Economic Value of Golf
Karl McCartney Excerpts(8 years, 8 months ago)
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Karl MᶜCartney (Lincoln) (Con)
Two weeks ago, I was particularly pleased to have secured this Adjournment debate in the wake of the launch, hosted by the all-party group on golf, of which I am chairman, of a report by Professor Shibli at Sheffield Hallam University on the benefits to the UK economy of golf. The report was instigated and funded by the Royal and Ancient, the home of golf.
As my right hon. Friend the Minister is aware, and as maybe you are Madam Deputy Speaker, many facets of life depend on impeccable…timing. Indeed, all the sports that I regularly play, many representing parliamentary teams, rely on good co-ordination and timing. The report’s launch and this Adjournment debate coincides with last weekend’s exciting golf, where Danny Willett won the US Masters. Six of the top 15 players at the tournament were British. Perhaps they were told last weekend about the importance of this upcoming Adjournment debate and my starring role—although I think other factors may have provided any extra incentive they might have needed.
Our great sporting nation invented or codified practically every global sport—an amazing achievement. Golf is no different. Among the constant clatter and chatter of football, the hurly burly of rugby union or league and the more measured poise of cricket, golf stands out as a sport that can be played and enjoyed by all in our society. Indeed, there are about 3,000 golf clubs across the United Kingdom. No player can rely on his or her team mates, the decisions of a referee, or the noise from the home crowd. It is one man or woman against one course—that is all. Two foes fighting each other for control: the ultimate battle both physical and mental. I was recently informed that some view golf as a game played across a distance not of a course or a fairway, but of the five-and-a-half inches between the ears. It can be a sport as frustrating and rewarding as one wants it to be.
Among all the preamble, I mentioned the report that I was proud to help launch. The report, “A Satellite Account for Golf in the UK”, shows explicitly the value, in a monetary sense, of golf to the UK economy. This debate will enable the House to recognise and celebrate golf’s contribution on myriad levels, including economically and to the health of participants.
At this point, I would like to congratulate Martin Slumbers and all at the Royal and Ancient who supported the report, and Professor Shibli of Sheffield Hallam University Sport Industry Research Centre who produced it—the first of its kind for an individual sport in the UK.
Stephen Gethins (North East Fife) (SNP)
I would like to congratulate the hon. Gentleman on securing this important debate, and to acknowledge his work as part of the all-party group on golf. He raises an important point about economic value. Does he agree with me that there is a particular value to small business, as I well know round about St Andrews and elsewhere in North East Fife? He is also right to acknowledge the health benefits for people of all ages of taking part in golf.
Karl MᶜCartney
I thank my colleague and fellow all-party group chairman for his welcome intervention.
I am aware that the Government have set five priorities in their “Sporting Future” strategy, one of which is economic development. When the results of the widely available report I referred to were published last month, it was clear that golf makes a vast contribution to our economy, much of which has been unheralded and unsung thus far. I trust this debate will go some way towards promulgating the good news.
The economic value is clear: with nearly 4 million people playing golf once a year and 1.5 million people playing golf every four weeks—a number even larger than those employed in the national health service—the total economic activity of golf exceeds a staggering £10 billion per annum.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I am glad that my hon. Friend has secured this debate. Although I cannot challenge St Andrews, Dorset has many fine golf courses. In terms of economic benefit, golf provides useful employment, especially for younger people living in a rural area. Does he agree that that is vital in our more rural areas?
Karl MᶜCartney
Indeed it is, and I thank my hon. Friend for making the case for Dorset, as one of the many parts of the nation, both urban and rural, where golf is important. I shall come on to some of the statistics later in my speech.
Overall, golf’s positive contribution to the British economy is over £2 billion per annum, not just directly through golf clubs and through our vibrant golf equipment industry and golf shops, but indirectly through the construction and real estate industries.
I am particularly pleased that England Golf is the home of the amateur game in this country. It is based in my county of Lincolnshire in Woodhall Spa in the constituency of my hon. Friend the Member for Louth and Horncastle (Victoria Atkins), so the game’s contribution is well spread across our nation. I doubt that even colleagues who want us to remain in the European Union could come up with a scare story about the damage that leaving might hypothetically do to this great game of ours—the Ryder cup is surely safe, no matter what happens on 23 June.
Jason McCartney (Colne Valley) (Con)
I congratulate my hon. Friend and namesake on securing this debate. I have a family interest in that my dad and constituent Bob is a keen player at Meltham golf club in my constituency. In talking about the economic benefits, will my hon. Friend also acknowledge those in the clothing and equipment supply chains? Glenbrae Leisure in Slaithwaite, for example, makes lots of jumpers and leisure wear, and the cloth in the green jacket that Danny Willett wore in Augusta at the masters was woven and dyed in my constituency on the outskirts of Huddersfield.
Karl MᶜCartney
I thank my good friend, distant relative and fellow all-party group officer for his interjection. He never fails to take the opportunity to make a good point in this Chamber.
The final piece of the economic jigsaw is the number of people who work in golf, with an estimated 75,000 people directly employed in the UK—the equivalent of 54,000 full time workers from Land’s End to John O’Groats. When the sport is on the world stage, as it will be at the Royal Troon for the British open in July of this year, the economic benefits for the local economy stretch far and wide. Even our friends from the north in Scotland must concede that the English have assisted in the promotion and healthy aspect of their tourism industry, where golf is concerned.
Dr Philippa Whitford (Central Ayrshire) (SNP)
As the Member who represents Royal Troon, in my maiden speech I paid tribute to it and welcomed people to come and attend the open in July. As I said, my house is not quite big enough, but my garden is quite big if people want to bring a tent. Anyone wanting advice on eateries, travel or anything else about Royal Troon is welcome to speak to me.
Karl MᶜCartney
That is very kind of the hon. Lady. I am happy to have been able to tee that up, so that she could drive that intervention down the fairway! Sorry, everybody; I must stop it.
Of course, golf is not just about jobs and money, vital as these are. Golf is the fifth largest sport in the UK in terms of participation, and the health benefits are clear for so many who take part in it. If everyone played a round every week, perhaps the obesity problem we face in our country would soon be eradicated. No one can play golf without indulging in physical exertion. Indeed, the game has been described by some as a good walk interspersed with some elation and frustration, often in unequal measure. Golf is a sport that supports our Government’s aim of ensuring that the nation’s population are active. On average, a game of 18 holes involves walking about six miles, although I personally would disagree with that figure. Given my playing standard, I often find myself walking perhaps double that distance as I search for my balls in the rough off the fairway—often on both sides—and dig them out of bunkers. Some have remarked that I am lucky to have a soft touch in my short game.
More seriously, golf is a sport that supports participation by men and women across all age groups. It is not subject to the decline in participation in some sports, such as team sports, by people who have reached their early twenties. Golf participation rates tend to increase until people are in their thirties and remain steady until they retire. It is, indeed, a game for all.
Andrew Stephenson (Pendle) (Con)
My hon. Friend is making some excellent points. Does he agree that municipal golf courses are particularly important? Is it not disgraceful that my local council, Pendle borough council, is proposing to close the only municipal golf course in Pendle in order to save £50,000 a year? The same council, in the same month, spent £300,000 on the purchase of a disused building in another part of the borough, so it clearly has a lot of money and does not need to make that saving. It simply does not recognise the importance of golf to people in all age groups. This is a real sport in which everyone can get involved, and the borough should save our local golf course.
Karl MᶜCartney
I thank my good friend and fellow traveller for his intervention, but unfortunately that is not the only example in the country. In my home area, Wirral council, which is also Labour-controlled, will get rid of the municipal golf course if it has its way, and in Lewisham, one of the oldest courses—perhaps even the oldest—is also under threat.
Dr Whitford
In Troon, we are lucky enough to have 12,000 souls and nine golf courses, three of which are municipal. The hon. Gentleman spoke of people playing until retirement. In fact, golf is one of the few sports in which people can engage in their eighties and nineties. Our ladies’ club certainly includes players who are well into their nineties. Such courses should not be got rid of.
Karl MᶜCartney
I shall come on to some of the other options for people who want to play golf in their retirement.
All that shows why golf adds such value to our economy, to employment, to our environment, and to our public health. I felt that it was important to secure this debate because I wanted to ensure that golf received the recognition that it deserves, and also to build on the recent re-formation of the new all-party parliamentary group for golf—an important new step. For far too long, golf has only been recognised in both Houses by the Parliamentary Golf Society, an august and traditional body whose role, it seems to some, has been to help traditional parliamentarians to play 19 holes together rather than celebrating the positive impact of the game throughout the nation. Some of us who came up against that closed shop in the last Parliament decided to reinvigorate the APPG with the simple aim of promoting participation in golf across the ages and sexes. Our European neighbours see ladies’ and girls’ participation rates that are double ours in the UK, and we want to close that gap. Golf can be, and is, a game to be enjoyed by all the family.
The first priority of the APPG is participation, but hand in hand with that goes an aim that is just as important—the aim to change the perception of golf. This great sport is for all ages, and we want to encourage young girls and boys to try it, whatever their background and wherever they live, and to continue to play throughout their lives with their friends and families. Who knows? It may not be a further 20 years before we see another British winner of the US Masters.
Some great work has been done by England Golf and its new chief executive, Nick Pink, by the Golf Trust and by others. All four home unions have specific projects in inner-city areas, including the national Get Into Golf campaign and help for those with disabilities to take part in the sport. In the neighbouring constituency of my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), Lincoln Golf Centre recently launched a project to help people with dementia to play and continue to play golf, which is happily hosted by Brian Logan and supported by Anthony Blackburn, founder of Golf In Society. Before Easter I was invited to meet players and their families, friends and carers, some of whom enjoyed a morning of respite while their husbands, wives, friends or partners enjoyed some golf.
The end of April marks the start of national golf month, which I am sure the whole House will support. On Wednesday 27 April there will be an event on Speaker’s Green to promote participation in golf. My right hon. Friend the Minister has been invited, and I am sure that you, Madam Deputy Speaker—as a member of the all-party parliamentary group—and all my colleagues throughout the House would enjoy taking part.
The conclusion of the report demonstrates that golf is of considerable importance to the economic contribution of sport within the UK economy.
Richard Arkless (Dumfries and Galloway) (SNP)
I am interested in investment in golf tourism, and the results of that and of direct spending in constituencies. In my constituency, we have 30 courses. A £10,000 investment by Visit Scotland and the local council has led to almost £500,000 of indirect and direct revenues. Should we not be using this debate—I am sure the hon. Gentleman will agree—to put pressure on tourist boards and local authorities to put more money into attracting golf visitors to the UK, because the bang for our buck there is clearly higher than it would be elsewhere?
Karl MᶜCartney
I thank the hon. Gentleman for that intervention. I agree with virtually all the points he made. The many disparate and far-reaching organisations within golf need to work with those outside the sport to ensure that it achieves the participation level that it should, at various levels.
The conclusion of the report demonstrates that golf is of considerable importance to the economic contribution of sport in the UK economy. At the heart of the industry is a thriving club sector. However, the sport’s presence in tourism, hospitality, construction, equipment, clothing, betting and events are all notable areas of golf’s economic impact, as is its contribution to taxation.
The report provides a replicable economic baseline for the golf industry, against which the future development of the sport can be measured. With golf making its return to the Olympic Games at Rio later this year and the economy on an upward growth path, the economic and sporting conditions are favourable for the UK golf industry to develop further. So I am looking forward to hearing the response from my right hon. Friend the Minister, including his acceptance, I hope, of my invitation to him for a round of golf this summer at either Bexleyheath or Barnehurst golf clubs in his constituency, which have obviously noted his renowned sporting prowess.
I thank the House for its attention.
Enterprise Bill [Lords]
Karl McCartney Excerpts(8 years, 9 months ago)
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Helen Goodman
The main reason I will be supporting the amendment tonight is that the Government’s proposal is bad for people who work in shops—it is bad for them as individuals, it is bad for their families and it is bad for their communities.
The hon. Member for Enfield, Southgate (Mr Burrowes) made a brilliant speech, and I was very disappointed by the Minister’s response. The notion that the British economy can become more efficient only by making people work seven days a week is absurd. If that is the economic model, there is something wrong with the economic model.
People work to live; they do not live to work. There are lots of things we could do that would be more efficient. We could propose to our partners by text, or we could read to our children on Skype from the office, but nobody would suggest those things. The constant denigration of family life is truly unhelpful.
The protections for those in shops are not working properly. It is ironic that the legal advice against the proposals comes from John Bowers QC, who is now the president of Brasenose College—perhaps the Prime Minister should go back to his old college and get a little tutorial on this problem.
We know from the experience of the Olympics that this proposal will not strengthen the economy; it will just shift business from small shops to big shops. It will also not stop people using the internet. I am afraid the Minister’s proposal for pilots and evaluation is very much undermined by the way the Government have handled the issue in the last six months.
I know that the amendment from the right hon. Member for Meriden (Mrs Spelman) is well intentioned, but the irony is that every cathedral city in the land would be zoned and have longer hours, and it is the Church that is leading the campaign against longer Sunday trading hours.
I have had no representations from constituents in favour of change—only representations in favour of keeping the status quo. That is true whether people run businesses or work in shops. I will leave the last word to a woman who works in a shop in my constituency, who wrote to me saying, “Don’t I deserve a life too?”
Karl MᶜCartney (Lincoln) (Con)
Like my good friend, my hon. Friend the Member for Peterborough (Mr Jackson), it is with a heavy heart that I will be voting in favour of the amendment tabled by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), who spoke so eloquently earlier. I say that because, to keep Sunday special, I will be voting against my Government—a decision that no loyal Government Member wants to take, and certainly not too regularly. It also means that I will be voting against my good friend and fellow sportsman, the Minister. He has spent some time speaking to me and other colleagues, trying to persuade us, but I think he was given a very sticky wicket. He will not mind my saying that he perhaps batted more like Geoffrey Boycott than Ian Botham. He did his very best.
The reasons why I will be supporting the amendment, and why other Members should consider supporting it, are based on three core issues: my Conservative principles and the traditions of our country; the impact on staff in all shops; and particularly the impact on small independent shops, their owners and their staff. These places are well used and well liked in the city of Lincoln, but if Sunday is no longer special, we will lose them.
There is something uniquely British—perhaps even Anglo-Saxon and, dare I say it, Christian and traditional—about the way we mark Sunday in this great country of ours. It is the one special day we have every week, and to lose that means losing something special about Britain. A week where every day is the same will mean a drab and very grey Britain.
As a Conservative who believes in our country’s traditions and culture, undermining that special day is not something I can support. I personally would go even further and look at protecting other days in the year, such as Boxing day, Good Friday and Easter Monday, perhaps by imposing current Sunday opening hours on those days. Sunday already provides enough opportunities for large-scale shopping—if someone is up early enough, they have a full six hours. Those who want to shop online will do so, whether or not larger shops are open for longer on Sundays. For those who do not want to spend all day shopping in large malls or superstores on Sunday, there are plenty of convenience and independent shops to go to, and I am fearful about the impact of this measure on those shops, which are the lifeblood of many communities across our country.
I want to live in a country with a rich mixture of shops, not an endless sea of large, faceless superstores. I fear that extending the hours of larger shops on a Sunday will diminish choice, impact on the livelihood of those owning and working in smaller shops, and ultimately damage businesses on our high streets. I am also concerned about the impact on the families of shop workers. As well as Sunday being a special day for those who do not have to work, we must ensure that it remains a special day for those who do work. If we extend shopping hours, there will be no respite for those people, and throughout the week all they will have is snatched time with their families—they will be on a conveyor belt of work that never ends. Everyone needs quality family time, or just time away from work. As the hon. Member for Bishop Auckland (Helen Goodman) said, we should all work to live, not live to work.
I understand that big businesses want to sweat their assets. Closed large stores in Bluewater, Meadowhall or anywhere around the country earn no money from shoppers, and hence no profit for their owners. In the middle of the UK, I am sure that Bicester shopping village would want to open for 24 hours, 365 days a year, but what would be the effect on the staff working there? Sunday as it is currently is a Great British compromise that works for everyone. Retailers can trade, customers can shop, shop workers can spend quality time with their family, and we can still have that one special day of the week.
I do not want to live in a country where every day is the same, and where our traditions and uniqueness are lost. Upholding the traditional British way of life is important to me and my constituents, and that is why I will vote for the amendment. I hope that, after today’s reasoned debate, some of my Conservative and traditional colleagues will examine their consciences and support the amendment tabled by my sound and illustrious hon. Friend the Member for Enfield, Southgate.
Hywel Williams (Arfon) (PC)
The Minister’s proposals for pilots are what we call in Welsh a “cath mewn cwd”—a cat in a sack—and if we open that sack, we will get our noses scratched, as far as I can see. With Wales, the Government are bypassing our National Assembly, fostering a relationship directly with our local authorities. They are bypassing our Government in Cardiff and acting on the basis of that peculiar entity, “England and Wales”. Local authorities in England and Wales are to be treated as if they exist in the same country, national devolution is ignored and, as the infamous entry in the first “Encyclopaedia Britannica” put it, “For Wales—see England”.
I have two brief points. First, there is a precedent in terms of the council tax benefits that were devolved to local authorities in England, but to the National Assembly in Wales. Secondly, this particular matter is devolved in Northern Ireland and Scotland, and I would say that Wales should be treated no differently.
Domestic Politically Exposed Persons: Money Laundering Rules
Karl McCartney Excerpts(8 years, 11 months ago)
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Karl MᶜCartney (Lincoln) (Con)
My hon. Friend is making an excellent speech. Can he tell us whether every bank and every Back Bencher has been affected? I ask because, at present, one party seems to be, shall we say, over-represented in the Chamber.
Mr Walker
Colleagues are naturally reluctant to talk about the issue, but I can tell my hon. Friend that this applies to every bank, although some are worse offenders than others. The banks that I have come across are HSBC, Lloyds, the Halifax and Barclays, but there will be others.
Oral Answers to Questions
Karl McCartney Excerpts(9 years ago)
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Mr Osborne
We all enjoy a great British curry, but we want the curry chefs to be trained in Britain so that we can provide jobs for people here in this country. That is what our immigration controls provide.
Karl MᶜCartney (Lincoln) (Con)
Q12. My right hon. Friend is well aware, from my repeated representations to him and his colleagues, of the need for a southern relief road and eastern bypass for Lincoln, which have been delayed by bureaucracy for nearly 100 years. He and his Government colleagues are well acquainted with the need to drive growth and local economic wellbeing by utilising appropriate infrastructure improvements to fuel the midlands engine. What would he say to my constituents, should he visit the beautiful city of Lincoln, other than to tell them that any new road is eventually better than no road?
Mr Osborne
I congratulate my hon. Friend on securing £50 million of extra funding for Lincoln and ensuring that a bypass will go ahead. I have spoken to him. I know he has concerns that the bypass will not be big enough and that it should be a dual-lane bypass. Let us continue to have those conversations. We both need to ensure that local authorities agree with his assessment, and I am happy to help him with that task.
Oral Answers to Questions
Karl McCartney Excerpts(11 years, 7 months ago)
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Danny Alexander
I am grateful to my hon. Friend. Every small business in the country is benefiting from the fact that fuel taxation is 13p a litre less under this Government that it would be under Labour’s plans. It is the coalition Government who are on the side of those firms. I will make the case to the European Commission to extend the discount to the most remote areas. We are working to build a case on that and I would welcome his support, and that of his local authority, in doing so.
Karl MᶜCartney (Lincoln) (Con)
Q8. what steps he is taking to secure economic recovery.
The Economic Secretary to the Treasury (Sajid Javid)
The Government’s strategy of deficit reduction, monetary activism and supply-side reform is designed to protect the economy and to lay the foundations for stronger, more balanced growth. There are encouraging signs that the economy is healing. The deficit is down by a third, GDP is growing and the private sector is creating jobs at a near-record rate.
Karl MᶜCartney
I commend the Government’s efforts to reduce the budget deficit. The Opposition are yet again advocating more spending to achieve economic salvation, but such expenditure in the past has left us with a current national debt of close to £1.2 trillion. Does my hon. Friend agree that the British public, and certainly my constituents in Lincoln, will not trust the Labour party with the nation’s finances as long as it continues to hold on to such reckless ideas and to a shadow chancellor who continues to peddle them?
Sajid Javid
I could not have put it better myself; I agree 100 per cent. with my hon. Friend. The economy is healing after suffering the deepest post-war recession this country has seen, which destroyed the hopes of many working families up and down the country. The deficit is down by a third, which has brought confidence and helped create jobs at a record rate: 1.25 million created in three years.
Corporate Tax Avoidance
Karl McCartney Excerpts(11 years, 11 months ago)
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Karl MᶜCartney (Lincoln) (Con)
I congratulate the hon. Member for Redcar (Ian Swales) on securing this Back-Bench debate on corporate tax avoidance. It is an important subject that has been dangerously blurred by some of our colleagues. I want to say at the outset that I find myself far more concerned about the way in which Government spend our money than about how they collect it. If spending were controlled, or had been—I give the example of the last Labour Government—the collection problem would be vastly reduced. I believe that my Government have taken such sentiments to heart and we are actively reducing spending to aid our country in difficult economic times.
I certainly think the approach of the Chairman of the Public Accounts Committee, the right hon. Member for Barking (Margaret Hodge), and others who have swallowed her line, misses two simple and quite fundamental points. First, the tax on shareholders is inseparable from company tax and is quite high. While companies are literally separate legal entities from their shareholders, they are in effect tax collection agencies for Governments to tax the profit stream which in effect belongs to their shareholders. That profit stream is not just taxed by the corporation tax payment on which all of this debate is focusing. In reality, the profit stream belongs to the shareholders and it is taxed not once by corporation tax, not twice by corporation tax and income tax, but three times, once as corporation tax, once as income tax on distribution, and finally with capital gains tax, or inheritance tax, on retentions as a proxy for the capital gain.
I have a sound mathematical example in my notes that might well lose some Opposition Members, so let me just outline that on £100 of pre-tax profit, with corporation tax and other taxes taken into account, the Government take £52.91 in tax paid. Some of this amount comes from income that can be deferred, but it is a tax that is ultimately not avoidable, other than perhaps by devices such as the trust of the right hon. Member for Barking for her shares in her family company, which one presumes is morally fine with the Opposition Members who have followed the debate so far and so must be okay. But that near £53 from £100 does not sound very low to me, especially given that the Government scrapped indexation relief on capital gains at a time when they are clearly targeting higher inflation. Perhaps more importantly though, what incentive is such a tax on profits to entrepreneurs? What encouragement do such figures give to those involved in setting up and driving forward young businesses, or those entrepreneurs thinking of taking that big first step into the world of small business and working for themselves?
Secondly, is it wrong for companies to avoid tax? Janan Ganesh in the Financial Times has written well on this particular issue, but I would draw hon. Members’ attention to one of his main and salient points for this debate with which I agree. The Starbucks precedent—and by association, one might say, any future pressure on Google, Amazon, and historically some of the mobile phone companies and indeed perhaps most notoriously the Guardian newspaper group—is a dangerous one. Tax should be a matter of law not moral persuasion. If any Government want Starbucks or any other corporation to pay more tax, let them pass an appropriate piece of legislation. Otherwise tax payment will become a matter of public image and impact, and I imagine that very little tax will be paid by the maker of the polystyrene cups, which we may never have heard of. Do we really want to travel down “The X Factor” road of choosing something, indeed policy setting in this country, making important decisions based on fickle public opinion on the hoof?
Mr Bacon
While my hon. Friend is right that it should be a matter for law, not for moral persuasion, PricewaterhouseCoopers’ request of the Government, in the consultation that took place last year, that they should do more to clarify what constitutes unacceptable tax avoidance versus what constitutes acceptable tax planning, places a burden on the Government to be clearer about their own intentions.
Karl MᶜCartney
My hon. Friend will be pleased to know that I agree with him. I will mention PricewaterhouseCoopers shortly.
The objective of business, any business, is not ostensibly to do good or to pursue corporate social responsibility; it is to do business and make money for the owners and/or shareholders. Directors of all small, medium, large and multinational companies have a fiduciary responsibility to maximise gains for that company’s owners, including minimising the tax paid. Any diversion of company management from that objective is wrong as a matter of law and dangerous as we move forward in the 21st century.
John Christensen of the campaign group Tax Justice Network made a true claim when he said that the figures highlight that tax avoidance by large businesses has become a “much bigger issue” over the past 10 years because of the “enhanced relationship” policy put in place. That policy was put in place by the then Labour Prime Minister, Tony Blair, and his then Chancellor and ultimately successor as Labour Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).
The problem is perhaps exacerbated in that we have a very complicated tax system. The previous Labour Government did nothing to uncomplicate matters. In fact, they set up a whole new industry making it more complex. What we need as a country, and for us to remain an economic powerhouse on the world stage, is much greater tax simplicity and lower tax rates.
I am pleased that the Government are consulting on a general anti-abuse rule, the GAAR, targeted at artificial and abusive tax avoidance schemes, with a view to bringing forward legislation later this year. Echoing my earlier statement, Mary Monfries, head of tax policy and regulation at PricewaterhouseCoopers, has also been quoted in the media saying with regard to our tax system that “simplicity is key”. She described complexity as a
“key problem with the current tax model”,
adding that the GAAR should
“help to act as a disincentive”
against
“abusive, extreme tax avoidance arrangements”.
But I also believe that some of my colleagues are being disingenuous with the great British public in that the vast majority of multinationals mentioned are not breaking any laws and, as the Government make the law, it is their own and our fault if companies use the rules in place to minimise their tax. Our tax legislation is huge and very complex, so any shortcomings are down to Government failure to create and implement the right tax framework.
The multinational aspects of tax collection and avoidance can be solved only by international bodies working together. That will not be easy for any of my ministerial colleagues to achieve I am sure, but as for any avoidance by UK companies, we do not perhaps need this debate now, as the GAAR legislation will, we trust, come into force during the next tax year. Surely that is the mechanism to stop so-called unacceptable tax avoidance that the hon. Member for Redcar seeks to debate this evening. Many private sector individuals in business may view this debate and other pronouncements by some hon. Members as politicians just diverting public opinion away from their own shortcomings by encouraging media interest in the tax avoidance issue. As politicians we organise the rules and therefore as long as what the companies do is legal, morality surely does not come into it much. Google, The Guardian, Amazon and others are perhaps insulated in that they have little direct competition in the services they provide, so no incentive to make voluntary tax payments as they have avoided such sizeable payments for a number of years. But Starbucks is now paying reportedly quite sizeable sums of voluntary tax, not for moral reasons but to protect its brand and customer loyalty—that is, to protect its profits.
Bob Stewart
Surely if a company is making a voluntary contribution of £10 million a year, it must be making very much more than that, and be doing that only because it hopes to get off the hook, and that is something that we must legislate on.
Karl MᶜCartney
My hon. Friend makes a good point. I agree that such a company is probably making a lot more in profit than £10 million for the next two years.
A potential solution is perhaps not to hound companies that legitimately use the tax laws as they are, but to make the tax system such that there is no benefit in tax avoidance—that is, reduce corporation tax rates and the complexity of the system, whilst at the same time cracking down hard on those who are abusing the tax system. This, for those in the Chamber who are technically minded, is known as the old carrot and stick approach.
We want multinationals to headquarter in the UK. Frankly, I cannot complain if they organise themselves to pay the lowest legitimate tax that they can. What I am more interested in is that they bring their jobs and spending power to our shores. It fills our restaurants, houses and shops. It provides secondary support service employment across a plethora of sectors in Great Britain.
Let us not be negative this evening, because that will put businesses off coming here, which is the exact opposite of what we want. We want the whole world to know that Great Britain is a superb place to start up, locate or relocate a business, and with the Conservatives in government we continue to be Great Britain. We can all help to send out the message that we welcome international businesses—even Starbucks, Amazon, PayPal and Google—to our shores and would like them to bring more of their business to the UK. We are a country that is determined to drive down tax rates, as demonstrated by our recent corporation tax reductions, undoubtedly a feather in the jaunty cap of the Chancellor and the Treasury team. We are a great place to do business.
It is telling that employment tax brings in 5.4 times more revenue than corporate tax—£259 billion versus £48 billion—so let us focus on those things that create more sustainable jobs, the positives. One of the Government’s main roles is to make the UK the best country in the world to do business in. Everything else will be easier if we can achieve a massive influx of foreign companies moving their bases and thus employing more people here.
I believe that populist politics masquerading as morality is a Lib Dem trade mark that would inevitably lead us into a vicious spiral, one that is downward and certainly not a virtuous circle. We know that the Lib Dems are desperate to be popular. They often say anything on the doorstep, often expressing views that are diametrically opposed to those of their neighbours in order to garner votes, as anyone who has canvassed after them will know. That cheapness was amply demonstrated by their head of communications—presumably the paper clips organiser—who last month supposedly leaked instructions to Lib Dem Members of this House to monster the Conservatives, people like me and my fellow cuddly Conservative Back Benchers, in their vicious pre-Christmas briefing.
The Liberal Democrats might hanker after a yellow paradise of sand and yellow sun, but it is a very small yellow island they currently inhabit, surrounded by very deep and clear blue water. I think they know that it is likely to become a smaller island. They need to mature as members of the coalition Government. They need a dose of reality over the next two and half years. We are not some paradise or utopia—this is the real world.
I am conscious that my time is almost up and so will conclude. Of course all the Conservatives on the Government Benches want our country to have the most competitive corporate tax system of any major world economy. By doing so we will ensure that our country’s economic recovery will be private sector-led, but we expect those corporate taxes to be paid, regardless of where any larger international firms that do business here might be based or have business operations. A need for fairness and reasonableness from both sides seems to be most apt. In that respect, I am particularly pleased that the Chancellor recently announced extra investment in the part of the Inland Revenue that tackles tax avoidance by multinational companies.
Dan Rogerson (North Cornwall) (LD)
I pay tribute to my hon. Friend the Member for Redcar (Ian Swales) for securing the debate, and for the work that he and his colleagues on the Public Accounts Committee do on our behalf to delve a bit deeper into these issues. It is also a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), who made a lot of sensible points.
The hon. Member for Lincoln (Karl MᶜCartney) was a little strident earlier, when he sought to have some political fun within the coalition. I am sure that hon. Members from Northamptonshire would have been proud of him. I thought he was being rather ideological. The Conservatives used to be the party of pragmatism, but his message was that there should be cuts at all costs, and that implementing cuts was the virtuous thing to do. I disagree with that. I believe that if there is something good to be done and the Government have the money to do it, they should spend that money on behalf of the people to try to achieve that goal. I do not think that there is anything inherently good in cuts, but the Government are trying to cut the deficit that we inherited, because it has burdened the country and future generations with huge interest payments and threatened to destabilise the economy. It is therefore the right thing to do.
Pretty nearly all the parties in the House agree that the deficit needs to be reduced over a certain period, but if we are asking people to contribute to that through cuts or through paying tax elsewhere, they need to know that everyone is making a fair contribution. That is understandable. Even though UK Uncut sometimes takes an extreme position and oversells the contribution that could be made to the economy by dealing with this problem more equitably, there is a core of truth in what it says, which is that some organisations are using expensive advice to ensure that they get away with not paying the same contributions as everyone else. As the hon. Member for Hayes and Harlington (John McDonnell) said, those who pay their taxes on a more straightforward basis want to know that everyone else is making a fair contribution.
We represent a diverse economy here in the UK. I represent a small business economy in which it is incredibly difficult for retailers to survive. The hon. Member for Cities of London and Westminster (Mark Field) talked about not wanting our high streets to be homogenous, but we need to be sure that there will be some sort of high street left. I am sure that most of us will have done some online shopping, because it is convenient and helpful, but it cannot be right for small, local businesses to compete under a completely different set of rules from those used by multinationals such as Amazon. We have heard that this is not just about corporation tax, and that the problem exists in relation to other taxes as well. We need to look at the matter across the piece. My hon. Friend the Member for Redcar made that point very well when he framed the debate.
We know why companies avoid paying tax. It is rational behaviour, and we cannot knock them for doing it. An industry has grown up around it because it is legal, rational behaviour. Governments of all political colours have sought to exploit this and to push behaviour in a certain direction. An example is waste policy and the effect of the landfill tax regime, which was used to push behaviour in a particular way. We all bear some responsibility for how we set the terms of the tax regime, but we can also set the culture. The hon. Member for Bognor Regis and Littlehampton (Mr Gibb) mentioned boardroom culture earlier, but this is about the culture of society as a whole. The fact that we are having this debate today is a positive thing. This is not about populism; it is a genuine response to concerns expressed by people who want us to articulate their views.
The coalition has acted to make corporation tax more reasonable, but that will work only if people actually pay it. The trade-off involves ensuring that we have a tighter regime. I agree that we should not move towards a bargaining system in which the final arbiter is public opinion. That is certainly not the way to run a tax system. I praise my right hon. Friend the Chief Secretary to the Treasury and his colleagues for investing in the areas of Her Majesty’s Revenue and Customs that carry out such work, because that is where the battle must be fought and won. Yes, the solution involves the legal framework, but it is also about HMRC having the resources to implement the measures.
It is no accident that we are in this situation. Previous Governments have preferred not to discuss the matter, because big business has a seat at the top table and has been able to lobby effectively. It has made the case that everything it does is good and everything it touches turns to gold, and that it should therefore be left alone to get on with it. I think the culture has changed at this time of austerity in favour of delving a little deeper and saying, “No, that is not the case. Where you do good, we will be partners in rewarding it and ensuring that our economy works, but where you are trying to pull one over on us, we will invest in the resources through HMRC to get the job done.”
The hon. Member for Hayes and Harlington was absolutely right to highlight the closure of tax offices under the last Government. I lost the battle to save my local office in North Cornwall, even though our compliance officers had a great deal of skill at doing such work. If it had been argued that their work could be done more efficiently so that the bigger corporations could be looked at, we could have retrained those people and they could still have been based out in the regions—as Amazon showed, it does not really matter where people are based; the trade will keep coming if things are managed effectively. It is a great shame that we lost that expertise, but that is now ancient history, as we are where we are.
It is clear that the sums involved are highly significant and that previous Governments have been too timid in tackling the problem. We are now having an open and public debate—both here tonight and out in the country—which I welcome. I look to the Minister to set out his determination to tackle the problem, invest the resources in HMRC and ensure that we tighten up the regulations where possible.
Dan Rogerson
I am afraid that I cannot give way.
Significantly and finally, we must work with our international partners to set up an international framework for a culture in which companies pay for the profit they make and work effectively and in harmony with Government to achieve prosperity in the way that most people would expect.
Oral Answers to Questions
Karl McCartney Excerpts(12 years, 1 month ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
We looked at introducing this measure on the basis of household income, but it would mean bringing 8 million households into the tax credit system and impose a much greater administrative burden on many people. At least Labour Members are consistent: they have opposed every measure to try to reduce the welfare budget, whether it be the welfare cut or child benefit for higher earners. It is time for us all to look at public spending in that area and bring it under control, but the Labour party will simply not do that.
Karl MᶜCartney (Lincoln) (Con)
T10. In the light of a recent report by the Centre for Economics and Business Research, which suggests that UK growth will outstrip many of our European neighbours in 2013 and 2014, will my right hon. Friend assure the House that the Government will continue to deal with the UK’s structural deficit? That deficit started to emerge before 2008, despite repeated protestations to the contrary by the shadow Chancellor.
Danny Alexander
Yes, I can certainly give my hon. Friend the assurance he requires. The coalition Government have put Britain back on the path to fiscal credibility, and we have cut the deficit by a quarter in our first two and a half years in office. We intend to continue in that policy direction, which is endorsed not only by the CEBR but by many other organisations.
Treasury
Karl McCartney Excerpts(12 years, 3 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.
[Official Report, 11 September 2012, Vol. 550, c. 125.]
Letter of correction from Sajid Javid:
An error has been identified in the oral answer given on 11 September 2012 to the hon. Member for Lincoln (Karl MᶜCartney).
The correct answer should have been:
Oral Answers to Questions
Karl McCartney Excerpts(12 years, 3 months ago)
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Danny Alexander
Letters to people who are likely to be affected by that change will go out in October—[Hon. Members: “Which year?”] October of this year. I am surprised to hear that the hon. Gentleman objects to the change, given that it is a necessary part of our fiscal consolidation, and particularly part of our asking the wealthiest in this country to make a contribution to deficit reduction. His party should support that.
Karl MᶜCartney (Lincoln) (Con)
7. What assessment he has made of the effect on pubs of the continuation of the beer duty escalator.
The Economic Secretary to the Treasury (Sajid Javid)
The Government recognise the important contribution that pubs throughout the country make to their local communities and the wider community. Given the large number of factors contributing to the decline in pub numbers, including shifting social trends, the relationship between beer duty and the pub industry cannot easily be determined.
Karl MᶜCartney
I welcome the new Minister to his post and thank him for that answer. In my constituency, the beer and pubs sector supports around 1,300 jobs. At a time when household incomes are static and pubs have seen a reduction in trade as a result of the smoking ban and other nanny state impositions by the Labour Government, does he agree that the Treasury needs to provide further support to the industry by reversing the trend of rises in beer duty, which has grown by more than 40% since 2008?
Sajid Javid
As the incoming Economic Secretary, I note that I have been given responsibility for some of the more popular duties and taxes.
There will be no further changes to alcohol duties beyond those designed and pre-announced by the previous Government, but I hope that the minimum unit pricing system that the Government have announced will make a difference to pubs, along with other measures that we have announced to help small businesses such as reducing the corporation tax rate, the extension of the small business rate relief holiday and the reduction of the small profits tax rate.[Official Report, 12 September 2012, Vol. 550, c. 2MC.]
Finance (No. 4) Bill
Karl McCartney Excerpts(12 years, 8 months ago)
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Jonathan Edwards
I am grateful for that intervention. I am coming to that. Unfortunately, the papers did not report Labour’s shameless record on some of these issues.
Monday’s Second Reading saw Members from both sides continuing to trade a barrage of figures to explain why the additional rate should be cut or remain as it is. I thought the contribution from the hon. Member for Pontypridd on Monday night was excellent in explaining the political and economic value of the 50p rate. It is clear that there is no agreement over the mechanics of the issue, and given that Labour’s agreement to the 50p rate in the first place was based on revenue-raising rather than principle, that is a very important fact.
The Treasury should therefore instigate a report on the income-shifting and avoidance measures used to lower the amount of tax paid under the additional rate, and on possible revenue from a 50% and a 45% rate, taking into consideration the outlying factors that always impact heavily on the first year of any tax innovation. Such a report would clarify the situation and allow the House to make a considered judgment one way or the other in the next Finance Bill. As always, the majority of people pay the tax that they should, but there are some who will always try to avoid as much as possible.
The artificial shock of the Chancellor at the scale of tax avoidance suggests that he takes Members of this House for fools. Although I accept the argument for a relationship between a lower taxation rate and economic growth and perhaps larger revenues, I find that argument counter-intuitive for income tax rates on this occasion. The majority of those who seek to avoid paying income tax at 50% will, I suspect, also seek to avoid paying it at 45%—and, as the Government contend over the 50% rate, they will have the resources to avoid doing so.
My amendment 76, which would require a review, neatly coincides with the Opposition’s amendment, so I assume that when my amendment is pressed to a vote they will join us in the Lobby. After all, they have already signed up to my amendment 7, which, I shall explain for the benefit of the Committee, is consequential on the additional rate changes relating to dividend and trust payments, the transferring of retirement benefits to a non-additional rate tax payer and the notional tax credit attached to some capital payments. We look forward to dividing on amendment 76 at the appropriate time.
Karl MᶜCartney (Lincoln) (Con)
It is a great pleasure to follow my hon. Friend the Member for Christchurch (Mr Chope), the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and, of course, the hon. Member for Rhondda (Chris Bryant), who should take heart from the fact that although our initial reaction on the Government Benches perhaps disproves the adage that everybody goes crazy about a sharp-dressed man, we agreed with some of the points he made, which were valid. I will cover in my speech some of the points on which I perhaps do not agree with him.
Karl MᶜCartney
Not on purpose.
We were told during the dying days of the previous Labour Government that the 50p tax rate was always intended to be a temporary measure. That remark came from very near the top level, as it was made by the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling). Many of us suspect, however, that at the top of that economically discredited Labour Government, the then Prime Minister, who is now much missed in his absence, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), had a more political plan, perhaps with three prongs. First, the 50p tax rate was a bone to throw to the Opposition’s political masters who run the unions. It said, “Look how we are clobbering those who earn—or should I say ‘are paid’—slightly more than you.” Secondly, it was part of the Labour party's scorched-earth policy, a desperate act up there with the protectionist decision of the right hon. Member for Kirkcaldy and Cowdenbeath further to increase the indebtedness of our armed forces’ budgets by ensuring the most watertight contract, despite the fact that Whitehall lawyers are not renowned for their prowess in closing legal loopholes, for two new aircraft carriers, which funnily enough were not to be built in English or Conservative Members’ constituencies.
Karl MᶜCartney
Not at this stage.
Thirdly, the 50p tax rate was designed to be something that any new Government would have to address at some time early in the next Parliament and to reduce to an acceptable level to ensure the competitiveness of our nation in the international marketplace.
Karl MᶜCartney
In a minute.
One hopes that the Labour party knows and realises that the 50p tax rate it introduced for spurious reasons made our country economically uncompetitive, but it has never let the truth get in the way of a good soundbite, has it? It is not fair to say that the reduction in the 50p tax rate and other measures announced in the Budget are a tax break for the wealthiest because, in total, the measures announced will see the wealthiest paying many times more.
Karl MᶜCartney
Later, I will be as generous as the hon. Gentleman was if hon. Members will let me get through some of my speech. I certainly will not speak for as long as he did.
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Order. I think we are having a few too many interventions. I say to the hon. Member for Rhondda (Chris Bryant) that although the hon. Member for Lincoln (Karl MᶜCartney) might have broken his leg, he obviously did not break his tongue, which he ought perhaps to hold a little more.
Karl MᶜCartney
Thank you, Mr Hoyle for letting me continue. I feel I ought to correct what might be an untruth: I did not break the leg of the hon. Member for Rhondda. I gave him quite a good pass—not even a hospital pass—on the rugby field and the two large gentlemen who were about to tackle me then tackled him.
The independent Office for Budget Responsibility agrees that the 50p rate raises only a fraction of what was supposedly intended. So, one of my questions to the Chancellor and his Ministers is whether they know of any reason why any Member would disagree with the highly respected OBR other than for disingenuous political gain.
The 50p rate is bad economics. The previous Labour Government’s Chancellors and Prime Ministers and the Labour party’s current shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), are well aware of that privately but cannot bring themselves to acknowledge it publicly. Ultimately, it is the highest tax rate in the G20. Our Government are clear where they stand on the 50p tax rate: it has not raised anywhere near the revenue expected as many individuals cleverly engaged their own or their accountants’ knowledge to bypass the rate and lower their tax bills. The Government have now sent out a clear signal to the international community that Britain is open for business and will no longer have the highest tax rate in the G20. The same clear signal cannot be said to be coming from those on the Opposition Benches.
Karl MᶜCartney
Not at this point.
It has been interesting—and would be again—to hear from the Chancellor or his Ministers what positive signs we have seen from businesses after he announced the change. Once again, why does the Labour party fly in the face of business leaders’ opinion? As I have said, the 50p tax rate raises only a fraction of what was intended and is bad economics. It is better to put the British economy first, ahead of cheap headlines, but then that was never the Labour way, was it? One would have thought by now that Labour might have learnt some economic lessons.
The cut in the 50p tax rate was never a priority of this Government. Raising the personal tax allowance and helping low and middle income earners has always been the No. 1 priority tax cut for the Government and that is what we have done. This is a Budget to be welcomed by all with far-reaching tax reform that Labour should be embarrassed it never even considered. It announces the largest ever increase in the personal tax allowance, which will benefit 24 million ordinary families up and down our country. Most basic rate taxpayers will gain at least £220 every year. In total, this Government will have taken 2 million low paid people out of tax altogether.
Labour spent much of the aftermath of the recent budget indulging in photo calls in unfamiliar territory for Labour Members—any pasty shop they could find. Even an unannounced visit to my own constituency of Lincoln by the photogenic brother of the Leader of the Opposition, the right hon. Member for South Shields (David Miliband), featured such a stunt. Among all this new-found fondness for pasties, but perhaps notably not for one bottle of a famous brown sauce, the Leader of the Opposition has strongly criticised the decision to cut the top rate from 50p.
The right hon. Member for Doncaster North (Edward Miliband) made a laughable claim when he said:
“After today’s Budget, millions will be paying more while millionaires pay less.”—[Official Report, 21 March 2012; Vol. 452, c. 809.]
He is the true heir to Blair, is he not? Soundbite, not substance—and not even basic mathematical understanding. After this Budget, not only will millions of people pay less tax, but many low earners will pay little or no income tax. If, as we know, the 50p top rate raised only a fraction of what was intended and in addition harmed our international competitiveness and, as other Budget changes have ensured that the direct cost of the reduction to a top rate of 45p has been mitigated many times over, that should surely be welcomed by Members on both sides of this House.
Sammy Wilson
Let me make it clear that my party is not a party of high taxation. We do not wish to see people squeezed until the pips squeak and we are not ideologically committed to high taxation.