Budget Resolutions and Economic Situation

Debate between Geraint Davies and Sheila Gilmore

Wednesday 18th March 2015 Commons Chamber

[Sheila Gilmore]

We have heard the argument that if we reduce taxes, we get more revenue in. Of course, it is usually heard in relation to the 50p rate of tax, but that was a very poor example. It hardly had any effect, and so many people made their own arrangements before and after the announcement was made on reducing the rate again that we cannot tell what really happened.

It is important that we should have a discussion about the kind of values we want and the kind of society we want to live in. There has been a similar debate north of the border, where we have a Government who are trying to suggest that, although they do not necessarily want to cut taxes, it is possible to have fantastic services without ever putting up taxes. That will also leave the public confused about what can really be achieved.

[Geraint Davies]

Does my hon. Friend accept that if the Government consistently put up tax allowances while putting wages down, tax revenues are going to fall? Does she agree that that is why we are nearly bankrupt?

[Sheila Gilmore]

Tax revenues have been falling, and the whole issue about low wages is extremely important.

We have had discussions in the House about zero-hours contracts. I think it was the hon. Member for Dover (Charlie Elphicke) who said today that Labour had done nothing about them for 13 years. I was not a Member of this House at that time, but I was a local councillor for much of that period and I met people constantly in that role. In all honesty, I do not recall people raising the issue in the way that they have been doing more recently.

Zero-hours contracts are a growing phenomenon, and they are still under-reported. I mention them on some of the literature that I give out when I am door-knocking, and a couple of the people I have spoken to in the past few days have looked at that literature and said, “What are zero-hours contracts?” When I explained, they said, “Oh yes, that’s what my son had when he was working for a pizza house.” Another man said, “Oh yes, that’s what happened to my son. The other day, he called and asked me to pick him up from work because he had gone in, only to be told to go home again because there was not enough work for him. They could do that under the terms of his contract.” Those people might not have known the term “zero-hours contract”, but they certainly recognised the conditions involved.

These issues are a matter of concern for young people. Unemployment is not falling as it should be. It is still, in the words of most commentators, “stubbornly high”, and we need to do something to address the problem. Also, earnings for younger people have not risen. The Government are proud of saying that average household incomes are beginning to rise again. Those in the oldest age group have done the best, and people in the middle are beginning to do a bit better, but young people are still doing significantly less well. That is a serious matter and we should be giving it greater consideration.

Many young people have a string of temporary jobs. They are in and out of jobs even when there is work available, which is very frustrating. One constituent told me that her son had worked for Royal Mail for three months at Christmas. He knew that it was a temporary job and he was told that there was no further work afterwards. He signed up with an agency that handled temping work, and he was phoned up a few weeks after Christmas and asked whether he was interested in a “call-on job”—a zero-hours contract, effectively—with Royal Mail, no less. So apparently there was no proper job on offer, but Royal Mail had none the less asked the agency to take on someone on those terms. How much better would it be for that young man if he could get a proper job that paid him a proper wage and in which he could learn a skill? We must do something for our young people. We must not sit back in apparent complacency and say that there is not a problem.

Finance Bill

Debate between Geraint Davies and Sheila Gilmore

Monday 1st July 2013 Commons Chamber

[Geraint Davies]

I am grateful for your expert advice, Madam Deputy Speaker. I will move quickly back to the mansion tax.

At the moment, foreign investors are buying mansions for capital appreciation. A properly worked-out mansion tax would not be a simplistic flat rate of £36,000. That was the Government’s arithmetic—it was laughable, wasn’t it? It was, “Oy, what yer gonna do? ’Ave I got this roight? We want £2 billion, we’ve got 55,000 mansions, so you divoid it in—that’s it, it’s £36,000, innit? That’s what you’re gonna do.” Obviously, that would not be the strategy. It would be to have an escalating rate according to capital values, which would change over time.

The system would obviously have to be refined and played with, and as my hon. Friend the Member for Nottingham East (Chris Leslie) pointed out, the impact would depend on the delivery. To a certain extent, £2 billion is just a ballpark figure. That is why he asked for more detailed figures. There are various factors driving demand for such properties, and they have a range of prices in the marketplace, so the likely yield would change over time. We therefore need to consider a sophisticated system. However, it is clear that it is the right direction of travel for the very richest to make a contribution at the most difficult times, to make work pay for everybody else.

It is clear from international examples, such as in New York city, which already charges a mansion tax on $3 million properties, that the tax is tried and tested. We can learn from our friends and colleagues in America how to apply it correctly. We should come together—I know that the Liberal Democrats have always been keen on the tax, and I hope that they will join us in the Lobby to support it.

[Sheila Gilmore]

When the debates took place on whether the 50p tax should be changed, Government Members were keen to tell us that we could make up a lot of what was lost, and perhaps make even more, through various forms of property taxation. They obviously had in mind changes in stamp duty, ways of dealing with companies that buy very expensive houses and so on. We were told how much better a property tax would be than a tax on income, and that we would get far more money from it. However, when we follow that train of thought and suggest that there is merit in considering a mansion tax, we are suddenly told, “No, no, that would be terrible.” We are told either that it would be terribly expensive, and people would not be able to afford it, or that it would simply be the wrong thing to do. It seems that when we come to talk about something real, the Government run backwards as fast as they can.

We have had some figures thrown at us that are not mentioned in our new clause. They come not from anything that we have said but from what the Government have said, yet we are being told that we have to justify them. We are being told that figures such as a £2 billion yield and 55,000 houses are correct, which will mean people having to pay £36,000. I do not know whether 55,000 houses is the correct number of those that would be affected, but I do know that at the moment, according to Zoopla, there are 3,847 properties on the market for £2.1 million or more in London. That is not all the properties of that price but just those that are for sale. On that basis the figure of 55,000 is perhaps a conservative estimate, but the whole debate has been based on that figure.

--- Later in debate ---

[Geraint Davies]

Using that argument, people have said, “Oh well, we’ll raise more with a 45p rate than a 50p rate” yet my hon. Friend will know that year on year, bankers’ bonuses went up 64%. Does she agree that bankers were moving their income from a 50p year into a 45p year, and that if we had kept that rate up we would have raised that money? We should have done that as well as the mansion tax.

[Sheila Gilmore]

It certainly sounds on the face of it as if some sort of income arrangement was possible. For a lot of us, including people on PAYE, that would be difficult to do, but it is easier for other people. I have advocated not running away from a tax on property too easily. Not long ago we had that debate at some length in Scotland after a proposal by the Scottish Government to move to local income tax—again, they decided not to proceed with that. Some of the problems with local income tax concern the mobility of individuals’ incomes and the fact that some wealthy people might be able to avoid paying that tax. Those of us in political parties in Scotland that opposed moving to local income tax argued strongly the advantages of a property tax. Interestingly, the SNP Government, from 2007, backed away from their proposal in the face of those arguments.

[Geraint Davies]

I am grateful for my hon. Friend’s enormous generosity in giving way. She may know that in the past two years, the top 10% have seen their income rise by 5.5% each year—that is 11% in two years while everyone else is being squeezed. The rich are getting richer and richer, and the Tories are cutting the top rate of tax. Given that people are buying bigger and bigger houses with the great huge buckets of money they are getting, is it not right that they should face a mansion tax?

[Sheila Gilmore]

I was looking through the property pages of The Sunday Times yesterday, and interestingly it was full of descriptions about valuable houses and how property prices are rising. Since property prices at the top end were rising so much—driven partly by investment from abroad—it was argued that that would be good for everyone because it would lever up property prices for all. The argument is that high property prices are always beneficial, but those who tried to buy homes up and down the country long before the credit crunch know that high property prices are a double-edged sword because many could not get on the property ladder at all. In many parts of the country, not just in London, the amount that must be earned to buy even an average-priced house is more than people can earn in that area.

[Sheila Gilmore]

There has undoubtedly been a huge increase in the private rented sector. When I was elected as a councillor and became interested in housing, all the housing authorities and textbooks said that the private rented sector had become a residual sector and was disappearing. It might perhaps be there as a niche for young professionals or students, but it was not expected to be an important part of the housing mix. Within a short period—probably 10 to 15 years—we have seen an explosion in the private rented sector and in private sector rents. That is another issue for young people, particularly those who might wish to settle permanently. They cannot afford to buy a home because house prices are too high or they cannot get a mortgage. In the meantime they pay very high rents, which makes it difficult to save. I am not entirely convinced that high property prices are always a great bonus, and we should be looking for a more stable property market.

[Geraint Davies]

I am grateful for my hon. Friend’s enormous generosity in giving way again. Is she aware—I am sure she is—that property prices in London have grown so much that some local authorities have greater asset value than the entirety of Wales? Therefore, the mansion tax is a sort of cap—

--- Later in debate ---

[Geraint Davies]

But only Welsh farmers—[Interruption.]

[Sheila Gilmore]

And Scottish farmers, I am sure, and so on.

A mansion tax—I think my colleagues on the Front Benches would agree—is about residential property, not business property, which is already taxed in various ways. Obviously, a whole raft of taxes are appropriate for businesses, and that would be the best way to deal with the issue, rather than a mansion tax. If a mansion tax is a way of ensuring that we can appropriately tax wealth, we should consider it very seriously, given that it is probably a better basis for taxation than income, which people can move around—I have yet to see a house be dragged offshore. That may not be impossible, but in this country we generally do not put houses on wheels and move them, unlike in the United States—at least, so we see in the movies. A mansion tax would be a way to help the low-paid, through the introduction of the 10p rate.

Cost of Living

Debate between Geraint Davies and Sheila Gilmore

Tuesday 14th May 2013 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

I should like to address housing, which hon. Members on both sides of the House must start to take seriously. In 2012, the Institute for Public Policy Research showed that, in the current spending review, nearly £95 billion will be spent on housing benefit compared with just £4.5 billion on building affordable housing. That means that for every £1 spent on affordable housing, £19 will be spent on housing benefit. We should therefore not be surprised that the housing benefit bill has been rising. We accept that, but the problem is that the Government have not analysed the reasons for it, and have decided to address housing benefit spending by trimming bits of money off recipients of housing benefit here and there. For those individuals, those bits of money are not insubstantial. For somebody on £71.70 a week, losing £12 a week because they have to pay it towards their rent is extremely significant in their cost of living. The policy does not make sense for the country or for those individuals.

In the 1970s, 80% of housing expenditure was for building houses—very little was spent on rent subsidy. As a result, many working people, including people in relatively low-waged jobs, had affordable housing in which to live. They therefore did not need to claim benefits. No wonder people say, “Too much goes on benefits.” The money is going in at the wrong end.

The previous Labour Government did not address the problem in the way that I, as a councillor active in housing, would have liked. Many Labour Members have said that for some time. I was pleased that the shadow Secretary of State for Work and Pensions said recently in an article in the Evening Standard that one principle of the next Labour Government would be to redress that.

[Geraint Davies]

My hon. Friend will know that the cost of housing benefit has doubled in the past 10 years to about £20 billion, but is she aware that 70% of the increase is because of private sector rent increases? Does that not make her case for building more affordable housing, not just crushing the poor?

[Sheila Gilmore]

As recently as February 2009, about 1 million private rented tenants claimed housing benefit. By October 2012, that number had risen to 1.7 million. Far more people in the sector need to claim housing benefit, largely because they are on lower wages or have lost working hours because they are on poor contracts.

Jobs and Social Security

Debate between Geraint Davies and Sheila Gilmore

Wednesday 28th November 2012 Commons Chamber

[Geraint Davies]

I have been the housing chair for London and for Croydon. I know that it is possible to devise strategies involving incentives to encourage people to move to smaller homes—and, of course, as people die over time, housing is recycled in any case—but the suggestion that a group of people in social housing should be evicted once their children have grown up and that, because suitable housing does not exist in their own communities, they should be moved around is not only despicable but completely counter-productive. It is economically insane as well as socially immoral.

[Sheila Gilmore]

I am sure my hon. Friend agrees that this is not an attempt to ensure that housing is distributed more evenly. It even applies to people with disabilities. Couples who have to sleep apart for medical reasons will be suddenly told that they have too big a house. It is a draconian measure.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. There is a danger that those who wish to make a speech later will not be able to do so. I am sure that the hon. Lady understands that if she does not have an opportunity to make a speech herself, it will be her own fault.