Public Service Pensions and Judicial Offices Bill [Lords]

Christine Jardine Excerpts

Report stage
Tuesday 22nd February 2022 Commons Chamber

To be frank, we have no idea in any detail how this will operate. We have no idea how it will be transparent and open to debate. I have tabled my amendment because what I fear most is that this will be determined by Treasury direction. Treasury directions never come before this House. They are not like delegated legislation: they are made by Government themselves with no form of accountability. So the Government will be able to determine this economic test and effectively tear up the cost control mechanism that unions were promised would last 25 years. Whether benefits will go ahead and contribution levels will be determined by an OBR assessment of whether the economy can withstand the cost of that without any Member of this House having the ability to debate it, vote on it or determine it. That is why I believe Treasury directions are unsuitable for something so significant that will affect whether so many of our constituents will live in poverty in their retirement. For that reason, I believe the Minister needs to look again at how we can go forward to restore trust and confidence in the administration of public service pensions in the future, based upon some of the promises given a number of years ago to us as Members.

[Christine Jardine (Edinburgh West) (LD)]

This is an important Bill, but Liberal Democrats believe there are still several serious concerns that need addressing. More support is needed for individuals in making decisions; perhaps a helpline would be useful. There are implications for women—the pensions gap. There is also the potential negative impact on diversity in the judiciary, which is currently dominated by a generation of older white men.

I will focus on Liberal Democrat new clauses 4, 5 and 6, but first let me say that the Liberal Democrats will not be supporting new clause 1, tabled by the right hon. Member for Newark (Robert Jenrick). That is nothing to do with BDS; it is because the wider implications and unintended consequences could be significant in cases such as Xinjiang, where we believe a genocide is taking place. That is not Government policy, so what would the Government direction be in that case? Our concern is the wider implications and unintended consequences.

New clause 4 would require the Government to review the impact of the Bill on fairness. It calls a review of fairness and just treatment, particularly with regard to members of current schemes. It is important to ensure that members of current schemes are not caught in the pensions trap. Women are more likely than men to have taken time off work for caring responsibilities. Under some of the new schemes, which are based on age, they will have to work longer. The issue of gender in pensions is not new, and this would not be the first time the House made a misstep.

The gender pension gap is the percentage difference in pension income between female and male pensioners. The latest research showed that it had increased to 37.9%; we must be aware of that. The deficit will continue, so the amendment seeks to highlight the importance of this issue and the need for urgent measures to address it.

New clause 5 is about access to information and would require the Government to publish guidance to members of affected pension schemes and allow for provision of a helpline or online services to offer further assistance in important decisions for people’s futures. It is important that we think of the Bill in terms of individuals—the people whom it will affect—and their futures, what guidance and support will be provided to each person, how that will be resourced and how the Government will signpost that. That is key. We have seen with pensions for women born in the 1950s that when decisions and timings were not signposted, that had a massive impact on them when they found that their pension age had changed. We must not do that again—and we still have not rectified the first mistake. The Government have already accepted that people with complex tax issues can have financial advice. The same should be the case for millions of public sector workers who will have to make such choices, so the Government should put a helpline in place for that.

New clause 6, would require the Government to publish an annual update on progress in recruiting new members to the judiciary and on increasing diversity. It is important that our senior judges in the Court of Appeal and the Supreme Court reflect the society in which we live if they are to be respected. They must be seen as part of the current era, to reflect society’s trends and understand those trends, but there is perhaps a perception that they do not, and we are all concerned about that.

Although the proportion of judges who are women continues to increase gradually, women remain under-represented in judicial roles. That is particularly the case in the courts, where 32% of all judges and 26% of those in more senior roles are women, compared with 47% of all judges in tribunals. I am sure we would all like to see those figures addressed. The situation with black, Asian and minority ethnic judges is worse, with the figures being 4% for High Court judges and above compared with 8% of all court judges and 12% of tribunal judges. Surely that is far from acceptable. The new clause would ensure that the Government published an annual update on progress in this important area.

This is an important Bill and it is important that we address the issues in it. However, we must do that properly and ensure that there are not unintended consequences.

[Zarah Sultana (Coventry South) (Lab)]

I rise to speak to new clause 1. The year was 1985. After a campaign lasting decades, 123 councils answered the call for solidarity with the South African anti-apartheid movement and adopted policies opposing that injustice, including 39 councils that had divested from companies operating in South Africa and Namibia. While the Prime Minister, Margaret Thatcher, was calling the African National Congress and Nelson Mandela terrorists and Young Conservatives were proudly wearing badges calling for him to be hanged, local authorities were on the right side of history, standing up to the horror of apartheid. Of course, the Conservative Government could not tolerate that, so, a few years later, to weaken the anti-apartheid movement, they brought in laws making it illegal for local councils to boycott South African and Namibian goods. Looking back, it is crystal clear who was on the right side of history and who was on the wrong side.

The new clause, in the name of the right hon. Member for Newark (Robert Jenrick), would ban local councils from taking such a stand. Had it been in place back in 1985, because the Conservative Government supported apartheid South Africa—let us not forget that—local councils, no matter the strength of local feeling or the righteousness of the cause, would have been prevented from divesting pension funds from apartheid South Africa. They would have been compelled to be complicit in injustice.

Government Members may argue that that is history and things are different now. I contest that the facts say otherwise. The House knows that British-made weapons and diplomatic support are integral to the Saudi war in Yemen. Even as that war has claimed the lives of more than a quarter of a million people, pushed more than 20 million into absolute destitution and resulted in grave violations of international law, British complicity has continued. The new clause could deny councils the right to divest from arms companies whose bombs rain down on the people of Yemen. Similarly, if a local authority wanted to align its pension fund with international law and divest from companies operating in illegally occupied Palestinian lands, the new clause risks denying it that right, too.

Economic Update

Christine Jardine Excerpts

Thursday 3rd February 2022 Commons Chamber

[Rishi Sunak]

I am grateful for my right hon. Friend’s support. He rightly champions those people who are just about managing and who work incredibly hard to build a better life for themselves and their families. They should know that this Government are on their side. I thank him very much for his support and we will continue to champion those people.

[Christine Jardine (Edinburgh West) (LD)]

The Chancellor’s plans play Russian roulette with taxpayers’ money, gambling that prices will go down, rather than providing a real solution to help families to avoid skyrocketing bills. It is just delaying the pain while he increases taxes by £600 a year for the average household. Why will he not listen to the Liberal Democrats’ suggestion of a package that would help families to reduce their bills by £1,000 a year? Surely it is time to admit that he has got it wrong. It is time to scrap the Conservative tax hikes.

[Rishi Sunak]

We have not heard from the hon. Lady’s party any plan to provide the funding that the NHS needs. We all know that the NHS is grappling with the recovery from covid. There is an unprecedented scale of backlogs to work through and the social care system needs urgent reform. The only way to grapple with those challenges is to provide the NHS and social care with a sustainable source of funding. That is what we are doing, it is the responsible and right approach, it is the progressive approach, it will benefit people in Scotland, Wales and Northern Ireland as well as England, and in the long run it will be the right thing for this country.

Tackling Fraud and Preventing Government Waste

Christine Jardine Excerpts

Tuesday 1st February 2022 Commons Chamber

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to speak in this debate and to follow the hon. Member for Newport East (Jessica Morden). I thank the Labour Front Bench for calling this debate, in which we have heard so many powerful arguments. The debate follows the powerful statement made by Lord Agnew on his resignation, where he drew attention to the “lamentable” litany of mistakes, errors and inexplicable decisions by this Government.

I will not take up the House’s time by going into detail again, but we have heard today about the problems at Companies House, about the approximately £5 billion that we understand will just be written off and about the procurement mistakes that mean billions of pounds have been wasted on equipment that was of no use to anybody at a time when the emergency services in this country were crying out for proper personal protective equipment.

I speak not just on behalf of my party but, perhaps more importantly, on behalf of my constituents, who would recognise the shadow Chancellor’s description of the situation as a disgrace and an affront. Yes, it is a disgrace, and it is an affront to all my constituents and the 3 million people across the country who were told time and again by this Government that support would not be available to them during the pandemic from the job retention scheme and the self-employment income support scheme because it would be too difficult to administer due to the risk of fraud. We know now that, at the same time, companies were defrauding taxpayers.

It is an affront to them, and it is also an affront to my many constituents who are hounded on a weekly basis by the Department for Work and Pensions and Her Majesty’s Revenue and Customs because of errors made not by them but by those two Departments. It is also an affront to all those who have been pursued for loan charges. They are taxpayers who followed the rules and then, in many cases, faced bankruptcy because of a retrospective change in the law.

How is it that the Government are able to support the pursuit of those people? How is it that there is no support for them, while we stand here knowing that those who have taken money from the taxpayer fraudulently, at a time of national crisis, are not going to be pursued? I cannot believe there are any Conservative Members who think it any more acceptable than we do that their constituents can be treated in this way, and that criminal action—because it is criminal action when money has been stolen from our constituents, from honest, hard-working taxpayers—is simply going to be accepted, and these people will allowed to get away with it. I think that that is an affront to all of us.

Cost of Living Increases

Christine Jardine Excerpts

Monday 24th January 2022 Commons Chamber

[Christine Jardine (Edinburgh West) (LD)]

Thank you, Madam Deputy Speaker. It is a pleasure to speak in this important debate and to follow the hon. Member for East Renfrewshire (Kirsten Oswald).

It is important that we have heard contributions from the hon. Members for North Norfolk (Duncan Baker), for Bury North (James Daly), for Ceredigion (Ben Lake) and for Broadland (Jerome Mayhew), because they emphasised that this is an issue that affects households not just in Scotland but in every single corner of the United Kingdom. I suggest to the hon. Member for Glasgow East (David Linden) that there are people in the home counties who are suffering just as much as households across the rest of the UK. They will suffer as a result of the Government’s hike in national insurance, and they are suffering from the record inflation rate and the stealth tax introduced as a result of the Government not increasing the tax threshold. All those things are affecting households who are also facing a massive increase in energy prices, which for a lot of them will mean a choice between heating their home and feeding their family this winter.

It is important that the Scottish National party take into account that this is an issue on which we all agree. The Labour party agrees; the hon. Member for Edinburgh South (Ian Murray) made many of the same arguments that we have heard from the SNP Benches, and that people will hear from the Liberal Democrats. We want to see a doubling of the warm homes discount and the winter fuel allowance. We want to see a new 10-year home insulation scheme, support for energy-intensive businesses and a windfall tax on those who have benefited.

However, every single time SNP Members come to this House, they make it about independence and breaking up the United Kingdom, rather than sticking to the issue, which we all agree is important and which we all agree that our constituents across the United Kingdom face—yes, they face the same issue in Edinburgh South as they do in North Norfolk. That is something we have in common. It is a common problem and it will need all our attention and efforts in the United Kingdom to address it.

We have seen our cost of living degenerate over the course of the pandemic. Now we see it under more stress, and we have a Government whose attention—let us all be honest—is not entirely where it should be, but on their own internal problems, such as partygates and internal rows. Those should have no place here at a time when we face such a serious problem. I appeal to the Government to put all that aside, to fix it and to sort it; the Prime Minister should consider his position, and they should get on with dealing with the issue we all face.

To the Scottish National party I would say: we support you in fighting the cost of living crisis we all face, but we could fight it together. We could beat it together. We could help our constituents together, if we stopped having narrow identity arguments that simply divide us and make it more difficult for everybody.

Household Energy Bills: VAT

Christine Jardine Excerpts

Tuesday 11th January 2022 Commons Chamber

[Christine Jardine (Edinburgh West) (LD)]

It is an honour to speak in today’s debate, even though it is a very frustrating one. I cannot get my head around the fact that Government Members seem more offended by the Labour party trying to take control of the Order Paper than the cost-of-living crisis facing this country. That is not coming down the line; it is here and it is now. We have inflation at its record highest level in the last 10 years, a stealth tax that the Government introduced by freezing the tax threshold and a hike in national insurance, all of which are making a bad situation worse. Let us not start reheating pointless Brexit arguments; let us try to deal with the issue.

The Liberal Democrats believe that cutting VAT is a blunt instrument, so in principle, we would prefer to see targeted measures, doubling the warm home discount and the winter allowance. That is what we need, but we will support the Labour party today because it wants address the issues that people in our constituencies care about: how they will heat their homes, feed their children and keep themselves warm if they are elderly. That is what they care about, not debates that happened two years ago or, for that matter, Scottish independence. They care about how they pay their bills now, so we will support the motion.

Will the Government please stop speaking to us all as though we are not aware of what is going on in the country? Perhaps they are not aware—perhaps they are detached from it—but we Liberal Democrat Members are very aware of the problems that our constituents face due to the cost of living, inflation and energy prices going up, and the economic impact of the pandemic on our local businesses and independent traders, who provide vital income not just to our local communities, but to the people who work for them.

Two years ago, the Chancellor promised us that he would do whatever it took to fix the economy. It is a crying shame that he and the rest of the Government are apparently not prepared to do whatever it takes to help the people of this country through an economic crisis and a cost-of-living crisis that is hitting them hard.

Downing Street Garden Event

Christine Jardine Excerpts

Tuesday 11th January 2022 Commons Chamber

[Michael Ellis]

There is absolutely no indication of anything along those lines, so the hon. Lady is mischaracterising the position and jumping the gun. It is best not to make political points but, rather, to wait for Sue Gray’s investigation.

[Christine Jardine (Edinburgh West) (LD)]

We have heard today some reminders of what so many people in this country were going through in May 2020. One of the things that helped to keep us all together was the belief that we were all in it together and that the Government understood and supported what we were going through. Will the Paymaster General tell us whether the Prime Minister appreciates that my constituents and, I am sure, constituents elsewhere in the country now feel let down, betrayed and treated with contempt by this Prime Minister and his Government? Will he tell us when the Prime Minister will show some respect for the House and come here and answer the questions we all have for him?

[Michael Ellis]

The Prime Minister will come to the House tomorrow for Prime Minister’s questions and the Leader of the Opposition, or his deputy, will have the opportunity to ask questions then. The hon. Lady asks whether we are all in it together; yes, we are all in this together. The Prime Minister knows—as Prime Minister, he sees the documents, the scientists and the medical professionals and he meets the families and visits around the country. He is in a better position than most to know the impact of this pandemic and he fully recognises it, not only because of his personal experience but because of what he has seen and witnessed on his visits, in his meetings and by everything else he has done as Prime Minister since this covid pandemic began. He does recognise that, he is on the side of the people of this country, and he is working to achieve the best results for the people of this country.

Public Service Pensions and Judicial Offices Bill [Lords]

Christine Jardine Excerpts

2nd reading
Wednesday 5th January 2022 Commons Chamber

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to follow the hon. Member for Bromley and Chislehurst (Sir Robert Neill), and it was very interesting to hear his views on that aspect of the Bill and the judiciary. It is one of the reasons why— as other Members have mentioned—I do not think that the Liberal Democrats will oppose the Bill, although we may, at a later stage, table a number of amendments, which I will return to later.

As has been mentioned, there have been a considerable number of amendments to the Bill, which is intended, as the Government said, to ensure that we have equal treatment for all members in each of the main public service pension schemes. It would remove unlawful discrimination and bring in the remedy to age discrimination, as identified in the McCloud judgment, enable the Treasury to establish new public service pension schemes, increase the mandatory retirement age for judges, as the hon. Member mentioned, and provide for regulation-making powers. I believe that all of us in this place would support those aims, but the Liberal Democrats have several concerns, some of which the right hon. Member for Wolverhampton South East (Mr McFadden) mentioned. Many of the concerns were raised in the other place in relation to the amount of detail that is left to regulation and direction and what support will be available to members in making important decisions about their future pension planning.

In considering the Bill, we should reflect on lessons that we have learned, or should have learned, from previous, well-intentioned but ultimately problematic pension reforms, when issues of discrimination and unfairness emerged. I am thinking of the unintended consequences, a lack of information and poor communication, the implications of which have characterised the changes to the state pension age for women, particularly those born in the early 1950s. Ministers could do worse than to listen to some of the 6,000 so-called WASPI women in my Edinburgh West constituency talking about the hardship that the mismanagement or miscommunication of complicated pension changes can cause.

Our experts fear that up to 3 million pension holders will be affected by these important changes. Although consultation responses were supportive of the deferred choice method in the Bill, they warned that the complexity of implementing it may have been underestimated, and that was one of the concerns the Liberal Democrats mentioned in the other place. We believe that not enough support is being offered to members of schemes faced with complex decisions that could involve heavy losses. In the other place, we tabled an amendment to require the Secretary of State to issue guidance to help members understand the choice in front of them, and that could include something like a helpline.

We are also concerned about fairness and the disproportionate effect that some of the provisions in the Bill may have on women, and we tabled an amendment in the House of Lords on women and the gender pensions gap. The Government do not seem to have any real policy on how to rectify the problem, and women will potentially be adversely affected by the Bill, given the time they will have taken out of work for childcare and so on.

One last concern, which we may return to, is that raising the mandatory judicial retirement age from 70 to 75 could have a negative impact on the diversity of the judiciary, which at the moment is dominated by older, white men. To return to the statement by the hon. Member for Bromley and Chislehurst, the judiciary—its diversity, its fairness and its reflection of the country—is as important in many ways to our democracy as this place is.

That is all we would want to add at this stage, but we will return to these issues, perhaps on Report, and certainly with some amendments.

Oral Answers to Questions

Christine Jardine Excerpts

Tuesday 7th December 2021 Commons Chamber

[John Glen]

The hon. Member keeps asking “Where is the register?” I will answer the question in a moment. What the Government have done is put in an additional £63 million in the last Budget to deal with Companies House reform, which is one of the areas. We have been the world’s leader in terms of common reporting standards. We were the first country, five years ago, to raise the standard in terms of transparency. We will implement that register when legislative time becomes available.

[Christine Jardine (Edinburgh West) (LD)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Rishi Sunak)]

A month ago, I set out our plan for a stronger economy, protecting and supporting jobs, driving up economic growth and cutting the universal credit taper rate, giving the lower-paid in our society a tax cut worth £2.2 billion.

[Christine Jardine]

In the 2019 Queen’s Speech, the rationale for reform was set out as being to

“ensure our tax system is supporting Scottish whisky and gin producers and protecting 42,000 jobs”—

including many in my constituency. How would the Chancellor square that with the actual proposals, which will tax domestic producers more than those of imported cava, prosecco and champagne; do not take into account how people consume spirits with mixers, the sugar and calorific content or his own Government’s health policies; and actually increase the competitive disadvantage of an important domestic sector compared with the international one?

[Rishi Sunak]

Our reforms of the alcohol duty system usher in a system that is simpler, fairer and better for public health. I am not entirely sure that the hon. Lady has got the details right on this. In fact, for Scotch whisky, this is an improvement because we have levelled the playing field for higher-strength drinks, which the Scotch Whisky Association had been calling for. With regard to the differential between domestic and foreign producers, because English sparkling wine is produced to a lower alcohol content naturally than foreign sparkling wine, it will actually, for the first time, enjoy a tax advantage under the new system. Perhaps most relevant immediately, we also froze all alcohol duties—a half-a-billion-pound tax cut for British people this year.

Finance (No. 2) Bill

Christine Jardine Excerpts

Committee stage
Wednesday 1st December 2021 Commons Chamber

On the national insurance hike, it has been said many times—I make no apology for saying it again—that it breaks a clear manifesto promise of the Conservative party. Even with the increase in dividend taxes in the Bill, the burden still falls disproportionately on the shoulders of the lowest earners, the youngest and those with the fewest assets. We have to ask ourselves whether the Government are on the side of those who work hard, play fair and appreciate the urgency of the climate emergency that we face. Sadly, given the Bill and their opposition to the amendments that have been tabled, I have to say that the answer is no.

[Christine Jardine (Edinburgh West) (LD)]

I confirm that the Liberal Democrats will not be supporting the Bill and will be supporting the Opposition amendments. There are several specific reasons for that, which I have expressed previously, including that the Bill fails to address the cost of living crisis in this country and fails to adequately address the need to have and to shift to a greener, more sustainable economy. It also fails to address the concerns that the hon. Member for Gordon (Richard Thomson) expressed about the changes to the banking surcharge, which strike many people in the country as inappropriate at the moment.

I will focus on one issue that is dealt with by new clause 17, which has been tabled by my party. The Minister mentioned the innocuously titled basis pay rate and the basis period reform. One of the frustrating things about the Bill is that the more we look into the detail, the more we find to object to. Hidden in it are huge accounting changes that will make life much harder for tens of thousands of farming businesses, and other partnerships and sole traders around the country. Under the basis period reform, farmers will have to submit two tax returns instead of one, doubling their administrative burden.

Proud farming communities from Shetland to Shropshire are worried about the costs and burdens that will come with those changes. In Shropshire alone, there are more than 6,000 partners and directors in the sector who are likely to be affected by the reforms. Like many others from communities in the so-called blue wall, they find that the Government are taking them for granted and saddling them with administrative burdens and costs—and yet more promises that somehow seem to be ignored. They will force farmers to submit estimated tax returns when there is no good way of knowing the value of a crop yield when it is still in the ground.

We would like Ministers to put those plans on hold immediately and listen to farmers’ concerns. They should at least offer them an extended deadline, so that they do not have to estimate their profits but can submit just one final tax return. They should also explore the options laid out by the Office of Tax Simplification about changing the tax year to a 31 December end date. Farmers across the country have already seen their basic payments cut by at least 5% and could be facing even more costs. They deserve better. This is unfair and counterproductive, and it is yet another reason why people are disappointed with what they have heard about this Finance Bill.

Therefore, the Liberal Democrats will not vote to support the Bill, but we will support the Opposition amendments.

[Richard Burgon (Leeds East) (Lab)]

As always, it is a pleasure to serve under your chairship, Dame Eleanor. I wish to speak in support of new clause 16, which is in my name, and new clause 8, which has been tabled by my hon. Friend the Member for Hemsworth (Jon Trickett).

Both new clauses aim to tackle the gross injustice of taxes on share dividends being set at less than income tax rates. They are both part of a wider push for tax justice and wealth taxes—a push made ever more urgent by the growing inequality that we have seen throughout the pandemic. I also support the new clause on this issue from the Leader of the Opposition and the new clause on the banking surcharge. It is shameful that the Government are cutting taxes for banks while increasing the tax burden on working families.

Faced with a backlash over their plans to impose tax rises on working people, the Government made a very limited change, increasing the taxes on share dividends by 1.25%. That was done to try to give the impression that they were sharing the burden of the so-called health and care levy equally between ordinary working people and those lucky enough to live off their wealth. But that was just smoke and mirrors, done solely to deflect the media and distract the public, not to help to actually secure economic justice. That is obvious from the amounts that will be raised by the so-called health and social care levy. The national insurance increases will raise £11.4 billion a year, while the increases in tax on share dividends will raise just £600 million a year. We need to be clear about this: the Government’s change is woefully inadequate.

However, this can act as a watershed moment when we finally get to grips with the great injustice in our tax system that wealth is often taxed at much lower rates than income tax. It is clear, is it not, that our economy is rigged in the interests of the 1%? That has become even clearer during the pandemic, when we have seen the corrupt contracts that have been handed out or the fact that the billionaires have increased their wealth by £290 million a day while food bank use has hit record levels. How completely grotesque.

Our tax system is also rigged in the interests of the top 1%. One obvious way in which that happens is that those with wealth get special discounts on their tax rates. They pay lower tax rates than the vast majority, who have to go out to work day in, day out. My new clause seeks to put a stop to that racket, to that injustice. Why on earth is someone lucky enough to have inherited millions of pounds of shares and who now lives comfortably off their annual share dividends allowed to pay a lower rate of tax than people who have to go to work day in, day out? That is completely unfair and completely unjustifiable. It needs to change. Economic justice demands change, and my new clause would deliver that. It would raise tens of billions of pounds that could go towards funding a national care service, for example, in a progressive way by taxing wealth and not by hitting the pockets of working people.

Let us look at how this rigged system works in practice for those lucky enough to be in the top 1% of incomes. They currently have to pay a 45% rate of tax on income but pay way less on earnings from share dividends: just 38.1%. That tax discount applies even though payments to shareholders primarily go to a very wealthy minority. One quarter of the total income of the richest 1% is generated from dividends and partnership income alone.

The Government try to give the impression that we somehow live in some kind of shareholding democracy where everybody has an equal stake in owning shares, but I am afraid that that is just not true. TUC research shows that UK taxpayers earning over £150,000, which is just 1% of all taxpayers, captured about 22% of all direct income from UK dividends, so the wealthiest accumulate their money from share dividends instead of working, and the Government reward them for this with a tax discount. That is totally unjustifiable, totally unreasonable and totally indefensible.

The changes I have called for in new clause 16 would raise billions for the Treasury—billions that could go towards funding a national care service. Institute for Public Policy Research calculations in 2019 estimated that this would raise £29 billion over the lifetime of this Parliament, even after accounting for behavioural changes. But I am afraid the Conservative party does not want to tax the income of the super-rich who bankroll the party. This new clause has been tabled as an opportunity for the Government to really tackle the injustice in our taxation. It is absolutely outrageous and it needs to change, and that is why I put down this amendment.

Finance (No. 2) Bill

Christine Jardine Excerpts

2nd reading
Tuesday 16th November 2021 Commons Chamber

[John McDonnell]

I raised in my Budget speech the lack of confidence in the Government’s commitment to levelling up overall and even to defining what it means, and I mentioned the importance of the need for a bit of levelling back because of the scale of the cuts that have been endured over the past 11 years.

I make the general point that there is currently a level of insecurity and uncertainty, and a questioning of politics overall and of whether the people can trust any politician. I thought that with a Budget and a comprehensive spending review the Government would at least be able to set out their plans and bring forward the measures in the Finance Bill so that we would at least know where they are going, which might give us some security or confidence that the Government at least have some sense of direction. I do not think it is there—it is certainly not in the Bill. We can take some humour from this situation. The Chancellor certainly led with his chin in respect of the proposals to cut the bankers’ levy and the tax on flights and champagne. No one could blame the shadow Front-Bench team coming forward and taking the rise out of what was quite obviously a bankers’ Budget.

Let me comment on a number of the key issues that have been raised in the debate so far. If the Budget was about the end of austerity, high skills, high wages and so on, the Bill flies in the face of all that. The hon. Member for Glenrothes (Peter Grant) talked about how people have been treated in respect of other announcements; how can the Government argue that the Bill is about high wages when they are freezing tax bands, introducing national insurance increases and cutting universal credit? All those things hit earners.

Something fundamental at the heart of this Bill—it was at the heart of the Budget, too—is the Government’s refusal to take on the imbalance between the taxation of wealth and the taxation of earnings. We have seen it in the Government’s setting out of proposals some time ago on reforming capital gains tax but their failure, yet again, to do it in this legislation. Given that the argument over the need to ensure that we tax on capital and wealth as well as on levels of earnings has been won, the proposal that I thought would be in this Bill was to ensure that taxation on earnings and on capital gains were brought into line. The amount that that would bring in to the Government was initially recalculated at £14 billion, but I see that the TUC’s figure is £17 billion. That could have resolved the issues in social care. That would have ended austerity for large numbers of our population.

The Government argue that, in the Bill, they are doing something about the taxation of earnings from dividends, but it is negligible in comparison with what is needed and it sends out a similar message that they are willing to penalise earners, but, at the same time, allow others who earn their money from wealth to walk away.

The reason that the bank levy offends is not just that it is going back to the days of the crash and the scurrilous role that the banks played in enabling that to happen—the profiteering at all our expenses; it is because what the banks have is the best insurance policy in the world. It is an insurance policy, backed up by the UK Government, that no matter what they do, no matter how much they fail, they will never be allowed to fail because the Government will always step in and bail them out. An additional levy was placed on the banks to make sure that they paid something back from the crash, and also that they paid something in return for the guarantee that they were given. What we find now is that the amount that they have paid so far does not even pay off some of the damaging costs that fell to taxpayers as a result of their wild speculation that brought about the crash.

One matter that has been raised in the debate—the Exchequer Secretary has also mentioned it—is that of tax reliefs and the extension of the annual investment allowance. I can understand why the Government have done that, but what I cannot understand is why they have done that as well as introduce the super deductions. The Government’s argument is that 99% of the business investment that is undertaken will be covered by the annual investment allowance, but to then go on and give a super tax deduction of 130% flies in the face of that argument. If we look at the record of tax reliefs, most of which, historically, have never been reviewed by the Treasury, we see that they mount up year after year, decade after decade. Some of them go back nearly a century, but they are never reviewed, and that is often with scandalous effect. On the entrepreneurs’ allowance, even the Government had to accept that that was an abuse of an allowance. People were walking away with large amounts of benefits without in any way demonstrating their entrepreneurial skills. It is the same with the patent box.

Let me now come to the tonnage tax. I have been lobbying on that now for nearly 15 years. The tonnage tax was introduced by John Prescott—by the way, I hope that all of us will send our best wishes to him in the hope that his recovery from the severe stroke that he had is going on apace—as part of a strategy to revive British shipping. The purpose of it was to give a tax allowance to shipping companies so that they would then employ more UK seafarers, and employ them on a decent wage as well. Year after year, we argued about it with the Government—the Labour Government got into this one as well. Large amounts of money were going to these shipping companies, but the jobs were not appearing. In fact, we were losing UK seafarer jobs. Seafarers were largely being recruited from abroad, and in some instances were not even being paid the minimum wage. The tonnage tax was linked to the training of officer cadets, not ratings, and a limited number of officer cadets were recruited by the shipping companies. As a result of lobbying—I was there in a meeting with the Minister—we did get a bit of flexibility, whereby if a company was not recruiting officers, it was able voluntarily to recruit ratings and still qualify for the tax.

Let me just explain to the House the tonnage tax figures. The tonnage tax was introduced in 2000-01. Its cost—£2.165 billion. How many jobs do hon. Members think have been created, that we know of, for £2.165 billion? Does anyone want to intervene with a figure? All we know about, on the record, is 75; that is £28 million a job.

[Christine Jardine (Edinburgh West) (LD)]

Almost as good as they get!

[David Linden]

That’s about as much as Geoffrey Cox gets!

--- Later in debate ---

[Christine Jardine (Edinburgh West) (LD)]

It is a pleasure to follow the right hon. Member for Hayes and Harlington (John McDonnell). I rise to my feet on behalf of the Liberal Democrats to say that we cannot support this Finance Bill, which derives from a Budget that missed a vital opportunity to help struggling families in this country. Instead, it hammers them with tax hikes, empty words and broken promises. It is completely out of touch and offers nothing to help them with the energy bills that they will face this winter. Worse than that for me, the Bill sends a clear message to children and their parents that they are worth less to this economy than investment bankers and banks. Far from providing the support that families needed when we are facing a cost of living crisis, this Finance Bill will provide less in extra catch-up funding for schools than it does in tax cuts for big banks. There will be just £1 of extra catch-up funding for each child, compared with £6 a day in tax cuts for each banker. That brings the £1.8 billion new catch-up money offered to just £5 billion, one third of what the Government’s own advisers said was necessary to allow our children to catch up on the many millions of hours that they have in total lost in their classrooms over the past 18 months, which threaten, according to official figures, to leave them losing anything up to £46,000 in income over the course of their lifetime. Putting bankers before children tells us everything we need to know about the priorities in this Bill.

People who have worked hard, paid their taxes and played by the rules are seeing their incomes squeezed through no fault of their own. They are being crippled by tax hikes and their benefits have been slashed—all in the face of skyrocketing bills. We should be demanding a fair deal for families and an investment in future generations: support for vulnerable families, more investment in our children’s education and more funding for tackling the climate emergency. Instead, we see an end to the £20 uplift to universal credit, nearly half the minimum wage rise clawed back through the increase in national insurance, no help with energy bills, the Chancellor’s announcement on universal credit taper giving back just one third of what he snatched away, and millions of families with no help at all.

When it comes to the climate, while COP26 was getting under way in Glasgow and we were all looking for something that would send a clear message that saving the planet was a major priority, what did we get? We got a reduction in air passenger duty, which will do nothing at all to help to reduce carbon emissions.

This Bill offers nothing of what we would like to see for the people of this country. It offers nothing, either, for the businesses, because it fails to deliver on the Government’s promise to reduce business rates through a fundamental review of the system, leaving companies with no long-term support as they cope with the impact of the pandemic and new international trade barriers. The business rates announcement will not abolish the skewed and complicated system, which only benefits property landlords and not the hard-working business owners who rent from them. Even the tax cuts for businesses investing in green energy for properties are only set to benefit commercial landlords, not our high street shops, whose owners will really pay the bill.

Businesses have been hit hard by endless Government disasters, the handling of the pandemic and a new mountain of red tape introduced post Brexit. However, I cannot agree with the hon. Members for Glasgow Central (Alison Thewliss) and for Glenrothes (Peter Grant) that the answer to all that is an independent Scotland.

[Peter Grant]

Oh, go on, go on.

[Christine Jardine]

Not this time. On that point, I cannot agree, because there have been Governments in this place that have done wonderful things for Scotland, not least of which was to deliver devolution, and we have learned in Scotland over the past 14 years that moving the Government to Holyrood does not guarantee it will be any better. On behalf of my colleagues in the Liberal Democrats, we will not support the Finance Bill and we will support the Labour amendment.