Retained EU Law (Revocation and Reform) Bill

Debate between Jonathan Reynolds and John Redwood

2nd reading
Tuesday 25th October 2022 Commons Chamber

[Jonathan Reynolds]

I understand the hon. Member’s position. I simply say that, if we were to lock ourselves into a permanent debate on this matter, it would produce many of the negative consequences that have already come from this process. I appreciate that, from an SNP perspective, it does not see uncertainty as a problem, because its plans would, in many ways, produce even more uncertainty. However, I do not think what he suggests is a serious way forward. I am happy to have that argument because I do not think that it is a practical set of proposals.

The past four weeks in British politics have been nothing short of a disgrace, but the UK’s problems predate the past four weeks. As we heard earlier in Business, Energy and Industrial Strategy questions, at the heart of the poor economic performance over the past 12 years is the fact that our business investment has been too low. Even before the mini-Budget set fire to the British economy, the UK had the lowest rate of business investment in the G7, despite having the lowest headline rate of corporation tax.

Business is crying out for stability, for long-term political commitment and for consistent policy. That is why we on the Opposition Benches have published our industrial strategy and why the chairman of Tesco recently said that only Labour is on the pitch when it comes to growth.

The Conservatives’ imaginary view of business leaders who want deregulated, unpredictable, pure market forces simply does not sit with the established facts. Business likes certainty, but the Bill throws thousands of pieces of legislation into the grinder with no idea which and how many of them will survive. Why would a business have any confidence in our country when it has no idea what the rules will be that govern every part of its operation in 12 months’ time? Once again, this is a matter of trust. After the chaos of the past few weeks, Government Members are foolish to think that any business leader would now trust them with this seismic task.

[John Redwood]

Can the Opposition spokesman name a single regulation or directive of the EU that he thinks should either be repealed or could be improved?

[Jonathan Reynolds]

I certainly can. I have always said, for instance, that Solvency II could be improved by having to do the regulation on a basis in this country. If we look at the Government’s approach to that area through the financial services and markets legislation, we see that they are taking exactly what might be termed a more sensible approach, going on a sector-by-sector basis, putting forward positive proposals, rather than following the sunset clause procedure, which is so reckless and uncertain. I say genuinely to the right hon. Gentleman: please have the humility to look at the damage done in the past four weeks, and the role of Government Members in that, and perhaps think, “What if we are wrong, and what are the consequences if we are?”

Finance (No. 3) Bill

Debate between Jonathan Reynolds and John Redwood

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Jonathan Reynolds]

The Father of the House is as accurate as ever. Some colleagues are pursuing a dangerous argument that all our trading relationships with countries that are not in the EU are somehow currently under WTO terms, which is an absurd misconception. We have entered into trade agreements as a member of the EU that account for something like 16% of our goods exports.

Regardless of the significant impacts of a no-deal outcome, we could go further and say that to leave the EU having not secured a deal—an acrimonious departure —would damage our relationship with our most important trading partner for years to come and fundamentally undermine our credibility on the world stage. I cannot see how any serious-minded Member of this House could understand that that would not be of severe consequence for the United Kingdom, which is why it is so important that this House makes a clear statement today about the dangers of no deal.

[John Redwood (Wokingham) (Con)]

Can the hon. Gentleman name a single country that has a free trade agreement with the EU that will not transfer it to the UK under the novation procedures?

[Jonathan Reynolds]

We simply do not know the answer to that question. I always listen to what the right hon. Gentleman has to say in Treasury and Finance Bill debates, but he is one of the archetypal Members who come to the House and pursues what I call the BMW argument: “Everything will be fine because we buy BMWs and everyone will give us what we want.” That argument is still being pursued in these debates, but it has been proved completely untrue by the stage of the negotiations that we are at. It is simply not good enough to say, “It will all be alright on the night. Everyone will transfer over the benefits we currently have. It will be as straightforward as that.” If that were case, the Government would not be in this morass and the country would be in a far better position.

Finance (No. 3) Bill

Debate between Jonathan Reynolds and John Redwood

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[John Redwood]

That is right. Many people who have been relatively successful and got to more senior positions are now being caught by quite penal taxes. I would like to see, in either this or a future Budget, more progressive work done to cut the tax rates to raise more revenue. That has come out very well so far on the Government Benches. We all strongly support what the Government have done on corporation tax rates, which have come down a long way and are coming down further. That boldness has been rewarded with a 50% increase in revenue—an increase that the Opposition do not want. They want to put the rate back up to avoid that increase in revenue. [Interruption.] They nod and say it would not happen, but it does happen. It happens every time they get into office: they put the rates up, tax revenue falls, and we have to come in and lower rates again, but we also have the problem of dealing with the extra borrowing.

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

I cannot wait until half-past nine when I get to wind up the debate. I say again: causation and correlation are not the same thing. Every independent assessment of what has happened to corporation tax over the last few years, such as that by the Institute for Fiscal Studies, very clearly shows that the reductions in corporation tax have been very expensive and cost this country a great deal of revenue.

[John Redwood]

We disagree.

Let us take another tax where very clearly a lower rate has produced a lot more revenue: the higher rate of income tax. Labour wisely kept the highest rate of income tax at 40% throughout most of its time in government, knowing it was the way to attract people with money into the country, to attract investors and entrepreneurs, and to encourage people to take more risks. It set a more penal rate just as it left office, as a kind of tax trap for the Conservatives. When the Conservative Chancellor eventually summoned up the courage to lower the rate from 50% to 45%, there was a big surge in revenue.

As one of my colleagues has already pointed out, there was an even bigger surge in revenue when a previous Conservative Government cut the rate from 80% in two stages to 40%. The amount of tax went up in cash terms and in real terms, and the amount of tax paid as a proportion of the total by those on the top rate went up. It was a win, win, win. I would urge the Chancellor to reconsider reducing it back down to 40% because he would collect more revenue and provide that stimulus to enterprise.

I hope that the Government will think again about a couple of tax rises that have been deeply damaging to our economy. The first is the rise in car tax, or vehicle excise duty. The graph showing car sales and output in the UK was increasing progressively between the Brexit vote and the spring Budget of 2017, but it then fell very sharply, and we now have a serious problem. The tax attack on diesel cars, allied to the threat of more controls on diesels, has been particularly damaging. Governments of both persuasions have gone out of their way to attract a lot of inward investment, and new investment, in diesel output and diesel vehicles. They encouraged that, only then to kick the props away and make such investment very difficult.

The Economy

Debate between Jonathan Reynolds and John Redwood

Thursday 22nd March 2018 Commons Chamber

[John Redwood]

I think that the hon. Lady will agree that this is one area where even she must see that getting out of the EU is a big positive, because she and I will be able to unite on something for once, and shove the abolition of this much-hated tax through the House. Is it not a disgrace that the world’s fifth largest economy and an important country cannot even control its own taxes? Over all those years in the EU, we were assured by Governments of all persuasions that tax was a red line and that the House of Commons would always be able to decide what the tax rates would be and what was going to have to be taxed. That simply will not be true until we leave the EU.

That is the first bonus. The Brexit dividend is to take control of our money and to spend it on our priorities. It will have a double advantage: not only will it give a boost to growth the first time we do it, but it will cut our balance of payments deficit. I am more worried about our balance of payments deficit than our state deficit, because the Government have done a great job in getting the state deficit down to perfectly reasonable levels, whereas the balance of payments deficit needs working on. The simplest way of cutting it is to stop sending money to the EU, because that is like a load of imports.

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

I wish to ask a serious question. The right hon. Gentleman is very well remunerated for his views on finance and is very much sought after for advice in the City. He will know that, if we were to lose just 10% of, say, the financial services sector in the UK, as a result of market access ending through Brexit, that would constitute a loss of £8 billion to £9 billion in taxation to this country. Is he genuinely not worried at all that we need to retain some elements in our economic relationship with the European Union as part of those Brexit talks?

[John Redwood]

I am an optimist. We will have a perfectly good economic relationship even if we do not get a comprehensive formal deal of the kind that I know those on the Front Bench would really like to secure. The hon. Gentleman shakes his head. Well, let me give him the evidence. When I studied this subject before the referendum—I always like to ensure that I give good advice, so I try to find out what I am talking about and have some facts—I looked at the economic performance of the United Kingdom during the early 1970s, when we first entered the European Economic Community, and took great interest in the economic growth rate around 1992 when the single market was completed, which people say is so crucial to our growth rate. From that, I can assure the hon. Gentleman that we cannot see any positive kick up in the graph of UK growth either when we first joined the EEC or when the single market was completed in the early 1990s. Indeed, the growth rate fell off on both occasions. I do not blame the EU for all of that, but it shows that there was no great benefit.

If there was no benefit going into the thing, why should there be something negative when we come out? It is not asymmetric. There will not be a hit. I promise him that when we look back on it all in five years’ time, he will not be able to see that—certainly on world growth graphs and, I suspect, on UK economic graphs—when we left the EU. It will not be a big economic event. It is a massively important political event, but it will not be a significant economic event, because joining it was not. Indeed, even worse, in the immediate aftermath of both joining the EEC and of completing the single market, there were very big recessions where our growth rate took a very big hit. I do not blame the EEC for the first one—that was more to do with international banking and the oil crisis—but I entirely blame the EU for the second one, because it was the European exchange rate mechanism that ripped the heart out of our companies and our economy and led to a boom and bust that was almost as big as Labour’s at the end of the last decade. That was why we did so badly.

Let me now go into a little more detail on some of the crucial sectors that have been badly damaged by our membership of the EEC, and then the EU and single market. We can do rather better in those areas once we are out of the legal entanglements.

Let us start with the most obvious and topical one this week—the fishing industry. When we first went into the EEC, we had a flourishing fishing industry, with a large number of trawlers and successful fishing ports in Scotland, England and Wales, and a net surplus of fish. We were an exporter of fish because we had access to one of the richest fishing grounds in the world in our own territorial waters and beyond. The common fisheries policy destroyed much of that. Many of our boats were lost, and much of our fishing capacity was lost. We are now a heavy net importer of fish, as a result of being part of the common fisheries policy. Our fishing grounds have been greatly damaged, because too many industrial trawlers have been allowed in from outside to do damage to the seabed and to the shoals of fish that we once had. The quota system has not really worked because of the discard policy.

It would be easy to design a UK fishing policy through which we would have both more fish to eat and we would take fewer fish out of the sea. We would do that by not having the discards. It would also be easy to design a policy in which the fish was landed in the UK, so that there would be more economic benefit for us in processing and selling it on, and in which we would have much more capacity in the English and the Scottish fleets so that we could capture more of the added value. I look forward to the Secretary of State publishing a detailed strategy and offering us draft legislation, and I look forward to the Scottish National party supporting that legislation, because it must know how important the recovery of our fishing industry is.

--- Later in debate ---

[John Redwood]

I trust that Northern Ireland, as part of the United Kingdom, will benefit from the economic policies I have been describing. It is the settled wish of a majority in Northern Ireland that they stay part of the United Kingdom, and they are very welcome. If the hon. Gentleman is referring to the alleged difficulties regarding the border, I simply do not think that that is a serious, real problem. It is obviously a political problem because the EU wishes to make it so, but the EU needs to understand that this border is already a complex one. When goods are being moved either way between the Republic of Ireland and Northern Ireland, there is a currency change to be effected, and there are different incidences in excise rates, VAT, income tax and corporation tax levels on each side of the border. Yet we do not have a man or a woman at the border stopping every truck and working out the sums on what has to be done on the excise tax or the currency, because that would be ridiculous. If we end up with World Trade Organisation-based trading so that there do have to be tariffs at the border, it is no more difficult to calculate the tariff electronically and charge it away from the border than it is to charge the excise and the VAT at the moment. We know how to do it; it is not that complicated: we live in the electronic age. I can see that Labour Members want to live in the pre-computer world and do not think that we can send data electronically, but I assure them that it is a magical development.

[Jonathan Reynolds]

The slogan of the leave campaign was “Take back control”. What does that mean if it does not mean taking back control of one’s borders? There are movements of people that need to be considered. There is still the common travel area between this country and the Republic of Ireland. One cannot simply introduce borders and then tell the British public that those borders will not be physical, or even exist, because there will somehow be a digital solution. It is not practical to say that those borders are going to be put in place and then they will not exist.

[John Redwood]

The hon. Gentleman has been here long enough to know that all parties have always agreed that we keep the common travel area with the Republic of Ireland. That has always been a given. It was not dependent on the EU in the first place, and everybody wants to keep it.

Let us deal with the question of our UK external border, wherever it may be, and the issue of migration. Yes, the British people voted to have more controls over the number of people who come to work and settle here. The Prime Minister has promised on several occasions that she will get the net migration total down to tens of thousands from the quarter of a million-plus we have been experiencing each year, and I wish her every success with that. We do not need new hard border checks because, as I understand the way that thinking is going in the Government—the way I encourage it to go—we just want to control two things. We want to control the right to work through a work permit system and we wish to control the entitlement to benefit by making sure that people are properly qualified for it. That does not require big controls at the border. Anybody is welcome to come as a tourist, to come and spend their own money, and to come and invest. That is not what we are trying to stop. We can control the things we wish to control through a work permit system and through a benefit system.

Finance Bill

Debate between Jonathan Reynolds and John Redwood

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.

Finance Bill

Debate between Jonathan Reynolds and John Redwood

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

[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.