Autumn Statement Resolutions

Jim Shannon Excerpts

Monday 27th November 2023 Commons Chamber

[Mr Ellwood]

My right hon. Friend is absolutely right. The Centre for Economics and Business Research suggests that there is £10 billion to be made in lost GDP at the moment, as we are not attracting overseas visitors because our taxes are higher than those of our continental counterparts.

Looking at the bigger picture, finances certainly remain tight. The national debt, although falling as a percentage of GDP, as I said, remains too high. Our growth, although larger than Germany’s, is not where it should be. Given that we are the sixth largest economy in the world, we need to look at improving productivity, which remains sluggish, as it has been since 2008. A lot of these economic debates focus, understandably, on the micro level—the line-by-line budget allocations to Whitehall Departments, and the changes to general taxation, benefits and pensions—but how all those fiscal jigsaw pieces fit together is often overlooked. Our world is changing fast. Not only is it becoming more internationally competitive, but there is a question mark as to what our role actually is. I am reminded of what John Foster Dulles, the former US Secretary of State, said:

“Britain has lost an empire and not yet found a role.”

What we saw in the autumn statement was interesting indeed. The world is going digital, as IT changes every aspect of our lives: how we communicate, travel, do business and even strengthen our own security. That is all good news for the UK, as we have the third largest tech sector in the world, after the US and China. We are world leaders in pharmaceuticals, life sciences, creative industries, aerospace, fintech and artificial intelligence. With some of the best universities in the world, along with our globally recognised finance sector, we are well placed to become a high-tech superpower—another silicon valley. That is also good news for Bournemouth, because that is exactly where our area focuses; we are focused not just on tourism and financial services, but on the creative industries.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Gentleman for what he says about the pharmaceutical and engineering sectors, as we have businesses in those areas in my constituency that can do well. One thing that is needed to improve it is reviewing and increasing the child benefit thresholds—perhaps the Government should consider that. It would enable families that work hard to get more benefit, which they cannot do at this moment in time.

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[Dame Margaret Hodge (Barking) (Lab)]

I congratulate my new hon. Friend the Member for Tamworth (Sarah Edwards) and I wish her well, but she arrives in difficult times, because in 30 years as an MP, I have never seen the country’s finances in such a mess. We have the highest taxes since records began, the highest public sector debt since the 1960s and inflation at a 41-year high, and average households will be £1,900 worse off by the end of this Government.

At the same time, public services are on their knees and the OBR predicts a miserable 0.1% growth rate for the fourth quarter. The Government try to pile the blame on others—covid, Ukraine, the middle east and even their own past leaders—but the whole Conservative Government have done this, having voted through 13 years of flawed measures and disastrous policies that have not helped growth and jobs, but have intensified inequality and increased child poverty. We have had enough, the country has had enough and Britain deserves better.

I will focus on three areas that could make a real difference if the Government made different choices. In 2012, the tax gap—the gap between what HMRC receives and what taxpayers pay—was £34 billion. This year, it is up by nearly £2 billion, and if tax campaigners calculated it, they would probably triple or quadruple that figure. Failing to collect £36 billion is massive—that is £3 billion more than we spend on the whole of primary education across the UK.

Those who benefit most from HMRC’s failure to pursue them are the rich. Last year, only 11 wealthy individuals were prosecuted for tax cheating and only eight were pursued for evasion over two years. However, 420,000 people on low incomes, many not earning enough to pay a penny in tax, were taken to court for filing their tax returns too late.

What about the big multinationals who still aggressively avoid tax? TaxWatch’s analysis of just eight tech companies, including Google, Facebook and Apple, shows UK profits of £9.6 billion, but the tax paid amounted to a miserly £297 million. They avoided £1.5 billion in UK tax. Add the estimated £350 billion annual loss through fraud and money laundering, and we are talking about eye-watering sums, yet prosecutions and convictions by HMRC have both fallen by 75% in the last five years. This wretched failure to pursue tax avoiders, evaders, fraudsters, money launderers and multinationals is a scandalous stain on this Government and destroys faith in our system.

Equally awful is the fact that the Government cannot be trusted to spend our money wisely. Government waste is yet another scandalous stain on the Conservative Government’s record: £15 billion lost to fraud and error across all covid schemes, £1 billion overspent on a contract for a new warhead facility, another billion pounds lost on the Astute nuclear-powered submarines and £2.2 billion wasted on the now abandoned HS2 phase 2 project. The bill for the failed asylum support system has gone up fivefold in four years and cost us a shocking £3.6 billion. The staggering costs of meeting the needs of nearly 300,000 homeless families are at least £18 billion a year. With services so stretched, the waste of taxpayers’ money because of sheer incompetence is unforgivable. People are struggling while the Government squander.

I want to turn to the unfairness in the tax system that the Government deliberately promote. Our system is ridiculously complex, opening opportunities for aggressive tax avoidance. Take the 1,180 tax reliefs, of which 339 are non-structural reliefs, supposedly introduced to help a particular group achieve a particular policy outcome. We have no idea how much those tax reliefs cost or whether they are effective, and there is no accountability for the expenditure, because it is all below the line. One hundred reliefs have been costed, at an estimated £195 billion, which is almost double what we spend on local government and double the £46 billion spent on defence. That sum accounts for only a third of the 339 non-structural reliefs. With little data, and scant scrutiny and evaluation, we are sitting on a time bomb.

Take, for example, the cost of the research and development tax credit—up from £2.3 billion to £5.2 billion in five years, yet without an equivalent increase in R&D investment by companies. The patent box relief was introduced to encourage companies to commercialise their inventions, but has now been exploited as a tax loophole. The moment the KPMG partner seconded to the Treasury to write the technical rules for the relief left the Treasury, he produced a brochure entitled “Patent Box: what’s in it for you”. That relief is costing us £1 billion a year. Entrepreneurs’ relief cost £427 million in 2008-09, but that had ballooned to £2.2 billion by 2018-19, the last year for which I could find proper figures. The relief is supposed to encourage investment, but a survey of those who claimed it found that only 8% said the relief had influenced their decision at the point of investment.

Finally, we talk about making work pay, but we have a system in this country whereby the income that people gain from work is taxed at a higher rate than the income they gain from wealth. No such system can ever justify that we are a country that enables work to pay.

[Jim Shannon]

The rise in taxation for working-class people has implications for their childcare costs. Does the right hon. Lady agree that when it comes to childcare costs, it is impossible to make ends meet, and that working-class people and those on the poverty line need more help? Unfortunately, I do not see that help.

[Dame Margaret Hodge]

I agree entirely with what the hon. Member says. I simply point out that if we got the money in that was owed to us, spent it wisely and taxed fairly, we would be able not only to pay for childcare costs but to have the high-quality childcare that is essential to ensure that we equalise life chances.

This Government have failed. They have failed to get the money in, they have wasted billions and they have failed to tax and spend in a fair way. Trust and confidence have been squandered. It is time for them to go.

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[Stephen Crabb (Preseli Pembrokeshire) (Con)]

I rise to make a few remarks in support of the Chancellor’s autumn statement, emphasising two themes that came out strongly from it. They have been consistent themes for the Government over the past 13 years we have been in office: boosting incomes, particularly for those in the lowest income brackets, and improving our benefits system to ensure that we have a dynamic labour market and individuals can fulfil their maximum potential.

Before I go into those points, it is worth underlining again where we were 13 years ago when we took office. The minimum wage was less than £6 an hour, the state pension was less than £100 an hour—no pensioner will forget the derisory 75p increase that they got from Gordon Brown—and we had a welfare system where more than 1 million people had been languishing out of work for almost 10 years, out of the reach of any meaningful engagement from local job centres. We should not forget either that, while the Labour party might this afternoon present itself as a party of welfare reform, spending restraint and sensible economics, for most of the past 13 years it set its face against every step that we took to try to improve our benefits system. What we have now is not perfect—no benefits system ever is—but it is so much better than what was in place under the previous Labour Government. We know that because Labour Ministers who served in the Department for Work and Pensions before 2010 were themselves highly dissatisfied with the benefits system. Those with particular reforming instincts were doing their best, fighting an uphill battle to see improvements. We should not trust the Labour party as a party of benefit reform.

Briefly on boosting incomes, a national living wage of £11.44 an hour is transformational for constituencies such as mine in Pembrokeshire, where for decades there has been a culture of low pay, as there has been right across Wales. Thousands of people in my constituency will benefit from that increase to the living wage. Increasing the state pension by the full triple lock boost will ensure that pensioners continue to see the full value of their pension increase. That comes at a cost. All of us who defend the triple lock need to bear in mind that it has significant long-term costs, and we need to speak to how they will be met in the future, but the triple lock that this Conservative Government introduced in 2010 has been transformational in lifting pensioners out of poverty in my constituency, and all across the United Kingdom.

[Jim Shannon]

One of the reasons the triple lock is in place is the confidence and supply agreement between the Democratic Unionist party and the Conservative party. It was one of the things that we insisted upon. When it comes to giving credit for things, I want to keep the record straight.

[Stephen Crabb]

The hon. Member makes a strong point on behalf of his party. Lots of people claim credit for the triple lock. Again, all of us who defend the triple lock need to bear in mind the long-term costs and be ready to speak to how the country will afford them. The answer that successive Governments have found of just pushing the state pension further out of reach by increasing the state pension age is not a long-term sustainable plan.

On benefit reform, I strongly support what the Government are trying to do in linking together more closely the work of local jobcentres with that of health authorities, health boards and the Department of Health and Social Care overall. Successive Ministers have found huge institutional resistance to the NHS and the DWP working together—two massive spending Departments that have levers to do something really positive in getting people with long-term sickness and disabilities back into work. It is really encouraging to see much greater levels of co-operation than at any time in the past 20 or 30 years.

The point that has been made several times this afternoon about obligations is really important. There was speculation that the Chancellor would not uprate working-age benefits by the higher level of autumn inflation rates, but he did so. That was entirely consistent with what the Conservative Government have done consistently through the pandemic and the cost of living challenges, which is to help people on the lowest incomes. The Government doing the right thing and choosing to be consistent in that underlines the point about obligations, and the social compact that needs to be at the heart of our welfare system. Government Members have talked about that, as have those on the Labour Front Bench. An adequate benefits system supports people on the lowest incomes and provides a strong and secure safety net. There needs to be a sense of obligation around that as well.

As I said, there were Labour welfare Ministers who struggled with how to engage people who had been long-term sick and had long-term health needs to get more meaningful interaction, so that they could perhaps begin a journey back to work if that was appropriate. It is one of the biggest public policy challenges that we as a Government have faced. If the Labour party forms the next Government, it will wrestle with that, too. Governments of countries around the world that share a similar demographic to ours, with an ageing population and increasing numbers of elderly and sick people, are wrestling with these challenges. There are no easy solutions.