Leaving the European Union

Debate between Chris Leslie and Geraint Davies

Monday 1st April 2019 Westminster Hall

[Mr Chris Leslie (Nottingham East) (Ind)]

The petition that I particularly wish to address is that signed by over 6 million members of the public, calling on the Government and Members of Parliament to be prepared to revoke article 50 in the face of a Brexit catastrophe and support remaining in the European Union. Over 8.6% of my constituents—some 9,500 people in my constituency—have signed that petition. In December, I and other Members whose constituencies will come back to me—I could name them, but I am trying to think of their constituencies —took a case to the European Court of Justice in Luxembourg. We took a risk and prosecuted the case that, as the United Kingdom, we had the unilateral right to rescind the notification of article 50 if we needed to do so. We took that case despite many people saying that we should not do it, that it was impossible, or that the decision to trigger article 50 was a one-way street.

We expected that once the mythology of Brexit—the unicorns—was held up to the light, and once Members of Parliament and other people looked at this question, we would find ourselves in the situation that we are in this week. We predicted that the concept of a jobs-first Brexit, or a Brexit that promised all of those wonderful things that were on the side of the big red bus, was a mirage that would prove impossible to deliver. There was a notion that Britain could pull up the drawbridge and everything would be fine: that we did not need to worry about our European alliances, or care particularly about the border between the Republic of Ireland and Northern Ireland, because these things could all be ironed out and it would be sorted out. We now know that is not the case.

Many of my constituents, and many hon. Members present, have looked at some of the options that we are debating in the other Chamber today: a customs union, the Norway option, the Canada option, or a supposed managed no deal. They have looked at the evidence, as they should, and have concluded that every single form of Brexit will make our constituents worse off. Therefore, how can I in good conscience say to my constituents, “That’s fine—no problem at all,” especially as they voted for remain? How can I possibly allow that situation to continue without giving them, at the very least, the right to sign it off through a form of final consent? They should have the final say.

I found myself finally having to leave the Labour party because I could no longer continue with the charade that somehow the Labour party was going to eventually get to the position of offering the public a vote. That option has remained on the ballot paper; it looks as though there has been some movement, and many good Labour MPs have been trying their best to get their Front-Bench team to support it. However, that was one of the reasons why I could no longer stay in the Labour party and had to join the Independent Group. Our view is that the public, if they so choose, should have the right to instruct their Government to revoke the article 50 notice and support remaining in the European Union. We are in a difficult set of circumstances, but if we want to truncate them and bring this situation to a conclusion sooner, a referendum is the best way to do so, rather than entering into four, five, six or seven years of long negotiations about our future relationship with the European Union.

[Geraint Davies (Swansea West) (Lab/Co-op)]

The hon. Gentleman may know that I tabled the Terms of Withdrawal from the EU (Referendum) Bill on 6 July 2016, and that my hon. Friend the Member for Hove (Peter Kyle) is putting forward that proposal now. It is taking time, but we are getting there.

[Mr Leslie]

My hon. Friend has been very prescient on this issue. He has been consistent throughout—as have many hon. Members present—and I give him credit for that.

Faced with this petition, which has been signed by 6 million people, it is our duty to ensure that these views are not pigeonholed and sidelined in Westminster Hall, but that they are heard by the Government. It is not just a junior Minister—with respect to the hon. Member for Daventry (Chris Heaton-Harris)—who needs to hear the voices of the people, but the Prime Minister and senior Cabinet Ministers. When we come to the end of this debate, I do not believe we should simply nod through the motion that this Chamber, Westminster Hall, has considered this petition. It is important that we fight for those who have signed it, and take this issue to be considered in the main Chamber of the House of Commons. That is the position that I will be taking today.

European Union (Withdrawal) Bill

Debate between Chris Leslie and Geraint Davies

Committee: 7th sitting: House of Commons
Wednesday 13th December 2017 Commons Chamber

[Mr Leslie]

Let us think about all the important priorities for our constituents, including public service reform and living standards. This is one of the most frustrating things: we are treading water just to keep up what we already have. Indeed, things will not be as good as the arrangements we already have. What annoys me most is when Ministers try to gloss over this and pretend that it is all going to be fine, saying, “There’s no problem here. There’s nothing to see.” Lord Price, who used to be a International Trade Minister, tweeted about the 36 free trade agreements, saying that they were all fine and that:

“All have agreed roll over.”

The current Minister of State at the Department, the Minister for Trade Policy, retweeted that. However, when we ask the Secretary of State whether countries have agreed that they all roll over, we are told, “Well, we haven’t had any objections from them to suggest they might not roll over.” Will they want to renegotiate? We are told, “Well, we haven’t heard from them yet.” This is an incredible example of trying to put the best possible gloss on the situation, and to get past exit day and worry about it all afterwards. The Government will then pretend that everybody knew about this beforehand.

I will finish my remarks now because I want to hear the speech of my hon. Friend the Member for Swansea West (Geraint Davies); we need an assessment of these treaties and of what could be lost; we need an assessment of the risks and of what is at stake; and we need honesty and transparency from Ministers about the consequences. This is not what the public expected when they voted in the referendum, and that is why I urge Members to support new clause 20.

[Geraint Davies]

I shall speak to amendment 352, which seeks to maintain for future trade deals the EU rights and protections that are currently enjoyed in other trade deals. A problem that has already been mentioned is that we are going to move away from the comfort zone of the EU, a massive trading bloc which, on 8 December, agreed the key provisions for a trade deal with Japan that will embrace 30% of global GDP and 600 million people and that has integrated in it the Paris agreement. It does not have investor-state dispute settlement, but it does have various protections. One of my key fears about that particular agreement, which will come into effect in March 2019, is that such agreements take a long time to put together. If we want to come along after the event and say, “Can we join in?” the chances are that the terms will not be as good.

As for our negotiations with other countries, if we exit the EU and expect Chile or Uruguay or some other country to offer us the same trade terms that it has with the EU, which is a much bigger bloc, at a time when we are much weaker, we will be seen among the international trading community as a vulnerable victim of our own self-inflicted harm. They will say, “We will give these terms to the EU, but you are just a small player compared with the critical mass of the EU.” That would undermine not only the financial impact of the terms of trade, but the standards that we currently enjoy.

People will be aware that the REACH arrangements—the registration, evaluation, authorisation and restriction of chemicals—mean that manufacturers in Europe are required to prove that a chemical is safe before it is sold. In America, however, manufacturers can basically sell asbestos and other harmful products, and it is for the United States Environmental Protection Agency to tell them that they cannot. The worry is that our regime and our standards may change as we are thrust into the hands of the United States, and that workers’ rights, human rights and other rights may change due to China.

The Minister will know that the widespread use of hormones in meat production in America is giving rise to premature puberty among children, and that the widespread use of antibiotics is leading to much greater resistance to them. There is also chlorinated chicken, genetically modified food and other things, and we will be under enormous pressure from the United States to accept standards that are below those that we enjoy as a member of the EU. Donald Trump stood up at his inauguration and said that he would protect the American economy from the foreign countries that were taking America’s jobs, and he has already shown in the Bombardier case that he will play tough. The United States is a much bigger player than Britain, and the competition between the EU and the US is a matched fight when it comes to the negotiation of a deal such as the Transatlantic Trade and Investment Partnership. We will be a much smaller player, and we will have left the conditions of the EU.

Ministers currently have quite widespread powers to sign deals. The current International Trade Secretary signed a provisional agreement for the comprehensive economic and trade agreement without parliamentary approval, and we should be drawing such powers in for parliamentary scrutiny, amendment and agreement. There is a risk that a negotiated settlement that reduces the standards that our citizens enjoy will happen outside this place. I therefore tabled amendment 352, which seeks to maintain the same standards, rights and protections that we enjoy in Europe, as protection in case we end up being asked to vote on trade deals that have all sorts of dire consequences beneath the surface for public health, workers’ rights and consumer protection.

European Union (Notification of Withdrawal) Bill

Debate between Chris Leslie and Geraint Davies

Committee: 2nd sitting: House of Commons
Tuesday 7th February 2017 Commons Chamber

[Chris Leslie]

My understanding is that we remain in the European Union until such time as the article 50 two-year period expires, after which, potentially, there is the famous cliff edge.

Now that we have had partial acceptance from the Government that the vote needs to take place in Parliament sufficiently early on the draft arrangements, I hope that Parliament would then have a sufficient period of time to say to Ministers, for example, “We like 90% of the deal that you’ve done, but we’d like you to go back again, within the time that remains, to get a slightly better deal.” This is simply the role that Parliament should have. Taking Parliament out of that process altogether would be a great shame.

[Geraint Davies]

rose—

[Chris Leslie]

I would like to move on because other hon. Members want to get into this discussion.

The wording of new clause 110 is very deliberate in talking about the new relationship as well as a new treaty. It is important that we take the opportunity that the Supreme Court has given us. Not only that, but we should listen to the entreaties of the Prime Minister herself in her own White Paper, where the 12th of her 12 points said that we would not aspire to a cliff edge—that we would try to get a deal. This new clause simply seeks to facilitate, in many ways, the role that Parliament could have in achieving the very thing that the Prime Minister has said that she wants.

I am afraid to say to the Minister that Hobson’s choice, take-it-or-leave-it style votes are not acceptable and not good enough for Parliament. We must have a continued say in this. I urge members of the Committee, across the parties, to consider the role that new clause 110 could play in making the vote meaningful.

Budget Resolutions and Economic Situation

Debate between Chris Leslie and Geraint Davies

Thursday 9th July 2015 Commons Chamber

[Chris Leslie]

I have not read the comments by the former Chancellor, although I keep hearing about them from Members. I will have a good look at them, but it is important that we scrutinise the Government’s record on productivity. Unless we improve productivity in our economy, we will not generate the revenues to deal with the deficit and raise living standards. In 2012 and 2013, our productivity growth was negative, and last year it was just 0.2%. That compares with an average of 2.2% under the Labour Government from 1997 until the global financial crisis hit. It is, therefore, almost beyond belief that on the OBR’s analysis the Budget could lead to lower productivity growth, now estimated to be 0.4% lower than the forecast for next year, 0.2% lower in 2017, 0.1% lower in 2018 and 0.2% lower in 2019—productivity down next year, the year after, the year after that and the year after that.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Is not one of the reasons for that the fact that the Government are creating lots and lots of low-paid jobs and substituting them for high-paid jobs? In particular, there are 800,000 fewer people earning over £20,000 now than there were in 2010. Is that not a catastrophic record of falling productivity? We want to stand up for the middle earners rising, not just the lowest earners.

Finance (No. 2) Bill

Debate between Chris Leslie and Geraint Davies

Wednesday 25th March 2015 Commons Chamber

[Chris Leslie]

My hon. Friend’s point about distributional analysis is a good one. We know that those on lower and middle incomes have been hit particularly hard: people on the lowest incomes do not benefit from many of the changes that the Government have made, and we must consider what data we need.

My point about parliamentary procedure is not just about the political dates of Budgets and so forth; it is also about the time that officials and civil servants have to draft some of the provisions and proposals. I do not understand why it has to be so last minute and by the seat of their pants. It is one thing to exclude one’s political opponents from the reveal moment of the Budget, but surely it would be good to ensure that proper internal arrangement are in place in the Treasury for drafting these arrangements.

The Institute of Chartered Accountants in England and Wales has its concerns:

“we do not think that Parliamentary consideration amounting to only one day is in any way sufficient to consider and pass another significant Finance Bill that runs to 349 pages and contains a considerable amount of controversial legislation.”

An article in today’s Financial Times quoted Heather Self of the law firm Pinsent Masons. She said that the decision to rush through the Finance Bill was

“an abrogation of the parliamentary process…Legislation this complicated should not be going through without parliamentary scrutiny”.

My hon. Friend the Member for Edmonton was right when he talked about Tolley tax handbooks—I know his walls are adorned with the tax code in fine, leather-bound tomes. He will know that when the coalition came to office, there were 17,795 pages in that tax handbook, but by the end of this Parliament that has risen to 21,414 pages. The Minister says that is not a good barometer. I suppose it is good for publishers and perhaps makes my hon. Friend’s library a little more expansive and extensive, but I suspect it makes things more difficult for people to understand and follow. I think that our constituents deserve better and want proper scrutiny of the Finance Bill, and we will try our best to do that. The House should bear in mind the fact that the Bill appeared in the Vote Office yesterday, so it is difficult even for my diligent hon. Friends properly to absorb and assimilate all the provisions and to do justice to the Bill. Nevertheless we will give it a go and try our level best.

Ultimately, the Finance Bill could not disguise the coalition’s failures of the past five years. There is a slow recovery, but it is not being felt far and wide. By the standards and tests that the Government set when they came to office and made their promises in 2010, the Conservatives and Liberal Democrats have failed, particularly on the public finances. They have failed to eliminate the deficit, which should have gone by now. In fact, in the autumn statement 2010 the Chancellor trumpeted that he would bring forward to 2014-15 the year by which the current structural deficit would be eradicated, yet we find ourselves with a £90 billion current budget deficit, which fell by only 5% on the previous year—not exactly the rate we were promised.

There are many other structural issues in the economy. I do not know whether my hon. Friends remember the Chancellor’s promise about the march of the makers, but I am afraid that this country’s exports have not lived up to the £1 trillion target set for 2020; we are already a mere £300 billion off course in achieving that. Before the last election the Chancellor set the litmus test of cherishing our triple A rating, but of course that was downgraded.

One thing in the Finance Bill that supports the Government’s fiscal strategy was the revelation of how extreme the cuts will be to public services over the next three years—twice as deep over the next three years as we have seen for the past five years. In the words of the Office for Budget Responsibility, the “rollercoaster” is about to go over the precipice, and public finances, social care, the police, defence and many other public services will be pushed over the edge of that cliff should the coalition parties Government have a further five years in office.

It is no wonder that when people look at the impact of deep and extreme cuts to what Government Ministers term “non-protected Departments”, and see how deep they will be, they say, “Well that isn’t going to happen; it’s impossible to countenance that they would end up taking 30%, 40% or 50% from some of those Departments.” It is no wonder that people then believe there must be another plan, either for raising taxes or for cutting other services that some assume ought to be protected, in particular the national health service.

We had the debate on VAT, but I find it difficult to take the Prime Minister’s words seriously. These days, he has a habit of shooting from the hip—about whether he is retiring or what his views are for the day—so I am not sure that people will necessarily say, “Oh well, the Prime Minister said he’s not going to do it. That’s that then.” That is sort of what he said before the last general election about having absolutely no plans to raise VAT, but it was only a matter of weeks before he got round to doing it.

[Geraint Davies (Swansea West) (Lab/Co-op)]

My hon. Friend will know that the number of people earning more than £20,000 has fallen by 800,000 since 2010, and the slack has been taken up by more and more people on low pay and zero-hours contracts. Does he accept that we are facing these draconian cuts because the Government are overseeing a completely unsustainable business model and creating more and more low-paid people who cannot pay any tax? The revenues are not coming in, which is why they have borrowed more in five years than Labour did in 13.

[Chris Leslie]

As ever, my hon. Friend manages to sum up the Government’s record in a pithy and simple intervention. I had not heard those statistics about the number of people earning more than £20,000, but I shall certainly take a look at the points he makes. We shall perhaps look at those statistics in more detail.

My hon. Friend’s point about living standards is a good one that all Members should intuitively and properly understand. If we do not include everybody in the growth of the economy, if everybody does not have a stake or a share in it, if their consumer capabilities are not stronger, and if we do not tackle the sustainability challenge for growth in the future, we should not be surprised to find that we have an unequal recovery. Britain will only succeed if working people succeed. That is a catchy way of summing that up, and Government Members may well hear it a few more times in the coming weeks, but it is true.

Ultimately, our public finances are not determined in isolation, as though they are frozen in aspic. They cannot simply be dealt with in terms of cuts or changes in revenue: there is a dynamic, strategic set of issues that relate to what is happening in the real economy and the real world. The health of our economy will ultimately determine the health of our public finances. The Prime Minister and others say, “Why are you talking about living standards? Why are you talking about these things? That is not really the economy; it’s not about growth.” Of course it is. Ultimately, these things are related.

The low-wage economy the Chancellor has been heading us towards is a danger to our public finances. We are enduring an epidemic of job insecurity. The number of zero-hours contracts has ballooned by more than 20% in the past year alone. That is a problem for those who cannot plan even for the child care they need for the week ahead, let alone for getting a mortgage. It is also bad because it undermines the tax receipts the Treasury needs to sustain and pay for public services. It means that tax credits need to be higher to subsidise low pay and it is why the social security bill is £25 billion higher than the Chancellor expected.

Those living standards issues come up time and again in surgeries, meetings and encounters that my hon. Friends have with our constituents. Some 900,000 people are using food banks, and some 600,000 people have been hit by the cruelty of the bedroom tax. These issues will come back to haunt Ministers. They have attempted to deal with the deficit by hurting those on the lowest incomes. It has not worked; it has not succeeded; and it is a strategy that will just get worse in the coming years.

--- Later in debate ---

[Chris Leslie]

We are delighted that the Government took a shine to our proposals for pension tax relief changes—I suppose that imitation is the best form of flattery. We will stick with our policy to reduce tuition fees to £6,000, and we will set out in our manifesto, in a matter of days and weeks, how it will be funded. Still at this late hour, the full costings in our manifesto are available for the Office for Budget Responsibility to audit and verify—if only the Minister had shaken my hand on that. I offered him the hand of friendship—was it on the “Daily Politics” the other day?—but sadly he could not do it. It is important that we have fully costed and funded manifestos and that all parties engage in the process. We will look closely at the Conservative party manifesto. The Conservatives have made some grand promises about tax which will cost at least £10 billion to implement, even in the final year of the next Parliament, yet we have not seen a dicky-bird—even in the Budget figures—on how they will be paid for. I am looking forward to reading that chapter in its manifesto.

[Geraint Davies]

I mentioned that low productivity was driving down wages. Is not the point of tuition fees policy to increase the number of qualified people, productivity and national wealth, to end the deterrence on going to university, to stop people having credit ratings that prevent them from buying houses and to stop them not wanting a pay increase in case they have to pay back more of their fees? Surely this makes economic sense, while the Conservative party’s unsustainable economics of low pay and austerity is sending us into bankruptcy.

[Chris Leslie]

My hon. Friend knows that the change from £9,000 to £6,000 would make an appreciable difference. Of course, it is still a significant fee, but we will only ever make promises we know can be kept and that are fully funded. I would love to do more on many other tax issues, but given the state in which the Chancellor will be leaving the public finances in only a matter of weeks, we must show students that we understand the burden of debt on them and the nation. The Government never appreciated that so many students would never be able to pay back their debts and that the bill would have to be picked up by the taxpayer sooner or later.

As well as measures on tuition fees, the Bill should have contained a proper bank bonus tax for the starter jobs that many young people who are having trouble finding employment need.

Income Tax

Debate between Chris Leslie and Geraint Davies

Wednesday 5th November 2014 Commons Chamber

[Chris Leslie]

My hon. Friend hits the nail on the head—as if our constituents are not still bearing a burden. The Chancellor of the Exchequer said that he could not countenance reducing that 50p rate until people were no longer bearing that economic burden. Are we in that position? Absolutely not. What does he do? He chooses to give that tax cut to the very wealthiest in society. Has there ever been a fallacy greater than the Chancellor’s hollow claim that “we’re all in this together”?

How strange that before the last election, as my hon. Friend says, the Chancellor said, “No, no, no, we certainly wouldn’t tackle that 50p rate,” but after the election, amazingly, he decides to do what Conservatives always do. That was at a time when Oxfam reports that 20 million meals were given out in food banks last year, up by more than 50% on the previous year. Its chief executive is right to say that the fact that they are needed in 21st century Britain is a stain on our national conscience. We cannot and we must not allow these warped and perverse priorities to go unchallenged.

There is an alternative and a different set of choices. When Government borrowing is 10% higher in the past six months compared with the same period last year and the deficit is rising, the Treasury cannot afford to dole out tax breaks to those at the top of the pile. Borrowing so far this year has been £58 billion, compared with just over £52 billion for the first six months of last year. The revenue from the 50p rate of tax remains essential when that deficit is pressing so heavily on vital public services and bearing down on the shoulders of lower and middle income households in our constituencies.

[Geraint Davies (Swansea West) (Lab/Co-op)]

As my hon. Friend will know, income tax receipts were projected to rise by 7% this year but have, in fact, gone up by only 0.1%, so there is a pressing need for extra income. He will also know—perhaps he will comment on this—that the marginal rate of tax for national insurance and income tax is 62% for people on incomes between £100,000 and £120,000, so how can the Government argue that behavioural changes resulting from a 50p rate will suddenly drive everyone away? It is obviously a load of bunkum designed to protect their rich friends.

Cost of Living

Debate between Chris Leslie and Geraint Davies

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

I have not even said a word in response to the point of order. I will do so if the hon. Gentleman will allow me. It just goes to show that the Conservatives will do everything they can to distract attention from the cost of living crisis that is facing this country. As Corporal Jones might have put it, “They don’t like it up ’em!”

The hon. Member for Spelthorne (Kwasi Kwarteng)—

[Geraint Davies (Swansea West) (Lab/Co-op)]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. You also want to speak, Mr Davies. You are constantly on your feet. I want to hear Mr Leslie. I also want to hear what the Government have to say. I will not hear either of them with the amount of time we have taken so far.

Finance Bill

Debate between Chris Leslie and Geraint Davies

Tuesday 2nd July 2013 Commons Chamber

[Chris Leslie]

We had that debate on a financial transaction tax a few weeks ago. I think we managed to extricate from the Minister, despite his reluctance, a suggestion that somehow, somewhere, buried in the Government, there was still some flicker of interest in a financial transaction tax. I am not sure whether it has been snuffed out by this particular measure. If this is the abolition of stamp duty on unit trust transactions, what will be next? What else will they give away to this particular set of fortunate investors? Will the Minister rule out plans to abolish the other financial transaction tax, the stamp duty on equity transactions? Do the Government have that long-standing financial transaction tax, which has been around for several hundred years, in their sights? Conservatives are second to none when it comes to defending the best interests of the wealthiest in society, and I take my hat off to the Minister for managing to slip this little one through in the Budget provisions without anybody really spotting it.

[Geraint Davies (Swansea West) (Lab/Co-op)]

My hon. Friend has already pointed out that this £150 million saving per year for the very richest should be compared with the bedroom tax saving of £450 million from the very poorest. The difference between the two measures is that the bedroom tax is hitting thousands upon thousands of the poorest people. The bedroom tax costs about £10 per week, and I have had people tell me that their disposable income is being reduced from £30 to £20 per week. With this tax, the £150 million saving is going to a very small number of people who will receive a large amount of money. These are the choices we face in Britain today. Does my hon. Friend think that that is disgraceful?

[Chris Leslie]

I am more disappointed that the Government think they can get away with it. I want very much to hear the Minister defend this decision. I am sure he will do so with gusto and alacrity, as ever, but I know that deep inside—the record will reflect that I am looking into his eyes—he realises that this is a completely daft idea. This is not a priority at this time. It is a crazy priority when the public are struggling, and I know that in his heart of hearts he agrees with me. It is not clear where this idea has come from. I saw something on the Deloitte website that said there had been many decades of lobbying in favour of this particular change. Perhaps the lobbying is something that the Treasury has eventually succumbed to.

When we line this measure up alongside other examples of largesse the Government have shown to those who are doing very well, it is notable. We cannot take it out of the context of the paucity of the bank levy, which was supposed to raise £2.5 billion in the previous financial year but did not. Last night, the Minister said that they will try to get £2.7 billion next year instead, but they are already £1.9 billion in arrears from the previous two financial years. It will be more than a decade before they are able to recoup the loss. It was notable last night that he did not say that he was certain that £2.5 billion would be brought in from financial years 2011-12 and 2012-13.

I will put the bank levy to one side. After all, what is a couple of billion pounds between friends? The Government refuse to repeat the bank bonus tax, despite the fact that financial services bonuses leapt by 64% in the first month of this year, when all those who benefited from the reduction in the additional top rate of tax—earnings over £150,000 were taxed at the 50p rate, but from, I think, 6 April they were taxed at the 45p rate—rushed out all those bonus payments. Of course, those individuals found ways and means to avoid the higher rate of tax, as the Government helpfully flagged the change up for them far in advance.

[Geraint Davies]

Does that not contrast sharply with the 2 million people in Britain who are on payday loans? They could each be given £70 with that £150 million. They are desperate for the money, but instead these tens and hundreds of thousands of pounds are all focused on, again, the very rich. Does that not speak volumes about the cruel values of the Tories?

[Chris Leslie]

The point is the context in which these things arrive from the Government. Perhaps it is our fault that we have not successfully flagged up for the wider country what exactly is happening in the Budget or what will happen in future Finance Bills; but for the time being, it is incumbent on the Minister to do at least this one thing: let us have the distributional analysis showing who benefits from the change. Which deciles, in terms of the affluence of society, will gain the most from this £150 million tax cut? The case for it has not been made. It has not been high on the public agenda. There is no problem in the City or the investment management community of such significance that it merits this intervention by the Chancellor, at the expense of the health in pregnancy grant or the cuts to tax credits that merited the pasty tax and the caravan tax.

This £150 million tax cut is an incredibly important totem of the Chancellor’s priorities. It is a sign that he does not care about the fact that most people—the typical family—will be paying an extra £891 this year because of the tax and benefit changes made since 2010. Those who have found themselves pushed into greater deprivation and poverty will look at the decision and be absolutely disgusted that this is the Government’s priority now. This change has no justification. The Minister has not made the case for it. We need more information about who benefits from the arrangement.

All that comes on top of the Government’s giveaway on the bank levy, their failure to repeat the bonus tax, the millionaires’ tax cut from 50p to 45p and other changes hidden in the Bill, such as making the additional tier 1 debt coupon tax deductible for the banks, which The Times described thus: “Chancellor to the banks’ rescue with secret £1 billion tax break”. Lots of people will have questions, although not necessarily about this Minister’s priorities. He is doing the best of a bad job and having to cope with the hand he has been dealt. He is, I am sure, a decent and honourable chap, but when he goes home this evening, turns on the television and sees the hardship afflicting families up and down the country, I would ask him to keep in mind whether making a tax cut of £150 million for those investment managers was the right call to make at this point in the economic cycle, such as there is a cycle involved.

[Chris Leslie]

That is the £150 million question. The tax cut is £150 million in the key years, but it goes up to £160 million in financial year 2017-18. It gets greater and greater as time goes on. If we roll all the numbers together, as the Chief Secretary to the Treasury is wont to do when presenting figures in the Budget, we get a total of £600 million of tax cuts in this area in the Red Book. I am sure that you could think of a good use for £600 million, Mr Deputy Speaker. At the very least, we want a distributional impact assessment. We want to know who will benefit from the measures, and it is incumbent on the Minister to tell the House the facts.

[Geraint Davies]

I have been provoked to stand up and speak on this outrageous stealth tax, which is an attempt to subsidise the very richest in a clandestine way. If hon. Members had known about the £145 million being crept into the back pockets of the very richest people in the City, the Chamber would have been full of Members speaking in protest, as I am doing now.

The direction of travel in the Budget and the spending review continues unabated. It consists of blaming the poorest for the bankers’ errors, punishing them with cuts in public service jobs and wages and cuts in welfare benefits, particularly outside London and the south-east—and especially in Wales—then pumping all the infrastructure growth opportunities into London and the south-east, to line the pockets of the very richest, many of whom were responsible for the disaster in the first place.

The Government are allegedly trying to balance the books, but they are dismally failing to do so. They have decided to sack 600,000 public sector workers. This is having a disproportionate effect in certain parts of the country. Many parts of Wales, for example, are 50% more likely to have public sector workers than London, and it is in those areas that the cuts are biting deepest. Meanwhile, the money is going to places such as London, where the cuts are not so deep, not only in infrastructure investment but in measures such as this one. We are talking about getting rid of stamp duty on transactions in the City of London, where a small community of people will benefit from that tax cut of £145 million a year, and rising.

We must set against that the fact that 2 million people are already using payday loans. Dividing the £145 million between those 2 million people would give them about £70 each. Only today, I have been talking to colleagues in Swansea about the emerging problem on our council estates, and on estates generally, of companies setting up shop to take advantage of people in dire need by offering them payday loans. At the same time as the Chancellor announced this cut in stamp duty, he asked the newly unemployed to wait an extra week before receiving their money. That will of course feed the stomachs of the payday loan sharks. Those sharks are not just the well-known wonga people; they are also the new, smaller operations setting up in very poor communities. They hire people in the community, on a commission basis, to persuade their neighbours to take out loans at exorbitant rates of interest that they cannot afford. They then harass them by phoning them in the middle of the night or following them into the supermarket, for example, until they repay the loan. That is the cruel reality of Tory Britain today.

Alongside that reality, we have this ghastly attempt to give another £145 million to some of the richest people in the banking community, who were part of the problem in the first place. The alleged justification is to make the City of London more competitive. It appears that these whizz kid City folk, with their red braces, zoom up in their Rolls-Royces to see their old Etonian friends, such as Ministers, and look in awe at them and say, “Have another champers, will you, Minister?” and all that sort of stuff.

Finance Bill

Debate between Chris Leslie and Geraint Davies

Monday 1st July 2013 Commons Chamber

[Chris Leslie]

I would be the first to concede that it was a mistake to abolish the 10p rate in 2007. I do not think that it creates complexity in the tax system. The Institute for Fiscal Studies has long been in favour of simplicity in the number of tax bands, but I believe that there is a genuine debate to be had about progressivity in the income tax system. The hon. Gentleman’s colleagues can see the case for a 10p rate, and I believe that it would be a useful way of introducing a transition from the tax-free personal allowance to the 20p basic rate of tax. A 10p rate would be an important staging post along the way. A tax cut for those on lower and middle incomes would be broadly welcomed throughout the country.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does my hon. Friend agree that it is in the very nature of progressive taxation to have increasing marginal tax rates as someone earns more money? The Institute for Fiscal Studies has shown that there is therefore a genuine trade-off between social justice and increasing fairness, as people have more money, and tax efficiency. That is fair enough, and we should opt for progressive justice.

[Chris Leslie]

Indeed. Having a 10p band in the income tax scale ensures that we can focus on that sense of fairness. “Fairness” is a word that might not necessarily be recognised by some Government Members, but it is important in our tax system. We know that their idea of fairness is to cut the highest rate of income tax from 50p to 45p. They can justify that in their own terms, and to their own constituents, but we believe that it is far better to focus on giving help by introducing that lower rate straight above the personal allowance.

--- Later in debate ---

[Chris Leslie]

I do not know how simple I need to make the point for the Exchequer Secretary, so I will do so very slowly and particularly. The new clause suggests that the Treasury—that means him, by the way—should publish some proper, worked-through evidence on where those properties lie across the country, how a banding proposal might work and what the options for the width of the 10p starting rate of income tax might be. By the way, he did not say a word about whether or not he supports a 10p starting rate of income tax.

[Geraint Davies]

Surely my hon. Friend will agree that the figure of 55,000 is a complete red herring. It is being said that housing wealth should be progressively taxed, and that the current council tax rates are out of date. Some of these properties are worth much more than £2 million, and perhaps even £10 million—we hear stories about Russian oligarchs and all the rest of it. Add to that the Chancellor’s strategy to generate more sub-prime debt by offering cut-price mortgage deals, and we will presumably have a progressive system of different rates and a thought-out new council tax regime that would be progressive, and we would not end up with everyone paying £36,000 at all, and the Minister knows it.

[Chris Leslie]

That is why we must ensure that we move the issue forward and get some proper workings from the Treasury—[Interruption.] The hon. Member for Enfield, Southgate seems to think that he has all the answers, so why do the Government not publish them? What is going on with Government Members? They should share these things in the public domain. Do we really have to make a freedom of information request to Ministers in order to get those data?

--- Later in debate ---

[Geraint Davies]

My hon. Friend will know that there is an increasing trend of international financiers buying London properties in particular as part of their asset portfolio in an uncertain world and that, at the top end of the market, an increasing share of them are owned by Russian oligarchs, oil sheikhs and so on. Does he agree, therefore, that this is a great opportunity to introduce a charge on foreign owners who invest in London—which is fair enough—in order to redistribute some of their massive wealth to the poorest people in Britain?

[Chris Leslie]

Yes, I agree. Governments often ask Oppositions how they will pay for tax cuts for those who need them most. We have given a clear example of one possible option. It is important to show that there is a fair way to give a tax cut to the vast majority of lower and middle-income households through the introduction of the new 10p band. The mansion tax is feasible and has cross-party support, as indeed does the 10p starting rate, and the Minister’s arguments are diminishing by the day, to the extent that we have managed to get him to lift the skirt of the data and publish more of them, which is what we want to see.

It is important to consider the arguments for fairness behind the 10p starting rate, which we think would provide a good tax incentive into work, especially for those on lower incomes. It is widely supported, especially by those Conservative Members who were champing at the bit only a matter of months ago when they tried to persuade the Chancellor and the Prime Minister to consider the proposal. Conservative Back Benchers have managed to get the Government on the run on their favoured topics, including an EU referendum and a tax break for married couples. They have the bit between their teeth, so perhaps we can persuade them to consider the 10p tax rate, too.

The principle of fair taxation is at stake in this debate. It should transcend party differences. We should be looking at funding a tax cut, not defending the wealth of the wealthiest. If the Government really mean it when they say that we are all in this together, the time has come for a mansion tax to help those most in need. The Government have a history of giving tax cuts to the wealthiest—they have already reduced the 50p rate, thereby giving millionaires a tax cut—and they have hit pensioners with what came to be known as the granny tax.

--- Later in debate ---

[Chris Leslie]

I did say earlier—I do not know whether the hon. Gentleman was in the Chamber—that it was a mistake to get rid of it in 2007. There were arguments. The Institute for Fiscal Studies looked at the issues. The basic rate of income tax had been reduced and calculations had to be made about how to pay for it. I think, however, that the right thing to do is to take these steps and have progressivity in the income tax scale.

It is wrong to hurt those in society who are most in need. They are paying the price and life is getting harder for them because the Government’s economic plan has failed. We need to concentrate on the contribution that the wealthiest 1% in society should make. They should pay a fairer share and we should make sure that that money goes to the vast majority—25 million people—on lower and middle incomes.

[Geraint Davies]

In essence this debate is about political choices and not just the technical efficiencies of marginal rates of tax. When this Government took over from Labour in 2010, two thirds of the deficit had been created by the banking community and a third by pump-priming in response to the financial tsunami after a history of sustained growth under the Labour Government. The new Government decided to focus not on growth, but on cuts to get down the deficit, which was a fundamental error that has led to a flatlining economy. They then had to decide who should bear the brunt in order to pay down the deficit—80% in cuts and 20% in taxes—and the answer that the Conservatives and the Liberal Democrats came up with was that it should be the poorest who were hit hardest.

The recent spending review and infrastructure plans replayed the same Tory agenda: the cuts will hit hardest in the poorest areas, including Wales and the north, and 80% of the investment in infrastructure for growth will benefit London and the south-east in order to shore up the Tory and coalition votes. This new clause is about making a move in the other direction so that the very rich make a slightly greater contribution, which will be redistributed to people in the middle and at the lower end of the income scale.

Finance (No. 2) Bill

Debate between Chris Leslie and Geraint Davies

Wednesday 17th April 2013 Commons Chamber

[Chris Leslie]

Why should a constraint on the bonus pool have a constraint on the lending capacity of banks? The hon. Gentleman seems to be suggesting—this is the classic Conservative attitude to banking—that the one inviolate part of a bank’s balance sheet is remuneration, or “compensation” as they sometimes like to call it: “Do what you like to the banks, but for goodness’ sake don’t affect that bonus pool and don’t change that compensation pool.” Well, I am sorry, but we take a totally different point of view. In fact, if there is one area of bank finance that needs a culture change, and which proves that stronger capital adequacy is not anathema to bank lending, it is management remuneration. It is too bloated and needs to change.

[Geraint Davies]

My hon. Friend has been thinking creatively about how banks can make a contribution to getting people back to work. In light of the previous debate, has any consideration been given to the idea of banks being guided into investing in social housing, which could then become part of their assets? Rather than just taking money from banks, which then complain they do not have any money left, their assets could be interwoven with job creation, asset generation and a lowering of the housing benefit bill. We all know that the 17% rise in housing benefit is due to the private sector and a lack of public housing.

[Chris Leslie]

There is a debate to be had—possibly a separate one—about how we can make a certain kind of socially useful asset class more attractive to private investment. If we as a society want to boost housing investment, we need to attract investors to make those decisions. That would certainly be a more sophisticated way of devising public policy, instead of the dreamed-up approaches in the Help to Buy scheme and the NewBuy scheme, which, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, delivered only 1.5% of the expected additional housing.

--- Later in debate ---

[Chris Leslie]

I would like nothing more than for our banking sector to move to a more enlightened and responsible approach to remuneration. I would not want to see a bloated and unfair bonus arrangement continuing in perpetuity simply as a result of a function of the tax system. For the time being, we need to start to send a signal on behalf of public policy makers that the current arrangements, which have not changed sufficiently since before the financial crash or during it, continue to be difficult. The banks often say that they want catharsis and that they want to move on, and I do not want to spend the rest of my life in banking legislation, for goodness’ sake, but we are still not there and the bonus levy is part of that process.

I do not want to talk for much longer, but I want to challenge the Minister specifically on the bank levy arrangements as we are debating stand part for clauses 200 to 202. We have had six different bank levy rates and they have failed to raise the right amount. We have talked about this time and time again, and I do not want to keep coming back in our debates on the autumn statement next year or on the 2014 Budget to a similar discussion on retrospectively tweaking the bank levy. I want to hear from the Minister when he replies that he can guarantee that in this financial year £2.5 billion will be netted in by the bank levy. If he cannot guarantee that, he must admit that we must reconsider the policy, which is haemorrhaging money when it should be boosting the Exchequer far more significantly.

As I said before, parliamentary rules prevent the Opposition from tabling amendments that would tweak the bank levy upwards. There is a convention of the House that only Governments can table amendments to a Finance Bill that would increase a charge on individuals or companies. The process is incredibly frustrating, as we need to ensure that we get into the detail of how the bank levy should work and what the rates should be. For the time being, we feel that tabling amendment 2 so that we can consider a review of how a bank bonus tax could help the young unemployed, in particular, and of how to incorporate it into a bank levy that nets the amount it should is the right way forward. I commend the amendment to my hon. Friends.

[Geraint Davies]

I make my comments in light of the fact that today’s unemployment figures showed an increase of 42% in the number of people on jobseeker’s allowance in my constituency of Swansea West. That comes in the aftermath of the financial tsunami of sub-prime debt that hit our shores in 2008, which was largely a result of the banking world taking unhealthy risks in the knowledge that the state would ultimately stand behind it. On the upside, people can take enormous gambles and make tremendous bonuses in the knowledge that if it all goes wrong, the taxpayer will cough up. The net impact of all that is that we are now doddering along on the bottom of the sea of growth and people do not have opportunities.

The strategic challenges for the Government are how to ensure that money is focused on job creation and that the banking community pays its fair share. We know that from this April, the top rate of tax was reduced by 5 points—from 50p to 45p. I realise that the Prime Minister gets up on his hind legs and says, “Oh, but we will raise more from the 45p rate than was going to be raised from the 50p rate,” but we all know that the reason for that is that people with large amounts of money can move their income between tax years. Bankers and others will simply move money to a different tax year when the rate was 45p instead of 50p and avoid the tax. If the 50p rate had been sustained, we would have generated a lot more money, particularly from the banking community. My hon. Friend the Member for Nottingham East (Chris Leslie) did a great job of highlighting the multi-million pound giveaway to the richest in our communities from the reduction. Our modest proposal would deal with people who are being shielded by the taxpayer from proper competition.

Finance (No. 2) Bill

Debate between Chris Leslie and Geraint Davies

Monday 15th April 2013 Commons Chamber

[Chris Leslie]

If I can try to be optimistic, I hope that there will be a sustained increase in employment, but I am getting worried. The latest figures showed that unemployment is rising again. We must look at the underlying situation reflected in the productivity gap and the capacity problem in the economy, which the Treasury is worsening. The Minister spent a large part of his speech trumpeting the reductions in corporation tax that the Treasury have put into the Bill as the big solution to those problems. Of course we want the UK to be seen as a good place for investment, but the Treasury has not produced any analysis of how those further cuts in corporation tax will feed through into economic growth. We hope they will, but it is time we saw some clear proof that inward investment and business growth are flowing from that approach, and that we are not just stacking up corporate surpluses which are locked away because businesses fear that they will not be able to access bank credit.

[Geraint Davies]

My hon. Friend will know that the debt to GDP ratio will have grown from 55% in 2010 to 85% in 2015, and that the way to sort that out is by confronting the debt and/or confronting the GDP—namely, growth. Does he accept that even though 1 million more people are in jobs, overall production has not gone up, so their average productivity has gone down? Does he agree that it is time to invest in infrastructure, super-connectivity and skills, and to make Britain more productive and make it grow?

[Chris Leslie]

My hon. Friend makes a good point. It is not a good sign that it is taking more and more people to produce the same amount of output. In the long run that is not a sustainable strategy for our economy. Ministers need to look more seriously at that issue. The problem is not just the fact that the Bill neglects economic growth.

--- Later in debate ---

[Chris Leslie]

Where is the regional economic strategy from the Government? Where is their attempt to revitalise those parts of the country that have suffered most of all? I am sorry if I sound a little like Eeyore to Government Members, but somebody has to say, as my hon. Friends have been saying, that Government policies are just going to harm those parts of the country that are in desperate need of regeneration and will make the situation worse for them. My hon. Friend makes that point well.

[Geraint Davies]

Does my hon. Friend accept that one of the Government’s biggest failures has been not to resuscitate consumer demand, which would stimulate growth? It is the poorest in our communities who spend the highest proportion of their income, because they cannot afford to save. By hitting the poorest the hardest the Government are hitting growth overall and making a more unbalanced economy and a more divided society.

[Chris Leslie]

It is the politics of shooting oneself in the foot. The difficulty is that the Chancellor does not even understand that his strategy is making his task far harder in the long run. It is not just the fact that people on lower and middle incomes are suffering as a result; it is the unfairness when they compare it with what the Government are doing for those parts of the economy and of society that they favour. The banks are still getting away with not paying their fair share. A tiny corner of the country is doing very well out of the Chancellor. The banks, whose actions created the deficit, are not contributing their fair share towards repairing it. In fact, astonishingly, they are benefiting from the Chancellor’s generosity. This Bill fails to get a grip on the contribution the banks ought to be making. It is still too weak on the very institutions that had to be bailed out by the taxpayer because of their perilous self-indulgence. We have debated in the past, and we will do so again, the fact that Ministers have failed lamentably when it comes to tackling bonuses. In opposition, the Prime Minister promised:

“Where the taxpayer owns a large stake in a bank, we are saying that no employee shall be paid a bonus of over £2,000”.

My hon. Friends probably remember that comment. However, when I express my dismay about the Bill’s weakness, I am not just talking about the lack of a bank bonuses tax. The Government said that the bank levy, as a charge on bank balance sheets, was their answer to clawing back some of the costs for the taxpayer.

The Prime Minister said in 2011 that once the levy was “fully up and running” it would raise £2.5 billion each year—in fact, he said that it would raise £9 billion over the spending review period. We now see that the Government have totally failed to live up to their promise and that the banks have swerved to avoid the bank levy; they have not paid anything like the amount mentioned. In fact, the Chancellor has raised nearly £2 billion less from the banks since the Prime Minister made that promise just two years ago. Those are not my figures, but the latest figures from the Office for Budget Responsibility and HMRC.

The Government repeatedly claim—the Minister did it again today—that the bank levy will raise £2.5 billion a year and that the cuts in corporation tax will not benefit the banks; the Minister said that those corporation tax cuts would be offset by increases in the levy. However, the OBR figures, published alongside the Budget, estimate that in the financial year that has just ended, 2012-13, the bank levy will raise just £1.6 billion—a massive shortfall. We have then to deduct a further £200 million because of the generous corporation tax cut. All in all, the banks have paid £1.1 billion less than Ministers promised. That is even worse than in the previous financial year of 2011-12, when the combined shortfall was £800 million less than the Minister promised.

What on earth is going on? Why cannot the Minister get a grip of the issue? The bank levy strategy is haemorrhaging money when it should be boosting the Exchequer far more significantly. I ask my hon. Friends to think of what that nearly £2 billion could have achieved in the past two years. This is the third or fourth attempt by the Government to get the issue right, but each time they have failed to raise what they promised. The Minister has to go back to the drawing board now and come up with a policy that will actually work, rather than something designed to pass a press release test.

The Chancellor is making bad decisions because he is getting deeper into difficulty, proving time and again that saving his own skin comes before getting the judgment right. It did not take long for the world to see, for example, that the Government had not properly thought through their flagship Help to Buy scheme after it was announced in the Budget. That was hailed as the boost that we needed for housing, but focusing only on demand without any corresponding action to supply more affordable homes is only a half-policy partially thought through.

I hope that the scheme succeeds, but why on earth cannot the Government ensure that funds are not siphoned off for second-home purchases? By contorting the scheme so that it does not count against the deficit figures, do they not realise that they have added complexity that might hinder take-up? After all, the Government promised that 100,000 people would have used last year’s NewBuy scheme by now, but only 1,500 people have become involved so far.

--- Later in debate ---

[Chris Leslie]

The Government are not putting any of those resources into building affordable social housing. Kicking people out of their homes will not help people in that way. We have already seen evidence that nine out of 10 of those affected by the bedroom tax have no option of going anywhere else at all. The Government have totally neglected the supply of affordable housing. They have not prioritised that.

Then we come to the grotesque spectacle of a Chancellor of the Exchequer demeaning his office—using the case of a multiple child killer to argue for his changes to the welfare system. We knew that Conservatives relish any opportunity to do down social insurance protections and that the Government’s policies are actually pushing more people into welfare—not helping them out, but pushing up the welfare bill to record levels. However, we did not know the depths to which the Chancellor would stoop. The nasty party is back.

The Chancellor certainly grabbed the headlines, but I say to Government Members that what he said diminished his standing in the eyes of millions who rely on benefits—those in work relying on tax credits as well as people looking for work, pensioners and the disabled. Those millions have absolutely nothing in common with Michael Philpott whatever and were all sickened by the evil behind those crimes. In his speech at the beginning of the month, the Chancellor had the audacity to castigate his critics for their “shrill, headline-seeking nonsense”—he said that without a hint of irony. He suggested that those who dared to criticise his plans

“always complain, with depressingly predictable outrage”

and are just another bunch of “vested interests”.

Let us just think about that accusation—“vested interests”. Putting to one side for a moment the fact that the Chancellor knows a thing or two about defending positions of privilege, is he really saying that those who care about defending the well-being of some of the most vulnerable in society are “vested interests”? Well, for the record, yes—we are interested in, and deeply concerned about, the impact that the bedroom tax, the withdrawal of council tax benefits and the changes to disability benefits will have. However, the more important question is why the Chancellor is not interested. Why does he think it makes sense to tell 660,000 people, most of whom have a disability, that they need to give up a spare room but leave nine out of 10 with no option of moving anywhere smaller? Why does he think that some of the poorest and most vulnerable can cope with significantly higher council tax bills as a result of the withdrawal of council tax benefit, the arrears from which could end up costing a fortune to collect? Why does he think it makes sense to penalise working people by cutting their tax credits at a time when we should be making work pay?

The Chancellor is not concerned because for him this is a political game. He is not serious about helping those on welfare; for him, and for the Conservatives’ new spin supremo, Lynton Crosby, this is all about ideology and tactics.

[Geraint Davies]

My hon. Friend will be aware that housing benefit costs have doubled in the past 10 years, but is he also aware that 70% of that increase is due to private sector rents because rents have been inflating and we have not been building enough houses? Does he accept that if we built more houses we could lower average rents, sort out housing benefit and give people stable communities and more chance of getting a job as well?

[Chris Leslie]

Looking at the situation in the round, that is exactly the sort of welfare reform that we need. If we are going to get to the root of these problems, we must have serious reforms to our welfare system, and we need a Government who are serious about delivering them.

The Chancellor and his Ministers are not serious about solving these issues; all they want to do is to stoke up fear and prejudice, blame the unemployed and the welfare system, and deflect attention from their own woeful failures to repair public finances. Serious welfare reform has to be a continuous process to fit the modern circumstances of society. Reform is never just a “job done”, nor should it aim only at being headline-grabbing. We should crack down harder on fraud but also on tax evasion, we should better reflect the contributory principle, and above all, we should focus relentlessly on getting people back into work so that they are making a productive contribution while also paying taxes again to bring in those much needed revenues.

A Work programme where only 2% of participants find themselves in sustained employment is a humiliation for these Ministers. They should never have scrapped the new deal, and if they were genuine reformers they would immediately set out a compulsory jobs guarantee, using the repeat of the banker bonus tax to fund a minimum-wage job placement for all young people unemployed for a year, and using the money saved from reducing the pension tax relief for the richest 1% to fund a job for all adults who are long-term unemployed for two years or more. No excuses: if they turn down those decent and properly paid job opportunities, they should forfeit unemployment benefits. Languishing on the dole for the long term must end, but we need to treat those looking for work with respect and give them a decent and real job opportunity, not cast them aside.

Tax Fairness

Debate between Chris Leslie and Geraint Davies

Tuesday 12th March 2013 Commons Chamber

[Chris Leslie]

What more can I say? I thought the hon. Gentleman supported the proposition in our motion, but clearly he does not. However cynical and defensive he may feel, Liberal Democrats should at least acknowledge that a principle of fair taxation is at stake today, and that it ought to transcend party differences as we try to create a more just society.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does my hon. Friend share my fear that the Liberal Democrats may become an endangered political species? Before 2010, they were very popular in Swansea but following the tuition fees, VAT and deep cuts turnaround, they lost the council. If they do not support the mansion tax, which was part of their manifesto, does he not think there is a real danger that we will never see them again in the political sphere?

[Chris Leslie]

It would be a great loss for the House to lose some of the skills and contributions of Liberal Democrat Members. Perhaps at our next Opposition day debate a Liberal Democrat protection order should be on the agenda. They may cling on in a number of ways in different places.

I am surprised that the Liberal Democrats do not support the mansion tax proposition. It is hardly surprising that Conservatives do not support the idea. After all, half of them are in politics to defend the wealth of the wealthiest, and the other half will probably need to declare an interest before they speak on the issue.

Let us consider the mansion tax in relation to the other tax benefits that the richest 1% receive. If the Lib Dem design for a mansion tax were to be enacted, it would just recoup a mere fraction of the money being given away to high net worth individuals in the millionaires’ tax cut from April—the first of too many examples of unfairness. In the last Budget, the Chancellor took the decision to hit pensioners with the so-called granny tax, which is more accurately described as a freeze on the old age personal allowance and has caused widespread disgust, especially because the Government chose to use the money to fund a cut in the higher rate of income tax. That is not fair and it is not right, and it certainly should not be part of the society we want to build. Even Liberal Democrats must know that it is deeply resented across the country, yet the Government continue to clobber lower and middle-income families, whether by freezing the maternity pay of new parents, taking child benefit away in a fiendishly complex tax assessment process or reducing the value of the tax credits on which so many working people rely. They cannot even ensure that the money men pay their fair share, with a bank levy that for two years running has undershot the supposed target of £2.5 billion that the Chancellor claimed it would collect.

On maternity pay, the bedroom tax and the cuts to tax credits, the Government have their priorities all wrong. They are handing a tax cut to millionaires when millions of hard-working families pay more. Voting for the motion is an opportunity, especially for the Liberal Democrats, to tell the Government that they need to rebalance their priorities.

Financial Services Bill

Debate between Chris Leslie and Geraint Davies

Tuesday 22nd May 2012 Commons Chamber

[Chris Leslie]

We are trying to ensure that the Government fundamentally address the question. These provisions give the Minister and the Treasury the power to make by order amendments to many of the rules, statutory instruments and suchlike that affect mutual societies. We think that they should have the capability to measure progress on mutuality in order to help to smooth progress towards fulfilling the coalition’s pledge.

Given that we have before us a financial services Bill, our constituents would expect us to be talking about firm and defined measures to make progress on diversifying the financial services sector. Unfortunately, they would be disappointed by the Treasury’s progress on that. The Treasury website has a very scant, short set of paragraphs stating the coalition agreement’s desire to promote mutuals. It says:

“The Treasury is developing policy and delivering legislative changes to…meet this aim.”

That is basically it—a statement but no substance. I want the Minister to tell us what progress is being made in fulfilling that objective. It is not good enough merely to talk about consolidating existing rules or legislation and wrapping that up as though the Law Commission’s recommendations somehow fulfil Government promises. We want to see more action.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Given that there is an appalling sovereign debt crisis in Europe affecting Greece, Spain, and so on, with the possibility of contagion, and given that we learned the lessons about the stability of mutuals following what happened in 2008, does my hon. Friend agree that it is remarkable that the Government are not pressing forward to reduce such risks by increasing diversity and promoting co-operatives?

[Chris Leslie]

My hon. Friend is entirely correct. When the Government have an opportunity to return to the market state-owned assets that the Treasury took in the height of the financial crisis, they simply look for a return to the vanilla plc model. They take a business-as-usual approach rather than taking the opportunity to rethink how we might have diversity in the financial service sector and in business operations. Yes, we need some organisations run on a plc model, and we have plenty of those, but why not think about opportunities to promote the non-profit or mutual sector? Northern Rock was a classic case in point. No adequate consideration was given to that option. A member buy-out suggestion would have been entirely feasible, but it was not considered seriously enough.

At this point, I pay tribute to the all-party group on building societies and financial mutuals. It made a series of recommendations a year ago, urging the coalition to adopt

“a comprehensive policy strategy to implement its Coalition Agreement commitment to promote mutuals.”

It stated that the Treasury should be proactive in promoting the interests of financial mutuals within the Government. One of the first conclusions in the summary of its report was:

“HM Treasury appears to have taken a reactive stance to the mutual sector beginning to deal with important issues such as building society capital, but little else of substance.”

I do not want to labour that point, because time is short.

[Chris Leslie]

The credit union sector deserves far more support and encouragement than it receives, and previous Governments of all parties have failed to do enough to promote it. The demutualisation agenda of the 1980s and early 1990s significantly reduced the size of the building society sector, and compared with other developed countries mutual providers have a very small market share, particularly in the financial services sector.

[Geraint Davies]

We used to hear about the share-owning democracy, but there have been tidal shifts in people’s desire to take risks and own shares. Does my hon. Friend agree that we have a moment in time at which we can change direction and have more diverse ownership among the population and a new culture of business? The Government are missing a trick.

[Chris Leslie]

Now is the time to think about the culture change that we want to see in the financial services sector. Yes, there are some good plc structures, but we have an insufficiency of good mutuals, building societies and so on. There should be new entrants of that type, and current ones should grow to provide some proper competition to the big banks.

Budget Responsibility and National Audit Bill [Lords]

Debate between Chris Leslie and Geraint Davies

Tuesday 22nd March 2011 Commons Chamber

[Chris Leslie]

If the OBR is to do an adequate and holistic job in commenting on economic prospects, it surely needs the clear and explicit right to comment on employment policy, growth policy and so forth. My hon. Friend is absolutely right to raise the issue of employment and jobs. The most recent figures show that the jobseeker’s allowance claimant rate is 8% of the population, which is a 17-year high, and a prediction of 2.6 million unemployed. Again, that is likely to be revised upwards by the OBR when it comments on the forthcoming Budget.

My constituency, Nottingham East, symbolically passed the 10% claimant count rate, which is a very depressing milestone. For those reasons, and because long-term unemployment is increasing so quickly—it is up 24% in the last year—and more than one in five young people between the ages of 16 and 24 are out of work and on the dole, surely we need the charter for budget responsibility to include a growth mandate, and for the OBR to have the ability to assess the impact of the Treasury’s polices on jobs and growth.

[Geraint Davies (Swansea West) (Lab/Co-op)]

The Bill states:

“It is the duty of the Office to examine and report on the sustainability of the public finances.”

The sustainability of public finances involves three factors: tax, spend and growth. In tomorrow’s Budget, the Chancellor is expected to say, “This is a Budget for growth with very little change in tax and spend,” but it would be remarkable and ridiculous if two massive parts of the sustainability of public finances were not properly accommodated within the OBR.

[Chris Leslie]

My hon. Friend is absolutely right. It would be such a pity if this edifice—the OBR—did not scrutinise the things that the Government know they are vulnerable on, and on which their policies are deficient. The Government do not have a strategy for growth and jobs, and we need the OBR to be able to expose that. Growth has a number of drivers—

--- Later in debate ---

[Chris Leslie]

If a policy were having a significantly adverse effect on jobs, such as some of the policies pursued by the current, Tory-led Government, it would be useful to have an independent, authoritative budget office to comment on that and to flag it up—to put out a red alert, as it were—as something that parliamentarians ought to comment on. I would not have a problem with that level of commentary. We should be big enough to cope with that level of challenge, audit and scrutiny. We would not be giving the OBR any power to make decisions; the point is simply to shine a spotlight on Treasury and Government policies.

[Geraint Davies]

rose—

[Chris Leslie]

If my hon. Friend will allow me, I will not give way. I have been speaking for rather a long time and I want to stop, but hon. Members may wish to make their own comments individually.

Clearly we need a proper growth strategy, but a growth mandate would also help. We need to start focusing on future growth industries and maximising our comparative advantage. We need to cast forward with a growth strategy not just for a decade, but for several decades. We need to focus on skills and, yes, a fiscal strategy, but we also need to focus on job creation, and a growth mandate with the clarity for the OBR to make its own assessments would certainly be a step in the right direction.

Finance (No.2) Bill

Debate between Chris Leslie and Geraint Davies

Monday 8th November 2010 Commons Chamber

[Geraint Davies]

In my constituency, my hon. Friend’s constituency and throughout the country, there are women who do not earn any money but live in a household with a partner, receive child benefit and spend the money on their children. In the light of their uncertainty about the future, given what we all know about the divorce rates, those women are critically concerned that the hand of government will suddenly come in and snatch that money from them or their children because of what the man earns. The Bill is clearly an infringement of independent taxation and an attack on children and mothers.

[Chris Leslie]

My hon. Friend highlights the fact that I cannot see this being the end of the matter. The Minister suggests that the measure is part of the Government’s carefully calculated spending commitments, but I do not think that they will continue with the plan. There are so many anomalies and problems in its design and operation that they clearly did not think it through properly. They might have looked at the ready reckoner, saying “Oh yes” as they licked their lips at the £2.5 billion that they could take from families, and went straight to the first day of the Conservative party conference to announce their proposal, but it is unravelling by the moment.

The Institute for Fiscal Studies and others are starting to highlight the economic perversities and distorting effect of this measure. Even the sole issue of independent taxation is sufficient to hole below the waterline the Government’s plans to tax child benefit. I therefore hope that we can divide the House on the new clause.

Question put, That the clause be read a Second time.

Finance Bill

Debate between Chris Leslie and Geraint Davies

Thursday 15th July 2010 Commons Chamber

[Chris Leslie]

I thank my hon. Friend for his assistance. On home insurance, the excess is typically £100 or £200. Those hon. Members who are IT-literate, and who use the interweb to purchase their insurance, will realise that on many sites there is a little bar that one can shift across the page to increase the excess to £400, £500 or more. It effectively means that people will rarely, if ever, claim against that insurance, and it thereby removes not only much of the cost of the initial premium, but the chances that they will ever use that product. Again, that will leave people under-insured, with poor cover, and with a poor product for what could be a great expense if they are broken into or have problems with internal flooding or other damage to their property.

In some parts of the country, particularly where there is a flood risk, far too many people are still uninsured, and the pressure that they put on the taxpayer more generally to pick up the tab will be great. In some ways, the measure is a false economy by the Treasury: it discourages people from taking out insurance, yet they will undoubtedly be under pressure to pick up the tab in flood-risk areas.

There is a rumour going around that the Treasury might also impose an extra tax on those who live in flood-risk areas in order to cover the extra costs to the taxpayer of flood-prevention work—yet another example of a crude and unfair measure. I am sure that the Minister will be happy to tell the House that that is not the case and to put our minds at rest, because it would be a shame if such a measure were to come forward.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Will my hon. Friend give way on that point?

[Chris Leslie]

Happily.

--- Later in debate ---

[Geraint Davies]

On that specific point about the incidence of such insurance deals, the reality is that, as climate change progresses, the people who are caught by such costs will often be the poorest, who are closer to high flood-risk areas because of bad planning and the like. Does my hon. Friend agree that the impact of the measure will be increasingly regressive?

[Chris Leslie]

Absolutely. My right hon. Friend the shadow Chief Secretary to the Treasury made that point very forcefully earlier. The regressive impact of insurance premium tax is not widely understood, but, when our poorest constituents take out insurance, they are hit disproportionately hard, and unfortunately many of them will decide to go without that insurance altogether.

--- Later in debate ---

[Geraint Davies]

Will my hon. Friend give way?

[Chris Leslie]

I would like to make some progress, but yes, I shall give way.

--- Later in debate ---

[Geraint Davies]

My hon. Friend mentioned the issue of compulsion and rates. Does he agree that there is a case to be made for keeping the “holiday tax”, as he put it, lower, and paying for that by making it compulsory? One could argue that it is irresponsible for people to go on holiday without insurance and end up with all sorts of problems.

[Chris Leslie]

I hear what my hon. Friend says, but I am reluctant to extend compulsion in that regard. We should certainly encourage people to take out travel insurance and inform them of what might befall them should they not do so—they could be stranded abroad or find themselves without adequate medical or health cover, for example. I do not know whether hon. Members always remember to fill in their E111 forms when they travel to other countries in the European Union, but our constituents often do not. They can find themselves in significant jeopardy. In those circumstances, travel insurance is very useful.

Many people are employed in the insurance industry, and if there are disincentives against our constituents’ taking out decent, high-quality policies there will be an impact on the insurance sector and the financial services sector more widely. The financial services sector, including insurance, is one of the great industries of our country. It has been subject to a lot of criticism, and we can talk about that on another occasion, but it is important that we should not take steps that harm the products that we consume in this country and sell worldwide.

I conclude by reiterating to the Treasury the importance of assessing the impact of the insurance premium tax increase on our constituents and the Revenue. We do not know from the Red Book how the £455 million annual yield precisely breaks down between pensioners, young people and beyond. My right hon. Friend the shadow Chief Secretary says that the impact on pensioners will be significant and I take his word for that. That issue is a great worry. These are serious matters and I hope that the Treasury and other hon. Members will hear some of the points shared across both sides of the Chamber today.

--- Later in debate ---

[Geraint Davies]

The Economic Secretary knows that the distributional impact of the proposals is, as I have said, to spread the £3.6 billion burden from the top 2% to 10%. It is as simple as that. She knows that that is the case, and there is no way that she can wriggle out of that political and economic fact. Before the election, there was a promise that million pound estates would avoid inheritance tax—the top 5,000 households. At the last moment, the Chancellor stepped back and said, “Oh no, at such difficult times, we won’t give billions of pounds to the top few thousand households. Don’t worry. Vote Tory.” However, their secret plan was to have a word behind the scenes with their rich mates, telling them, “Don’t worry, we’ll reverse the Labour party’s old plan to make sure that the top 2% pay most.”

[Chris Leslie]

My hon. Friend is making several important points. The clause appears to reinstate an enormous tax relief capability for the wealthiest, yet the Economic Secretary guffaws at questions from Labour Members about taking it away. Surely the Treasury should clarify the position.

[Geraint Davies]

My hon. Friend is right. Only yesterday, he lucidly pointed out that, when we went into the election campaign, the Conservatives were saying, “We won’t help the rich with inheritance tax, and we’ll get those bankers with the bankers levy”, but that the levy of £400 million will be nullified by the corporation tax give-away to the bankers. On top of that, we hear not only that the bankers will not pay a levy because they get corporation tax back, but because of this proposal they will have the £3.6 billion in pension contributions. That is an absolute disgrace.

The Government argue that the measure is both fair and effective. I have already argued that it is clearly not fair and will not labour the point any longer, but is it effective? That the previous scheme was complex has been acknowledged, but the new system is also complex. There is enormous uncertainty within the industry, which is asking how pensions can be accrued in defined benefit schemes, how they will be valued under the proposals, and what will be the impact of the proposal on the provision of such schemes and what will be the impact on basic rate taxpayers. There are also compliance and delivery questions, and all sorts of other questions, and the measure must be delivered within a very tight time frame. We are therefore playing fast and loose with our economy and public finances, and with the confidence of the international community, in order that the Tories can bail out their rich friends. That is quite outrageous.

The Government say that the matter will not be done and dusted immediately, but that the measures give them various regulatory powers to withdraw Labour’s well thought out proposals and to leave a void. Specifically, it is said that there will be a discussion document in the summer of 2010, meaning that there will be a big discussion among the stakeholders on how the Government are going to recover the £3.6 billion that they would have made from the top 2%. The Government say, “We’d better not take that £3.6 billion because we’d be taking it from our friends, but we don’t know how we’re going to recover it, so we’ll have a stakeholder discussion in the summer,” which will presumably take place in the Maldives or somewhere similar.

[Chris Leslie]

Again, the Labour party was trying to close the loopholes for the very richest and to reduce some of the tax give-away for the millionaires. The Minister is asking the House to trust her while she shuffles the rules—that is what clause 5 effectively means—but does my hon. Friend think that the Government, given their track record, can be trusted on this matter?