Finance Bill

George Mudie Excerpts

Monday 12th July 2010 Commons Chamber

[Clive Efford]

The hon. Gentleman makes a point that I could repeat. Cutbacks in Her Majesty’s Revenue and Customs staff make more distant the target of maximising the amount of tax taken. He may have joined me on the odd occasion when I voted against the previous Government, so we have been on the same side of such arguments from time to time. Some of us are sinners turned saints, and even as a loyal Labour Back Bencher, I might agree with elements of the criticisms of the previous Government.

We have been given instruction in tautology on the question of avoidance and evasion, but we are quite clear that we are talking about people whose actions are not within the rules. We need to ensure that action is taken so that they pay their fair share, because clearly, the increase in taxation—the VAT increase and other measures—and the cuts will hit the poorest in our communities first. That is why it is absolutely essential that we have discussions such as the one instigated by my hon. Friend the Member for Hayes and Harlington.

[Mr George Mudie (Leeds East) (Lab)]

Does my hon. Friend agree that it would be a shame to let this debate go by without mentioning the activities of Barclays bank, and particularly its capital section? The head reputedly earned £90 million a year. We should consider that amount of money, because that group was set up to find ways for companies to avoid paying corporation tax, or indeed any tax.

[Clive Efford]

My hon. Friend’s intervention needs no comment from me, other than to say that it is an excellent example of the sort of practices that we need to bear down on. We pay a plethora of accountants and financial advisers to advise on how to invest our money wisely, and that is a legitimate area of activity. It is right that people may order their finances within the rules to maximise their income, but if that becomes exploitation or unfair in terms of what people are contributing, we have to act. That is where the amendments that we have tabled on capital gains tax, which we will discuss later, come in.

The hon. Member for Dundee East (Stewart Hosie) mentioned the cut in tax staff, and if we are going to see substantial cuts in staff, it will make it even more difficult for HMRC staff to perform their task on whatever tax they are pursuing, be it corporation tax or any other.

The right hon. Member for Wokingham seemed to dismiss the issue of tax evasion, suggesting that we could pursue evaders until the cows came home, but they would never pay the tax so we would not be able to close the deficit by pursuing them. He then went on to talk about the difference between evasion and avoidance, rather than focusing on what we can do—as the people who scrutinise legislation—to ensure that the Government are delivering on their words in the Budget.

--- Later in debate ---

[Stephen Timms]

I am happy to subscribe to the view that the tax code should be as simple as possible, and I look forward to the new Government introducing measures along those lines. Simplicity is certainly a virtue, but, as I have said, those who are pressing for such measures might find that they have a rather longer wait than they would have liked. Let me also make it clear, in agreeing with my hon. Friend the Member for Hayes and Harlington, that there is absolutely nothing wrong with tax planning or with people ordering their affairs in a sensible way from a tax point of view.

[Mr Mudie]

I thank the Minister for giving way. I am sorry, I should have said “the shadow Minister”—old habits die hard. Does he recall that it was reported last year that the majority of the top 100 companies paid no tax whatever? That was not a matter of the tax system being complicated; it was a simple matter of their going to enormous lengths—working with the worst culprit, Barclays bank—to devise systems and work through offshore companies to avoid paying any tax. Do not Members on the Government Benches get angry that ordinary people work hard and pay their taxes while multinationals and other large companies go to extreme lengths to pay no tax whatever?

[Stephen Timms]

My hon. Friend is absolutely right. There are some flagrant examples of that, not least in the banking sector. Indeed, some of those examples were very well documented in the excellent series in The Guardian earlier this year. I would particularly welcome an update from the Minister on the progress of the voluntary code of practice for the banks, which could be an effective way of tackling the problem that he is dealing with.

Alignment (Clear Line of Sight) Project

George Mudie Excerpts

Monday 5th July 2010 Commons Chamber

[Mr George Mudie (Leeds East) (Lab)]

I did not intend to speak in this debate, but I was enormously cheered by the contributions from the hon. Members for Chichester (Mr Tyrie), for Sevenoaks (Michael Fallon) and for Birmingham, Yardley (John Hemming). I do not know whether that is down to the new faces among us, but after 18 years in this place, I had begun to despair of achieving any sensible discussion on the scrutiny of public money. We spend other people’s money, but it had seemed to be the last thing on anybody’s mind in this place.

I do not downplay the steps that the previous Labour Government took, the framework that the Minister has inherited or his steps to put that framework into operation as quickly as he has, but my right hon. Friend the Member for Barking (Margaret Hodge) put across something else very important. The proposal to put online anything over £25,000 in a budget is an enormous step forward, because we are discussing streamlining and stopping the overlap between, and the disjointed effects of, the varied financial information that covers what we spend of taxpayers’ money. I pay tribute to the Minister for that proposal.

We have to remember that we spend hundreds of billions of pounds every year. When I first came here from local government, where we knew about every line, I had the cheek to ask people in one of the Departments to break down a budget head, and I could almost hear their terror. They thought that I was very impertinent even to suggest it, and said, “It would be too expensive to give you this information.” We could take any line in the book that is in the Vote Office now—the central Government supply estimates. I picked it up this afternoon, as a geek, to go through it. There is a line referring to £1.5 billion, with a few words of explanation. If we attempt to find out what that covers and how it is broken down, we are thought to be exceeding our brief.

I listened to what was said by the hon. Members for Gainsborough (Mr Leigh), for Sevenoaks and for Chichester, who has, I think, disappeared in case he gets talked into agreeing to something. I do not think that this is pork barrel politics. It is a duty of Members in this place to know the detail of the legislation we are passing and what we are spending, but the system does not allow us to do that. There is a good argument for the Committees chaired by my right hon. Friend the Member for Barking and the hon. Member for Sevenoaks getting together, in whichever way, whether it is by taking the suggestion of the hon. Member for Sevenoaks or a combined option, with a joint Sub-Committee of the Public Accounts Committee and the Treasury Committee rather than a budget Committee. Whatever we did, it would frighten the officials. It would bring us so much power and so much ability to have a say in what we are spending if we set up an apparatus that allowed us to break all these lines down. However we do it, we need to get a system whereby we set up a group of Members who are willing to spend their time on this. That is one of the difficulties of suggesting that we have another Committee that would add to all the hours put in by members of the Treasury Committee and the Public Accounts Committee.

Two weeks ago, I made a suggestion to the new Chairman of the Treasury Committee regarding the Sub-Committee so admirably chaired by the hon. Member for Sevenoaks over the past few years. I said that we already look in outline terms at the budgets and work of the Departments and bodies covered by the Treasury Committee, but we could also run a yearly exercise whereby we took one Department and, instead of just having a two-hour session, spent the whole year going through its budget line by line, and we would do that for each Department in turn. When the Treasury Committee tried to scrutinise the work and expenditure of a Department, the people from that Department had only to see the Committee for two hours a year. They could take whatever abuse was thrown at them and bat off whatever questions they were asked, but then they knew that they were free for the rest of the year. If they knew that, on a yearly cycle, they would have line-by-line scrutiny of their Department’s budget, they might be a bit more sensible in the way they spent public money.

Some wonderful suggestions have been made, and this is wonderful new ground. We should all resolve to accept the proposals that are on the table, but we should not be satisfied in thinking that they go anywhere near to allowing us to scrutinise properly. I have one last thought. I would love to have the opportunity that the Government are taking. I do not agree with their policies, their time scale, and so on; I think I made that clear the other night. However, I do agree with the music that is coming out whereby they are forcing Departments to sit down with them and go through, as much as is possible in the time scale, the make-up of the budgets to determine whether the money is being spent sensibly. That is a wonderful step forward.

Banking Reform

George Mudie Excerpts

Thursday 17th June 2010 Commons Chamber

[Mr Hoban]

I am grateful to my hon. Friend. There have been a number of conversations with other colleagues globally about the lessons to be learned from the financial crisis and from the regulatory structures. It is interesting to talk to people in other jurisdictions about their views. Christian Noyer, the governor of the Banque de France, said in July last year:

“Indeed, one of the main lessons of the crisis may be that those countries where central banks assume banking supervision took advantage of their ability to react quickly and flexibly to emergency situations.”

Others have expressed a similar view and that is why I think that the reforms we are announcing today are in the mainstream of reforms in financial regulation—a mainstream that the Opposition seem quite happy to stay outside, yet again.

[Mr George Mudie (Leeds East) (Lab)]

I welcome the evolution of financial regulation. I think that the present system was tested and found wanting, so the movement has to be welcomed. I want to press the Minister on the subject of the Banking Commission. It was interesting that he left it out of his statement and that worries me, because I note that it will take 18 months before it reports. If that is so, it will probably miss the Queen’s Speech for the following year, which suggests that it will be three or four years before we see legislation and the much-needed changes that will deal with the banks that caused the crisis. They continue to flaunt their behaviour on bonuses and have continued to hurt small business by not lending in the last two years. Urgent action is needed, so why is there this long timetable and why was this subject missing from his statement?

[Mr Hoban]

I am grateful to the hon. Gentleman for that question. He has been a distinguished member of the Select Committee on the Treasury and has taken part in many discussions in that Committee and in Public Bill Committees when we have explored some of these issues. I sense that he is much more engaged in the need for reform than his colleagues on the Front Bench.

The Banking Commission is important and it is vital that we ensure that we learn some of the lessons that arise from the structure of the UK banking system. We have a very concentrated banking structure and three out of the four principal banks in the UK are universal banks. We need to understand what risks flow from that and how best to tackle those risks, as well as considering the impact of competition in the banking sector. The appointment yesterday of Sir John Vickers as chairman of the commission has been greeted with warm applause across the business and consumer community. There are four other commissioners— Martin Wolf, Martin Taylor, Clare Spottiswoode and Bill Winters—who are equally distinguished in their own fields. The commission will provide the opportunity for a proper debate about the structure of banking in this county—a debate in which the former Prime Minister and former Chancellor did not want to participate. We think that it is time to have that debate and when we have had it, that will help remove the uncertainty about the structure of banking in the UK.

Office for Budget Responsibility

George Mudie Excerpts

Monday 14th June 2010 Commons Chamber

[Mr Osborne]

I know that my hon. Friend takes a keen interest in these matters, so she will have seen the G20 communiqué signed in South Korea that says:

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions.”

That is, of course, precisely what the OBR does.

[Mr George Mudie (Leeds East) (Lab)]

Has the Chancellor seriously come to this House and told us he does not have any concerns or see any danger of high unemployment or damage to the economy in taking a short-term approach to clearing the structural deficit?

[Mr Osborne]

We have demonstrated that the OBR, alongside some of the other things we have done, is a commitment to the long-term sustainability of the British public finances, and I remind the hon. Gentleman of the following words of the Governor of the Bank of England:

“The most important thing now is for the new Government to deal with the challenge of the fiscal deficit. It is the single most pressing problem facing the United Kingdom”.