Childcare Payments Bill
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Catherine McKinnell
I think that the hon. Lady is straying somewhat from the subject of the debate, but I also think that a number of the workers who were involved in Thursday’s strikes were among the very lowest paid, who we know need this child care support and who are struggling to make ends meet. That was one of the motivating factors in the action that they took last week. I therefore do not think that the hon. Lady’s point was entirely irrelevant, but let me now return to the issue that is under discussion, which is child poverty.
There is concern about the fact that much of the progress that has been made has been either halted or, even worse, reversed by the Government’s policies over the last four to five years. The Government are absolutely on track to miss spectacularly their statutory obligations in terms of eradicating child poverty. As their own child poverty adviser Alan Milburn said recently,
“The Government’s approach falls far short of what is needed to reduce, let alone end, child poverty in our country.”
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I must draw something to the hon. Lady’s attention. Child poverty may be ancillary to the Bill that we are discussing, but she said that the matter before us was child poverty, and it is not; the matter before us is the Bill. However, I am sure that the hon. Lady is illustrating her remarks by referring to child poverty, and that she will soon return to the subject of the Bill.
Catherine McKinnell
Indeed, the next sub-heading in my speech is “The Bill”, so thank you, Madam Deputy Speaker. My point was that child poverty was the issue—the issue in front of us—with which I was dealing before I took a number of interventions. That issue is very pertinent, because we know that the provision of affordable child care is one of the key measures that will help children to be lifted out of poverty. We know that enabling parents to go to work and to be in stable, secure employment is the primary way of enabling them to bring their families out of poverty.
Let me reiterate—in the context of today’s debate and the Bill—that we support any Government action that will help families who are struggling with the child care crunch. However, as we know, this additional support does not do nearly enough to make up some of the ground that has been lost over the past four years. For a number of reasons, there is doubt about how effective it will be even when it arrives, in about a year’s time, and about how much better off families will be. The bottom line is this: the Bill confirms that there will be no help for parents who are facing a child care crunch until after the next election, which means that there will be virtually no help with child care for an entire Parliament under the Conservatives and the Liberal Democrats.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before the hon. Lady replies to the intervention, I simply draw it to her notice that she has now spoken for 44 minutes, which is more than twice as long as the Minister. I am not stopping the hon. Lady speaking because I appreciate that she is making some very good points and putting questions that have to be put. But before she considers taking other interventions, she might consider that other Members are waiting to speak.
Catherine McKinnell
Thank you, Madam Deputy Speaker. I am grateful for your guidance.
The final point I want to make concerns the delivery of this scheme. We are now some 14 to 16 months away from when the scheme should be up and running, according to the Government’s revised timetable, yet the Government still have not made a decision—at least publicly—about who will deliver the child care accounts through which parents will access Government top-ups and pay for child care. They originally announced in their consultation response that National Savings & Investments would be their delivery partner, but after ditching that decision and the preceding consultation process, they have backtracked and reopened the consultation process.
Will the Minister tell us why the Government commissioned a £38,000 cost-benefit analysis report by Economic Insight, which recommended an open, competitive market model for delivering child care accounts, and then simply ignored the report’s recommendations and chose an in-house provider, NS&I, instead? Will she clarify who will be delivering the child care accounts under this in-house option, as it is my understanding that the former Economic Secretary to the Treasury, now Secretary of State for Culture, Media and Sport, awarded a seven-year outsourcing contract to Atos in May 2013 to deliver all customer-facing and back-office services to about 25 million NS&I customers? If the Government continue with the previous plan to have NS&I deliver child care accounts, will the Minister clarify whether it will in fact be Atos delivering them? If that decision is taken, does the Minister plan to renegotiate, or at least revisit, NS&I’s contract with Atos to ascertain whether the company is up to delivering and maintaining accounts to potentially 2 million parents, considering that this would be significantly different from NS&I’s current activities?
Finance Bill
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The Minister for Skills and Enterprise (Matthew Hancock)
On a point of order, Madam Deputy Speaker. Given that the Office for National Statistics has confirmed this afternoon that four fifths of new jobs have been created outside London, and given that the Leader of the Opposition may inadvertently have misled the House by saying that the number of people waiting more than four hours in A and E has risen by over 300% when this is not accurate, may I take your advice on how the Leader of the Opposition may be brought before the House to retract these inaccuracies and apologise?
Madam Deputy Speaker (Mrs Eleanor Laing)
No, the hon. Gentleman may not take my advice. It is not the position of the Chair to advise hon. Members, far less the Leader of the Opposition, on the content of their speeches, but the hon. Gentleman has put his facts on the record, and I am sure that they have been noted on both Front Benches.
Chris Leslie (Nottingham East) (Lab/Co-op)
Further to that point of order, Madam Deputy Speaker. Is there anything that you can do to stop these eager Front Benchers seeking Cabinet preferment in the forthcoming reshuffle from making spurious points of order, when what they should do with statistics is allow the Office for Budget Responsibility to audit these—
Madam Deputy Speaker
Order. The hon. Gentleman knows that that is not a point of order, nor could it be further to a point of order, as there was no point of order.
Ian Swales
On a point of order, Madam Deputy Speaker. I made a point of order earlier today regarding a figure used yesterday by the hon. Member for Birmingham, Ladywood (Shabana Mahmood). The 2010 figure that I gave was correct, but I am now aware that the hon. Lady was using a figure derived on a new basis, so the comparison that I drew was incorrect. I felt that that should be put on the record.
Madam Deputy Speaker
I am grateful to the hon. Gentleman—[Interruption.] Order. I am grateful to the hon. Gentleman. That is a point of order. He has put the record straight, and the House is grateful to him.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
On a point of order, Madam Deputy Speaker. Could you advise me, please, with reference to the inaccurate information that was given by the Prime Minister about waiting lists for A and E, and the fact that in 48 out of the past 52 weeks, A and E targets have been missed by this Government—
Madam Deputy Speaker
Order. I have already reminded the House that the content of Ministers’ speeches is not a matter for the Chair, and that is not a point of order.
New Clause 1
Oil contractor activities: ring-fence trade etc
‘Schedule (Oil contractors: ring-fence trade etc) contains provision about the corporation tax treatment of oil contractor activities.’—(Mr Gauke.)
Brought up, and read the First time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Government new clause 2—Determination of beneficial entitlement for purposes of group relief.
Government new clause 3—General Block Exemption Regulation.
Government new clause 4—Co-operative societies etc.
Government new clause 5—Tax relief for theatrical production.
Government new clause 6—Exclusion of incentivised electricity or heat generation activities.
Government new schedule 1—Oil contractors: ring-fence trade etc.
Government new schedule 2—General Block Exemption Regulation.
Government new schedule 3—Taxation of co-operative societies etc.
Government new schedule 4—Tax relief for theatrical production.
Government amendments 42, 43, 5, 6, 1, 2, 4, 11 to 14, 7 to 10, 15 to 41, 3 and 44 to 66.
Mr Gauke
I will attempt to speak briefly to this long list of Government new clauses, new schedules and amendments, although I will respond later in the debate if any questions are raised.
New clause 1 and new schedule 1 make changes to provide a fair amount of taxation for activities carried out on the UK continental shelf in connection with the UK’s oil and gas resources. The Government are committed to maximising the benefits that the North sea can bring to the UK economy while ensuring that all companies benefiting from the UK’s natural resources, either directly or indirectly, pay their fair share of tax.
The UK is not currently receiving a fair amount of tax from companies that provide drilling rigs and accommodation vessels to the oil and gas industry. Many of those companies own their assets in lower tax jurisdictions overseas. Those assets are then leased to associated entities operating on the UK continental shelf through specialised leasing arrangements known as bareboat charters, giving rise to a large deductible leasing expense in the UK. That results in up to 90% of operating profit made in the UK being moved overseas.
This measure will cap the amount the UK base contractor can claim as a deductible expense for those leasing payments. It will ensure that companies pay a fair amount of tax for the activities they carry out in connection with the UK’s valuable natural resources.
New clause 2 makes changes to corporation tax group relief rules to remove an unintended restriction that has been identified in current anti-avoidance legislation. That legislation is well targeted and limits the opportunities for avoidance, for example through artificial groupings. However, the rules are triggered in limited circumstances where conditions are agreed or imposed on a group by the Government or a statutory body. That is clearly unintended.
The clause proposes a restricted amendment to section 169(2) of the Corporation Tax Act 2010 to exclude from the definition of “arrangements” situations where conditions are agreed or imposed by the Government. That will ensure that the anti-avoidance rules are more effectively targeted for the future and that companies involved in these specific commercial arrangements will have improved access to group relief. The amended rules will continue to ensure that they prevent manipulation of company control and group status and will continue to restrict access to group relief where appropriate. That will maintain the fairness and consistency of the tax system.
Government new clause 3 and amendments 42 and 43 make a number of changes to three capital allowances: enhanced capital allowances for zero-emission goods vehicles; enhanced capital allowances for enterprise zones; and business premises renovation allowances. All are state aids designed to comply with the general block exemption regulation. The existing regulation ended on 30 June and a new one took effect from 1 July. Although it is similar to its predecessor, the new regulation contains a number of differences that need to be reflected in those reliefs. The new clause and the amendments do that. Broadly, they ensure that various definitions found in those reliefs refer to the new general block exemption regulation.
In the case of enterprise zone allowances, it also excludes expenditure on energy generation, distribution or infrastructure, and broadband networks; restricts qualifying expenditure incurred by large companies in certain enterprise zones to new economic activities; and requires companies that make a production process more efficient to ensure that the qualifying expenditure exceeds by value at least three years’ depreciation of the machines being replaced.
New clause 4 and new schedule 3 make technical changes to the tax legislation applying to co-operative and community benefit societies, industrial and provident societies, European co-operative societies and credit unions to ensure that the definitions used in the legislation are clear, up to date and work as intended. There has been no policy change on the taxation of the various societies or the reliefs available to them, or indeed their members. There will be no effect on their tax position, but the changes we are making will ensure that the legislation is accurate and fully in accordance with the policy intention.
New clause 5 will introduce an additional corporate tax deduction and payable tax credit for theatre production costs. Production companies will be eligible for a payable tax credit worth up to 25% of qualifying expenditure for touring productions and 20% for all other productions. These provisions will be available from September for producers of a wide range of theatre and performance, supporting plays, musicals, dance, ballet, opera and circus.
Finance Bill
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Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I assume that Members taking part in the Finance Bill debate are arithmetically astute, so will be able to work out as quickly as I can that, if the Minister is to have any chance of answering the many points put to him, particularly by Opposition Front Benchers, the four people wishing to speak have little more than 10 minutes left. If they take less than three minutes each, everyone will get to speak; if they take more, they will be being discourteous to each other.
Charlie Elphicke
I will endeavour to be as brief as possible, Madam Deputy Speaker.
I have often made the case against tax avoidance—international and national—in the House. I have often mentioned the behaviour of the water companies, which used the quoted eurobond exemption to further their strategies. Yet I cannot support the new clause, which is, in the words of the Labour party’s head of policy, the hon. Member for Dagenham and Rainham (Jon Cruddas), nothing less than an “instrumentalised, cynical” nugget
“of policy to chime with…focus groups and…press strategies”.
The shadow Chancellor showed that at the weekend.
The new clause would not raise £500 million. I will be interested to hear the Minister say exactly how much it would raise, as in many cases double taxation treaties could be used. When I raised the loophole in question, my case was about the debt-equity gearing ratio—a far more effective way of looking at the issue. I would be surprised if the Labour party had consulted experts beyond its own advisers. Indeed, there was a consultation on this issue in 2012. I stand to be corrected, but I do not believe the Labour party gave a response to that consultation. It simply thought, “What wheeze can we table as a new clause to plonk out there for our press strategy as our instrumentalised policy nugget?”
The new clause is highly cynical. It has been devised purely to make a case and to say, “Yes, we are on the pitch in the tax avoidance debate.” In fact, when the Labour party was in power receipts from income tax doubled but receipts from corporation tax went up by 6%. Again, we heard cynicism in the debate today with remarks about the tax gap going up by £1 billion to £35 billion. That is because the economy is growing. In reality, the percentage has fallen from 7.1% to 7%, so the tax gap has been heading in the right direction.
The Government have done a lot to make the case on this issue and to take the battle to the tax avoiders. I support the accelerated payments regime—I differ from my hon. Friend the Member for Aldershot (Sir Gerald Howarth) on this—because people who are subject to it know that they are engaging in a tax avoidance arrangement that is going to be under attack, and so should be prudent and keep the money to one side. If they are not doing so, they should be thinking about things rather more carefully, because they know they have entered into an arrangement that is likely to be under attack from the Revenue.
Office for Budget Responsibility (Manifesto Audits)
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Madam Deputy Speaker (Mrs Eleanor Laing)
I inform the House that Mr Speaker has selected the amendment in the name of the Prime Minister.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before I call the Minister to move the amendment, I must inform the House that a great many hon. Members obviously wish to speak in the very limited time available. I will therefore put a limit on Back-Benchers’ speeches of six minutes, which may well be reduced later if they take many interventions and speak for much longer than six minutes. I hope that hon. Members will behave with courtesy to others and keep their speeches short.
Consumer Rights Bill
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Stella Creasy
I beg to move amendment 1, page 51, line 9, at end insert—
“1A A term which requires a consumer to pay a charge for, or be liable for, an element of a good or service that another party has also been charged for in the course of the same transaction.”
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Amendment 2, page 51, line 15, at end insert—
“2A A term which relies upon any bill of sale, as defined in section 3 (Construction of Act) of the Bills of Sale Act (1878) Amendment Act 1882, to reduce the level of consumer protection in relation to contracts concerning consumer credit.”
Amendment 3, page 51, line 18, at end insert—
“3A A term that directly causes financial detriment to the consumer such that it can reasonably be seen to alter the capacity of the consumer to pay the costs of the contract, where the contract is for a financial service.”
Amendment 4, page 53, line 2, at end insert—
“20A A term which either—
(a) requires or encourages a consumer to contract third party services without informing them of their right to seek independent advice; or
(b) seeks to limit a consumer’s access to independent advice regarding third party contracts where there is a potential conflict of interest for the third party involved.”
Amendment 19, page 53, line 2, at the end insert—
“20A A term which has the object or effect of permitting a trader to block, restrict or otherwise hinder the access of a consumer to any lawful electronic communications network or electronic communications service on the basis of an unreasonable or unusual definition of ‘internet access’, ‘data’, ‘webaccess’ or similar word or phrase. Nothing in this prohibition shall affect filters for the purpose of child protection. Electronic communications network or electronic communication service shall have the same meaning as in the Communications Act 2003.”
Amendment (a) to amendment 19, after “trader”, insert
“engaged in the provision of fixed broadband internet access or mobile internet services.”
Stella Creasy
I shall speak to all the amendments in the group, which are about unfair contract terms. Unfairness is such a central concept to British values, I will wager, that it provides an apt discussion point for this week alone. All the amendments deal with where a market is stacked against one party and, we would argue, both miss out as a result. When service providers exploit a lack of information or collude to distort behaviour, it is not just the public who are badly treated: competition is stifled, creativity and innovation are weakened and, above all, the consumer is ripped off. The amendments thus reflect some of the problems affecting markets that we see in Britain and deal with what more could be done to make a stronger consumer rights framework that would give the public the tools to be able to prevent rather than have to deal with the problems that come from these distorted behaviours. There are four different issues, but we consider them all to be part of the conflicts of interest that cause detriment to the consumer.
Amendment 1 refers to what we call “double charging”, and particularly the behaviour of estate agents. We all know that buying a house is one of the biggest costs any of us will face in our lifetime. An English man or woman’s home is their castle, but it is often a very expensive one. The cost of buying a house has gone up so substantially in my constituency that it is now 30% more than it was a year ago—a source of extreme concern for many. Indeed, we know that the average home is worth eight times the average wage and that it can take 20 years for a family to save for a deposit. A million homes were bought in the UK last year, and prices have risen across the country by 8%, even if they have not risen as much as in some of our London areas. That is why the Governor of the Bank of England has warned that the biggest risk to the economy stems from the fact that people are getting mortgages—sometimes four or more times their salaries—that they cannot sustain. Housing is indeed a bubble underpinning our economy and leaving it in an incredibly precarious position.
The Government’s housing Bill will provide 15,000 houses, but people in my constituency know that we need to double that and then some, which is why Labour are proposing to build 200,000 houses, getting us closer to where we need to get to in order to deal with the pressures that people are experiencing. This amendment speaks, too, to some of the other charges that people face when buying a property. We may disagree about how many houses need to be built, but I am sure we would all want the housing property market to be as fair and open as possible so that it does not involve more expenses that mean people needing an even higher mortgage or an even higher level of debt—particularly in the form of the personal loans that people are taking out to pay the sort of fees necessary when they start ownership of a new property.
The amendment would deal with what the property ombudsman has called an “emerging commercial practice”—one that means that people such as estate agents, who benefit from the increase in demand for housing by exploiting the pressure on the country’s housing supply, reap the benefits. The practice involves a contract that we believe is ripping off consumers—both buyers and sellers—and therefore needs addressing. It is called “double charging” if the estate agent applies a fee to both the buyer and the seller of a property on the same transaction.
Let me explain the problem for the benefit of Members who have not yet observed the practice in their constituencies. It often results from the process of “sale by informal tender”. House owners are asked to accept sealed bids for their properties. Increasingly, estate agents are then charging successful bidders a “finder’s fee”, which, in some cases, is between 2% and 2.5% of the property fee plus VAT. According to the Consumers Association, an estate agent’s commission should normally be between 1% and 2%. Moreover, sellers themselves are paying to market their properties. Buyers must find the cost of the additional fee in order to bid.
The Economy and Living Standards
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Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It will be obvious to the hon. Members in the Chamber that a great many still wish to speak this afternoon and there is very little time left. After the next speaker has concluded, I will reduce the time limit to four minutes. I appreciate that this makes it difficult for Members who have prepared speeches, but if everyone is to be given the opportunity to speak, we simply cannot have more than four minutes. I call Andrew Selous.
Zac Goldsmith (Richmond Park) (Con)
I am pleased that the debate is about living standards because it gives me an opportunity to make the link between rising living standards and improved democracy. That link has been made many times before, notably by the celebrated Power commission, later by the economist Richard Layard, and later still in a very wide-ranging study by Harvard university. In their different ways, they all established that rising living standards boost the public appetite for democracy, and that boosted and strengthened democracy in turn stimulates an increase in and boosts living standards. The link is unavoidable.
One element of the Queen’s Speech is a commitment to introduce a recall system. In theory, that would certainly improve our democracy and therefore lead to rising living standards. I say “in theory” because the Government’s current proposal falls so short of genuine or meaningful recall as to be meaningless. However, the House will at least have the opportunity to make profound amendments to the Bill, and I very much hope that it does.
Recall was promised by all three parties before the last election. They felt obliged to make that promise on the back of the expenses scandal that rocked the House, and it presented an easy, democratic and simple solution. Effectively, recall means enabling voters to remove underperforming MPs if at any time they lose the confidence of the majority of their constituents. It could not be more straightforward: if enough constituents sign a petition in a given period of time, they earn the right to hold a referendum to ask whether constituents want to recall their MP, and if a majority want to recall their MP, there is a by-election. There is a natural safeguard in that the threshold would, in an average constituency, require 14,000 constituents actively to visit the town hall and sign a petition during an 8-week period. Recall would put people in charge, allowing them to replace their MP if a clear majority want to do so.
The public understood that they had finally been promised a reform that might empower them, but then the election happened. I am afraid to say that the Labour Opposition went quiet on the issue, and the coalition Government began to weave small print through their promise. The current proposal is for a form of recall that can happen only by permission of the Standards Committee, and its criteria are so narrow as to make it entirely meaningless.
People are already angry with politicians—the signs are everywhere—but hon. Members should try to imagine how voters will react when they discover that they have been duped by this pretend recall Bill, this illusion of reform. It is extraordinary that even if the Bill becomes law, an MP could switch parties, fail to turn up once to Parliament or even go on a two or three-year holiday without qualifying for recall. At the very first scandal, voters will learn that they have been tricked. The anger that they feel will dwarf—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman, with some ingenuity, has done well to keep in order and speak to the amendment. I trust that, in the final minute of his speech, he will conclude with reference to the specific matters in the amendment.
Zac Goldsmith
I will certainly do my best, Madam Deputy Speaker.
Even if people do not realise it yet, at the very first scandal, they will realise that they have been duped. Even before the Bill has been put to the test, 170,000 people have signed a petition saying that they want the real deal—not this thing that the Government are offering. Unlock Democracy has said that, given a choice between this Bill and no Bill, it would go for no Bill, because it thinks that the Bill represents a step back.
I understand why the Government have done this. The Deputy Prime Minister has talked about kangaroo courts and vexatious campaigns, but he is wrong. Where recall happens around the world, there is not one example of a successful vexatious recall campaign. There could not be one here, because it would require so many people—14,000 people—to be persuaded to join a vexatious campaign. We know that that is simply not possible in our constituencies.
I am going to run out of time. I simply ask Members to consider how the Government’s proposal might work. It is much more worrying than true and genuine recall.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Although Members have been very well disciplined and have kept their speeches extremely short, there are still many Members waiting to speak and we are running out of time. I must therefore reduce the time limit to three minutes.
Consumer Rights Bill
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Yasmin Qureshi
No; as I said, I am not going to give way.
I am very concerned about how animals are treated and reared and concerned that they should not be treated cruelly when they are transported. We should have a proper scientific debate about slaughtering, because the evidence is out there. Concern is perpetuated because most people do not know how the halal or kosher methods of slaughter take place. If they looked into the studies that have been done in America—I do not have the time to go into all of them—they would find that this is a proper system with the animal’s level of pain being monitored—[Interruption.] I know that Government Members do not want to hear this, but I am sorry: they are going to have to listen to me. I have the Floor, and I am not—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The House must listen to the hon. Lady.
Yasmin Qureshi
Thank you, Madam Deputy Speaker.
I am probably saying something that a lot of people are finding a bit difficult to swallow, but it is about time that the counter-argument and the full facts were presented to the country and to Parliament. For far too long, the debate has been skewed, because certain sections of the media want to deal with just one aspect, but they are misleading people. A myth is being perpetuated that somehow kosher and halal methods, carried out as they should be, are more painful and cause more suffering to the animal, but that is incorrect. The stunning method is probably more painful, so banning things or labelling based on “humaneness” or whether animals are being treated properly is wrong. I want to say more, but I will leave it at that, because others want to speak.
Section 5 of the European Communities (Amendment) Act 1993
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Shabana Mahmood
I shall deal with precisely what has happened to the personal allowance later in my speech, but let me make this point to the right hon. Gentleman now. It is true that the personal allowance has risen, and the Opposition have supported those changes, including yesterday when we debated clause 2 of the Finance Bill in Committee. However, it is also true that ordinary working people continue to be worse off despite the changes, and will still be worse off in 2015 than they were in 2010. This is a classic case of the Government’s giving with one hand and taking away much more with the other, and it goes to the heart of the “fairness” charge that I am laying at their door.
I was very struck by the suggestion made by a welfare Minister, Lord Freud, that the reason for the massive increase in the number of people who are using food banks and having to rely on food parcels from them was that
“there is an almost infinite demand for a free good.”—[Official Report, House of Lords, 2 July 2013; Vol. 746, c. 1072.]
I had to read that comment several times, because I could not quite believe that such words could emerge from anyone’s mouth during a discussion about food poverty and the fact that people are going hungry in our country. When the story about the huge increase in the number of people using food banks hit the news a couple of weeks ago, I was also struck by the main attack line from those on the Government Benches: the claim that the increase had a lot to do with advertising and the fact that many more people are now aware of food banks.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Lady will be aware that this is a very narrow motion. I am sure that she is using the matter to which she is referring as an example, which is in order, but I expect that she will be very careful not to stray too far from the very narrow terms of the motion.
Shabana Mahmood
I will, of course, be careful, Madam Deputy Speaker. However, the point that I am making relates directly to what is in the Red Book, to the nature of the motion that we are being asked to support, and to whether we are being presented with a true and accurate reflection of what is happening in the United Kingdom economy. My view, and that of other Opposition Members, is that the Red Book implies that the “commitment to fairness” is being met. I do not believe that a situation in the United Kingdom economy in which more and more people are being forced to use food banks while the Government see fit to give a tax cut to the wealthiest in our country indicates a genuine commitment to fairness, and it is for that reason that I have rejected the thrust of the motion—which asks us to approve the Red Book as such an accurate reflection—and supported the amendment.
The Red Book paints a rosy picture of the goals that have been met and the targets that have been delivered, but, although I looked very carefully, I could not find any reference to the Government’s failure to meet the terms that they had set themselves for their so-called long-term economic plan. The Minister said earlier that the Government were “on track”, which is fair enough, but the track to which she referred is not the track that the right hon. Member for Tatton said that we would be on when he became Chancellor. At the beginning of this Parliament, the Government said that the deficit would be eliminated by 2015, but we now know that that is not the track they are on. The deficit will not be eliminated by 2015; indeed, the current forecast is that it will not be eliminated until 2017-18, when we shall be well into the next Parliament. That is not the test that the Government set themselves for their economic plan, which has failed on its own terms.
Finance (No. 2) Bill
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Shabana Mahmood
I will not for the moment. I will make some more progress—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Too many conversations are going on around the Chamber that have nothing to do with the speech being made by the shadow Minister. Members ought to have the courtesy to listen to the hon. Lady.
Shabana Mahmood
Thank you, Madam Deputy Speaker. I am not surprised that Government Members do not want to hear about their secret £145 million tax cut for investment managers.
Shabana Mahmood
My hon. Friend makes a powerful point. His experience as a constituency MP is exactly the same as mine. Almost every business that comes to see me at my surgery is struggling with its business rates and energy costs.
What does the Bill say about the top rate of income tax? Well, it remains at 45p. This Government have given an average tax cut of more than £107,000 to the 8,000 millionaires in our country. They seem to think that if they keep talking about the increase in the personal allowance, they will make people forget that the combined impact of the tax and benefit changes is that a typical household is £900 a year worse off, and that the richest in our country are getting an absolutely huge tax cut. The Government are desperate to be able to claim that the 50p rate raised as little money as possible because they want to make it easier for themselves to justify their decision to give a tax cut to the wealthiest at a time when ordinary families are really struggling.
The Government’s own assessment claims that the cost of cutting the rate to 45p, excluding all behavioural changes, was over £3 billion. To justify the tax cut, they argued that most of the potential revenue would be lost as a result of tax avoidance. Government Members were very excitable about the Government’s record on tax avoidance, which I will come to in a moment. But surely a Government as proud as they are of that record would have taken some targeted anti-avoidance measures to stop people avoiding the 50p rate. Instead, they ducked the opportunity.
The Government also claim that tax revenues rose after they cut the top rate of tax, but both the Office for National Statistics and the OBR have said that many of the highest earners moved their income and delayed their bonuses by a year after the 2012 Budget to benefit from the lower top rate of tax. That shifting of income will have cost the Treasury millions of pounds in lost revenue. When the deficit is high it cannot be right to cut the top rate of tax. The next Labour Government will put that rate back to 50p while we get the deficit down.
There was some excitement on the Government Benches about the Government’s record on tax avoidance. Although they like to pretend that that record is strong, it is nothing to write home about. The DOTAS—disclosure of tax avoidance schemes—measures were introduced by a Labour Government in 2004. Every time Government Members stand up and take credit for those measures, I shall pass on their thanks to the previous Labour Administration, who introduced them.
The Government have made a number of assumptions in their calculations of the value to the Exchequer of extending the accelerated payment scheme to both DOTAS and the general anti-abuse rule. Although HMRC is successful in about 80% of the cases it litigates, I find it hard to see why the same 80% success rate has been applied to potential cases under the GAAR when a case on the GAAR has yet to go to court. We will scrutinise the Government’s numbers in Committee: they have a history of overestimating the impact of their avoidance measures. We have spoken a lot today about the Swiss deal, which raised £2.3 billion less than expected. I am sure that the Exchequer Secretary will not—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The House is too noisy. If hon. Members listen quietly, perhaps the hon. Lady will be able to come swiftly to the end of her speech.
Shabana Mahmood
Thank you, Madam Deputy Speaker. I will bring my remarks to a conclusion, but I want to give the Exchequer Secretary an opportunity to intervene and explain to the House why he got the numbers so wrong on the Swiss tax deal. He is shaking his head, which implies to me that he is not prepared to stand up for his own record or admit that he has a history of overestimating his numbers. We will look at the numbers closely in Committee.
The Government had an opportunity with the Bill to provide help in the here and now. That is an opportunity they have failed to take. We will be voting against the Bill and in favour of our reasoned amendment, which lists the measures that we believe are necessary to tackle the cost of living crisis and make sure that people on lower and middle incomes start to see the benefits of recovery. We will seek to improve the Bill in Committee and try to persuade the Government to change course, but from what we have heard today and what we are no doubt about to hear from the Exchequer Secretary, I fear that the Government are so blind to the lives of ordinary working people that they will refuse to take the opportunity to do so.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Surely the House wants to listen to the Minister. A little quieter.
Mr Gauke
After the mess we inherited, how do we ensure that we build up the economy and get the sustainable growth that will increase living standards? The answer is set out in this Finance Bill.
It is worth pointing out the measures in the Bill that the Labour party will vote against this evening. There is the annual investment allowance, which will help manufacturing and other businesses up and down the country. It means that nearly 5 million businesses will get 100% relief on capital expenditure. That was welcomed by the hon. Member for Houghton and Sunderland South. Labour Members will vote against that. There are the reforms to R and D tax credits, which will help businesses to start up. [Interruption.]
Madam Deputy Speaker
Order. I am not going to ask any more polite questions. The House must listen to the Minister. Stop talking among yourselves.
Mr Gauke
Thank you, Madam Deputy Speaker.
Labour Members will oppose the R and D tax credit. There are the reforms to the carbon price floor, which will help manufacturing industry and ensure that the UK is not uncompetitive. They will vote against that, against the interests of businesses in their constituencies.
On the issue of pensions flexibility, the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), said that the debate following the Budget was diverted by the attention on annuities, but it is fair to say that the Leader of the Opposition was not diverted by annuities in his response to the Budget. Since then, we have seen confusion from the Labour party. Labour Members have said that they are worried that people will spend recklessly and that that will create a burden on the public finances. They should know something about that, but they should not judge other people by their standards. The truth is that the Labour party does not trust the public with their money and that that feeling is mutual.
On the subject of avoidance, the Bill’s measures mean that £9 billion in additional revenue will be collected over the next five years. Avoidance will be tackled as a consequence of the Bill. It is also worth pointing out that HMRC’s yield over the course of this Parliament will be almost double its yield over the course of the previous Parliament. That is the progress that we have made on tax avoidance and evasion.
We are helping with the cost of living. There are hon. Members, including on the Opposition Benches, who have long campaigned for their constituents who have relatives in the Caribbean or south Asia. We are helping with air passenger duty, but Opposition Members will be voting against that measure.
On the starting rate of income tax for savers, we are cutting a 10p rate, not doubling a 10p rate. That will mean that 1 million more people will no longer pay tax on their savings. Opposition Members will be voting against that.
The personal allowance will increase to £10,000 this year and £10,500 next year. Opposition Members will be voting against that. Were they to succeed, the personal allowance in 2015-16 would be not £10,500, but £9,880. That would mean that millions of people would pay £124 a year more in tax as a consequence of the way that Labour votes.
amendment of the law
Baroness Laing of Elderslie Excerpts(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Hain
I agree with the right hon. Gentleman to this extent: we did not regulate the banks well enough or carefully enough, but his party—not necessarily he, but his leadership—was saying that there should be less regulation of the banks at that time, yet now they have the temerity to attack our spending plans when we brought borrowing down. [Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. All other speakers have been heard in silence. The right hon. Gentleman has livened up the debate, but he also ought to be heard.
Mr Hain
It is interesting how those on the Government Benches do not like to hear the truth, Madam Deputy Speaker. The level of debt under the Labour Government before the banking crisis was lower than we inherited from the Conservatives in 1997. We brought borrowing down and we brought the deficit down compared with what we inherited, and yes we invested in repairing the desperate state of our public services—people dying on trolleys in hospitals, schools crumbling, the railways decaying. We repaired all of that and then the banking crisis came along and blew it out of the water. There was a failure by every Government right across the world to recognise the seeds of that banking crisis, but it was not caused by Labour overspending, and not caused by Labour high borrowing or high debt, because none of those things was going on prior to the banking crisis. If we had not dealt with the banking crisis in the way that we did, the whole of the economic and banking system in Britain would have collapsed. We need decency and honesty from Government Members and acknowledgement of that central fact.