Finance (No. 2) Bill

James Murray Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I beg to move,

That this House declines to give a Second Reading to the Finance (No. 2) Bill because it derives from a Budget that failed to guarantee a pay rise for NHS workers after their unparalleled service over the last year; because it undermines the country’s economic recovery, targeting household finances by freezing income tax allowances before increasing the rate of corporation tax; because it does nothing to mitigate the effect on family finances of the sharp council tax rise in April; because it contains measures connected with a cut to social security later in the year; and because it fails to set out the ambitious plan for jobs and growth that is needed to help the country emerge strongly from the worst economic crisis of any major economy.

May I start by extending my deepest sympathies to Her Majesty the Queen and the royal family at this sad time? His Royal Highness the Duke of Edinburgh devoted his life to public service and, crucially, to his role as a supportive husband. My thoughts are particularly with the Queen as she mourns the loss of someone who has been at her side, or just behind her, for 73 years.

As this is my first time physically in the Chamber for well over a year, I would also like to put on record my thanks to Mr Speaker, the Deputy Speakers and the Speaker’s Office for doing so much to help all Members, particularly those of us like me with relevant medical circumstances, to take part virtually throughout the pandemic. Now, having recently had my second jab and having spoken to my doctor, I am glad to be here in person to speak today to this important Bill.

Like millions of others in this country, I feel so grateful to be benefiting from the brilliance of our NHS and GP staff, scientists, lab technicians, nurses and volunteers, but we know that the health crisis of covid-19 is very far from over and that the harm to jobs and the economy resulting from the outbreak is even further from being over. On the Chancellor’s watch, our country is enduring the worst economic crisis of any major economy, yet in his and the Government’s plan we lack the ambitious, confident modern approach we need to emerge from this crisis stronger.



The Budget in March and this Finance Bill should have been an opportunity to pull out all the stops to get the economy going. The Chancellor should have focused resolutely on supporting families, securing jobs and backing small businesses. The Government should have used this opportunity to make sure we invest in solutions to the problems that we have struggled with as a country for so long, from social care to the climate emergency and the housing crisis.

There are many missed opportunities in this Bill and the recent Budget to take on some of the big challenges to which our country is begging for a solution. Take high streets, for example. We are all acutely aware of the severe difficulties that high streets are facing because of covid and how well online delivery-based businesses have done during lockdown. We know that for years, high street businesses have struggled with business rates, while tech giants have paid very little tax by comparison, and we know that the outbreak has made that imbalance far worse. Now should have been the time to at the very least level the tax playing field for high street businesses and online firms, yet there was nothing on that in this Budget, no decisions were taken on the Government’s new tax day, and the Finance Bill is silent on this crucially important issue. That is just one example of how the Government have missed opportunities to support and shape our country for the better.

Instead, so much of what the Government have done will make the problems we face worse. This Government have the wrong priorities and the wrong values, and their Ministers are following failed approaches from the past that now lack much, if any, of the wider support they may once have claimed for them.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I agree with the hon. Gentleman that we need to level the playing field between high street businesses and online businesses. That is a very tricky thing to do, particularly when talking about business rates. What is his solution to that?

[James Murray]

I am very glad to have the hon. Gentleman’s support for our push for a solution. As he knows, the Government have been promising for some time to come forward with proposals on business rates, but we have nothing. We had the new tax day, when we were supposed to hear lots of announcements—nothing. We want to see something to help high streets, and we have not had anything. We need the Government to step up and offer a solution to the problem, which has bedevilled high streets for so long.

[Kevin Hollinrake]

rose—

[James Murray]

I will make a bit of progress.

High streets are just one example of how the Government have missed those opportunities. Ministers have shown that they simply do not have it within themselves to offer solutions to the challenge we face.

First and most immediately, the Government are taking money from people’s pockets. Families in all their many forms are the target of tax rises from this Government. People will suffer and our economy will stall if families see money taken from them when they need it most. It is unfair and economically illiterate, yet it is exactly what this Government are doing. Half the country will pay more next year, thanks to the provisions in this Bill to freeze income tax personal allowances.

At the same time, the Bill does nothing to stop the sharp council tax rise that the Government are forcing councils to implement right now. It supports the Chancellor’s plan to cut £20 a week from social security this autumn for some of those who need that help most. It tells us everything we need to know about the Government’s priorities: they raise taxes and cut help for families immediately and without a second thought, years before an increase in corporation tax. At the same time, they are letting some of the world’s biggest companies stop paying tax altogether.

If that was not bad enough, the Government are also choosing in this year of all years to take money from the pockets of NHS workers. We now know how hollow those claps on the doorsteps of No. 10 and No. 11 must have echoed around Downing Street. The Government are cutting NHS workers’ pay. Ministers are breaking their promises, and the Conservatives are showing how little they have learned from the awful experience of the last year.

If we add that NHS workers’ pay cut to the personal allowance freeze, the council tax hike and the cut to universal credit, the scale of the impact of the Government’s decisions becomes clear. To give an example, a newly qualified nurse living with their partner and two children in rented accommodation will lose more than £1,100 a year. Rather than supporting families out of this crisis, the Government are prioritising tax breaks for tech giants.

That tax break is being handed to big businesses through the so-called super deduction—the £25 billion tax break for companies that the Chancellor and the Minister say represents

“the biggest two-year business tax cut in modern British history”,

and that forms our second key concern about this Bill. As the chief executive of the Resolution Foundation has made clear, investment incentives have been abused for tax avoidance purposes in the past, yet the Government have failed to say or do anything to address widespread concerns that the super deduction is open to fraud and abuse. Economists from the Institute for Fiscal Studies have said that the super deduction will

“create a risk of tax avoidance and even potentially fraud as companies essentially try to find ways to dress things up as plant and machinery investment”,

yet the Chancellor has done nothing to counter suggestions from industry consultants that the deduction could be used for luxury items, including jacuzzis.

The Government have also failed to address environmental concerns. With the deduction giving firms an incentive to buy new rather than existing assets, the Exchequer Secretary to the Treasury was recently unable to guarantee that the super deduction would be used to support green development. The Chancellor himself has seemed confused about the overall impact of the deduction, recently claiming that, as well as bringing investment forward,

“it will also increase the amount of investment”.—[Official Report, 9 March 2021; Vol. 690, c. 641.]

That claim comes despite the Office for Budget Responsibility revealing a week earlier that cumulative business investment over the next five years will be £8 billion lower following the Chancellor’s announcement of his new scheme than had been projected before.

Particularly with a tax cut of this size, it is crucial that we understand who it is helping and what it will achieve. The truth is, as we know, that companies can already benefit from the annual investment allowance, a 100% tax break on investment up to £1 million, which the Bill extends to the end of this year. The Treasury Committee concluded in its report “Tax after coronavirus” that the annual investment allowance

“appears well targeted to promote growth in small and medium-sized enterprises.”

With the existing allowance apparently well targeted at the growth of small and medium-sized businesses, and with such businesses standing to benefit only marginally from the new super deduction, we are left with an inescapable conclusion: the main beneficiaries of the Chancellor’s new scheme will be the big firms that need help least. No wonder TaxWatch has nicknamed this the “Amazon tax cut”—a giveaway from the Chancellor that could wipe out Amazon UK’s tax bill entirely.

[Christian Matheson (City of Chester) (Lab)]

I am grateful to my hon. Friend for talking about what has been identified as an Amazon tax cut. Has he noticed—and I get the impression from his contribution that he has—that most of the firms that will benefit from this are foreign-owned large tech firms that are not British, and most of the firms that will not benefit are the smaller British firms that will feel the wrong end of the Government’s policies? Does he not find it rather ironic that the Conservatives, who wrap themselves in the flag, are actually being entirely un-British and damaging British interests? They claim to be patriotic, but they are doing exactly the opposite.

[James Murray]

My hon. Friend makes a very important point and exposes again the hypocrisy in the Government’s approach. The fact is that, rather than helping families get through the tough times ahead, this Government are delivering a tax break for tech giants.

We know that Amazon workers have provided vital deliveries to millions of people across the country during lockdown. They need their rights at work to be protected and strengthened, and we all want that company to pay its fair share of tax. I see no one calling for a tax break for Amazon, yet that is exactly what this Government are providing. The Government would do well to learn from the new Biden Administration’s approach. The US Secretary of State has said that, rather than compete on lowering tax rates for corporations, the United States will focus on its

“ability to produce talented workers, cutting-edge research and state-of-the-art infrastructure”.

The new President has also been leading a drive to put in place a global minimum corporate tax rate. A spokesperson for the Treasury here has indicated that the UK might back those plans. Taken along with the Chancellor’s decision to raise corporation tax to 25%, this seems to be an admission by the Government that the last decade of Conservative corporate tax policy making has been totally wrong-headed. If that is the case, we welcome the Government’s admission, and it is vital that the UK plays a leading role in developing and implementing the proposals that President Biden is backing. We have not yet heard from Ministers on this matter in Parliament, however, so I urge the Exchequer Secretary to use her closing speech today as an opportunity to confirm to the House that she and the Chancellor back plans for a global minimum corporate tax rate and that they will do all they can to make this a reality.

While the initiative on international tax is being led by those overseas, closer to home the offer from this Chancellor of such a large tax break to companies will, of course, make people wonder what processes will be in place to prevent Ministers from intervening improperly on behalf of commercial interests in how decisions are made. The Chancellor is still refusing to properly account for his role in the Greensill scandal. To ensure public confidence in who will benefit from this £25 billion tax break, we strongly urge the Exchequer Secretary to today set out what new safeguards will be put in place to make sure that public money is not misused.

[Jim Shannon (Strangford) (DUP)]

Before the debate, I spoke to the shadow Minister about insurance companies. It has come to my attention that some insurance companies are unfairly using business interruption insurance premiums to punish businesses that had the foresight to take out said insurance before the pandemic. Insurance premiums are being increased dramatically. Does the shadow Minister agree that when it comes to supporting small and medium-sized businesses, we need to close the loopholes that insurance companies are notorious for using and ensure that the spirit is legislated for? Perhaps—just perhaps—this Bill might be the way to do that.

[James Murray]

The hon. Gentleman is right to draw attention to the fact that the Bill does everything for the big businesses that need the help most but does not do what is necessary to protect small and medium-sized businesses. I am sure that the Ministers present heard his points, and I hope that the Exchequer Secretary will respond to them in her closing speech.

Aside from all the concerns about the super deduction—from its potential for fraud, abuse and misuse to the fact that it offers to wipe out Amazon’s UK tax bill—the fact that the Government’s only national policy for growth and investment relies almost entirely on this tax break brings us to our third key concern about the Bill and the profound lack of ambition in the Government’s approach. There is simply no plan from the Government to make sure that we invest in what is needed for the future. The Bill follows a Budget of cuts. The OBR has confirmed that the Government will cut departmental resource spending plans by £15 billion a year from 2022-23 onward, and rather than bringing forward capital spending to invest in the green recovery that we need now, the Government have cut capital plans for this year by half a billion pounds.

Far from charting a course for the future, the Bill lacks any mention of a plan to tackle the big problems that we have faced in this country for a decade or more and that have in so many cases been brought into sharp focus by the covid outbreak. It is clear that over the past decade under this Government, our country’s social care system has been underfunded, with its workers chronically underpaid. Our country’s response to climate change has stubbornly lacked the urgency, ambition and scale that it needs. Our country’s answer to the housing crisis has been left to developers and speculators, leaving an entire generation let down and left behind. Investing in better social care, new green infrastructure and the council housing that we need would create jobs, improve lives and finally start to tackle the problems that our country needs to resolve.

The Conservatives have had more than 10 years to stand up to the challenges I have outlined, yet they have failed to do so. With the recent Budget and this Bill, they have proved themselves again unable or unwilling to do so. The Government’s whole approach is being exposed as one of failure rooted in the past and an inability to rise to the future. In fact, Conservative Ministers are continuing on the course that began in 2010—one that brought us a decade in which UK growth was below the average of all major economies and business investment fell to the lowest rate in the G7.

Our country’s economy will be £300 billion smaller in 2026 than was forecast at the start of the previous decade. At times during that decade, Ministers may have benefited from some international cover for their misguided and harmful choice of cuts rather than investing in growth in response to the financial crisis, but no more: a new international consensus has rapidly been gaining strength. As the International Monetary Fund’s head of fiscal policy said, our Government and others should use fiscal policy to beat covid and to stimulate our economies by reducing unemployment and restoring economic growth. That focus on growth, investment and jobs is at the heart of the approach set out by the shadow Chancellor, my hon. Friend the Member for Oxford East (Anneliese Dodds). Our framework will meet the challenges of our times—it is a responsible approach in which a balanced current budget over the economic cycle would never prevent us from protecting people and businesses during a crisis or making critical investments in our future.

As the Bill progresses through the House, we will look at the detail in respect of the points I have outlined so far, as well as on other measures in the Bill such as those relating to freeports. We want to see good jobs and economic growth in every part of the country, irrespective of whether an area has a freeport. We need long-term, locally led investment in every region and nation, and freeports will in no way compensate for Ministers’ inexplicable decision to scrap their industrial strategy and disband their industrial council just when we need a long-term plan to support our critical industries. Furthermore, with freeports elsewhere in the world having become magnets for organised crime, tax evasion and smuggling, we fear that at a time when HMRC is already overstretched Britain is not well placed to manage such risks.

In Committee, we will challenge the Government over their approach to tax avoidance and tax evasion more widely, following up our long-standing concerns that Treasury Ministers continue to drag their feet on tackling these problems. Although the Bill contains measures to tackle the promoters of tax avoidance and change the system of penalties, there is a clear sense that those measures are extremely limited in scope, rather than the comprehensive action that we need. Indeed, those changes are not even included in the Budget report costings, suggesting that their financial impact must be minimal.

We will use the next stage of consideration of the Bill to go through the detail of the measures it contains that seek to address the problem of plastic pollution and to increase the use of recycled content. The principle of a plastic packaging tax is one that we support, and because we want it to be as effective as possible we will ask Ministers to consider the detail of its operation in Committee. Overall, however, we cannot support this Finance Bill. The Bill, and the Budget that it follows, should have seized the opportunity to help people who are struggling now; to invest in good new jobs in every part of the country; and to be ambitious in finally getting to grips with social care, housing and other challenges that our country has faced for so long without solving. In fact, rather than supporting families out of this crisis and setting an ambitious plan for the future, the Government are prioritising tax breaks for tech giants.

If this Bill had been presented by Conservative Ministers 10 years ago, it would have been the wrong solution then; a decade later, their approach has not changed but the rest of the world has moved on. No longer will they find allies for their approach in international institutions, and the politics of the United States shows that the consensus around the world is shifting. The Government are out of step with economic reality. They are taking decisions that will push up taxes for people across our country while helping Amazon to reduce its tax bill. They are choosing to cut NHS workers’ pay while failing to fix our system of social care, and they are deciding to continue a decade of cuts to public services when we urgently need to invest in the future.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[James Murray]

I have only a few moments. The hon. Gentleman may speak later.

We will vote for our amendment and against the Bill, to make it clear to people in our country that we understand that people need to be spared the Bill’s tax rises; that Amazon does not need any favours; that NHS workers deserve our support, that we need good new jobs in every region in the nation; that the economy will grow only through responsible investment; and that we need to fix social care, the climate emergency and the housing crisis. Above all, people in our country need a Government who are on their side, and it is absolutely clear from the choices that the Bill and their Budget make, and the problems that they choose to ignore, that this Government fail that test.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We now go to the Chair of the Treasury Committee, Mel Stride.

Contingencies Fund (No. 2) Bill

James Murray Excerpts

2nd reading
Thursday 11th March 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

I thank the Financial Secretary for setting out the case for the Bill so clearly. The Bill seeks to amend the Contingencies Fund Act 1974, which is one of the monuments of a previous Labour Government. The 1974 Act embodies principles that are central to the accountability of Government, so its amendment should not be taken lightly.

This time last year, the Opposition fully accepted that the conditions of the pandemic made it necessary, expedient and right for there to be provision for the Government to act swiftly. We accepted that, in the rush of the early response to the outbreak, there could be times when it would not be possible to follow normal procurement processes. We accepted that, at certain points, the spot price paid for particular goods facing global shortages might be higher than it would otherwise have been, and we accepted that, on occasion, at a time when the Government were taking on entirely new responsibilities, some mistakes would be made. But we do not accept, and the British people will not accept, that what may have been excused in the early days of the outbreak has turned into a succession of failures and scandals, which it seems Ministers can no longer even see as wrong.

Last year, the Opposition agreed to a rise in the provision of the Contingencies Fund to some 50% of annual expenditure. While we accept that a higher than usual level for the Contingencies Fund is again in order and we will not be opposing the Bill, Ministers would do well to remember that the fund was created as a fall-back and that its extension is an emergency response, not an opportunity for unaccountability. Ministers seem to have forgotten that public money needs to be spent effectively, in a way that achieves value for money and commands public confidence.

The starkest example of failure by this Government must surely be their flagship Test and Trace scheme, a programme outsourced at great expense and the subject of a report published yesterday by the Public Accounts Committee, which was truly damning. The Government should be embarrassed and deeply apologetic over Test and Trace, which Lord Macpherson, who led the Treasury civil service from 2005 to 2016, described as

“the most wasteful and inept public spending programme of all time.”

What makes it even worse is that everyone in the country desperately wanted Test and Trace to work. Everyone was willing the programme and its team to succeed. We all wanted and needed that money to be spent on a programme that would achieve its stated goal, and we have all witnessed the profound consequences of incompetence on such a scale. I lost count of the number of times that my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), my right hon. Friend the Member for Leicester South (Jonathan Ashworth) and my hon. Friends the Members for Oxford East (Anneliese Dodds) and for Houghton and Sunderland South (Bridget Phillipson) called for the Government simply to focus on getting Test and Trace working, yet Ministers did not.

The opening summary of the Public Accounts Committee’s report contains the following telling sentences:

“The Department of Health & Social Care justified the scale of investment, in part, on the basis that an effective test and trace system would help avoid a second national lockdown; but since its creation we have had two more lockdowns. There is still no…evidence to judge”

Test and Trace’s “overall effectiveness”.

Only people who have no real understanding of the value of money or the importance of public investment in changing lives for the better could be so reckless about how it is spent. We believe that the Government really need to learn from the last year, not only by accepting that the outbreak exposed the weakness of our rights at work and the impact of a decade of cuts to our public services, or by recognising that they repeatedly did too little, too late to protect the public’s health and our economy, but by making serious structural reforms to how they initiate and examine spending.

The shadow Chancellor, my hon. Friend the Member for Oxford East, has set out how the next Labour Government would do things differently, by taking a robust and determined approach to ensuring that public money improves the lives of those we serve. She has explained how we would invite the Comptroller and Auditor General to submit an annual report to Parliament, bringing together the National Audit Office’s findings throughout the year into a single assessment of the effectiveness of public spending in those areas that it has examined. As my hon. Friend has said, we must hard-wire value for money into the budgetary process.

But the value for money aspect is not the only part of this extraordinary year for public spending that commands our attention. It would be possible to achieve value for money and yet still fall far short of other standards we expect. That is why the new clause that the Opposition will move in Committee seeks to improve the transparency of Government spending.

We know only too well, as my hon. Friend the Member for Leeds West (Rachel Reeves) has set out, that the way in which procurement is conducted also matters very much. Put simply, the time to end emergency procurement is overdue. Covid, as she rightly observed, is no longer a surprise. Supply chains have been established and, while there are of course still significant challenges and responding quickly remains essential, there is no longer a case for the continued widespread use of emergency measures of procurement for items that the Government now know how and where to find.

Contract publication should now follow the normal rules, and when contracts fail to deliver, the Government should get money back. That is public money. “Deliver or you won’t get paid” is what contractors expect from every other organisation and company they supply. The Government must not be the softest touch in the market.

We must drive a culture of transparency throughout public spending. The new clause that we will move today seeks to improve the transparency of the Contingencies Fund, because that is what the Bill before us concerns, but it is time for every part of public spending to achieve better value for money and for the Government to use their spending power to improve standards in the way the public would expect. The Opposition believe that achieving these changes need not be difficult or controversial.

We recognise the power of public investment to transform people’s lives for the better. That is fundamentally why we, like the British public, cannot bear to see Ministers casually and carelessly waste public money on deals that do not deliver, on contracts that do not work and on outsourcing that should never have taken place. Every pound that this Government misspend makes it that bit harder for nurses to accept the Chancellor’s pleading that a 1% pay rise is all he can afford. Every penny that this Government waste could have gone towards building a fairer, more secure future for our country. We will not be opposing the Second Reading of this Bill, but our new clause in Committee will set out a new standard of transparency that would pull Ministers up, force them to sharpen their focus on value for money and make sure we have more money to spend on the things that matter to us all.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call Andrew Jones, I want to point out that although what we are dealing with is very important, we also have the Committee of the whole House and Third Reading, and then we have 70 contributions in the International Women’s Day debate. If people could keep that in mind as they consider the length of their contributions, I would be extremely grateful.

--- Later in debate ---

[James Murray [V]]

With the leave of the House, I would like to respond briefly to the debate and pick up on some of the contributions. First, I would like to address a comment by the hon. Member for Thirsk and Malton (Kevin Hollinrake), who seemed to claim that I was not in my place during his speech. I would like to reassure him that I have been listening carefully throughout in the virtual Chamber, but perhaps he was not here earlier when I began my contribution virtually.

My hon. Friend the Member for Brent Central (Dawn Butler) made a powerful and important case about the link between trust and transparency and how important it is for us to take action in this place to reassert that link. She also set out how insulting the 1% pay rise—a real-terms pay cut—is to the nurses in our country. My hon. Friend the Member for Sefton Central (Bill Esterson) mentioned the huge waste that has happened through Test and Trace and the private outsourcing giants that have benefited from that money. It is telling that no Conservative Members today addressed Test and Trace and the spending on that programme, as far as I could tell. I found it curious, however, that the hon. Member for South Cambridgeshire (Anthony Browne), when trying to make a case around value for money, chose to focus on the time that the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) spent in City Hall, given that one of the most notable achievements of that right hon. Member in that office was to oversee £46 million of public money being spent on a garden bridge that was never built.

As I made clear in my opening remarks, we will not be opposing the Bill’s Second Reading, but in the Committee debate that follows, I will set out how our new clause aims to introduce a new standard of transparency, which we believe is urgently needed after the Government’s approach over the last year.

Contingencies Fund (No. 2) Bill

James Murray Excerpts

Committee of the whole House & Committee stage
Thursday 11th March 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

The new clause is intended to ensure that the Government learn from the past year and, as I set out in my earlier contribution, not only recognise that they have repeatedly done too little, too late to protect the public’s health and the economy through the outbreak, but make serious and structural reforms to how they initiate and examine the spending of public money. The new clause would ensure that the extra financial freedoms that Parliament grants in the Bill are used in a manner that reflects the importance of transparency with public money.

I shall not repeat the arguments that I and other hon. Members made on Second Reading, but address the substance of the new clause. Our new clause is simple. Subsection (1) sets out that, in respect of each plausible category of unforeseen Government spending—urgent cash requirements for existing services; urgent cash requirements for new services, whether yet approved in principle or not; increased cash requirements; and short-term cash flow issues—the Treasury must lay before the House a report of all the advances made that month.

Subsection (2) sets out that each payment from the fund should be explicitly associated with ministerial statements, which explain the purpose of such expenditure. Subsections (3) sets out that where such payments have been carried out only on the basis of ministerial direction, the fact and nature of that direction should also be disclosed. We fully accept that on occasion ministerial directions are a vital part of how our country and political system responds quickly and effectively to unforeseen circumstances. There are occasions when the accounting officer will not be able to align urgent needs with normal accounting procedures. What matters is not the fact of the direction, but its nature.

Subsection (4) ensures that where rapid procurement decisions are taken, they provide an opportunity for the Government to improve and are assessed as such. The role of the Comptroller and Auditor General is crucial in our system of parliamentary control over public finances. There are lessons to be learned from the specific practice of emergency procurement. It is wrong to see each instance of rapid procurement as a special case.

Subsection (5) reflects the premise of subsection (4) and ensures that there is no conflict with the wider role of the National Audit Office. I very much hope that the Government will feel able to accept the new clause in the spirit in which we propose it.

The Financial Secretary will be aware of the many extraordinary and frankly irregular arrangements, which have been explored in the court and in the media recently, for the disbursement of public money in the past year. I will not take the Committee through the full annotated catalogue as time is so limited, but I will mention just two of the most egregious examples to emphasise our concerns.

First, there was the contract given to Randox Laboratories for £133 million in respect of tests. Randox is a company that we understand is advised by a Conservative Member. The Department of Health and Social Care ordered that 750,000 of those tests be withdrawn from use for safety reasons. Secondly, at least £150 million of a £252 million face mask contract with Ayanda Capital seems to have been wasted owing to the unsuitability of one type of mask in the order. We understand that the contract included FFP2 masks, which did not meet requirements for use by frontline healthcare workers because they had ear loops instead of head loops. The sum of £150 million pays the salaries of some 4,000 nurses. That fact alone should make clear why it is so important for public money to be spent on improving the lives of those we serve.

The new clause sets out a new standard of transparency that would pull Ministers up, force them to sharpen their focus on value for money, and ensure that we have more money to spend on the things that matter to us all. With such concerns in mind, I ask the Committee to support the new clause.

[The Second Deputy Chairman of Ways and Means]

Before I call Andrew Jones, let me just say that I am grateful for the restraint that people demonstrated on Second Reading. We have a rather extensive call list for the International Women’s Day debate that follows, so if people could show the same restraint in Committee, whether they are remote or in the Chamber, I would be grateful. A number of people withdrew from the Second Reading debate; if anyone wishes to withdraw from Committee stage, please will they do so in the normal manner, through the Speaker’s Office?

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

As you will be aware, Mr Evans, clause 1 provides for an increase in capital for the Contingencies Fund. It raises the limit from the standard 2% to 12%, providing a sum of approximately £105 billion for the financial year 2021-22 only.

We are all agreed across the House on the central importance of accountability to Parliament, but it is the Government’s very firm view that new clause 1 is not needed in order to achieve accountability. It is important to say again that supply processes continue to be used in the usual way with expenditure still subject to parliamentary scrutiny and a vote. This Bill simply permits an advance on expenditure that will be included in the main or supply estimates.

Let me set out four points that make this quite clear. First, the Contingencies Fund is about ensuring cash flow, restricting it to urgent services in anticipation of parliamentary provision becoming available and temporary funds required for necessary working balances. It is not additional spending; it is simply a cash advance to be repaid. It does not in any way preclude the scrutiny by Parliament of additional provision sought by a Department through the supply estimates, nor does it preclude the Comptroller and Auditor General from expressing his view on the regularity of departmental expenditure.

Secondly, each and every departmental accounting officer remains fully accountable for expenditure; and, of course, that expenditure will be audited by the NAO in the usual way as part of the annual reports and accounts of each Department. Transparency arrangements for ministerial directions—where they are sought under the requirements of the doctrine of “Managing Public Money”—will also continue in the usual way. Accounting officers are already required to publish any direction that they receive as soon as possible, unless there is a broader public interest in keeping it confidential.

Thirdly, the House has seen throughout 2021 that Departments must notify Parliament by way of a ministerial statement agreed with the Treasury where a commitment will be or has been entered into in advance of supply. I would like to make it clear that the mandatory WMS wording agreed with Parliament and the NAO already distinguishes whether this advance is a new service, new expenditure or simply a cash requirement ahead of a supply estimate.

I remind hon. Members that the Contingencies Fund is not a tool—some hon. Members have made this point—that Ministers can choose to use; it is not discretionary. It is managed entirely by the Treasury, and the accounting officer must ensure that advances are given in line with strict rules agreed between Parliament, the NAO and the Treasury. These rules are set out clearly in the published estimates manual. Every Department makes an application outlining the urgency of their case and how they plan to meet the listed requirement. It is worth mentioning that the NAO also audits the Contingencies Fund accounts, and that includes a full list of advances.

Let me turn to a couple of the points raised by Members in the debate. I did ask for questions on the Bill, but the hon. Member for Luton North (Sarah Owen) somehow found that difficult. She raised another irrelevant issue about public spending. She asked me about my own link. I assure her that I had nothing to do with the awarding of any contracts. As my hon. Friend the Member for South Cambridgeshire (Anthony Browne) pointed out, this is true for Ministers across the Government, according to the NAO.

The hon. Member for Hackney South and Shoreditch (Meg Hillier), who chairs the Public Accounts Committee, made a speech, wonderfully—and I thank her for it—on the Bill. I am very grateful. She asked whether the Bill is rushed through. The answer to that question is no, it is not. It is important to do it, we think, before the beginning of the new financial year. The same Bill was put through in March last year, and so it is here. She asked about Treasury controls. We fully, strongly believe in them. She recommends Ghanaian principles of public finance, but I am not sure I can follow her in that direction.

[James Murray [V]]

With the leave of the Committee, I will respond briefly to the debate and pick up on some contributions that hon. Members have made. My hon. Friend the Member for Luton North (Sarah Owen) made powerful remarks and drew our attention to how hollow the phrase of the former Prime Minister—that “sunlight is the best disinfectant”—now rings, given how the current Government have behaved. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) spoke from great experience about the weakness of Parliament in scrutinising Government spending. She set out how the claims of bureaucracy from Government Members are misplaced and that, in fact, new clause 1 is about transparency and accountability. My hon. Friend the Member for Warrington North (Charlotte Nichols) set out clearly the consequences of vast sums being given to companies with no track record of delivery, underscoring why this really matters to people’s lives.

My hon. Friend the Member for Newport West (Ruth Jones) made it clear that the Government should listen and learn from the events of the past year and regain the trust of the public, while my hon. Friend the Member for Bradford West (Naz Shah) highlighted the Government’s shameful record on transparency, value for money and, crucially, the outcome of what is actually delivered. Finally, my hon. Friend the Member for Luton South (Rachel Hopkins) made some critical points on scrutiny leading to better government. She spoke from great experience of why it is so vital that the reporting of written ministerial directions is taken into account so that they can take responsibility for their decisions.

I thank the Minister for his comments, but I was disappointed that he did not use the opportunity to refute or respond to any of the comments about the Public Accounts Committee’s report on Test and Trace. I noted that despite some Government Members having spoken for a second time today, they still did not find time to justify and explain how the spending on Test and Trace has been value for money. The Minister fundamentally failed to address the inadequacy of current scrutiny arrangements, given what has happened over the past year.

As I made clear in my opening remarks, our new clause aims to introduce a new standard of transparency. We believe that it is urgently needed after the Government’s approach over the last year. I am not convinced by the Minister’s argument. I welcome the SNP group’s support for new clause 1 and we will seek a Division on it.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Question put, That new clause 1 be read a Second time.

Oral Answers to Questions

James Murray Excerpts

Tuesday 9th March 2021 Commons Chamber

[Steve Barclay]

The hon. Lady is right about the importance of Test and Trace; it is key to our unlocking the economy and to addressing the much more substantive costs in terms of the non-pharmaceutical interventions. As she will know as Chair of the PAC, while I as Chief Secretary and my right hon. Friend the Chancellor will always look at the cost of Test and Trace, the bigger prize is getting our economy opened. On the substantive point the hon. Lady raises on the self-isolation payments, again I point to the fact that at the Budget my right hon. Friend the Chancellor increased the funding for discretionary support; that sits alongside the £500 itself, and is in addition to the wider support that the majority of employers provide.

[James Murray (Ealing North) (Lab/Co-op) [V]]

The Government’s road map out lockdown says that self-isolation is critically important to halting the spread of disease, yet Baroness Harding has recently admitted that financial difficulties prevent people from self-isolating and a year ago the Health Secretary admitted he could not live on statutory sick pay of £94.25 a week. It is now £95.85 a week, so can the Minister explain why the Chancellor refuses simply to guarantee that anyone who has to rely on statutory sick pay or is unable to access even that should be eligible for the £500 payment?

[Steve Barclay]

I do not think the hon. Gentleman has actually read the Budget announcement made last week, because the discretionary element of the Test and Trace support payments applies even if people are not in receipt of means-tested benefits. So it does recognise the point raised by Members that it is important that there is an incentive for people to be tested; that is what the £500 payment through the Test and Trace system addresses. But in addition Members raised cases which were just outside the means-tested element of Test and Trace; that is the issue that the discretionary fund addresses, and it was dealt with in the Budget last week.

Income Tax

James Murray Excerpts

Monday 1st March 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

Thank you, Mr Deputy Speaker, for giving me the opportunity to speak on behalf of the Opposition on these regulations. As we have heard, this statutory instrument relates to the Euro 2020 football championships, which were delayed by covid-19 into 2021. Although I am speaking as a shadow Minister, this subject is literally close to home for people in my constituency; from many places near where I live, including the top of Horsenden Hill, people get a full view of Wembley’s arch, under which several of the games are set to be played, including the semi-finals and the final.

As we have heard from the Minister, the purpose of these regulations is to create an exemption from income tax for income earned in the UK by certain non-resident individuals in connection with football matches held in the UK as part of the tournament. The Opposition recognise that this income tax exemption was a condition of the bidding process for all countries wishing to host matches in the UEFA Euro 2020 finals tournament. We also recognise that the formal requirement to grant an income tax exemption in hosting the Euro 2020 finals is consistent with the approach taken in comparable events hosted in the UK in the past, such as the World Athletics championships 2017, the UEFA Champions League final 2017 and the London anniversary games in 2016. We will therefore not oppose this statutory instrument, and we look forward to enjoying the matches this summer.

Government's Management of the Economy

James Murray Excerpts

Tuesday 23rd February 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

Across this country, we have all felt the pain of missing our family and friends, and we have all longed to go about our lives as we could before, but we have also seen the pain of this crisis fall unevenly, with some people facing greater difficulties and hardship than others. The virus has exposed weakness and unfairness in the foundations of our economy, and what unites so many people now is a determination to learn from what covid has exposed and make the UK a fairer place to live.

Going into this crisis, as the shadow Chancellor, my hon. Friend the Member for Oxford East (Anneliese Dodds) pointed out, one in four UK households had less than £100 in the bank, while 3.6 million people were trapped in insecure work. A decade ago, the Conservative Chancellor stopped investing in new social housing, and now we see families told to stay at home in overcrowded flats.

Social care workers, delivery drivers, shop workers and others have all been on the frontline, but many are on such low incomes that if they are asked to self-isolate, they have a choice they should never be forced to make: doing the right thing or putting food on the table. We were on shaky foundations going into the crisis, and once it hit, the Government have been too slow to give people the support they need, with millions falling through the gaps altogether. Business closures are up by more than a third, yet the self-employed are left in the dark over what help might be on offer from one month to the next. Parents are struggling with the difficult job of home schooling, yet the Treasury refuses to heed our call to give working parents the legal right to request paid flexible furlough.

As many of my hon. Friends have set out today, the UK Government have left people exposed throughout this crisis. My hon. Friends the Members for Jarrow (Kate Osborne), for City of Durham (Mary Kelly Foy) and for Warwick and Leamington (Matt Western) set out how the Government’s choices over the past 10 years left us ill-prepared. My hon. Friend the Member for Gower (Tonia Antoniazzi) spoke of the struggle that so many people face making ends meet, while my hon. Friend the Member for Coventry South (Zarah Sultana) spoke about children going hungry and having to rely on food banks. My hon. Friend the Member for Neath (Christina Rees) set out the different, fairer choices that the Welsh Government have taken.

The truth is that the state of the economy we had coming into covid, and the Chancellor’s irresponsible choices throughout the crisis—both to wind down support and to lift restrictions too soon—have undermined efforts to protect people’s health and left us suffering the worst economic crisis of any major economy. Time and again, businesses, workers and the self-employed have anxiously faced the looming end of support schemes, only for new grants to be introduced in a last-minute scramble as the public pressure to avoid the next cliff edge becomes overwhelming. People might have forgiven this early on in the outbreak, as the Government adjusted to the new challenge we all faced, but a year later that argument holds no water. What we have seen instead is a pattern of the Chancellor’s behaviour, and we should continue to question his judgment as our thoughts turn to what comes next. Ten years of the Conservatives has undermined the foundations of our economy and hollowed out our public services. We must not let the country suffer the same mistakes again.

We heard from many of my hon. Friends today about the damage to our economy and our public services over the past decade. My hon. Friends the Members for Liverpool, Wavertree (Paula Barker), for Vauxhall (Florence Eshalomi) and for Sheffield, Hallam (Olivia Blake) spoke about the rise of insecure working while wages have been falling. My hon. Friends the Members for Enfield North (Feryal Clark) and for Easington (Grahame Morris) spoke about the impact of cuts on local government, while my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) spoke of cuts to social security.

My hon. Friends the Members for Slough (Mr Dhesi), for Wallasey (Dame Angela Eagle), for Luton South (Rachel Hopkins) and for Liverpool, Riverside (Kim Johnson) all reminded us of the ideological drive and dogma—not economic necessity—behind the cuts of the past 10 years, while my hon. Friend the Member for Aberavon (Stephen Kinnock) spoke of the importance of an active state working in partnership with enterprise and business. My hon. Friend the Member for Nottingham East (Nadia Whittome) spoke of the need to rebuild our country with secure housing and secure jobs at its heart.

My hon. Friends are not alone in warning the Government to take a different path. In fact, the IMF’s head of fiscal policy has said that Governments should now use fiscal policy to not just beat the virus but stimulate the economy by reducing unemployment and restoring economic growth. As the shadow Chancellor set out, the path the Government should take is one that puts jobs and investment at the heart of rebuilding our economy. That is why we want to see start-up loans for 100,000 new businesses employing people across the country. It is why our approach would view public finances over the next 20 years, so that we can finally get on top of the long-term challenges our country faces. People are tired of the Government ducking big decisions, from social care to the housing crisis to climate change, and they want to see a fair, modern, robust approach to the future. Our responsible approach to the public finances—an approach in line with the IMF’s and OECD’s recommendations—would make sure that we could always protect people and businesses during a crisis and make crucial investments in our future.

We know that the impact of this crisis has played out very differently for people in different situations. Many families have had to take on worrying levels of debt, while other households have been able to work from home and save. That will result in highly concentrated household savings, forecast to reach £250 billion by the end of June, and what happens with those savings will have a big impact on the economic recovery. The Chancellor is betting everything on people spending those savings, but the Bank of England evidence suggests that only around 5% of the money will be used in that way. The rest will remain in bank accounts or be invested in assets, which we know, among other things, will push up house prices. That is why we are proposing a new British recovery bond, which would give millions of people security for their savings while raising billions to invest in businesses, jobs and infrastructure for the future. That approach would bring people together, united around a common determination for us all to feel more secure and to live in a fairer country.

Today we have heard a string of tired claims from the Chief Secretary to the Treasury that the record simply does not reflect. He said that the economy was not growing when Labour left office, but as my hon. Friend the Member for Chesterfield (Mr Perkins) made clear, the truth is that it was. Government Members make claims about unemployment when Labour is in power, but if they looked at the last 40 years of unemployment data, they would find that unemployment was lower on average in the years when we were in power compared with those when they were.

Over the coming months, we may well hear the Chancellor repeat his flawed economic ideology around the need to cut people’s livelihoods, to cut support for businesses and to cut investment in the public services and infrastructure that we need. Will we hear him apologise for mismanaging hundreds of millions of pounds throughout the crisis and outsourcing projects that should have been delivered by public servants? Will we hear him explain how people with no income or savings can spend money in the economy or how a country with businesses closing, public services run down and infrastructure lacking is expected to grow? I doubt it. If he will not listen to us, he should listen to the fears of people in the country. He should use this Budget to reverse the planned £20 cut in universal credit, to reverse the key worker pay freeze and to provide councils with the funding they need to prevent huge increases in council tax. Then, he has the chance to listen to economic institutions around the world and follow their urging of him to invest in jobs and growth.

After a decade of the Conservatives, our economy was already weak when covid hit, and their irresponsible decisions since then have weakened it further. That is why we have had the worst economic crisis of any major economy. It does not have to be this way. We should come out of this crisis determined not to go back but to build an economy with fairer, more secure foundations. We should focus relentlessly on jobs and growth across the UK and on the long-term investment we need to meet the challenges we face. We need to change our economy for the better, and this is a chance to do so.

Exiting the European Union (Value Added Tax)

James Murray Excerpts

Wednesday 3rd February 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

I am grateful for the opportunity to respond on behalf of the Opposition to these two statutory instruments. Our priority, as the Opposition, is to ensure that the UK economy functions as smoothly as possible and that the Northern Ireland protocol operates effectively following the end EU exit transition period. We will therefore not oppose the Government on these two statutory instruments.

As we have heard, the first of these sets of regulations includes changes to replicate in domestic law the measures that currently exist in EU law. They make provision in UK law for a VAT zero rate for the handling of qualifying aircraft at non-customs and excise airports, as businesses can no longer rely on EU law to provide that measure. Other measures in this set of regulations make more substantive changes. The introduction of a VAT zero rate for the handling of international trains is new, although in practice it is similar to the relief for aircraft. The removal of a VAT exemption for suppliers of pension fund management services for funds established in the EU is also substantive, although it was predicted when the VAT exemption for pension fund management services was introduced in UK law last year.

As those two points represent substantial changes, will the Minister say what assessment the Treasury has made of the impact on the tax base of these regulations? On the one hand, there will presumably be a loss of revenue as a result of the zero rating for handling of international trains, while on the other, the removal of the exemption for EU-established pension fund management services will presumably generate income for the Exchequer. Will he therefore set out what impact, separately and net, these changes are expected to have on the tax base?

The second set of regulations makes changes to the Value Added Tax Act 1994 needed following the end of the EU exit transition period in the context of the Northern Ireland protocol. As we have heard, the measures in this instrument will ensure that VAT can be recovered by DIY house builders in Northern Ireland on goods used in construction purchased in the EU. It will also remove VAT relief for goods moved from Northern Ireland to Great Britain for avoidance purposes and ensure that recovery is possible if VAT is incurred when a business moves its own goods from Great Britain to Northern Ireland.

As I made clear, the Opposition want to see the Northern Ireland protocol operating effectively and we want people in Northern Ireland to be protected from disruption to their lives and their businesses. While these changes are therefore welcome, it is vital that businesses are supported in understanding and being able to follow the new arrangements they face. The Minister will know that my Opposition colleagues have been calling on the Government to support a major and effective information campaign for British businesses about the new rules on trade with Northern Ireland and to increase capacity at the Trader Support Service to help businesses to complete new customs declarations. In the light of the disruption we have seen since the end of the transition period, will the Minister set out what extra support the Government have decided to put in place since the beginning of this year? Can he confirm specifically whether, since 1 January, there have been any substantive changes to the Government’s communication strategy for British businesses about the new rules on trade with Northern Ireland or increases in capacity at the Trader Support Service? These are important questions to ensure that the protocol operates effectively, and I would welcome the Minister’s addressing them directly.

Exiting the European Union (Excise)

James Murray Excerpts

Wednesday 3rd February 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

There are countless examples of this Government leaving it until the last minute to make decisions about what arrangements would be in place following the end of the EU exit transition period. The trade deal with the EU was published only on Christmas eve and considered by Parliament on 30 December, leaving businesses frustrated and unable to prepare fully until the very last minute.

It seems even more frustrating and inexcusable for the Government to have left it so late to make arrangements for the post-transition period when the issues have been known about for years and were not the subject of any ongoing negotiations. Today’s regulations include a prime example The Government have had more than four years since the referendum to get this right, yet they announced their decision to end VAT-free retail both at airports and within Great Britain for all international travellers less than four months before it took effect, in the middle of a pandemic and with no plans to mitigate the economic damage. That is sadly typical of the panicked, last-minute approach that this Government, and in particular this Chancellor, have taken at every turn in recent months. People working in shops, airports, manufacturing and hospitality are going to be carrying the can for the Chancellor’s irresponsible choices.

We accept that, to comply with World Trade Organisation rules, the Government needed to make changes to the regime covering VAT-free shopping; they had to amend the approach to VAT-free and duty-free shopping so that the same rules would apply to both EU and non-EU visitors. As the UK can no longer distinguish between EU and non-EU visitors to Great Britain, the Government had a choice of two options for VAT-free shopping: Ministers could amend the VAT and retail export scheme and VAT-free retail at airports by either extending them or abolishing them for all travellers—and they chose the latter.

The decision has come as a body blow to jobs across the country in sectors desperately hoping that they might be able to start recovering from the impact of covid later this year. Clearly, the frontline jobs immediately affected are those in city centre or shopping village high-value retail, where international visitors make use of the retail export scheme, and in international airports around the country, including Heathrow, where many of my constituents are employed and where travellers make use of the relief on VAT on goods purchased airside. But it is not just those jobs that are set to be hit. Knock-on effects of the changes will threaten jobs in the factories and manufacturers of the goods that tourists come to buy, and in the hospitality sector, as the UK might expect fewer tourists as a result of the withdrawal of the concession. That impact on jobs, of course, comes amid the impact of covid-19, and many are in sectors with a disproportionately high proportion of young and BAME people relative to the wider population.

Given the wide-ranging impact on jobs, it is shocking that the Government did not fully consider the jobs impact of the change before taking their decision. If they were serious about protecting jobs, they would have looked closely at the wider impact of those changes across all sectors affected and throughout every part of our country, yet there is no evidence that they did so, and many of the assumptions in the calculations that they did carry out have been questioned by people respected in the industry. In its reasoning for taking the decision, the Treasury relied on a number of calculations and assumptions about the impact of the change, more detail about which they included in a technical note issued to stakeholders. There is deep concern among stakeholders that many of the crucial figures were flawed, as the Government overestimated the cost of the option of extending the retail export scheme to EU visitors and underestimated the negative impact of ending the scheme for others.

Those affected and their representative organisations, such as Value Retail, have questioned the Treasury’s assumption that non-EU visitors spend the same amount of money as EU visitors, thereby producing flawed calculations of the cost of the alternative course of action, which was extending the retail export scheme to all. They also question the assumption that the low value of many discounts means that they are insufficient to change visitor behaviour, so removing the retail export scheme will not affect how much people spend or their decisions about spending time in the UK.

Given our concern about the impact on jobs, I wrote to the Office for Budget Responsibility ahead of the Chancellor’s spending review in November 2020, asking it to scrutinise the figures and assumptions that the Treasury was using to justify its decision to end the VAT retail export scheme and to consider its wider impact on jobs. The OBR’s reply appeared to undermine what Ministers have been saying. For example, in reply to one of my written parliamentary questions, the Exchequer Secretary to the Treasury, who will be responding in this debate, said that

“the OBR also looked at this package in the round when assessing the indirect impact on the economy”.

However, in its reply to me the OBR seemed to play down the extent of its analysis, confirming that it had not considered the indirect effects of ending the VAT retail export scheme on jobs. Furthermore, it said:

“our remit prevents us from considering impacts on disadvantaged groups or particular geographical areas”.

It seems clear that, despite his or his Ministers’ protestations, the Chancellor went into this decision with his eyes closed: yet again, he failed to consider the impact of his irresponsible decisions on people’s jobs.

My question to the Minister today is direct and I would welcome a direct answer. We know that the Government’s decision to end VAT-free shopping will have a significant impact on jobs. It is also clear that the Government took the decision without fully knowing what the impact on jobs would be after the new arrangements were put in place. As the measure has now come into force and analysis of it no longer has to be based on assumptions alone, I would like to ask the Minister to commit the Treasury to reviewing the impact of the changes to VAT-free shopping on jobs across different sectors and across different parts of the country, and to report back to Parliament ahead of the March Budget. If the Minister will not commit to doing so today, I would be grateful if he committed to raise it with the Chancellor and to ask him to update the House.

Oral Answers to Questions

James Murray Excerpts

Tuesday 26th January 2021 Commons Chamber

[Jesse Norman]

The truth is that this pandemic has had a desperately difficult effect for the whole of the UK economy, and for families and people across our country and regions. It is appropriate to recognise the totality of the difficulty we find ourselves in. It is true that many women have found themselves in the position of either caring for home schooling or vulnerable individuals. They are supported and protected through the schemes we have put in place. Of course, over and above those schemes, we have also put in place significant amounts of support for remote education, laptops and councils to help vulnerable individuals.

[James Murray (Ealing North) (Lab/Co-op) [V]]

Earlier this month, the shadow Chancellor successfully called on the Chancellor to make it clear that working parents and others can be furloughed owing to childcare responsibilities. Most employers will want to do the right thing, but where an employer is refusing to follow the guidance and offer a parent furlough for childcare reasons, can the Minister tell me who the parent should report that to and what action will be taken?

[Jesse Norman]

As the hon. Member will know, furlough is an arrangement reached between companies and their employees. Her Majesty’s Revenue and Customs and the Government do not have direct involvement in that. What they say is that where an agreement can be reached between the two sides we will support them, as laid out in one of the most generous schemes available in any country around the world. As I said, that is just one part of a much wider panoply of support for people at risk through the pandemic.

Equitable Life

James Murray Excerpts

Thursday 21st January 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

As we have heard today, it has been more than 20 years since the House of Lords ruling rendered the Equitable Life Assurance Society financially unviable, and it has been over a decade since the then Chancellor announced the Equitable Life payment scheme to compensate policyholders who had lost out as a result of the scandal at that company, yet even after so many years, thousands of Equitable Life policyholders do not feel they have been treated fairly.

The Equitable Members Action Group continues to campaign tirelessly on their behalf, and during this afternoon’s debate—I congratulate the hon. Member for Harrow East (Bob Blackman) on securing it—we have heard Members from all sides passionately setting out the injustice that so many policyholders feel. My hon. Friend the Member for South Shields (Mrs Lewell-Buck) powerfully set out the upsetting case of the 84-year-old pharmacist she represents as an example of how the scandal has affected people living in constituencies across the country. My hon. Friend the Member for Newport East (Jessica Morden) spoke of the human impact on her constituent, an 89-year-old living with dementia, whose life has been hit by this scandal, alongside nurses, teachers, shop workers and so many others over many years.

My hon. Friend the Member for Coventry North West (Taiwo Owatemi) emphasised how long the scandal has been going on, and spoke about the crucial importance of transparency, which I will return to. The importance of transparency was also underscored by my hon. Friend the Member for Liverpool, Riverside (Kim Johnson), who spoke about the costs of the scandal on the plans and dreams of those affected, and the ongoing impact of current cases such as London Capital & Finance. My hon. Friend the Member for Putney (Fleur Anderson) spoke about a 91-year-old in her constituency and others who invested in good faith but have gone for decades without a satisfactory conclusion.

It is crucial that we learn lessons from what happened at Equitable Life, including about the wider importance of having a well-regulated financial services sector, as the right hon. Member for Gainsborough (Sir Edward Leigh) said. In recent months, the cases we have seen at London Capital & Finance and Brewin Dolphin underline the importance of the Government’s doing more to ensure that people are well protected in the first place.

On Equitable Life itself, the issue at the heart of the disagreement over the past decade has been how the payments to the vast majority of its policyholders have been determined. As we know, that has generated intense disagreement with the Government over their approach, and as today’s motion makes clear, there is a further issue of transparency and trust. Many policyholders lack confidence that those payments have been calculated fairly.

In October 2020, my hon. Friend the Member for Oxford East (Anneliese Dodds), the shadow Chancellor, wrote to the Chancellor of the Exchequer, asking for the Treasury to set out clearly the basis on which it had calculated the payments that had been made to policyholders and to ask what assessment his officials had made of the overall accuracy of the scheme. In his reply, the Chancellor claimed that when the Equitable Life payment scheme was operational, it was fully transparent, and that its calculations methodology was published in full. He claimed that the Treasury had worked with the Equitable Members Action Group and others to produce a simplified explanation for policyholders.

Unfortunately for the Chancellor, the Equitable Members Action Group does not share his assessment. It contends that the Treasury refused full disclosure and hid behind commercial confidentiality. The group had to attempt to reverse-engineer the calculations, and it remains unsatisfied that payments can be shown to be accurate. It has presented cases of policyholders who received an amount substantially less than they were due. In one of the most extreme examples, which the hon. Member for Harrow East drew attention to, it quotes a case where the Treasury calculated a policyholder’s loss at £17, only for that to be revised to £8,661 when challenged. More widely, the group cites a freedom of information request that revealed that, where compensation had been recalculated following complaints, it resulted in an increased payment to the policyholder in every case—on average, by a factor of three.

A report of the Public Accounts Committee, under its former Chair, my right hon. Friend the Member for Barking (Dame Margaret Hodge), concluded:

“Policyholders have struggled to understand how their payments have been calculated and cannot, therefore, check that the amount that they receive is correct.”

In a letter to the Committee’s current Chair, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), the permanent secretary to the Treasury restated the Government position. He said:

“no errors in the actual methodology have been found, including when the Equitable Members Action Group’s own actuary examined the methodology.”

Again, the group does not share the Treasury’s assessment. It contends that the actuary acting on its behalf was denied the information he needed to validate the methodology used, and he could not verify the calculations for one third of the sample policies studied.

It is the Government’s responsibility not only to do the right thing but to earn people’s trust that they will do so. It is clear from the continuing challenge presented by Members of Parliament on behalf of Equitable Life policyholders today that that is not yet the case. I find it hard to disagree with the Equitable Members Action Group’s view that the Treasury’s refusal to be fully transparent only increases suspicion that something is wrong.

After such a long-running disagreement, we believe that a transparent approach is the best way forward, and that it is the only way to find a way forward that is widely trusted and accepted. We therefore look forward to the response from the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee on this important call to establish a joint inquiry into the accuracy of payments made to victims of the Equitable Life scandal.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the hon. Gentleman and apologise to him that the timer has been put on. Can the timer please be taken off by whoever is controlling it? It is very distracting and it was not fair to Mr Murray to have those numbers apparently telling him he had to stop when he did not have to stop. I am sorry for that, but these technical hitches sometimes just happen.