Finance (No. 2) Bill

Debate between Catherine West and Ruth Cadbury

Committee stage & Committee of the Whole House (Day 2)
Tuesday 20th April 2021 Commons Chamber

[Catherine West]

I thank the hon. Member, and it is always lovely to have an accountant in the room. If there are some improvements, we are very grateful for them.

[Ruth Cadbury]

If I may intervene, London is one of the few cities that has no residency or nationality rule for owning residential property, and many very high-cost cities for residents to live in, such as Vancouver and Auckland, have such rules. Could this Government consider such rules, because this issue has helped to trigger the explosion in housing prices, particularly in London, but also in our other large cities?

[Catherine West]

My hon. Friend makes a very important point. I am sure it has not escaped the Treasury’s attention that prices of the top 1% of properties in the country—mainly in London—have been skyrocketing, when everybody else’s house prices have been going up by a little. That differential is quite frightening. In this terrible time when our economy has shrunk by 11%, who can afford to buy properties worth several million pounds, and do we know enough about these individuals? We know that there are big gaps in the way that Companies House operates, in terms of simply understanding who owns what, and simplifying that is the sort of thing that would make the work of HMRC much more streamlined.

I would also like to put on record the wonderful work being done by civic society groups to spread information and education about the importance of understanding taxation, what it does and what it purchases. It is through these campaigns—often outside this House—that we can understand how to change things.

Aside from our international reputation often being questioned on the issue of Russian oligarchs, we know that the lack of action on questioning some people’s contacts with the Kremlin is costing us over £30 billion every year in lost revenue from taxes. That is a lot of money, and it would be better used to pay for the furlough, eliminate child poverty, vaccinate more children in the third world, or pay and equip our NHS staff for the heroic job that they do every single day.

The Government must act without delay and begin by supporting amendment 77 and new clause 29, which are a significant improvement on the weaker proposals put forward by the Government. That would send a signal that the UK will no longer be silent in the face of tax evasion and tax avoidance and is no longer a welcome home for the oligarchs and agents who see the UK as the destination of choice for their ill-gotten gains. I urge the Minister to do the right thing.

[Ruth Cadbury]

I speak in support of new clause 29 in the name of Her Majesty’s Opposition and cross-party amendment 77. I congratulate my hon. Friend the Member for Ealing North (James Murray), my right hon. Friend the Member for Barking (Dame Margaret Hodge) and the right hon. Member for Sutton Coldfield (Mr Mitchell) on their speeches.

Addressing tax avoidance and evasion is, of course, an important objective of the Treasury, and Finance Bills and other legislation are the vehicles to do that, but as with all tax changes, Government must assess and respond to the unintended consequences of any changes. This Government have a terrible track record on tackling tax evasion and aggressive tax avoidance. They have consistently stood in the way of Labour’s calls to clamp down on loopholes and have failed to collect over £30 billion in taxes every year. They have promised to legislate on these issues, but the proposals in the Bill fall far short of any substantive change. Instead, they have been responsible for an increasingly complex system of payment, fraught with difficulties and risks for the unsuspecting worker.

A growing number of working people need to work on a contractor basis, either for personal reasons or because it is the only way of getting work in their sector or with their professional skillset. Increasingly, the alternative to being a contractor is to be a PAYE freelancer—to pay tax in full but without any of the rights of being an employee and all the costs of being self-employed. This is zero-rights employment, and it is unfair.

We need an effective tax avoidance policy that criminalises those promoting tax avoidance, rather than going for the workers inadvertently caught up in them, as this Government and HMRC have been doing with the loan charge in particular. That is the wrong target. While ordinary people who are victims of mis-selling are facing ruin and bankruptcy, the Government have done too little, too late to go after those who promoted the schemes.

I acknowledge that the Bill contains measures to tackle the promoters of tax avoidance and changes the system of penalties, but those measures are extremely limited in scope. Indeed, those changes are not even included in the Budget report costings, which suggests that their financial impact must be minimal. IR35 was enacted 21 years ago to stop the practice of those who, in reality, were permanent, generally full-time workers being paid as contractors through personal services companies, as many were paying much less tax than if they had been employees. It was right to address that tax avoidance, but the Government must address the unintended consequences for workers and the labour market that have followed since then.

Oral Answers to Questions

Debate between Catherine West and Ruth Cadbury

Thursday 5th November 2020 Commons Chamber

[Catherine West (Hornsey and Wood Green) (Lab)]

What plans his Department has to support creative freelancers who are not eligible for the Self-Employment Income Support Scheme.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

What plans his Department has to support creative freelancers who are not eligible for the Self-Employment Income Support Scheme.