Bankers’ Bonuses and the Banking Industry
Debate between Cathy Jamieson and Andrew Gwynne(9 years, 9 months ago)
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Cathy Jamieson
I will always give credit where it is due, but we also have to look at what has happened on this Government’s watch. As the hon. Gentleman knows, what we have seen with HSBC over the past few weeks shows that it can take a considerable time for some of those issues to come to light and be dealt with. The important point is to have a regulatory environment in place that allows those issues to be dealt with quickly, rather than just put to one side. We also need a change in culture to ensure that those things do not happen again.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is making a very important point. She will remember that after the LIBOR scandal the Parliamentary Commission on Banking Standards set out a programme of reform for the banking sector. Is she as concerned as I am that those reforms have not gone nearly far enough in their implementation? We need a proper investment bank and proper competition in banking, and we must also ensure lending to businesses.
Cathy Jamieson
My hon. Friend makes a useful point. I am confident that he has read the paper we published on that, which highlights the need to ensure that finance gets to small and medium-sized enterprises, in particular, and the important role that a proper British investment bank can play.
Earlier this month we saw a new and startling example of impropriety, with the allegations that HSBC’s Swiss subsidiary actively advised customers on how to avoid, and indeed evade, tax. I want to emphasis again that all those activities are symptoms of a wider culture that has seeped from investment to retail banking. That culture has been characterised by short-termism and the pursuit of profit at the expense of all else—in many cases, at the expense of the banks’ own customers and the wider economy. That culture led to banks exploiting their consumers and ripping off the taxpayer.
That culture has also caused banks to lose sight of what should be their core function. The role of our high street banks is, or should be, twofold: they must serve the needs of consumers, providing basic borrowing and saving facilities and loans for mortgages to buy homes; and they must provide finance to businesses, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) suggested, enabling them to start up, grow and create well-paid and secure jobs. However, lending to business has fallen by over £55 billion since 2010, despite an array of Government schemes, such as Project Merlin and the funding for lending scheme, all of which have to varying degrees failed to deliver. Despite that, however, and despite all the scandals, the banks have continued to pay lavish bonuses to a small cohort of senior employees.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
Debate between Cathy Jamieson and Andrew Gwynne(11 years, 3 months ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
It is a pleasure to have the opportunity to make a short contribution to this afternoon’s important debate. I follow what I thought was an excellent speech from the shadow Leader of the House, who laid out for us all and on behalf of many of our constituents the very real concerns that exist over this Bill. Her speech was followed, of course, by another excellent one by my hon. Friend the Member for Nottingham North (Mr Allen), the Chairman of the Political and Constitutional Reform Select Committee.
What we have heard subsequently, from both Opposition and Government Members, is a whole series of reasons why this Bill should not proceed at this time. We have heard how it would have been possible to garner some consensus and some support to deal with the real issues around lobbying. The constituents who contacted me—not those who could be described as “the usual suspects” or people, as my hon. Friend the Member for Wansbeck (Ian Lavery) mentioned, seeking a revolution—are simply people who are seeking transparency, who want a Bill to deal with some of the “dodgy dealings” they perceive to have gone on in the past and who want to ensure that politics is cleaned up and the lobbying industry held to account. Those are the terms in which my constituents contacted me.
It is interesting to note the number of constituents who contacted me who are involved in small voluntary organisations and small charities in local communities. They, as well as a number of trade union members, are genuinely worried about the implications of this Bill. My constituents want to see a proper register, but they do not like any suggestion that perfectly legitimate organisations putting forward points of view to try to make a case to change things in their communities or to change legislation should in any way be gagged. I heard the hon. Member for Stevenage (Stephen McPartland) suggest that the Bill was not about gagging. I would respectfully suggest to him, however, that if we have a coalition—if I may use that word—of organisations ranging from the trade unions through the legal sector, the Electoral Commission, the voluntary sector, charities and political commentators of all shapes, colours and sizes, all of which are in agreement about the problems with this Bill, it is indeed time to take notice.
With my background in the voluntary sector and my working for a Scotland-wide organisation before I became a Member of the Scottish Parliament back in 1999, I have some concerns to express. I would not have been able effectively to do my job campaigning on behalf of young people in the care system had I not been able to approach the various Ministers of the day and the various local authorities of the day to make my case. Indeed, it was my responsibility so to do.
One real concern emerging from today’s debate is that at a time when charities and the voluntary sector are already feeling under pressure because of cuts in funding and are already finding it difficult in some instances to speak out for fear of somehow prejudicing future funding or opportunities to gain funding or support from government, any suggestion that they might be stopped in doing their job is a worrying matter for them, as indeed it should be.
In common with others, I have some serious concerns about how the Bill has been handled. Given that I have had various exchanges across the Chamber with the Parliamentary Secretary, Cabinet Office, the hon. Member for Norwich North (Miss Smith), who I see in her place, I am somewhat surprised about the matter of pre-legislative scrutiny. If ever a Bill were designed for such scrutiny, it would be this one, given the number of different organisations and interests affected. Frankly, it is not good enough to hear Government Members saying, “It will be all right; we will sort it out in Committee” when so many serious concerns have been expressed and so many amendments would be required to make this Bill workable as to make it questionable whether the Bill should proceed to Committee at all.
Andrew Gwynne
The list of organisations that have expressed concerns about the Bill includes the regulator, the Electoral Commission, which has identified a series of controls that are unenforceable. Does that not underline the argument in favour of pre-legislative scrutiny? If the regulator cannot enforce the Bill, what is the point of it?
Cathy Jamieson
My hon. Friend has made an extremely pertinent point. I find it astonishing that the Electoral Commission has not been more involved in the process, and that no evidence was taken from it at an earlier stage with the aim of improving the Bill.
I believe in pre-legislative scrutiny. It has been part and parcel of the way in which the legislation has been dealt with in the Scottish Parliament, and I think that there should be more of it in this Parliament. If pre-legislative scrutiny was good enough for the Bill that became the Small Charitable Donations Act 2012—and I believe that it enabled us to improve that Bill—I cannot see for the life of me why it is not good enough for such an important and wide-ranging Bill as this.
Finance Bill
Debate between Cathy Jamieson and Andrew Gwynne(11 years, 5 months ago)
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Cathy Jamieson
I thank the hon. Gentleman. He and I do not always agree on every matter that is discussed in the Chamber, but on this occasion I accept what he says.
We have heard disagreement on the Government Benches with the point that I was making, but the reality is that as of this April, 13,000 people earning more than £1 million a year are receiving a tax cut equivalent to £100,000. Another 254,000 people earning more than £150,000 a year are also seeing their income tax bills go down. At the same time, if we take into account the changes that the Tory-led Government have made to tax, tax credits and benefits, households in the UK will be an average of £891 a year worse off. That is the reality that people face. As I have said in a number of previous debates, that may not seem a lot of money to the millionaires who are getting a tax cut from the Government, or to those on the highest wages, but it is a lot of money for my constituents and, I am sure, for the constituents of other hon. Members. I see some heads nodding on the Government Benches. It is a huge amount for constituents throughout the country, who are being ruthlessly squeezed to pay for the Chancellor’s economic failure.
Andrew Gwynne (Denton and Reddish) (Lab)
It is indeed a lot of money for many of my constituents and my hon. Friend’s. Is she aware of the figures published by the Institute for Fiscal Studies showing that for a two-earner couple with children, the loss caused by the changes rises to £1,869.09?
Cathy Jamieson
Yes indeed. My hon. Friend makes an important point on which I will comment further in due course.
Cathy Jamieson
My hon. Friend speaks words of wisdom. I have repeatedly said today, and it has been said by others, that while we have accepted that, come 2015 if we are in government, we will have to take as a starting point the overall spending plans that have been laid out, that does not mean that we would have made the same choices or that we would make the same choices in the future.
Andrew Gwynne
I would not expect my hon. Friend to set out our tax policies two years before a general election, but is it not important to emphasise that there is a question of priorities here? The issue is that the Government have chosen to clobber some of the lowest-paid workers in my constituency and in hers with a council tax increase caused by their changes to council tax benefit?
Cathy Jamieson
My hon. Friend speaks with great passion on behalf of his constituents and he is correct to identify the fact that we need, in difficult times, to talk the language of priorities. That is why on previous occasions—from the Dispatch Box and elsewhere—I have asked the Government why they believe that it is fair to give the tax cut to the richest and, on top of that, to give those very same people the winter fuel allowance even if they happen to be pensioner millionaires. To me, that does not seem to be fair and reasonable, and I am sure it does not to my hon. Friend either.
Even where a council tax freeze has been put in place, people are seeing local services that they rely on being cut to the bone. They are not able to access educational opportunities, leisure opportunities, support via social services, library services, the arts and culture. It is all very well having a freeze, but in a range of areas people feel that they are not necessarily getting the services in return.
Andrew Gwynne
My hon. Friend is absolutely right, but the situation is even worse than that for 2.4 million low-paid families, who are losing some, if not all, of their council tax benefit. That is an in-work benefit, paid not just to people who are out of work. Those families will, for the first time, be getting a tax increase, because they will have to pay council tax.
Cathy Jamieson
Once again, my hon. Friend is absolutely right. He is a powerful advocate for his constituents and those on the lowest incomes. He is correct to identify the fact that, despite the rhetoric, the Government have, across the piece, consistently attacked the living standards of those in work and on low incomes. I need only refer again to tax credits, particularly for those working part-time hours. The Government seem to think it fairly straightforward for them simply to get additional hours of work, but we know that in many industries, it is not that easy; it is not possible to get the requisite number of hours. Many people who were, to use the Government’s mantra, doing the right thing—taking up employment, for however few hours and however low the wages, rather than doing nothing or sitting at home on benefits—found their working tax credits cuts. As my hon. Friend correctly says, that was compounded by changes to housing benefit, which mean that many of them are even worse off.
Let us look at the impact. I said that this Government will go down in history as a Government who divided; of the richest who are receiving a tax cut, 85% are estimated to be men, and about 70% of the revenue raised from direct tax and benefit changes will come from women. Some 52% of those benefiting are based in London and the south-east. I do not for a moment mean to suggest that there are not people there on extremely low incomes; of course there are, and many of my hon. Friends will no doubt wish to make that point. However, long-term unemployment, including in the north and Scotland, is on the rise.
Andrew Gwynne
My hon. Friend is being incredibly generous in giving way. She is right to emphasise the impact on low-income families, but the tax changes are also hitting moderate and middle-income families. She will be aware that the measures involve lowering the higher rate tax threshold to £41,450. Why is it that those on the lowest incomes and middle incomes are being clobbered, whereas those on the highest incomes are getting a tax cut?
Cathy Jamieson
Once again, my hon. Friend makes an important point, particularly in relation to many middle-income earners. The issue of the lowering of the threshold at which the higher rate of tax is paid has perhaps not had as much air time as some other topics, or other cuts that the Government are making, but the reality is that it affects many who would not see themselves as particularly well off, who have worked hard over the years and been promoted in a company or in the public sector, and who are trying to do the right thing for their family, and are feeling the squeeze.
To go back to the point about who will suffer most as a result of the Government’s policies, I emphasise that I know that in many places in London and the south-east, employment is not at the level that it is elsewhere, and incomes are being squeezed, but it is interesting to note the geographic spread.
Perhaps we should not be surprised to see the Tories operating in this way. I recall, on first entering this place, attending a debate on cutting and abolishing child trust funds. I was surprised that the Government thought that was the correct thing to do at that stage. They were once again attacking those who were trying to do the right thing and support their children and families. Under their approach, it is women and families— the very people they say they want to protect—who consistently suffer. The rhetoric and the reality are two very different things. We should perhaps not have been surprised by the Government’s proposals. It is an age-old Tory mantra that the poor—those on the lowest incomes—are expected to work harder; otherwise, they will be made poorer. At the same time, the rich will work harder only if we make them richer. In this instance, there seems to be one rule for the very richest and another for everyone else. This is arguably the same old out-of-touch Tories—this time, sadly, aided and abetted by the Liberal Democrats.
I always like to try to end on a positive note, however, and I come back to the point that the new clause is a relatively mild-mannered proposal. It seeks nothing more than that the Government should use their good offices to gather the necessary information to make an assessment of the impact of the changes and to produce a report. That does not seem an unreasonable request. Indeed, when the Exchequer Secretary to the Treasury was in opposition, he regularly requested such reports and no doubt regularly tabled amendments and new clauses to that effect. He is nodding his head. I hope that he will remember those days, and remember why it is so important to have such reports and assessments. I hope that he will show that he is not only a listening Minister but a Minister who is prepared to act, and that he will accept new clause 8.
Finance (No. 2) Bill
Debate between Cathy Jamieson and Andrew Gwynne(11 years, 8 months ago)
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Cathy Jamieson
I want to make a bit more progress. I come back to the point raised by the hon. Member for Tiverton and Honiton about times being hard and the idea that somehow the problem is to clear up the mess left behind, as he described it. People out there in the real world are getting tired of hearing that same old mantra. The Government have responsibility for what is happening now. They have to take responsibility for policy decisions taken in Budgets that impact on the lives of ordinary people.
I go back to the research from the TUC. Some Government Members may look sceptical about it, but I assure them that many ordinary people in my constituency and those of my hon. Friends recognise the value of the work that the TUC and trade unions are doing in standing up for those finding that their individual and collective incomes are being affected.
The TUC research considers the impact of direct and indirect tax changes over the Parliament. It shows that a household with an average weekly income of £195.92, the lowest income band for working people, will gain £1.09 a week—that figure is underlined, so I have not made an error—from the above-inflation rise in the personal allowance by 2015. However, and importantly, the same family will lose £4.26 a week through the increase in VAT, which went up in January 2011, leaving them with a total annual loss of £164.84 as a result of the Government’s tax policy.
Many on the Government Benches may say, “Well, that is not a huge amount.” I repeat what I have said in previous debates: it may not be a huge amount for someone with a decent job and income—I include all of us here in that—but it is a huge amount for those trying to have a reasonable standard of living and ensure that their families have food on the table and that their kids have clothes.
Cathy Jamieson
I hope I am not being churlish in hoping that the hon. Gentleman will understand that most of those independent commentators also point to what is happening to those on the lowest incomes. Opposition Members feel strongly that those people are taking a disproportionate share. It is not a case of, “We’re all in it together.” When ordinary people see millionaires and those on the highest incomes getting a tax break or a tax cut, it seems unfair to them that their wages or incomes are hit hard by the Government’s policies.
Andrew Gwynne
My hon. Friend is absolutely right to call for an assessment of the cost of living. Does she accept, though, that it should not be restricted to the impact of the fiscal changes announced in the Budget but should look more widely at the effect on families of expenses such as increasing fuel prices, increasing transport costs, and interest payments on payday loans?
Finance Bill
Debate between Cathy Jamieson and Andrew Gwynne(12 years, 5 months ago)
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Cathy Jamieson
I thank my right hon. Friend for that intervention, which explains the history extremely well. That is why I have focused so much on reminding us that this is supposed to be about children and doing the right thing by people who have the responsibility for caring for them, whether parents, or grandparents or other family members who may be entitled to claim the benefits. I hope to have enough time to be able to say a few words about that towards the end of my contribution.
The Government did revise the original proposal, but that revision has not gone far enough to deal with the inherent unfairness. The revised proposal will affect about 1.2 million families, of whom it is estimated that some 70%—790,000 couples and 30,000 lone parents in 2013-14—will lose the full amount of their child benefit. A further 330,000 couples and 20,000 lone parents affected by the charge in 2013-14 will lose a proportion of their child benefit. The average loss for those who are going to lose out is estimated at about £1,300 a year. In a previous debate, I highlighted the difficulty for families who are going to lose about £500 a year because of other changes that have been made. That £1,300 is a very significant amount for anyone caring for children in today’s economic climate.
Andrew Gwynne (Denton and Reddish) (Lab)
Of course my hon. Friend is absolutely right about the unfairness of this proposal. We hear statements from the Government about the complexity of the tax system, so does she not find it surprising that they have come up with a proposal that increases complexity in the taxation system, as well as unfairness?
Cathy Jamieson
Again, my hon. Friend makes a valid point, and I shall deal with it in detail in a moment or two. Strangely, given everything else that the Government have supposedly wrapped up to try to make anomalies disappear, we know that sometimes even more anomalies have been created as well as unfairness. In trying to simplify things, they have actually made them more complicated.
In the Committee of the whole House, I raised issues about the principle and about the costs. It is important to have those firmly stated on the record, because the Government have estimated that the additional cost to Her Majesty’s Revenue and Customs over the first five years will between £8 million and £13 million for the computer system—the development and running costs—about £100 million for staff resources and £5 million for customer information. I asked the Minister in that debate for some further information on that. Some further parliamentary questions since then elicited more information, particularly on how much would be spent on marketing the new system. However, having looked at all this again in great detail, I must say that in my opinion and in that of Labour Members, it is not marketing that is needed at this point in time to make a bad policy and an incoherent change to the taxation system palatable to people, but a change of policy to make sure that whatever is done is fair and workable, and will not cause any further problems.
Despite exhortations from Government Members for further changes, those with incomes above £50,000 will have their child benefit withdrawn at 1% for each £100 of income from January 2013. That means that there will be no child benefit entitlement for families where any earner has an income of more than £60,000. As I said in Committee, although the changes that the Government have made are a small step forward, they do not deal with that inherent and fundamental unfairness. That is because they still leave the scenario where a couple with children where one earner is on £60,000 and the other is on £10,000 lose all their benefit, whereas a dual-earner couple on £49,000 each keeps it all. We still do not see how that is fair.
It is not just Labour Members who are saying that there is a problem. Irrespective of someone’s views on whether this is a fair system or whether they support the principle of what the Government are trying to do, which I do not, there remain a number of issues that others have raised. These points will not be new to the Minister, but I am outlining them once again because they have not been adequately addressed during the consideration of the Bill. The most recent information that has come from the Institute of Chartered Accountants in England and Wales makes things clear. It states:
“While this Bill makes some steps in the direction of tax simplification, many of the measures introduce yet more complexity and taken overall the Bill does little to simplify the UK’s complicated tax system. The child benefit reforms…create considerable cost, confusion and complexity.”
It is also concerned about the Bill in general and states that
“the valuable lessons in drafting style produced by the Tax Law Rewrite project have been lost.”
I mentioned that earlier in our consideration of the Bill. As so much of the Bill is made up of complicated schedules and guidance and as it is the longest finance Bill ever, we must question whether we have had the opportunity to carry out all of the scrutiny, even though we did our best in Committee.
People who have to operate the provisions are concerned that they might need to be amended in the light of experience to ensure that they all work properly together and do not end up having further unintended consequences. Essentially, we are using the amendments to ask for clause 8 and schedule 1 to be withdrawn because we believe that the changes are flawed and unfair. That has also been pointed out by the ICAEW, which was straightforward and blunt in its language, stating that there could be a “reputational and operational disaster” for the Government and for HMRC. Those criticisms were largely reported and we have had the opportunity to listen to them in our debates.
We share the ICAEW’s disappointment that the Government have not tabled more workable proposals in time for our final consideration of the Bill. I would hope that even at this stage the Government will at least be able to give us some answers to the criticisms that have been raised or to accept that their plan is not only unfair but risks being unworkable.
The criticisms highlight the fact that
“the phased withdrawal for those earning between £50-60,0000 will be difficult to implement, open to error and potentially costly for HMRC to administer and for taxpayers to comply with.”
As those critics have said:
“The trouble is that an income tax system based on taxation of individuals, does not work properly if it has to cope with benefits that apply to a household”
such as tax credits
“or potentially to another person”
such as child benefit. The real concern is that:
“The phased withdrawal will not work well with the PAYE system.”
A considerable amount of concern has been expressed that the
“‘sliding scale’ approach to tapering down the benefit makes the system much more complicated.”
It has been described as “perverse” that such an approach is being removed for higher personal tax allowances for those aged over 65 on the grounds that this will help to simplify the system at the same time as a form of it is being re-introduced for the withdrawal of child benefit. That does not seem to be a consistent policy approach.
A further criticism is that the implementation timing is odd, with a start date of January 2013 that does not align with the start of the income tax year on 6 April. Concern has been raised that that
“could trigger many unexpected tax bills at the end of the tax year, as many more taxpayers will be brought into self-assessment.”
I do not think that the public have yet caught up with what they will be required to do.
The system is also
“unlikely to cope efficiently if families change or break up”
and we had a considerable amount of discussion on that question during the previous debate. As we all know, family formations change over time. Couples form, the people involved might have children from previous relationships and so on. There is real concern that
“The confusion caused by the new system could hit tax compliance, and undermine confidence in the tax system at a time when the employers are also having to implement the Real Time Information scheme for PAYE.”
On top of the criticisms set out by the ICAEW, the Chartered Institute of Taxation has raised a number of concerns. I hope that the Minister will be able to give an answer to some of these points about the complexity of the scheme. The institute’s concern is that
“ a high degree of complexity—for both HMRC and taxpayers—into what has hitherto been a straightforward benefit with practically universal take-up”
is now being introduced. It also believes:
“If the legislation is to be implemented, there are many issues that need to be resolved”
and that that should happen well before the new charges go live. Given the timing of the implementation of these provisions, there is not a huge amount of time to sort out any of the anomalies. I hope that the Minister can say something on that point. [Interruption.] I heard someone say “six months”. If it is believed that all this can be sorted out in that time, I would like to hear it from the Minister, because many of us have experienced cases where, with the best of intentions, and with support on all sides, fairly complicated systems—new computer programmes and so on—let alone systems of this complexity, have not worked.