Short Money

Helen Goodman Excerpts

Tuesday 23rd February 2016 Commons Chamber

[John Penrose]

I will take submissions from any Member on either side of the House on what would involve good value for money. My hon. Friend is absolutely right to focus on the questions of what represents value for money, how much it costs to run an Opposition office and whether we can make sure it is done as efficiently as possible with taxpayers’ cash.

[Helen Goodman (Bishop Auckland) (Lab)]

The fact is that the number of special advisers has gone up to 96 and the Prime Minister has appointed a record 236 peers to the other place. Meanwhile, the Government have introduced the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 and are attempting to gag the trade unions and cut the Short money. That shows that the Government are not interested in cutting the cost of politics. It is absolutely clear that they want to silence any opposition in this country.

[John Penrose]

I am afraid that I do not accept the premise of the hon. Lady’s question. We are proposing to cut the number of MPs in this place—which is not an easy thing to do—so we are very serious about cutting the cost of politics. I therefore hope that, in that spirit, people will contribute constructively to the request for views.

Tax Avoidance and Multinational Companies

Helen Goodman Excerpts

Wednesday 3rd February 2016 Commons Chamber

[Mr Gauke]

I am grateful to my hon. Friend, who reminds the House of an important point. When we brought in the diverted profits tax, the intention was clearly to make sure that we got more money being paid in corporation tax. We want to stop companies diverting their profits out of the UK, and we are leading the way in bringing forward legislation on this.

Let me address the shadow Chancellor’s point about resources for HMRC. We have invested heavily in HMRC’s ability to strengthen its anti-evasion and compliance activity, including through extra funding and hiring professionals whose area of expertise is multinational companies. For example, contrary to the impression that he gave, the number of people working in HMRC’s large business directorate has gone up, since it was formed in 2014, from 2,000 to 2,600 people. We believe in competitive taxes—that is why we have cut our rate of corporation tax so that it is the lowest in the G7—but we also believe in making sure that those taxes are paid.

I turn to the issue of transparency raised by several hon. Members. Taxpayer confidentiality is a fundamentally important principle of our tax system, as in the tax systems of every other major economy. We hear complaints that HMRC is not disclosing full details of the settlement. HMRC is prevented by law from disclosing taxpayer information. The resolution of tax disputes, however, is subject to full external scrutiny by the independent National Audit Office, which has reviewed how tax inquiries are concluded by HMRC. In 2012, it appointed a retired High Court judge, Sir Andrew Park, to investigate HMRC’s large business settlement process. Sir Andrew concluded that all the settlements he scrutinised

“were reasonable and the overall outcome for the Exchequer was good.”

I do wish that those who are so keen to accuse HMRC and its staff of sweetheart deals were as keen to look at what happens where independent scrutiny occurs in order to see that in fact there are no sweetheart deals. HMRC introduced—

[Helen Goodman (Bishop Auckland) (Lab)]

rose—

[Mr Gauke]

Let me just make this point. [Interruption.] I will give way to the hon. Lady.

[Helen Goodman]

I am grateful to the Minister, who is doing his best in a difficult situation. However, Ministers are not barred by law from publishing the minutes of meetings that they have, so could he now publish the minutes of all 25 meetings that Ministers have had with Google?

[Mr Gauke]

We have a very open and transparent arrangement for disclosure of meetings. I am very clear that when it comes to determining the tax liability of a company such as Google—or, indeed, any other taxpayer in this country—there is no ministerial involvement. HMRC is entirely operationally independent. There is no ministerial interference in such areas, and no suggestion that there would be. When it comes to determining the tax bill of any taxpayer, it is a matter of HMRC enforcing the law; it is not for ministerial involvement. HMRC introduced new governance arrangements for significant tax disputes in 2012 to provide even greater transparency, scrutiny and accountability. They included the appointment of a tax assurance commissioner to ensure that there is clear separation between those who negotiate and those who approve settlements. The tax assurance commissioner oversees the process and publishes an annual report on his work.

Let me be absolutely clear. There are no sweetheart deals, and there is no special treatment for large businesses. HMRC resolves disputes by agreement only if the business agrees to pay the full amount of tax, penalties and interest. Otherwise, it is a matter for the courts—an arena in which HMRC has a strong track record of fighting and winning.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to take part in this extremely important debate. Clearly, a number of things have gone wrong in the case of Google, but I shall focus on one aspect: the tax treatment of intellectual property. This is a growing part of the economy and we need to get it right.

I draw a distinction between two extremes—on the one hand, a large pharmaceutical company that does a great deal of research and development and employs a large number of people to make a new drug, and, on the other, a company such as Starbucks, which registers its name in Luxembourg, seemingly purely as a tax avoidance device. Between those extremes there is a continuum and Google is somewhere in the middle. It has done some mathematics to make some algorithms, but it also has a brand that is extremely powerful. We need to tighten up on this.

What happens at present is that a name is registered in a low tax domain. That separate company charges a fee to this country, where the work is done. That wipes out the entire tax treatment. That is ridiculous. One thing that is wrong is that the company seems to be able to set the price itself. The Revenue is not auditing it and asking whether that is reasonable. Obviously, maintaining a brand involves some costs, but small costs—perhaps to repaint some signs or to train its marketing people. Those costs cannot be compared to the cost of research and development.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

Does the hon. Lady understand that an awful lot of the cost could be in intellectual property and in ideas held by people overseas? That is not necessarily as cheap as a lick of paint, as she suggests.

[Helen Goodman]

I was trying to distinguish between real intellectual property and intellectual property that is purely branding. Take the example of the BBC, which sells television programmes. The BBC can get more money for its television programmes than a small television production company, partly because it is called the BBC, even though the actual costs of making the television programme are the same.

The question we have to ask ourselves is whether, because of the high value of the brand, the company should pay less tax. I submit that that is a fundamental mistake, because the brand is an asset. What the company is getting in that situation is economic rent. The fact that it has a valuable asset is not a reason for it to pay less tax. That is absurd. If a company invests in a piece of machinery and makes a claim against its capital allowance, over time the amount that it can claim against tax decreases as it moves from the point at which the investment was made. In cases where the brand is the asset, companies are claiming more over time as they are selling more. I think that is an area where we could very usefully tighten up.

Perhaps this area of tax would be better handled if we had a few more economists looking at the underlying economics and fewer accountants, who seem very comfortable with the way the system works but are not driven by the desire that the rest of us have to make sure that these people pay their fair share.

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

The budget deficit that we inherited from the previous Labour Government was £153 billion. That is equivalent to nearly £6,000 for every household in the country. When a Government inherit such a deficit, one of the first things that they go after is the money that is supposed to be coming in, but is not. As my hon. Friend the Financial Secretary set out comprehensively at the start of the debate, no Government have done more than we have to crack down on tax evasion and aggressive tax avoidance.

The Government crackdown, led by my right hon. Friends the Prime Minister and the Chancellor, has resulted in more than 40 changes to tax law to close loopholes that Labour left in place. Among those changes was the world-leading diverted profits tax, which stops multinational companies shifting their UK profits to other countries. That policy alone will bring in an extra £1.3 billion from multinational corporations by the end of the Parliament, some directly but some, more importantly, as a result of its deterrent behavioural impact. I believe that the Government can be proud of that record, but we need to continue to do more and we are doing so. Tax avoidance is a global problem and it calls for global solutions.

To be clear, corporation tax is not a tax on the sales that happen in this country, or even a tax on the profits that derive from the sales that happen in this country. The system that operates internationally is that profits should be allocated on the basis of what is called “economic activity” in each country. Economic activity is not just about sales, but about where research and development takes place, where the various stages of production take place and so on. In short, that was a simpler formula to work out in the 1920s, when the world tax system came into being, as the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), in his entertaining style, reminded us. Since then, there has been a move from manufactures to services, from the tangible to the intangible, and from the mechanical and the edible to the digital.

This Government have embarked on a programme to tighten the rules and the definitions. Domestically, we have acted to prevent companies trying to take advantage of ambiguities. Internationally, we are working to plug gaps and address loopholes.

[Helen Goodman]

Will the Minister give way?

[Damian Hinds]

I cannot give way because of the time. I apologise to the hon. Lady.

The Institute for Fiscal Studies has said that there is “literally nothing” that any one national Government can do unilaterally about some of the loopholes. That is why we are working together with our international partners. We led the debate on updating the international tax rules by initiating the G20-OECD base erosion and profit shifting projects during our presidency of the G8. We were the first country to take action to implement the G20-OECD recommendations to help us better to align the location of taxable profits with the location of economic activity. As part of the implementation of the recommendations, the UK last week signed an agreement with 30 other tax administrations to share country-by-country reports from next year. We now want agreements on making information public, as was spelled out in our manifesto. We will continue to lead any multilateral debates in this area.

We know that to achieve sustainable and long-term economic growth, to drive up productivity and to carry on creating jobs we need internationally competitive taxes. We are clear, however, that those taxes must be paid. In 2009-10, the tax gap—the difference between tax liabilities and the amount of tax collected—was 7.3%; last year, it had fallen to 6.4%. Over the last Parliament, HMRC secured more than £100 billion in compliance revenues. In the spending review, the Chancellor approved an additional £800 million of funding for HMRC to recover an additional £7.2 billion of taxes, which is a great deal for the British taxpayer.

Let me be clear: HMRC investigates tax impartially. No organisation or individual gets preferential treatment because of their size or because of their income. Let me remind hon. Members, including the right hon. Member for Barking (Dame Margaret Hodge), that during the tenure of the Labour party in government, the House of Commons reaffirmed and enshrined in law the long-standing principle of confidentiality through the Commissioners for Revenue and Customs Act 2005. The principle of taxpayer confidentiality means that HMRC cannot publish details of a settlement. That is a fundamental principle of the tax system of every major economy, including ours: there is no ministerial involvement in this country. The hon. Member for Ilford North (Wes Streeting) asked how we can know that there has not been a sweetheart deal. HMRC publishes online its litigation and settlement strategy, which makes it clear that the department cannot and will not settle for anything less than the full tax, interest and penalties payable under the law.

My time is very short, but I want to respond briefly to a couple of points made in the debate. The hon. Member for Glasgow South West (Chris Stephens) secured a debate in this place on the HMRC office estate. As he knows, the plan is to concentrate expertise in a number of regional centres, which will make interaction between the areas of expertise more straightforward and, indeed, improve career opportunities for many people. The number of HMRC staff dealing with large businesses is not going down; it is going up in line with the increased investment that, as I have mentioned, the Chancellor has committed to tackling evasion and avoidance.

The hon. Member for Wythenshawe and Sale East (Mike Kane) talked, rightly, about developing countries. It is right that we give extra support to countries that need it. In 2015-16, HMRC established a new tax experts team to support a number of developing countries. I would be happy to take him through more of the detail of that if we had the time.

We had excellent and informative speeches from, among others, my hon. Friends the Members for Sherwood (Mark Spencer), for Mid Worcestershire (Nigel Huddleston), for Norwich North (Chloe Smith), for South Norfolk (Mr Bacon) and for Thirsk and Malton (Kevin Hollinrake). My hon. Friends the Members for Spelthorne (Kwasi Kwarteng) and for Croydon South (Chris Philp) reminded us of the record of the last Labour Government, but I fear that the Opposition’s current plans are much worse. They claim that they want to make businesses pay more tax in the UK, but in truth their policies would drive companies away from this country, which would mean fewer jobs, lower wages and a weaker economy. This week, we have learned that they want to put taxes up not just for businesses, but for working people.

To achieve long-term economic growth, we need internationally competitive taxes, but our message has been clear: “If you operate in the UK, you pay tax in the UK, and whoever you are, the same UK law applies.” We will continue to strengthen the law, to close the loopholes and to invest in HMRC’s capacity through additional funding and extra powers. We will continue to lead the world in the fight against international tax avoidance to ensure that the UK has an internationally competitive but fair tax regime. I urge hon. Members to support the amendment and to reject the motion.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

Bank of England and Financial Services Bill [Lords]

Helen Goodman Excerpts

Monday 1st February 2016 Commons Chamber

[George Kerevan]

I am trying to avoid pointing the finger and drawing inferences. What I will do, in agreeing with the hon. Gentleman, is to quote the right hon. Member for Chichester. I hope he will forgive me for doing so. When the LIBOR scandal emerged in 2014, after the Banking Commission, he said:

“As time passes, the pressure for reform will weaken”—

it is, is it not?—

“The old system failed disastrously…Maintaining or resuscitating parts of the failed system, whether at the behest of bank lobbying or for the convenience of regulators, must not be permitted to happen.”

I think we are getting both: we are getting bank lobbying, but we are also getting the regulators wanting a quiet time.

The hon. Member for Wyre Forest made a reasonable point. He said that by extending the senior managers and certification regime, the Bill will place in law a very detailed duty of responsibility on senior bankers to take all reasonable steps to prevent wrongdoing. However, at the same time, it will place the onus on the regulators to prove that that responsibility was discharged. Suddenly, it gives the regulators a job—

[Helen Goodman (Bishop Auckland) (Lab)]

And no resource.

[George Kerevan]

Absolutely.

As the right hon. Member for Chichester pointed out, time after time when there have been regulatory failures, the regulators have been implicated. I therefore do not want to return to a situation in which it is up to the regulators to prove that something has gone wrong in the new regulatory regime, when they are partly responsible for it. I want the onus to fall on the bankers themselves.

It is worth looking more forensically at the reasons against the presumption of the reverse burden of proof. Andrew Bailey has argued that there is a worry that when the next crisis comes along, senior bankers will rush off to the European Court and claim that their rights under the European convention on human rights are being taken away because of the reverse burden of proof. That is rubbish.

The Parliamentary Commission was perhaps a little unwise to use the phrase “the reverse burden of proof”, even though we all use it and I use it. We are not talking about criminal law and making people guilty until proven innocent. We are talking about infractions in banking if, say, a banking crisis takes place. The legislation that the Government are trying to change would make it an infraction to be responsible for an activity in which wrongdoing took place, rather than for committing the wrongdoing itself. To give a flippant example, if it is a criminal offence to be in charge of a bawdy house, the prosecution needs to prove only that somebody was in charge of that house of ill repute, not that they were selling their own body. It would be no defence that they thought the bawdy house was a nunnery.

The reverse burden of proof regime makes managers responsible for the activity in their banks. When a disaster takes place, it is up to them to prove that they failed to stop it happening, rather than, as has always been the case, it being up to the regulators to find the solution and explain what happened, which means that everyone hides behind collective responsibility.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to be able to contribute to this debate and to follow the hon. Member for Havant (Mr Mak), who gave a Panglossian view of the City and the Bill. When I first read this Bill, I thought it was disappointing, but the more carefully I looked, the worse I thought it became. Of course it contains some good steps, but one thing we see here is the Tory Government circling their wagons to protect their friends and funders in the City. The Bill gives us no hope of introducing the separation between retail and investment banking that we so obviously needed after the crash and for which many, including Professor John Kay of Oxford University, Martin Wolf of the Financial Times and the former Tory Chancellor Lord Lawson, are still calling.

The main flaws in the Bill are on transparency at the Bank and the responsibility of senior managers across the sector. In the Treasury Committee, I questioned both the Chancellor and the Governor about the original draft of the Bill, which allowed the court, on an ad-hoc basis, to determine the scope of audits by the Comptroller and Auditor General. I am therefore pleased to see the redrafting of clause 11, which clarifies what the policy carve-outs will be, but I do not believe that is enough. First, we were promised a memorandum of understanding, agreed between the CAG and the Bank of England. Where is it? This House must see the memorandum before we pass this legislation. The Government are treating the House with the same disdain they do when they put substantial measures into statutory instruments and do not share those with the House either. Why have the Government brought the Bill back to this House before the memorandum of understanding has been drafted? The answer is obvious: it is because the senior managers regime comes into force in March and so the Government are desperate to get Royal Assent before that happens. I am not sure that CAG access will be enough. The Bank of England is independent in its existing judgments with respect to monetary, financial and prudential matters, and that is how it should be, but it is also democratically accountable. I believe citizens will be able to exercise their democratic rights only if we make the Bank subject to the Freedom of Information Act. Let me set out why.

When Treasury Ministers announced the RBS sale last summer, they waved about a letter from the Governor endorsing the sale. Writing this letter was not part of the Governor’s role on monetary, financial and prudential policy; it was an intervention in Government policy, at the Chancellor’s request, on the issue of a share sale. I asked the Governor whether he considered this letter to be policy, and he said it was. I asked him whether he would share the analysis that underlay the letter, but he refused, point blank, to do so. This is what he said:

“It is a policy judgment. I was asked as Governor by the Chancellor for a judgment with respect to the potential sale…as you know, and the terms of the question are outlined in the letter. I was asked as Governor; it was not a question of the FPC or the PRA Board. It was not a question in terms of safety and soundness but in terms of the overall impact. I consulted with the Deputy Governor for Prudential Regulation and the CEO of the PRA, Mr Bailey; and did analysis in the team.”

He continued:

“The analysis rested on the supervisory judgments, the input of the stress test and then the broader perspective of an institution that had been stabilised”.

He went on to say that

“the overlap between the commercially confidential information that we obtain as part of the discharge of our supervisory responsibilities of the PRA and the analytic is perfect”.

It is, however, very far from perfect—it is a raggedy hotch-potch.

The letter the Governor wrote roamed far beyond these matters. It said:

“it is in the public interest for the government to begin now to return RBS to private ownership...a phased return of RBS to private ownership would promote financial stability, a more competitive banking sector, and the interests of the wider economy.”

No information has been shared with any of us as to how this sale promotes a more competitive banking sector—it does not—or what the benefits will be to the wider economy. I still live in hope that when the CAG undertakes his audit of the RBS sale he will see this analysis, but I believe we need a structural reform: the application of the Freedom of Information Act to the Bank of England. This Bill should be the vehicle for that change.

Let me now turn to the issue of personal responsibility and the catastrophic capitulation of Ministers to their friends and funders, the banks. At first blush, the extension of the new senior managers regime for banks and building societies to all authorised persons in all financial institutions looks like a good thing, but unfortunately the quid pro quo is the significant weakening in the way this will operate. Instead of senior managers having to show that they took reasonable steps to prevent regulatory breaches, as recommended by the Parliamentary Commission on Banking Standards, ably chaired by the right hon. Member for Chichester (Mr Tyrie), the burden will be on the regulator to show that the senior manager failed to do that. As Lord Eatwell pointed out in an excellent speech in the other place, the only reason put forward by Ministers for this change is to deal with what they have described as “an excessive regulatory burden” and “costs” on firms. As he said, the Bill will result in less documentation; less awareness on the part of bankers of their responsibilities; and less examination of the relationship between the risks they take and the responsibilities they have.

The Government continue to believe it is acceptable for banks to privatise their profits and socialise their losses. Let us never forget the cost to all of us—to the British taxpayer: the £133 billion we had to stump up to save the banks. The banks continue to benefit from an implicit taxpayer subsidy, including to their risky investment activities, undertaken, as Lord Lawson said on Second Reading, “just for themselves”. But they continue also to whinge at the Government about the costs of documentation which would fall to them.

Ministers should also take note of the fact that a regime where the managers must show that they have taken reasonable steps is what applies in road traffic legislation, health and safety at work legislation, the Bribery Act 2010, legislation on terrorism, the Misuse of Drugs Act 1971, the Trade Marks Act 1994, the Criminal Justice Act 1988 and the Official Secrets Act. What, we want to know, is so special about bankers?

Another argument put forward by a series of lawyers in the other place is that this approach fundamentally is unfair and outwith the traditions of English law. As Lord Pannick said, the regime, as proposed by the Parliamentary Commission on Banking Standards, requires “strong justification”. What is the justification here? He said that he did “not understand it”.

Apart from the £133 billion bill and crashing the entire economies of the OECD, there is quite a lot to be said for what has gone wrong. Perhaps if those in the other place had constituents, they would understand that the appalling austerity now being wreaked on our constituents, especially disabled people, is something to which some of us must respond, “Never again”. If the £133 billion cost to British taxpayers is not enough justification, what about the fact that none of the senior bankers has taken responsibility or been punished for their criminally selfish and irresponsible behaviour?

In other words, what we see is yet another decision by this Chancellor of the Exchequer and this Government to put party interest before the national interest. After hours of hearings and work in the previous Parliament by the Parliamentary Commission on Banking Standards, the Chancellor was lobbied by his friends and funders in the City and he has let them off the hook again.

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[Harriett Baldwin]

With the leave of the House, Mr Deputy Speaker, I would like to speak for a second time.

I commend the fact that we have had a wide range of speeches, with 12 by Back Benchers from, I am pleased to say, almost across the country. We heard from my right hon. Friends the Members for Chichester (Mr Tyrie) and for Cities of London and Westminster (Mark Field), the hon. Members for East Lothian (George Kerevan) and for Bassetlaw (John Mann), my hon. Friend the Member for South West Devon (Mr Streeter), the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), my hon. Friend the Member for Havant (Mr Mak), the hon. Member for Bishop Auckland (Helen Goodman), my hon. Friend the Member for Yeovil (Marcus Fysh), the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), and my hon. Friends the Members for Newark (Robert Jenrick) and for Dudley South (Mike Wood). I will deal with some of the questions they asked later.

This has been a very revealing debate. We have just heard the hon. Member for Wolverhampton South West (Rob Marris) say that he is not satisfied with the creation of the system of regulation that was rightly criticised in 2005 and resulted in the financial crash on Labour’s watch. In fact, Labour Members, by declining to give this Bill a Second Reading tonight, are showing once again that they would be a risk to the livelihoods of everyone, most especially the poorest and the oldest, if they were ever to return to power, because their shadow Chancellor opposes giving a Second Reading to this entirely sensible Bill due to his opposition to the independence of the Bank of England—Gordon Brown’s best decision. His reasoned amendment says that

“the Bill fails to increase oversight and accountability of the work of the Bank of England”.

I thought it might be interesting to see exactly what the shadow Chancellor means by that. In 2012, he said:

“In the first week of a Labour Government democratic control of the major economic decisions would be restored by ending the Bank of England’s control over interest rates and bringing the nationalised and subsidised banks under direct control”.

That is what his reasoned amendment implies. In setting up his review of monetary policy, he said:

“Perhaps we should be even bolder, creating a national investment bank and using newly printed money to fund it.”

He does not need me to criticise that as a terrible idea that would cause inflation—he should look no further than his predecessor as shadow Chancellor, the hon. Member for Nottingham East (Chris Leslie), who said:

“Printing money and ending Bank of England independence would push up inflation, lending rates, squeeze out money for schools and hospitals and mean spending more on debt servicing. Higher inflation and a higher cost of living would hit those on the lowest incomes, the poorest people who couldn’t afford those goods and services.”

That is the reality of the Opposition’s economic policies with regard to the Bank of England. Inflation is a tax on the poorest, and they would hit the poorest hard.

[Helen Goodman]

rose—

[Harriett Baldwin]

Does the hon. Lady agree with that policy?

[Helen Goodman]

Surely the hon. Lady knows that it is the current Chancellor who has printed, as she puts it, £175 billion of money, and in doing so has increased the wealth of the top 5% in this country by £185,000 each.

[Harriett Baldwin]

I do worry about the hon. Lady sometimes, because she is again criticising the decisions of the independent Bank of England.

That is before we get to the Opposition’s other policies, such as bringing back secondary picketing, banning dividends, and nationalising businesses without compensation. Even Danny Blanchflower, the head of the independent review that the shadow Chancellor has set up to look at the remit of the Bank of England—

Spending Review and Autumn Statement

Helen Goodman Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

As I said, I was able to listen to concerns that were raised, including by my hon. Friend, and because of the improvement in public finances we can help families move to the lower welfare, higher wage economy that I know people in Twickenham want. On investment in our infrastructure, I have detailed the plans that we have set out for roads and railways. When it comes to airports my hon. Friend must be patient just a little more because, as she knows, the Government are considering the Davies report and will make a decision on that in due course.

[Helen Goodman (Bishop Auckland) (Lab)]

Table 2.1 in the spending review shows a 56% cut in grant to local authorities, which the Chancellor expects them to make up from business rates and higher council tax. As my right hon. Friend the Member for Don Valley (Caroline Flint) said, that is easier to do in wealthy areas than in poorer areas. Will the Chancellor provide regional analysis that shows what his assumptions are and takes account of the differential spend on infrastructure in different parts of the country?

[Mr Osborne]

My right hon. Friend the Secretary of State for Communities and Local Government will set out details of the local government settlement in due course, and we have taken the opportunity to put floors and ceilings on some of the effects of those changes, relatively to protect certain authorities. Given the area that the hon. Lady represents, I am sure she appreciates that there is a huge amount in this statement to support regional growth and growth in the north of England, and to ensure investment in the transport infrastructure, science and civic power of the north. That will help us to continue what we are seeing at the moment, which is the north growing faster than the south.

HMRC Office Closures

Helen Goodman Excerpts

Tuesday 24th November 2015 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

On a point of order, Mr Deputy Speaker. I do not know whether you are aware that cinema distributors in this country have refused to carry an advertisement for the Lord’s prayer by the Church of England, despite the fact that it has been approved by the British Board of Film Classification and by the Equality and Human Rights Commission. What action do you think I might take to draw this to the attention of the Secretary of State for Culture, Media and Sport, who might do something about this fundamental attack on free speech?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

That is not a point of order, but the good thing is that you have raised it on the Floor of the House, it is now on the record, and I am sure that, quite rightly, people will look at it closely. I hope that at some point people will come back to you on the point you raise.

Royal Bank of Scotland

Helen Goodman Excerpts

Thursday 5th November 2015 Commons Chamber

[Jon Cruddas]

Labour was in government, and many of us were arguing that we should have created this opportunity to diversify forms of banking products. The hon. Gentleman might have meant the debate about the future of the Post Office, and many of our colleagues were involved in trying to articulate the case for a Post Office bank that could offer robust, bona fide financial products to communities such as mine, which were being vacated by the big commercial banks. We have a consistent theme developing among the contributions from the Opposition side of the House, and it is not an either/or political point-scoring exercise.

[Helen Goodman (Bishop Auckland) (Lab)]

My hon. Friend will no doubt recall that the bank that backs the Post Office bank is Ulster Bank, which is owned by RBS.

[Jon Cruddas]

My hon. Friend is exactly right, so let us talk about stakeholder banks and look at some of the evidence. I refer colleagues to the NEF document “Reforming RBS” and some of its findings. First, stakeholder banks tended to be better capitalised and less volatile before the crisis, and they were less exposed to the risky and speculative activities that caused it. Co-operative banks suffered just 8% of the total losses incurred during the banking crisis, despite accounting for around a fifth of the European banking market. To put that in context, HSBC alone was responsible for 10% of those losses. Secondly, stakeholder banks were also more likely to keep lending after the crisis. In fact, German public savings banks, Swiss cantonal banks and credit unions in the US and Canada all kept expanding their lending to businesses right through the crisis and the resulting recession.

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[Mr Douglas Carswell (Clacton) (UKIP)]

Madam Deputy Speaker, I will take your advice exactly and speak for only a couple of minutes.

[Helen Goodman]

He has only just come in.

[Madam Deputy Speaker]

Order. If the hon. Gentleman had only just come in, I would not be calling him to speak. It is very kind of the hon. Lady to offer advice from a sedentary position, but it is not appropriate. I call Mr Carswell.

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[Helen Goodman (Bishop Auckland) (Lab)]

I am very pleased to follow the hon. Member for Clacton (Mr Carswell), who was admirably brisk.

The one respect in which this share sale is a disaster is its timing and price, which the Chancellor has chosen; according to the Chancellor’s own advisers, that means a loss to taxpayers of £7 billion. The taxpayer has been given no justification for that, and the National Audit Office should look into it, so I have written today to the Comptroller and Auditor General.

Before the sale, the Governor of the Bank of England wrote a two-page letter to the Chancellor, which said that selling the shares

“would promote financial stability, a more competitive banking sector and the interests of the wider economy.”

The Chancellor has relied heavily on that advice. I asked the Bank of England Governor about it on 20 October at the Treasury Committee. He said twice that

“the timing and valuation for the taxpayer…are entirely decisions for the Government.”

He also told us that his letter was based on analysis by the Bank of England, but he refused point blank to disclose the analysis. Will the Minister tell us today whether that analysis was passed to the Treasury?

I find that failure to disclose totally unacceptable; I hope that the Comptroller and Auditor General will be able to recover the information when he assesses the value for money of the share sale. The Rothschild document, which is one of the thinnest and weakest papers I have ever seen, at no point quantifies the benefits to the public of the sale. There might be some benefits to financial stability in the banking sector that are worth something, but how many? We should be told. I put it to the House that Ministers have been lobbied by their banker friends and funders in the City and that is why they are selling off the shares cheap, rewarding their cronies and cheating the taxpayer.

The Government have said repeatedly that they want to improve behaviour at the banks. In statements to the House in February, Ministers repeatedly told us that tax evasion promoted by the banks via Swiss accounts was a thing of the past, but RBS has 404 company subsidiaries located in tax havens. Evidence uncovered by The Guardian, but not yet published, from Coutts, a subsidiary of RBS, shows that that practice has continued throughout all the five years of Government ownership.

Alerted by a whistleblower, The Guardian met a senior manager at Coutts, which, incidentally, is chaired by a Conservative peer, Lord Douglas-Home. The manager offered to “park” undeclared money and help move a potential customer to Switzerland to avoid UK tax. During the meeting, the executive was recorded saying that he would accept a deposit worth 8 million Swiss francs on which tax had potentially been evaded, that he would accept funds without ensuring that the money was not the proceeds of a crime, that he would help a client pay

“as little tax as legal”

and that he would help a client move to Switzerland to avoid tax. The executive is a British national who ran a private banking team at Coutts International’s head office in Zurich. He was recorded saying:

“Basically, tax authorities are your enemy”.

Furthermore, these facilities and opportunities were advertised in the brochure by Coutts and, until The Guardian got in touch with Coutts, were on the Coutts website. Although under Swiss law tax evasion is not a crime and there is no obligation to report it to the authorities, in England it is illegal for a banker to deal with money that they know or suspect to be the proceeds of a crime.

When the head of UK Financial Investment came to the Treasury Committee, I asked him about this issue and whether he had problems with Coutts. He said, “Yes” and went on to say that “controversial” practices were “one of the reasons” for selling Coutts International. He also said that he had kept Treasury Ministers

“regularly informed of every conduct item we find out about”.

It would appear that, once Treasury Ministers were told, the Government, rather than tackling these malpractices and stopping them from taking place at Coutts, decided to wash their hands of the matter by selling the shares.

Taxpayers will want to know when Ministers were told about this tax evasion; what they did; what estimate was made of the tax losses; whether Treasury Ministers or officials alerted HMRC to the practice so that it could recoup the lost tax revenues; why the Minister told the House that the era of mass-market avoidance schemes was over; and whether we can have a systematic review of the 404 RBS subsidiaries located in tax havens. I submit that until we have answers to those questions, there should be no further sale of RBS shares.

Oral Answers to Questions

Helen Goodman Excerpts

Tuesday 27th October 2015 Commons Chamber

[Greg Hands]

I totally recognise the difficulties faced by many people in my hon. Friend’s constituency. One thing I will say is that my hon. Friend is a real champion for jobs in his constituency. Only last week, he ran his fifth annual jobs fair for his constituents, and that is part of the reason why unemployment there went down by more than 1,000 in the last Parliament. I will, of course, be happy to meet my hon. Friend to discuss further what training and support is available for the constituents affected.

[Helen Goodman (Bishop Auckland) (Lab)]

Seventeen hundred people in Redcar have lost their jobs, and throughout the north-east it is expected that total job losses will be 9,000. Will the Minister tell those people how long it will take for his measures to take effect and for them to have jobs again?

[Greg Hands]

We are taking a number of measures in relation to steel. We are tackling unfair trade practices, and voting and speaking on that basis at EU summits. We are doing something to deal with high energy bills and we are making sure that more public contracts go to UK steel producers. At the end of the day, the one thing the UK Government cannot do is deal with the world steel price at the moment. We are offering comprehensive packages, particularly in Redcar, and we are making sure that the situation is as good as it can be at the moment.

Welfare Reform and Work Bill

Helen Goodman Excerpts

Tuesday 27th October 2015 Commons Chamber

[Debbie Abrahams]

Yes, it is right to acknowledge the Government’s role in bringing in the Disability Discrimination Act 1995, but this Bill flies in the face of that legacy. I really hope that by the end of today, the Government will be able to provide some reassurance, because to date there has simply been none for disabled people.

In Committee, the Minister said that these cuts would not affect people currently on the ESA WRAG, but does that mean that people diagnosed with progressive conditions, but assessed after the Bill is enacted, will be deemed to have a different form of the progressive condition? Will they require less support, or do the Government finally accept that, apart from being dehumanising and exacerbating people’s health conditions, the work capability assessment is not fit for purpose and needs a complete overhaul so that people with progressive conditions are not placed in the ESA WRAG? I would really appreciate some clarity on that point.

Surely if the Government were serious about supporting disabled people into work, there would be measures in place to support into work those disabled people who are able to work. How many employers will be engaged? Although the Disability Confident scheme is a good first step, only 68 employers are currently active in it, and they will certainly not be able to support the 1.3 million disabled people who are able to and want to work. Do the Government intend to extend Access to Work beyond the 35,000 disabled people it helped stay in work or into a new job last year? What is going to happen about the appalling ratio of one disability employment adviser for 600 disabled people? [Interruption.] What estimates are there of the impact on the employment of disabled people of this measure and the reduction of the 30% disability employment gap?

[Helen Goodman (Bishop Auckland) (Lab)]

My hon. Friend has just said the most astounding thing I have heard in this Chamber for a very long time. There is one work adviser for 600 people. In the course of a year, I wonder whether each person would get some attention just once. Has there been any assessment of the absurdity and ineffectiveness of this situation, as contrasted, of course, with the marvellous suggestions we heard a short while ago from the hon. Member for Gloucester (Richard Graham)?

[Debbie Abrahams]

That figure was revealed through the work done when I sat on the Select Committee. Yes, it is shocking. Some are trying to say that this Bill is about encouraging people into work, but there are no measures in place to support it. Indeed, my next point is—where exactly is the “work” bit in this Welfare Reform and Work Bill? Here we are on Report, and these basic questions have still not been answered. All we know from the Government’s impact assessment is that by 2020-21, approximately £640 a year will have been cut from social security support for disabled people—on top of the £23.8 billion of support that has already been taken from them—and that £100 million a year will be provided in unspecified support to help them into work. That is a disgrace; disabled people deserve much better.

--- Later in debate ---

[Debbie Abrahams]

I thank the hon. Gentleman for his kind remarks. I understand that his wife has previously worked in a Jobcentre Plus office. To reiterate my response to the hon. Member for Beverley and Holderness (Graham Stuart), the whole point is that there is some evidence and that we need a better understanding, which is why we need an independent review.

[Helen Goodman]

If there is to be an independent review, does my hon. Friend agree that it should take evidence from the National Audit Office, which has stated that although the targets might not come from the Minister’s office, the performance management of the jobcentres amounts to targets, because what it measures does not take into account the numbers of people who are supposed to go back into work or the quality of advice they receive?

[Debbie Abrahams]

My hon. Friend makes a valid point. The Select Committee reported on the fact that there are targets for off-flow, which means getting people off the books. Those in themselves are targets. [Interruption.]

--- Later in debate ---

and associated higher levels of childhood mental health problems.

[Helen Goodman]

Exactly. It is a long-term problem.

[Debbie Abrahams]

Absolutely.

Similarly, there are concerns about the impact of the benefit cap on disabled people, who already face extra costs associated with their disability, as I mentioned earlier. It is estimated that 150,000 adults and 395,000 children will be affected by the reduction in the cap. We believe that, in conjunction with the freeze in local housing allowance, cuts in social housing rents and a lack of affordable homes, the lower cap also risks exacerbating the housing crisis. The Government’s own impact assessment concedes that rent arrears, evictions and homelessness will increase as a result of the lower cap. We believe that further reductions in the benefit cap in London and elsewhere risk pushing tens of thousands of children, families and disabled people into poverty. We are the sixth wealthiest country in the world. It is not right that the Government are seeking to secure the recovery on the backs of the working poor, their children and disabled people. I hope they will think again.

--- Later in debate ---

[Helen Goodman]

I am pleased to follow the hon. Member for Cannock Chase (Amanda Milling) and will begin where she left off: on the benefit cap. It is quite clear that, as she has described, the public take the view that there needs to be a certain reciprocity and that there is a certain fairness in limiting the amount that individual households can receive. The question is whether the amounts are set at the right level and whether the right benefits are included.

The impact assessment that the DWP initially produced when it introduced the benefit cap stated that the object of the policy was to get more people into work. That raises a question about how sensible it is to include carer’s allowance, since carers are already busy caring, and maternity benefits, since people claiming those will obviously have little babies to look after. The Government should think more carefully about those proposals.

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[Michelle Donelan (Chippenham) (Con)]

The hon. Lady mentioned six applications a week. Just to clarify: is that less than one application a day?

[Helen Goodman]

It depends what kind of job is being applied for and how long it takes. I do not know how many applications the hon. Lady made when she was unemployed. Obviously, if they are simple job applications, one can make more. My point was: the young man had made 27 and he was sanctioned. Does she think that a sign of somebody malingering or a sign that people in the jobcentre were playing games? I put it to her that it was not a straightforward way to treat this young man. It was not encouraging or supportive; it was demeaning and demoralising, and it should stop. Ministers should ensure that the sanctions rules are properly applied.

The big study on sanctions carried out by Glasgow University found that one person in four on JSA had been sanctioned. I am sorry, but I think there is the intention on the part of Ministers to massage down the JSA numbers. Of course, the number of people unemployed has fallen and employment has risen—everybody is pleased about that, and nobody wishes to deny it—but I think there is an attempt, through sanctions, to massage the JSA numbers and pretend that there is not an unemployment problem. When I went to the Bishop Auckland jobcentre, I was told that half the people claiming JSA there had been unemployed not for more than 12 months but for more than three years. This is a serious problem, but the Government are not addressing it in a serious way.

[Paul Scully]

The hon. Lady might make a stronger case if she were looking at the unemployment figures alone. The fact is, however, that we now have record levels of employment in this country. They are at their highest since the statistics first started to be recorded. Does she not agree that that shows a move from unemployment to employment?

[Helen Goodman]

The statistics are quite dubious, in a number of ways. Let us consider, for example, the number of people who have gone into self-employment because they have not been able to find proper jobs, and the extent of under-employment.

[Paul Scully]

As someone who has been self-employed for the best part of 20 years, I find that quite offensive. Is the hon. Lady seriously telling her constituents that self-employment is not a proper job?

[Helen Goodman]

Is the hon. Gentleman aware that self-employment has increased by 42%? How many of those newly self-employed people does he think are in sustainable small businesses? People come to my constituency surgeries who have become self-employed and are working as window cleaners. That is fine—of course everyone needs to get their windows cleaned—but there is a limit to how many window cleaners we need in society. If people are coming out of highly skilled jobs and going into very low-skilled ones—[Interruption.] Conservative Members can protest as much as they like, but when the Treasury Committee took evidence from representatives of the Bank of England, they told us that a lot of the increase in self-employment was not real employment and that it was a sign that people could not get the kind of employed jobs that they wanted. Professor Kristin Forbes said precisely that to the Committee. Conservative Members do not need to pretend that this is some kind of prejudice on my part. It certainly is not.

[Neil Coyle]

Much has been said about the current employment levels. Indeed, we heard earlier that there had been a miracle, no less. Is my hon. Friend aware that the percentage of working age disabled people in work has fallen over the past five years, in direct correlation to the reduction in the number of disability employment advisers and in the number of disabled people being supported by the Access to Work scheme?

[Helen Goodman]

I was not aware of that fact, and I am grateful to my hon. Friend for pointing it out.

On the employment numbers, I also want to point out that there are a lot of people on short-hours contracts. I am not talking about zero-hours contracts, which have now reached 750,000, as Conservative Members must know; I am talking about eight-hour and 12-hour contracts. They provide insecure employment and insufficient money for people to live on, and they make it very difficult to get other jobs. They are, however, recorded as employment. There is all the difference in the world between working 35 hours a week and working eight hours a week, and Conservative Members need to think about that before they start talking about miraculous employment figures.

[Emily Thornberry]

A snapshot of today’s jobs market would also reveal that 3 million people in this country identify as being underemployed. They are not working enough hours to be able to support their family.

[Helen Goodman]

My hon. Friend has expressed that beautifully.

I shall move on to the question of employment and support allowance. Again, hon. Members need to think about the overhang from the heavy industries and the impact that reductions in people’s income has on those individuals and on whole communities. I suppose this seems quite unusual to those representing a constituency whose casework consists of a lot of neighbour disputes and planning issues, and where only one person a week turns up with a benefits problem, but in a constituency like mine—a former mining constituency in an industrial area—the bulk of the casework is this sort of thing. The cuts Conservative Members are proposing to vote for tonight will have a devastating impact on the amount of money in the local economy, as well as being very unfair to people who are not going to be able to go back to work.

Finally, I want to make one observation on universal credit and lone parents. It is not reasonable to have the same conditionality for a lone parent with children under school age as for people in couples. The practicalities of looking after children are different for lone parents and for married couples. Ministers in the Parliament before last changed the rules so that the conditionality for lone parents was aligned to the tax credit system, and the period was 16 hours instead of 30 hours for people in couples. Ministers must help people balance their parenting responsibilities and their working responsibilities better.

[Jo Churchill]

I was fortunate enough to sit on the Public Bill Committee, and I also sit on the Women and Equalities Committee. That has shown me two things. I recently spoke to women in Oldham running a voluntary group, and the leader said to me she did not feel what we were doing was wrong, because she felt these measures helped marginalised minority women break out of the cycle of being kept in their homes, improved their English and helped them understand how their families interact with the wider world, asking women to find work and not rely on—

[Madam Deputy Speaker (Natascha Engel)]

Order. The hon. Lady is making a speech, not an intervention, so I ask her to resume her seat.

[Helen Goodman]

People can take different views on this matter, and I have just been describing the view I take with respect to lone parents.

I want to make one final point. Conservative Members have repeatedly said that the Opposition have no proposals for savings and they are the only ones who are concerned about the deficit. The Opposition voted against the inheritance tax cuts, which will benefit the richest 60,000 households, and we went into the last general election with a proposal to cut the winter fuel allowance for wealthy pensioners. Personally, I think that would be a better thing to do than hit disabled people once again.

[Jeremy Lefroy (Stafford) (Con)]

I am going to speak extremely briefly to amendment 29 in my name and that of my hon. Friend the Member for Stevenage (Stephen McPartland), which asks the Government to look again at withdrawing the full amount of the WRAG component, which affects approximately 492,000 people. Let me briefly explain the reasons.

First, as the hon. Member for Banff and Buchan (Dr Whiteford) mentioned earlier, many in the WRAG are in that group for a long period—two years or more, compared with six months on average for jobseeker’s allowance, for instance. As she said, it is extremely difficult to exist on these levels of income for long periods, whereas it might be possible for a few weeks or even a few months for those with other kinds of support. It is therefore important that we look at the length of time.

Secondly, the costs for people in this group are often higher. It has been said to me that the personal independence payment will compensate. It will not compensate for all those costs; for instance, heating is not part of PIP, nor are the special diets people may have, although caring and mobility are part of PIP, of course.

Thirdly, there is the question of the incentive. Because the support group has a component of £36.20 a week at present as opposed to the WRAG of £29.05 a week, which it is proposed to take away, there will be the incentive and a tendency for people to be put into the support group rather than the WRAG. Surely the whole point is to bring people into the WRAG so that they can be given support to come back into work. For instance, 30% of people with Parkinson’s are wrongly placed in the WRAG. This means that instead of receiving the £29.05 component a week, they will receive nothing in future. I have seen instances of people placed in the wrong group in my constituency.

We are talking about a benefit where sanctions are wrongly applied in a number of cases, as has been mentioned in the debate. I need to be very brief and I apologise for not making my points in more detail, but I want others to come in. I ask the Minister to come back on this—

--- Later in debate ---

[Victoria Atkins]

No, I will not give way, because I wish to develop this point. The ripple effect of the national living wage includes commitments by at least two employers in Louth and Horncastle—I am talking here about Morrisons and Sainsbury’s, but there may be many more that have not yet declared their intentions—to raise their lowest wages to more than the first stage of the national living wage, which will take effect in April.

[Helen Goodman]

rose—

[Victoria Atkins]

I will not give way, thank you.

The point is that the policy is part of a package, and the principle behind it is to make work pay. The criticisms that we are hearing from Opposition Members highlight how different our approaches are. We want to create a culture of employment. We believe in work and in all of the benefits that work brings to people.

Our responsibility as a Government is to make work pay, but we cannot do that if the system means that some people are better off out of work than in work. That does not make economic sense. We know that, since the cap was introduced, at least 16,000 capped households have moved into work. That is a good thing for those households. We know that those people who are now working are spending their money in the local economy. A strong local economy pays for the things that we care about—hospitals, teachers, the armed services and so on.

As we saw on the Bill Committee, what counts is not just the pay packet, but what it brings to people’s lives in terms of life chances, the positive benefits that it has for children in a working household and the examples it sets for those children. Those are all factors that are part of this package that some Members seem keen to avoid.

We know that households subject to the current cap are 41% more likely to get into work than uncapped households. I join my hon. Friend the Member for Weaver Vale (Graham Evans) in congratulating the Government on making the commitment that the money saved through this measure will be used to help fund more apprenticeships. It is about getting people into work and into training. We should celebrate, not criticise, the fact that unemployment and the number of out-of-work claimants is at its lowest level since 2010. The fact that we have these very low claimant rates, these measures and this determination to make work pay is something to be supported and not chipped away at.

Tax Credits

Helen Goodman Excerpts

Tuesday 20th October 2015 Commons Chamber

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

Protecting working people’s economic security is, and always has been, a priority for this Government. We are passionate about that, because we believe in people being allowed to meet their potential and fulfil their aspirations from wherever they come in life. Our mission is to get wages up, tax down, and welfare under control. The reforms to tax credits must be understood as part of a wider package of reforms that includes an increase to the personal allowance, increased childcare provision for working families, and of course the national living wage.

Next April the legal minimum pay for a full-time worker will be £1,300 higher than it was the year before. We have done that at a time when businesses have created record numbers of jobs—1,000 a day and 2 million in total, and the highest rates that we have ever reached. Coupled with strongly rising wages, more hours on offer and low inflation, our policy is delivering security and prosperity for working households up and down the country. That is what the country deserves and that is what we are doing.

[Helen Goodman (Bishop Auckland) (Lab)]

Is the Minister aware of the fact that average incomes will reach their pre-recession point only in 2017, after seven years of this vile Tory Government?

[Damian Hinds]

As a matter of fact, living standards have this year reached beyond their pre-crisis point, or indeed any prior year.

We can make lasting economic reforms only because we have taken the tough decisions to get this country back on its feet after the financial crisis that crashed into Labour’s structural deficit, which was among the highest in the developed world. Some choose to indulge in a game of “What if we had unlimited money?” We face facts. In 2010, the Government inherited a deficit of £153 billion. That is almost £6,000 for every household in the country. Our budget deficit was 10.2% of GDP. For every £4 the Government were spending, £1 was borrowed. That could not be allowed to go on, because when Governments lose control of the national finances, those who lose the most are generally those who have the least.

--- Later in debate ---

[Kwasi Kwarteng (Spelthorne) (Con)]

I am very much obliged to you, Mr Speaker, for being able to speak in this debate. We have heard lots of passionate speeches and many well-argued speeches, but I wish to start by referring to the one made by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke). He said that when we look at the election, we see that there was a clear choice between the Conservative party and other parties on economic credibility. It is on that rock of economic credibility that this Government are doing something that is difficult but essentially the right thing. Opposition Members have to outline where they are going to find the £4.4 billion of savings, and they have not done so in any way.

[Helen Goodman]

rose—

[Kwasi Kwarteng]

I am not going to give way. [Interruption.] I am not frightened of the hon. Lady, but I realise that I have limited time. I am not frightened—

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I am delighted to follow my hon. Friend the Member for Ilford North (Wes Streeting). Once again, we have a Budget from this Chancellor that was very shiny on the day he presented it but that is unravelling under closer inspection. The Treasury Select Committee took evidence on a number of the issues that people have raised today, and I want to tell colleagues on both sides of the House what we found. First, on work incentives, which Conservative Members have made much of in the debate, the taper has moved from 41p to 48p, but the effective marginal tax rate for a lone parent will increase to 93%. That means that for every extra pound she earns, she will take home only 7p. Compare that with the banker who will take home 60p in every pound.

The second problem relates to the interaction between the tax credits and the minimum wage. Many hon. Members have spoken about the sequencing. The national minimum wage gains will not, in the main, go to the tax credit losers. Half the cash gains from the national minimum wage will go to people in the top half of the income distribution. Sir Stephen Nickell from the independent Office for Budget Responsibility told the Select Committee:

“It has been known for ages that the proportion of people in receipt of minimum wage who live in poor households is very small. It used to be 14%...In other words, minimum wage as a method of relieving poverty is completely hopeless because most people on the minimum wage do not live in poor households.”

I urge Conservative Members to look at the evidence and to think again.

Charter for Budget Responsibility

Helen Goodman Excerpts

Wednesday 14th October 2015 Commons Chamber

[Mr Osborne]

We have not deserted the people of Redcar. We have provided £80 million of support to local people affected by the closure of that steel plant. That steel plant tragically closed under the previous Labour Government and there was nothing like that support for the workers then. We stand behind the workers of Redcar and we stand behind the workers in every steel plant to see what we can do, but I can tell the hon. Gentleman this: we will not have steel plants or any other plants open in this country if we do not have economic stability in Great Britain.

That point brings me to the final and perhaps most dangerous objection to this charter rule, which is when people say that Britain does not have to go to the bother of saving money and trying to pay for things but can instruct the Bank of England to print the money and use it to finance Government spending directly. The leader of the Labour party calls it

“quantitative easing for people instead of banks”—

that is an accurate quote from his leadership campaign. It sounds seductive, but it is actually called monetary financing. It might be a novel argument in this House of Commons and in the British political debate, but that is because no one has seriously proposed that approach in our country in recent decades. It is a very old argument.

[Helen Goodman (Bishop Auckland) (Lab)]

Will the Chancellor give way?

[Mr Osborne]

No, I will not give way.

[Helen Goodman]

Will he—[Interruption.]

[Mr Speaker]

Order. The hon. Lady is pressing the point. The Chancellor is not giving way at this stage.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to follow the hon. Member for Boston and Skegness (Matt Warman). He has clearly not read the columns of his former colleague Martin Wolf, who agrees with the arguments made by Labour Members. If anybody wanted to know whether this was a political gimmick, they only needed to look at the 90 minutes provided on the Order Paper for this debate—a pitiful 90 minutes to discuss something that is meant to be an important economic policy.

As my hon. Friend the Member for Bassetlaw (John Mann) said, we took evidence on this—

[Simon Hoare]

Will the hon. Lady give way?

[Helen Goodman]

No, I will show the hon. Gentleman the same courtesy the Chancellor showed me.

We took evidence on this matter in the Treasury Committee in July. We found nobody who was prepared to endorse the Chancellor’s proposals. Even the Governor of the Bank of England, when pressed by the Chair of the Select Committee, said that he was

“declining to opine on specific legislation”.

He stated that

“the UK Government have had the announced intention in Budgets in place for a sustained fiscal consolidation. That is one of the headwinds against the economy”.

It was not just left-wing economists who criticised the Chancellor. The head of the Thatcherite Institute of Economic Affairs, Professor Philip Booth, said that the fact that

“these very damaging things have been done to child tax credit systems…is my biggest concern.”

He continued:

“I think in the handbook of possible fiscal rules the Government is choosing a very, very, very bad one.”

One of the most pernicious things about the rule that the Chancellor has chosen is that it treats capital and current spending the same. He is ignoring the fact that investing in housing, science, broadband, transport and the university system is a way of strengthening economic productivity and increasing growth in the British economy. Nobody thinks that it is right to max out the credit card to pay the weekly grocery bill—of course not—but families up and down this country take out mortgages to buy their homes. There is a precise parallel here.

Opposition Members are not deficit deniers. We want to bring down the debt-to-GDP ratio, as the shadow Chancellor said. In that task, the Chancellor has failed spectacularly. The debt has gone up by £500 billion under his stewardship. To get the debt-to-GDP ratio down, we must do two things. We must run the public finances in a sensible way. That means making sensible savings, for example by tackling fraud in the housing benefit system and not going ahead with the ludicrous cuts to inheritance tax, which will benefit the richest in our country. At the same time, we must get sustainable growth into the economy. That means investment.

[Several hon. Members rose—]