IR35 Tax Reforms

Debate between Ged Killen and Paul Sweeney

Thursday 4th April 2019 Westminster Hall

[Ged Killen]

I thank the Minister for that. I appreciate that we can have a constructive approach. I do not think any of us disagrees about the principles; this is about getting it right.

HMRC’s idea of working with people to assist them is different across the board. I point out gently to the Minister that it can be daunting for people to have HMRC assisting them, because it provides guidance but it is also the enforcer. People are therefore keen to get things right on their own, so we need a fair and transparent system that everyone can understand and use fairly. If we can get a tool that works, that is great, but let us make sure we have one before we come down too hard on people.

I did not hear the Minister confirm whether the changes will eventually be rolled out to small businesses in the private sector. I appreciate that he might not be in a position to answer that today. If the Government are considering that, I urge real caution. They have not suggested that yet, but, having come from a small business background, I can say that that would be a very difficult prospect.

[Mr Sweeney]

My hon. Friend makes an important point about the roll-out being restricted to larger businesses, which the Minister referred to. The changes will inevitably also impact small businesses, which are contractors with areas of expertise. For example, a large bank such as Barclays might commission a software expert to come in and build a product or tool, and that expert might in turn employ staff to support that project. If we classify the person who runs that small business as an employee of the bank, how are they meant to pay their staff?

That is the fankle that this reform will result in. It will draw us into situations where thriving, dynamic businesses that are responsive to the needs of large businesses—small businesses that can, for example, plug into a large financial institution to deliver a bespoke project and detach again —are not able to function in that way because their people will be pulled in as payroll staff members. Does my hon. Friend agree that those will be some of the inevitable negative impacts for small businesses if the Government do not get their act together with these changes?

[Ged Killen]

I absolutely agree. Small businesses will be affected by these changes anyway. People will be operating in a two-tier system, because many will work for small businesses as well as for large businesses in the private sector, and different rules will apply in those situations. I am not saying that is an argument for equalisation, because I still think it would be difficult for small businesses to act as the judge of whether someone falls under the scheme.

I am not in any way opposed to the principle of preventing tax avoidance. We all want to ensure that we boost tax revenues as much as possible, but that must be done fairly and transparently, and we must not destroy flexible working in the economy or self-employed people and small businesses in the process.

Question put and agreed to.

Resolved,

That this House has considered IR35 tax reforms.

Local Government Funding

Debate between Ged Killen and Paul Sweeney

Wednesday 27th March 2019 Westminster Hall

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Colne Valley (Thelma Walker) on securing this debate at a critical time for our public finances.

I speak as a Member of Parliament for the great city of Glasgow, which has a fine tradition of what might be called municipal socialism. It would be great to rediscover that municipal route to socialism, but it has been under assault for many years now, with a decade-long programme of austerity cuts, if not more, the brunt of which has been borne by local government. We often hear from Scottish National party Members in this place about how wonderful everything is in Scotland, and how munificent the Scottish Government are in stewarding local government by dispensing the fruits of excellent governance in Edinburgh to the rest of Scotland. That could not be further from the truth.

Look at the dire straits in which Glasgow City Council finds itself. Last year, Glasgow had to find £49.9 million-worth of cuts, almost £20 million of them a direct consequence of the Scottish Government’s cuts to local government. The remainder are due to pay and other inflationary pressures. The real brunt of cuts made by central Government in Westminster and at Holyrood is borne by councils, and, as a result, Scotland has lost 30,000 council jobs in recent years. That is a shameful indictment of those who are responsible. The mass unemployment that we railed against during Thatcherite deindustrialisation in the 1980s has been writ large in local government by a Scottish nationalist Administration in Edinburgh.

Between 2010 and 2018, Glasgow lost £233 per head of population in Scottish Government funding. That is a real-terms cut; it is the cost of the Scottish National party to every single Glaswegian. In May 2017, a minority SNP administration took over Glasgow City Council. However, instead of robust opposition to the onslaught of cuts, we have seen not only meek acceptance by the council, but even an attempt to divert attention and to deny the reality of the fiscal constraints on Glasgow—Scotland’s largest city, and a city with some of the greatest social problems in the country.

In my constituency, the failure in the quality of local services—a reduction in cleansing services, poor repair of roads, failure to help homeless people to move into temporary accommodation, and a decline in care and social work services—has had a creeping effect on some of the weakest people in our society, who disproportionately rely on such services. That has happened at a time when the SNP has celebrated imposing a council tax freeze on local government.

[Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

On the council tax freeze, does my hon. Friend agree that if local councils are to be accountable to the people who elect them, it is essential to protect the autonomy of local government to raise its own funds, rather than giving councillors the choice between making worse cuts and even worse cuts?

[Mr Sweeney]

I thank my hon. Friend for making that pertinent point, which goes to the heart of the issue of local government—structural decay over decades. Once, we had great, autonomous and highly vigorous municipal authorities. Look at Glasgow, which used to run its own gas and electricity provision, tramways, railway system and subway system. The Glasgow Corporation was a huge enterprise, and it has been slowly but surely torn apart over the past 50 years by creeping centralisation. That has happened at a regional level, and it is now happening with the dismantling of Scottish regional councils and regional authorities and their centralisation into Holyrood.

An inadvertent and regrettable effect of devolution over the past 20 years has, in essence, been to displace the municipal power of Glasgow and the west of Scotland, and to suck it into the east and into Edinburgh. We should guard against that in the constitutional reform of city regions across the United Kingdom. We need to consider what effect such devolution might have on the margins and the periphery of that power base. I would like that to be corrected in Scotland as we look forward to the next two decades of devolution.

Community Bank Closures

Debate between Ged Killen and Paul Sweeney

Thursday 8th February 2018 Commons Chamber

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for the opportunity to contribute to this very interesting and vital debate on a massive issue that affects communities across our nation. It is always a pleasure to follow the hon. Member for Strangford (Jim Shannon), who made a particularly passionate and insightful speech about the impact the programme of closures will have on communities in his constituency.

I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) on securing this debate, and on speaking so passionately and knowledgeably in introducing it this afternoon. I also thank the hon. Member for Hazel Grove (Mr Wragg) for his contribution, and for securing the debate through the Backbench Business Committee.

I speak with a degree of nostalgia and affection for community banking, given that I grew up around community banks. My mum has worked in retail banking for her whole career, and I remember vividly as a kid being taken down into the vaults of the Bank of Scotland in Charing Cross, where my mum worked. I also remember opening my Squirrel saver account at the Bank of Scotland, and my little plastic Bank of Scotland piggy bank, which was great.

I speak with great affection about community banks, but I also know how important they are, particularly for elderly customers and vulnerable people in the community. They develop a very close and affectionate relationship with the staff, who know them very well, understand their needs and are able to accommodate them. It is a form of personal interaction that builds affectionate relationships and a long-term engagement with banks, and those relationships are hugely valuable for the banks. I would have hoped that more banks recognised how important such personal interaction is for communities —it is vital—and how it contributes to them.

It is a shame to think that that bank in Charing Cross is now a Starbucks. That shows that this is a long-term process of withdrawal from communities, and we must challenge it because our communities are approaching a real cliff edge. My worry is that the programme of bank closures that we have observed, particularly in recent years, appears to target the poorest communities in our society disproportionately. Well over 1,000 branches have closed in the past two years alone.

In my constituency of Glasgow North East, where unemployment is twice the national average—I would add that it has had the lowest turnout in elections in any constituency, which perhaps shows the level of disengagement of many people—we have had the closure of the RBS branches in Possilpark, one of the poorest communities not only in Glasgow but in Scotland, and on Alexandra Parade in Dennistoun in recent months, followed by the closure of the Clydesdale bank in Springburn.

It was a cruel irony that, when I went down to look at the Clydesdale bank branch on Springburn Way, next to the shopping centre, I saw a branch of BrightHouse doing good business—it was doing a roaring trade. BrightHouse is a rapacious organisation that fleeces the poorest communities in our society by, I would argue, mis-selling consumer goods at outrageous rates of interest. That is also something we should challenge. As more people are forced out of normal commercial banking into the hands of these rapacious lenders, such lenders have to be challenged.

[Ged Killen]

My hon. Friend is talking about poorer communities being left behind by these banking changes, and he is absolutely right. Although the recent stay of execution for 10 branches in rural areas of Scotland is welcome, these are some of the wealthiest communities in Scotland, and three of the banks being saved are in the constituency of the Secretary of State for Scotland. The Government are the majority shareholder of RBS, so surely there is a role for RBS to step in and look after more such deprived communities?

[Mr Sweeney]

My hon. Friend is correct, and that is one thing we do not see—I have tried to piece together the evidence, but it is not nationally recorded. What is the density of banking operations in the poorest communities in our society? Data is not gathered on that issue. Possilpark and Springburn fall into the most deprived decile on the Scottish index of multiple deprivation, including for employment, health, education and housing. That seems to be the case for a lot of areas with branch closures, certainly in the Glasgow area, and it would be interesting if the Government could oblige banks to provide the data as a matter of national standards. By contrast, in the wealthiest parts of the city—I took the example of Byres Road, which is arguably the wealthiest postcode in Glasgow—every major bank is represented. Banks seem to be withdrawing from the poorest communities while maintaining their services in the richest parts of the city, and if that is extrapolated across the UK, it paints a dismal picture.

It has been argued that bank closures are a reality of technological change because more people are using online banking services. In reality, however, 2 million Scots do not use online banking, and they are disproportionately older people who are not familiar with the change in technology. We must be realistic about the rate of change and how practical it is, so as to reduce the harm caused to society and prevent the generational dislocation that is evidently occurring. More than one third of people who use the services of Citizens Advice Scotland have no or limited internet access. How will they access finance and banking if the major commercial banks disinvest in their local communities? Such closures are not just driven by technological change.

It is a great privilege to be a council member of the Institution of Engineers and Shipbuilders in Scotland, and the banking sector is a huge driver of innovation in our society. As hon. Members have said, we have seen huge technological changes, and one great British innovation that sticks out for me is the ATM. In 2016, the Scot James Goodfellow was inducted into the Scottish Engineering Hall of Fame for his work in inventing and patenting the first ATM in 1966. He did that in response to the desire by the major commercial clearing banks to close on Saturday mornings. People were trying to find a technological way to accommodate that desire, and that is how the ATM came into being and why it is so ubiquitous on our high streets today. We must harness technological change for the public good, not simply use it as a cop-out or an excuse to ridiculously disinvest from our communities at an inappropriate rate. We in the House must challenge that and adapt technological change for the public good; we cannot leave the banks to be judge and jury about the way that such change should occur.

I mentioned that closures are not just driven by technological change, and we must consider the banking sector in the UK. Five of the major commercial banks hold 85% of all current accounts, and personal banking services are combined with riskier investment banking activities. That is symptomatic of a very difficult and high-risk sector that in the last decade alone threatened our national prosperity with the banking crash.

The banking system in this country is an oligopoly and one of the most centralised systems in the world. As Adam Smith recognised, profit-seeking behaviour runs contrary to the common good and the creation of national wealth—we should always remember that when considering this issue. Germany has more than 400 local savings banks, known as Sparkassen, 1,000 co-operative run banks, and 300 private commercial banks, and that contrasts with the five massive banks in this country. Those banks in Germany are characterised by providing “patient finance”, not just to households and consumers but also—critically—to industry.

When James Goodfellow made his speech while being inducted into the Engineering Hall of Fame, he said that the greatest regret of his career was that ATMs were patented and invented in this country, yet they are not built or manufactured here. We have not benefited from this country’s industrial innovation, and our industrial strategy is symptomatic of our banking sector. We do not finance industrial growth because we are seeking high-risk, high-return profit in the City; we are not investing in the real economy, and that contrasts with the German banking system.

Why does Germany have the largest manufacturing sector in Europe, and one of the largest in the world? Because its banking system is resilient enough to underpin patient finance and allow real industrial growth and long-term economic resilience. We see that with German investment in machinery and a productive economy, and with their productivity rate—German workers produce in four days what UK workers produce in five. If we look at that as a broader symptom of malaise in banking and industry, we have to grip it and address it at all levels.

That is why I am so proud to stand here as one of the 39 Co-operative party Members of Parliament: the largest ever group of Co-operative MPs in Parliament and the third-largest party group in this House. The Co-operative party has long recognised the structural problems in society, which is why it proposes turning RBS into a mutual owned by its members and run in a not-for-profit manner in the public interest. The case for that is clearly self-evident and vital: we need that disruptive intervention in the sector.

We want to create a legislative mechanism to support the development of credit unions in the United Kingdom, one perhaps based on the US Community Reinvestment Act 1977, which I think was mentioned previously. The key innovation of the Act, introduced under the Carter Administration, was to combat discrimination and provide access to credit for low and moderate-income communities. If we reflect on the nature of bank closures in the UK, it is highly likely that they disproportionately affect the poorest communities. In the United States, that was known as “redlining”: banks essentially blacklisted communities they thought not worthy of investment. We can make the accusation that that is happening today in this country, albeit on an informal and opaque basis. It is about time a light was shone on the reality of the economic dislocation happening in our poorest communities.

Legislation similar to the Community Reinvestment Act would combat that discrimination by providing access to credit for low and moderate-income communities. It would apply a rating to banks based on their density of operation in poorer areas. In the US, investment credit unions are included as a CRA activity, meaning that the credit union sector is worth billions of dollars and it competes on an equal footing with commercial banks. Santander’s operations in the United States contrast with its operations in the UK: an £11 billion five-year commitment to support community benefits. An increase of 50% was announced in the US. It does not extend its American community reinvestment activity to the UK, because there is no legislative or regulatory imperative to do so.

The picture in the UK today is one of perilous dislocation, with banks withdrawing from our most vulnerable communities. It is the duty of this House and this Government not simply to capitulate to free market dogma, but to temper and control that market in the public interest.

Male Suicide

Debate between Ged Killen and Paul Sweeney

Wednesday 13th December 2017 Westminster Hall

[Ged Killen]

As I said, there are a lot of complex issues that might affect suicidal behaviour. I am identifying specific areas that research shows are more likely to increase the risk of suicide. Living in a deprived area is one of those.

Sadly, many Members have said in the Chamber that they hear from increasing numbers of people showing signs of suicidal behaviour, as do I in my own office. I could not speak in the debate without acknowledging that. But I bring the debate in a spirit of collaboration. I am certain that every Member in this room wants a reduction in male suicides and wants strategies to be devised and implemented to achieve that aim.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

One note of encouragement is that the suicide rate in Glasgow has certainly gone down in the last 20 years: 64 men took their lives last year in Glasgow, but that is down from 122 men in 2000. Might that indicate a generational difference, where the generation of younger men feel more open to talking about their issues? Perhaps that represents a challenge for older generations, who still feel that certain social norms or taboos prevent them from opening up, but one that is changing slowly but surely.

[Ged Killen]

I hope that is the case and I think that, certainly, younger men are more likely to talk about their feelings than the older generation. Although there has been a strong downward trend in suicide rates in Scotland, in 2016 there was an 8% increase. Hopefully, that will go back down, but the issue still needs to be addressed, which is why it is important to have debates such as this.