Charter for Budget Responsibility

Debate between John McDonnell and Andrew Gwynne

Wednesday 20th July 2016 Commons Chamber

[John McDonnell]

Of course. That is why we support a fiscal charter approach and have produced a realistic one—fiscal charters must be realistic. If the Government set targets and then miss the three that they set themselves, that undermines the credibility of the Government’s economic policy making.

The only hope of rescuing the existing charter is by activating its knockout clause, which the Chancellor referred to in an earlier speech. To remind hon. Members, if growth has been below 1%, is below 1% or is forecast by the OBR to be below 1% on a rolling four-quarter by four-quarter basis, the charter’s targets can be suspended. The problem is that the OBR recently announced that it will not release new projections until later this year, so we remain in the dark about whether the charter targets are still in operation. In the absence of evidence to the contrary, we can only assume that the charter still holds. That means Departments and other public agencies are operating under the old rules; they are still implementing planned spending cuts and still holding back investment decisions. It is essential for the wellbeing of this country that the House repeals the updated charter, because as it stands the charter still requires achieving a surplus, which we all know is impossible to achieve, as I believe the Prime Minister admitted today.

[Andrew Gwynne (Denton and Reddish) (Lab)]

One flaw in the current charter is that it is all about the supply side—reducing welfare costs, reducing debt and eliminating the deficit. What this economy needs at this moment in time is investment. We need investment in infrastructure and in skills, and we need investment in the future.

[John McDonnell]

As always, my hon. Friend is spot on. We are on the same page as almost every organisation that has an interest in the economy in this country: the CBI; the Federation of Small Businesses; the British Chambers of Commerce; and the TUC. All of them are saying exactly as he has said.

The Economy and Work

Debate between John McDonnell and Andrew Gwynne

Thursday 26th May 2016 Commons Chamber

[John McDonnell]

It is interesting to note that the inquiry into Google was started under the Labour Government. It is also interesting that the last assessment that was made, not by us but by the Financial Times—an independent organisation—said that the measures introduced by that Labour Government would reap tax rewards 10 times greater than anything introduced by this Government. After six years, the Chancellor has no one to blame but himself.

The Queen’s Speech furnished us with plenty more unreal promises. The Government say that they

“will support aspiration and promote home ownership”.

Tell that to the hundreds of thousands of our young people who now have no serious chance of ever owning a home of their own. Home ownership has fallen to its lowest level in decades on this Chancellor’s watch. Rough sleeping has risen in London by 30% in the past year, the biggest rise since the current reporting procedures were introduced. Nearly 70,000 families are now living in temporary accommodation, including bed and breakfast accommodation. Nine in 10 under-35s on modest incomes could be frozen out of home ownership by 2025 according to independent analysis.

[Andrew Gwynne (Denton and Reddish) (Lab)]

That phenomenon is not just happening in London; we now have tents in the streets of Manchester. Is that not a shocking indictment of this Government’s housing policy?

[Jake Berry (Rossendale and Darwen) (Con)]

It is a shocking indictment of a Labour council.

Tax Avoidance and Evasion

Debate between John McDonnell and Andrew Gwynne

Wednesday 13th April 2016 Commons Chamber

[John McDonnell]

The issue of a public register is critical to any measures that are taken in the future, because such a register will enable these kleptocrats to be held to account—particularly in the developing world, where they have denied development resources to the economies of their countries.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Transparency throughout the Crown dependencies and the overseas territories is, of course, crucial. Does not the lack of such transparency further reinforce the message to our constituents that there is one tax rule for the rich and powerful, and another for everyone else?

[John McDonnell]

One of the key things that I think the whole House must do in the coming period is re-establish the credibility and fairness of our taxation system, which has been so badly damaged.

Tax Avoidance and Multinational Companies

Debate between John McDonnell and Andrew Gwynne

Wednesday 3rd February 2016 Commons Chamber

[John McDonnell]

I am grateful for the intervention. The hon. Gentleman probably knows that I was not the most enamoured of the Labour Government’s track record during that period, but it was a Labour Government who started this inquiry and the hon. Gentleman’s Government took six years to complete it. According to a recent estimate by the Financial Times, the measures introduced by the Labour Government will reap 10 times the amount of tax that this Government have secured.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will not many of our constituents find it difficult to understand the fact that this information is largely in the public domain? We know the profits, assets and liabilities of Google in the United Kingdom because those finances are public. We also know how much tax is being paid. Does that not lead us to the conclusion that the tax rate is 2.77%, not 20%?

[John McDonnell]

Let me come on to that point.

It did not take long for independent analysis to show what a derisory sum the Google tax payment was. The word “derisory” is not just my description, but the word used by the hon. Member for Uxbridge and South Ruislip (Boris Johnson), the Mayor of London, as well as many others. Google had a UK turnover of approximately £4 billion in 2014-15. If profits here were similar to those across the whole group, about a 25% return, that implies £1 billion-worth of profits. If the standard 20% corporation tax is levied, that implies a £200 million tax bill for the one year, not the £200 million paid by Google for the decade. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, independent assessors have estimated that the Google tax rate for the past decade was 3%.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between John McDonnell and Andrew Gwynne

Wednesday 11th September 2013 Commons Chamber

[John McDonnell]

I want to follow on from the excellent exposé by my hon. Friend the Member for Sunderland Central (Julie Elliott) of the rationale for the concerns of the Opposition and others. To be frank, I thought that we had won this argument. As my hon. Friend the Member for Edinburgh South (Ian Murray) has said, we had a debate on blacklisting several months ago, in which there was cross-party understanding of the vulnerability that people feel in the work force. As my hon. Friend the Member for Sunderland Central has said, that vulnerability relates not only to blacklisting, but to victimisation.

I raised the issue in 1997 and in 2003. We got some legislation that was not effective and then I convened the first meeting of the Blacklist Support Group, which brought together in 2008 all those workers with blacklisting cases that they wanted to pursue. One of the breakthroughs for us was the raids undertaken by the Information Commissioner, under the Data Protection Act, that exposed the scale of blacklisting, with nearly 4,000 people on at least one list. People are anxious for us to ensure that any future legislation does not set up a system that could make them vulnerable again.

It could be argued that some of our amendments are a belt-and-braces approach, but this is about restoring confidence. The tragedy in the past—I do not mean to be hypercritical of any organisation by saying this—was that it was not just employers exchanging blacklist information. We now know that it was also coming from the police and security services and, actually, some renegade trade unionists, who passed information to employers who then went on to compile a blacklist. That is why, if we are to establish a new system that gives the certification officer a wide range of responsibilities and that appoints—in the words of my hon. Friend the Member for Wansbeck (Ian Lavery)—the bizarrely named assurer and inspectors, we need to ensure that there is a belt-and-braces approach so that they are properly tasked with abiding by the duty of confidentiality. That is why our amendments are so critical.

Amendment 107 states that it is important that the assurers

“have a duty of confidentiality to the trade union”.

It is critical that the trade union has confidence that those officers have such a duty. It is also critical, as amendment 108 sets out, that when those individuals are appointed, their qualifications are known and they are qualified to do the job. I hope that my hon. Friend the Member for Wansbeck does get the job and the wage from Len McCluskey. I am sure that he is completely qualified to do the job. There needs to be some assurance that the people who are appointed are qualified to do the job. In addition, there must be a process by which assurers can be dismissed if they breach confidentiality. That is also dealt with in the Opposition amendments, which would assure people that their concerns about the use of this information for blacklisting and victimisation are taken seriously in the Bill.

I share the concerns about line 28 on page 41, which states that the duty of confidentiality involves taking “all reasonable steps”. That is not acceptable because it is not powerful enough. Amendment 118 would replace those words with “all necessary steps”. We must ensure that any action that is taken goes beyond reasonableness; it must be necessary and effective.

Further down page 41, the circumstances are set out in which a member’s name and address are permitted to be provided. The list includes the member’s consent, but that seems to be overridden by a range of other situations in which the certification officer may provide names and addresses.

[Andrew Gwynne]

I commend my hon. Friend for the work on blacklisting that he has done in Parliament. Is he as concerned as I am about proposed new section 24ZG(3)(d) to the Labour Relations (Consolidation) Act 1992, which states:

“where it is required for the purposes of the discharge of any of the functions of the assurer”?

That seems to be very wide-ranging.

[John McDonnell]

I have no idea what that means. It has such a range of interpretation that it gives the assurer the ability to provide information to virtually anyone for any purpose. It will undermine the confidence of workers who have experienced blacklisting or victimisation and workers who are currently at risk if the Bill is passed in this form.

One of the reasons why there may be a disclosure of information is

“where it is required for the purposes of the investigation of crime or criminal proceedings.”

In the real world of industrial relations, many Opposition Members have seen a crime being alleged because of the process of picketing. Because the list includes the investigation of an alleged crime, the certification officer will be able to hand over the names and addresses of pickets who are accused of action that could be construed to be illegal. That will undermine people’s ability to exercise their democratic rights as trade unionists by undertaking picketing or other forms of industrial action.

I am anxious about the whole clause. It flies in the face of the assurances that have been given in the House that blacklisting and victimisation will be addressed. People have been blacklisted or victimised simply because they are trade unionists or health and safety representatives. On the blacklist that we discovered, names had been misinterpreted and the wrong people had been identified. Some people had been blacklisted simply because they had undertaken political activities unrelated to trade union activities.

The Opposition amendments simply try to gain the assurance that a duty of confidentiality will be placed on the officers who will implement the new regime. I do not find that to be excessive. It will not introduce burdens on trade unions, the certification officer or the assurer. It will simply clarify their legal duties. One of their legal duties must be to protect the information that they are inspecting or, to use the new verb, “assuring” as a result of this legislation.

I urge the Government to accept the amendments. I hope they do, but even if they cannot, they can at least take the spirit of what Opposition Members have said and return with their own amendments to ensure that there is a duty of confidentiality on the officers concerned; that the qualifications can be properly examined when the assurer is appointed; that assurers can be dismissed if there is a breakdown of confidentiality; and that there is absolute security for the information the assurer guards and controls on behalf of the trade union.

Enterprise and Regulatory Reform Bill

Debate between John McDonnell and Andrew Gwynne

Tuesday 16th October 2012 Commons Chamber

[John McDonnell]

I chair the PCS parliamentary group, which represents the union that represents the staff. I have therefore been involved in the discussion with them about the cuts that have taken place. The pressures that existing staff are under are immense. Reducing staff numbers still further will lead almost to the breakdown of the organisation.

Let me return to the Bill. We have been saying that there is real worry about the Government’s intent and the future of the organisation. The cuts in resources and staff are being compounded by the undermining of the legislative basis on which the organisation operates. It is that legal basis that we must consider.

On clause 52, the original legislation laid out a general duty to send out the message to which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) referred. As a community we needed and continue to need the message that there is an organisation advising the Government that will encourage and support a society based on freedom from prejudice and discrimination—a society based on individual human rights, respect for the dignity and worth of each individual, equal opportunities to participate and a mutual respect between groups based on understanding and valuing diversity and shared respect for human rights. I do not think that society has changed so dramatically that that statement is irrelevant—it needs to be embodied in legislation and repeated time and time again. It had all-party support in 2006.

[Andrew Gwynne]

My hon. Friend is absolutely right, and I am proud to have been part of the Government that introduced the Equality Act. However, does not this provision shed light on the Government’s real motives? By stripping down the commission and stripping it of its remit, they are undermining the equalities that we cherish and hold dear.

[John McDonnell]

I do not see how it can be interpreted any differently. The argument has been made that this provision has been included in the Bill for a purpose and that it is all to do with removing restrictions on businesses so that they can be encouraged to be more enterprising and create better profits, which might somehow contribute to tackling the recession. The argument is almost that we cannot afford equality, but our argument is that we cannot afford inequality. That is exactly why we enacted that legislation in 2006. There were strong arguments about not just fairness but efficiency. If there is discrimination against people, sections and groups in society, they cannot make their contribution. That was why we made a strong economic argument for the 2006 Act.

Finance (No. 3) Bill

Debate between John McDonnell and Andrew Gwynne

Tuesday 5th July 2011 Commons Chamber

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is setting out his case very well. In recent years, there has been an ever-speedier move towards the globalisation of our economies, and he is absolutely right that this assessment and review is needed in respect of our obligations to global society. My hon. Friend has set out that case perfectly. Does he agree that it is crucial that we do not overlook some of the global challenges in tackling poverty and climate change?

[John McDonnell]

Yes, and when the various groups lobbied us last month it was interesting to note how the debate had progressed since the original discussions about the Tobin tax. The debate had become much more refined and concretely related to the global needs that my hon. Friend mentioned. There has been a debate about how we allocate these resources and what the greatest priorities are, and so far it has been about poverty in this country so that we do not in any way undermine support for such taxation among people in the UK, but we must balance that with support for efforts in the developing world. The climate change issue has also come on to the agenda since the Tobin tax was first proposed.

One question that arose in the discussions in Central Hall was what the effect would be if we did raise, for example, £20 billion in this country. It was said that if we spent £4 billion, we could halve child poverty in this country overnight, and if we spent £5 billion, we could insulate every home and therefore take people out of fuel poverty. Such examples bring home the reality of what could be done through such a tax.

It is not a tax on normal retail banking or on savings or mortgages. It does not hit the ordinary saver. It is a micro-tax, and in some ways a tax on short-term speculation banking. It does not fall on UK banks alone either, as foreign banks operate in the City. I would take particular delight in taxing Goldman Sachs in this way—that is a personal grudge—but there are also other hedge funds operating in the City of London. A strong argument, which we have heard today, has been made for seeking international agreement. Negotiations are taking place and there is consensus, even within the European Parliament, on introducing a European-wide financial transaction tax. My concern about that is that the European discussions were about using that tax to fund the European Commission—I might have more than reservations about that proposal.

--- Later in debate ---

[John McDonnell]

There is a spell, is there not—[Interruption.] The new sequel film is coming out soon, so we will see what spell there is to retain bankers in this country, if we need them.

I do not take this issue about international agreement lightly. That is why I am calling for a report, as any report would examine that issue. We are going back to the point that my hon. Friend the Member for Wirral South (Alison McGovern) made earlier, because this country is best placed to take the lead in trying to secure some of these agreements and such a report could address how we could do that. However, it certainly should not hold us back from taking unilateral action.

The other matter that has been raised in this debate previously is the concern about avoidance, but we can design out any avoidance measures. We can design this tax to make it difficult to avoid, just as we did with stamp duty.

[Andrew Gwynne]

My hon. Friend rightly talks about taking the lead. Are we not hearing exactly the same arguments as the ones used against my private Member’s Bill to tackle vulture funds in the previous Parliament? Thankfully, the Bill was pushed through by the previous Government using the wash-up procedure and it has been made permanent by this Government. Were not exactly the same arguments employed during the debate on that Bill? Is it not sometimes right that we do take the lead?

[John McDonnell]

Yes, I had forgotten that example. It is a good example of how unilateral action can raise the standard overall across Europe and globally.

Another issue raised in our debate on the Tobin tax a number of years ago concerned whether it would be practical. Things have moved on since then and the system for undertaking financial transactions is highly automated and centralised. New systems have been put in place, and I refer Members to the study by the Institute of Development Studies that identified how the system now operates:

“The Continuous Linked Settlement Bank, launched in 2002, now settles more than half of all foreign exchange transactions, with the remainder processed through national real-time gross settlements systems.”

Now we have the systems in place, through advances in new technology, to monitor the process and thereby ensure that tax is collected easily and that avoidance can be prevented.

Finance (No. 3) Bill

Debate between John McDonnell and Andrew Gwynne

Wednesday 4th May 2011 Commons Chamber

[John McDonnell]

Strangely enough, given that I represent Hayes and Harlington, an urban area, I do not have an awful lot of engagement with the NFU, although my area does still have one farm left in it. I have an engagement with Hillingdon chamber of commerce—I am meant to be hosting its annual parliamentary lunch at the moment—and a number of its members have explained to me their concerns about the impact on small firms. I share the view of the hon. Member for Amber Valley: capital allowances should not be used just as mechanisms to be manipulated in years of high profit. There is a need for an overall review of capital allowances, but I find it unacceptable to cut them in the short term to pay for corporation tax reductions and for the beneficial treatment of multinational corporations. That is why I support the amendment, which is fairly mild-mannered and simply asks whether we can reconsider the matter.

As my right hon. Friend the Member for Delyn said, I would expect a wise Government to have the Treasury carry out such an assessment regularly. The amendment asks for that process to be more open and transparent and for it to be reported to the House so that we can have a full and thorough debate. I hope that the Minister can assure us that he can at least give us some line of reporting on the implementation of the policy over the coming period.

It worries me that as we cut capital allowances, which will reduce corporation tax in this country, we will get into a cycle just like that in the 1930s with an internecine battle between countries about reducing corporation taxes. That will lead to a policy of beggar thy neighbour in order to secure some short-term gain in the form of overseas investment in the UK. I do not believe that that is the solution and I think it will be found to be counter-productive in the long term, even though there might be some short-term gains to tide the Government over for the next 18 months, if they survive that long.

I believe that the Government are mistaken in bringing forward this process of corporation tax reduction. If we are paying for that through the capital allowances changes, we will divide industry and the private sector. A large number of small firms, particularly in the manufacturing sector, will lose out and will not gain sufficiently as a result of the corporation tax cuts. Other areas of the economy, particularly the finance sector, will gain yet again and yet more anxiety will be expressed in the private sector about the Government’s divide-and-rule policy.

[Andrew Gwynne]

Is it not worse than that? Many of the small manufacturing industries in my constituency have been dependent on an old declining style of manufacturing. The capital allowances were the mechanism that they used to diversify. On my hon. Friend’s point about rebalancing the economy, if we are to do that in areas that are heavily dependent on manufacturing industry, we must allow them to diversify into the new technologies and new manufacturing sectors.

[John McDonnell]

That is exactly the point that my right hon. Friend the Member for Delyn made and that I wish to reiterate. Capital allowances were introduced as a method of the Government’s trying to shape behaviour within industry as best we could. They were a way to stimulate sectors of the economy, but they have also been used to stimulate innovation. The Government are committed to the stimulation of the green economy and I, like other Members on both sides of the House, deeply regret the Government’s failure to act sufficiently swiftly to establish the green investment bank and to get it up and running, but that is a subject for another debate.

The role of capital allowances, particularly in the environmental field, could be key and cutting them with this broad-brush approach will deny the opportunity to the environmental industries, particularly those involved in the development of renewables, to become world leaders as the Government envisaged that they would in the coming period, an idea that we all supported. This is my right hon. Friend’s point: if a review of the impact of the capital allowances were linked to the disastrous corporation tax policies overall, we would have the opportunity to consider the implications sector by sector and industry by industry as well as the design of the appropriate mechanisms, allowances or other things to stimulate those sectors of industry.