National Insurance Contributions (Rate Ceilings) Bill

Helen Goodman Excerpts

Tuesday 15th September 2015 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to take part in this debate, even though it is on a gimmick, and we are not so used to debating gimmicks in the Chamber. The Chancellor is a paradox. He constantly wants legislation that prevents him from doing things—measures in the Finance Bill to avoid taking further decisions on income tax or VAT, today’s legislation on not making any changes to NICs, and legislation at some point in the future on the fiscal stance and his proposals to have a permanent budget surplus.

I am afraid that this Bill is completely unnecessary. As the hon. Member for Dundee East (Stewart Hosie) said, the truth of the matter is that if there were a crisis and the Chancellor suddenly needed to raise more money, he could repeal this Bill. It does not give us the stability and certainty that the Government claim.

[James Cartlidge]

If we reach that point and the provisions have to be repealed, that will be a public act. This is an open and transparent Government. If we make this promise and then legislate, it is extremely difficult to repeal it on the sly. The Labour Government broke promises on the sly, hoping that we would not notice. It is impossible to do that with this type of approach.

[Helen Goodman]

I am afraid that I do not accept that. This is purely weak willed on the part of the Chancellor. I thought that the Economic Secretary to the Treasury did not give us nearly as good a defence of the Bill as the hon. Member for North West Hampshire (Kit Malthouse). He managed to situate it within the needs of the business community and give some rationale for it. The more the Minister spoke, the clearer it became that this is indeed a gimmick. I find that odd, because I thought that the Chancellor of the Exchequer wanted to be the Chancellor of the Exchequer and to take decisions, but clearly he does not. He just wants to tie his hands behind his back at every verse end.

I think it would be a good idea to vote against the Bill, and I am slightly disappointed that we are not opposing it. [Hon. Members: “Ah!”] It is not for me to say what the official Front-Bench position is, unfortunately. I want to point out to Conservative Members that we live in a world where the Chancellor has a desire to bring the deficit down very quickly. That is a difficult thing to do, as we saw when he failed comprehensively to achieve his target during the last Parliament. He is now having to go through some very choppy waters to get this done. He made a promise to introduce this legislation to fix VAT, income tax and national insurance because he thought that that would make him a low-tax Chancellor in the eyes of the British public. The fact is, however, that since then he has increased VAT to 20%, increased vehicle excise duty and increased the insurance premium tax, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) pointed out. He is not a low-tax Chancellor.

[Andrew Gwynne]

Does my hon. Friend agree that there is another reason to believe that this is purely a gimmick from the Government? The Chancellor can give the impression that he will not increase national insurance rate ceilings, but fiscal drag could still have an impact, through the back door, on the amount of national insurance that people pay.

[Helen Goodman]

My hon. Friend makes an astute point. That is one of the things that is going on here.

The Chancellor is also shifting more and more from direct taxation on income to indirect taxation on spending. In doing so, he is pushing the burden of tax from those on middle incomes to those on lower incomes. They are the true target of this Government, as we shall see in the debate on tax credits later this afternoon.

The hon. and learned Member for South East Cambridgeshire (Lucy Frazer) claimed that this measure was about low tax, but I would ask her to reconsider that. For whom is it about low tax? For all the reasons given by the hon. Member for North West Hampshire, including the fact that not raising the basic rate of national insurance is a good thing to do, it is clear that this is a tax on labour. At a time when we want more people to have more good jobs, that seems rather perverse.

The most perverse thing about national insurance is the upper earnings limit, and including that in the legislation is a highly political act. We shall have a debate on tax credits in a little while. Let us look at the marginal rate that the Chancellor is giving to people, taking account of the tax and benefits system. After the Budget, the effective marginal tax rate faced by second earners in couples on very low incomes with two children will be 75%. However, for those earning more than £150,000 a year, the normal marginal tax rate of less than 50% will apply. Even when universal credit is introduced, the marginal rate for people earning around £10,000 a year will be 65%, but the withdrawal rate for people earning more than £150,000 will be 48p in the pound. That is not about low tax or certainty. It is clearly about protecting the Tory party’s rich friends and rich donors.

[Lucy Frazer]

I heard the shadow Minister say that this was Labour party policy. What does the hon. Member for Bishop Auckland (Helen Goodman) say to that?

[Helen Goodman]

As I have said, I would not have made a commitment on the upper earnings limit. That is just not my view. Fortunately, in the House of Commons we are free to speak as we find things. We are having this debate and I am making my contribution. I am telling the House that that is not a terribly sensible commitment to make.

The hon. Member for North West Hampshire made some good points about the certainty that small and micro-businesses need, but I ask hon. Members to consider for themselves how many small and micro-businesses are employing people on £150,000 a year. I suggest that not many are doing so. I know that Hampshire is better off than County Durham, but it is not so much better off that every farmer and small shopkeeper is paying themselves and their staff £150,000 a year.

[The Financial Secretary to the Treasury (Mr David Gauke)]

May I seek some clarity? The hon. Lady said that she would not make a commitment on the upper earnings limit. Is she therefore suggesting that the 12% rate of national insurance contributions should also apply to higher rate income tax payers?

[Helen Goodman]

I am saying that it would be perfectly reasonable to consider that, rather than pre-committing in the way that the Bill is doing. That seems to be common sense.

It is surprising that the Treasury thinks that it can simply continue to switch off policy levers and that that is an intelligent way of carrying on. As my hon. Friend the Member for Worsley and Eccles South has said, commentators including the Financial Times and PricewaterhouseCoopers have pointed out that this measure will force the Government into a more difficult and tricky situation. The position will become more constrained, and it will be more difficult to take sensible decisions on raising money. The Bill will put more pressure on the Government to cut public spending.

[Kit Malthouse]

I think I am grateful to the hon. Lady for her support earlier. That was kind of her. Would she accept that one of the strengths of having these measures embedded in legislation is that if a future Chancellor were to decide that he or she wanted to raise national insurance rates, an element of delay would be injected into the proceedings by dint of the repeal process? That would give businesses some months—and possibly a year or even longer, if the House were so to decide—in which to adjust to what would otherwise have been a sudden decision.

[Helen Goodman]

Well, it might or it might not, depending on the circumstances.

This quest for certainty is quite reasonable in regard to small businesses—

[Mr MacNeil]

rose—

[Helen Goodman]

I shall give way to the hon. Gentleman from the Scottish National party.

[Mr MacNeil]

In any debate about taxes, it is instructive to look at what the OECD tells us about global tax-to-GDP ratios, which is what I have just done. Denmark has a tax-to-GDP ratio of 47.2%. Mexico, at the other extreme, has a tax-to-GDP ratio of 19.7%. The Conservatives’ mantra is “lower taxes, lower taxes, lower taxes”, but that would appear to be sending us in the direction of Mexico. That is not the sort of society I want; I want a society that is high on the UN human development index such as Denmark. The figure for the UK is 33%. How far do the Government want to go? Do they want to give us a society like that of Mexico, or do they want us to be like Denmark?

--- Later in debate ---

[Helen Goodman]

The hon. Gentleman knows the way to my heart; he knows that I am half Danish and that I would much prefer the Danish model to the Mexican model.

Hon. Members have been talking about certainty, but the Bill will provide certainty only for the very well off. The Government are not worried about certainty for people on very low incomes, as we shall see in an hour’s time when we discuss the cuts to tax credits.

[Christopher Pincher]

The hon. Lady is a doughty individualist. I recall her calling me up a few months ago, when she was seeking the chairmanship of the Public Accounts Committee—regrettably, she was unsuccessful in that enterprise—and asking me what the PAC Chair should do. One thing she said was, “We must make Parliament more accountable.” Surely by passing this legislation, which would have to be repealed if the Chancellor wanted to make changes, we are making this House and the Chancellor more accountable.

[Helen Goodman]

That is rather a silly remark. If the Chancellor makes decisions on tax, we can question him about them. This Bill is more a non-decision about a non-tax. It does not do what the hon. Gentleman suggests. Conservative Members have reiterated some of their well-known mantras, but have added nothing of substance to the debate. There is no positive agenda in this Bill addressing the needs of the British economy. It is, I am sorry to say, a gimmick.

Tax Credits

Helen Goodman Excerpts

Tuesday 15th September 2015 Commons Chamber

[Damian Hinds]

If Opposition Members will allow, I will take some time to set out the regulations.

The regulations make three changes to the tax credit system. First, they reduce the working tax credit threshold from £6,420 to £3,850 and the child tax credit threshold from £16,105 to £12,125. Secondly, they increase the taper rate from 41% to 48%, meaning that when a claimant’s earnings reach the new tax credit income threshold, their award will be gradually removed by 48p in the pound, rather than the current 41p, ensuring that state taxpayer help is focused on those who need it most. For recipients of housing benefit, the interaction between the two systems of support means the overall change in the withdrawal rate will be 2p, not 7p.

Thirdly, the regulations reduce the income rise disregard from £5,000 to £2,500, taking it back to its level between 2003 and 2006 and matching the rate of the income fall disregard. Following the introduction of real-time information, Her Majesty’s Revenue and Customs has much more up-to-date information on claimants’ earnings, so there is no good reason to have such a high disregard figure. These three changes form part of a wider set of welfare reforms, most of which are currently under consideration in the Welfare Reform and Work Bill.

[Helen Goodman (Bishop Auckland) (Lab)]

The Institute for Fiscal Studies, following a request from the Treasury Select Committee, sent us a new analysis showing that lone parents earning less than £20,000 will have marginal deduction rates of either over 90%, if they are on the old legacy system, or 75%, if they are on universal credit. How does the Minister square that with his claims at the Dispatch Box?

[Damian Hinds]

I am afraid that high marginal deduction rates have long been a feature of the social security and welfare system. As many Opposition Members know, universal credit will change that by making a substantive change in the withdrawal rates.

--- Later in debate ---

[Mark Garnier]

I am not sure I recognise the figure of £2,000 on a £17,000 income, and I do not accept that this Government are punishing hard-working people. I see a Government who are doing an enormous amount by reducing the threshold tax rates and by helping small businesses. We have seen more people come into work than there have ever been before. This Government have had a huge number of successes, so I do not recognise what the hon. Gentleman is describing.

There are two particular reasons why I support this measure, the first of which was highlighted by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), the former Chancellor, and my hon. Friend the Member for Croydon South (Chris Philp) in talking about the effect that tax credits have on employers. We do not know exactly the extent to which this has been the case, but without a shadow of a doubt some employers will have been not paying the right salary or pay, given that the Government are subsidising not necessarily those people on low incomes but the employers employing people on low incomes. We also know that if that did happen early on, it is much more difficult to unravel it now, which is why it is very important that we have the new national minimum living wage. It is there to ensure that wages do start going up, although I concede that this does not necessarily cover it all.

[Helen Goodman]

How can employers take account of the tax credits, given that the tax credits are paid according to family circumstance and the wage is not?

[Mark Garnier]

Because employees will work for a wage that they can afford to work at, and if the Government are subsiding those household incomes the employers can take advantage of that. It is difficult—I completely concede that—to unravel this.

Finance Bill

Helen Goodman Excerpts

Tuesday 8th September 2015 Commons Chamber

[John Redwood]

: I remind the Committee that I advise an industrial and an investment company and the details are set out in the register.

I found it interesting to listen to the hon. Member for Worsley and Eccles South (Barbara Keeley)speak from the Opposition Front Bench on this important matter. As someone who thinks that taxes are best kept low and that we need to do all we can to maximise the spending power of those we represent, I had a lot of sympathy with much of what she was saying. Of course, there will be people who do not want to pay an increased insurance tax—who does? In particular, some people will find it difficult because it is quite a high tax. I would have found the hon. Lady more convincing had she been able to answer the question in my intervention: if not this, what?

We have just had a passionate debate in this House in which the Opposition, understandably, wanted us to do more for Syrian refugees. That takes money. We are already being very generous with our overseas aid budget, and although we understand their motivation they are not proposing lots of reductions in spending.

[Helen Goodman (Bishop Auckland) (Lab)]

Perhaps the right hon. Gentleman has forgotten that in July we voted against the cut in inheritance tax in the Budget, which would bring in another £1 billion in the final year.

[John Redwood]

That is interesting, because one of the difficulties with capital taxes is that they are sensitive to the rate and details of the scheme. The first rule of any tax must be that if it is raised, more revenue must be got from it. One thing that is certainly true of this insurance tax is that although we would rather it was at a lower rate, it is still at a low enough rate that if we raised it we would collect more revenue. I am not sure that that is true of the inheritance tax system, and the hon. Lady must understand that quite a lot of her constituents are not very happy about the current regime and are looking for changes.

[Helen Goodman]

The right hon. Gentleman is talking through his hat. In my constituency last year, not one property sold for £650,000 and the Government are raising the threshold to £1 million. It certainly will not affect any of my constituents.

[John Redwood]

The hon. Lady might well find that some of her constituents have aspirations and could be successful; I am surprised that she is so negative about them. Many people in all parts of the country welcome the idea. In 10 or 20 years’ time, if there is a death in the family and assets pass, they would be grateful not to have that limit. It was a good effort and I accept that the hon. Lady came up with the least bad of the Labour attitudes. Everything else that Labour wants to do involves either spending more money or increasing tax rates, which will reduce the revenue.

--- Later in debate ---

[Andrew Percy]

It is a pleasure to follow the hon. Member for Wirral South (Alison McGovern), and I agreed with much of what she said.

I find myself, not for the first time, standing to criticise a Government of my own party, but they should pay heed when Members such as my hon. Friend the Member for Selby and Ainsty (Nigel Adams) make such speeches. When my hon. Friend and neighbour makes such a speech, the Government need to consider whether they are in the right place, because he is not a serial trouble causer, as some of us are sometimes labelled—for a Yorkshireman, it is a badge of honour. Given that he made the speech he made, I hope the Government listen to him.

I support my hon. Friend, representing the constituency that I represent, and having looked through the proposals and the impact they will have on my area. I will say something about Drax in a moment, but I agree entirely with my hon. Friend on Eggborough. It is a deeply concerning situation. We are not addressing Department of Energy and Climate Change Ministers tonight, but it is fair to say, having seen the Budget, that DECC is now a wholly owned subsidiary of the Treasury. Perhaps a message will get back to those who are really running DECC.

Our concern about Eggborough is significant. A range of factors affect Eggborough, not all of which are in the Government’s gift. However, they need to be conscious of the potential crunch that is coming. When we had meetings a year or so ago, we were told that Eggborough would probably not close and that it was playing something of a game. That is certainly not what has come to pass. The warnings, which my hon. Friend was making privately a year or so ago, have come to pass. He should have been listened to then as he should be listened to now.

I hope the Government give great weight to the significant dangers if we lose 4% of generating capacity next year, given the crunch that will come in 2016-17. I hope Ministers consider what more can be done to support Eggborough and the brilliant workers, many of whom live in my constituency, who make their living there.

I do not agree with the comments of the hon. Member for Brighton, Pavilion (Caroline Lucas) on solar and onshore wind—she perhaps would not expect me to do so. We have fought off a number of proposed solar farms on grade A agricultural land in my constituency and my constituents cannot be described as being in favour of the solar farms that have appeared. I feel no sorrow for what is happening to onshore wind and solar—my constituency is peppered with hundreds of onshore wind turbines and we will be pleased to see the back of further support for them, given that we have been dumped with far more of them than anybody could have reasonably expected. They continue to be dumped on us.

On biomass, I am concerned about the impact that the measure will have on Drax. I should declare an interest: I live opposite Drax. If I invited you up to my bedroom, Mr Howarth, you would see Drax power station. [Hon. Members: “What?”] It is not going to happen, Mr Howarth, but you could look further and see Eggborough and Ferrybridge. We have a string of power stations that we are proud of. We are proud of the contribution we make to energy supply in this country and of the skilled and well paid jobs that are created by those industries. We are proud of the role we have played in the industrial development of the country, through pits such as Kellingley, which unfortunately is to close, in the neighbouring constituency of my hon. Friend the Member for Selby and Ainsty. We are proud of the contribution that coal-fired generation has made to this country and proud of the contribution we continue to make through biomass and through some coal still at Drax power station.

Drax provides 1,300 jobs for those living in my hon. Friend’s constituency and mine, and in the other constituencies around us in Yorkshire. They depend strongly on Drax, so it is very significant and concerning that, as my hon. Friend pointed out, £450 million was wiped off the value of Drax overnight from a decision that nobody saw coming. As Dorothy Thompson, the chief executive of Drax, said after the Budget:

“We are surprised and disappointed at this retrospective change to a support regime which has been in place since 2001 specifically to encourage green energy and support renewable investment decisions.”

I have met people from Drax countless times, as have a number of other Members. The one thing they have always asked of us during the past few years is stability to secure investment. To remove that stability overnight with a click of the fingers is not good decision making. That is not joined-up government and it does not provide the confidence that investors such as Drax require. I do not need to reiterate the point about the impact on international versus domestic companies. My hon. Friend and others have made it clear that 70% of the income from the exemption currently goes to UK generators. In the case of Drax, the levy exemption certificates are worth about £4 a megawatt-hour, which provides an additional source of income on top of the generating revenues.

Drax has done everything that has been asked of it and more in its conversion to biomass. The power station is part of a network along the Humber in east Yorkshire and north Lincolnshire that has seen significant investment to support the conversion to biomass at Drax. As I have said, 1,300 people are currently employed at Drax. My village is a power-generating village: power is the main source of income for many people, including our neighbours. It is how we make our livings locally. After the conversion to biomass at Drax, and what we hoped for at Eggborough, we were convinced that that would continue. I really hope the Government will pay heed to today’s debate and ensure it will continue.

Drax invested significantly to improve delivery facilities, surveying the investment landscape and concluding it was stable. Some £125 million was invested directly in importing facilities, in particular at the Immingham renewable fuel terminal. One can trudge along my constituency and follow the biomass as it arrives at Immingham in the Cleethorpes constituency and travels by rail through my constituency up to Drax. Some 100 jobs were created during the construction phase at the port and 100 more once the facilities were operational.

We thought the new facilities underlined the Humber’s reputation as the UK’s energy estuary, something that is at the heart of the northern powerhouse. When I was asked by the Chancellor only a year or so ago what the vision was for the Humber, I said that our vision is very clear and simple: to be the UK’s premier energy estuary. That includes the support going into offshore wind. It is not just offshore wind, although it has been much of the focus locally. The point we have always tried to make absolutely clear is that other power generation is at the heart of our economy in our bit of the northern powerhouse. The jobs in place at the moment relate very strongly to biomass and its importation from the United States and elsewhere. Drax’s £700 million conversion project was going to reduce carbon emissions by 80%. That is exactly what we should be aiming for: providing sustainable replacement for coal and generation that is stable in the market and on the grid. That project, alongside the carbon capture and storage project, White Rose, which we have also been keen to emphasise, will support 3,200 jobs. So this is a significant issue for my constituents and those of my hon. Friend the Member for Selby and Ainsty.

Biomass and the future stability of Drax are significant for the whole UK. Drax accounts for 8% of generating capacity, while Eggborough accounts for 4%—of course we are losing Ferrybridge, the third power station in the M62 corridor. When the chief executive of a company that provides 8% of the electricity generated in this country says we are on the wrong side on this issue, we have to listen, and that is what I hope the Government will do. Along with my hon. Friend, who made a fine speech—a better speech than I could on this—I will not support the Government on this issue. I have been unimpressed by other things in the Budget and will vote accordingly next week. I have a lot of sympathy for new clause 2, tabled by the hon. Member for Worsley and Eccles South (Barbara Keeley), and I will lend that my support this evening.

[Helen Goodman]

It is a pleasure to see you in the Chair this evening, Mr Howarth.

I am pleased to follow the hon. Member for Brigg and Goole (Andrew Percy), who made an excellent speech in support of the industry in his constituency. I agreed with much of what he said. The hon. Member for Selby and Ainsty (Nigel Adams) made an outstandingly good speech, contextualising the issue and setting it in the framework of the energy market in this country. His was a very helpful contribution.

Just before the summer recess, I became a member of the Treasury Select Committee, and in July we took evidence from the Chancellor, so I took the opportunity to ask him why he had taken this decision on the climate change levy. The first question I asked was:

“Are you a climate change denier?”,

to which he responded:

“I am not sure I accept that phrase as a general term in British politics, but what I will certainly say is that I think climate change is happening, that it is caused by human beings, in part, and that it is not good for our society, going forward.”

This did not seem a very strong endorsement from the greenest Government ever—as they like to think of themselves—so I asked whether he supported the international work and whether he was

“looking for a good, strong commitment in Paris, internationally agreed, on climate change”.

“Yes”, he said. So then I asked about the domestic legal framework:

“Do you wish to see any changes to the legal frameworks that we have in this country? So, the carbon budgets out to 2027, the target to have 15% of our electricity generated through renewables by 2020, or our target to see carbon dioxide emissions reduced by 80% by 2050; are you looking to change any of those frameworks?”

“No”, he said.

As hon. Members have said, the pattern of words and actions do not seem to fit, so I said to the Chancellor:

“Notwithstanding the fact that you are committed to all of those, you have removed the climate change levy exemption for renewables, removed the subsidy for onshore wind, restructured VED, and ended the zero carbon homes commitment”—

since then, of course, he has also changed the solar subsidies as well. The papers the Committee had from HMRC said, with respect to the climate change levy, that there would not be any impact on climate change, so I asked him whether, taking all four measures together, there would be

“any reduction in the rate at which we are reducing our carbon emissions from the measures you have taken”.

He said:

“We can go through each one individually, but I think for different reasons they are not effective or good value for money, and I think there are better ways to meet these targets.”

He said we needed to meet the targets, but in a cost-effective way, so I asked him:

“Do you have any forecast or any scenario setting out how you think that the environmental objectives will be achieved on your new policy framework?”

“Yes”, said the Chancellor.

“I am happy to send you some analysis.”

--- Later in debate ---

[Harriett Baldwin]

What a pleasure it is to serve under your Chairmanship this evening, Ms Engel.

Clauses 16 and 17 and schedules 2 and 3 make changes to the banking tax regime. They will ensure that banks continue to make a fair contribution to the economic recovery in a way that does not harm the UK as a global financial centre or affect banks’ ability to support the economic recovery.

It might be helpful if I set out the background to the Government’s approach to taxing the banking sector. In his first Budget in 2010, my right hon. Friend the Chancellor announced the introduction of the bank levy, an entirely new tax on banks’ balance sheets, equity and liabilities. The levy had two objectives. First, at a time when banking profits were low, it was designed to ensure that banks made a fair contribution to the taxman to reflect the risks that they pose to the UK economy —risks that were made very clear in the extraordinary events of 2008. Secondly, the levy was designed to complement the developing regulatory regime by providing incentives for banks to reduce the size of their balance sheets and support their activities with more stable forms of funding.

Measured against those objectives, the bank levy has undoubtedly been successful. It raised more than £8 billion across the last Parliament and is forecast to raise a further £17 billion by 2021. It has played a key role in increasing the stability of the UK banking sector, with banks now holding more capital against their assets and being less reliant on short-term risky funding. It has helped to satisfy the UK’s resolution financing obligations under the EU bank recovery and resolution directive, thus supporting the more orderly resolution of banks in crisis. Despite those successes, the Chancellor has been consistent about the need for balance in ensuring that banks pay a fair contribution, while ensuring that this supports the UK as a global financial centre and banks’ ability to support the wider economy.

The Government believe that, as the sector returns to profit, a change is required to maintain that balance. The reforms in the clauses achieve that over the coming Parliament and beyond. The first change is a gradual reduction of the bank levy. Clause 16 reduces the bank levy rate to 0.18% from 1 January 2016 and sets out further reductions to the main rate over the following five years, resulting in a rate of 0.1% from January 2021. The Government have committed to exclude non-UK subsidiaries from the bank levy charge from January 2021, a change we are committed to legislate for in this Parliament.

Clause 17 introduces a surcharge on banking sector profit from January 2016. That is a new 8% tax on the corporation tax profits of regulated banking entities within banking groups. It will apply to profits that exceed £25 million across a group, disregarding the losses that banks have carried forward from periods before the surcharge’s introduction. The first £25 million will benefit from the reductions in the main rate of corporation tax—from 20% today to 19% and then to 18%—included elsewhere in the Bill, giving the UK the lowest rate of corporation tax in the G20. It means that the overall rate of corporation tax will be slightly lower for banks than it was in 2010.

The OBR forecasts that the surcharge will raise £6.5 billion from the sector by 2021. That revenue more than offsets the cost of reductions to the bank levy rate. It means that banks will pay an additional £2 billion in tax over the period, increasing banks’ total additional contributions beyond £23 billion.

[Helen Goodman]

Like many hon. Members, I am sure the Minister has had many letters from small banks and the building societies about the fact that the surcharge will be imposed on them. The Building Societies Association says that it expects it will cost them £630 million over the lifetime of the Parliament, which would be sufficient to fund at least £4 billion in new mortgage lending. That means 15,000 or 20,000 new homes. The effect of including building societies is therefore to make it more difficult for 15,000 or 20,000 families to have a new home. Will the Minister consider whether that is a good idea?

[Harriett Baldwin]

I hope the hon. Lady recognises that the rate paid by building societies and smaller banks will be lower than it was at any time when she and the Labour party were in government. In fact, the measure brings the corporation tax rate to a level lower than when the Conservatives took power in 2010. In addition, 90% of building societies will be exempt from the charge because the first £25 million is exempt from the surcharge.

At the same time, we believe that the changes in clauses 16 and 17 will create a fairer, more competitive and more sustainable basis for taxing the UK banking sector. By rebalancing banks’ contributions towards a tax on profits, future charges will be more aligned with profit and capital accumulation. That reduces the risk of tax affecting banks’ decisions on where to invest and helps to ensure that tax does not impact banks’ ability to lend to businesses and individuals.

By aligning banks’ contributions with their activities in the UK, the changes recognise and reduce the impact of tax on UK banks’ ability to compete in overseas markets. They help to reflect the impact of regulatory reforms, which have reduced the risk of those overseas operations to the UK economy.

I shall draw my brief remarks to a close. The Government firmly believe that banks should make a fair contribution to the economic recovery. However, that contribution must be balanced with the need to maintain the competitiveness of the UK and to support lending to the wider economy. The changes in the clauses provide a better balance between those two objectives, and do so while providing long-term certainty and stability to the sector, and short-term revenue to the taxman. I therefore hope that clauses 16 and 17 and schedules 2 and 3 stand part of the Bill.

Greece

Helen Goodman Excerpts

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

I do not want to speculate on how this country would behave if it were a member of the eurozone. Thankfully, that is one of the pressures that our Government do not have to bear. However, this does remind everyone that a country that joins in a currency with other nation states and creates collective institutions will find itself bound by those rules, and will find that some of its unilateral, albeit democratically endorsed, decisions are not necessarily accepted by everyone else.

[Helen Goodman (Bishop Auckland) (Lab)]

Obviously the Chancellor is focused on the short term, but under any scenario one of the issues the Greek Government must get to grips with is improving their revenue-raising. Has any thought been given to technical assistance programmes along the lines of those run for the east European countries, to increase their capacity to raise taxes more effectively?

[Mr Osborne]

The hon. Lady draws attention to the very poor record on revenue collection in Greece. It is one of the things that most frustrates its creditors and it comes up regularly in the discussions with the other eurozone Governments. There is actually some history to this: there is a tradition of non-payment—if we can put it like that—going back through Greek history, partly because of the Governments it has had in the past. To be fair to the current Government, and indeed their immediate predecessors in Greece, they have talked about trying to improve revenue collection. The British Government have offered assistance; members of the British civil service have been out on secondment and the like over recent years to try to improve revenue collection. Unfortunately, however, at the moment revenue collection has almost dried up.

Greece

Helen Goodman Excerpts

Monday 29th June 2015 Commons Chamber

[Mr Osborne]

I have absolutely no idea; I thought it was one of the better speeches I gave over the past five years. My hon. Friend will be glad to know that I repeated exactly those arguments, including the phrase about the challenge of Britain having to choose, in the Mansion House speech that I gave just a couple of weeks ago. That is certainly up on the Treasury website.

[Helen Goodman (Bishop Auckland) (Lab)]

A further collapse in the Greek economy would obviously be extremely bad for the Greek people and for our exporters, particularly in pharmaceuticals. Even the Financial Times this morning described the creditors programme as “economically counter-productive”, and we have learned that the US Treasury Secretary urged the creditors to take a more compromising stance. Did the Chancellor follow the American lead, and will he do so as the days go by?

[Mr Osborne]

I do not want to go into the private discussions we had, but we said very publicly that both sides needed to reach a compromise. We did not say that this was exclusively a challenge to the Greek Government; we said that the eurozone also needed to work towards a compromise. I think it is fair to reflect on the fact that the reason we are having this statement and the reason there are capital controls and the like is the unilateral decision by the Greek Government on Friday. We respect the vote in the Greek Parliament, and of course we will respect the decision of the Greek people, but that was the change in the dynamic that happened over the past three days.

Oral Answers to Questions

Helen Goodman Excerpts

Tuesday 16th June 2015 Commons Chamber

[Greg Hands]

I once again congratulate my hon. Friend on his excellent election result in Basildon. I note that, to date, he has served five years on the Science and Technology Committee, so there cannot be many in the House who take a stronger interest in the matter. He will know that our capital funding for science almost doubled in the last Parliament, and that we take science very seriously. Wider decisions on science funding will be dealt with in the spending review.

[Helen Goodman (Bishop Auckland) (Lab)]

Traditionally, Britain has been absolutely brilliant at basic science, but less good at translating that into innovation for industry. What are the Government going to do to address that issue?

[Greg Hands]

The hon. Lady makes a reasonable point, but that is why in the previous Parliament we increased spending on innovation, including on the new catapult centres and on a whole host of other projects, and we look forward to doing more in this Parliament.

Royal Bank of Scotland

Helen Goodman Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

I thank my hon. Friend and constituency neighbour for his question, which shows his depth of knowledge. He is right. In my years of managing portfolios, what I paid for investments in the first place was a fact, but managers also have to factor in the future. None of us has a crystal ball. My hon. Friend’s words are wisely taken.

[Helen Goodman (Bishop Auckland) (Lab)]

I welcome the hon. Lady to her new role at the Dispatch Box. Everyone agrees and understands that the RBS shareholding needs to be transferred to the private sector. The Rothschild report states that if shares were sold at the current share price there would be a paper loss of £7.2 billion, which by anybody’s standards is a lot of money. What the report does not show, however, is why the public benefits add up to £7 billion. Could the Minister explain that please?

[Harriett Baldwin]

I thank the hon. Lady, who has great knowledge of these matters, for her question. Any estimate—and the one in the Rothschild report is no different—will be based on the current market conditions. The number that the report cites is, I think, as at 5 June. I note that the share price of RBS has performed well today; there will be different prices in the years to come. The Government have made it very clear that this will not be a quick process; it will take time. We can only project as at today’s prices the £7 billion figure, but it may or may not be a bigger number in the future.

The Economy

Helen Goodman Excerpts

Thursday 4th June 2015 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to follow the hon. Member for Waveney (Peter Aldous). As he described infrastructure in his constituency I began to wonder whether it had been transferred to the north-east, because we have very similar problems.

At the beginning of this debate we heard an intense political exchange about the right speed of deficit reduction. We will continue to see a big political debate about the appropriate size and scope of the public sector, but where we have consensus is on the importance of effective and efficient use of public money. Everyone wants the taxpayer to get good value for money.

We all have our stories of Whitehall waste. My low point was when I was a Minister. I was sitting in my office and two men came in to water the plants. They watered two plants, and then I pointed to another one on the windowsill and said, “What about that one?” They went over and looked very carefully at it, felt the leaves, and then said, “That’s not ours”, because plant watering had been contracted out. Before Government Members suggest that that was confined to the Labour years, I have to tell them that after tabling a series of parliamentary questions in the spring, I found that Departments are renting desks, including one Department that was paying the fabulous sum of £10,309.63 a year per desk.

If we are to get to grips with these problems, we must ask why they happen. It is important to root out waste in individual programmes, but we will succeed only if we look at the underlying patterns and problems. There are recurrent issues, including in large information and communications technology projects. For example, in past years the Rural Payments Agency and tax credits were a problem, and this Government are now running into similar issues with universal credit. Procurement capacity in Whitehall needs to be improved. It is not good, because the route to the top is through being able to write clever policy papers, not through doing good deals.

The transparency of value for money when services are contracted out is another problem. We have to hold to account the Sercos, Capitas and G4Ss of this world, because they now control billions of pounds, and they cannot hide behind the excuse of “commercial in confidence” any longer. We are seeing unnecessarily complex financial arrangements, excessive returns to bankers and consultants, and not the cheapest deal for taxpayers. Only this week, problems were highlighted in the health service, with rip-off agency fees for doctors and nurses who are being paid more than those on regular contracts, and the revolving door for senior executives. No one thinks it is acceptable for someone to retire on a Monday, collect a lump sum on the Tuesday and then go back into the same job on the Wednesday.

As a country, we are now spending £740 billion. If we can achieve an efficiency improvement of 2% on that £740 billion, the savings would amount to £13 billion. Some people would want to use that for tax cuts, whereas some would want to use it to bolster public services, but it is definitely money worth finding. Parliament, including the Select Committees, has a key part to play in that. By fulfilling our role, we can improve Government’s long-term capacity to deliver their plans to set out and do what they intend to do.

If we work in an incisive, open and transparent manner, we can raise trust in the political process. By shining a light and not being afraid to challenge those in positions of power, we can make a real difference. By doing so in an effective way, we will raise confidence in politics, Parliament and the political process, as I am sure all Members of this House want to do.

Finance (No. 2) Bill

Helen Goodman Excerpts

Wednesday 25th March 2015 Commons Chamber

[Shabana Mahmood]

It is a little unfair of the hon. Gentleman to shake his head at such an early stage of my speech. He should at least give me a chance to develop my arguments.

[Helen Goodman (Bishop Auckland) (Lab)]

Does my hon. Friend agree that one of the worst aspects is the massive loss to the Revenue? Am I right in recollecting that the projected annual revenue loss to the public purse in 2011 was some £3 billion?

[Shabana Mahmood]

My hon. Friend is absolutely right. The measure has a static cost of £3 billion a year, and behavioural changes also have an impact. That is the hot debate in which the Minister and I have been engaged ever since I have been in the shadow Treasury team.

Future Government Spending

Helen Goodman Excerpts

Wednesday 4th March 2015 Commons Chamber

[Chris Leslie]

The hon. Gentleman is misrepresenting the OBR’s views. It is clear, as the Institute for Fiscal Studies has said today, that the global banking crisis had a devastating effect not just on this country’s public finances, but across the world. Conspicuous by its absence from the hon. Gentleman’s comments was any evidence that he had said in the past that public expenditure plans were all wrong. The Chancellor of the Exchequer and the Prime Minister signed up to support all the previous Government’s proposals.

[Helen Goodman (Bishop Auckland) (Lab)]

Does my hon. Friend agree that Government Members should be reminded of chart 1.1 of the OBR report, which shows that total managed expenditure rose from 36% to 40% of GDP between 1998 and 2008, and then from 40% to 46% by 2009? In other words, the biggest part came from the banking crisis.

[Chris Leslie]

If we had a Government who understood that a connection exists between living standards, the health of our economy and the health of our public finances, perhaps we could make some progress on deficit reduction and tackle some of those issues. Instead, recent figures show that the gap between what the Government spend and their income is perpetuating at a very high level. I think it came down from £80 billion in the first nine months of last year to £74 billion in the first nine months of this year. The deficit reduction strategy is a thing of the past for this Government, because they do not realise how stagnant wages have pulled the rug from underneath it.

--- Later in debate ---

[Mr Gauke]

So there we have it—that is the complaint from the Opposition. Their big problem is that we have not cleared up their mess fast enough. That is the essence of their argument. They have opposed every difficult decision we took on the path towards recovery—every spending cut and every welfare change. As for the deficit, they usually forget to mention it. All the rhetoric we are hearing from them is about how they would reverse the decisions that we have taken and presumably turn the clock back to 2010—the time when we had the worst deficit in peacetime history, when we were borrowing £1 for every £4 spent, when we had an economy whose ability to pay its way was questioned internationally, and when the outlook of the Labour Government could be summed up by the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne):

“I’m afraid there is no money.”

This Government have made great steps forward to get us out of that mess. In 2014, our growth rate was 2.6%—the highest of any major advanced economy. Our deficit is down by half as a percentage of GDP. Thanks to the stability that we have put in place, businesses have created 2.16 million private sector jobs since the first quarter of 2010, each and every one representing someone in the UK who is now standing on their own two feet. Some 2.1 million more entrepreneurships have been set up, with over 750,000 more businesses than in 2010. That has all happened under this Government.

[Helen Goodman]

Can the Minister explain why the real Chief Secretary is not responding to this debate? Is it because when the OBR finally audited the Government’s future plans and found that they would take us back to the 1930s, the other coalition partner peeled off and left the Tories isolated?

--- Later in debate ---

[Mr Gauke]

My hon. Friend is absolutely right. It is right that we highlight that point. They do not like our spending plans, but what are they going to do? Are they willing to borrow more? Are they willing to tax more? It must be one or the other or both. Which is it to be: a borrowing bombshell or a tax bombshell?

[Helen Goodman]

rose—

[Mr William Bain (Glasgow North East) (Lab)]

rose—

[Mr Gauke]

I will give way to the hon. Lady. She will give us an answer.

[Helen Goodman]

I want to bring the Minister back to the point he was making about five minutes ago, when he said that there should be £12 billion of cuts to the welfare budget. Would he like to spell out for the House and the nation what those £12 billion of cuts will be?

[Mr Gauke]

We will set out the full details in due course, but we have already said that £3 billion of that will come from freezing benefits. If the Labour party is ruling out touching the welfare budget, which is a considerable part of public spending, where else is the money coming from?