Finance (No. 2) Bill

Charlie Elphicke Excerpts

Tuesday 1st April 2014 Commons Chamber

[Danny Alexander]

The measures that my right hon. Friend the Schools Minister has introduced are not actually in the Finance Bill, and I hope that their impact will not be seismic in the literal sense, but I agree with my hon. Friend that they will make a serious difference to schools in his area and in other historically underfunded areas of England that have been campaigning for a long time for a fairer level of funding in their schools. I am glad to hear that my hon. Friend welcomes those measures.

[Charlie Elphicke (Dover) (Con)]

Are not the most important aspects of the Bill the things that it will do for the least well-off? The previous Government abolished the 10p tax rate, resulting in the least well-off paying higher taxes. Is it not right that this Government are helping those people?

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[Danny Alexander]

I am grateful to my hon. Friend for his comments, and he is absolutely right. The tax system we inherited was, as with so many other parts of the previous Government’s economic strategy, full of holes and leaking revenues all over the place. The Labour party had spent all its time on a prawn cocktail offensive in the City, sucking up to the banks, rather than concentrating on making sure that everyone in this country paid the proper amount of tax. As a result of action we are taking, we are raising—so far—an extra £60 billion in this Parliament, and before the election we expect tens of billions more to be raised in revenue that would not have been raised had we accepted the Swiss cheese that Labour left us.

[Charlie Elphicke]

May I support my right hon. Friend in taking no lessons from the Labour party, which, when in government, was too often the tax avoider’s friend? It allowed a culture of industrial-scale tax avoidance to come into existence, and tax revenues were depleted by its neglect of the system.

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[Chris Leslie]

I love it when Liberal Democrats start talking about VAT. Of course, the hon. Gentleman promised to oppose the VAT bombshell, and my hon. Friends will remember the picture. I do not know whether he was driving the van that went round Parliament square at the time; perhaps the Chief Secretary was in the driving seat. Yet the hon. Gentleman has the temerity to ask what our position is on VAT. I cannot promise to get rid of the VAT increase that they have put in place, contrary to the manifesto on which he stood—yet another Liberal Democrat broken promise. When Labour makes promises in our manifesto at the next general election, we will make sure that they are fully funded and that the sums add up. If we do make promises, everybody will be clear where the money will come from—[Laughter.] Government Members do not like that idea, because it is so foreign to them. They are so used to making promises that they do not recognise the concept of trying to be honest and straight with the electorate.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Chris Leslie]

I will give way to the hon. Gentleman in a moment, but I ask him to bear it in mind that it is important to be open with his constituents about the full picture of what has been happening with tax and benefit changes. He needs to answer a question prompted by the independent Institute for Fiscal Studies, which has calculated the impact of all the tax and benefit changes since 2010 on his constituents. Its conclusion is that the typical household is £900 worse off after those tax rises and cuts to benefits and tax credits. Does he disagree with the analysis of the independent IFS?

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[Charlie Elphicke]

The hon. Gentleman says that his pledges will be fully funded come the manifesto, but does he not accept that the fact that the Opposition have so far spent the bankers bonus tax more than 10 times does not give this House or the people of this country much confidence that they will be able to add up when we get to manifesto time?

[Chris Leslie]

I shall have to send some details to the hon. Gentleman, because he is obviously not fully aware of the situation. I would never accuse him of misleading the House, as that would be unparliamentary, but perhaps he is unintentionally giving an impression that is not correct. We have said that we would repeat the bank bonus tax, which was very successful in 2009 and raised a significant amount of money, and spend it on starter jobs for the long-term unemployed. He should know about long-term youth unemployment because in Dover it has rocketed since he was elected.

[Chris Leslie]

I am grateful to my hon. Friend for addressing that point. Yes, such transparency would help a great deal. Let us elevate the level of public debate and allow an independent assessment of those policy costings. The public can then decide for themselves and make a judgment about the relative merits of the various policies in the manifestos of the major political parties. I know that in his heart the Chief Secretary to the Treasury agrees. I know that he realises that the Chancellor is standing in the way because the Chancellor wants to run the general election campaign by means of smears and falsehoods, giving a false impression of the policies of the other political parties. We must grow up and raise the standard of debate. Let the OBR be the judge of these things. Ministers can talk among themselves and perhaps negotiate concessions so that when we come to the Committee stage of the Bill, we may be able to reach cross-party agreement on that point.

[Charlie Elphicke]

rose—

[Chris Leslie]

I forgot to give way to the hon. Gentleman. Long-term youth unemployment has gone up in Dover by 125% since he has been its Member of Parliament.

[Charlie Elphicke]

Long-term youth unemployment did go up in my constituency by 300%, and in the hon. Gentleman’s constituency by 400%—in the previous Parliament. Will he welcome the fact that long-term youth unemployment in my constituency has fallen by 22% in the past year and in his constituency by 15%?

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[The Exchequer Secretary to the Treasury (Mr David Gauke)]

indicated dissent.

[Charlie Elphicke]

rose—

[Chris Leslie]

No, nothing is forthcoming. Perhaps the hon. Member for Dover (Charlie Elphicke) can help us on that.

[Charlie Elphicke]

The hon. Gentleman referred to the article in The Daily Telegraph but did not explain it fully to the House. It shows that the Chancellor is keen to see foreign banks paying a fair share of the levy. It is not about letting off the major clearers; it is about ensuring that all banks in the UK pay a fair share. Surely that is right.

[Chris Leslie]

That is a very interesting explanation. There is a shift in policy, which is to let certain banks off the hook when it comes to the bank levy. Perhaps the hon. Gentleman is right and that is a strategy. I have given the Minister an opportunity to explain what exactly the Government’s plan is, but he will not put it on the record. We will have to explore that in more depth in Committee.

While we are on the financial services sector, let us look at what the Government are doing in clause 107, which relates to stamp duty reserve tax. My hon. Friends might begin to wonder what that is all about, especially when we say that it is known as the schedule 19 charge, which refers to the 1999 Finance Bill. Many people think, “Oh well, we’ll see what comes of these taxes.” But the schedule 19 charge, set out in clause 107 of this Bill, seeks—this is the priority of these Conservative and crypto-Conservative Members—to give a tax cut of £145 million to the investment management industry by abolishing stamp duty reserve tax. At the same time, my hon. Friends’ constituents are having to cope with the bedroom tax, extra council tax charges and the VAT increase. Despite the hardships they are facing, the priority of the Chief Secretary and the Exchequer Secretary is to give away £145 million by abolishing stamp duty reserve tax. I know that they have been lobbied heavily on that.

We will oppose that change, because we think that the Government should be using that resource to help scrap the bedroom tax, if indeed it is raising any money—I have my doubts about that. The National Housing Federation states that it might well be costing more than the Government planned. We certainly should not be giving away that money, especially at a time when the investment management industry, which holds £5.4 trillion in collective funds, increased its holdings by about 7% in 2013. I do not think that £145 million is an unreasonable sum to ask from a sector that has been doing very well in recent years. We should be making sure that we pursue a fair policy and so will oppose that clause.

We then come to the Bill’s tax avoidance measures. We know that the Government have a bad record on that—[Interruption.] Well, they do. The oh-so-successful Exchequer Secretary, who cannot even manage to get the amounts of money he promised from the banks, cannot manage to get from the Swiss the £5 billion he promises through the Swiss tax deal. The Chief Secretary stood up a moment ago and said that he would get only £1.7 billion. We had a deal with the Liechtenstein Government, which we projected would bring in £2 billion; in fact, it has brought in £2.5 billion. When we have tax deals with tax havens, they work. However, when the Exchequer Secretary gets his fingers on these things, it is amazing how it all goes wrong—it is his reverse Midas touch.

The Government have fallen into bad habits in pencilling into the Red Book projections of revenues from the avoidance measures that involve what the OBR calls particularly uncertain assumptions. The Government are, of course, quick to spend the projected money; Paul Johnson from the Institute for Fiscal Studies calls such moves the Chancellor’s manoeuvres, always relying on revenues that are by nature uncertain. It is important that we scrutinise whether the supposed tax avoidance deals will deliver what the Government say.

Rather than the measures in the Bill, we need action to deliver starter jobs, guaranteed for the long-term unemployed. The number of young people out of work for a year or more has doubled and we need compulsory starter jobs for those who have suffered unemployment, which is a scourge not just on society but on their career prospects. We need action on child care. Free child care should be extended from 15 to 25 hours, paid for through a proper collection of the bank levy.

We need a help to build scheme to counter-balance the Help to Buy scheme. There is a serious risk—as the Chief Secretary knows, even the Governor of the Bank of England has concerns about these things—of a lop-sided recovery unless we match the boosting of demand with the boosting of supply. A help to build scheme particularly focused on ensuring that small and medium-sized construction companies can do better is one way to make a big difference.

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[Charlie Elphicke (Dover) (Con)]

It is a real pleasure, as always, to follow the hon. Member for Bolton West (Julie Hilling). Listening to her speech, and indeed that of the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), I was reminded, given recent events in Ukraine, of the charge of the Light Brigade in the first Crimean war, which we fought some years ago. They were very game, very determined and, in complete denial of the situation in which they found themselves, carried on regardless. It was fascinating to listen to the shadow Chief Secretary’s amazing negativity about the changes the Government have made. The Government have turned around the very difficult situation that they inherited.

The hon. Member for Bolton West seems to have a somewhat short memory, to put it gently. She was quick to blame the problems on everyone else, but slow to acknowledge any responsibility on the part of the previous Government. It is important to remember that there were problems in the UK’s banks due to the extremely poor and dislocated regulatory system put in place by the previous Prime Minister. There were problems with this country’s finances, and not just since the 2008 recession, because the previous Government ran a structural deficit from 2002 onwards, which left this country massively exposed. They said that they managed the crisis so well, but the UK, as some of us recall, had one of the largest budget deficits in the developed world. They spent the good years introducing more welfare and more spending, rather than controlling welfare and spending and making sure the UK’s finances were in a good state while the sun shone.

[Mr Kevan Jones]

The hon. Gentleman, who was not a Member in the House at that time, belongs to a party that throughout that whole period was calling for less banking regulation, not more. I know that he is one of the new Members who have been programmed to think that way by Tory central office, but the facts are that the GDP debt in 1997 was 42% and by 2008 it was down to 35%. Those are the facts, irrespective of what Tory central office tells him. He cannot deny the facts.

[Charlie Elphicke]

The hon. Gentleman knows perfectly well that his Government ran a budget deficit for a very long time. Running a budget deficit is understandable when coming out of recession, but not in a time of economic success. The previous Labour Government’s irresponsibility left this country badly exposed.

[Mr Jones]

I am sorry, but the hon. Gentleman must look at history. The previous Conservative Government ran a budget deficit for about 16 of their 18 years in office. In 1997 the deficit was nearly 8%. He has to look at the facts. The previous Tory Government ran a deficit even in good times.

[Charlie Elphicke]

Let us talk about those good times. Before the downturn in the ’90s, the national debt was at least 10 points lower than before the latest crisis.

[Jacob Rees-Mogg]

Surely the hon. Member for North Durham (Mr Jones) is forgetting that the success of the Labour party in the first two years came because it followed Conservative spending plans.

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[Charlie Elphicke]

Indeed.

There was Labour’s crash. We hit the wall in 2008 and were left overexposed in a bad place with an economy that had been run very badly for a long time. Then the Labour party has the cheek—

[Mr Kevan Jones]

rose—

[Charlie Elphicke]

I have given way quite a lot. I think we have heard enough from the hon. Gentleman for a minute. Will he allow me to develop my points?

The Labour party, having learned nothing and forgotten nothing, has the gall to say that when we woke up in spring 2010, with a new Government, everything should immediately have been fine. Recessions are not like that; they continue for some time. It takes time to fix the car after it has been driven into the ditch. The absence of any sense of responsibility from the Labour party for the difficulties that it left and the toxic legacy that the Government inherited is, frankly, extraordinary. Government Ministers have done great work to turn things around and fix things. We cannot hand back the keys to the people who crashed the car when they remain in denial as the Labour party does today.

[David Rutley]

Was not the real crime of the previous Government that they became completely absorbed in what Lord Turnbull—not Conservative central office—said was complete wishful thinking? Through successive periods of economic growth, the Labour Government lost sight of the fact that there would inevitably be a bust after a boom, and that they would have to prepare for it. They missed that obvious challenge, and we are having to clean up the mess.

[Charlie Elphicke]

The Labour Government were delusional. I recall them saying for a long time that they had abolished boom and bust. It is great shame that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister, is seen so rarely in these parts these days; it would be interesting to hear his take.

[Dr Thérèse Coffey]

Where is he?

[Charlie Elphicke]

Since he was bundled out of Downing street, he has been in the attic of Portcullis House but has been in the Chamber very rarely indeed. That is a shame.

One might think that the Labour party, having had four years to reflect, might not only accept full responsibility but try to develop its own economic plan. Saying how dreadful everything is but having no plan to take things forward is no plan to take to the country in a general election.

As I listened to the comments of the shadow Chief Secretary to the Treasury, a question struck me: what does the Labour party have to say to the person who worries about their job, wants their business to succeed and would like their kids to do well? The party is adopting policies that are so anti-business and so unimaginative about any kind of job creation—other than spending the same money 10 times over and claiming that as a new pledge. It has so little to say to the country and about the future; all it can do is sink into a sea of negativity.

[Julie Hilling]

This is the sort of speech that raises my blood pressure. Where does the hon. Gentleman believe the recession started? Does he agree that the global economic crash started in America? Does he accept that his party in opposition argued for less financial regulation? What would he have done when the crash came—let the banks go and leave everything else to go into a depression?

[Charlie Elphicke]

I apologise to the hon. Lady if I have raised her blood pressure. In England, the NHS will look after her very well; it has an increasingly good record.

I turn to where the Labour party has managed to get to. We have set out a clear economic plan, through which we have successfully cut the deficit by a third and cut taxes on average by £705 for hard-working people. We have managed to support business and cut business taxes, which the anti-business Labour party has taken to opposing of late. It says it supports the welfare cap, but in media interviews it wants to exempt this and that benefit from it. We have managed to take firm action to control immigration and we have plans for better skills for our young people, to give them a better future.

[Simon Kirby (Brighton, Kemptown) (Con)]

Is it not true that we have not only a plan but a long-term plan that is credible and believable and is beginning to show some success? If Labour Members have a plan, perhaps they might tell us about it.

[Charlie Elphicke]

I completely agree. It is a major problem for Labour Members that they are unable to welcome any positive move. They look around and must surely see that a recovery has been building and the situation is improving, but all they can do is stick their heads in the sand and issue a cry of complete and utter denial.

Some years ago, the Leader of the Opposition said that the Conservative plans would mean the loss of 1 million jobs. Far from that, 30.19 million people are in employment, up by 1.3 million since the election. There are 1.7 million new jobs in business. We have an employment rate that is up since the election and an unemployment rate that is down since the election.

Then Labour Members moved on and sought other ground on which to go around stirring up negativity and spreading apathy, as they do, up and down the land. They thought they might find a more profitable situation in drawing a distinction between full-time and part-time jobs. For a while, as we repaired their damage, that rather seemed to work for them, and they thought there was some profit in it. They glossed over the fact that during the previous Parliament the number of full-time jobs fell by 320,000, because they found that inconvenient and wanted to seize on the problems of people in full-time jobs as the economy recovered. Unfortunately for them, the number of people in full-time employment has been rising. In the past year it increased by 430,000, and there are now more people in full-time employment than there were at the time of the general election. Then, there were 21 million people in full-time employment; today, there are 22.1 million people in full-time employment. This Government have done well not only on jobs but on full-time jobs.

Seeing that that line of attack did not render profit to them, Labour Members then thought they would start talking about long-term unemployment and seize on the long-term unemployment figures for young people, which the hon. Member for Bolton West, who would have made a very good cornet at the charge of the Light Brigade, said were going up. Unfortunately for her, that is not the case. During the previous Parliament they did go up, across the country, by 311%, but in the past year they have gone down by 30%. Their whole theory about long-term unemployment does not work.

I congratulate the hard-working people of Birmingham, Ladywood, who saw their long-term unemployment among young people rise by 103% under the previous Labour Government but have seen it fall by 4% since this Government were elected and by 31% in the past year. In my constituency of Dover, the figure went up by 700% under the previous Labour Government. That was a very sad, despairing thing. So much hope was taken away from so many of the young people I represent. I welcome the fact that the figure has fallen by 22% in the past year.

Bit by bit, the Opposition’s case disintegrates—nowhere more so, hon. Members may be interested to learn, than in the constituency of the Leader of the Opposition, who gave such a fascinating response to the Budget the other day. In his constituency, long-term unemployment among young people rose by 1,600%—not under this Government but under the previous Government in which he served as a Cabinet Minister. Since the general election, that figure has fallen by 9%, and it is down by 31% in the past year alone.

The Opposition have no long-term economic plan, just pure negativity. In each negative case they raise, every figure or statistic they snatch at seems to disintegrate in their hands. They would have better spent their time putting forward a true alternative economic vision for this country than seeking to attack a Government who have been trying to fix the problems that this country has had and repair the toxic legacy that they inherited.

I turn now to the cost of living—after all, that is the latest part of the Opposition’s case. They are keen to point out that wage inflation has not kept up with real prices. That has been the case after every single recession, which is why I made the point that in 2010 we were not simply going to get an immediate, overnight repair after Labour’s crash—it was going to take some time. We now stand on the threshold, as the time is fast approaching when wages are likely to outstrip inflation. We have seen the latest figures: inflation is now at 1.7%, down from 2.8% a year ago. Wages have grown 1.4% in the three months to January when compared with a year ago. The moment is therefore approaching when the cost of living argument will face a challenge of its own. What will the Labour party say then? What case will it take to the country, as people see that the Conservatives’ work to repair the country’s finances and the value of work is taking hold?

Of course, Labour has also latched on to the issue of energy prices, but we have seen the Government’s action to undo the hard work done by the Leader of the Opposition when he was Secretary of State for Energy and Climate Change in putting green levies on to our electricity bills. Those have been rolled back and we have seen a positive impact and a positive announcement from SSE, which has pledged a freeze until 2016. Again, that is positive action from the Government, who understand the challenges that people have faced because of the legacy we were left.

We have seen council tax frozen. We have seen the fuel duty rises planned by the previous Government held back. In this Finance Bill we have seen particular help for the least well-off, with the increased personal allowance. I have long been an advocate for increasing the personal allowance, to take the least well-off out of tax all together. The allowance is rising to £10,500, which is welcome.

It is not just about hard-working people, however. We also need to be concerned about people who are retiring. The work we are seeing on pensions—with a higher flat-rate pension and a move to get people out of the annuity requirement, to give them greater choices about what to do with their hard-earned, hard-saved money—is really attractive as well.

This Finance Bill does a great job in extending the Government’s work on recovery and ensuring that we are set fair for the future. Thankfully, it was not a give away Budget and it is not a give away Finance Bill. It should be, and is, steady as she goes: the work is not yet done. This Government recognise that much has been done but there is much yet to do. This Bill is a key part of the way back for Britain and of the kind of future that we can build, for people who work and for businesses that are growing today, and also for our young people tomorrow.

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[Mr Bain]

I hope that when the hon. Gentleman speaks to his constituents in Redcar, he will remind them of the entirety of the record of the previous Government, who of course oversaw a dramatic decline in pensioner poverty and a huge fall in child poverty. Those policies did work. The inheritance we were left on both counts in 1997 was a disgrace that should have shamed Conservatives who were Members of that Parliament.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Mr Bain]

I cannot resist giving way to the hon. Gentleman.

[Charlie Elphicke]

In fact, in the previous Parliament the relative figures for child poverty rose and the gap between rich and poor rose, but those numbers have reduced since this Government have been in power.

[Mr Bain]

Over the entire period of the Labour Government, pensioner and child poverty were lower than they were in 1997. If the hon. Gentleman examines the records from the Institute for Fiscal Studies, he will see that that is clearly the case.