Oral Answers to Questions

John McDonnell Excerpts

Tuesday 9th April 2019 Commons Chamber

[Elizabeth Truss]

We have provided schools with additional funding to cope with the rise in pension contributions. We will be looking at school funding as part of the spending review and I will take my right hon. Friend’s representations into account.

[John McDonnell (Hayes and Harlington) (Lab)]

With the Brexit dialogue ongoing it is best to leave exchanges on that topic to the negotiations, although I hope we can all count on the Chancellor, if not everyone on his own side, to continue to insist that no deal is not an option.

Turning to Google, when will the Chancellor tackle the scandal of Google’s tax avoidance? Google has an estimated taxable profit of £8.3 billion in the UK, so it should have a tax bill, according to the Tax Justice Network, of £1.5 billion. That would pay for 60,000 nurses, 50,000 teachers, seven new hospitals, 75 new schools. It pays £67 million. Why is the Chancellor, year on year, letting Google the tax avoider off the hook?

[Mr Philip Hammond]

As the right hon. Gentleman probably knows very well, the issue is a good deal more complex than he suggested in his question. We have announced the introduction of a digital services tax to begin to address the challenge of shaping our tax system to respond to the digital age, but the problem is that we have a set of international tax rules that we are obliged to follow, which were invented in the age when international trade was all about goods. Nowadays it is mostly about services, and much of it is about digital services. The international tax system is simply not fit for purpose and the UK is leading the charge in international forums—including the G20, which will be meeting later this week in Washington—in looking for a new way to allocate profits appropriately between jurisdictions where digital platform businesses are involved.

[John McDonnell]

After nine years in government, that smacks of an excuse, and let me say to the Chancellor that the Government’s digital services tax has been roundly criticised as being too narrow and having artificial carve-outs. Let me move on from one scandal to another: the scandal of London Capital & Finance. LCF collapsed in January, leaving 11,000 investors in the lurch. They had £286 million invested in the company and most of them were not wealthy people. The Financial Conduct Authority was repeatedly warned of LCF’s dubious structure and operations and failed to respond to those warnings. A decade on from the financial crash and our regulatory system is still not fit for purpose. What action is the Chancellor taking to secure justice for the LCF investors and to reform our regulatory system?

[Mr Hammond]

We take very seriously the failure of London Capital & Finance. Last week, my hon. Friend the Economic Secretary directed the FCA to launch an investigation into the company. We will carry that investigation out and look carefully at the findings.