Finance (No. 2) Bill

Jonathan Edwards Excerpts

Tuesday 1st April 2014 Commons Chamber

[Danny Alexander]

As usual, my hon. Friend is absolutely right. In particular, the measure will help small and medium-sized manufacturers outside London; they are the backbone of our economy.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Will the Chief Secretary to the Treasury tell the House where the UK lies in the global league of business investment as a percentage of GDP?

[Danny Alexander]

I do not have those figures immediately to hand, but I can tell the hon. Gentleman that, according to recent indices from major international firms, the UK is seen to be in the top two or three countries in the world for companies to invest in. One of the accountancy firms recently published an index showing that the environment for investment in the UK was now among the top half dozen in the world. Our position has improved significantly in recent years.

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[Chris Leslie]

I do not think it helps with social cohesion to move from the 50p to the 45p rate. That sends a very bad signal, and I know that Members on the Government Benches will feel that in their constituencies, especially when the Government are jacking up taxes and reducing tax credits and other help for some of the poorest in society, while giving that very generous tax cut—typically £107,000—to the average millionaire at the top of the scale. I do not think a 50p rate is unreasonable.

It is unreasonable for Government Members to say that a 50p rate does not raise any money—“we cannot possibly do it”. If it is telegraphed to that set of high earners at the point at which a 50p rate comes into effect that it will be going in a year or two anyway, of course they can stave off the point at which they draw down their dividend from their personal service company. Everybody knows how they managed to avoid paying that 50p rate. They waited until the new tax year ticked over, then they paid the lower rate. It was very simple, which is why in the statistics we suddenly saw bonus payments go through the roof, sky high, at the point when the 50p rate fell to the 45p rate. We should have been allowed a proper assessment of what happened at that point.

[Jonathan Edwards]

I am listening intently to what the hon. Gentleman says and I agree with the point he makes, but will he explain why the Labour party proposes only a temporary return to the 50p rate, rather than a permanent return?

[Chris Leslie]

We have said that a 50p rate needs to be the policy for the next Parliament. We make judgments in manifestos from one Parliament to the next. Tax policy should never be written in perpetuity. We have said that while the deficit is likely to be as high as it is, the 50p rate is justified. The hon. Member for Cities of London and Westminster (Mark Field) talked about social cohesion. While the process of deficit reduction will now have to continue well into the next Parliament, when it was not expected, the 50p rate is perfectly justified for good social cohesion reasons.

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[Julie Hilling]

I thank the hon. Gentleman for his intervention. At that time our Government needed to act to bail out those banks. He says that the Government need not have acted if the Bank of England had, but the reality is that the Government acted and needed to do so.

It has been claimed that before the global collapse we were spending too much, so why did the right hon. Member for Witney (Mr Cameron) pledge in 2007 to match Labour’s spending plan for further three years—to match our spending on investment, jobs and growth?

The level of debt under the Labour Government before the banking crisis was lower than that we inherited from the Tories in 1997. We brought the deficit down, we brought borrowing down and, far from failing to fix the roof when the sun was shining, we invested in repairing the terrible state of our public services. People were dying on hospital trolleys before they were seen, others were waiting a year to get on the waiting list before waiting another year to have their operations, schools were crumbling, the railways were decaying and youth services were disappearing. We repaired all that, and then the bankers behaved totally irresponsibly and brought down the world economy.

Yes, there was a failure by every Government right across the world to recognise the seeds of the banking crisis, but it was not caused by Labour’s overspending, and it was not caused by Labour’s high borrowing or high debt, because none of those things was going on before the banking crisis. If we had not dealt with the crisis as we did, the whole economic and banking system in Britain would have collapsed. If our Prime Minister at the time had not worked with other world leaders to bail out banks and bring forward investment, the world would have been plunged into a depression beyond belief.

We need honesty from Government Members to acknowledge the truth. The Government should acknowledge that the national debt has doubled on their watch to £1,400 billion. They should accept that wages are down by £1,600 a year since May 2010, and that people will be worse off in 2015 than they were in 2010. The Government should acknowledge that they have introduced 24 tax rises, that energy bills are up by almost £300 since the election, and that even though they inherited a growing economy, they squashed that growth, had three years of flatlining and have overseen the slowest recovery for 100 years.

The Government like to talk proudly about the number of jobs that they claim have been created in the private sector, so I asked them some questions about those jobs. I asked how many of the new jobs created lasted more than 12 months, but they could not tell me because they do not collect those statistics. So I asked them

“how many new jobs created in the private sector in the last 12 months were (a) unpaid workfare or internships, (b) through zero-hour contracts, (c) part-time, (d) part-time working 16 hours or less per week, (e) part-time working eight hours or less per week, (g) paid at the level of the minimum wage and (h) jobs transferred from public sector organisations.”

What a surprise. I was told:

“Information regarding the number of jobs created is not available. As an alternative, estimates relating to the net change in the number of people in employment in the private sector have been provided from the Labour Force Survey (LFS).”—[Official Report, 11 November 2013; Vol. 570, c. 460-61W.]

Estimates showed that more than a third of the new jobs that have been created are part-time, and that a third of those are under 16 hours. However, the Government do not collect the figures for those people who are on unpaid Government schemes or internships, even though those are included in the number of new jobs created. They cannot tell with any accuracy the number of people on zero-hours contracts or the number on the minimum wage. They also cannot tell me how many of the jobs now designated as being in the private sector are simply jobs transferred from the public sector, even though we know there are a large number of such jobs. The proud boast that over a million new jobs have been created is based on sand. We do not know how many are really new jobs, how many are unpaid, how many are low-paid, how many are zero-hours or how many are temporary. The Government like to think that any job is better than unemployment—a job at any price—but that is causing untold misery to many.

Let me tell the House a story of a man who went to the Allerton food bank. He was absolutely made up that he had got a job in Poundland. In week one, no work was offered; in week two, still no work offered; in week three, still no work offered. At this point he and his family were existing on boiled pasta because that was all they had in their household. Fortunately, somebody directed him to the food bank. People at the food bank helped him and spoke to Poundland, who said, “Well, we can’t finish him because he may get hours next week.” In the end he had to resign from his job and take the hit from the Department for Work and Pensions because he had resigned from a job—a job in which he was never given any hours to work. He had to resign so that he could feed his family.

Zero-hours contracts are a scourge on the unemployed, but instead of cracking down on them, the Government fail to collect statistics. Other sources estimate that a million people are on zero-hours contracts; a million people who do not know whether they can feed their families or pay their rents each week; a million people who cannot get a mortgage or a loan to buy a car; a million people who can make no plans for their future. It is like the bad old days when people had to queue up at the dock gates just to be picked for a day’s work. These workers are paid 40% less than those on permanent contracts, and 20% of them have said that they have had money docked or been penalised in some other way if they were unable to work when they were called for at a moment’s notice. Half the people have said that they have had shifts cancelled at the last minute. The Government should take Labour’s lead and regulate zero-hours contracts, not allow the exponential growth that has occurred under their watch.

[Jonathan Edwards]

The Social Services and Well-being (Wales) Bill was recently passed in the Welsh Parliament and my party put forward an amendment to prohibit the use of zero-hours contracts in that sector, yet the hon. Lady’s party, the governing party in Wales, voted down that amendment. What is her message to her colleagues in Wales?

[Julie Hilling]

With the greatest respect to the hon. Gentleman, I am not a Welsh Member and I am not a Member of the Welsh Assembly, so I do not feel able to comment. However, I wholly believe that what the Labour party says it will do in government is the action that should be taken, and that we need to crack down on zero-hours contracts.

The Government have presided over the destruction of permanent appropriately remunerated jobs with decent terms and conditions, with the creation of insecure, poorly paid private sector jobs.

At least we have not had the omnishambles of a Budget that we had a few years ago. I am pleased that the Chancellor, albeit secretly, has turned to plan B and is investing in infrastructure. But he is still doing nothing to tackle the cost of living crisis, and he is still ploughing ahead with further unnamed cuts. But we know where some of those cuts are being made. We already know that northern local authorities are bearing the brunt of the cuts in local government spending. Bolton will have lost £100 million from its budget, cutting services to the most vulnerable. Will the Government ever accept that they cannot cut their way to growth; that holding down wages means that more people are reliant on tax credits and many are in poverty?

The proposals on pensions appear to be welcome, but the Budget has done nothing for the 1.6 million pensioners living in poverty. Nor will it do anything for the crisis in social care, which has seen the number of older people receiving support falling by more than a quarter since 2005. Proposals on child care are welcome, but we need action now not in 18 months’ time. I met a woman on Friday in Horwich when I was campaigning for an energy price freeze who told me that she used to work in a nursery, but had to give up her job because she could not afford the child care costs for her own two children.

How on earth can the Government justify sacking tax collectors when the tax gap is somewhere between £35 billion and £120 billion? In 2011-12, before the last round of cuts, 20 million calls to HMRC were not answered. The estimated cost of those calls was £33 million, and the value of customers’ time was estimated at £103 million. Since then, the number of staff has been further reduced. Recent figures show that there were fewer confiscation orders in 2013 than in 2012 and less money was recovered, and only four officials are hunting 124 of the worst tax dodgers. The biggest scandal of all is that the Government say that they reduced the top rate of tax from 50% to 45% because people were avoiding paying their tax. They think that if people are poor they will work harder if their pay is cut. They think that people should pay all their tax, and that will make them better people, getting jobs and working harder. But the rich just have to pay less. They just have to say they will find other means so that they do not have to pay their taxes.

What nonsense. If the poor do not pay their taxes, they are prosecuted. If the rich do not pay their taxes, they get a tax cut. Even sadder, is that in the only full year that people had to pay the 50% tax, when they could not pre-pay or post-pay their tax bills, it brought in £1.1 billion extra. Perhaps I am a little strange, but I think that £1.1 billion is quite a lot of money. It could go some way towards solving some of the problems in our economy and some of the desperate situations my constituents face.

Until the Government deal with the cost of living crisis facing so many people in Britain today, they cannot possibly claim to be building a fairer society. It is an utter disgrace that in the sixth richest country in the world people are dependent on food banks and children are going to bed hungry. It is a disgrace that people are living in houses with no heat because they cannot afford the bills. It is a disgrace that long-term unemployment is going up. Yet again the Government seem to miss the point. They leave the poor and the vulnerable to suffer.