Budget Resolutions

Debate between Caroline Lucas and Stewart Hosie

Wednesday 8th March 2017 Commons Chamber

[Stewart Hosie]

That is precisely the point. The choices are that we grow and we take exports seriously, or we do what Tory Governments have always done, which is to sell off the family silver.

Growth is forecast to be based on heroic levels of business investment after the uncertainty of Brexit ends this year. It will be propped up by household consumption with a commensurate rise in household indebtedness, central Government investment, which I welcome, and fixed investment in private dwellings, but with house prices forecast to rise at two or three times the rise of inflation. The Budget report seems to make merit of that: people will feel wealthy, it says. We know what happens when prices fall, and we know what the impact is on youngsters trying to get on the property ladder. On household debt in particular, the Chancellor should have been much more aware of the concerns that, even after excluding mortgage payments, household debt has now reached record levels. This is not a balanced recovery.

However, it is the issue of trade that is most worrying. The figures are clear. The last full year for which we have figures—2015—saw a current account deficit of £80 billion, and a deficit in the trade in goods of £120 billion. At least the Chancellor did not repeat the claims of his predecessor that we could double exports by the end of this decade to £1 trillion. Perhaps he should enlighten the Secretary of State for International Trade, who still thinks that it is sensible to keep the target even though he does not believe that it can be met. This is not all the fault of this Chancellor. Many of these failings have been embedded in the UK economy for decades. It is not just about exports, but about support for innovation, which I welcome, and manufacturing as well as boosting productivity across the board.

We should have had specific plans today—the Chancellor has had enough time in office—for substantial GDP growth, not the less than 2% in every year for the forecast period, which is lower than the pre-crisis trend. We should have had measures to boost productivity. In Scotland, productivity is 4% higher than the 2007 level, compared with next to nothing in the UK. We should have had targeted support for high-growth export-focused small and medium-sized enterprises. The Chancellor should have taken more businesses out of business rates entirely in England rather than offering just a bit more help for a short period of time.

I welcome what the Chancellor said about education. If we tackle the attainment gap, we can get inclusive growth. We will not get inclusive growth if people are struggling to put food on the table because the welfare cap is squeezing people’s real incomes.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Earlier, the hon. Gentleman was talking about significant omissions. Does he share my deep concern about other omissions? There was nothing at all in this statement about the climate crisis; nothing about investing in green energy; nothing about energy efficiency; nothing about reversing the solar tax hike; and nothing about the public health emergency caused by air pollution. Does he agree that that is a reckless and irresponsible squandering of a vital opportunity?

[Stewart Hosie]

The pattern that we have seen over the past few years confirms that. It is not just about the photovoltaics and the contracts for difference changes, which were not helpful, but all the other issues that the hon. Lady has raised too. She is right to keep on making those points.

One reason why the Government cannot fund their policies is to do with the yield from taxes. I believe in tax competition, but if we look at the corporation tax yield, we can see that it has flatlined and fallen in real terms for the past four years of the forecast period. In order to make amends today, or to make the numbers stack up, we have seen a scandalous attack on aspiration and on the self-employed by taxing more and making more changes to national insurance contributions to the tune of £4.2 billion or so. The party of aspiration is taxing those who are self-employed, pouring in active, real hard disincentives to starting businesses, to employing people, and to stepping out on one’s own. That is a decision that will come back to haunt this Chancellor.

Finance Bill

Debate between Caroline Lucas and Stewart Hosie

Tuesday 8th September 2015 Commons Chamber

[Caroline Lucas]

I am grateful for this opportunity to contribute to the debate on this clause, which I believe should simply have been deleted. Ministers have failed to provide a robust or even remotely convincing justification for removing the renewables exemption to the climate change levy. This would be laughable if it were not so serious. The Chancellor has complained that this is all very fine because the UK now has

“a long-term framework for investment in renewable energy in place”.—[Official Report, 8 July 2015; Vol. 598, c. 331.]

If only that were the case! The reality is becoming increasingly distant from the rhetoric, especially now, after yet another wave of destruction has been unleashed by the Treasury on sensible and popular climate and clean energy policies.

The most outrageous of those policies is the proposal to cut support for rooftop solar by up to 87%. That risks making it impossible for my constituents and many others to afford solar panels for their homes, schools or community centres. Solar power can become subsidy-free, but not if Government cuts to support are wildly disproportionate to the admittedly impressive cost reductions that the industry has managed to achieve. And then there are the 35,000 people who work in the solar industry and who are facing a very uncertain future.

Clause 45 of the Finance Bill is one of several such senseless attacks on sustainable energy and climate policies. It will have negative impacts on existing and potential renewable energy developments, some of which are already being reported to have become unfeasible and which have now been cancelled. It will also have negative impacts on the overall investment climate for everyone from small community groups to multinational businesses, all of which are looking to put their money into clean power. This is the very last thing we need, for our economy, for our jobs and for tackling climate change, and it flies in the face of public opinion. New polling this month found, yet again, overwhelming support for renewables, including onshore wind and solar, with even greater levels of support for community energy generation. Some 78% would support local projects, even within 2 miles of their home. For all those reasons and more it seems intelligent to have an incentive, so that when a business or public sector organisation purchases clean renewable power, rather than dirty polluting power, it pays less tax.

Ministers claim that the change is intended to prevent taxpayers’ money from supporting renewable electricity generated overseas, but in reality ditching the renewable energy exemption is a completely disproportionate measure, which turns a policy designed to encourage low-carbon electricity into little more than an electricity tax for businesses. If a third of benefits do go overseas, that should surely still mean that two thirds support home-grown renewable power generation and jobs here in the UK. If Ministers really want to cut out overseas generators, they should therefore modify the policy to fix the anomaly at that rate. Did anyone ever even consult industry about what level of cut to make? We have already seen by the Minister’s inability to answer my question a few moments ago that there simply was no consultation with the industry in advance. Ditching this exemption completely is, as Friends of the Earth has said, like making people pay an alcohol tax on apple juice. It harms British renewable energy businesses and undermines efforts to tackle climate change. No wonder it has received widespread condemnation, on both environmental and economic grounds.

This is all happening less than three months before the crucial climate talks in Paris. Yet at that time we will hear the spin machine in the Department of Energy and Climate Change going into overdrive, coming out with all kinds of lovely rhetoric which is completely at odds with what the Government are doing on the ground with this measure. It is yet another example of the huge gulf between the rhetoric and the reality of the policy. When it comes to avoiding dangerous climate change, the shift to clean renewable energy is key. Phasing out fossil fuels and phasing in a 100%-clean agenda has to be at the top of the agenda. Yet, once again, the UK is going in the wrong direction, with generous tax breaks and taxpayer-funded propaganda propping up the fossil fuel companies, while the knife is being stuck into our own home-grown renewable energy sector.

[Stewart Hosie (Dundee East) (SNP)]

Does the hon. Lady not agree that this is only part of an ongoing series of issues: a lower strike price for nuclear than for renewables; the continuing unfairness with the connectivity charges, where the bulk of the renewable potential is; the pulling of support for onshore wind; the threats potentially even to the green investment bank; and the threatening of funding for future projects? This is all part of the same anti-environmental agenda.

[Caroline Lucas]

I am grateful to the hon. Gentleman for his intervention, and of course he is absolutely right; long gone are the days of hugging huskies and we are now in the days of “green crap”—even, ridiculously, when there are strong economic arguments for pursuing green policies. The idea that that is somehow against the interests of business is completely belied by the fact that so many businesses are crying out for a change in direction on the part of this Government.

Finance Bill

Debate between Caroline Lucas and Stewart Hosie

Tuesday 21st July 2015 Commons Chamber

[Caroline Lucas]

I would love to hear it, but not that much, so I am going to continue.

Then we have the senseless proposal to tax renewable energy as if it were a fossil fuel by removing the climate change levy exemption for renewables.

[Stewart Hosie]

On the VED changes being intended to tackle the debt or the deficit, I am sure the hon. Lady will have heard the Chancellor say that the entire set of measures was fiscally neutral and has nothing to do with bringing down the deficit or the debt.

[Caroline Lucas]

I thank the hon. Gentleman—my hon. Friend—for that well-made point.

As campaigners have pointed out, the policy on the climate change levy exemption for renewables is like making people pay an alcohol tax on apple juice. The Government claim that it is intended to prevent taxpayers’ money from benefiting renewable electricity generated overseas. In fact, it is a completely disproportionate measure that turns a policy that was designed to encourage low-carbon electricity into just an electricity tax for businesses. It is interesting that Ministers remain suspiciously silent on the shocking revelation earlier this year that the Government spend 300 times more on backing fossil fuel projects abroad than on clean energy via the export credit agency. If they are that worried about the issue, one would have expected a little more consistency from them. The scandalous public spending on fossil fuel subsidies should be cut, not support for clean, green, home-grown renewable energy.

I agree with the shadow Energy and Climate Change Secretary, the right hon. Member for Don Valley (Caroline Flint), that removing the renewables exemption from the climate change levy will undermine investor confidence in renewable energy, and that we should instead be seizing the massive opportunities for jobs and investment that moving to a low-carbon economy would provide for this country. I hope that we can work together across all parties to remove this stupendously senseless provision from the Bill altogether.

The Minister spent a long time talking about how important this Bill is for productivity. I am a great supporter of productivity, but I fail to see how, for example, plans to scrap the long-established zero-carbon homes policy will support it. Indeed, in an open letter to the Chancellor, over 200 businesses warned:

“This sudden u-turn has undermined industry confidence in government and will now curtail investment in British innovation and manufacturing”.

So much for putting our economy on a stable footing; so much for this Government’s phoney concern about energy costs. Scrapping this policy means that future homes, offices, schools and factories will be more costly to run, locking residents and building users into higher energy bills. Businesses are increasingly speaking out not against the so-called green crap, but against the tsunami of Government blue crap that is putting up energy bills, harming business and undermining climate action.

I have a few last words on the welfare aspects of the Bill. The Chancellor can crow about raising the tax threshold so that fewer people on low incomes pay tax, but although that is the right thing to do, it does nothing to change the overall impact of his Budget and of the Finance Bill. As the IFS has shown, it leaves us with a tax and benefits system that is more regressive. The biggest losers are those in the second and third poorest tenths of the population—the working poor. Under the cover of austerity, the welfare cap will make housing, in particular, unaffordable for many families. Young and disabled people have been unfairly singled out to lose benefits. Child poverty already costs Britain upwards of £29 billion, and is set to rise under plans to limit tax credits, which could leave 3 million families on average £1,000 worse off, even allowing for increases elsewhere.

According to Treasury’s own analysis, the plan to raise the inheritance tax threshold will benefit high-income and wealthy households. Given that it is one of the easiest taxes to both avoid and evade, and that the very rich often find ways to pay very little, it is clear that this whole area needs a complete rethink.

On tax dodging, I welcome the Government’s recognition that the so-called Mayfair loophole needs to be closed. Many of Brighton’s residents have written to me about this, and it is thanks to the determination and persistence of individuals and campaigners that we have got this far. Yet again, however, the Government spin machine is in overdrive and the reality does not match the rhetoric. I urge the Chancellor to address that by agreeing that carried interest counts as income and should be taxed as income.

Finally, if the Chancellor is serious about tackling tax dodging, as I hope he is, I urge him to reconsider his opposition to the Robin Hood tax and to adopt the comprehensive policies set out in the tax dodging Bill proposals, which are supported by 25 UK and international non-governmental organisations and would generate about £3.6 billion in the UK.