High Speed 2

George Howarth Excerpts

Wednesday 12th September 2018 Westminster Hall

[Craig Tracey (North Warwickshire) (Con)]

I congratulate my hon. Friend on securing the debate. I, too, voted against HS2, as I am sure he is aware, because we have probably the most affected constituencies in the country, given phases 1 and 2. If HS2 were to be scrapped, as he suggests, with potential savings of £50 billion, is he aware of the great British transport competition, which I recently launched in conjunction with the Taxpayers’ Alliance to identify how the money could be better spent across the country rather than in narrow swathes? Will he recommend to his constituents that they take part in the competition?

[Mr George Howarth (in the Chair)]

Order. Before Sir William continues his speech, I remind Members that a lot of people want to speak in the debate and I am sure that there will be interventions, which I hope can be kept brief, because otherwise it inhibits my ability to call everyone who wants to speak.

[Sir William Cash]

I endorse what my hon. Friend has said about what is an extremely good idea and fits in with the opinion poll I mentioned. I am extremely glad that he voted against HS2, and sorry that I did not mention that earlier.

--- Later in debate ---

[Graham Stringer]

The right hon. Lady makes a good point. I am a Manchester MP, I went to university in Sheffield and I always wanted the project to start in Manchester and Sheffield, but it would have been a unifying factor for the United Kingdom for the project to start in Scotland. There is no reason for it to start in only one or two places—it could have started in three; many projects of this scale do.

I could talk at length but many hon. Members want to speak. This is a project of national importance, like the third runway at Heathrow. I understand that the right hon. Member for Chesham and Amersham (Dame Cheryl Gillan) has constituency issues. Many of us understand national priorities but we are elected by our constituents and have to represent them. I understand that balance. I do not think that the HS2 consultation has always been perfect and it—and the compensation—could have been improved. I pay tribute to the right. hon Lady for the considerable amount of increased investment in HS2 tunnelling that she has managed to get for her area. We have to keep this in perspective. We do not want investment in the north of England to stop, yet again, because of the methodology and because lobbying in London is so intensely powerful.

[Mr George Howarth (in the Chair)]

Before I call the next speaker, I need to say that we will start on the wind-ups at 10.40 am. I will not set a time limit, but it would be helpful if those who speak from hereon in confine their remarks to about eight minutes.

--- Later in debate ---

[Several hon. Members rose—]

[Mr George Howarth (in the Chair)]

Order. I have to impose a five-minute limit on speeches—I am afraid the time available does not allow for anything else.

--- Later in debate ---

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Stone (Sir William Cash) for bringing forward the debate and all other hon. Members for their pertinent questions. Let us first remind ourselves why investment in growing our railways is imperative. We need investment in capacity growth and connectivity, which is being called for particularly in the north but also across the rest of the country. We also need to see environmental improvements, particularly in air quality. Rail provides a real opportunity for modal shift, whether from car to train or, indeed, from plane to train in the case of high-speed trains. We also need to invest in economic opportunity, so much so in the north, which for generations has missed out on the investment we have seen in London and the south-east.

However, we must be mindful of communities, the environment and construction costs. For such major infrastructure projects, we must also be mindful of skills, the opportunity for employment and how we develop engineering across the country. We must also be aware of the cost of getting it wrong. It is therefore right for hon. Members to call for reviews, investigations and transparency, because this is a publicly supported project about which the public demand answers, and they must receive them. As the project moves into a new phase of governance and leadership, it is important that a new approach is brought to high-speed rail to put in place the scrutiny that the public demand.

We must also get answers from the Minister. We have heard speculation and read reports, so today I ask her to clarify the actual costs of each part of phase 2—phase 2a, phase 2b east and phase 2b west—so that we can all understand the figures, how they have been derived and where costs fall. We must also understand the timeline, which we hear has been set back.

HS1 was hailed as a success, coming in on time and on budget, but clearly the rumours are that HS2 will not have such success. We need to understand why the learning of HS1 has not been translated into this project. HS1 is successful in bringing people from mainland Europe to the UK and in taking people to the south-east. We are proud of that project, but we must understand where the needs sit now.

I understand the public’s frustration. The complete chaos across our rail network over the last three months has set it in the minds of so many that rail can no longer be relied on. We have seen people stranded at stations, people losing jobs because a train has not turned up, and people not getting home to see their family in the evening. When the Government cannot even get the basics right, people are asking, “Why aren’t we getting things shored up before we move on to HS2?” We will read the Glaister report—I understand the interim report will be out later this month—which will address those issues, with interest.

We must have a fully integrated rail system, not one with segregated high-speed rail. I want assurances from the Minister that we will see that integration rather than have high-speed rail just for people who can afford premium rates, because that will not bring economic opportunity to the north. That is why Labour is clear that we would have one fully integrated rail network owned by the public and run by the public as we move forward.

We know that we must build more capacity on the rail network, that we must invest in the economies of the north and that people must be able to travel. The point about freight is important: we need more paths for freight. We must enable that serious modal shift and move freight off roads and on to rail. Investment is therefore imperative, as we know that the road haulage industry cannot recruit the drivers required to run the freight network on the roads. We must make those changes, and we therefore need available paths to do that. Building that capacity is essential, and the west coast main line will lend itself to that.

We also need leading-off capacity to the south-west, Wales and elsewhere across the north, including north of Manchester and York. Labour has closely considered how to develop a long-term plan for rail investment because, as many hon. Members have indicated, it is important to invest in the right places. We have been clear that creating a Crossrail for the north, bringing that connectivity to the north of the country, is our priority.

The Secretary of State’s decision not to electrify the trans-Pennine line has brought real damage to the north, but Labour will introduce reparation for that decision as soon as we come into government. We will ensure that someone can travel from Manchester, Liverpool, Leeds, Bradford, York or Hull, and down into Sheffield and up to Teesside and Newcastle. These are important decisions, and Crossrail for the north will be our priority, ensuring that we catch up on the timeline on which we have been so let down by this Government. Building connectivity to Sheffield will start to address the issues about what route HS2 should take in a faster way, because we wish to ensure that people can get to where they need to go. We must also invest in digital rail so that we get maximum capacity and opportunity from our railways. We must address the dreadful overcrowding that commuters experience day by day, because often people are not even able to get on the trains.

On speed, we believe that it is important to improve the east coast main line. Since we do not know when—or indeed whether—HS2 will be achieved, it is important that control period 6 provides extra capacity for speed and upgrades to the east coast main line. Travelling from York to London will take only 1 hour 31 minutes, and the additional time saving that HS2 will bring to cities such as mine will not be the reason why we need the additional spend required by high-speed rail. This is about capacity, not speed; it is about whether someone has a seat and can work or carry out their activities. That is why we need to invest in rail.

We must also ensure that we are responsible for the environment. I have met the Woodland Trust, and I am concerned about some of the environmental impacts of the project, particularly on sites of special scientific interest. We must be mindful that once things have gone, we cannot bring them back, and I believe that we must maximise our support for the environment as this project moves forward.

Today we have all identified wasted opportunities. Where, for example, is the cycle route alongside this network? That would make sense, but it has not yet been planned, despite its minimal cost. The hon. Member for Stafford (Jeremy Lefroy) mentioned a depot that suddenly appeared on land, and we must scrutinise every decision and decide whether it is imperative for each little piece of infrastructure to go ahead, or whether there are alternatives. It is certainly distressing to hear that so much construction will be delivered by road rather than rail, and it is important to consider that.

Finally, on economic opportunity, I agree with my hon. Friend the Member for Blackley and Broughton (Graham Stringer) that we need better connectivity to the north. Manchester is such an exciting city, but we cannot stymie its growth by denying it that much-needed connectivity. Liverpool is also moving forward and follows closely behind. We must ensure the right connectivity and invest in the right places. We need transparency on spend as we move forward. People are concerned; they are paying so much more for their rail fares, which have gone up by 35% under this Government, and they need to understand what the future will hold.

[Mr George Howarth (in the Chair)]

Order. The hon. Lady has exceeded her time.

Finance (No. 2) Bill

George Howarth Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Rachel Maclean]

I am glad the hon. Gentleman made his intervention, because I would like to set the record straight. The Labour party talks a lot about banks. Shall we remind ourselves that it was the Labour party and Ed Balls—its former shadow Chancellor—who created the light-touch regime that led to the crashing of our entire economy? Millions of people were thrown out of their jobs; they lost their jobs and were in poverty because of the decisions of the former Chancellor of the Exchequer.

[Mr George Howarth (Knowsley) (Lab)]

Will the hon. Lady remind the House which party criticised the last Labour Government for having too onerous a regulatory regime in the banking system?

[Rachel Maclean]

I thank the right hon. Gentleman for his intervention. I was not in the House at that time, but I am certain one of my Front-Bench colleagues will pick up on that point in the wind-up. What I do know is that we are imposing more measures on the banks. We are bringing in more measures in this Finance Bill, which is collecting more money from the banks. We are clamping down on that regime—that lax regulation—that led to the banking crash, which put thousands of people out of their jobs, crashed the economy and led to a lot of the problems that we see today in our country. I find it astonishing that Labour Members talk so much about the banks and what they would do. They say that they are the party for the many and not for the few, but it is actually the Conservative party that has done more for the many, getting them into work, getting jobs for people and creating an environment in which businesses can flourish.

Let us just look at the facts—let us just look at the businesses that have started up under this Government. These are businesses backed by entrepreneurs—wealth creators—who are creating jobs for people to feed their families. We asked the hon. Member for Bootle many times to explain how he was going to pay for his policies. My hon. Friend the Member for Sleaford and North Hykeham said that we had asked 26 times—it might be 27, 28 or 29, I am not sure—but he cannot do this. That is why people in Redditch, and people up and down the country, are terrified of the idea of a Government led by—

Public Sector Pay

George Howarth Excerpts

Monday 4th December 2017 Westminster Hall

[Helen Jones]

My hon. Friend is right. This Government have been very good at trying to place the blame elsewhere for a policy they introduced. In fact, so bad have things got that last year the chief executive of NHS Providers told the Health Service Journal that one trust had tracked where its low-paid workers were going when they left. They were leaving to work in supermarkets because the pay was better.

Of course, it is not just pay that has caused problems for public sector workers. While their pay is being held down, they are being asked to do more with fewer resources, and they worry about that because they are committed to their jobs. The TUC report includes interviews with various people. One midwife said:

“The pressures on wards, the size of our caseloads and the level of pressure means we worry about making mistakes.”

Another said:

“I’ve seen people walk away from the profession because they can’t take it anymore. It all affects the continuity of care for the women in our care”.

A firefighter told the TUC:

“My station used to have fifteen firefighters and two vehicles on each day. Now there are only six firefighters and one frontline vehicle.”

That combination of pay restraint leading to real-terms cuts and increased pressure on public sector workers means that in many areas we are now having serious difficulty recruiting and retaining staff.

The school workforce census in 2015 showed that one in 10 teachers had left the profession in the previous year. We now know that one quarter of newly qualified teachers leave within three years. That is the highest since records began, and that is not surprising, because they are under enormous pressure. The Government have tried to deprofessionalise the job. They have taken away the checks and balances that used to ensure that heads did not behave unreasonably. Not all bosses are saints, even in the public sector. Cuts to schools are changing the balance of the workforce. We used to have that balance between young teachers coming in with new ideas and older, more experienced staff who could support them, but that is subtly shifting because schools cannot afford to employ the more experienced staff.

I know of one woman, fluent in two languages, who could not find employment when she wanted to come back into teaching after looking after her children. She can only find a job as a teaching assistant. That is a scandalous waste of her experience and qualifications. The Government got rid of lots of prison officers, and now our jails are at risk of serious violence, yet they are having difficulty recruiting more staff because the pay is poor. The NHS has shortages in various areas—accident and emergency, anaesthetics and psychiatry, for example—and the Government’s response when trusts bring in locums or agency staff is to blame the trusts for spending too much money. In fact, the cure is in the Government’s own hands: recruit staff, train them well and pay them properly. That means not only abandoning policies such as refusing to give trainee nurses a bursary, but stopping treating staff as the enemy, as the Health Secretary did in the case of the junior doctors, and it now seems that he plans to do that again to other staff.

In the Budget the Chancellor announced the Government would fund a pay rise for nurses. It applies to all the “Agenda for Change” staff, although we are used to the Government forgetting that cleaners, porters, lab technicians, support workers and a whole load of other staff work in hospitals, and without them our doctors and nurses could not do their jobs. However, the Health Secretary immediately announced that he wanted to change the conditions of work for staff, particularly their unsocial hours payments, so the Government are giving with one hand and taking away with another.

A very wise old headteacher once said to me—in the days when headteachers stayed around a long time, rather than getting burnt out and leaving—“People say the most important thing in school is that the children are happy, but I think the most important thing is that the staff are happy, because if the staff are happy the children will be happy and well taught.” That needs to be applied in other areas as well. Public sector pay has dropped 15% from its peak, and has lagged behind growth in the economy as a whole since 2016. It is now at its lowest level relative to the private sector since the 1990s, when, funnily enough, there was also a Conservative Government in power. As my hon. Friend the Member for Wrexham (Ian C. Lucas) has said, that has had a huge effect on regional economies.

If we take average public sector pay and look at the number of full-time equivalent workers in a region, we can estimate the loss. The north-west has lost £3.7 billion from its economy; the midlands £3 billion; and London a whopping £9.1 billion. That is all money that would have been spent in local businesses, protecting local jobs. Most of the people we are talking about are low paid and the extra money they get is spent on essentials, but the Government choose to ignore that. They have several excuses, or explanations, depending on one’s point of view. First, they try to say that public sector workers have better terms and conditions than the private sector. Well, they no longer have better pensions—although most of them never did—as their pensions have been changed. Estimates of private sector pay are always depressed by the fact that some areas of the private sector have very low pay indeed. The Government know that, because their statistics authority told them so in 2016 and showed that on a like for like comparison public sector workers are on average paid 5.5% less than in the private sector, not more.

The second attempted explanation usually implies that public sector workers have cushy jobs and have it easy. Tell that to a police officer in the inner city, a nurse in A&E, someone who cleans in a hospital, or the bin men working out in the rain and snow this winter. Cushy? Most Conservative Members here would not last a week. In fact, I do not think many of us would last a week. The jobs are hard.

The third explanation says that all this is dreadfully, terribly regrettable, but necessary to get down the debt. We need to say that that is simply and absolutely wrong because during the time of the public sector pay cap, debt has increased, not diminished. It has increased by £496 billion. So if the answer to debt is a public sector pay cap, someone is asking the wrong question. The Government fail to take into account the tax that the public sector generates. It has been estimated that for every 1% increase in public sector pay, at least £710 million worth of tax receipts are generated, possibly as high as £800 million, cutting the amount that is spent on tax credits and benefits. That reduces the total cost of a 1% increase to around £600 million. Opposition Members will say, “That is a lot of money”, which it is, but it is a drop in the ocean compared with what the Government have spent on reductions in corporation tax.

The total of the reductions in the main rate of corporation tax, the small profits rate and the combined rate costs the country £16.5 billion a year on current prices. So there we have it: tax cuts for big companies and pay restraint for public sector workers. Nothing could tell us more about the Government’s priorities. They also ignore the fact that public sector pay increases generate more jobs in the wider economy and at least £470 million in the wider economy, probably nearer £800 million, and that supports at least 10,000 full-time equivalent jobs in hospitality, transport and retail. The truth is that the policy is based on a failed economic model.

[Mr George Howarth (Knowsley) (Lab)]

My hon. Friend is typically making a powerful and eloquent case, which I agree with. Does she agree that another excuse the Government frequently use is that it is not down to them, but down to pay review bodies? The difficulty with pay review bodies, which are generally a good thing, is that they are not required to close the gap that already exists, but to consider relativities as they stand at the moment. Is it not time we had a proper review that looked at all the issues my hon. Friend has mentioned and that accepted that public sector workers are important to our economy, our safety and our everyday existence?

[Helen Jones]

My right hon. Friend is right. The cap has depressed the wider economy. It is now starting to depress wages in the private sector, and it is seriously depressing public sector workers. It has failed all round. The Government need to accept that they have failed and should stop trying to put the blame elsewhere. They announced, for instance, that the police can have a rise, but they will not fund police authorities to pay for it. Council workers can have a rise, but they are cutting the money available to local authorities. Health service workers can have a rise, but they will take it back from somewhere else. The Government must stop making excuses and recognise that the policy has failed.

Two things need to happen: first, all of our public sector workers should at least get a proper living wage: not the spurious national minimum wage, but a real living wage. We cannot run public services on the backs of poorly paid workers any longer. Secondly, the Government need to let proper negotiations begin in the various pay review bodies. My right hon. Friend is right: at the very least they should look at the discrepancies that have been created and how far public sector workers have fallen behind. Then they need to fund those pay rises. That would be good for public sector workers, the wider economy and our regions, and in the end it would be good for our country. It is time to abandon the policy and give people a decent wage.

Finance Bill

George Howarth Excerpts

Committee: 1st sitting: House of Commons
Wednesday 11th October 2017 Commons Chamber

[Kirsty Blackman]

I beg to move amendment 13, page 22, line 21, leave out

“on or after 6 April 2017”

and insert

“on or after the date on which the Chancellor of the Exchequer lays before the House of Commons a report of the review undertaken under section 809VP of ITA 2007”.

This amendment would provide that the changes in Clause 15 do not have effect until after the Chancellor of the Exchequer has laid before the House of Commons the review provided for in NC3.

[The Temporary Chair (Mr George Howarth)]

With this it will be convenient to discuss the following:

Clause stand part.

New clause 1—Review of conditions under which business investment relief is available—

‘(1) Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

(2) After section 809VO (investments made from mixed funds), insert—

“809VP  Review of conditions under which business investment relief is available 

(1) Within six months of the coming into force of section 15 of the Finance (No. 2) Act 2017, the Commissioners for Her Majesty’s Revenue and Customs shall complete a review of the conditions under which business investment relief is available.

(2) For the purposes of this section “the conditions” means—

(a) Condition A as defined in section 809VD,

(b) Condition B as defined in section 809VF.

(3) The review shall make an estimate of the value of the reliefs granted as a result of the conditions in respect of each tax year for which the relief has been available.

(4) The review shall make an estimate of the change in the value of the reliefs granted as a result of—

(a) changes to the conditions relating to eligible hybrid companies,

(b) changes to the periods specified in sections 809VD and 809VH,

(c) changes to the grace period in section 809VJ.

(5) The review shall make an assessment of the effectiveness of the conditions in relation to the stated policy aims of the Government in relation to business investment relief.

(6) The review shall prepare an analysis of the characteristics of beneficiaries of reliefs having particular regard to—

(a) income distribution,

(b) gender and other protected characteristics under the Equality Act 2010,

(c) domicile (including deemed domicile).

(7) A report of the review under this section shall be laid before the House of Commons within one calendar month of its completion.””.

This new clause requires HMRC to carry out a review of the conditions under which business investment relief is available, including estimates of the value of the reliefs (before and after the changes proposed in this Bill) and an analysis of the characteristics of those using the relief, including their domicile status.

New clause 3—Review of the efficacy of the conditions for business investment relief—

‘(1) Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

(2) After section 809VO (investments made from mixed funds), insert—

“809VP  Review of efficacy of the conditions for business investment relief

(1) Within two months of Royal Assent to the Finance (No. 2) Act 2017, the Commissioners for Her Majesty’s Revenue and Customs shall complete a review of the impact of the conditions for business investment relief in encouraging investment in the UK.

(2) The review shall make an estimate of additional investment as a result of the condition for business investment relief—

(a) prior to Royal Assent being given to the Finance (No. 2) Act 2017, and

(b) if the changes to those conditions in section 15 of the Finance (No. 2) Act were brought into force.

(3) The Chancellor of the Exchequer shall lay the report of this review before the House of Commons.””.

This new clause requires HMRC to carry out a review of efficacy of the conditions under which business investment relief is available and the Chancellor to lay it before the House of Commons.

[Kirsty Blackman]

I appreciate having the opportunity to speak in this second part of our debate on the Finance Bill.

The matter in hand now has been discussed a number of times over the past few months, specifically around business investment relief. Some aspects of it were discussed while tackling the Ways and Means resolutions and on Second Reading. We are still not clear what impact this will have; the Government have still not told us. An overview of tax legislation was produced at the tail end of last year, when the Bill was first in draft form. It said there was likely to be a negligible impact on the public finances, but that does not explain what is actually going to happen. It also says that between 200 and 400 individuals a year benefit from business investment relief, but again that does not really explain the impact of this relief.

We do know, however, that everybody who benefits from the relief is a non-dom. The Government claim that they are changing the way non-doms are considered and are making it less easy for them to get away with dodging taxes, but this serves to increase the ability of non-doms to get away with not paying tax. The Government suggest this is about increasing investment, but they have not been able to produce any evidence of how much investment has been created as a result of business investment relief.

I am concerned about the amount of time and energy that the House is spending on this matter. It is spending a significant amount of time: we put this measure in place, presumably, at some point in the past few years, yet only 200 to 400 individuals have taken it up. Despite the fact that the numbers are so small, however, we are again debating the matter; this is the third time that we have done so this year, when there are many very important other items on the agenda.

--- Later in debate ---

[The Temporary Chair (Mr George Howarth)]

With this it will be convenient to discuss new clause 2—Review of changes to chargeability of trading profits to corporation tax at Northern Ireland rate—

“(1) CTA 2010 is amended as follows.

(2) After section 357WH (Allocation of Northern Ireland profits etc of firm to company), insert—

‘357WI  Review of changes to chargeability of trading profits to corporation tax at Northern Ireland rate

(1) As soon as practicable after the completion of the first financial year in respect of which the Northern Ireland rate is set by the Northern Ireland Assembly in accordance with the provisions of section 357IA, the Commissioners for Her Majesty’s Revenue and Customs shall complete a review of the effects of the changes to chargeability of trading profits to corporation tax at the Northern Ireland rate made in Schedule 7 to the Finance (No. 2) Act 2017.

(2) A review under this section shall consider in particular the effect of those changes on the extent to which companies are based in—

(a) Northern Ireland, and

(b) Great Britain.

(3) A review under this section shall also consider the effect of those changes on the extent to which the profits or losses of companies and firms are Northern Ireland profits or losses.

(4) A review under this section shall also consider the effect on employment in—

(a) Northern Ireland, and

(b) Great Britain.

(5) A report of the review under this section shall be laid before the House of Commons within one calendar month of its completion.’”

This new clause requires HMRC to carry out a review after the first year of operation of the Northern Ireland rate of the effect of the changes in Schedule 7 on the location of companies in Northern Ireland and in Great Britain, the extent to which trading profits and losses are treated as subject to the Northern Ireland rate and on employment in Northern Ireland and in Great Britain.

Finance Bill

George Howarth Excerpts

Tuesday 28th June 2016 Commons Chamber

[Sammy Wilson]

I am reluctant to get involved because I know that the Chair will call me to order, but perhaps you will indulge me, Mr Howarth, and allow me to answer the point. I do not share the hon. Gentleman’s views about the detrimental impact of Brexit. Indeed, for businesses in Northern Ireland, where we have become export-oriented, it opens up the opportunity to look to those parts of the world where there are growing economies and allows us to make our own trade deals with them. I believe that Brexit will be of benefit to us and—

[The Temporary Chair (Mr George Howarth)]

Order. I understand the connection that the hon. Gentleman is making, but he is about to strain it beyond the limits.

[Sammy Wilson]

I was about to say, Mr Howarth, that the reduction in corporation tax will be an additional means by which we can capitalise on those opportunities.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Mr George Howarth)]

With this it will be convenient to discuss the following:

That schedules 11 and 12 be the Eleventh and Twelfth schedules to the Bill.

Government amendments 30 to 35.

Clauses 73 to 75 stand part.

Government amendments 36 to 38.

That schedule 13 be the Thirteenth schedule to the Bill.

Clause 76 stand part.

Government amendments 39 to 64.

Amendment 181, in schedule 14, page 432, line 45, at end insert—

“169VS Expiration of Chapter V provisions

(1) The provisions of Chapter V of part 5 of this Act shall remain in force until five years after their commencement and shall then expire, unless continued in force by an order under subsection (2).

(2) The Secretary of State may by order made by statutory instrument provide—

(a) that all or any of those provisions which are in force shall continue in force for a period not exceeding 12 months from the coming into operation of the order; or

(b) that all or any of those provisions which are for the time being in force shall cease to be in force.

(3) No order shall be made under subsection (2) unless—

(a) a draft of the order has been laid before and approved by a resolution of both Houses of Parliament,

(b) the Secretary of State has laid the report of a review of the operation of Investor’s Relief before both Houses of Parliament.”

Government amendments 65 to 68.

That schedule 14 be the Fourteenth schedule to the Bill.

Amendment 182, in clause 77, page 135, line 17, leave out “£100,000” and insert “£50,000”.

Government amendment 184.

Clauses 77 to 81 stand part.

New clause 2—Review of remuneration of investment fund managers—

“The Chancellor of the Exchequer must commission a review of ways in which the law could be amended to ensure that no element of the remuneration paid to an investment fund manager may be treated as a capital gain, and that such remuneration shall be treated for tax purposes wholly as income, and must publish the report of the review within six months of the passing of this Act.”

New clause 11—Entrepreneur’s relief: value for money—

“The Chancellor of the Exchequer shall, within six months of the passing of this Act, publish a report giving HM Treasury’s assessment of the value for money provided by Entrepreneur’s Relief.”

[Mr Gauke]

The final session of today’s debate considers a number of changes to capital gains tax, along with Government amendments and one Opposition amendment.

Clause 72 will provide an incentive for people to invest in companies by reducing the main rate of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. The Government want to ensure that companies can access the capital they need to grow and create jobs, and want the next generation to be backed by a strong investment culture. We believe the best way to encourage this is to let investors keep more of the rewards when their investment is successful. At 28%, our higher rate of capital gains tax is among the highest in the developed world. We do not want high tax rates to deter investment. The lower capital gains tax rates introduced by this clause will make it more attractive for people to invest in companies, helping those companies to access the capital to expand and create jobs. Gains made on residential properties that do not qualify for private residence relief, and those from carried interest, will remain subject to the 18% and 28% rates. Retaining these rates will create an incentive for individuals to invest in companies rather than in property.

Clauses 73 to 75 make changes to ensure that entrepreneurs relief on capital gains tax rewards business owners and entrepreneurial investors while safeguarding the effect of measures introduced last year to prevent abuse of the relief. The Government are committed to supporting enterprise and entrepreneurship, but they are equally committed to fairness in the tax system. Entrepreneurs relief allows certain capital gains to be taxed at 10%, rather than the normal rates, and plays an important role in supporting the enterprise culture of this country, but, as with all tax reliefs, we need to make sure that it is not being claimed in circumstances where it does not achieve its intended purpose.

These changes will improve the targeting of the anti-abuse rules introduced in 2015. The changes in clause 73 will allow relief for gains on disposal of a private asset used in a business in cases of genuine retirement or where members of the claimant’s family succeed to the claimant’s business. These changes will level the playing field for family-run businesses and allow them to be passed to the next generation without an unfair tax charge.

The changes in clause 74 will allow someone selling their business to a limited company to claim relief on the goodwill of that business, providing they have only a small stake in the company. The relief will still be denied where the former proprietor or partner could continue running the business through the company and benefit directly from future profits and business growth. Entrepreneurs relief on gains on shares is due only where those shares are in trading companies or the holding companies of trading groups. Clause 75 amends the definition of a trading company to ensure that relief is available for shares in a company that has no trade of its own but which holds shares in a trading joint venture company where the investor effectively holds 5% or more of the joint venture company. The further changes made by these clauses will be backdated to the date on which the 2015 changes came into effect, meaning that no one who has made a genuine disposal for commercial reasons should be disadvantaged by the new rules.

The Government have tabled several minor amendments to the clauses. Amendments 30 to 33 simply move one of the new conditions introduced by clause 73 to a different place in the relevant statute. Amendments 34 and 35 correct two unintended retrospective effects of clause 73. Without the amendments, someone who made a disposal after Budget day 2015 and was eligible for entrepreneurs relief could find themselves deprived of that relief by changes announced at Budget 2016. Amendments 36 to 38 clarify the commencement provisions for the new rules introduced by clause 75 and ensure that the new definition of a trading company supersedes the definition used by the Finance Act 2015. These amendments do not reflect any change in policy and will have no impact on the costings of the measures.

Now is an appropriate time to address new clause 11, tabled by Opposition Members, which proposes that my right hon. Friend the Chancellor of the Exchequer publish within six months of the passing of the Act a report of the Treasury’s assessment of the value for money provided by entrepreneurs relief. Opposition Members will be aware that the Government keep all tax policy under review. This includes entrepreneurs relief, as demonstrated by recent action taken to ensure that the relief is effective, well targeted and not open to abuse, and we will continue to act where appropriate. I can inform the Committee that officials have for some time been developing a detailed research programme designed to identify taxpayers’ motivations for using entrepreneurs relief, and I expect the results to be published at some point in 2017. I do not believe it is necessary to legislate for a review, so I hope that the Opposition will not press the new clause.

Clause 76 and schedule 14 introduce investors relief and apply a 10% rate of capital gains tax to gains accruing on the disposal of qualifying shares held by an external investor in an unlimited trading company for at least three years. Many companies struggle to attract the long-term external investment they need to grow and expand, and this can be particularly difficult for unlisted companies, which is why, on top of cutting the capital gains tax rates, the Government are introducing this additional financial incentive to invest in these companies over the longer term. Investors relief has been designed to help unlisted companies attract inward equity investment from external investors. This clause and schedule apply a 10% rate of capital gains tax to gains accruing on the disposal of qualifying shares held by an investor in an unlisted trading company or trading group. The investor must not be an employee or officer of the company at the time of subscription. In addition, the shares must have been newly issued after 17 March 2016 and held for a period of at least three years starting from 6 April 2016. The amount of relief is capped, with individuals subject to a lifetime cap of £10 million on qualifying gains.

We are today making a number of amendments to this clause to ensure that the rules surrounding the relief are fair and clear, and to extend the scope of the relief to prevent market distortions and unlock further sources of capital. Amendments 39 to 41, 43, 44, 50 and 61 will ensure that trustees of a settlement as well individuals who choose jointly to subscribe with other individuals are able to subscribe for investor relief qualifying shares. In the case of trusts, amendment 51 includes rules that prevent individuals from creating multiple trusts, each with a £10 million lifetime limit.

Amendments 45 to 49 clarify how to determine the number of shares that qualify for investors relief when a disposal is made that consists of a mixture of qualifying and non-qualifying shares. Amendments 52 to 60 and amendments 65 to 68 clarify the provisions that deal with share disposals, share exchanges, elections, subscriptions and the distribution of value to existing shareholders.

Finally, some investors may wish to monitor and protect their investment through a seat on a company’s board. Amendments 42 and 62 to 64 allow such an investor to become a director after their investment has been made as long as they are not remunerated in that capacity. They also allow an individual who becomes an employee of the company to access relief in most situations after 180 days of the share issue. Investors relief is designed to attract new capital into unlisted companies, enabling them to grow their business. It will help to advance this Government’s aims for a growing economy driven by investment and supporting businesses to grow.

Let me turn to the Opposition amendment that was tabled by the hon. Member for Feltham and Heston (Seema Malhotra), but is now being taken up by her successor—and may I congratulate the hon. Member for Salford and Eccles (Rebecca Long Bailey) on her promotion? Amendment 181 seeks to end the relief after a period of five years, with the option of an additional 12-month extension if agreed by both Houses, subject to the Chancellor laying a review of the operation of the relief before both Houses. The amendment is unnecessary when the Government rightly keep all tax policy under review in line with normal tax policy-making practice. There would be limited merit in conducting the review within five years; the first data on the uptake of the relief in its first year of operation would not be available to HMRC until 2020-21. The Government believe that legislating for a review within five years is unnecessary and inappropriate. I therefore hope that amendment 181 will be withdrawn.

Clause 77 relates to shares given to employees who accept employee shareholder status. It places a lifetime limit of £100,000 on the capital gains tax exempt gains that a person can make on disposal of those shares. The limit will apply to shares received under arrangements entered into after 16 March 2016. The change will enable employee shareholders to realise the significant growth in the value of their shares without paying any capital gains tax, while helping to ensure that the status is not misused. The clause provides for fair and consistent treatment of transfers of shares to a spouse or partner. The change will benefit the Exchequer by £10 million in 2019-20 and £35 million in 2020-21.

It is also an appropriate point to address amendment 182, which was tabled by Opposition Members. It proposes that the lifetime limit be £50,000 rather than the Government’s proposed £100,000. This is not a change that the Government would welcome. The introduction of a cap of £100,000 where there was none before is, we believe, a significant change. The level of the cap is a matter of weighing up two policy objectives—ensuring that employee shareholder status is not misused, and encouraging and rewarding entrepreneurship. The Government believe that setting the cap at £100,000 strikes the right balance. It encourages entrepreneurship by allowing an exemption from capital gains tax which is still generous while reducing the likelihood of abuse by ensuring that the benefits for individuals are proportionate and fair. I therefore invite hon. Members to reject amendment 182.

The Economy and Work

George Howarth Excerpts

Thursday 26th May 2016 Commons Chamber

[Mr George Howarth (Knowsley) (Lab)]

I begin by thanking the Chancellor for the £5 million he earmarked in the Budget for Shakespeare North. May I press him a little further and ask him to waive the VAT on the construction costs?

I want to talk today about the link between poverty, economic progress and education. Before doing so, however, I should perhaps say a word about my position on the EU referendum. In the previous referendum, in 1975, I chaired the “Huyton says no” campaign. That merry band of naysayers was a fairly eclectic group consisting of Labour party Young Socialists, the Communist party of Great Britain and two Tories who ran a ballroom dancing academy. Fortunately, the people of Huyton sensibly listened to our local MP at the time, Harold Wilson, and voted to stay in.

The argument that I want to advance today takes its inspiration—fittingly, in the centenary year of his birth—from Harold Wilson’s “white heat of technology” speech. Key to his argument in 1963 was that we needed to adapt to changing economic realities by embracing the challenges presented in science and technology. It also included an element about the importance of education as a pathway out of poverty. My argument is that we now face a similar challenge. How do we compete in a rapidly changing global economy? Do we, as some international corporations would suggest, adopt zero-hours contracts and other insecure forms of employment, or do we incentivise innovation and educate and train our workforce to take advantage of the opportunities that innovation creates? The first option is, in my view, a self-defeating race to the bottom.

However, we have to face up to some uncomfortable truths, one of which is the decline in manufacturing in the UK. In 1972, 32% of the UK’s GDP came from manufacturing. By 1997, that percentage was down to 14.5%, and by 2013 it had dropped further to 10.4%. The economic levers available to the Chancellor and the Government need to be remorselessly focused on creating incentives for innovation, using not only the taxation system but the export guarantee system and everything else available to ensure that the opportunities that exist in the world are brought within the reach of our country.

We also need to talk about education. We have serious problems with education in Knowsley. I do not want to go into too much detail, but we have a serious problem of under-attainment at GCSE level.

[Andrew Gwynne]

I just wonder how many secondary schools in Knowsley are academies.

[Mr Howarth]

That is the point. Out of the six secondary schools in Knowsley, four are already academies, so that is clearly not the solution to the problems we face. My own belief is that we need to start from scratch and completely rebuild the education system. Nothing should be protected from proper scrutiny or from modernisation. The curriculum, the public examination system, educational institutions and even the underlying philosophy behind education need rigorous questioning and frankly need to be radically redesigned to meet the real challenges that we face in the world. If we do not do that, areas such as Knowsley will continue to lag behind. We can, however, make bigger and bolder choices to meet the challenges and harness innovation and education as the twin engines of tackling inequality, deprivation and the random economic effects associated with where people live. Surely there is only one choice, and that choice must be progress.

Budget Changes

George Howarth Excerpts

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

As always, I appreciate my hon. Friend’s spirit of helpfulness but I am afraid that I do not agree with him. It was a manifesto commitment by our party that we would fulfil the 0.7% target.

[Mr George Howarth (Knowsley) (Lab)]

Harold Wilson once said that a week was a long time in politics. How long is a long-term economic plan? Three days? Four days? Five?

[Mr Gauke]

Let us be clear: this is a Government who have turned the economy round and delivered this country as the fastest-growing major western economy in 2014. We are forecast to be the fastest-growing again. We have record levels of employment. The deficit will be down by two thirds by the beginning of the next fiscal year. That is what this Government are delivering and will continue to deliver.

Electoral Law

George Howarth Excerpts

Tuesday 2nd February 2016 General Committees

[Chair]

Before we begin, it may be helpful if I remind Members of the procedure in European Committees. The proceedings must conclude no later than two and a half hours after we begin. I will begin by calling a member of the European Scrutiny Committee to make a brief statement about why the Committee decided to refer the documents for debate. I will then call on the Minister to make a statement followed by questions for up to an hour, although I have some discretion to extend that time if there is an appetite to do so. The Committee will then debate the Government motion, and I will put the question on that motion when the debate or the time available is exhausted, whichever comes first.

Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the documents to the Committee?

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

May I say what a pleasure it is to be serve under your chairmanship for the first time in the new year, Mr Howarth?

The proposed Council decision, which is, I am glad to say, subject to unanimity and ratification by member states, aims to harmonise certain aspects of the conduct of European Parliament elections in member states. Initiated by the European Parliament on the basis of article 223(1) of the treaty on the functioning of the European Union, its more significant measures include common deadlines for establishing lists of candidates and electoral registers; making members of regional parliaments and legislative Assemblies ineligible for election as MEPs; proposals concerning the gender equality of candidates; proposals on electronic and postal voting; some mandatory 3% to 5% thresholds for winning seats; proposals relating to voting by EU mobile citizens and their data; incorporating the spitzenkandidaten process, under which there is a pretence of electing the Commission President; and making provision for detailed implementing rules. However, it does not include aspirational proposals, only set out in the European Parliament’s resolution, such as a common minimum voting age of 16 and a common voting day.

On 13 January, the European Scrutiny Committee recommended a reasoned opinion on the proposed Council decision. The reasoned opinion procedure, introduced by the Lisbon treaty, allows national Parliaments to object to a draft legislative act if they consider that it breaches subsidiarity. That principle requires that decisions should be taken as close to the citizen as possible. National Parliaments have eight weeks from transmission of a proposal to submit a reasoned opinion. If such opinions represent one third of all votes of national Parliaments, they constitute a yellow card. The initiator of the proposal, in this case the European Parliament, must review it. The EU Committee in the House of Lords has also decided to recommend a reasoned opinion. The Government have expressed some subsidiarity concerns, saying that some aspects of the proposal are best decided at national level. Their main concern appears to be that uniform practice for European parliamentary elections would be inconsistent with domestic electoral practices, making it difficult for the UK to hold European parliamentary and local elections at the same time, resulting in further reduced turnouts for European parliamentary elections.

The European Scrutiny Committee concluded in its reasoned opinion that there is no detailed subsidiarity statement in the draft legislative act, so the European Parliament has failed to comply with an essential procedural requirement; there is, in any case, insufficient substantiation in the resolution and the European “added value” assessment; and the proposal’s objective of creating a uniform electoral procedure to enhance the European Parliament’s democratic legitimacy through electoral equality is undermined by harmonisation at a level of detail which divorces the European Parliament’s electoral procedure from well-established and recognised domestic procedures. Bearing that in mind, the European Scrutiny Committee has raised specific objections questioning the European Union’s “added value” benefits of all of the significant measures outlined, excepting the measures on spitzenkandidaten and implementing rules.

The European Scrutiny Committee was not assisted greatly in this task by the Government’s inadequate subsidiarity and financial assessment of the proposal for the reasons set out in paragraphs 1.7 and 1.8 of its report, and so asks the Minister to comment on that.

[Chair]

I call the Minister to make an opening statement.

European Union Referendum Bill

George Howarth Excerpts

Tuesday 8th December 2015 Commons Chamber

[Mr Jenkin]

I have to be mindful about whether that is taking us beyond the scope of what we are discussing, but it reminds me of a very controversial element of the Government’s conduct of the Scottish referendum, and I have some sympathy with arguments that have been made on this point. I refer to the use of a permanent secretary to give a speech on behalf of the Government’s view while this was purporting to be the publication of advice to Ministers. Such advice should never be published. On any orthodox analysis, the opinions of civil servants in the form of advice to Ministers should never be published, but this was used as part of the propaganda. Many Scottish National party Members would regard that as a gross misuse of civil servants during a referendum period, and we need to try to avoid that.

I leave two questions for the Minister as he responds to this debate on Lords amendments 5 and 6. First, what does “publish” actually mean? What do the Government intend to do by way of the publication of these two reports? Are they just to be White Papers or are they to be propaganda circulated by the Government in some way much more widely? Secondly, how will he ensure that this is done in the highest spirit of impartiality, using that word in the way most people would expect it to be used? How is he going to ensure that these publications are genuinely objective and not just a means of advancing one side of the argument against the other?

[Mr George Howarth (Knowsley) (Lab)]

Does the hon. Gentleman not accept that the Governor of the Bank of England giving advice, for example, with the Monetary Policy Committee on interest rates, is in a very different position from other public officials, because his advice is often made public? It is perfectly clear that if he has any advice on this, it should be a matter of public interest.

Finance Bill

George Howarth Excerpts

Tuesday 8th September 2015 Commons Chamber

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Mr George Howarth)]

With this it will be convenient to discuss new clause 2—Report on the removal of the Climate Change Levy exemption—

“(1) No later than 6 months following the passing of this Act the Chancellor of the Exchequer shall publish a report into the effect of the removal of the Climate Change Levy exemption on renewable energy generators.

(2) That report must include information about:

(a) The effect that the removal of the exemption has had on existing generators

(b) The effect that the removal of the exemption has had on projects which were in the planning process

(c) The cumulative effect on investor confidence in renewable energy of this change in the context of wider government policy on renewable energy; and

(d) The effect of these changes on the United Kingdom’s ability to meet its climate change targets and commitments.”

[The Exchequer Secretary to the Treasury (Damian Hinds)]

Clause 45 ends the exemption—[Interruption.]

[The Temporary Chair]

Order. Will Members leaving the Chamber please do so quietly?

--- Later in debate ---

[Alison McGovern]

I thank the Minister for giving way. First, I supported my hon. Friend the Member for Leicester West (Liz Kendall). Secondly, I thought I liked the Minister.

[The Temporary Chair (Mr George Howarth)]

Order. Before the Minister resumes her speech, fascinating and colourful as this exchange is I hope that it will not be too extended.