Finance Bill

Jonathan Reynolds Excerpts

Tuesday 31st October 2017 Commons Chamber

Digital reporting and record-keeping for income tax etc

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I beg to move amendment 7, page 78, line 19, after “day”, insert

“no earlier than 1 January 2022”.

This amendment provides that the provisions for digital reporting in Clause 60 may not be brought into force before 2022.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 8, page 78, line 20, at end insert—

“(4A) No regulations may be made under subsection (4) until 90 days after the Chancellor of the Exchequer has laid a report before the House of Commons which sets out—

(a) the steps which HMRC has undertaken to establish that suitable software is available;

(b) the results of the testing by HMRC and others of that software, and

(c) the reasons why mandatory use of the software is in the interest of HMRC and taxpayers.”

This amendment would require the Chancellor of the Exchequer to report on software suitability and testing before giving effect to the provisions of Clause 60.

Amendment 9, in clause 61, page 78, line 34, after “day” insert

“no earlier than 1 January 2022”.

This amendment provides that the provisions for digital reporting in Schedule 14 and Clause 61 may not be brought into force before 2022.

Amendment 10, in clause 62, page 79, line 12, at end insert—

“(5A) No regulations may be made under sub-paragraph (5) on a day prior to 1 January 2022.”

This amendment provides that the provisions for digital reporting in Clause 62 may not be brought into force before 2022.

Amendment 11, page 79, line 19, at end insert—

“(6A) Regulations under sub-paragraph (5) may not impose mandatory requirements for businesses to generate quarterly updates.”

This amendment provides that any system for quarterly updates to be generated must not be mandatory.

New clause 2—Taxation of chargeable gains: review of treatment of commercial property held by persons with foreign domicile—

“(1) The Taxation of Chargeable Gains Act 1992 is amended as follows.

(2) After section 14 (non-resident groups of companies), insert—

“Review of treatment of commercial property held by persons with foreign domicile

(1) Within three months of the passing of the Finance (No. 2) Act 2017, the Commissioners for Her Majesty’s Revenue and Customs shall complete a review about the taxation of chargeable gains held by persons with foreign domicile.

(2) The review shall consider in particular the implications if the treatment of commercial property were to be the same as the treatment of residential property under section 4BB(2).

(3) The Chancellor of the Exchequer shall lay a report of the review under this section before the House of Commons within three months of its completion.””

This new clause requires a review to be undertaken of the treatment of capital gains on commercial property disposed of by UK taxpayers with a foreign domicile.

New clause 3—Income provided through third parties: review of effects generally and in relation to sports image rights—

“(1) The Chancellor of the Exchequer shall, no later than 21 July 2019, undertake a review of the effects of the changes made in relation to income provided through third parties.

(2) The review under subsection (1) shall consider in particular the effects in relation to sports image rights.

(3) The Chancellor of the Exchequer shall lay before the House of Commons a report of the review under this section no later than 15 October 2019.

(4) In this section—

“the changes made in relation to income provided through third parties” means the provisions of sections 34 and 35 of and Schedule 11 to this Act,

“sports image rights” means the rights or purported rights, whether or not protected or capable of protection under any relevant laws, associated with the identity or activities of a person where those rights or purported rights are associated with their participation or former participation in a sport.”

This new clause requires the Chancellor of the Exchequer to carry out and publish a review of the effects of provisions for disguised remuneration in relation to income provided through third parties, including particularly the effects in relation to sports image rights.

New clause 4—Impact analyses of provisions of this Act—

“(1) The Chancellor of the Exchequer must review the impact of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider—

(a) the impact of those provisions on households at different levels of income,

(b) the impact of those provisions on people with protected characteristics (within the meaning of the Equality Act 2010), and

(c) the impact of those provisions on different parts of the United Kingdom and different regions of England.

(3) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

“regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause requires the Chancellor of the Exchequer to carry out and publish a review of the effects of the provisions of the Bill on households with different levels of income, people with protected characteristics and on a regional basis.

New clause 5—Review of the conditions of registration for third country goods fulfilment businesses and traders using their services—

“(1) Within six months of the passing of this Act, the Chancellor of the Exchequer shall complete a review of the conditions of registration for third country goods fulfilment businesses and the traders using their services.

(2) The review shall consider in particular—

(a) an automatic joint and several liability for VAT between registered fulfilment businesses and the traders using their services, and

(b) a requirement that registered fulfilment businesses should charge VAT to customers on behalf of traders using their services.

(3) The Chancellor of the Exchequer shall lay a report of the review under this section before the House of Commons within one month of its completion.”

This new clause requires a review to be undertaken of the conditions of registration for third country goods fulfilment businesses and the traders using their services.

Government amendments 12 to 16.

[Jonathan Reynolds]

I rise to speak to amendments 7 to 11, which relate to the Government’s Making Tax Digital proposals. I do not think I will be able to get in any references to ancient Rome or Greece, unlike my colleagues, because of the subject matter.

Given that the debate on this package of measures has been ongoing since the first version of the Finance Bill, Labour’s many concerns have been well rehearsed at every stage of the discussions. However, they are not our concerns alone. They echo the worries of businesses, service providers and the trade associations that represent them, including the Institute of Chartered Accountants, the Chartered Institute of Taxation and the Federation of Small Businesses.

We recognise that Labour’s repetition of and emphasis on the potential damage that the measures might have had has led to a number of concessions over the summer. The Government had to concede that the timeline for implementation was not feasible and undertook a U-turn to delay the implementation of digital reporting for VAT until 2019. The Federation of Small Businesses described that change to the timetable as a “lifeline for small firms”. Labour has also ensured that there is an exemption for small businesses operating under the VAT threshold of £85,000.

However, we do not believe that those changes are enough. That is why Labour proposes this package of amendments today. To be clear, we support the principle of digitising tax returns, as we would any measure that purported to simplify the compliance and reporting burden on UK businesses and that might help HMRC efficiently and accurately to collect the amount of tax it is owed. That does not change the fact that the Government have made a chaotic mess of implementing Making Tax Digital. This significant and important change to the system needs to be approached with due care and attention.

If the Government’s measures are carried out as currently proposed, there is a risk that added costs and unintended consequences will be passed on to small and medium-sized businesses, as tax experts and accountants have warned. The Government’s target implementation date is unrealistic and unworkable. What is more, it will coincide with the uncertainty created by Britain’s departure from the EU, which is already creating a significantly tougher operating climate for small businesses. I note the comments made by Conservative Members during the debate on the first group of amendments about not wanting a review of any measure in the Finance Bill to coincide with Brexit. I am sure that they will apply that view consistently to this package of measures.

To be frank, nobody is sure whether HMRC or business can be ready for the implementation date. At present, the plans are rushed and poorly thought through. This is why our amendment proposes that the date is put back to 2022 to allow time for consideration and compliance and to avoid a clash with our exit from the European Union.

--- Later in debate ---

[Mel Stride]

As I have said, we are looking at this and we will continue to do so. I have carefully considered the points raised by the hon. Lady both on Report and in Committee, and I think I have a clear understanding, as she does, of what she wishes to achieve.

New clause 2 would not do what the hon. Lady intends. I hope that she will take some comfort from my assurances about our looking at this matter and that she will not press the new clause to a Division. Whether or not she does, I urge the House to reject the Opposition amendments and new clauses.

[Jonathan Reynolds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 62

Digital reporting and record-keeping for VAT

Amendment proposed: 11, page 79, line 19, at end insert—

‘(6A) Regulations under sub-paragraph (5) may not impose mandatory requirements for businesses to generate quarterly updates.”—(Jonathan Reynolds.)

This amendment provides that any system for quarterly updates to be generated must not be mandatory.

Question put, That the amendment be made.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 24th October 2017 Commons Chamber

[Mr Hammond]

No. Of course a Government need to be able to respond to an external shock, but a prudent Government have got the economy in good shape to respond before such a shock arises. The problem in 2008-09 was that the then Labour Government were borrowing tens of billions of pounds at the top of the economic cycle—grossly irresponsibly.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The major cause of the deficit was of course the collapse in tax revenue following the global financial crisis in 2008, yet that is exactly what we will face again unless there is a transitional deal with the EU to allow our world-leading financial services sector—it contributes £66 billion a year in tax revenue—to operate legally within the single market. As my hon. Friend the Member for Nottingham East (Mr Leslie) has already said, we have been asking the Government all year to confirm that there will be a transitional deal. As today is the penultimate Treasury questions before the end of the year, the last Treasury questions before the Budget, and—if hon. Members have read the papers—perhaps the Chancellor’s last Treasury questions ever, will the Government promise UK-based firms a transitional deal guaranteeing market access before the end of this year?

[Mr Hammond]

As I have already said, the Government have made it clear—the Prime Minister set this out in the Florence speech—that we want to agree an implementation period as part of a deal with the European Union. We are greatly encouraged by the fact that, at last week’s European Council, the 27 agreed to start internal preparatory discussions on guidelines in relation to an implementation period. We are confident that that will give British businesses confidence that we are going to provide them with the certainty they require.

Mortgages: Eligibility

Jonathan Reynolds Excerpts

Monday 23rd October 2017 Westminster Hall

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is always a pleasure to see you in the Chair, Mr Hollobone. It has been a particular pleasure to listen to this debate. I congratulate the hon. Member for Sutton and Cheam (Paul Scully) on presenting the e-petition this afternoon and I congratulate all of the people who were able to sign it and put their views on the record.

Being able to respond to this debate as the shadow Economic Secretary is a pleasure. It is one of the best portfolios in politics because the issues that the Minister and I cover are interesting and important. It is a portfolio where we learn things. Also, it is the best because of the fact that the UK is the world’s leading financial centre. It is a pleasure to interact with that, to learn more about its dynamism and to see the advantages that that brings to the UK.

This debate brings us to one of the central issues that we should discuss more in this country. How can we combine being the world’s leading global financial centre with a situation in which so many of the people of this country, so many of our constituents, are financially excluded or marginalised, and where more than a million are unbanked? Crucially, how is it that, with this incredible dynamism that we possess, we have allowed a situation to occur where the poorer someone is, the more financially excluded they become? If I did not spend all of my time in the City listening to City institutions and their legitimate concerns about Brexit—I am sure that is true for the Minister, too—this is the agenda we could spend more time talking about. It is a personal issue for me. My mum worked for Provident, the noted door-to-door lender. I spent much of my childhood learning about credit and creditworthiness, how people need access to credit and where they get it from. It should be a much greater priority for our debates in the House. It is certainly right to start the debate with a discussion about how it impacts on the housing market.

The hon. Member for Sutton and Cheam said we have a broken housing market, and I certainly second that; so many of the country’s problems come from that dysfunctional market. As the hon. Gentleman said, a lack of supply is at the heart of the problem, but we need to be pragmatic and recognise that the private sector alone cannot build sufficient homes. The operation of right to buy without replacement is a problem. I support right to buy because I want working class people to own their own homes, but clearly we have to replace the units that we lose with like for like, and we have never done that. We have a poor planning framework that hands far too much power to developers. Frankly, we have to blame ourselves. There is a lack of courage in political discourse when it comes to things such as new towns and tackling the green belt. We have failed to remediate brownfield land. There is a lot of blame to go round for all of us to share.

The problems of the housing market are extreme. They defeat benefit reform, hamper labour mobility and ruin lives. Through some of the churches I am involved in, I am aware of families less than a mile from this building made up of couples and four or five children who are living in one room. Clearly, that is not a situation that any of us should be happy or satisfied with, so I particularly welcome the chance to respond to this debate and to the sentiment that has been expressed so warmly by all Members today.

There are 11 million renters in the UK, and that number is growing. A large rented sector is not necessarily a bad thing. Germany, for instance, has a well-functioning, well-regulated private rented sector, but we get the worst of all worlds. We have a very large private rented sector, but without the secure regulatory environment to protect the tenants in it. Britain’s renters deserve fair access to credit and much better access to the housing market. As has been said, up to 80% of renters have seen their credit rating rise when they have been able to include their rental payments in their credit score. Crucially, it has added a digital footprint, which is so important these days, for many people who simply did not have one before.

My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) talked about ground rents and leasehold reform. I am firmly in agreement with him. It is a particular problem in the north-west of England, where I have used the phrase “legalised extortion” at times, because I am not able to see what service is being offered for many of the huge payments now levied on people through the leaseholds they signed up to. That will stop the housing market functioning effectively, because no one will want to take on such a liability when they realise the scale of it. The right hon. Member for Clwyd West (Mr Jones) gave support in principle, but said that there are some complexities. He was absolutely right to talk about the CreditLadder system, but fundamentally I think he was saying that there is a role for the Government in trying to solve this problem, which is very welcome.

My hon. Friend the Member for East Lothian (Martin Whitfield) rightly talked about past personal relationships. A Conservative member of the Treasury Committee recently told me that when he was a student his bank manager not only wrote to him to warn him about his spending, but copied the letter to his father as well. I am not sure that any of us present today, even at our ages, would wish for that to happen. His point was that there has to be an individual assessment of a person’s needs, outgoings, liabilities and expenditure.

The hon. Member for South Suffolk (James Cartlidge) referred to his experience as a mortgage broker, which was very interesting, and said that many rental payments are already taken into account. I think we need to look at whether we can improve people’s credit ratings more broadly with such initiatives. I thought that his comments about the future of work, lending into retirement and buy-to-let were absolutely right. I will not give him any more praise or he will probably be accused of supporting Venezuelan-style socialism, which would not help his career at all, but I thought all his points were very well made.

My hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) talked about the impact of this issue on his constituents, 32% of whom are in the private rented sector. Clearly, if a third of his constituents are in a poorly regulated form of tenure and are not getting the proper response that they need, that is a problem. He talked about how this e-petition could make a difference and managed to plug his own e-petition, which I thought was particularly skilful and well done.

The Scottish National party Front-Bench spokesperson, the hon. Member for Aberdeen North (Kirsty Blackman), made many points that I agree with. She talked about the impact on young people in particular. There is an under-remarked on phenomenon in that the burden of student debt, combined in most parts of the country with house prices that, in real terms, are up to three times what they would have been in the early ’70s, and higher pension contributions, which are a necessity based on the demographic profile of the country, produce a difficult scenario for a lot of people. Older generations are perhaps not aware of the burden of that, and it makes the affordability of things such as housing scarcer still.

The hon. Member for Sutton and Cheam mentioned the Bill introduced by Lord Bird in the other place, which would essentially put the sentiment of this e-petition into law. I met Lord Bird recently and had a chat about the principles behind the Bill. If you will excuse the pun, Mr Hollobone, it is to his credit that he has tabled the Bill. Clearly, we would all like to see a concerted attempt to tackle the root causes of poverty in this country. There will be disagreements about aspects of Government policy that the Opposition would say have exacerbated some of those problems, but such popular cross-party consensus proposals can help us find a way forward.

There is so much more that we can do, not only on creditworthiness but on things such as using smart meters to end the poverty premium on gas and electricity, which we have talked about many times in the House. We still need further action on that. We have proposed initiatives such as capping the cost of credit card fees so that no one pays back more than double the principal sum that they borrowed. That is not writing off debt, but making it clear—as other countries have—that there has to be a framework that protects people in persistent debt so they are in a position to get through their problems eventually.

We should also have a much stronger focus on financial education in this country. Frankly, very few people really understand what an annual percentage rate is telling them. It looks frankly inevitable that the Monetary Policy Committee will put up interest rates, but a lot of people may be unaware of what that means for the debt that they have already taken out in mortgages.

When I talk to people in the City about some of that agenda, their eyes light up with passion. Clearly, there are a lot of people in this country with the expertise, passion and commitment to see progress on those things. We must talk not just about the effect of Brexit on financial services but about how we can use the expertise and skill of the people in this country, who hopefully will stay, to tackle some of these long-term problems.

I am absolutely happy to pledge in principle the support of the Opposition Front Bench for the kind of initiative that this e-petition suggests, and for Lord Bird’s Bill, which seeks to put it into legislation. That seems a sensible way forward, and I hope we can all agree on it.

Finance Bill

Jonathan Reynolds Excerpts

Committee: 1st sitting: House of Commons
Wednesday 11th October 2017 Commons Chamber

[Mel Stride]

My hon. Friend makes a powerful point. This is about strengthening Northern Ireland’s economy, society and infrastructure, to the end that we all seek, which is a stronger and more united Northern Ireland.

In conclusion, these provisions include changes that will ensure that the regime is robust against abuse, in order to maintain the regime’s focus on encouraging genuine additional economic activity in Northern Ireland.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the Financial Secretary for introducing this group. This is an important debate, not only for the future of Northern Ireland, but for this country’s overall approach to taxation and devolution.

We know—we have discussed it frequently throughout this process—that our country faces a substantial tax gap. The official estimate of the UK’s tax gap is at least £36 billion, up from £33 billion in 2010, but that is at best a conservative estimate, given that the Government’s definition of the tax gap excludes convoluted corporate structures, which we know are used by multinationals to minimise their tax liabilities. The view that the tax gap is underestimated is shared by the Institute for Fiscal Studies and the Public Accounts Committee. I think that we all agree that that £36 billion, and possibly more, is money that should be used to fund our public services, and that everybody should pay their fair share.

Corporation tax is an important part of the UK’s tax revenue. In 2016-17, HMRC collected £56 billion in corporation tax receipts. Although it is important that we keep the rate competitive, particularly in the light of the UK’s exit from the European Union, it is worth noting that we face a law of diminishing returns in this regard. At 19%, the UK’s corporation tax rate is already one of the lowest in Europe. We should be confident that we do not need to plunge the rate to rock bottom in order to encourage businesses to invest and domicile here. The UK plays host to a wealth of resources that enable it to be globally competitive, including our legal system, our language, our time zone, our infrastructure, our regulatory bodies and, most of all, our people.

It is equally important that Northern Ireland is equipped with the tools to compete in that international landscape, as has been brought to the fore recently with the punitive tariffs aimed at Bombardier in the United States. As the Financial Secretary has explained, the corporation tax rate has already been devolved to the Northern Ireland Assembly, through the Corporation Tax (Northern Ireland) Act 2015. Now that that legislation has been decided, it is for Northern Ireland’s politicians to work together and use those powers to see where the line lies between a lower tax rate and the broader appeal of Northern Ireland as a business destination. At present, the decision has been that 12.5% best achieves those ends. It is not my intention to revisit those arguments today, and nor would it be appropriate to do so, given the reasons already outlined.

What is relevant, and the reason Labour has proposed new clause 2, is the relationship between that rate and the rest of the UK. The gap between 12.5% and 19% represents a significant potential for arbitrage between Northern Ireland and the rest of the UK. Some businesses might base their decisions on where to domicile purely with regard to taxation, and that is a risk that we accept—indeed, we already compete with the rest of Europe on that basis. Our concern is that the Government are introducing measures that could be exploited by companies that will seek to abuse the proximity between Northern Ireland and the UK simply to divert profits and benefit from a lower tax regime, which would benefit neither the UK nor Northern Ireland.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The hon. Gentleman spoke a few moments ago about the importance of competitiveness throughout Europe. Does he agree that the argument that he is making runs counter to the attempts to make Northern Ireland’s private sector business more competitive, when we have a difficult relationship with the Irish Republic and its very low corporation tax, which he has alluded to?

--- Later in debate ---

[Jonathan Reynolds]

I take the hon. Gentleman’s point, but I would not agree with his characterisation of the situation. We are making the case that our amendment will really benefit Northern Ireland, because if the relationship was abused and firms sought to benefit from the lower rate without investing in Northern Irish jobs or business production, that would surely defeat the purpose of having a lower corporation tax rate—that is the sole point of trying to devolve the rate to Northern Ireland. Our concern is that loosening the rules could lead to brass-plating, where UK businesses are given a loophole that allows them to domicile their businesses in lower-tax jurisdictions while they continue, in reality, to operate in the UK.

[Ian Paisley]

The hon. Gentleman recognises that the one sector in which the proposals might be abused, the financial services sector, is specifically precluded from taking advantage of them. Could he provide the House with an example of a sector that he thinks would abuse the rules?

[Jonathan Reynolds]

I do not agree with the hon. Gentleman’s assertion that only the financial services sector will seek to do that. We are proposing a very reasonable review of the measure after one year, and he has nothing to fear from such an amendment.

Labour, more than any other party in this House, has consistently made the case for a level playing field between larger and smaller businesses, but a level playing field cannot be simply an equal race to the bottom in which smaller businesses are given the same tax avoidance opportunities as larger ones. That is not to say that the rule changes will necessarily lead to a flight of small and medium-sized enterprises rushing to domicile in Northern Ireland. We note that the majority of enterprises operating in the UK are honest and committed to paying their fair share. We should be vocal in praise of that contribution and its role in making the UK economy a success. However, opening what could become a loophole is significant, and it is critical that we protect against unforeseen consequences.

At this stage we have little indication of the potential impact of this measure, because behavioural effects are notoriously unpredictable to model. For that reason, we have tabled an amendment that calls on the Government to review the measure as soon as is practicable after the completion of the first financial year in which it has been fully in force. The report of that review would be presented to the House within one month. That would allow us to understand fully the impact of chargeability, see how companies are responding and react accordingly if the measure is being treated as a loophole. In turn, if evidence shows that the measure is forging stronger business links between Northern Ireland and the rest of the UK, and that the impact to the Exchequer is minimal, at least a proper assessment will have been made.

We are at a critical time when the UK economy simply cannot afford to lose revenue to tax avoidance. We have heard in the Chamber many times the arguments about why it makes little sense to drop corporation tax rates to below European averages. To do so betrays a lack of confidence in the many attractions of the UK as a domicile for ambitious companies that seek to grow their businesses. We should not be compounding revenue loss by opening a back door to even lower corporation tax rates without a framework in place to assess the impact properly.

[Jonathan Edwards]

I am sure that the hon. Gentleman agrees that one of the biggest economic challenges that we face is the huge and gross geographical wealth inequality within the British state. Is the Labour position that fiscal devolution has no part to play in the strategy for dealing with geographical wealth inequalities?

[Jonathan Reynolds]

The hon. Gentleman is not correct in that assessment. I certainly agree with him that regional disparity in the UK is one of the principal economic challenges that we face, but I do not agree that the solution is a race to the bottom in corporation tax rates between different parts of the UK. That would be neither effective nor the right way forward, and it would almost certainly fail to address the problems that he raises.

I put it to the House that new clause 2 is a sensible, pragmatic and effective proposal to deliver objectives that are widely shared by Members from all parts of the House: a prosperous Northern Ireland, an effective partnership across the nations of this country and a competitive UK with strong public finances supporting quality public services.

Finance Bill

Jonathan Reynolds Excerpts

2nd reading: House of Commons
Tuesday 12th September 2017 Commons Chamber

[Jonathan Reynolds]

We say that all the time. We always welcome it, but we just wish it was possible for the debate to include a consideration of the situation in a huge number of households where people are in work, as child poverty rates are rising and households are in poverty. Why does the Conservative party say nothing about that phenomenon, which is a huge part of life in Britain today?

[Alex Burghart]

I listened to the opening remarks in today’s debate and I did not hear anyone from the Opposition welcoming record employment, so I am glad to hear the hon. Gentleman do so now. If I gave him the opportunity, I am sure that he would also want to welcome the fact that inequality is decreasing and that a whole generation will benefit from growing up in households with work. It is a gift that keeps on giving. The number of children in workless households has decreased by a third since 2010, and the number of households in which no one has ever worked has fallen by 40% since the previous Labour Government were in office. In fact, we are nearly back at the all-time low that was reached under the Major Government. The gift of work enables families to get on with their lives and enables children to grow up in a home where they have the example of people in work. Those opportunities cannot be taken lightly.

I am pleased that the Government on whose Benches I sit continue to feed the economy, but we are not doing that by spending money that we do not have or by borrowing money from future generations. Instead, we are spending and living within our means. I am extremely pleased to see that essential value embodied in the Bill, which is why I shall be supporting it tonight.

--- Later in debate ---

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The British economic model is “broken” and in need of “fundamental reform”. Those are not my words, but the findings of the interim report of the Institute for Public Policy Research’s economic justice commission, which comprises, among others, the Archbishop of Canterbury, the global managing partner of McKinsey and the policy chairman of the City of London corporation. The report spells out in painful detail the situation that most Members see in our constituencies every week: the link between economic growth and higher living standards is broken; young people with no prospect of attaining the quality of life enjoyed by their parents; a UK with a fundamental imbalance between the south-east and everywhere else; a labour market characterised by insecurity and low pay; and inequality growing, with a third of children living in poverty, and that proportion going up.

[Michael Tomlinson]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I feel I have heard quite a lot from the Conservative party, so if the hon. Gentleman will forgive me, I shall proceed.

Today’s proceedings, along with the ways and means discussion last week, have been characterised by deeply held concerns about the state of our economy. There have been many fine and noteworthy contributions in what has been a wide-ranging debate, taking us from Venezuela to the application of the Laffer curve to corporation tax. I feel that Conservative Members will find it quite difficult to cope when I point out that the average rate of corporation tax in OECD countries is 25%, or that in Germany, the strongest economy in Europe, it is between 30% and 33%—and it is even higher in America. The hon. Member for South Thanet (Craig Mackinlay), who is no longer present, even questioned the very basis of taxing companies at all, but it is a reasonably held position that companies benefit from good infrastructure, a skilled workforce and a proven legal system, and it is reasonable to balance the impact of taxation between individuals and corporate entities. I feel duty-bound to point out that the tax gap fell every year between 2005 and 2010—from 8.5% to 7%.

I wish to pay tribute to two particular contributions—

[John Redwood]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will not give way; I have listened to the Conservative party for more than eight hours.

The first contribution to which I pay tribute is the maiden speech of my hon. Friend the Member for Liverpool, Walton (Dan Carden). It was at times funny and moving, and it captured the character of his constituency extremely well, but it also had a serious and thoughtful message about the changing nature of work, automation, and the fundamental lack of opportunity faced by young people today. He described Liverpool as one of the great cities of the world, which it undoubtedly is—perhaps not quite as much as Manchester, but we can take that outside—and he proved he will be a fine representative for it. With 85.7% of the vote at the election, I imagine we will have the chance to hear from him for some time to come.

It was also a pleasure to hear the maiden speech of the hon. Member for Moray (Douglas Ross). He was extremely articulate and gracious about his predecessors, and that came across very well. I have visited his constituency: I have been to Elgin and to Cullen, and I have tried Cullen skink, a dish every bit as tasty as his maiden speech. I congratulate him on such an assured debut.

Despite the party political nature of much of the debate, we have heard serious concerns about ailing productivity. We have heard worries about the lack of certainty in the Brexit negotiations and what that means for the public finances. We have heard Members reference the challenging demographic and technological changes that face our nation, and yet we have a Bill before us that has nothing to say about any of that.

When I was talking to residents in my constituency during the EU referendum, leave voters raised specific concerns about immigration and sovereignty, but more than anything else it was a sense of recurrent anger and of post-industrial decline that they had witnessed and lived through that animated so many of them. My constituents told me that they were voting leave because of zero-hours contracts, because they could not get on the housing ladder, or because they had lost their job due to austerity and now had to work for less pay and poorer conditions. For me, those people were voting not to leave the EU, but to try to leave the UK. All of us, whichever side of that referendum or this House we are on, must be concerned about that. We should want to tackle that disconnection and alienation—not just paint a rosy picture of statistics and how we want to see them for our own political benefit.

I will let the House into a secret: I am jealous—I really am—of the Ministers on the Front Bench. I am jealous of the power that they have to put this right. I am jealous of the opportunity that they have to do good. However, instead of using that opportunity and that power, this Government do not even appear to see the problems. The Finance Bill before us today seems to be legislating for a completely different set of economic circumstances. It is not difficult to see why there may be frustration among those who look at these measures and feel that they are being left behind and among those who look at this Government and ask: why is there always one rule for the people at the top, and another for everyone else?

We have had an absurd set of interventions about student debt, pretending that the Leader of the Opposition had said something, which evidently he had not. It says to me that the Conservative party is still in denial about what happened in the general election—how it lost a majority despite being so far ahead in the polls. If Members think that it was down to something that they are wilfully misinterpreting, I am afraid that they will face further difficulties ahead.

The backdrop to last week’s ways and means debate was a rally of nurses outside Parliament, rightly asking for redress for the 14% real terms pay cut they have endured since 2010. Yet while that was happening, this Government were proposing a resolution, which expanded business investment relief for non-doms. It was a stark reminder of where this Government’s priorities lie: look after the people at the top, and the rest of us will supposedly benefit from the trickle down. It is just that on the Labour Benches, we see it the other way round.

Only this Government could pretend to flirt with the public and say that they were ending the public sector pay gap, and then, on the day that the consumer prices index comes out at 2.9%, announce rises well below that. If we end up, as is looking likely, with people like those nurses taking industrial action in protest at their treatment, public sympathy will not be on the Government’s side.

As a country, we are on the cusp of huge change driven by deeper globalisation, environmental change, technology, and, most pressingly, our exit from the European Union. Brexit is now the defining issue of our generation and it brings with it significant challenges and uncertainty. Our worry is that we are approaching Brexit not from a position of economic strength, but as a rudderless ship, already taking on water and listing badly off course. The Government are failing to plan ahead for our future outside of the EU and this Bill is another demonstration of that.

I want to refer specifically to the Government’s provisions around HMRC. The Conservative party certainly talks a good game on tax avoidance, but the Government have yet to explain how HMRC will better battle tax avoidance while accommodating another £83 million of cuts. Surely this is the time that we should be investing in HMRC, not taking resources away.

One of the most pressing areas is the future of our customs system. This Bill sees the introduction of a fulfilment house registration scheme to deter VAT abuse by overseas businesses. However, experts are already suggesting that abuse may escalate faster than HMRC can keep up, particularly given the ever growing popularity of online business. More urgently, the legislation makes no reference to how this will change once we have left the EU. The scope of these measures will be altered hugely should our customs arrangements with the EU change, which they almost certainly will. There are huge implications for policing our own customs border, and for getting an IT system ready to manage customs and excise once we leave the EU, but this Government cannot even tell us what the likely transition arrangements will be, let alone start preparing for them. Surely the worst possible place to start is from a situation in which we have already lost 5,000 staff from HMRC. Time and again, we find ourselves in a situation where it is hard not to conclude that this is a Government without any substantive agenda, other than hanging on to office at all costs.

This Finance Bill, now finally coming to the end of its Second Reading after months of delay, was sadly not worth the wait. It is a damning reflection of the Tories’ priorities—fiddling on the deck of the rudderless ship as it cruises straight towards the rocks. We need answers on investment, productivity, fairness and prosperity, but we have a Government who are not even willing to ask the right questions. Listening to some of the contributions today—we heard some presidential quotes in the maiden speeches—I was reminded of a line from President Obama’s first campaign, when he said

“it’s not the magnitude of our problems that concerns me the most. It’s the smallness of our politics.”

Our message to the Government is that we will vote against this Bill tonight because it is not worthy of the challenges this country faces. The British people have had enough of an austerity policy that has comprehensively failed, and they are desperate for something better. If this Government cannot bring themselves to face up to the challenge of building a post-Brexit country that is fairer, more competitive and more prosperous, they should get out of the way for the people who can.

Finance Bill

Jonathan Reynolds Excerpts

Tuesday 12th September 2017 Commons Chamber

[John Redwood]

We think that this is a debate about the Finance Bill, and about how much money we raise and how we raise it. A very important question to consider when deciding how much money we raise is how much we need to spend. We are debating, in part, a very important promise that was made by the Opposition party. My electors—and many other Members’ electors—thought that that party would want to sustain it and come up with ideas about how to raise the odd £100 billion, but we now discover that that promise was not meant to be for any time other than the election and that it has now reneged on it. That is exactly what the people outside this House want to hear about. They want us to be topical and relevant to their lives. Very technical matters that deal with certain kinds of tax abuse are all very important to a limited number of people and in the interests of fairness, but what matters out there, and what should go back from this debate today, is this: does the principal party of opposition have any principles, or did it merely offer to cancel student debt before an election knowing full well that we cannot raise in this Finance Bill, or any other, £100 billion to deal with it?

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Given that Conservative MPs want to spend a considerable amount of time on this matter—indeed, they appear to have decided to filibuster their own Finance Bill—and given that the quote from the Leader of the Opposition has been used, let me finish that quote, word for word. He said:

“I don’t have the simple answer for it at this stage—I don’t think anybody would expect me to, because this election was called unexpectedly. We have had two weeks to prepare all of this, but I am well aware of the problem.”

That is the quote.

[John Redwood]

I am very grateful for that clarification. I think that we can rest our case. It seems very clear that an impression was given. This is relevant because the Opposition now have the opportunity to tell us how they would raise £100 billion. I will let them into a secret: if there was an easy way to cancel everybody’s student debt, I would be delighted, because it would make us extremely popular. Clearly, it made Labour very popular before the election. I am not persuaded that there is a simple way of raising £100 billion, which is why it would be interesting to hear in this debate whether there is something that we have missed.

The hon. Member for High Peak (Ruth George) chided me for not debating what is in the Bill, and said that she did not have time to read it all. That is very odd, because I seem to remember that this Budget was delivered weeks and weeks ago—before the general election. She has had plenty of time to study the Bill and to come up with some principles that the rest of us here could debate today. I wish now to move on to some of the actual measures that the Government are recommending, but, first, I give way.

Ways and Means

Jonathan Reynolds Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Wes Streeting]

I wholeheartedly agree. I am proud of the contribution that UK financial services make—not just the City of London, but other economic centres, for example, in Edinburgh and Leeds.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Manchester.

[Wes Streeting]

And Manchester, as my hon. Friend says.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 18th July 2017 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Private investment thrives on stability, but we have a Cabinet in a state of anarchy when it comes to the terms of our exit from the European Union. Do the Government agree with Labour Members that an early announcement on transitional arrangements is therefore essential? If the Minister does agree with that, will he tell us the Government’s position on the latest date such arrangements could be announced—or are we more likely to see a transitional Chancellor than a transitional deal?

[Andrew Jones]

I am not going to speculate on the negotiations, as that would be way above my pay grade. I just refer the hon. Gentleman to the Chancellor’s answer a moment ago on the merits of a Brexit deal that secures our economic future.