Economic Update

John McDonnell Excerpts

Tuesday 17th March 2020 Commons Chamber

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

There was an element of déjà vu about that statement. I thank the Chancellor of the Exchequer for providing us with an earlier copy of it. Of course, we recognise the immense threat that this virus poses to our country and the globe, and we want to work with him to ensure that we do everything we can to protect our economy and our people. But today, in some of our constituencies, people were being laid off—they were losing their jobs and their incomes, and their livelihoods are being threatened. People are worried, and I am disappointed that today’s package of measures does not really appreciate the urgency or the gravity of the situation for those individuals and their families.

Let us establish a principle throughout our discussions. To protect our people, the underlying principle must be that, wherever a person is sick, self-isolating or laid off from their employment, we will protect their income and give them security. I want to raise a number of questions about issues that the Chancellor failed to address and that I hope will be addressed urgently.

On those people who are sick, there is an urgent need for statutory sick pay to be available for everybody from day 1, and that means extending it to people on low pay, in part-time work and on zero-hours contracts, who at the moment do not qualify. Will the Chancellor now consider abolishing completely the lower earnings limit with regard to statutory sick pay, as called for by the CBI? May I also ask him to heed the call of the TUC and other groups to lift the overall level of statutory sick pay? The TUC has proposed that it should be raised to the level of the real living wage, and I think we should support that. Other countries are providing 100% protection of wages.

Other questions with regard to individuals remain unanswered. Will those workers who have been asked or required to self-isolate—teachers, health workers, nurses, carers and other essential public servants—be protected on full pay to ensure that essential services continue? Will the Government assure people of a right to work from home?

Other pressures felt by individuals relate to rents, mortgages and evictions. I really regret—I ask the Chancellor to consider this urgently this evening—that there was nothing in the statement to protect renters. It affects all our constituents. Will the Chancellor bring forward urgently now measures to protect renters, prevent evictions and enable rent holidays for those people unable to meet their costs? Will he put powers in the legislation now to follow the example of some other countries that have frozen or suspended utility bill payments and put that on a statutory footing because this is an emergency?

For those who have already lost their jobs, let us be clear: the level of and access to universal credit are unacceptable. The Chancellor has said that those receiving universal credit can receive an advance as a loan. This is pushing people into debt, some of them the poorest in our society. The Child Poverty Action Group has asked whether we can make that loan non-repayable as a grant. Can I urge him to consider that?

The Chancellor has said, and I welcome it, that he is going to bring the trade unions together to look at a more sustainable package. We need to do that within days, not weeks, and we will work with him to ensure that happens. I would cite other examples. In Denmark, the Government cover 75% of wages and companies cover 25%. It is true that workers give up some holidays in exchange, but there is a job guarantee for those workers.

We want financial support, but we want guarantees that these people, when this crisis is over, will have a job to go back to, particularly in those companies where there have been significant lay-offs. Unfortunately, we are now facing significant job losses, and a real sense of uncertainty for workers and businesses alike. I have to say that that uncertainty was made worse last night by statements with regard to the hospitality sector. I do not believe that the Chancellor’s statement today gives the clarity that is needed. Will he make it clear to the insurance companies that those in the hospitality sector—the pubs, the clubs, the theatres, the festivals—are closing on the instruction of the Government? In that way, most of them, even if they do not have “pandemic” in their insurance policies, will be covered.

I welcome today’s announcement of loan guarantees to businesses, but I notice in the small print—can the Chancellor clarify this?—that this is interest free for a period of six months only. I am not sure whether that gives the sufficient support and guarantee for the long term that many will want. I welcome the grants, but may I say to him that the response so far from a number of businesses has been that the scale of the grants needs reviewing? They are too small, and they do not relate to the costs that people are involved in at the moment.

I welcome what the Government have said about the business rates relief holiday, but last week the statement seemed to exclude nurseries and childcare. Can the Chancellor just clarify that that has been remedied now, because childcare and nurseries will be desperately needed in the coming period? A bit of concern has been expressed about the British Business Bank being asked last week to deliver the business interruption loan scheme. As of very recently there is little public evidence that the scheme has been established or developed.

I will turn quickly to individual sectors. On the aviation sector and other key transport sectors, I accept that there is a need now for support. I say gently, however, that I resent Mr Branson urging his workers to take eight weeks of unpaid leave, when he makes such a fortune, often by tax avoidance as well. If we are to give grants, loans and assistance to some of these sectors, we should consider whether to take an equity stake for the long term. That also relates to the rail sector. If any franchise fails, is there any planning to bring it under public ownership and management?

Another sector that has been mentioned—this is deeply worrying—is the fishing industry. It has been hit hard, particularly because of its inability to export. We have been told about the lack of insurance cover for boat mortgages. Can we look at that rapidly now to develop some form of legislative protection? Agriculture is now moving into the planting season. The sector was already facing a significant shortage of workers, but it now faces even bigger challenges. Will the Chancellor reassure the House that there will be support for agriculture throughout, because food supplies will be essential during this coming period, especially domestic food supplies?

I must also raise the issue of public services, which the Chancellor did not mention in any depth. The Opposition received well the commitment that whatever the NHS needs it will get, but can we be clear about the allocation of funding to enable testing to take place at scale? The £5 billion response fund did not earmark any particular funding for the NHS, let alone for testing. Clearly, the public now want reassurance that testing will be developed, and we need the funding. Also on the NHS, can the Government point to stronger steps that need to be taken to manufacture essential ventilators and provide personal protective equipment for frontline NHS workers? If we are harvesting our resources, Labour Members do not believe that we should be paying for private hospital beds at this time. Indeed, many of us believe that they should be requisitioned for the use of the whole community.

The overall system of caring for our population relies not just on the NHS but on social care. Will the Chancellor be absolutely clear now about the scale of funding that has so far been directed to social care, as there is uncertainty about that at the moment? What does he think is the best estimate for the level of funding that will be needed, given that we have already inherited 120,000 vacancies, and staff numbers may well dwindle because of the impact of the virus? In recent years, we have seen evidence that some care companies face threats to their financial viability. What plans have the Government developed to intervene if necessary in that sector? There is also pressure on family carers, who are relied on to support our social care system. We need proposals to support them financially as well.

One area of change that has been mooted is the possible closure of our schools. It is crucial that childcare support is provided in the event that any closures occur. We will work with the Chancellor on that issue and with local authorities, but it is crucial that children who depend on free school dinners receive support if the schools are closed. We cannot allow them to go hungry. School staff may be off for long periods and we would like an assurance that their incomes will be guaranteed. Pupils and students are being advised to study from home and most will require access to high-speed broadband. What will be done to ensure access to broadband for students? May I suggest to the Chancellor that it could be free? We all rely in our communities on the voluntary sector as well and it is being hit hard because of the temporary downturn in donations and staffing levels. What consideration has been given to grants to ensure that the voluntary sector can continue to carry out its important functions?

We need more clarity on the Barnett consequentials, and very quickly, because there is uncertainty about the scale of support that will be given to the devolved countries and regions.

With regard to international interventions, whatever people thought about Gordon Brown’s individual policies, in 2007 and 2008 he showed international leadership to tackle that crisis. I have expressed previously my disappointment that the Government did not act sooner in bringing countries together. I urge the Chancellor to follow up the teleconference with the G7 on Monday with engagement through the G20, the World Bank, the World Health Organisation and the UN, and to bring forward a global plan with his colleagues to ensure that we can give assurance not just to the markets but to those, particularly in the global south, who may well be hit hardest by this virus.

[Rishi Sunak]

I thank the right hon. Gentleman for the constructive attitude with which he approaches some of these issues. I very much welcome his desire to work with me to try to solve some of the pressing issues that face our nation.

I will try to answer as many of the right hon. Gentleman’s specific questions as possible, starting with financial security for our most vulnerable people. I wholeheartedly agree that this is a priority and should be a priority, which is why, in the Budget, we made significant changes to the operation of statutory sick pay, universal credit, and employment and support allowance to ensure that people had quicker and more generous access to a support system for them and their families. We have already invested £1 billion to provide that extra security, but of course we keep all these things under review. As I said, the next step of our plan is to focus on providing support to people, their incomes and their jobs over the coming days.

The right hon. Gentleman asked about insurance for the leisure sector. I can confirm that, after extensive meetings today between my hon. Friend the Economic Secretary to the Treasury and the insurance industry, the insurance industry will honour insurance contracts that would have been triggered if the advice had been to ban certain things, rather than it being advisory not to do them. That has been agreed and negotiated by my hon. Friend. I thank him for those efforts, and I thank the insurance industry for doing the right thing.

The shadow Chancellor asked, rightly, about renters. Of course, I announced measures today on mortgages. He is absolutely right that the biggest fixed cost that many families face will be their rent payment, and it is right that we have regard to that. I can tell him that my right hon. Friend the Housing Secretary will, in the coming days, make a statement with further measures to protect renters through these difficult times.

The shadow Chancellor asked about other countries and their experience, and about global leadership. He mentioned some specific examples of schemes. I can assure him that I am in touch with my counterparts across the G7 and the G20 to understand how schemes in other countries work. He mentioned, for example, employment support schemes in both Germany and Denmark. I say to him and to the House that, whatever package or scheme we come up with that we believe will provide the appropriate support, it is important that we can operationalise that at speed. The difference between our system and that of many other countries is that they have these systems already in place, so it is far easier for them to step them up quickly. We need to make sure we come up with a solution that can be delivered so that it makes a difference to people quickly, which is why I am happy to work closely with unions and business groups to see what will make the most sense.

On international leadership, I say to the right hon. Gentleman that it was widely noticed by other countries that last week, in this country, we saw both monetary and fiscal policy—the Government and the Bank of England working independently but in a co-ordinated fashion to provide significant support and confidence to the economy. That was acknowledged by people, including the International Monetary Fund, which noticed what happened here and pointed at it as an example for others to follow.

On the scale of our response, I ask the right hon. Gentleman to look at the analysis comparing the scale of the fiscal support that various different countries are providing. Again, I think he will find that the package of measures announced both last week and today shows that we have one of the strongest responses of anybody in the G7 as a percentage of GDP to the significant challenge that we face.

The right hon. Gentleman asked about the delivery of the loan scheme and it is right to focus on how it will be delivered. We have been working at pace over the past week to make sure that the loans can be delivered not by the British Business Bank, but by individual retail banks on high streets up and down the country. Again, because of the work of the Economic Secretary, that will happen by early next week: businesses will be able to walk into their local branches and request a business interruption loan that has been backed by the Government on these attractive terms. Again, we have to work with the systems that we have. We cannot let the perfect be the enemy of the good because we want to be able to deliver these schemes as quickly as possible to businesses up and down the country.

The right hon. Gentleman asked about support for a variety of sectors. I can tell him that I have urgently asked my Cabinet colleagues to convene roundtables and engagement with their particular industries to understand if there are specific measures we should be looking at, on top of the measures for airlines and airports that we can look to address in the coming days. All the sectors he mentioned will be covered by that.

I agree with the right hon. Gentleman: when it comes to providing support to larger companies, if the taxpayer is going to be put at risk in supporting those companies, it is right that the taxpayer is rewarded on the other side. That is a principle with which we also wholeheartedly agree. He can rest assured that, as we negotiate those situations, we will always protect the interests of taxpayers.

The right hon. Gentleman rightly asked about public services. Our No. 1 priority is to ensure that the NHS has everything it needs to get through this period. I made that commitment last week. I re-echo that commitment today.

On the Barnett consequentials, the right hon. Gentleman will have seen this week that we released the full amount of the Barnett consequentials resulting from the Budget package in advance to all devolved authorities. Today, I announced the overall quantum. Again, we will quickly release those, in advance of those payments being released in England, to the devolved authorities, so they can plan appropriately.

The right hon. Gentleman can rest assured that all the specific public service issues he mentioned, whether school meals, schools and social care, are under active and urgent consideration.

I will end on this point. Our public servants, in particular those working hardest in our NHS right now, deserve nothing but our support at this difficult time. I want them to know, and I want the country to know, that we will do whatever it takes to get through this.

Tax Avoidance and Evasion

John McDonnell Excerpts

Tuesday 25th February 2020 Commons Chamber

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

I beg to move,

That this House notes that the tax gap, the difference between the amount of tax that should be paid to HMRC and what is actually paid, has been estimated at between a minimum of £35 billion and £90 billion; believes that successive Conservative governments have failed to address tax avoidance and evasion while making savage cuts to public services and undermining the social security net; further notes that the Tax Justice Network has described the UK as backsliding on financial transparency; is concerned by reports of the Conservative Party’s links with individuals and companies that have engaged in tax avoidance; and calls for the proper funding of public services after a decade of austerity and for robust action to tackle tax avoidance and evasion.

With a Budget in just over a fortnight, over the coming days we will be setting out an agenda of issues that we believe the Government need to address to tackle the social and climate emergencies that our country now faces. And yes, there is a social emergency in many of our communities. Yesterday, my hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary, exposed the appalling levels of health inequality across the regions of our country. Today, the Marmot report shows what he described as the “shocking” results of 10 years of austerity: life expectancy has stalled for the first time in more than 100 years, and has even been reversed for the most deprived within our community, women in particular.

Yesterday, the hon. Member for Denton and Reddish (Andrew Gwynne), the shadow Secretary of State for Communities and Local Government revealed the scandalous impact of cuts to local councils—for example, the impact they have had on the services desperately needed to keep our children safe. This afternoon, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), the shadow Minister for mental health and social care, will describe the immense suffering and distress caused by the cuts in social care imposed by this Government. Members will remember the report only last year, reporting that 87 people died each day before actually receiving the care they needed.

At present, we have a Government who, on this evidence, have proved to be incapable of providing care for our people, of housing our people, of feeding them or of providing the work that will lift them and their families out of poverty. There is a lot of hyped-up talk about the big expenditure numbers that might be associated with the coming Budget. What we are interested in is outcomes, and the impact on the wellbeing of our people. These will be the key tests of the forthcoming Budget. Will it really end austerity? Will it really reverse the decade of austerity cuts that have been imposed on our community by this Government? Will it ensure that our people are properly cared for, properly housed, properly fed and lifted out of poverty? Alongside all of this, in a week when we have seen the Prime Minister’s failure to respond to the flooding that has damaged so many of our people’s lives, the overriding test is: will this Budget tackle the existential threat of climate change?

It is interesting that, contrary to virtually all the advice from mainstream economists 10 years ago, the newly elected Conservative Government took the political decision to impose austerity cuts on our community. As we have repeatedly said, it was a political choice, not an economic necessity. The alternative was to ensure that we had a fair taxation system to fund our social infra- structure, and that we borrowed to invest in our physical infrastructure to grow our way out of recession. The reality is rather that the neo-liberal ideologues simply could not let the economic crisis go to waste. They seized the opportunity to launch their experiment to downsize the role of the state through cuts, outsourcing and privatisation. This was linked to ever more restrictions to reduce the effectiveness of trade unions to represent their members and to shift the balance of power between capital and labour in the workplace.

The result has been that virtually every area of our public services is in crisis, with the slowest growth in wages in 200 years, 8 million of our people in working households in poverty and over 4 million of our children in poverty. The UN rapporteur has described levels of destitution in our country and the treatment of disabled people as an abuse of human rights. The Government’s alibi for austerity was the global financial crisis, even though Government spending was never a cause of that crash. Now, 12 years on, the Government no longer have that fake alibi for the cuts. It is clear the Tories do not just want to shrink public services and cut public sector jobs in the short term; they want to downsize our public services for good—as the Institute for Fiscal Studies has said, baking austerity into Government.

All this suffering, all this hardship, all this holding back the potential of a near-generation of our people would have been rendered completely unnecessary if we had had a fair taxation system and had invested in our economy. A fair taxation system starts with ensuring that people and corporations pay their taxes. That patently is not the case at the moment. There is much talk about levelling up; well, let us start with levelling up the rules of taxation and the amount many of the rich and the corporations pay in taxes.

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

Surely the right hon. Gentleman will be aware that the top 1% of earners in this country now contribute about 29.6% of all taxation, whereas in 2009-10 the figure was only about 25%. How can he say that is a failure?

[John McDonnell]

They pay that much because they earn so much more than everybody else, but the other issue, and it relates—[Interruption.] Let me finish. We have this debate time and again. The hon. Gentleman is referring to income tax, but when we take into account overall taxation we see that the poorest-paid in our country are paying about 40% of their income while the richest are paying around 34% of their income. It is the poorest who are hit hardest, it is the poorest who have shouldered the burden of austerity, and it is the poorest whose life expectancies are being reduced at the moment. That cannot be right; surely to God no one in this House was elected to ensure that life expectancy for the poorest stagnates and for some goes backwards.

[Ms Angela Eagle (Wallasey) (Lab)]

Does my right hon. Friend agree that the other side of this calculation is that those who are best able to pay ought to pay their fair share of tax, and what we have seen over the last few years is the creation and mass-marketing of tax evasion schemes? Those now exist like package holidays—they are package schemes. Does he also agree that the Treasury has been very remiss in not cracking down on this awful emergence of tax schemes that are packaged to make it much easier for people to avoid paying their fair share?

[John McDonnell]

I want to pay tribute to a number of my colleagues in this House who have consistently raised this issue, and my hon. Friend is one of them. When we had the debate very early on—in, I think, 2012 or 2013—a number of hon. Members, including my hon. Friend, started describing what was taking place as tax avoidance on an industrial scale. That is exactly what has happened, and it has not got better; it has got worse consistently.

At the moment, Her Majesty’s Revenue and Customs is saying that the tax gap is about £35 billion, and it defines that as the difference between its estimate of the tax that should be paid and what is paid. But we know, and HMRC accepts this, that that does not include many of the abuses of corporate profit shifting, and HMRC acknowledges

“many sources of uncertainty and potential error”

in its own calculations. So other experts have suggested—this is the point my hon. Friend is making—that the tax gap could be as high as £90 billion overall. So let us look at who we know is not paying their taxes.

[Paul Blomfield (Sheffield Central) (Lab)]

Each year I organise an annual community consultation, and each year there has been growing anger among my constituents about the sense that they are paying their fair share from very ordinary incomes while the level of corporate tax avoidance has been growing out of control as successive Conservative Governments have failed to step up to the mark in tackling it. We are apparently losing over £1 billion of tax due on UK earnings from just five of the biggest US tech firms; that is money that could pay for more than 42,000 rooms in care homes for people who desperately need them. So does my right hon. Friend agree that there is enormous public support for tough action on corporate tax avoidance?

[Mr Speaker]

Order. I can put the hon. Gentleman’s name down if he wishes to make a speech, but we must have shorter interventions.

[John McDonnell]

May I thank my hon. Friend for that wonderful speech?

Whoever is in government needs to accept that this is an issue that we have to address, because there is now an increasing lack of confidence in the tax system, and I know from meeting companies, including some in the City, that fulfil their obligations that they feel anger towards those that do not; so this anger is felt within the wider community, but also within the business community. It destabilises the whole process of tax collection and undermines confidence in the system, and also undermines confidence in Government overall.

As I have said, some have suggested that the tax gap could be as high as £90 billion. Let us look at who is not paying: it is the rich corporations, and in particular the multinationals. Successive Conservative Governments have been, I have to say, weak on multi- nationals. According to analysis by Tax Watch UK the top five tech companies alone avoided around £5 billion in UK tax over the last five years. We need to recognise that this is money that could be used by whichever Government for useful purposes. That sum is enough to reverse the cuts to homelessness services—we should remember that 700 of our fellow citizens died on the streets last year. It is enough to provide support for families to prevent children from being taken into care, and Members will recall that when we had a debate not long ago we had the report that there are record numbers of children coming into care because of the cuts in early interventions to support families.

We have had discussions in the House about this, therefore. Recent years have seen secret sweetheart deals between HMRC and tech giants, and they have only been made public as a result of the tireless work of tax justice campaigners. The Government have trumpeted their digital services tax. It was trumpeted before the election, but that tax has been widely criticised. It is aimed only at digitalised business models, and many have said—and I agree—that it is hard to administer and becoming impractical. It creates a pitiful 2% tax on the revenues of a very small group of businesses and is predicted to raise £5 million only this coming year —and that is if it is brought into force on 1 April. Now there is talk of the Government dropping even that hollow half-measure. So let us be clear: if the Government drop or delay the digital services tax, as is rumoured, it will effectively be another tax giveaway to powerful multinationals.

Let us look at non-doms again. Non-dom status is another tax giveaway. My right hon. Friend the Member for Barking (Dame Margaret Hodge) has been raising this issue consistently for quite a while. This is just another area where the Tories have said a great deal but have not had an effective clampdown. It is a colonial hangover from 1799 that allowed colonists to shelter their property from tax—a carve-out from the general rule that UK tax residents pay tax on income wherever it is earned. It is a carve-out that applies only to some who might have their domicile outside the UK.

George Osborne, one of the many Chancellors I have dealt with over the years, tinkered with the process and introduced an annual charge of £30,000 to be paid by some non-doms and £60,000 by others. The Government now will claim they are abolishing non-dom status, but actually it is being kept intact for a significant number of years despite the evidence that those who use this status are the wealthiest individuals, able to pay, able to contribute to the funding of our public services, and able to contribute to our society, which they enjoy living in for long periods. Previous estimates have said that fully abolishing now the status of non-doms could raise £1 billion for our public services—think what that could do now to assist families whose homes are flooded.

There are many other ingredients; non-dom status is just part of an array of ingredients that enable abuse of our tax system. Secrecy is at its core; it is financial secrecy, and especially the exploitation of overseas territories and Crown dependencies to avoid tax.

Last week, to this Government’s shame, the Tax Justice Network judged that the UK had increased its secrecy score by more than any other country since it last measured financial secrecy. It said that the UK had been backsliding in recent years by building its “spider web” of satellite tax havens. Some of us were in this House when the Panama papers were exposed. They revealed that the most popular haven in the world is the Virgin Islands, which is a British overseas territory.

A lot of words have been said about enablers, but there has been a history of failure to clamp down on the enablers of avoidance and evasion, including the auditors and, yes, the lawyers. One recent paper said—my hon. Friend the Member for Wallasey (Ms Eagle) made this point—that

“the tax services industry, propagated by the Big Four—”

the big four accountants—

“is essentially the apex of this pyramid of factors that helps build, manage and maintain”

the tax havens, but the Government have said and done little to crack down effectively on the tax services industry.

There has also been a history of failure to recognise how the City of London is complicit in the financial misconduct affecting the global south when it comes to tax collection and the hiding of taxation. According to Oxfam, the global south is losing £170 billion in tax revenue due to the wealth of individuals and corporations hidden in tax havens associated with this country. Surely it is our responsibility to ensure that London is not used as a global laundromat for washing dirty money. It is the Government’s duty to protect our citizens by stopping that dirty money undermining the rule of law internationally and undermining international stability. What goes around comes around, and allowing the City of London to be used in that way will have its consequences in the long term for all of us. To collect taxes we need tax collectors, yet Her Majesty’s Revenue and Customs has seen its staff numbers plummet from 105,000 in 2006 to 65,000 in 2019.

As we have raised before, there is a litany of legal loop- holes that the Tories have not acted on or have actively created. The general anti-abuse rule that many of us argued for has proved to be toothless—far weaker than anti-avoidance rules in other legislations. The use of legal professional privilege in tax avoidance cases is little short of a disgrace. George Osborne promised the “march of the makers”, but Nicholas Shaxson has said that the Tories have only created the “march of the takers”. I concur. A number of us have been working with a range of tax experts, accountants, the Public and Commercial Services Union, the HMRC staff union, tax justice campaigns and corporate reform groups. Labour has developed a plan to tackle each of those issues, and there is a range of expertise in this House on all sides arguing for more action.

On secrecy, we believe, as others have said, that we need a stronger public register of trusts and beneficial ownership of companies. We need to put an end to financial secrecy, because the current register of trusts, so often a vehicle of tax avoidance, is not truly public and the penalties for non-compliance are pathetic. The current register of who controls companies is not being verified properly and has a high threshold for disclosure. We have a plan for working with overseas territories and Crown dependencies to accelerate their move towards tax transparency. It is just not good enough that the deadline for establishing public registers of company controls has slipped to 2023 at the earliest.

We believe there should be a clampdown on enablers through the introduction of stronger laws on facilitating tax evasion and, yes, harsher penalties for those who promote schemes. The current law has a wide defence for those accused of facilitation, and penalties for promoters of tax avoidance and evasion are just too weak. We urge the Government to introduce an overseas loan transparency register. That would tackle injustices of the kind that we have seen in, for example, Mozambique. We met a group of women from Mozambique, who told us what had happened in their country. Some of their politicians had undertaken secret lending using UK law and had ripped billions from the budget of Mozambique. Then, when the effects of climate change were felt through flooding following a major cyclone, Mozambique did not have the resources it needed to protect its own people.

We urge the Government to introduce a plan to increase targeted audits undertaken by HMRC to raise the nearly £3 billion owed by self-assessment taxpayers. The majority of the self-assessment tax gap is owed by a small number of self-assessment taxpayers, who could be effectively targeted by such audits.

Our concern is that far from moving forward on tackling tax avoidance in the coming Budget, the Government are opening up the opportunity for more abuse, specifically with their proposals for freeports. The evidence suggests that freeports simply relocate jobs and investment, rather than creating new jobs and investment. Far too often, they become hubs for the abuse of workers’ rights and tax evasion.

Let me be straight with the Conservative party. There is a concern about why the Tories will not tackle tax evasion and avoidance effectively. It is argued by some that they are in the pockets of the City, and in the pockets of the avoiders, the evaders and the enablers. It is hardly surprising that some will be able to level that charge. For example, they could come to that conclusion when only this month we discovered that Lycamobile, which donated £2.1 million to the Conservative party, is embroiled in three tax disputes with HMRC over £60 million in unpaid tax. Indeed, the French auditors were blocked from accessing that company’s records in this country. The problem, however, may also lie closer to home: not just with donors, but with the Chancellor himself.

I put it on the record that there are questions I believe the Chancellor himself, given his past associations, has to answer about his own attitude to tax avoidance. I have written to the Chancellor with a series of questions on this matter. In recent weeks, it has become clear that the Chancellor of the Exchequer, the right hon. Member for Richmond (Yorks) (Rishi Sunak), has had close associations with tax avoiders and tax havens. If people are expected to have any confidence in this Government’s commitment to tackling tax avoidance, it is critical that the Chancellor is fully open and transparent about his own past activities. A former close business associate in two companies in which the Chancellor held senior positions was ordered to repay £8 million after engaging in an unlawful tax avoidance scheme. Two of the firms in which the Chancellor held senior positions have made use of the notorious tax haven of the Cayman Islands.

On our side, we will continue to press the case for a fair taxation system. To do that we need first of all to close the loopholes that allow tax avoidance and evasion to flourish. However, we also need to deal with the overall regulatory architecture of finance, a challenge raised by a report published this morning by the True & Fair Campaign. Let me quote from that report:

“the last four years have seen a multiple pile-up of mis-selling scandals and incidents of regulatory failure. It has witnessed the repeated and wanton abdication of responsibility by leading market participants...Worst of all, it has demonstrated a breathtaking betrayal of the trust...rightly owed by so-called financial services professionals to their investors and employees.”

That report is called “Asleep at the Wheel”. It singles out for criticism the Financial Conduct Authority, and in particular Andrew Bailey, appointed by the Government to be the next Bank of England Governor. On several occasions I urged the previous Chancellor, in this House and by correspondence, to delay the appointment and installation in office of Mr Bailey until there has been an independent review of his role at the FCA. This report adds urgency to that recommendation. I urge the new Chancellor to act on it now.

In conclusion, the forthcoming Budget will be a test of whether the Tory party has, as it claims, turned a page. From the evidence so far it looks like a bit more Johnsonian bluster. There is nothing on the scale needed to address in any serious way the damage Conservative Governments have inflicted on our community over the past decade, and certainly nothing on the scale needed to tackle the climate crisis. Any realistic policy to end and reverse austerity and invest for the future needs, at its base, a fair taxation system. We will wait, therefore, to see whether in this Budget, the Government will at long last effectively confront the scandal of tax evasion and avoidance. All I can say is that judging on past form, I am not holding my breath, and I do not think many others are either.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 11th February 2020 Commons Chamber

[Sajid Javid]

I can absolutely confirm that to my right hon. Friend. We are blessed with talent throughout our country. Wherever we look, we have talent. Our country is oozing with talent, and that, of course, includes Wales: we have just seen a demonstration of that talent. We need to ensure that there is much more opportunity, which means investment in infrastructure and skills and retaining a dynamic, competitive economy.

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

In the last month we have seen the Financial Times predicting that the Chancellor will miss his balanced budget target, and today we have seen zero growth in the economy. At the same time, Mr Dominic Cummings has demanded cuts in taxes and massive spending commitments, so the Chancellor has resorted to floating a possible raid on middle-income pensions, a mansion tax—once described as Marxist—and a 5% cuts round to find some money to pay for Mr Cummings’s demands. Yet in the real world out there, the victims of Wonga, the payday loan company, were told a fortnight ago that they would receive less than 5% of the compensation that they are owed. Will the Chancellor take a break from his arm-wrestling with Mr Cummings, and introduce measures to compensate the Wonga victims fully?

[Sajid Javid]

I think that I have to correct myself. I said that there was talent throughout the country, but, judging by what we have just heard, I do not think that that includes the Labour party.

There is all sorts of speculation about the Budget, and I am not going to respond to that. However, the right hon. Gentleman will know that when the Budget is published, it will be published alongside a report by the independent Office for Budget Responsibility. Those are the figures that are going to matter, not the ones that are speculated about in the press. As for growth, the right hon. Gentleman will also know that although there has been a fall in global growth, the International Monetary Fund forecasts that Britain will grow faster this year than France, Germany, Italy and Japan.

[John McDonnell]

I asked about Wonga. [Hon. Members: “You did.”] On the basis of that answer, I can see why No. 10 nicknamed the right hon. Gentleman CHINO: Chancellor in name only.

Wonga is just one example of the recent scandals in the financial sector. We have seen the scandals of closet tracking last year, London Capital & Finance, Woodford Investment Management, the tax avoidance by Lycamobile —a Tory party donor—NMC Health’s misreporting today, large-scale money-laundering, and audit failure after audit failure. Regulation of the finance sector—I say it again—is clearly failing, and now there is the risk to jobs resulting from the tardiness of a post-Brexit settlement. Let me put this to the Chancellor: can he assure me that the White Paper that he has promised today will address the failure of regulation and the culture of recklessness and abuse that has developed in some sections of the City, in addition to the risks from Brexit, so that we can plan a long-term stable future for our finance sector?

[Sajid Javid]

I remember that not long ago the shadow Chancellor stood here and said that he wanted to be known as the “people’s Chancellor”. I think the people had a very different idea, however. On his question about high-cost credit, when I was last in the Treasury as Economic Secretary, that was the first time that any Government had introduced proper regulation around high-cost credit. This is something that we keep under review, which is why, as we present our White Paper, we will be looking to see what more we can do.

Economy and Jobs

John McDonnell Excerpts

Monday 20th January 2020 Commons Chamber

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

I beg to move an amendment, at the end of the Question to add:

‘but respectfully regrets that the Gracious Speech fails to put an end to a decade of austerity, to invest in the UK’s underfunded public services, or to scrap universal credit; notes the damaging impact that the four-year freeze in working-age benefits has had on families on low income; and calls on the Government to bring forward a plan to reverse the damaging impact austerity has had on communities in the UK, tackle the climate and environmental emergency, and reshape the economy to work for everyone by clamping down on tax avoidance, tackling insecurity in work by extending full employment rights to all workers, ending in-work poverty, and introducing a real living wage.’.

I appreciate that many new Members will want to speak today, so I will seek to be as brief as possible. [Interruption.] I thought that would be appreciated on both sides. We aim to please.

You, Mr Speaker, have been in the House as long as I have, so you will know that the classic approach to a good Queen’s Speech and its subsequent debate combines an assessment of the position of the country—a state of the nation address—with at least some attempt to address the issues facing our people. On both counts, the latest Queen’s Speech and this process is by any stretch of the imagination crushingly disappointing—I believe that the overriding view that will come to be associated with this Government may well be one of disappointment. They appear to have no appreciation of the lives so many of our fellow citizens live or of the often heartrending problems they face.

The Government’s programme in the Queen’s Speech fails to reverse the decade of austerity. As the Institute for Fiscal Studies has said, austerity is baked into the Government’s economic policies, which fail to tackle insecure work, to end in-work poverty and to introduce a real living wage. Worst of all, the Queen’s Speech fails to address the brutal hardship caused by universal credit, introduced by this Government. We face twin emergencies: first, a climate emergency, an existential threat to our planet that, as we have seen only too well in Australia and Indonesia, is rapidly spiralling beyond control; and, secondly, in this country, a social emergency resulting from a decade of harsh austerity and decline. Last year, the House resolved that we faced a climate emergency. We should also resolve that we face a social emergency.

[Simon Hoare (North Dorset) (Con)]

If what the right hon. Gentleman says is true—and I very much doubt it—and if his Eeyore approach to what the country thinks is correct, to what does he ascribe the best result for the Conservative party since 1987 just last month?

[John McDonnell]

I suppose we will have a longer debate at some stage about the outcome of the last general election. I will be straight with the hon. Gentleman: I think the overriding issue was Brexit and that the overriding message was the one the Conservative party put out of “Get Brexit Done”. I ascribe the victory of the Conservative party to that. I cannot be straighter with him than that.

In the last three months in this Chamber, we have had debates on the spending review and the last Queen’s Speech in which hon. Members have highlighted report after report from independent agencies exposing the impact of a decade of austerity. I want to seize on one group as an example—a group dear to all our hearts. If we are to lay any claim to being a compassionate or even a civilised society, surely the most effective test is how we care for our children, and on that count the Government fail appallingly. Surely no Government could ignore organisations such as the Children’s Society and the Child Poverty Action Group, which have reported that more than 4 million of our children are still living in poverty. That means that one child in three is living in poverty in our country in the 21st century. Some 125,000 of those children are homeless and living in temporary accommodation.

The effects on our children of living in poverty are well documented by the Children’s Society. Those children are more likely to be in poor health, to experience mental health problems, and to have a low sense of wellbeing. They underachieve at school, and experience stigma and bullying. The shocking statistic, though, is that 70% of children living in poverty are in households in which someone is in work. The Children’s Society describes that experience as being hit by a perfect storm of low wages, insecure jobs and benefit cuts. The result is remarkable: this Government have achieved the historic distinction of being the first modern Government to break the link between securing work and being lifted out of poverty.

The Chancellor boasted recently that wage rises were at record levels compared with those of the last 10 years. That is a bizarre boast. Wage rises are at a 10-year record high because his Government have kept wage growth so low for the last decade. Average real wages are still lower than they were before the financial crisis. [Interruption.] The Chancellor, from a sedentary position, has again used the slogan “Labour’s crisis”. Let me try to find a quotation for him. George Osborne said:

“did Gordon Brown cause the sub-prime crisis in America? No.”

He went on to say that “broadly speaking”, the Labour Government

“did what was necessary in a very difficult situation.”

The Chancellor, again from a sedentary position, refers to the deficit. Let me quote again. In 2007, George Osborne said:

“Today, I can confirm for the first time that a Conservative Government will adopt these spending totals.”

He was referring to the spending totals of a Labour Government, by implication. Let me caution the Chancellor, because we might want to examine his role at Deutsche Bank, where he was selling collateralised debt obligations, described by others as the weapon of mass destruction that caused the crisis.

As I was saying, average real wages are still lower than they were before the financial crisis. The Resolution Foundation has described the last decade as the worst for wage growth since Napoleonic times. The recent increase in the minimum wage. announced with such a fanfare by the Government, reneges on their minimal commitment that it would be £9 an hour by this year. It certainly is not. The UK is the only major developed country in which wages fell at the same time as the economy grew after the financial crisis.

The Government seem to believe that the answer to low pay is raising national insurance and tax thresholds. When tax thresholds are raised, the highest gainers are largely the highest earners, and raising them and national insurance contributions is the least effective way of tackling poverty. According to the IFS, only 3% of the gains from raising the national insurance threshold would go to the poorest 20% in our society. A £3 billion cut in the national insurance contributions of employees and self-employed people—which, at one stage, was promised by the Prime Minister—would raise the incomes of that group by 0.1%, which pales into insignificance in comparison with the losses endured from benefit and tax credit cuts since 2010. It is also worth bearing it in mind that, while the heaviest burden of austerity has been forced on the poorest in our society, this Government have given away £70 billion of tax cuts to the corporations and the rich.

We have also heard Ministers refer to the so-called jobs miracle. Of course we all welcome increased employment, but when we look behind the global figures we find nearly 4 million people in insecure work with no guaranteed hours and 900,000 people on zero-hours contracts. Britain has one of the highest levels of income inequality in the developed world. A FTSE 100 chief executive will be paid more in three days than the average worker’s annual wage. Surely no Member of this House can think that that is right, can they? The gender pay gap is 17.3% and there is now an inter-generational pay gap of over 20%. There is an 8% pay gap for black workers, and if you are disabled the pay gap is 15%. There is nothing in the Queen’s Speech that will address any of this. There is nothing that will address the grotesque levels of inequality in our society and at work, certainly on the scale that is needed.

[Sir Edward Leigh (Gainsborough) (Con)]

And 30% of all tax receipts come from the top 1% of earners.

[John McDonnell]

That is just income tax. It is interesting that the lowest earners pay 40% of their income in tax while the highest earners pay 34%. We know who is paying more in comparison with what they earn.

There is nothing in this Queen’s Speech that will address the grotesque levels of inequality. Actually, the reverse is true because the Government are now launching another assault on trade union rights and, in particular, the human right of the ability to withdraw one’s labour. The Chancellor has also rejected future dynamic alignment with EU employment rights and standards, and there is a real fear—let us express it now—that this prefaces the fulfilment of ambitions of Conservative Members to undermine workers’ rights and conditions. Maybe that is what some of their campaigning for Brexit was all about. Wage levels are low, in part because this Government have produced a productivity crisis. Over the past decade, productivity grew at its slowest level in 60 years. A German or French worker produces in four days what a British worker produces in five, not because the UK worker is any less industrious; far from it. It is because investment in the UK has been broadly weaker than in the rest of the G7 countries, especially since 2016, and investment is currently stagnating.

This has been exacerbated by the lack of investment not just in capital but in human capital—in training and skills. In his interview at the weekend in the Financial Times, the Chancellor highlighted the role of further education colleges, and I agree with him. He talked about the role they could play in raising productivity by promoting lifelong learning and skills training. As someone who benefited from further education while I was on the shop floor, I fully agree, but the reality is that this Government have brought FE to its knees, with the IFS suggesting that at least £1.16 billion is needed just to reverse the cuts that the Government have imposed on further education. We have seen a decade of a Government denying opportunities to the very people whose skills have been desperately needed, not just to fire up our economy but also to lift their families of poverty.

Alongside skills, a vibrant economy needs to invest in the future if we are to compete in the fourth industrial revolution, but on investment in research and development, the UK is now 11th in the EU. We await the Government’s detailed proposals on investment in R and D, and if they are of a scale we will support them, but it will take a lot to make up for the lost decade in this field. A lack of investment in infrastructure and R&D has resulted in productivity going backwards in many regions of the UK. The 2017 Kerslake report identified a £40 billion productivity gap in the three northern regions compared with the south, which has produced some of the worst regional inequality in all of Europe.

[Mr Richard Holden (North West Durham) (Con)]

The Labour manifesto wanted to scrap R&D tax credits. How does the right hon. Gentleman square that with his support for R&D now?

[John McDonnell]

Quite simply. It is a good question, because we wanted to scrap the tax credits and put direct investment into R&D. Some of the very advisers the Government have called upon, such as Mariana Mazzucato, have been ripping apart some of those tax credits for inefficiency and ineffectiveness. We shared the objective, but we found a different and more effective route.

We have referred in the past to the differentiation between types of investment, and the example that we have used in previous debates is stark. Planned transport investment in London is 2.6 times higher per capita than in the north, so it is no wonder that rail infrastructure in the north has been falling apart. After a decade of decline, the Government at last seem to have at least acknowledged their mistake in refusing to invest in the regions—something we have been crying out for—but we will see what scale of investment is produced after the fine words.

However, this is not just about capital investment in infrastructure. There is also a desperate need for revenue investment in the social infrastructure of our regions and nations. It is interesting that many cities and towns in the north have borne the brunt of austerity. Seven out of the 10 cities with the largest cuts in the country are in the north-east, the north-west and Yorkshire. That came about not by some miracle, but as the result of deliberate Government policy.

Imitation, they say, is the highest form of flattery, so I suppose Labour should be flattered that the Government are now looking to rewrite the Treasury Green Book to reorient investment decisions towards the regions outside London and the south-east—an exercise that Labour undertook two years ago. I suppose we should also be flattered by the Government now following Labour in adopting a fiscal rule that enables them to take advantage of low interest rates to borrow, which we advocated at least four years ago.

[Richard Fuller (North East Bedfordshire) (Con)]

As we are in the habit of stealing clothes, as the right hon. Gentleman would present it, the Labour Party had its election manifesto and the costings—two documents that obviously have been consigned elsewhere—but the third document was about corporate tax breaks, so does he suggest that the Government should look at existing corporate tax breaks and reorient them to support investment in other regions?

[John McDonnell]

Again, Labour undertook work to look at exactly that. We looked at the regional impacts and at how tax breaks are distributed unequally around the country. There is an important and exciting piece of work to be done, and some of those issues were considered by the Kerslake review in 2017. There will be some element of consensus on how we can direct future investment, and we can build upon that in the long term, because if anything comes out of the lessons of the past 10 years, it is that we need a longer schedule than just a five-year parliamentary process for capital investment of that scale.

Returning to fiscal rules, the Government have now advocated a fiscal rule that largely follows Labour’s advice, but it is this Government’s third or fourth fiscal rule—I have lost count. Some of them have been adhered to—no, actually, looking back at it, none of them have actually been adhered to, which largely defeats the object of having fiscal rules. It will be interesting to see how long this one lasts and how far it is achieved. The problem is that, even if they use all the headroom that their new fiscal rule allows, they are only paying lip service to the need to invest at scale and for the long term. If we are to tackle the issues of poverty, regional inequality and, yes, climate change, the amount of new investment mooted so far by the Chancellor is nowhere near the scale needed to address the dilapidation of our infrastructure outside London, and it is certainly not at the scale needed if we are to tackle climate change. From what we have heard so far, the maximum amount of increased investment talked about by the Chancellor is less than today’s estimate of the cost of High Speed 2.

The Chancellor’s idea in his Financial Times interview, of splitting the Treasury and sending some of its officials to work in satellite offices outside London, is a pale imitation of Labour’s plans not just for regional offices but to move whole sections of the Treasury to the north, to move the Bank of England to Birmingham and, similarly, to locate a national investment bank outside London. If the Government are going to plagiarise Labour’s policies, they at least have a duty to do so competently.

What all these things have in common is a failure to tackle the root causes of the problems to which the Government pay lip service: the grotesque levels of inequality in income and wealth in our society; the concentration of wealth and power in the hands of a few; the ownership of the economy by an elite, with the vast majority of people locked out of decision making and having no say on how the economy works or on who it works for; and an economy increasingly serving the few, not the many. There is no sign that the Government recognise the root causes of the crisis we face, whether social or environmental—at least, there is no sign of them doing anything about it.

Of course, all these investment proposals will count for very little if the Government fail to secure a post-Brexit trade deal with our EU partners that protects jobs. On that score, it is hardly surprising that businesses’ fears rose when the Chancellor, in his weekend interview, cavalierly threatened to throw our manufacturing sector under a bus, as he rejected the calls from business for alignment with the EU to ensure his own Government’s long-standing promise of frictionless trade. He casually said:

“There will be an impact on business one way or the other, some will benefit, some won’t.”

Let us be clear that if frictionless trade is not achieved in a future trade deal or, worse, if there is no deal, the bulk of our manufacturing sector, including cars, aerospace, pharmaceuticals and food and drink, will be in the “some won’t” category. One recent estimate identified that, in the past decade, we have already lost 600,000 manufacturing jobs.

Today, business leaders and unions have combined to warn the Chancellor that his promise to split from the EU will cost billions and damage UK manufacturing. Bizarrely, he blames the manufacturing companies for not having already prepared for any regulatory divergence coming out of any future trade deal, when no one knows what the deal or the rules will be. There is an element of Samuel Beckett or Kafka here, I am not sure which.

We hear that the Chancellor is the only Minister to be secure in his job ahead of the possible “night of the long knives” reshuffle in February.

[Matt Western (Warwick and Leamington) (Lab)]

Following the Chancellor’s interview in the Financial Times, the response from the likes of the CBI, the Engineering Employers Federation, the Society of Motor Manufacturers and Traders, and the Food and Drink Federation is extremely alarming. They have said in unison just how concerned they are about the Government’s ambivalence, as my right hon. Friend says, about the real cost both to jobs and to industry.

--- Later in debate ---

[John McDonnell]

The Chancellor’s statement was reckless. I wish him well, as always, but I caution him that the Prime Minister may well be preserving him in his job to take the hit for any trade deal outcomes that go pear-shaped if frictionless trade is not achieved.

I am aware that many new Members wish to make their maiden speeches. It is important that the Front Benchers do not take too long, so I will come to a conclusion. There is so much more to be said about the operation of our economy: about the failure of the Government to effectively address tax avoidance and evasion and money laundering, which infects our financial system; and about the failure, despite the scandals within the City, and within our accountancy and audit systems, to address our failing regulatory structures.

[Chris Stephens (Glasgow South West) (SNP)]

Is the shadow Chancellor aware that Her Majesty’s Revenue and Customs’ wealthy unit had 1,046 full-time equivalents 18 months ago but now has 961? What does that say about the Government’s approach to tax avoidance and evasion?

[John McDonnell]

The whole process of cuts in HMRC over the years has been a self-defeating one, by which we remove the expertise we need to ensure a fair taxation system and to tackle tax evasion and avoidance.

There is a desperate need to harness our economy effectively, as we will discuss at a later date, and to end our dependence on fossil fuel and to do so much sooner than the inadequate target date of 2050. We will still have some opportunity to address these issues in the run-up to the Budget, but for now let me conclude by cautioning the Government that this Queen’s Speech fails dramatically to demonstrate the sense of urgency and scale of action needed to provide the decade of renewal they promise. Our people have endured a decade of decline. On the basis of what is laid out in this Queen’s Speech and the policy direction laid out so far by the Chancellor, they face not a decade of renewal but a decade of disappointment. We already have had a foretaste of the dangerous politics that disappointment and disillusion creates. We must avoid it, and I ask Members to support our amendment.

[Madam Deputy Speaker (Dame Rosie Winterton)]

As the shadow Chancellor said, a great number of colleagues wish to speak this afternoon. Just to warn Members wanting to speak, let me say that I will impose an eight-minute time limit immediately after the Front-Bench contributions. I am sure that the Chancellor and the Scottish National party spokesperson will bear that in mind.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 7th January 2020 Commons Chamber

[Sajid Javid]

I welcome my hon. Friend to his place. He is absolutely right about the importance of business rates, which are a real burden, particularly on smaller community and village shops. That is why we have made our exemption for the smallest businesses—some 675,000 businesses—permanent, and we have a rural and retail discount scheme. He will also know that in our manifesto we committed to a fundamental review of our business rates schemes. I look forward to working with him and hearing his ideas.

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

Mr Speaker, may I associate myself with your words about the tragedy taking place in Australia?

Let me say to the Chancellor that I welcomed his statement yesterday that we are to have a Budget at last, as well as that the Green Book is to be rewritten—only two years after Labour proposed it; and that there is a new fiscal rule to accommodate new investment—only four years after Labour proposed it. But there was another statement, which he made reference to, which was the statement before Christmas about appointing Mr Andrew Bailey to be the Governor of the Bank of England. During Mr Bailey’s tenure as chief executive of the Financial Conduct Authority, we saw the scandals of London Capital & Finance and the Woodford Equity Fund, and the continuing saga of the Royal Bank of Scotland’s Global Restructuring Group. In all those scandals, many people—many on low incomes—were hit extremely hard. May I ask the Chancellor: did he consult any of the victims of these scandals before he appointed Mr Bailey?

[Sajid Javid]

First, I welcome the shadow Chancellor to his seat. He fought a hard campaign and I commend him for his efforts. As he noted, just before the Christmas recess, I announced the new Governor of the Bank of England—I have just referred to that. Mr Bailey was an outstanding candidate—the stand-out candidate to be the next Governor of the Bank of England. That is one of the most important public sector jobs that our country has to offer, and it is hugely important that it goes to a rightly qualified person. Any reasonable person who looks at Mr Bailey’s track record of outstanding public service will see that he is eminently qualified.

[John McDonnell]

You will note, Mr Speaker, that I asked whether the Chancellor had consulted any of the victims of these scandals, and no response was received. Clearly, he did not. I referred to the Woodford Group, and in the filings lodged today at Companies House, it is reported that £13.8 million of dividends were received by Mr Ian Woodford, and his chief executive, in the 12 months leading up to the crisis that engulfed Woodford Investment Management and affected so many investors deleteriously. That adds to concerns already expressed by others that Mr Bailey was asleep at the wheel during his period of office at the FCA. Labour has already called for a short, sharp inquiry into the recent scandals and into the regulation of the financial services sector. May I suggest to the Chancellor that it would be appropriate to postpone Mr Bailey’s installation in office until an independent inquiry into those failures of financial regulation had taken place?

[Sajid Javid]

I believe the right hon. Gentleman means Mr Neil Woodford, not Mr Ian Woodford. The ongoing inquiry is, rightly, being led independently. It is not a matter for Ministers, and neither should it be. We are, of course, interested to ensure that an inquiry takes place and that we learn all necessary lessons. I believe the Economic Secretary to the Treasury again has a meeting with the FCA on this issue tomorrow, but we will let the inquiry take its course independently. Once it is complete, we will ensure that all necessary lessons are learned.