Income Tax

Debate between Frank Dobson and Chris Leslie

Wednesday 5th November 2014 Commons Chamber

[Frank Dobson (Holborn and St Pancras) (Lab)]

rose—

[Chris Leslie]

I will give way to my right hon. Friend, but first I want to hear a little more of the logic and the ideology espoused by the hon. Member for Wolverhampton South West (Paul Uppal).

[Chris Leslie]

Again, Conservative Members do not want to talk about the 50p rate of tax. They will find any example of other things. They will talk about the personal allowance or venture capital arrangements, and maybe we will get them on to VAT. We want to know the ideological basis for cutting the 50p rate to 45p. They may have thought that that would suddenly enliven enterprise across the country, but it has not done so.

[Frank Dobson]

There have been references to the ladder of opportunity. Education and training are a major part of that. It is this Government who have taken away the education maintenance allowance, which allowed large numbers of working class children to stay on at school, at college and in training. Taking that away has shifted several steps out of the ladder of opportunity.

[Chris Leslie]

It is important that we look in aggregate at the fate that has befallen so many of our constituents since 2010. We have had 24 different tax rises, as well as the effect of wages not keeping pace with prices. Let us look at some of the changes that have taken place since 2010—freezing child benefit, cutting maternity grants, cutting tax credits, abolishing the education maintenance allowance, higher insurance premium taxes, a frozen higher rate threshold, the granny tax, freezing allowances for pensioners and, of course, raising VAT to 20%.

In what must count as one of the most brazen transfers from the least well-off to the richest in recent years, the Chancellor announced in his conference speech a £3 billion strivers tax hit on tax credits until 2018—the same £3 billion sum given away in the tax cut to millionaires. There we have the comparative priorities—£3 billion in a tax cut to the very wealthiest in society, and the same amount taken away from some of the poorest and middle income families.

Finance (No. 2) Bill

Debate between Frank Dobson and Chris Leslie

Monday 15th April 2013 Commons Chamber

[Frank Dobson]

That might be the case, but I live in hope.

[Chris Leslie]

Let me make it absolutely clear that we should have a Government who are arguing for a financial transaction tax. We need to ensure that we get New York, in particular, on board, but we now have evidence of what will happen in the European Union, and there is no doubt that there is a very strong case for such a tax.

[Frank Dobson]

Yes, indeed. I have been advocating such a tax for some time, and I shall continue to do so.

I have asked Treasury Ministers several times how much money would be raised for the taxpayer by a 0.01% tax on financial transactions, but the great Treasury mandarins have always said that they have not worked out the figure. If that is the case, how can they possibly conclude that the money that would have to be paid out would damage the finance industry? If they do not know how much such a tax would raise, how can they know how much the industry would have to pay out?

We continue to find ourselves in the absurd situation in which the banks and their friends, and the big accountancy firms and their friends, are advising the Government on the taxation system that should be applied to them. We do not—as far as I know, anyway—have criminals advising the Home Office on criminal law, and I do not think that an industry with such a disreputable record should be advising the British Government on how it should be dealt with.

Finance (No. 3) Bill

Debate between Frank Dobson and Chris Leslie

Tuesday 5th July 2011 Commons Chamber

[Chris Leslie]

We discussed in Committee how the bank levy might be altered, and I will come in a moment to my own criticisms of how the Government have framed the bank levy. Their original plans would have brought in far more revenue, but the banks started complaining so the levy was shrunk back to a level that the banks felt was acceptable, not to a level the taxpayer felt was acceptable.

[Frank Dobson (Holborn and St Pancras) (Lab)]

Will my hon. Friend confirm that in order to pay for the corporation tax reduction, which has greatly benefited the banks, the Government withdrew quite a bit of the special funding that had previously been provided for investment in industrial activity? So much for their claim to be promoting British manufacturing! In fact, their taxation policies continue to over-promote the banks.

[Chris Leslie]

Indeed, they have imposed stealth tax after stealth tax on ordinary working people and small—and larger—businesses in this country. For some reason—we know not why—they have sought to give help and support to the banks at a time when they ought to be paying their fair share.

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[Frank Dobson]

They “might” benefit?

[Chris Leslie]

I agree with my right hon. Friend—they definitely will benefit from the reduction. I am not sure that the counteracting change—the tweak to the bank levy—goes far enough to counteract that corporation tax change. There are ways in which the bank levy could be amended further, but in general we support the principle; it is the design and the level at which it is set that we object to.

Amendment 31, tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell), relates to a financial transaction tax, for which a strong and impressive case can be made. Many of us, on both sides of the House, will have received letters and e-mails from constituents through the Robin Hood Tax campaign, which many charities have advocated. I pay tribute to the technical work that they have done on that issue. What may well be very minor changes to transaction levies could, according to many of these designs, generate significant and useful resources. Clearly, though, we need a design that does not jeopardise the rejuvenation of a stable and well-balanced financial services sector, so we would need an honest assessment of the impact of such a tax.

I am appalled that the Government have for now ruled out a financial transaction tax. It should not only stay on the table, but be actively examined and reviewed. Government Members might say that they are pursuing a financial activities tax—a slight variant in this policy area—instead, but the Chancellor, having talked about that last June, has made absolutely no progress with international jurisdictions in advocating or gaining support for it. We see no action by Ministers on what were ultimately G20 discussions about a financial transaction tax. We have not seen them explore either that possibility or a financial activities tax. The only qualm I have with my hon. Friend’s amendment is whether it stresses sufficiently the need for international agreement and discussion. Nevertheless, it is certainly something that, in broad terms, we think needs to stay on the table to be examined further.

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[Chris Leslie]

I cannot answer for the motivations of Ministers. It is difficult to know what motivates them. Is this a question of omissions? Is it incompetence? Is there some other devious motivation, or malice for those who might benefit from the proceeds of these revenues? We do not know, but we look forward to hearing the Minister’s justification for failing to get transparency and failing to repeat the bonus levy.

Recent figures suggest that some of the largest investment banks are actually increasing the slice of their revenues that they pay to their staff. The ratio between remuneration and revenues is known as the compensation ratio, and it is interesting to note from the detailed figures that even the Royal Bank of Scotland’s global banking and markets division paid 34% of its net revenues in remuneration in the first nine months of 2010, compared with just 27% of net revenues in the full year of 2009. The amount of compensation, in the form of salaries and bonuses, is therefore going up as a proportion of revenues. That was also the case for J. P. Morgan, which paid 39% of its net revenues in the first nine months of 2010, compared with 33% in the full year of 2009. Barclays paid 43% of its net revenues compared with 38% over the same periods. Compensations are strong and still growing.

[Frank Dobson]

Does my hon. Friend agree that the Orwellian use of the term “compensation” in relation to working for a bank suggests an effort to increase public sympathy for some of the greediest and most stupid business people this country has ever seen?

[Chris Leslie]

It is very easy to find oneself tied into the lexicon used by the financial services sector. My right hon. Friend calls a spade a spade, and it is sometimes important to do just that.

The bonuses that I have described are really excessive. For example, we know from the limited disclosures that we have seen that John Varley, the former chief executive of Barclays, received a £2.2 million bonus in 2010 and that, between them, the top five earners at Barclays, excluding executive directors, received more than £38 million in salary and bonuses in 2010 alone. That amount was shared between five individuals. Bob Diamond, the chief executive of Barclays, has received £6.5 million in bonuses for 2010 since January. As many will know, Mr Diamond lost out in the bonanza compared to his two senior managers at Barclays, with Tom Kalaris receiving a cool £10.9 million in salary and bonuses, and the other top manager, Rich Ricci—my hon. Friends might remember his name—receiving a cool £10.6 million. Those two individuals earned enough money—£17 million—in 2010 to pay the wages of more than 500 qualified nurses.