(10 years, 5 months ago)
Commons ChamberI am well aware that my hon. Friend enjoys a glass of wine. It is clearly good news for the wine industry that taxes will be frozen.
Players at Beacon Bingo in Redcar—they had to endure my calling the numbers a few weeks ago as part of the Boost Bingo campaign—will be delighted not only that their campaign to cut the duty from 20% to 15% has been successful, but that the Chancellor has gone further by cutting it to 10%. Bingo is a harmless social form of gambling and, from having talked to many players that day, it seems to me exactly the kind of thing that we should not penalise too heavily, as opposed to the high-stakes fixed odds betting terminals visited on us by the Labour party. I totally support the rise in taxes on those machines, of which we would like to see less.
I have a race course in my constituency and have campaigned in this House for the past three years for offshore bookmakers to be charged the betting levy. I am delighted to see that that is in today’s Budget. It will be a huge boost to the racing industry.
Other speakers have mentioned the measures on savings and annuities. I will not say much on those, except that the measures on annuities will be warmly welcomed. I receive a lot of correspondence from constituents who feel locked into products that have a very poor return. In some cases, they are not able to draw down the amounts that they want. Loosening all that is the right thing to do. As the Chancellor said, people should be able to access their own money. I welcome the safeguards in the small print to avoid people spending all their money and becoming dependent on the state. There is a threshold in the detail.
There is a lot of manufacturing in my constituency. We must remember that manufacturing supports many of the service industries. If one looks at the classification of industries, one will see that industries such as logistics exist mainly because of manufacturing. Those who say that the manufacturing industry is only a small part of the economy forget all the service industries that depend on it. The previous Government had a shameful record on manufacturing. It halved as a proportion of the economy and my constituency felt that particularly badly. I am pleased to see the growth that is happening.
I am pleased about the measures on energy-intensive industries. My constituency has not only a steel industry, but a large chemical complex. The employers will welcome those moves. I also welcome the moves on combined heat and power plants, which are relevant to my constituency. All those measures will help Britain to be more competitive and they are certainly needed.
We worry about the amount of money that sits on companies’ balance sheets and is not invested, so we should all welcome the increase in capital allowances. They were raised from £25,000 two years ago to £250,000 and are now being increased to £500,000. That is a huge incentive for people to invest in new equipment, plant and facilities. I have a special reason for welcoming the £60 million for new technology to support carbon capture, which is mentioned in the Red Book, because it is extremely relevant to my constituency.
The Lib Dems used to pride themselves on their green policies, so I wonder whether the hon. Gentleman is equally happy that the Government are hell-bent on getting every last drop of oil out of the ground, as the Chancellor said? While I am at it, does he agree that, although the £140 million for repairing flood defences is welcome, it is well short of the £500 million that we need?
I am disappointed that, having given way to the hon. Lady, she took quite a lot of my time. I will see her outside the Chamber with the answers to those questions.
There are many further measures in the Red Book on corporate tax avoidance, about which the Chancellor did not go into detail. It is good to see that further steps are being taken on electronic services and the shifting of profits. There is more to do, but there are some good things in the Red Book about that.
I was interested to hear what the Labour party had to say. I must say that I was hoping for a lot more. We heard about the bankers bonus tax—the gift that keeps on giving. I was thinking about this the other day. If the Labour party wants to put income tax up to 50% and to tax bank bonuses at 50%, I have news for it: 50 plus 50 is 100. How many banks will keep on paying bonuses if the entire amount goes to a future Labour Government? They will find different ways to reward their staff, as they already are doing.
That policy does not hang together at all, and neither does the electricity price freeze, which is criticised by everybody, from large energy companies down to organisations such as uSwitch and Age Concern, for being completely impractical. I was at an event last week about the price freeze, where even a Labour shadow Energy Minister failed to defend it. I think that we will hear the end of that one quite soon.
The hon. Member for Halton (Derek Twigg) spoke about social housing, but made no apology for the fall of 421,000 homes under the Labour Government—a truly shocking record.
The right hon. Member for Newcastle upon Tyne East (Mr Brown), who is not in his place, made some powerful points about inequality. I was listening very carefully. I do not necessarily understand how it is calculated, but the Red Book states that
“inequality is at its lowest level since 1986.”
That is because we are taxing people with the broadest shoulders, despite what the Opposition claim. I know that we have a long way to go, particularly in my area in the north-east, which has stubbornly high unemployment and many social issues.
I welcome the child care credit and, in particular, the 85% for people who are on universal credit. That will certainly help people get into work.
Overall, this is a Budget for a stronger economy and a fairer society, and I commend it to the House.
(10 years, 7 months ago)
Commons ChamberI absolutely agree. I look forward to the speeches of other hon. Members who have stayed late on this Thursday to hear more about other regions. I know that my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) is likely to talk about the south-west.
I congratulate the hon. Gentleman on securing this important debate. With hon. Members piling in to put their own inter-city and other rail services on the table, may I make a plea for the Brighton main line? We need more capacity, with a second line from Brighton to London so commuters do not get stuck in Brighton, as they do on the many occasions when that line is not operating.
I thank the hon. Lady. I am sure the Minister is logging the various bids that are being made.
My area of the north-east has good journey times to London, but very poor journey times to other places. Is it right that it takes longer to get from Darlington to Manchester on a single train than it takes to get to London? The Secretary of State for Business, Innovation and Skills was stunned recently when he discovered how long he had to spend on the train when travelling from Liverpool to Darlington. Ironically, he was making the trip to be present at the inauguration of the new inter-city train factory at Newton Aycliffe, which is hugely welcome in my part of the world.
Rail investment is not just about passengers, but about freight, as the hon. Member for Luton North (Kelvin Hopkins) mentioned. It was good to see the recent but long-overdue investment by the Government to enable modern-sized containers landing at Teesport to join the east coast main line. However, a large modern port needs good connections to a wide hinterland and, again, the cross-country links are very poor. If such a container was destined for Preston, which is less than 100 miles away, it would have to go via Birmingham, so poor are the trans-Pennine links.
(11 years, 7 months ago)
Commons ChamberI thank the hon. Gentleman for that intervention. I totally agree with him. The idea that large companies see their tax payments as voluntary, or as some kind of contribution they feel like making, is completely out of order. I will discuss the competition aspects later.
The hon. Gentleman is making a compelling argument about how tax avoidance has grown in recent years. By 2015, the number of staff employed by Her Majesty’s Revenue and Customs will have fallen by 40,000 since 2005. Does he agree that this apparent bid to save money is entirely counter-productive, given that if we had those members of staff at HMRC we would be much more likely to be able to crack down on avoidance?
The hon. Lady makes a powerful point. I will say more about that later, but I agree with her that we need more resource in the whole area of enforcement.
I was talking about my experience and how we would never have set up legal entities in countries just to avoid tax. Now, News International has more than 150 companies in tax havens. Transfer pricing, management fees, royalties, patent, copyright and interest payments are all ways to move money. The moving of whole businesses and headquarters to new jurisdictions is also becoming much more common.
Let us remember that companies that are prepared to go to elaborate lengths to avoid corporation tax may seek to avoid other taxes, too. If the BBC was making wide use of tax-avoiding personal service contracts for staff, we can be sure that some private sector companies are doing so, too. At a recent Public Accounts Committee hearing, Amazon told me that it raises UK VAT and pays it to the taxman, but it is a Luxembourg company; it also claimed that it did not even know the value of its sales to the UK. Someone wrote to me after the hearing confirming that they could not get a VAT invoice for their new iPad, bought for business purposes. Amazon said that
“we are unable to provide a VAT number as we are registered overseas”.
I thank my hon. Friend for the intervention. I am not familiar enough with how such a rule would be structured, but the idea would certainly be helpful.
May I suggest that all Members look at the private Member’s Bill introduced by the right hon. Member for Oldham West and Royton (Mr Meacher)? The Bill refers to the importance of a general avoidance principle rather than rules. The problem with rules is that people can bend them and get round them. A general avoidance principle is much harder to get round and has much wider scope. That is the route the Government should be taking.
(13 years, 1 month ago)
Commons ChamberI am pleased to speak in support of amendment 12, because the House needs much more detail from the Government on the impact of a carbon floor price, including possible unintended consequences.
First, however, let me say a few words about amendment 21. Although I have a great deal of sympathy with some of the comments made about the amendment, we need to be reasonable when looking at the impacts of the sort of floor price we are talking about on energy-intensive industries. I am quite sure that some parts within those industries will face real problems, and it is right to look at measures such as border tax adjustment so that they are not put at a competitive disadvantage.
Let us not forget, however, that the EU has already exempted large numbers of energy-intensive industries from paying for the EU permits under the emissions trading scheme. Let us not forget that not all energy-intensive industries are subject to carbon leakage. Some undoubtedly are, and we certainly need elements of mitigation for them, but some can quite easily raise their prices and pass them on. Let us not forget that what we are trying to do is to put a price on carbon. That is the purpose of the whole exercise. Yes, we need to look at mitigating measures, where necessary, but let us not throw the baby out with the bathwater and lose the purpose of the exercise, which is to shift to a greener economy. Let us not forget that research by the university of Cambridge and others has found no empirical evidence to show that more ambitious climate policies will result in mass relocation of industries out of the EU.
I respect the hon. Lady’s expertise on these issues. Can she give examples of energy-intensive industries that she feels are at no risk of carbon leakage?
What I can say is that I have been in the European Parliament, that representatives of industries have told us time and again that the latest EU environmental law will lead to mass relocation from Europe, and that plenty of studies have shown that that has not happened. I accept that many energy-intensive companies will face problems that will need to be mitigated, but, according to those studies, the risk of relocation is far lower than has been suggested.
I will not give way again, because I want to talk about amendment 12, which I have tabled.
I agree that an effective carbon price mechanism has the potential to reduce greenhouse gas emissions from electricity power, mainly by increasing the carbon liability attached to energy use and thereby making energy efficiency measures and renewables more attractive. It also embodies the “polluter pays” principle, which, of course, I also support. I fear, however, that the proposed carbon floor price will not ensure that investment in energy generation is directed towards low-carbon technologies.
I hold that view for a number of reasons, including the fact that market-based solutions to direct investment in low-carbon generation have proved pretty weak in the past. For example, the EU emissions trading regime has so far failed to maintain the cost of pollution allowances at high enough levels to make any significant difference in reducing emissions. It is also true that, because the floor price will be subject to annual votes in Finance Bill debates such as this, it will fail to provide the price stability that is needed to boost certainty and security for investors in low-carbon energy sources. Furthermore, it can be difficult to judge the level at which a carbon floor price should be set to give appropriate incentives to the various technologies that the Government wish to support.
It is clear from those inherent weaknesses that a carbon floor price will maximise its potential to support a low-carbon economy only if any additional revenues that it raises are ring-fenced for use in support of that transition. That must include, in particular, energy efficiency measures for the fuel-poor. Many Members have raised that subject this evening. The Institute for Public Policy Research estimates that an additional 30,000 to 60,000 households could be pushed into fuel poverty in 2013 as a result of the carbon floor price because it will push up the cost of electricity.
It is therefore crucial for flanking measures to be introduced alongside a carbon floor price, including measures that will properly support and protect those in fuel poverty. They should include proper capitalisation of the green investment bank, support for the implementation of the green deal—for instance, ensuring that the “eco” element is increased considerably, given that it is the part directed at the fuel-poor—and, indeed, assisting in the development of innovative renewable energy technologies. Failure to ring-fence the revenue of the carbon floor price would mean missing a real opportunity to focus efforts on the technologies that will most quickly cut emissions from power generation.
Many other Members have reinforced the idea that the carbon floor price must not deliver windfall profits to the well-established nuclear industry, which has already been heavily publicly supported for many years. The Government’s own figures show that existing nuclear generators stand to gain £50 million a year from it until 2030. It is vital for the Government to clarify whether such a windfall constitutes the kind of subsidy for nuclear power that they have repeatedly said they will not provide. It looks very much like a subsidy to me, and it looks very much like a subsidy to the Chair of the Energy and Climate Change Committee, the hon. Member for South Suffolk (Mr Yeo), who has said that the Government should be upfront about the fact that it is a subsidy. He has also said that
“it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face.”
I hope that Ministers will benefit from his expertise, and will recognise that rigging the electricity markets simply to try to provide more support for nuclear generation is entirely wrong.