European Union (Withdrawal Agreement) Bill

Debate between Geraint Davies and Mark Garnier

Committee stage & Committee: 2nd sitting: House of Commons & Committee: 2nd sitting
Wednesday 8th January 2020 Commons Chamber

[Geraint Davies]

I am grateful for your guidance.

I guess the point is that sovereignty is about our ability to make laws here without intimidation or interference, but that we could find ourselves outside the EU and no longer able, for example, to introduce a tax on sugar that would reduce the cost of obesity to the NHS. We could have a situation where we want to let people know that there are six teaspoonfuls of sugar in a Müller Light yoghurt and nine in a Coca-Cola, and we want to drive down sugar content in order to drive down diabetes and health costs. Instead, we could be fined because the projection of a manufacturer of a sugar-impregnated product was less than that. That is not sovereignty. If we cannot protect our environment, our public health and our trade because we will be under the cosh with these companies suing us through the arbitration panels, that is not sovereignty. This clause should therefore be struck out, because it is completely misleading.

[Mark Garnier (Wyre Forest) (Con)]

I actually agree with an awful lot of what the hon. Gentleman has said in terms of the construction of his argument, but his conclusions are hypothesised on a trade deal that is yet to be done. The important point about all this is that we have sovereignty over deciding what goes into the trade deal. If we do not want to put stuff into a trade deal, it does not matter what the investment courts say. They can only adjudicate on that which is in a trade deal, and what will go into a trade deal will be decided by this sovereign Parliament. That is where his conclusion is completely wrong. He was putting forward quite a strong argument to start with, and I do agree with it, but his conclusions are completely wrong given the sovereignty of this Parliament.

[Geraint Davies]

I am grateful to the hon. Gentleman for that intervention. If there has been any lack of clarity let me make it clear that I am saying that we are in the EU at the moment and obviously do lots of trade with the EU—44% of it—and we do quite a lot of trade through the EU indirectly with America and elsewhere, so we are in a reasonable position. If we come out of the EU and suddenly find that we need to make up for lost trade, we will be under a lot of pressure to do a deal quickly with the US. We will also be in a much weaker position, because we will be standing alone.

The US is a big player and knows it, so it will try to get what it wants, as has been pointed out on sugar, fracking and other examples. What is more, it has ISDS powers as part of its normal bilateral trading agreements, and that is already recorded in trading relations. The idea suggested by the hon. Member for Wyre Forest (Mark Garnier), which I respect, is that we could in theory say, “No, we don’t want this. We won’t go ahead with that.” but there would be a huge economic cost. There would also be enormous pressure, while doing all these other trade deals, to agree.

The assumption is that we could just carry on as before with all the other bilateral trading agreements with small countries such as Chile. If you were Chile, Sir Gary, you would think, “Hold on. Instead of negotiating with the big EU, I’m now negotiating with a relatively smaller UK, so I want a better deal.” Therefore, our sovereignty, in terms of our power to deliver what our electorate wants, is reduced. Our sovereignty has therefore been intrinsically undermined, rather than enhanced, which is contrary to what is being spun out here.

Finance (No. 2) Bill

Debate between Geraint Davies and Mark Garnier

Wednesday 25th March 2015 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a great pleasure and privilege to follow my hon. Friend the Member for Edmonton (Mr Love), who has been a distinguished Member of the House, particularly through his service on the Treasury Committee, which has added enormous insights into the deliberations of successive Governments. It is a great joy to follow my good friend and colleague.

I just want to make a few remarks. The budgetary process in the immediate run-up to the election has been very much a political stunt. The first thing to deal with is the illusion—or delusion—that there has been economic success and turnaround under the Conservatives. That is simply not the case; it is simply not borne out by the facts. The national debt is about £1.4 trillion—up 44%. Reference is made to the deficit and how much the debt is going up, but of course the current Government have borrowed more in five years than Labour did in 13 years—and we had to bail out the banks. The Government have lost the triple A rating. As I pointed out earlier, the number of people earning more than £20,000 is down by 800,000. There is a reliance on a fudging of the facts; this is a “fudge it” Budget, to make up for the fact that we have more and more low-paid people who cannot make a contribution towards the revenues in a sustainable way. Meanwhile, the Government continuously put up the tax threshold and say, “Who’s going to disagree with that?”, knowing everyone is scared to disagree. But that is the management of irresponsibility, because the money simply is not coming in to pay the bills.

So what we need is not a spat about tax and spend, but a serious consideration of how we generate productivity and growth, in order to have higher wages and a more sustainable plan for the future. Obviously, part of that was the debate about tuition fees and about enabling people to go, without fear, to university, so that we could get higher productivity and the students would not be hobbled by massive debt throughout their lives. Such debt can mean that they cannot get a credit rating and cannot get a house, and are scared of moving into a higher pay bracket because it pushes up their repayments.

Sadly, the Tories are creating a two-nation Britain. One nation will be the better off, who, lucky for them, own their own house, can get their sons and daughters into university and pass on money for them to put down a deposit on a property. There are others who may be equally or even more capable of going to university and of boosting the productivity in our collective economy but who are being stopped from getting houses in the future. We are at a turning point now. The party that gets elected will determine whether we have a more unequal or a less unequal future. I very much want us all to pull together as one nation to invest in the future.

The Conservatives have this massively political Budget profile, which has been described as a “rollercoaster”. Deep and savage cuts were going to take us back to the 1930s, but because that was pointed out by the BBC, the Office for Budget Responsibility and the Institute for Fiscal Studies, an adjustment was made. Bank shares were sold off and oil prices went down so that the public service time machine was moved back only to the year 2000. None the less, we all saw the Tories in their true oils. They were happy to make those savage cuts until the BBC highlighted what they were doing. Then they said, “Oh no, we’re not going to do that.” But there will still be savage cuts until the final year of the next Parliament, 2019-2020, when there will be a sudden acceleration in public spending—the biggest spending increase for 10 years—presumably to try to get Boris Johnson elected as the next Tory Prime Minister. That is probably what will happen in the unfortunate event of the Tories getting in again in some strange alliance with the UK Independence party, which would be a disaster for Britain.

We must strike a balance between trying to achieve economic growth and having to balance the books, instead of scrabbling around trying to decide which poor people to clobber. As my hon. Friend the Member for Edmonton pointed out, welfare cuts such as the bedroom tax raised only £400 million, which is small change compared with the numbers that we are talking about. Two thirds of the people hit by that tax are disabled. The cuts to tax credits are hitting people with children who are trying to work. It is ridiculous to try to squeeze more and more out of the poorest to make ends meet. Clearly, it is right that the richest pay more, whether those with more than £2 million pay the mansion tax—

[Mark Garnier (Wyre Forest) (Con)]

They do pay more.

[Geraint Davies]

They need to pay lots more, not a bit more. Of course some of the very rich are paying more, but that is because they are getting richer and richer on massive pay awards. They are earning so much more than anyone else, and the situation is getting out of control

Income Tax

Debate between Geraint Davies and Mark Garnier

Wednesday 5th November 2014 Commons Chamber

[Geraint Davies]

I do not want to say anything rude about David Beckham. Tony Blair was obviously a very successful Prime Minister, and as I have already pointed out, he increased the size of the British economy by 40%. If we were not sitting here after four years of the Tories borrowing more than Labour did in 13 years and with the debt going up and up, we would not have to think of measures to raise more money. It is because of the economic incompetence and failure of this Government that we need to raise more tax at this point.

I have pointed out that there are people who already pay marginal tax rates of 62p—national insurance plus income tax. They are doing that and they are not suddenly leaving the country. This is a sustainable tax that can be borne at this point in the economic calendar, and we need to do it to protect the very poorest. As I have already pointed out, we are ripping £400 million—incidentally, the area most affected by the bedroom tax is Wales, where 42% of council households face it—away from people who have virtually no money. It is simply unfair that those judgments are made.

[Mark Garnier (Wyre Forest) (Con)]

The hon. Gentleman has said on a couple of occasions that under Labour the economy grew by 40%. He is absolutely right: it did grow by 40% under Labour in the years leading up to the 2008 crisis. However, that came from a massive asset bubble that was fuelled by a colossal rise in household debt. One of the greatest crimes of the Labour Government in the lead-up to the financial catastrophe was that it allowed household debt to increase by £1 trillion. It went from £450 billion to £1.45 trillion, an increase of household leverage from 100% to 175%. That debt is still with millions and millions of people.

[Geraint Davies]

I am very grateful indeed for that intervention. The reality is that less than a third of the deficit inherited in 2010 was due to the Government. The Government were spending more than they were earning to gear us out of recession, which was the right thing to do to stop a world depression. We had growth at that time, but thanks to the Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne), suddenly announcing in May 2010 that he was going to sack 500,000 people, everyone stopped spending money in the public sector and demand flatlined. We have had no growth so we do not have the tax receipts.

On debt, what is happening now, as I mentioned earlier, is that banks are lending 30% less to businesses to invest in productivity, entrepreneurship and growth, and they are giving the same amount as they did in 2008 to household debt to buy houses. That is not to build new houses, but to inflate houses in the south-east. There are no new houses, and it is ratcheting up the debt the hon. Gentleman rightly refers to. That is being inspired by the Government’s right-to-buy schemes and so on. That is completely irresponsible, so I am grateful to the hon. Gentleman for making the point about how irresponsible and poor the Government’s financial strategy is.

On infrastructure, a disproportionate sum is being spent in London and the south-east, when it should be spread across the country. Finally, if we want to get away from a low wage, low tax receipt economy, we need to invest in productivity. We need to think again about our strategy for tuition fees versus Germany and elsewhere. Ultimately—I am coming to a conclusion, Madam Deputy Speaker—we find ourselves in a situation where the poor are getting so poor that eventually they turn to parties like UKIP and worse. They start to blame immigration and all the rest of it, and we have social fracturing that will only continue unless we bring about a more equal, robust, fairer and stronger economy. This measure is a step towards that.

Finance (No. 2) Bill

Debate between Geraint Davies and Mark Garnier

Wednesday 17th April 2013 Commons Chamber

[Mark Garnier]

It would have been wonderful if it had been brought it in earlier because it would have shown more resolve from the Labour party.

Will the hon. Gentleman enlighten the Committee about what is behind the proposal? Is the intention of the levy to reduce the risk of perverse incentives through what can be an obscene bonus system, or is it to generate revenue? One or the other, which is it?

[Geraint Davies]

I will come to that point. In his preliminary commentary, the hon. Gentleman asked why the Labour party failed to bring in the 50p tax rate, and indeed the Prime Minister boasts that he is taxing the rich more than Labour ever did, and that is great. The Labour party does not exist to introduce high taxes; it exists to give people opportunity and employment. Higher levels of employment bring prosperity and opportunity, so there is enough tax yield from a lower tax rate to fund public services. Between 1997 and 2008, the economy grew by 40%.

If one is concerned, as I am—as we all are—about the debt to GDP ratio, which is the total debt divided by the value of the economy, there are two ways to get it down. The first is to cut the debt directly, cutting most from the poorest as the Tories do. The other is to increase the size of the economy. In 2010, after we had gone through the financial tsunami, but luckily on the back of 10 years of unparalleled increase in growth under Labour, the debt to GDP ratio was 55%; now the forecast is 85%. The reason is not just that the Tories are keen on cutting money for the poorest and getting money from people who do not have it, but that they cannot get their act together strategically to generate a growth strategy that reduces the ratio so that we do not need higher tax rates. We do not want people who are making obscene bonuses to pay higher taxes for the sake of it; we want people in work.

[Mark Garnier]

Is not the biggest inequity that it is not Government debt that is the real problem, but household debt? In the period from 1997 to 2008, household debt as a percentage of household income went from 80% to 140%, and the boom in the economy was paid for by a colossal bubble of household debt. That is the real problem.

[Geraint Davies]

That simply is not the case. I was at the Bank of England relatively recently looking at the profile of debt in the run-up to 2008 and from 2010. From 2010, the ratio of the debt between the Government and the banking community was 1:2. Two thirds of the debt was that of the banking community. Do not misunderstand me: there has been a problem with the general public ratcheting up more private debt through the availability of low interest rates, which in themselves are a good thing, thanks to the fact that my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) introduced Bank of England independence and all the rest of it, and thanks to a feeling that there would be a continuation of growth. People were investing in houses and they were growing in price and so on.

Since 2010, when the Chancellor said, “We will have half a million people unemployed in the public services” and did not say who they were or when they would lose their jobs, there has been a sharp rise in savings rates and a fall-off in consumer demand. We have seen consumer demand basically flatlining, which underlines the reason why we do not have growth, which is why we do not have a reduction in the debt to GDP ratio.

We need confidence to get back on a growth path so that people can spend in the knowledge that they will have jobs in the future. Part of that is to re-engineer the financial world in such a way that money is channelled into productive capacity. Although, allegedly, we have an extra million people in work, overall output is the same. Average production has fallen and average productivity is down, which is very worrying. So we need to think how to ensure that the banking community pays its fair share and how to direct money, in a meaningful way, into job creation and public and private assets.

I was not in the Chamber for the previous debate, but part of that thought process would be, how to encourage the banking community, not in a high-risk way, to start helping people to build desperately needed housing—to get people who have been out of work, many of them in the construction industry, back into work to provide social houses.