Cathy Jamieson
Main Page: Cathy Jamieson (Labour (Co-op) - Kilmarnock and Loudoun)Department Debates - View all Cathy Jamieson's debates with the HM Treasury
Finance (No. 4) Bill
Cathy Jamieson Excerpts(12 years ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss the following: new clause 2—Review of VAT Exemption for small vehicles—
‘The Treasury shall, within two months of Royal Assent to this Act, lay before Parliament a report on the effect on the availability of transport services on the VAT exemptions for small vehicles.’.
New clause 3—VAT impact of changes—
‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 unless the Chancellor of the Exchequer has fully reviewed the impact of those changes on jobs, living standards and businesses and placed the review in the Library of the House of Commons.’.
New clause 4—Definition of ‘hot food’—
‘No new Order shall be made under section 30(4) of the Value Added Tax Act 1994 which amends the current definition of “hot food” in the Act.’.
New clause 5—Value Added Tax: baked products—
‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 which shall affect baked products when no attempt is made to keep the product hot for consumption.’.
New clause 6—VAT on caravans—
‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 which amends the Act to apply to holiday caravans that are currently zero rated.’.
New clause 7—VAT: protected buildings—
‘No new Order shall be made under section 30(4) of the Value Added Tax Act 1994 which amends the current definition of “protected building” in the Act.’.
New clause 8 has not been selected because it is outside the scope of the Bill. I indicate to the Committee that it will be for my successor in the Chair, the Second Deputy Chairman of Ways and Means, to determine, once she has heard more of the debate, whether to call any of the new clauses other than new clause 1.
Cathy Jamieson
It is a pleasure to follow some excellent speeches. As we heard earlier, the harsh reality of the Budget is that it has done nothing to give Britain the jobs and growth we desperately need. We have heard how it has failed—[Interruption.]
The Temporary Chair
Order. I am sorry to interrupt the hon. Lady. Will Members leaving the Chamber please do so quietly? I wish to hear the debate.
Cathy Jamieson
Thank you, Sir Roger. That gives me the opportunity to repeat, for those unable to hear because of the conversations, my point about the harsh reality of the Budget, which has done nothing to give Britain the jobs and growth we desperately need, and about how it fails the fairness test. It has done nothing to help support families and pensioners on modest and middle incomes. We will discuss that further tomorrow so I shall not dwell on it now. It would, of course, be outwith the scope of the new clauses. I shall only say that families are already finding out just what the Government’s decisions will mean for their household budgets. As we will hear, businesses are also now finding out that the botched Budget makes no economic sense for them either.
There was a time when people might have given the Chancellor some credit for his strategic brain. Some on middle incomes and small businesses might even have given him the benefit of the doubt on economic policy, notwithstanding our many warnings about cuts that go too far and too fast. They might have given him the benefit of the doubt even if they did not completely agree with everything he was doing. But how times change. The Chancellor has had several weeks of torrid headlines—The Mirror: “Half-baked Tory tax a mistake-and-bake from Osborne and co”; The Sun: “PM David Cameron is urged to show leadership over pasty-gate”; The Guardian: “‘Pasty tax’ is the last thing people need”; the Evening Standard: “Heston says pasty tax will stop artisan bakers earning a crust”; and even “Tax on beloved Cornish pasties sparks furore in Britain” in USA Today and “‘Pasty tax’ row heats up for British PM” on the al-Jazeera website.
Mr Redwood
Is the hon. Lady at all worried that the fine reputation of the pasty will be damaged by so many MPs trying to associate themselves with it and get their ratings up as a consequence?
Cathy Jamieson
I am sure that the pasty industry is looking on as we speak and will want to know exactly which MPs have gone and sampled the local delicacies in whichever part of the UK they happen to live.
Those weeks of torrid headlines have led us to the current situation. There is now a pasty petition, and there has apparently been a pasty summit, while Greggs is planning a pasty protest march on Downing street to plead with the Prime Minister to step in personally and kill off the hated pasty tax.
Brandon Lewis
The shadow Chancellor is quite right. Does the hon. Lady not agree that in removing this VAT anomaly, it is only fair to protect the interests of the fish and chip mongers in places such as Great Yarmouth?
Cathy Jamieson
The interests of fish and chip shops have been raised on a number of occasions in this debate, and I am sure that plenty of people will want to patronise those local establishments. However, that does not get us away from the fact that the introduction of this measure has been an absolute shambles.
Matthew Hancock
I am grateful to the hon. Lady and to the shadow Chancellor for encouraging her to give way. I have a simple question: is Labour going to reintroduce this anomaly, should it ever win an election?
Cathy Jamieson
I am almost disappointed that I took that intervention, if that is the best that the hon. Gentleman can come up with.
We on the Opposition Benches like to be helpful, so we are going to give the Government the opportunity to step back from the current mess, which is entirely of their own making, and drop these ill-thought-out plans, which have led to more questions being asked about hot and cold snacks than anyone could have dreamed were possible.
Before I move on, and before anyone asks me when I last ate a pasty—or a bridie, as it would be in Scotland—I have a confession to make. I am one of Parliament’s three vegan MPs, so the delights—[Interruption.] I hear calls of “Resign!” The delights of the Greggs steak bake have passed me by, although it is a firm favourite with my son, and the cheese and onion bridie is a staple component of my husband’s diet. However, I am very grateful to Brownings the bakers, in Kilmarnock in my constituency, which, in advance of Kilmarnock football club’s recent cup final triumph, created a vegan Killie pie, to mimic the award-winning Killie pie, so that I would not go hungry—some Ayrshire colleagues on the Government Benches can see where this is going—while other Kilmarnock supporters were enjoying that award-winning local delicacy.
When I went along to the bakery to receive the pies, it never occurred to me that such delicacies would become the hot—or cold—political topic only weeks later. We have seen quotation after quotation from bakeries and other producers of hot snacks, warning the Government of the problems that the tax will create for them. Indeed, who would have thought that the Treasury Committee would be taking evidence from the Chancellor on what constitutes an ambient temperature? Efforts on Second Reading to clarify exactly what “the ambient temperature” means did not elicit much more information, although we did learn that the hon. Member for North East Somerset (Jacob Rees-Mogg), who I see is in his place, prefers sausage rolls to pasties. I am sure that that was very useful information, and it was interesting to find it out, but it threw very little light on the rest of the subject.
Notwithstanding the Chancellor’s attempt to explain his rationale on hot takeaways to the Treasury Committee—which makes for fascinating reading—we are still struggling to find out whether the hot roast chicken selected in the supermarket by my right hon. Friend the Member for Stirling (Mrs McGuire), to which she referred on Second Reading, would be liable for VAT if it had cooled down by the time she reached the checkout.
Mrs Anne Main (St Albans) (Con)
In successful pasty shops such as Pengenna’s in Bude, the pasties come out of the oven and people eat them hot straight away. They are not being kept hot; they are being delivered hot and fresh from the oven. Does the hon. Lady share my concern that that represents an anomaly?
Cathy Jamieson
The hon. Lady makes a good point, and it will be interesting to see how she votes at the end of the debate.
If I were to go back to Brownings, my local baker, and purchase two vegan Killie pies, one to eat there and then and one to take home for another day, would one or both be VATable, to use the term the Chancellor used before the Select Committee?
Cathy Jamieson
I will give way—I was going to say “to my hon. Friend”, but he is actually my former colleague from another place.
Mr Wallace
The hon. Lady will know that Kilmarnock has some of the best fish and chip shops in Scotland. If she were not a vegan, she would certainly know that. Is she really saying that her party wants to maintain the competitive disadvantage that her local fish and chip shops have? Is she really supporting the big supermarkets and chains that will put those small chip shops out of business by ensuring that that loophole is exploited?
Cathy Jamieson
I am sure that the hon. Gentleman patronises many of those chip shops on his regular visits to my part of the world—and sometimes to my constituency. I hope that he will go to Brownings the bakers and have a Killie pie, if he has not already had one. The point that he makes does not negate the fact that it is primarily the smaller bakers—the so-called artisan bakeries and those that produce traditional products—that are going to have a problem as a result of this tax.
I want to return to my point about whether one or both of my two vegan Killie pies would be VATable. I am unsure whether “to VAT” is actually a verb that would provide us with the word “VATable”. I am, however, aware that the word “ambient” has its roots in the Latin word for “going round”. The Chancellor’s reputation, if not his ambitions for the future, seems to be going round in ever-decreasing circles as a result of this furore.
The Treasury Committee employed its usual straightforward way with words when it stated:
“We recommend that, where changes to complex areas of taxation are proposed, the greatest possible supporting material be published to allow for greater scrutiny of the possibility of unintended consequences.”
Those are extremely wise words—[Interruption.] I am happy to take an intervention from those Government Members who are mocking the wise words of the Treasury Committee.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Am I to understand from what the hon. Lady is saying that the Labour party is making a costed commitment to remove the tax from pasties, and to ensure that there is no anomaly by also removing it from fish and chips and from every other foodstuff as well?
Cathy Jamieson
I have to confess that, the last time I looked at the Labour party manifesto, it did not mention fish and chips, or pasties, or bridies. We are absolutely clear that this tax will do nothing to support those local industries and that it will place yet another burden on hard-pressed customers.
Julie Hilling (Bolton West) (Lab)
Does my hon. Friend agree with John Carr, the managing director of Carr’s pasties in Bolton, that when VAT was introduced on food in 1980, it was a total mess? It meant, for example, that biscuits were deemed a luxury although cream cakes were not. Will not this change in VAT create an even bigger mess? Is it not a ridiculous measure to have introduced?
Cathy Jamieson
I thank my hon. Friend for that intervention. I want to give plenty of opportunity for Back Benchers to contribute to the debate. It is not just a debate about pasties; it is also about caravans. I know that many Members will wish to speak on that issue because of its importance for their local industries. [Interruption.] I would be happy to take an intervention from Ministers or from one of those senior Tory MPs quoted as having met the Chancellor today to lobby on the issue of caravans. Does anyone want to give us an update on that? No, I see no takers at the moment. Perhaps we will hear about it later. [Interruption.]
The Temporary Chair (Sir Roger Gale)
Order. I am sorry to interrupt the hon. Lady again. The hon. Lady must be heard, and she really should not have to shout from the Dispatch Box to put her message across. Many Members on both sides of the Committee want to participate in the debate. Whether or not they are called will depend to some extent on their behaviour in the Chamber, and it will also depend on the amount of time available to us.
Cathy Jamieson
Thank you, Sir Roger. I will do my best to bring my remarks to a speedy conclusion so that others can contribute.
Let me briefly mention other issues. I have already mentioned caravans, but building work on churches is also important, and I know that some colleagues will speak about it later. One other area, if I can be pardoned a very bad pun, not yet highlighted in the headlines is the whole issue of hairdressers’ chairs. I mention it simply because the Government’s proposal shows once again a lack of understanding of the operation of many small businesses.
People and women—and it is often young women—starting out on their hairdressing careers, perhaps on their first business opportunity, often rent a chair in a larger salon. I see some nods of agreement from Government Members. It is welcome if some of them understand the issue, but it does nothing at all to help those people setting out on their first business venture if they suddenly find that they are going to have to pay more costs. The National Hairdressers Federation has highlighted further anomalies. Conservative Members might not be aware of it, but it is common practice in hairdressers’ businesses to rent out space not only to other hairdressers, but to others in the beauty and therapy professions. The anomalies highlighted by the NHF are made worse by the Government’s proposals.
David Morris (Morecambe and Lunesdale) (Con)
I can tell the hon. Lady of a loophole that has needed closing for many years. Although it is possible to rent a chair in the hairdressing industry, the problem has been that VAT is levied on the premises. I think it is right to place it on the individual because these people operate individually.
Cathy Jamieson
I am slightly surprised to hear that from the hon. Gentleman. All I wanted to do in raising this particular issue was to make the Government recognise that the consultation, which has been brought forward, amounted to too little, too late, and that it would have been far better if it had been done earlier.
Back Benchers want to contribute, so I shall close in order to give them the opportunity to speak. It would be useful, however, if some Conservative Members were able to give us an update on the meeting apparently taking place today. Will there be a change of position? Will the Government withdraw, particularly from the caravan tax, but also from the other ill-thought-out taxes? Once again, I see no one seeking to intervene on this particular point, so I shall finish and allow others to raise further issues.
Peter Aldous (Waveney) (Con)
I am grateful to be called to speak. I shall restrict my comments to new clause 6 and the proposed application of VAT to the sale of static holiday caravans from 1 October. My interest is a constituency one, as I fear that the impact of the measure will be far greater than HMRC has estimated.
I have received representations and expressions of interest from a variety of parties. These include Hoseasons, one of the largest holiday providers in the UK, which is based in Lowestoft in my constituency; and five park operators, including the chairman of my own constituency Conservative association, who has herself written to the Treasury and a number of other Members. Small and medium-sized enterprises, including painters and decorators, and a bank are also concerned about the impact of the proposal on business viability.
Let me make three observations. First, I fear that HMRC’s assessment of the impact of the change takes full account of neither the whole supply chain serving the industry, nor the fact that the industry is concentrated in specific geographical areas that will be hit very hard. Some of those areas are pockets of deprivation and unemployment, and many are coastal communities such as my constituency, where tourism is a vital component of the local economy.
The supply chain includes manufacturers who are located almost exclusively in the UK—mainly in the Humberside area—wholesalers, and park operators. In recent years, the sale of static caravans has become a vital part of park operators’ businesses. Without such sales the future of some businesses will be at best uncertain, while others will cut both staff and the reinvestment in facilities that is so important if they are to continue to attract customers and ensure their own financial viability. Trading conditions have been very difficult for those operators in recent years, and the introduction of the new tax on 1 October, following so soon after the imposition of VAT on pitch fees, rates, and water and sewerage bills on 1 January, would contribute to a double whammy.
I am especially concerned about the fact that HMRC’s assessment takes no account of the numerous SMEs that work in the parks. There are builders, decorators, plumbers, electricians, people who fit carpets and curtains, and people who service plant and equipment. We should also bear in mind that many of those who work in the parks—admittedly on a seasonal basis—are young people gaining their first experience of work. An unintended consequence of the measure could, in some cases, be the removal of that vital first rung on the employment ladder.
Mr Gauke
My hon. Friend continues to make his case very strongly. We are, of course, listening to the arguments, but we think it right to have a VAT system that deals with some of the anomalies, and that is why we have finally addressed some of the problems that have remained in our VAT system for too long.
Cathy Jamieson
At the outset of this debate there was a bit of laughing and joking, but the tone quickly changed as people realised the seriousness of the issues under discussion. The Minister’s contribution reminded me of the well-known phrase, “When you’re in a hole, you’d better stop digging”—particularly when Members on the Government Benches are looking so miserable.
I hope the Minister has listened to what has been said. In order to be helpful—and recognising that it was, perhaps, lack of attention to detail and unintended consequences, rather than malevolence, that prompted the Government to introduce these proposals, which would affect jobs and the economy—I beg to ask leave to withdraw the clause, but I shall press other new clauses in this group to a Division.
Clause, by leave, withdrawn.
Mr MacNeil
The hon. Gentleman makes a good point. I hope he will join me in the Lobby, because if it is good enough for Scotland, surely it is good enough for Kent. We are happy enough for it to be devolved to Kent if it wants it. We are not the type of people to want a power for ourselves that we would deny to others. We are not the type of people who would give it to Northern Ireland but not to Scotland.
The amendment is straight and to the point. It would allow the Scottish Parliament to set APD rates for Scotland. By passing it, under the rules in the Scotland Act 1998, the Treasury would redirect those specific funds to the Scottish consolidated fund instead of to a UK consolidated fund. With this economic lever, we in Scotland would have the ability to set our own rates, although owing to legal reasons we could not increase them—but frankly why would we? Higher rates of such taxes and the punitive fuel duty can only increase inflation and reduce productivity.
The evidence is growing in our favour. My office has discovered that Scotland has been getting the short end of the stick on non-EU flights. According to the Department for Transport, Scotland has only four non-EU direct routes—air routes that fly in and out of Scotland to a non-EU country. Let us compare that with our Celtic and Scandinavian neighbours. Norway and Ireland are connected to key emerging economies such as Russia, and Denmark is connected not only to Russia but to China, Japan and 24 other non-EU countries. Norway has connections with about 15 non-EU destinations, and Ireland with about 10, while Scotland is trailing with four. It is remarkable, given all this, that Edinburgh is such a successful financial centre. Arguably, Scotland was comparatively better connected in the days of the Icelandic sagas than it is now, with the Westminster Government controlling APD.
The UK Government are responsible for the negotiation of air routes with other countries. In short, Governments agree to routes in international air agreements and later decide where the routes go. In that capacity, the Westminster Government have failed Scottish airports. For more than 65 years, Governments have argued for more and more routes to the south-east of the UK, with only a handful making the road north of the M25. Devolving APD would take the pressure off Heathrow, with the calls for a third runway. Given that Monday is St George’s day, this measure would be almost a St George’s day gift from the SNP to the people of the south-east of England.
Cathy Jamieson
Before the hon. Gentleman moves on to other things, I wonder whether he might say a bit more about the relationship with his Celtic friends, as several amendments in this group affect Wales. Would it not make sense to look at the issue when the Silk commission reports, given that it is looking at a range of fiscal issues concerning Wales?
Mr MacNeil
I am glad that the hon. Lady seems to support devolving air passenger duty to Wales. Perhaps that could be extended to Scotland as well.
Without the ability to negotiate our own air routes, we therefore need other economic levers to attract businesses and travellers to Scotland. The current situation forces business and travellers to commute to Scotland via one of the most congested air hubs in the world. The south-east can absorb the impact of an 8% increase in air passenger duty. With the countless flights that go through London everyday, it would take a very severe drop in tourism indeed to affect travel through London. However, given that Scotland has already seen a serious decline in air routes—from BMI pulling out of Glasgow, as well as Ryanair—we have to think about the impact that the APD rise will have on us.
Mr MacNeil
I am sorry, but given the time I will take no further interventions.
Three airports support the devolution of air passenger duty, as do the chambers of commerce. They want it to be independently controlled in Scotland. They will be frustrated by what the House of Commons in London will probably do this evening, when I press amendment 61 to a vote. Frustration is a negative, but in my view this will have a positive outcome. Members who cannot yet understand the rising support for Scottish independence can surely see that those who are frustrated about APD this evening will begin to see a better way of dealing with the allied intransigence from London, on this and other matters, large and small. That will be one of the many reasons why people will vote for Scottish independence in 2014—to move the Scottish economy and Scottish connectivity forward.
I only hope that I have aided Members in understanding that this is not an SNP call: we are only a vehicle for the community of Scotland, along with the three airports and the chambers of commerce, in improving industry and creating better chances for families. The amendments in my name and those of my hon. Friends therefore seek to stop the increase in APD and to continue the pattern of devolving things to the Scottish Parliament, which is a more sensible locus for controlling air passenger duty.
Cathy Jamieson
I shall keep my remarks brief in order to give other Members an opportunity to speak. I have listened to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) and, as I said in an intervention, it is important that we should have an opportunity to look at this matter in the round. Given that a recent review of air passenger duty resulted in no changes being made, I hope that the Minister will take this opportunity to consider taking a further look.
Phil Wilson
I have a small airport, Durham Tees Valley airport, in my constituency. The problem with air passenger duty relates to regional airports, and I believe that we need a UK solution, rather than a Scottish solution or a Welsh solution. There are specific reasons for the arrangements in Northern Ireland. We need a duty that reflects the needs of the regional airports outside the south-east of England.
Cathy Jamieson
That is exactly the point that I was going to make. I understand the strength of feeling in Scotland on this matter. I also understand the situation in Wales. I understand why people want to grow the economy there, and I could talk about a whole range of issues relating to that. I shall resist the temptation, however, and stick to the matter in hand.
The workings of the Silk commission could provide an opportunity to look at this matter. There are also opportunities to do so in Scotland. The Labour party there has said that it is not against the notion of further devolution in principle, but it would have to be done for common-sense reasons and at the right time. My hon. Friend the Member for Sedgefield (Phil Wilson) has just made a sensible point. Every part of the UK arguing for its own small bit of devolution would not provide a joined-up solution or a common-sense approach to growing the economy; it would be unhelpful.
Will the Minister tell us whether, having listened to the debate tonight, she is minded to look again at the matter, given that the review produced no change? Perhaps she could look into the matter, taking into account the points that have been raised not only about Scotland and Wales—vital though they are—but about other parts of England.
Miss Smith
My hon. Friend makes a fine point, and I acknowledge it in what I am saying about the regional aspects of the debate and the necessity of aviation in many different parts of the United Kingdom.
Cathy Jamieson
Briefly, I heard what the Minister said about looking again at the whole issue of devolution. Does she accept that there is also a need to look at aviation taxation generally in the round? Does she have any plans to do that, as well as looking further at the question of devolution?
Miss Smith
In brief, all taxation is, of course, kept under review. If the hon. Lady will allow me, I will proceed and I shall endeavour to answer her other points in doing so. My main point about the potential devolution of APD is focused on the wider-ranging impact such a move might have across the whole of the UK economy. We should not run the risk of replicating the same problems that Northern Ireland has faced with its land border and lower taxes in the Republic.
Let me reiterate here today the Government’s determination to examine the full range of effects that the devolution of APD could have on Scotland, Wales and the UK as a whole before any final decision is taken. As I think the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) knows, this sits in context with a number of other pieces of work that the Government are doing on aviation.
Let me briefly deal with the issue of rates, which the lead amendment is designed to alter. Hon. Members will know that the Government were able to freeze APD for a year in March 2011. At the high cost to the Exchequer of £140 million, I think people will appreciate that this was not easy. Looking to the future, if we are to stay on course with our deficit reduction plans, it is necessary for APD rates to rise. The fact of the matter is that, over the two years 2011-12 and 2012-13, the increase in APD rates equates to a rise of no more than inflation. Indeed, most passengers will pay only £1 more on their flights. That increase is necessary. To provide greater certainty, we have also set out in this Budget the APD rates for two years up to 2013-14.
Let me move on briefly to other issues in the amendments. As I said earlier, passengers on business jet flights currently do not pay APD, whereas ordinary passengers aboard commercial flights do. We have recognised that anomaly, and are introducing fair changes to include business jet flights for the first time.
I have touched briefly on the changes that we are making in relation to Northern Ireland. I think that they have been welcomed by Northern Ireland Members here tonight, and by others outside the House.
The Government have listened, and have taken on board many of the concerns that were expressed during the recent consultation. I believe that we are striking the right balance—