has done so while providing 8% of the UK’s power day in, day out. Furthermore, that is money that could otherwise have been invested back in the company further to fund its biomass operations or to support White Rose, one of the country’s two flagship carbon capture and storage projects. That is not an isolated case. I understand that many other renewables companies saw huge falls in their value on the back of the decision.

Discontinuing the CCL exemption would also eliminate the only financial incentive for businesses in the UK to use renewable energy instead of fossil fuels, and it has been in place for over a decade. Hon. Members will know that it is a rare occurrence indeed when I agree with Friends of the Earth, but its observation that the situation is comparable to imposing an alcohol tax on apple juice seems spot on. It appears to me to be a retrograde step, and one that will put small business owners, for whom I have the greatest respect, given my background before entering the House, in a position of uncertainty. Furthermore, as a Conservative it pains me to say that, far from being the removal of an unnecessary burden on business, the removal of the CCL exemption is the extension of a tax. Every business in the UK, whether large or small, must now pay the CCL; they can no longer avoid it by using renewable power.

I understand that one of the Government’s principal objectives in removing the CCL exemption is to prevent taxpayers’ money benefiting renewable generation abroad. However, the reality is that more than 70% of the income generated by levy exemption certificates went to UK-based energy producers. Furthermore, generators supplying renewable energy to the UK through interconnectors are currently exempt from a range of transmission charges that British generators are required to pay. Surely it would be better for the Government to look carefully at that loophole, rather than at measures, such as those proposed in the Bill, that will make the economics of generating in the UK less appealing.

As hon. Friends will know, I am not given to highlighting problems without suggesting solutions. I believe that all that Drax and the renewals industry are asking for is to be treated the same as other industries. When exemptions were removed from the combined heat and power industry, it was given two years’ notice. That contrasts with the 28 days’ notice given this time.

[Caroline Flint (Don Valley) (Lab)]

I thank the hon. Gentleman for giving way—it is not easy to come to the House and take issue with one’s own party. Following his last point, does he agree that there were other ways to deal with any sense of unfairness about renewable energy coming through interconnectors, rather than taking a big hammer to smash a small problem in the system? We know how many jobs and how much future investment are based on business plans, whether at Drax, which I have had the pleasure of visiting, and at other renewables firms, small and large, across the country, which are doing their best to put some growth back into the British economy.

[Nigel Adams]

I agree with the right hon. Lady. Companies need certainty and time to plan, and 28 days’ notice is clearly ludicrous. A two-year notice period would allow companies to honour contracts they have signed, allow the industry to adapt and, above all, it would be fair.

I know that this is a topic of considerable interest and that other hon. Members wish to make their views known, so I will conclude my remarks by returning to my original point: nothing in life is guaranteed, including the availability of energy in our homes and businesses. I believe that we are entering a very precarious time for the UK, when our capacity margins are getting ever tighter and when plant closures continue to leave us reliant on gas imported from the middle east. Against that backdrop, we are in a global marketplace where investors are taking a sober, pragmatic approach to energy projects, and not just in the UK but elsewhere. We should be giving them greater certainty that the UK is a reliable environment to invest their money in, because that money is needed to deliver the energy projects that will power this nation in future. My concern is that the proposed revision to the climate change levy will do exactly the opposite. That is why, with great regret, I shall not be supporting the Government on this issue.

--- Later in debate ---

[John Redwood]

I have not seen all the figures on what the contract prices might entail, but I entirely agree that I want affordable energy. The advantage of nuclear energy is that it is reliable energy, and the problem with too much wind energy in the system is that it is very unreliable energy. It is therefore very expensive energy because a full range of back-up power is necessary for when the wind is not blowing. That means investing at twice the cost—investing in the wind energy and then in the back-up energy. With nuclear, only one investment needs to be made. The hon. Lady is quite right that it is crucial to get value for money if it is decided to lock into a nuclear contract.

[Caroline Flint]

The right hon. Gentleman may be aware that the interim report of the Competition and Markets Authority pointed out in June that customers on the standard variable tariffs are providing the big six energy companies with an extra £1 billion a year on account of over-charging? If he is concerned about the cost of energy, as I am, does he not agree that it is disgraceful that since that report we have heard nothing from the Government about how they are going to tackle this over-charging of some of the most vulnerable customers paying their electricity and gas bills today?

--- Later in debate ---

[Caroline Flint]

I thank the hon. Gentleman for giving way. Can he confirm that the Government are currently consulting on scrapping the feed-in tariff and that they are legislating on cutting the renewables obligation on onshore wind? Will he also answer the question that has been raised about whether they looked into isolating the renewable energy that came through interconnectors to deal with the issue around value for money and whether that imported renewable energy was already benefiting from subsidies elsewhere?

[Damian Hinds]

On the right hon. Lady’s last point, that is not the only inefficiency in this scheme, as I was outlining earlier. She is correct about the consultations that are going on and about us fulfilling our manifesto commitment on onshore wind, but that does not mean that we will not continue to be absolutely committed to our environmental objectives. As I go through my remarks, I will talk some more about how we are on course to fulfil those objectives.

New clause 2 put forward by the Opposition would require the Chancellor, six months after the passing of the Finance Bill, to publish a report detailing the impacts of clause 45. Such a report is not necessary in that timeframe. The Chancellor has already presented a report to the Treasury Committee, which was published on 26 August.

I will take the opportunity to respond to some of the points that were made during the course of this debate. My hon. Friend the Member for Selby and Ainsty (Nigel Adams) spoke about Drax. He will understand that I cannot comment about that particular company because of the current judicial proceedings. He also spoke very passionately about his constituents in Eggborough, as did my hon. Friend the Member for Brigg and Goole. Clearly and obviously, it is a very disappointing decision for everybody connected with Eggborough and for those who now face much uncertainty. There is no easy thing to say to someone in that situation.

Importantly, the value provided by the climate change levy exemption was relatively minor when compared with the other elements of Government support that are available for renewable energy. Most generators were expecting the exemption to have a negligible value for them by 2020, so it would not typically be a large factor in their long-term investment decisions.

Amendment of the Law

Caroline Flint Excerpts

Monday 28th March 2011 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

I begin by saying that the violence of a handful of anarchists and attention seekers at the weekend was an absolute disgrace, and I hope that prosecutions will follow. However, I have to add that none of their yobbish and illegal behaviour could detract from the biggest demonstration of British feeling for eight years. People wanted to tell the Government that their cuts are going too far and too fast, and that their lack of plans for jobs and growth just make the pain worse.

[Bob Russell]

Will the right hon. Lady give way?

[Caroline Flint]

I will shortly, but I want to make a little progress.

What the Secretary of State’s rhetoric today has revealed is that the Government have no plans for jobs or growth and no plans for the future. If he wants to talk about the economy that they inherited, let me tell him a thing or two about the legacy that we left. They inherited an economy in which growth had returned, inflation was low, unemployment was falling and borrowing was lower than forecast. I am proud to say that Labour increased funding for local authorities, built or refurbished 4,000 schools and 100 new hospitals and left the nation’s public housing stock in better shape than it had been in during our lifetime. If the Secretary of State got out of his office a little more often, he would see that Britain’s major towns and cities had been substantially regenerated.

Even when the worst recession in our lifetime was visited upon our country, bringing half the banks in the UK and Europe to their knees, we still had fewer repossessions, fewer business collapses and a lower rise in unemployment than during the Tory recession of the 1990s. Today we have an economy that is not growing at all and in which inflation is up to 4.4%, unemployment is at a 17-year high and borrowing will be higher this year, next year and in every year for the next five.

[Bob Russell]

I am glad that my intervention was delayed, because I had not recognised the utopia that the right hon. Lady has just described. Does she accept that the last Government had any responsibility for the financial situation that the UK is now in?

[Caroline Flint]

We were part of a global crisis that affected countries around Europe and the world, but it is interesting that before the international crisis hit, we had the second lowest debt of any G7 country. We had brought overall public sector net borrowing down, and the now Prime Minister and Chancellor committed themselves to Labour’s spending plans. In 13 years, we created 1.1 million enterprises, and in the past two years, which included our last year in government, the World Bank ranked the UK fourth in the world and first among European countries for the ease of doing business.

[Chris Bryant]

I am particularly glad that my right hon. Friend has reminded that lot over there on the Tory Benches that they fully supported Labour’s spending plans up until the end of 2008 and promised to spend the additional benefits of growth on the economy, which they never seem to remember. That lot on the Liberal Democrat Benches, when they were sitting over here on the Opposition Benches, urged even greater levels of spending, so we are not going to take any hypocrisy from them.

In addition, will my right hon. Friend remind that lot over there of one further piece of history? In 1924, George Lansbury—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. You have to be much shorter, Mr Bryant.

[Caroline Flint]

If my hon. Friend was going to point out that when we go into recession we have to ensure that we do not go into a depression, that is exactly what the Labour Government did. Things may look rosy from the leather seats of the Secretary of State’s new Government Jag, but for ordinary people, the Government’s plans are hurting but they are not working.

[Mr Pickles]

Mine is a second-hand ex-Labour Jag.

If the Labour Government were doing such a good job, why did the right hon. Lady resign?

[Caroline Flint]

For goodness’ sake. I have always put on record my pride in what the Labour Government did to ensure that this country recovered from 18 years of Tory rule. Whatever my disagreements with them, I will never take that away from any of our leaders of the past 13 years.

This Budget has offered more of the same. The Government claimed that it was a Budget for growth, but we got nothing of the sort. Only a few weeks ago, the Chancellor told us that it would be an “unashamedly pro-growth Budget”, as though economic growth was something that he would normally be embarrassed about. What the Government should really be embarrassed about is that as a direct result of their policies, the Office for Budget Responsibility has downgraded its growth forecast not once but twice. Now we know that growth was down last year and will be down this year and next year. The only things that are growing at the moment are the prices in the shops and the number of people out of work.

[Nadhim Zahawi]

Let’s try again. Does the right hon. Lady think that, in the court of public opinion, people blame Labour for the economic mess that we are in?

[Caroline Flint]

I think we are doing quite well in by-elections, but I do not take the public for granted, and I know that they believe the deficit should be tackled. That is quite right, and I absolutely agree. However, as every day goes past and people see the choices that the Government are making, they say that they are going too far and too fast. That was expressed on Saturday, and it will be expressed on 5 May.

[Claire Perry]

Does the right hon. Lady share the opinion of her esteemed colleague, the very sensible right hon. Member for Salford and Eccles (Hazel Blears), who recently said that Labour could be much more

“explicit about where we had plans to cut…The public…are worried that we haven’t been as clear as we ought to be.”

[Caroline Flint]

I will come later to the position that Labour put before the electorate at the general election, which we stand by today.

[Nadhim Zahawi]

rose—

[Caroline Flint]

I have already given way to the hon. Gentleman, so I am going to make some progress.

I turn to some of the measures announced in the Government’s plan for growth. I think we would all agree that the planning system shapes the places where people live and gives character to our communities. It helps us to protect our natural and historic environment, and it should ensure that everyone has access to green space and unspoiled countryside. It is crucial for growth, because it supports economic development, helps to create jobs and contributes to our prosperity as a nation. I have never shied away from the fact that we as a country need to build more homes, and that our planning system has to support that. When the Government were elected, they promised bold, radical reform of the planning system that would speed it up, reduce bureaucracy and support growth. Let us look at what has happened.

Following the Government’s chaotic and botched reforms to the planning system, there has been a dramatic fall in the number of planning permissions for new homes, which are now at a near-record low. The figure for the third quarter of 2010 was the second lowest seen in the past 19 quarters, and in the last quarter of 2010, new planning permissions were down 22% on the previous year. It is no good the Government blaming the previous one, because things have got worse and not better since they came to power. The biggest drop of all came just after the last general election. In the first quarter of 2010, before the election, more than 40,000 planning permissions were granted to developers for new homes, but by the third quarter, after the election, that had fallen to just 30,000.

The Chancellor sought to address that last week, but I am afraid that in doing so, he sounded the death knell of localism. I offer my condolences to the Communities and Local Government Secretary for the demise of localism, because after months of the Government pledging power to the people—neighbourhood plans, communities in the driving seat and so on—the Chancellor blew localism out of the water in a single sentence. He said that

“from today, we will expect all bodies involved in planning…to prioritise growth and jobs, and we will introduce a new presumption in favour of sustainable development, so that the default answer to development is yes.”—[Official Report, 23 March 2011; Vol. 525, c. 956.]

I cannot recall cheers from Government Members when that was said. While the Secretary of State trumpets devolving power to local people and promises to give them a real say in the development of their area, the Chancellor wants to make it easier for developers to bypass the planning system altogether. They cannot both be right, which reinforces the confusion that has paralysed the planning system in the past 10 months.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Did the right hon. Lady support regional spatial strategies, which imposed on my constituents a brand-new town on green belt that was not supported by any democratically elected person? Does she prefer that to the Government policy that she describes?

[Caroline Flint]

I am afraid that if the Chancellor gets his way, nobody will be consulted.

No community can thrive if the system is biased against change. Every community must look to create new homes, workplaces and jobs. A planning system that is devoid of obligations to provide for the future and that just protects the present is destined to fail, but a fair and open planning system that involves local people, and that leads to better decision making and greater consensus on development, is important. Although the Government promise to give local people more of a say, their policies do exactly the opposite. Ten months in, their record on planning is one of incompetence and broken promises. Government Members who represent our green and pleasant land must be in mourning, for although existing controls on green belt will be retained, the Chancellor made it very clear that the Government

“will remove the nationally imposed targets on the use of previously developed land.”—[Official Report, 23 March 2011; Vol. 525, c. 956.]

Forgive me for putting that in plain English. More developers will be given a yes, but as there will be no obligation to develop brownfield sites, by definition, more greenfields will be developed. I do not hear any cheers from Government Members for that one.

We can add to the chaos in the planning system the fact that plans for more than 200,000 new homes have been dropped. Under Labour, more than 2 million more homes were built in England, including 500,000 affordable homes; 1.5 million social homes were brought up to a decent standard; 700,000 new kitchens, 525,000 new bathrooms and more than 1 million new central heating systems were installed; 1 million more families were able to buy their own homes; help was provided to more than 130,000 first-time buyers through shared-ownership schemes or equity loans; and even in the teeth of the recession, the previous Government were building 55,000 new affordable homes, which is more than this Government will build in any of the next four years.

[Charlie Elphicke]

On a non-partisan basis, I caution the right hon. Lady against many of those numbers, because many of them apply to flats, which are quick and easy to build, but which left us with a shortage of family housing.

[Caroline Flint]

They still had people living in them. The hon. Gentleman should come to the constituencies of Labour Members to see the investment in social homes, and the partnerships that were developed with the private sector to ensure that we had social homes alongside private developments. The previous Government were putting an end to the division whereby social homes were in one part of the community and private homes were built in another. That is the Labour way, and I am very proud of it.

[Andrew Bridgen (North West Leicestershire) (Con)]

The story the right hon. Lady tells is not one that I recognise in my constituency, which had the worst quality council housing in the whole country. Seventy per cent. of our housing was not up to the decent homes standard, and it has taken a Conservative-led coalition Government to deliver the £21 million to bring them up to standard over the next four years.

[Caroline Flint]

People throughout the country benefited from the decent homes programme and other housing initiatives that helped them to get on to the property ladder and to ensure that they had choices. In the first six months of 2010, before the election, the number of new homes built went up by more than 20%, but in the last six months of 2010, after the election, the number of new homes started fell by nearly 20%. If the Secretary of State wants that debate, I am always happy to have it with him—or with any of his colleagues.

The country wants to know what the Secretary of State and his Government will do to help to build the homes for which communities up and down the country are crying out. Whatever he pretends, the reality is that the Budget brings very little good news. It promises help for first-time buyers. The Opposition welcome the Government’s U-turn—their decision to bring back Labour’s homebuy scheme, which they insist on calling “Firstbuy”—but less than a year ago, the Minister for Housing and Local Government described that policy as an “expensive flop”. That was not what thousands of first-time buyers thought about it or what the housing industry made of it. The Home Builders Federation said that it

“was judged a major success by the industry”.

Only a matter of months later, with his customary humility, the Minister has been forced to admit that he called it wrong. We have wasted 10 months in which we could have ensured that people had a better opportunity to own their own homes. He has done too little, too late, and the measure does not go far enough, because while more than 3 million hopeful first-time buyers try to get a foot on the property ladder, the measure helps only 10,000 of them.

No one is convinced that the new homes bonus is the panacea to the housing crisis that the Government believe it to be, least of all the 21 Tory council leaders from the south-east who wrote to them earlier this year warning that they were not convinced that the plan provides enough of an incentive to communities for them to welcome development. The Budget was crying out for measures to support housing, but they did not happen. All it comes up with is the idea of allowing commercial properties to be turned into homes without requiring planning permission. When the Government get around to establishing exactly which sort of commercial properties will be allowed to turn into residential properties and under what conditions, we will look at their proposals carefully, but if the Secretary of State really believes that the answer to the country’s housing crisis is turning some empty offices into luxury penthouses, or asking people to live in disused out-of-town business parks or derelict industrial estates, he had better think again.

The biggest disappointment is the failure to address the deeper problems of housing supply and the lack of available mortgages. In their submission on the Budget, the Home Builders Federation is absolutely clear that mortgage availability

“is the biggest immediate constraint on demand and house building.”

Figures from the Council of Mortgage Lenders published as recently as 18 March show that mortgage lending has stalled. It says that lending is

“weaker than a year ago”

and that the housing market is “stuck in a rut”, but on that, the Budget is silent.

Before we move on from housing, let us remind ourselves of another matter on which the Government have not lived up to their promises. Just a few weeks ago, the Minister for Housing and Local Government told the Zero Carbon Hub annual conference:

“The commitment to Zero Carbon remains in place—there’s no ambiguity about that”,

but when reading the small print of the Budget, we discover that that is just another broken promise, because from 2016, new homes will no longer have to source all their energy from carbon-neutral sources, which goes back on a commitment that the Conservatives made in opposition and repeated in government. Those standards were about not only protecting our environment, but driving innovation and creating new jobs in the green economy. The Government’s failure on that undermines not only their green credentials, but the ability of our economy to compete for new jobs, new investment and new industries.

Let me deal with the underlying economic nonsense at the heart of Government policy. They hope that the UK economy will be saved by an export-led recovery, which I call Osborne’s see-saw, because the Chancellor views the public and private sectors as opposite ends of a see-saw. He thinks that the harder, deeper and faster he cuts the public sector, the sooner the private sector grows to fill the space and suck up the unemployment. One does not have to be an economist to know that there is no reason why cutting home helps, police officers and council cleaners will lead to the UK selling more electrical equipment, cars or IT services abroad. However, I do know that if we cut public investment in roads, regeneration and house building, and shred the school building programme, the private sector takes a huge hit. The construction industry nose-dives and hundreds of thousands of skilled workers and those who manufacture and supply to them lose their jobs.

[George Freeman (Mid Norfolk) (Con)]

Has the right hon. Lady noticed the International Monetary Fund’s recent figures showing that Britain is running interest rates 3% lower than those in countries with similar deficits to us? Is that not a fundamental result of our programme for the deficit?

[Caroline Flint]

I notice that the economies of the USA, France and Germany grew in the last quarter of 2010, but that of Britain shrank by 0.6%, and that the German and US economies are forecast to grow more strongly.

This is the first ever Budget for growth to downgrade its own growth forecast, yet the Government’s answer is not to continue Labour’s plan to manage the deficit reduction, but to go faster and further and hammer public spending harder. Then they blame everyone but themselves when growth forecasts fall and when Government borrowing rises. Hundreds of thousands of people tried to tell the Government on Saturday that it is hurting but not working, and they are just not listening. For this Government, giving a tax cut to the banks was more important than supporting the construction industry, keeping people in work or building new homes.

The Budget shows above all else how out of touch the Government are. With more people out of work, inflation rising and people facing the biggest squeeze on their living standards in a generation, we hear the Secretary of State make much of this year’s council tax freeze, which every Labour council has implemented, despite receiving much steeper cuts than Tory and Liberal Democrat councils in far wealthier parts of the country. However, with the Deputy Prime Minister busily coming up with a thousand and one new taxes and the Business Secretary desperately trying to resurrect the idea of his mansions tax, it remains to be seen whether the Secretary of State will be able to say the same next year.

A council tax freeze helps only so much. It is a £72 saving versus a VAT increase that will cost a family £450 extra this year, and it is coming at a time when families are losing tax credits and facing a freeze in their child benefit, when pensioners are seeing winter fuel payments cut, and when the Government’s cuts are undermining our recovery and costing people their livelihoods. They give with one hand but take with many more from the communities that we represent.

[Mr Edward Timpson (Crewe and Nantwich) (Con)]

The right hon. Lady will be aware that the Darling plan commits her party to £14 billion of cuts, beginning in a few weeks, which is only £2 billion less than the Government are committed to. Will she tell us where those cuts would fall under her party’s Government?

[Caroline Flint]

It is amazing how Conservative MPs are picky about which part of our budget they want to suggest would go different ways. On the one hand, the hon. Gentleman claims that the difference between our budget and theirs is £2 billion, and on the other hand, the Chancellor boasted in the previous Budget that there was a £40 billion difference between our plan to halve the deficit over four years and his plan to eliminate it entirely. They cannot have it both ways. We need a Budget for growth, and a few facts tell us all we need to know.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Government Members have mentioned export-led recovery. Only last week, in the Budget debate, the right hon. Member for Wokingham (Mr Redwood) warned the Front-Bench team that such an export-led recovery will peter out very soon and for the next two years, as credit contracts in China, India and Brazil, among other countries. However, does my right hon. Friend agree that at the heart of the Budget and the growth strategy lies the privatisation of the Royal Mail, the privatisation of the NHS and the attempted privatisation of the forests?

[Caroline Flint]

They have already U-turned on the forests; let us see how much they respond to the elections in a month when the people of this country will make it loud and clear what they think of the past 10 months. The sad thing is that we have had to wait 10 months for a so-called plan for growth. In those 10 months, we have seen unemployment and borrowing rise and growth fall. That does not bode well for anybody in the country, be they those with families, those in the public or private sectors, those with a business trying to grow or those trying to start up a business.

[Nic Dakin (Scunthorpe) (Lab)]

Does my right hon. Friend not agree that what we need in order to promote growth is demand in the economy? However, with public spending being cut and people losing their jobs, which will cut private spending, where will the demand come from to fuel private sector growth?

[Caroline Flint]

My hon. Friend makes a very good point. I could not make it better myself.

The fact is that this is not a Budget for growth. We have the highest unemployment rate in nearly two decades, with nearly 1 million young people out of work and inflation spiralling out of control. Even Moody’s credit rating agency, which all of us have heard so much about from Government Members, are warning that our triple A credit rating could be at risk. What is the price of this failure? It will be another £43.4 billion in borrowing. Yet all the Government can come up with is more of the same: the same old excuses; the same failed policies; and the same old stories from the same old Tories.

No number of excuses can hide the fact that the Government have cut too far and too fast, hitting jobs and growth, and putting our recovery at risk. However, there is an alternative. We could get our country’s finances back on track by halving the deficit in four years; we could give families and businesses real help by scrapping the VAT increase on fuel; we could repeat last year’s tax on bankers’ bonuses, and invest the money in building 25,000 new homes and getting 90,000 young people into work; and we could boost the regional growth fund by £200 million.

With the Government’s first major elections just weeks away, this Budget sets out a very clear choice: between Labour, which will do everything it can to protect jobs and the services people rely on, and this Tory-led Government imposing cuts with barely disguised relish; between Labour, which knows that there are difficult decisions to be made, but will make them in a way that is fair and open, and the broken promises and underhand tactics of the Tories and the Liberal Democrats; between Labour, which will support people into work and get our economy back on track, and a Government who are taking a reckless gamble with the economy that is hurting but not working. In one month’s time, people up and down the country will have their chance to send the Government a very clear message—and their voices will be heard.

[Several hon. Members]

rose—

Government Spending Cuts

Caroline Flint Excerpts

Wednesday 26th May 2010 Commons Chamber

[Mr Laws]

I am grateful to my hon. Friend. I agree that there seems to have been a scorched-earth strategy as regards not only the state of the public finances but the way in which the Government were spending money at the end of their term. We are looking very closely at all the decisions that have been made, and we will be making further announcements shortly about the action that we will have to take.

[Caroline Flint (Don Valley) (Lab)]

I am firm believer that we should provide real opportunities and have employers at the heart of devising these schemes. What on earth is to be gained by taking away resources from the future jobs fund, which I understand means that there will be 80,000 fewer job opportunities working with employers around the country?

[Mr Laws]

We are maintaining the young person’s guarantee. I have to tell the right hon. Lady that the clear advice that we have had is that that particular part of the young person’s guarantee was simply not effective and was wasteful—that the proportion of expenditure that was being saved as a consequence of it was minor and the administration costs were huge. I would instead point out to her the real action that we are taking to help young people in these tough times, with an additional 50,000 apprenticeship starts. That will make a real difference and will be far more effective than the scheme that we are amending in order to save money, which frankly was simply not working.