HMRC Office Closures
Ian C. Lucas Excerpts(8 years, 7 months ago)
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Ian C. Lucas (Wrexham) (Lab)
I say to the Minister that this was an absolutely appalling announcement. It was appalling in the way it was done. I was sitting in a conference at 2.14 pm—I thank my hon. Friend the Member for Bootle (Peter Dowd) for reminding me of the time—with two Tory Ministers talking to us in north Wales about rebalancing the economy when I received a missive, not from a Minister or the Government but from a civil servant telling me that 350 people in my constituency in Wrexham would be made redundant or transferred from north Wales to Liverpool, where they would be in hot competition with individuals from Bootle trying to find jobs. I was told by email what the Conservative Government think of north Wales.
Never has there been a sharper contrast between rhetoric and reality. This Government supposedly talk about rebalancing the economy. Other colleagues in the Chamber have made the point that the sites identified and set out in the letter that was sent to us do not yet exist. This was an ideal opportunity for the Government to take a sensible approach to rebalancing the economy with taxpayers’ money, by shifting jobs out of areas that are economically successful and expensive, such as London or Cardiff, to other areas, such as north Wales. In Wrexham there are places available to house highly skilled workers providing a first class service in a new online age. The House need not take my word for it. We have in Wrexham high quality service companies such as Moneypenny, which provides virtual office services, and DTCC Avox, which provides company search facilities not just within the UK, but right across the world. They are expanding and bringing jobs to Wrexham in order to be more competitive.
This Government do not know their backside from their elbow. They do not recognise that already we have 350 highly skilled people in Wrexham who are doing an excellent job. In addition, we have people in the local economy who have been identified by the private sector as being particularly skilled at providing exactly the services that this Government or any Government need to bring in more money to eliminate the deficit that the Minister told us in 2010 would be gone by today but is still there because of the economic incompetence of the Tory party.
Philip Davies
The hon. Gentleman made the point, as did the hon. Member for Bootle (Peter Dowd), that the sites were not known yet. A site is already available in the Bradford district that HMRC could move to, whereas in Leeds there is no identified site yet. Does the hon. Gentleman agree that it is very bad negotiation for the Government to say that they are going to go to a particular place without a site, because if they do identify a site the landowner will have them over a barrel when the negotiations take place?
Ian C. Lucas
I am grateful to the hon. Gentleman, and I commend him—which, I think, is a first in the 14 years I have been here—for his excellent speech. The points that he made mirrored many of the points I have been making and intend to make. It makes no sense whatsoever for the Government to approach the issue in the way they have.
I shall speak specifically about Wrexham because I am here to represent my constituents. It is incredible that the only HMRC service in Wales will be in Cardiff city centre. Cardiff city centre is boom town. The announcement from HMRC was followed last week by the BBC announcing the creation of its new centre for Wales in Cardiff city centre, so HMRC had better hurry up and find a site or there will be no room left in Cardiff.
The Minister is a reasonable man. I find it incredible that he has been in the Treasury since 2010, because he is a reasonable man. I ask him please to look at the announcement again. I mean it seriously. I cannot understand the rationale for the announcement economically, politically, intellectually or in any sense. He should listen to the sensible debate. I am grateful to the SNP for bringing the topic to the Floor of the House and I will certainly support the motion today.
We desperately need a fundamental rethink, because the Government are talking about our money—our money, taking jobs away from a place like Bootle! They should be using public money to support economic development in the parts of our country that need it most. That is common sense, I say to the hon. Member for Taunton Deane (Rebecca Pow). I ran my own business, and if I did it pursuing policies like this, I would have been bankrupt before I started.
Damian Hinds
I will in a moment come to the point that the hon. Gentleman is shouting out from his seat. The average age of employees in the organisation is late 40s or early 50s, and this is a 10-year plan, so compulsory redundancy should be a last resort.
What counts as reasonable travel time will depend on the circumstances of the individual and will include consideration of factors such as caring responsibilities, which is one reason for providing the opportunity of one-to-one discussions, quite rightly, with all employees. Typically, reasonable travel time is taken to mean around an hour, but that does not mean that that is correct for everybody in every circumstance in every location.
A number of hon. Members, including the hon. Members for Middlesbrough (Andy McDonald) and for Bootle (Peter Dowd), my hon. Friend the Member for Shipley (Philip Davies) and the hon. Member for Wrexham (Ian C. Lucas), complained about the manner in which the announcement came out. I make no apology for the fact that the staff were told first. On the day of the announcement, the entire HMRC senior team was out in the field at those office locations to carry out face-to-face discussions with staff. The direction of travel had been shared with staff 18 months earlier, and in the intervening time some 2,000 events had been held up and down the country to discuss the changes. In terms of contact with MPs, I can confirm that HMRC will be happy to discuss the situation with them.
Damian Hinds
If the hon. Gentleman will forgive me, I will not, because of the time.
I want to respond to the specific points that hon. Members have rightly raised about their constituencies. On Shipley and Bradford, my hon. Friend the Financial Secretary has agreed to meet Bradford MPs, as they know. The chief executives of HMRC and of Bradford’s local authority are also due to meet to discuss the issue. We have heard about Chatham and Chelmsford. I should explain that they are both two-stage programmes with a transitional arrangement in place for three or four years at Maidstone and Southend respectively. The hon. Member for Bootle raised the question of not knowing exactly where in Liverpool the regional centre would be. This programme stretches over a number of years, and it is right that as an organisation goes into a commercial negotiation over premises, it does not identify the exact location it has in mind because, as was mentioned in the debate, that would put up the price that was asked.
I want to reassure the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) that HMRC is very conscious of the importance of the Welsh language service and intends there to be no denigration of service to Welsh speakers as a result of these changes. I want also to reassure colleagues from Northern Ireland that we expect the number of staff in Northern Ireland to go up at the end of this period, rather than down. HMRC absolutely recognises the unique issues in the Province.
The Scotland-specific proposals will see the opening of two regional centres, in Glasgow and Edinburgh. In addition, a specialist crime centre will be maintained in Gartcosh. Although discussions with individual employees are ongoing, HMRC’s presence in Scotland will remain consistent, at 12% of its total workforce as against only 8% of the UK’s population. To respond to the hon. Member for Dundee West (Chris Law), the 600 jobs at Sidlaw House will move to the Department for Work and Pensions, while we will do everything to find alternative options working one-to-one with those at Caledonian House who are outside reasonable travel times for the new regional centre.
Tax Credits
Ian C. Lucas Excerpts(8 years, 8 months ago)
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Greg Hands
I am not going to give way. I thank my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who told us:
“This is the time to do it”.
Finance (No. 2) Bill
Ian C. Lucas Excerpts(9 years, 3 months ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
Before speaking to clauses 66 and 67 and new clause 1, may I first say what a great pleasure it is to serve under your chairmanship, Dame Dawn? This is the last of a great number of Finance Bills in which you have played one role or another, and I have had the privilege of serving with you on a number of those occasions. This is the last afternoon on which you will be dealing with tax matters, having done so for an unconscionably long period, so I thank you for all that you have done over many years and for your service as Deputy Speaker and wish you a very happy retirement.
Clauses 66 and 67 set out the Bill’s provisions on VAT. Clause 66 refunds VAT to charities involved in co-ordinated search and rescue operations, air ambulance charities, hospice charities and blood bike medical courier charities. Clause 67 refunds the same levels of VAT to the strategic highways company—from 1 April it will take over the functions of the Highways Agency—as are paid to the Highways Agency itself. It is largely a tidying-up matter.
It is worth pointing out that refunding VAT will benefit around 400 charities that work alongside the emergency services, provide palliative care to terminally ill patients or support the national health service. The Hospice of St Francis in Berkhamsted in my constituency is very appreciative of the measure and thinks that it will make a significant difference to the service it can provide to my constituents in South West Hertfordshire. I suspect that clauses 66 and 67 will not cause great controversy in Committee, but I will of course be happy to take any questions on them.
Ian Lucas (Wrexham) (Lab)
I am sure that we all welcome the clauses relating to VAT relief for hospices, which do such a tremendous job. Can the Financial Secretary help me by explaining how charities are selected and how VAT exemptions are secured? I have previously raised the case of a charity dealing with disabled people in Wrexham that provides transport services, which are subject to VAT under the current arrangements. The process of securing exemptions seems easier for ski lifts, for example, than for disabled people in my constituency, so I would be interested to find out how on earth one secures exemptions for worthy charities.
Mr Gauke
I have heard the hon. Gentleman make both points in the past, and if I remember correctly, I responded to an Adjournment debate on those matters. There are significant benefits in our tax system for charities, but the Government look at cases partly depending on the demands on the public finances and what is affordable. We have looked in particular at hospices. There is a particularly strong case there, and to some extent they are put at a disadvantage compared with parts of the NHS because of the irrecoverable VAT that they pay. This is a matter that any Government would keep under review. I am sure that the hon. Gentleman, as a persistent Member, will raise the matter again if he has the opportunity to do so in future.
In new clause 1, the Opposition ask us to publish a report on the impact of the increase in the standard rate of VAT in 2010. No doubt, the hon. Member for Birmingham, Ladywood (Shabana Mahmood) will set out her thinking on that, but let me make a pre-emptive strike, if the Prime Minister has not already done so. Before I turn to the details and the imposition of VAT in 2010, I shall briefly set out the context for that decision.
Let us be clear that we increased the standard rate of VAT in 2010 as a consequence of the mess that the Opposition left the public finances in and the fact that, although the previous Government had left a mess, they had not left behind a plan to clear it up. Of course, a tax impact information note was published by HM Revenue and Customs at the time of the June 2010 Budget, but let us look at the situation that we inherited. At that time, the independent Office for Budget Responsibility’s pre-Budget 2010 forecast revealed that the structural deficit—the part of the deficit that will not go away with the recovery—was higher than previously thought: around £9 billion or 0.6% of GDP higher in 2010-11. Debt repayments were forecast to reach more than £67 billion by 2014-15, more than was spent on defence or on schools in England. The UK had one of the highest deficits of any advanced economy, so this Government had to take urgent action to eliminate the bulk of the structural deficit, which is a necessary precondition for sustained economic growth.
Mr Gauke
I will turn to that question in a moment, but before I do so, I shall say a little about this Government’s record.
High public debt can lead to a loss of market confidence and higher market interest rates, raising the cost of borrowing for families and businesses and discouraging investment and consumer spending. So what has our long-term economic plan delivered? Today public sector net borrowing as a percentage of GDP is forecast to have halved between 2009-10 and 2014-15. Latest data from the IMF show that this Government also reduced the structural deficit by more than half between 2010 and 2013. In fact, the UK’s structural deficit fell by 4.6% of GDP over 2010 to 2013—a larger reduction than any other country in the G7.
Since the autumn statement last year, the UK’s fiscal position has improved right across the forecast period, with higher receipts and lower debt interest. This Government have restored stability, put the public finances on a sustainable path and are about to put public sector net debt on to a declining path as a share of GDP.
Mr Gauke
Let me make a little more progress.
The previous Government failed to take decisive action to get our country moving again. Our record speaks for itself. Employment is now at its highest ever level. Economic growth is now firmly in place and at the Budget the OBR revised up its forecasts. The UK economy is forecast to grow by 2.5% in 2015, 2.3% in 2016, 2.3% in 2017, rising to 2.4% in 2019.
Mr Gauke
We must not forget that Labour will put up gun licences—that is also on the list.
I note that the shadow Secretary of State for Work and Pensions, the hon. Member for Leeds West (Rachel Reeves), announced yesterday that she will “abolish the bedroom tax” and use the savings for something else. I am not sure that I understand how there can be savings from that measure.
Mr Gauke
What I have said is consistent with what the Chancellor has said again and again. Our plans do not require us to increase taxes for hard-working people, which is why we can rule out putting up VAT—[Interruption]—or extending it. The point the hon. Gentleman must answer is that his plans require taxes or borrowing to go up. He wants to ask hard questions about filling in fiscal black holes by raising taxes. They are questions for Labour Front Benchers, not for me, because our plans clearly do not need it.
Shabana Mahmood
If the hon. Gentleman gives me a few minutes, I shall get on to that point very shortly. He will understand that the past performance and form of the people who sit opposite me today, the Conservatives, is the clearest and surest indicator. Unfunded tax cuts have already been promised and spending plans have been made that require a Government to cut further and faster in the early part of the next Parliament than they have in this Parliament, and that is the clearest indication we can get. They can do nothing else but put up VAT; that is their tax of choice when it comes to raising the tax revenues they are looking for.
As I have said, the independent Institute for Fiscal Studies has said that the Government’s Budget plans mean that spending cuts after the election will be twice as deep as anything seen in the past five years. The cuts will go deeper and be made faster in the early part of the next Parliament than we have seen during the past five years. In reality, that will translate into extreme cuts to our crucial front-line public services, such as the police, defence and social care. The cuts will be so deep that they will be almost impossible to achieve, first, without putting the NHS at risk, and secondly, without making a further rise in VAT on the Tories’ watch simply inevitable.
Not only do the choices that the Government, and the Conservatives in particular, have made about spending and deficit reduction make such a VAT rise inevitable, regardless of the Prime Minister’s bluster today they are ingrained in their collective DNA. Before the 1979 general election, the then shadow Chancellor Geoffrey Howe said:
“We have absolutely no intention of doubling VAT.”
He specifically talked about doubling it. In his first Budget, however, he raised VAT from 8% to 15%. Conservative Members may take comfort from the fact that eight times two is 16, not 15, but they should not be proud of a seven percentage points rise in VAT or show off about its not being the eight percentage points rise that it might have been, given that such a rise had been absolutely ruled out and that there was no intention to double VAT. [Interruption.] Such a point brought no comfort to people who ended up paying the 15% rate of VAT, despite what the Financial Secretary, who is chuntering from a sedentary position, seems to think.
In 1991, Chancellor Norman Lamont increased VAT from 15% to 17.5%, claiming that his approach was “consistent” with the “strategy for tax reform” first set out by Geoffrey Howe in the 1979 Budget. Chancellor Lamont was correct that the approach was consistent: it was consistent with the approach of raising VAT rather than doing anything else. It seems that that approach may have slipped his mind, because just a year later, before the 1992 general election, Norman Lamont told Parliament that he
“again made it clear that the United Kingdom has no intention of changing our VAT rate.”—[Official Report, 13 June 1991; Vol. 192, c. 627W.]
That promise was reiterated by the former Prime Minister John Major, when he promised Parliament:
“There will be no VAT increase. Unlike the Labour party, we have published our spending plans and there is no need for us to raise VAT to meet them.”—[Official Report, 28 January 1992; Vol. 202, c. 808.]
He also said that year that he had
“no plans and no need to raise extra resources from value-added tax.”
The arguments then are almost exactly same as those we are hearing now.
Will Government Members remind us what happened after the 1992 election? There are no takers, because they know the answer: the Conservatives remember their consistent approach to raising VAT. The then Chancellor introduced VAT on domestic heating and fuel in the 1993 Budget, phasing it in at 8% from 1994. When he became Chancellor in 1993, the right hon. and learned Member for Rushcliffe (Mr Clarke) refused to reverse that increase saying that
“no one is going to die from VAT on heating.”
That is a very bad way of making a point, because people have in fact ended up dying from the cold. We know that people, the elderly in particular, often have to choose between heating their home and eating. Had it not been for a Labour defeat in the House of Commons, under the Conservatives we would have seen VAT on electricity and gas bills increase to 17.5% in April 1995.
Twenty years later we find ourselves listening to a familiar story. Before the last general election, the Prime Minister, the then Leader of the Opposition, said:
“We have no plans to put up VAT, it’s not part of our plans.”
I like the double emphasis: say it twice, and that might make it true. The Chancellor, the then Shadow Chancellor, said:
“The plans we set out involved around 80 per cent of the work coming from spending restraint”—
cuts—
“and about 20 per cent from tax increases. The tax increases are already in place, the plans do not involve an increase in VAT.”
So such a rise was ruled out by the Prime Minister and by the Chancellor when they were in opposition. However, just weeks after taking office, like all the former Conservative Chancellors before him, the current Chancellor increased VAT to achieve his plans of 20% consolidation coming from tax increases and 80% coming from spending cuts. He said:
“To achieve that additional tightening while maintaining the right ‘four-to-one’ balance between spending and taxation means that I have to announce further tax rises today. On 4 January next year, the main rate of VAT will rise from 17.5% to 20%.”—[Official Report, 22 June 2010; Vol. 512, c. 177.]
There is no doubt that such a rise has hit family budgets hard. Despite knowing that that would happen, and that there would be a huge impact on the economy as a whole, the Chancellor chose to do what every Conservative Chancellor has always chosen to do—put up VAT. That is why we can say so emphatically—I say this to Liberal Democrat Members in particular—that if the Tories are elected at the general election in just a few weeks’ time, they will do it again. It is in their collective DNA, and ruling it out but then doing it is precisely what they have form on. That is their history, and I believe that they will honour their history if they are elected.
Analysis produced by the Treasury in July 2010 showed the estimated impact of a one percentage point rise in the standard rate of VAT. That analysis means that we know, for instance, that in the past four years the Government’s VAT rise has cost a single pensioner £500, a one-parent family £900, a pensioner couple £1,100 and a couple with children £1,800.
Ian Lucas
I do not want my hon. Friend to be too charitable to the Chancellor of the Exchequer, so may I remind her that in addition to the 2010 increase in the standard rate of VAT, the Chancellor made proposals in 2012, in the middle of his disastrous economic policy, to extend VAT through the pasty tax and the caravan tax? Not only did he increase VAT in 2010, but he went back to the well in 2012 when the policy was collapsing.
Shabana Mahmood
I was just about to make exactly that point. My hon. Friend is absolutely right that in 2012, having already done what all Conservative Chancellors do and put up VAT, the Chancellor sought to expand it by applying it to pasties and caravans in the so-called omnishambles Budget. I have always thought that it was a bit of a shame that that term from “The Thick of It” was used, because if the sequence of events that unfolded following that Budget had been presented to the scriptwriters of “The Thick of It”, they would not have touched it. They would have said that even for “The Thick of It” it was an unbelievable series of events. Yet that is what the Chancellor delivered. My hon. Friend is absolutely right that the Chancellor tried to expand the scope of VAT, yet today the Conservatives wonder why nobody will believe what the Prime Minister said at Prime Minister’s questions.
We do not have to go back over the past 20 or 30 years. We can just look at the record of the current Chancellor and Prime Minister on VAT. They like to put it up, and they sought to expand its application. I noticed that earlier the Financial Secretary appeared to rule out an expansion of VAT, but I was not entirely sure whether he had done that deliberately. Will he intervene on me to confirm that not only will VAT not go up—that is according to the Prime Minister, although I do not believe it—but it will not be expanded? I wonder why the Financial Secretary is not biting my arm off to intervene and confirm that.
Ian Lucas
It is a pleasure to speak under your chairmanship, Mr Hood. I want to say first how much my hon. Friend the Member for Edmonton (Mr Love), who is no longer in his place, has been valued in our economic debates. His contribution will be missed, and we all wish him well for the future.
The new clause is eminently reasonable, and it should not be a matter of dispute between the parties in the House that such a report would make a valuable contribution to any decision the Government take on VAT. We have had an interesting day on VAT because it was raised in Prime Minister’s questions. As hon. Members know—certainly the Minister will know—VAT is a subject in which I have an interest. Throughout this Parliament, I have pressed not just the Government Front-Bench team but the Labour Front-Bench team on the issue of VAT.
The Prime Minister is an honourable man. He has made a commitment from the Dispatch Box today that is different from the position outlined by the Chancellor of the Exchequer to the Treasury Select Committee only yesterday. I am interested to see the Treasury Minister nodding to confirm that there has, in fact, been a change in Government policy since yesterday. When I woke up this morning, I heard on the “Today” programme my hon. Friend the Member for Bassetlaw (John Mann) questioning the Chancellor on the issue of VAT. I heard the Chancellor set out the same mantra that there were no plans to extend VAT or increase its rate. My understanding of what the Prime Minister said today is that he has given a cast-iron guarantee—to use a phrase that the Prime Minister has used before—not to extend or increase the rate of VAT.
So the position has changed today, and it is a change that I welcome. For that reason, I think that the information requested under the new clause would be valuable. It is always better for us all to have more information about the impact of tax changes. We know, of course, that this Government introduced this tax change in June 2010 when they said that they would eliminate the deficit by 2015. The plan—the “long-term economic plan” then—was to eliminate it by 2015, and part of the plan was to increase the rate of VAT. It would be valuable to know what happened as a result of the raising of VAT in January 2011. In my constituency, people are under real financial pressure, and VAT affects all of us.
David Wright
When the Chancellor decided to increase VAT, he must have asked Treasury officials to produce projections on its likely impact on the economy at that point. It would be interesting, would it not, to compare the projections given to him by Treasury officials with an official report, which this new clause suggests should be commissioned, to see whether the two tally up?
Ian Lucas
Indeed. My hon. Friend has made a very valid point. I think that we should all be interested to know what was the impact of the last Tory-Liberal Democrat increase in VAT, which was introduced in January 2011, because it should inform future policy. It seems extraordinary to me that that should be resisted.
According to the Office for National Statistics, the median salary in my constituency, Wrexham, has fallen by 7.4% in the last year. The town centre is, unfortunately, populated—like many other town centres throughout the country—by too many empty shops, and part of the reason for the emptying of those shops over the past few years has been a decrease in consumer activity. What VAT does—and this is why I am passionate about VAT—is take money out of the pockets of consumers on the high street and send it straight to the Treasury. It has a massive impact on local businesses. Those of us who run local businesses and employ people want to ensure that we have the best and fairest type of tax system to develop local economies.
That is why I want to know the impact of the 2011 VAT increase. I think that the Minister is a reasonable man. I cannot for the life of me understand why he does not want to have that information, or, if he has that information, why he does not want to share it with the House.
We have made a lot of progress today. The Prime Minister has been dragged, kicking and screaming, to a point at which he has ruled out a VAT increase by the Conservatives in the next Parliament—if he is ever in a position to make such a decision. That is major progress. It is certainly a change, not just from the Prime Minister’s position earlier in the current Parliament, but from the position that the Chancellor outlined in his Budget statement last Wednesday, when he set out the spending and taxation plans that he expected to be implemented. Why did he not tell us that the Tories were going to rule out a VAT increase in the next Parliament? That is what amazes me. What has happened between last week and this week? What happened yesterday?
What has happened, in my view, is that because the Labour party, in opposition, made a commitment not to increase VAT in the next Parliament, Lynton has been on the blower. He has said. “We are under pressure, Dave. We are under pressure, Prime Minister. We have to match the commitment that the Labour party has made. You have to rule out a VAT increase in the next Parliament.” So that is why the Prime Minister made his statement at the Dispatch Box today—a statement that I welcomed.
History will judge whether that promise will be kept. We heard from my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) about the history of Conservative commitments on VAT: about what happens before elections, and about what happens after them. When I speak to my constituents over the next six weeks, I shall remind them of that record. I shall remind them of what the Conservative party and the Liberal Democrats said before 2010 and what they did afterwards, and I shall remind them of what this Chancellor tried to do in 2012 with the pasty tax and the caravan tax.
The tax of choice for the Conservative party is VAT. History tells us that. If the Conservatives want to increase taxes, they increase VAT. The country will have to judge whether the commitment that the Prime Minister has given today is one that will stand the test of time.
Sheila Gilmore
It is a pleasure to serve under your chairmanship, Mr Hood. I was also going to say that it was a pleasure to be in the company of so many Members who had participated in Finance Bill Committees during this Parliament, but one by one they have disappeared from the Chamber—even the hon. Member for Dover (Charlie Elphicke), who has been one of the most assiduous Committee members—which is a shame as I was looking forward to hearing the usually very robust views they express, when we are upstairs in Committee at least. Presumably they have something else on their mind today.
The period we are in, which spans one VAT increase to possibly another, is a very interesting one. One of the things that the Government are trying to say—interestingly, some of the other parties are trying to say the same—is that there is no difference between the policies of the Government and the Opposition and that we would all have to make the same decisions. However, the Institute for Fiscal Studies has clearly stated that there is a huge difference between the forward plans of the Government and those of the Opposition. Our policies involve a different attitude towards spending cuts and tax increases in order to reduce the deficit over a period. That is what we said back in 2010; we were clear that we would be following a different pathway. We were not deficit deniers, as was sometimes suggested, but we were clear that we had a different view on how this could best be handled and that there would therefore be fairness in our measures. That remains the case because, prior to the Budget, the IFS said that, given our forward plans and taxation proposals, in contrast to the £55 billion of spending cuts the Conservatives would have to find, the Labour Opposition would be looking to make only £4 billion of spending cuts. More recently the IFS has said that in order to carry out our plans we would not need to make any further spending cuts in the forthcoming Government. So that is a very big difference in our policies. From that point of view, we are in a position to say not just that we would not increase VAT, but that we have a different and much fairer road to go down.
It is right for us to ask what the Government—whether the coalition or the Conservative party; it is not always clear—would be doing. Not only have they said that they need to find those spending cuts to carry out their deficit reduction proposals, but they have also suggested further tax reductions through the continued raising of the tax threshold. At no time since that announcement was made by the Prime Minister at the Conservative party conference has there been any clarity as to where that money would be coming from. So not only are they clearly tied to making substantial departmental spending cuts, but they have not shown us how they are going to close this financial gap. That is why people are saying, “We think it’s going to be VAT.” It is hard to tell where else it might come from. Of course, if it is coming from somewhere else, we would expect that to be said. So the Prime Minister stands up and says, “Oh no, we won’t be increasing VAT,” but the other half of that statement has not been made. We do not know how he is going to square this circle.
Tourism Industry and VAT
Ian C. Lucas Excerpts(9 years, 3 months ago)
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Albert Owen (Ynys Môn) (Lab)
It is a great pleasure to follow the hon. Member for Ceredigion (Mr Williams), who is a fellow Welshman. We are having this debate in Welsh tourist week, and we have had a very good week promoting the pleasures that people can experience when they come to Wales.
I pay tribute to the Cut Tourism VAT campaign group for its excellent campaign. If the Chancellor is minded to make an announcement tomorrow and follow suit with what we are asking for in this debate, it would be a lot to do with the long-term work of the Cut Tourism VAT campaign, and indeed, the cross-party support that it has received.
I am very much an opponent of VAT. I believe that, as a consumer tax, it is regressive and hits the poorest in our society, an argument that I shall develop later. I agreed with the Prime Minister when he said, as Leader of the Opposition only a few weeks before the last general election, that VAT was a regressive tax and that it has had negative implications for the economy. I have been consistent in my view and I believe that the rise in VAT in 2010 sucked oxygen out of the economy at a very difficult time and held sectors back, including tourism.
Ian Lucas (Wrexham) (Lab)
Does my hon. Friend agree that the temporary reduction in VAT that the Labour Government introduced in the previous Parliament was successful in creating the growth that this Chancellor inherited from that Labour Government?
Albert Owen
Yes, indeed; it was a brave step. [Interruption.] It is interesting that we are getting heckled from across the Chamber by people who voted to put VAT up previously, but are campaigning here today to cut it. We are not going to take any lessons from some Members here in the Chamber today. I believe, as does the hon. Member for Ceredigion, whom I congratulate on securing this debate, that cutting VAT would give a great example to the industry.
In the past few months, I have spent time in France and the Republic of Ireland, where I have seen our near neighbours benefit from a cut in value added tax.
Tax Avoidance (HSBC)
Ian C. Lucas Excerpts(9 years, 4 months ago)
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Mr Osborne
The hon. Gentleman says that that’s the Tory party, but, as it happens, I think my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is referring to the newspaper accounts of the Labour leader. I am not going to get drawn into that. Of course there is a difference in law between tax avoidance and tax evasion, although the shadow Chancellor managed to mess it up in the question he put today, but I have said as well that aggressive tax avoidance is something we also need to clamp down on and stop, and we have taken many actions to do so.
Tax Avoidance
Ian C. Lucas Excerpts(9 years, 4 months ago)
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Mr Gauke
Let me put it this way. It was, and is, the case that UK residents can have bank accounts in Switzerland without committing any illegal acts. It is also the case that a Swiss bank can provide banking services to a UK resident without committing any wrongdoing. It was the case, in terms of what was known at that time, that a disc was acquired by HMRC relating to HSBC accounts. The question that HMRC was asking was whether the UK residents whose names were listed within those data had paid the tax they should have. Were they declaring their income as required under UK law? That was what the investigation was about. [Interruption.] I am afraid that the hon. Member for Birmingham, Ladywood (Shabana Mahmood) is making a non-point. It was known that there was an investigation into HSBC account holders—that was in the public domain. However, regarding the evidence we have seen of, for example, bricks of cash being handed out and advice being given to keep several steps ahead of the taxman who is dealing with tax evasion, that information has come to light in the public domain—and, indeed, to Ministers—in the past few days.
Ian Lucas (Wrexham) (Lab)
If the information was in the public domain, will the Minister answer the question that the Prime Minister refused to answer four times today? Did the Prime Minister discuss these matters with Lord Green when he appointed him to the Government?
Mr Gauke
The position is this: Lord Green was appointed in January 2011 and at that point the information about the fact that there was an investigation into HSBC account holders was in the public domain. There was no big secret about that. Of course, I was not privy to the specific conversations that were held, but there is no suggestion that Lord Green had acted improperly, that he was complicit in tax evasion or that he was involved in this particular activity. That could not be clearer.
Mr Gauke
My hon. Friend makes an extremely good point, and the fact that some Opposition Members do not appear to agree with it is troubling. The role of the Government is to set out the policy. Our philosophy is clear: individuals and businesses must pay what they owe, just like the vast majority of UK taxpayers. That point has been reiterated by the Prime Minister and the Chancellor again and again. Aggressive tax planning and, indeed, tax evasion are simply not acceptable. As I will set out, this Government have a proud record on that front.
Ian Lucas
I agree with the point made by the hon. Member for Cities of London and Westminster (Mark Field), but let me come back to the question of what the Prime Minister discussed with Lord Green about the political matter of his appointment as a Minister, and these allegations. Why will the Prime Minister not tell us whether he had conversations with Lord Green about these matters?
Oral Answers to Questions
Ian C. Lucas Excerpts(9 years, 6 months ago)
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Danny Alexander
I was not aware of my hon. Friend’s shopping habits, but I am very glad to hear that he has been spending time with small businesses in his constituency.I can tell him that in the King’s Lynn and west Norfolk area there are 1,280 small businesses that will benefit from the £1,500 discount. That is something worth celebrating in his constituency, as it is across the country.
Ian Lucas (Wrexham) (Lab)
Does the Chief Secretary agree that a further rise in VAT would be a hammer blow to small businesses in Wrexham and across the country? Does he also know that a Labour Government have never increased VAT?
Danny Alexander
I am not sure that last fact is absolutely correct. The level of VAT we have at the moment I think is the right one for the country and I certainly would not advocate any further increases. The right measures for small businesses are the reductions in business rates that we have put in place, which I would hope the hon. Gentleman would welcome. The fundamental review of business rates that we are now undertaking is an opportunity for every Member of this House, and small business across the country, to make the argument on how they want this outdated and outmoded system to be reformed.
Autumn Statement
Ian C. Lucas Excerpts(9 years, 6 months ago)
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Mr Osborne
First, may I say that I know the Royal Shakespeare Company does a brilliant job? We were able to help it earlier this year with support for touring around the world. Such people are looking at the theatre tax break and at what they can do to use it. I hope that the orchestra tax break is of help to the Orchestra of the Swan, which my hon. Friend mentioned.
On savers, I have announced today that people can pass on their ISAs to their spouse tax free. That major step forward in the ISAs regime comes on top of the increase to £15,000 for the new ISA and, of course, the new freedoms on pensions.
Ian Lucas (Wrexham) (Lab)
One thing the Chancellor did deliver in 2010 was an increase in VAT. Can he explain the difference between his statement in 2010 that he had no plans to increase VAT and his statement last weekend that he has no plans to increase VAT?
Mr Osborne
The plans that I have set out involve spending reductions and welfare reductions. By the way, the Labour party is the first to attack me for them. People have seen the decisions and the approach that we have taken on spending. We will go on reducing spending and reducing welfare, and we do not need tax increases.
As I remarked in my exchange with the right hon. Member for Edinburgh South West (Mr Darling), the previous Labour Chancellor planned to increase VAT after the general election—he put that in his memoirs—and those of us who were in that Parliament will remember that the Labour Treasury produced, by mistake, a document that said VAT would go up, which caused the Government great embarrassment at the time. As I say, our plans involve spending reductions and welfare reductions, and that is what we are committed to do.
The Economy
Ian C. Lucas Excerpts(9 years, 7 months ago)
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Chris Leslie
Government Members want to airbrush the fact that there was a banking crisis, and a global banking crisis—[Interruption.] They do not like the fact that there was a banking crisis. They want to pretend that it was everybody else’s fault—there they go again.
I must tell the hon. Member for Halesowen and Rowley Regis (James Morris) that he has been in government—perhaps he has not been a Minister, but he has supported the Government—for nearly five years. The Government must start taking some responsibility for the state of the economy.
Ian Lucas (Wrexham) (Lab)
On living standards, in Wrexham median weekly earnings have fallen by 7.4% in the past year. The Government show a complete lack of comprehension of my constituents’ lives. For as long as they continue to do that, they will not even begin to address this country’s fundamental economic problem.
Chris Leslie
It is the complacency from those on the Government Benches that will, I think, shock our constituents most of all.
Only last week, the Deputy Prime Minister said in questions that “the economy is fixed”. How out of touch are Ministers in this Government, whether they are Liberal Democrats or Tories?
Chris Leslie
I do not know where the hon. Gentleman has been, but did he not see the headlines in all the newspapers about the results of the annual survey on hourly earnings that the Office for National Statistics published last week? According to the ONS, the average weekly pay of full-time workers went up by just £1 between 2012 and 2013. That is a rise of just 0.1%, far below the rate of inflation. Prices continue to rise, but pay, wages and earnings do not keep pace with them. Government Members may not realise that. In the world that they inhabit, life is sweet—everything is fine in the world that they inhabit—but for most of our constituents, times are tough and life is getting harder.
Chris Leslie
This may even be the worst situation since the 1870s. Perhaps we should ask the House of Commons Library to go back in history, and tell us how bad things were in the 19th century.
I have set out our priorities for the autumn statement. However, we do not just need a strong economy to ensure that everyone gets a piece of the action; we need a strong and sustained economy to deliver strong and sustained public finances, which is why the autumn statement also needs a plan to balance the nation’s books in a fair way.
When will Ministers realise that the health of our economy shapes the health of our public finances? During the first seven months of this year, borrowing has been £3.7 billion higher than it was during the same period last year. Why? The Office for Budget Responsibility itself says that stagnant wages and all those low-paid jobs are keeping tax revenues down. The Chancellor has to realise that a low-wage, low-productivity economy will not deliver the goods. The OBR is predicting that growth will slow down next year, and yesterday the OECD cut its growth forecast for this year and next year.
The deficit has not been tackled effectively, and not just because of falling revenues. The Government like to sound tough on welfare inflation, but they do nothing to tackle the underlying causes of it. The Department for Work and Pensions has overspent by £25 billion since 2010. Let me give the House a few examples of where it has gone awry. It has spent £5 billion more than it planned to spend on tax credits during the current Parliament, because of the failure to tackle rising levels of low pay and insecurity. The number of working people—working people!—who are claiming housing benefit has risen by 50% since 2010 and is set to double by 2018, which will cost nearly £13 billion.
Whether the underlying issue is low pay, rising rents or the 700,000 young people who are in long-term unemployment, the Government have produced no serious, structural response. For them, tackling the deficit means little more than lopping off a fixed percentage from every departmental expenditure limit in each 12-month cycle. We need an economy that delivers higher-quality jobs, decent living standards, and robust and sustained growth, as well as tough decisions on spending and tax.
The Chancellor of the Exchequer caved in too easily to the lobbying of his friends who pushed him for that £3 billion a year tax cut for the top 1% who are earning over £150,000 a year. They must have been pestering him—“Give us that tax cut!”—and he did not have the will power just to say no. Instead, he piled higher VAT and cuts in tax credits on to millions of working people, because he did not mind that so much. I am afraid that a fairer plan for reducing the deficit must mean reversing the huge tax giveaway for millionaires—
Priti Patel
My hon. Friend is absolutely right and this brings us back to the heart of this debate. It is about having a long-term economic plan that is tackling the challenges for our economy left by the former Government, while also looking ahead to the future and making sure we have a plan in place.
Priti Patel
The hon. Gentleman will recognise that had it not been for Labour’s great recession, living standards in this country would be much higher. Thanks to our economic plan and policies, we are now seeing booming inward investment, often by more than the rest of the EU combined, with all the main sectors of the economy growing. A growing economy, a falling deficit, record numbers in work: those are the economic facts that Opposition Members seem to want to deny. They want to continue to scaremonger and misrepresent the economic reality. We said we would get the deficit down, and the deficit has come down. We said we would recover the economy, and recovery is taking place. The Opposition predicted that 1 million people would lose their jobs, but 1.7 million jobs have been created.
It would not be realistic to pretend that the job is done, however, or that the situation is perfect. We know it is not, and that is a result of Labour’s great recession, but I am sure that all Members will agree that responsible government means being straight with the public about the economic situation we are in.
EU Budget (Surcharge)
Ian C. Lucas Excerpts(9 years, 7 months ago)
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Mr Osborne
My hon. Friend is right. Part of the reform we seek in Europe is reform to make sure that the money that British taxpayers pay is well spent. Indeed, we want to make sure that the money of all European citizens is well spent in Europe. He is absolutely right that the only way to get that reform is with a Conservative Government, and then the British people can decide in a referendum.
Ian Lucas (Wrexham) (Lab)
Will the Chancellor name one European Commission official who asserted to him, or will he release correspondence from the European Commission indicating, that the rebate did not apply in this case?
Mr Osborne
As I have already said, the rebate and its size were only confirmed to us by the European Commission—by the vice-president for the budget—last Thursday night.