Finance Bill

Debate between Lord Beamish and Clive Efford

Tuesday 28th June 2011 Commons Chamber

[Mr Jones]

I am not saying that at all. I am saying that the hon. Gentleman, his party and, certainly, the more blue-blooded elements of it very strongly argue that the state should not intervene in people’s lives, including, in some cases, motorists’ lives, but what we have in new clause 5 is the right of the Tory party arguing for direct state intervention in something very personal: somebody’s personal relationship.

Earlier, it was said that a tax system would encourage people to get married, but there is no evidence of that at all. In the late 1960s and ’70s, when the old married man’s tax allowance was in place, there was a record rise in divorces, but that was less to do with the tax system and more to do with the change in society and the law that clearly made it easier to get divorced or to choose not to marry at all. Again, the idea that £20 a week will encourage somebody not to divorce is quite ludicrous. All the studies find that we would need to offer a considerable amount of money to prevent people from divorcing.

My hon. Friend the Member for Bishop Auckland (Helen Goodman) raised the issue of international comparisons, somebody else mentioned Denmark and other countries and the hon. Member for Gainsborough mentioned the fact that we are one of the few countries not to recognise marriage in the tax system, but there is no evidence to suggest that taxation as an encouragement to get married does anything to hold the family unit together.

[Clive Efford (Eltham) (Lab)]

I have listened to my hon. Friend’s speech with a great deal of interest. On fiscal incentives for people to stay together, does he agree that the cost of running two separate households is a major financial consideration for people living apart? It far outweighs any fiscal benefit that the taxation system could deliver.

[Mr Jones]

I agree. The changes being made to housing benefit will not do anything to help families stay together. My hon. Friend is a London Member, so he will know that families will be forced to move out of central London because of the Government’s changes to housing benefit rules. That is one of the inconsistencies of this Government. On the one hand they say that a tax break of £150, or £20 a week, will help to keep the social unit together, and on the other they—the same Minister, I hasten to add—pursue policies on housing benefit and other benefit changes that will not help at all to keep families together but will lead to the root cause of most of these issues: the poverty that affects such individuals.

I turn to some of the problems with the Bill as framed, and to what we have before us. New clause 5 is not the measure in the Conservative party’s most recent election manifesto. This proposed change includes married couples but excludes civil partners, who would not be covered by the new clause. When there was an outcry and complaints about what had been proposed at the election, the Prime Minister included civil partners at the last minute.

People would have to opt in to this system and elect to transfer their part of an allowance. That would be very unfair to many people who do not understand tax codes. I have just got my annual tax return and I keep putting it to one side, as most people do, until the deadline arrives. Introducing a system whereby people have to elect to transfer a certain allowance may well help the more articulate middle-class people who can do that when they fill in the form, but I am not sure that some of the people on poor council housing estates in Glasgow whom the Secretary of State for Work and Pensions is trying to address will have the wherewithal or knowledge to do it even if they knew that the option was available.

The Government have told us that they wish to simplify the tax system, but the new clause would make it a lot more complicated. In trying to bolster marriage, it would help certain groups of people but not others. Whenever we do anything with the taxation system, we should try to make it as user-friendly as possible. If someone opted to move their allowance around, that would be quite complicated because people’s incomes change throughout the year, so they might have a certain allowance available in one year but not another. The system would incur not only the £3 billion-plus cost of having it open to everyone but the cost of trying to work out how the tax office would administer it. In that respect, the new clause is not well thought out.

The Government have got themselves into a bit of a logjam on this. The Prime Minister is clearly committed to this policy. His Back Benchers are now worried that it cannot be implemented because of the coalition agreement. Huge amounts of public money would be used, but would it have any effect on child poverty? No, it would not, and neither would it affect most families. Moreover, it would help people without any children, including pensioners.

Standards and Privileges

Debate between Lord Beamish and Clive Efford

Monday 16th May 2011 Commons Chamber

[Mr Kevan Jones]

The report states that Mr Laws stopped claiming when the rules relating to the maximum amount changed. Did my hon. Friend find it strange that the reason he gave for not putting in receipts was to disguise this relationship with his landlord, even though the landlord’s name was on the tenancy agreement?

[Clive Efford]

I hear what my hon. Friend is saying, but if he will forgive me, I do not want to get drawn into the detail of the case against the right hon. Member for Yeovil. The concerns that the report has raised for me are general ones about how we should deal with everyone who comes under investigation, because, let us face it, any of us could come under investigation if someone made a complaint against us, and we would all want to be dealt with under the same rules.

Who has been allowed to pay back money and on what criteria? On what criteria have they been referred to the Metropolitan police, and on what criteria have they been dealt with by the Committee and had a penalty imposed on them, as recommended to us today? Does the fact that Members offer to pay the money back make a difference? This report refers to the fact that the right hon. Member for Yeovil paid money back, which seems to have been taken in his favour. Have other Members made such offers and, if so, has that affected how they have been dealt with?

I have read the report, and I have highlighted several passages that appear to be inconsistent. I find it difficult to understand, for example, how someone can be a lodger in a house to which they have contributed £100,000 for its purchase and can then state to the Committee that they have no financial interest in that house and that the financial interests of the landlord and the lodger are completely separate. I find that sort of thing very confusing and very inconsistent, and I want to know what criteria are being applied to MPs when these matters come before the commissioner and the Committee. There are serious inconsistencies in what is happening here, and I believe that they are worthy of further investigation.

Question put and agreed to.

Finance Bill

Debate between Lord Beamish and Clive Efford

Monday 12th July 2010 Commons Chamber

[Mr Jones]

No, I am sorry, we do not admit that. I am not sure what point the hon. Gentleman is trying to make or whether when he went into the general election in May, he had on his election leaflets, “Yes, we will be tough on banks for the rhetoric in the lead-up to the election, but if we get into power we will do a con trick where we take the money with one hand and gave it back with the other.” If, as the hon. Member for St Ives said, we do not know what the figures are, that makes it worse. We are asking the public to take severe cuts in public services and higher taxation, while at the same time the people who are still being paid high bonuses will get money back. That was reflected in a comment made earlier about the increase in bank share prices that took place once the Budget had been announced.

[Clive Efford]

To correct the hon. Member for West Suffolk (Matthew Hancock), it is just not true to say that the banks are going to pay more. Deutsche Bank has said:

“Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that is it should almost offset all of the banks tax. Overall a good outcome for the banks.”

Similarly, HSBC said:

“We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget”.

[Mr Jones]

I am grateful for my hon. Friend’s intervention, which completely blows a hole in the myth that this coalition Government are somehow being tough with the banking sector. Not for the first time, we are seeing rhetoric overtaking reality. The spin and presentation that is the hallmark of the Prime Minister is clearly catching up with him now he is in power and able to help his friends in the financial sector.

This policy also has an effect in terms of the banking sector itself, because the banks that are being rewarded are the ones that got us into the mess in the first place. Most people will rightly be horrified by that prospect.

Finance Bill

Debate between Lord Beamish and Clive Efford

Tuesday 6th July 2010 Commons Chamber

[Mr Jones]

I am not sure that it is, because the Chief Secretary knows what he has signed up to. With his great experience as press officer for the Cairngorms national park, I am sure that he knows danger when he sees it. We need to expose the Liberal Democrats’ rank hypocrisy. They went into the election campaign arguing against most of the things to which they have now signed up. They have abandoned decades of commitment to some of the poorest in our society.

Those actions are predicated on a myth. The hon. Member for Dundee East (Stewart Hosie) identified it earlier when he mentioned Canada. That is a worthwhile example, because if we want to explain what is happening, we need to examine in detail what happened in Canada in the 1990s. The Government are copying not only every single measure that the then Canadian Government introduced but the tactics, including the great consultation with the Canadian people about how to cut the budget.

[Clive Efford]

I am interested in my hon. Friend’s argument, particularly his comparison of the consultation that is about to take place with what happened in Canada. Will he confirm that the consultation in Canada took place on the basis that the Government would reinvest in the public sector after they had got through their budget deficit, whereas this Government are making an ideological change whereby they will cut back the state for ever? They are inviting people to take part in a consultation not to ascertain where we should take short-term measures, but to cut from the state services that people will never see again.

[Mr Jones]

My hon. Friend is right, but in Canada people fell for the trick, because they cut back and did not reinvest.

The Budget is ideologically driven. It is not about deficit reduction, but about driving down the state and ensuring that we can somehow con the British public into accepting the unthinkable.

We must always have someone with whom to compare ourselves and say, “We could be like that.” The current tendency is to compare us with Greece, whereas in Canada in the 1990s, New Zealand was used an example. The process followed the same pattern as today. The starting point is to convince the public that the debt is so horrendous that there is no alternative to ideologically driven debt reduction; some hon. Members have claimed that today. The next step is to whip up the media and get a friendly think-tank or other supportive organisation to put forward selective facts about the size of the deficit. To crank up the national debt as high as possible, everything is added in, including future private finance initiative funding. Revenue accounting is added to capital costs, without explaining to people that capital investment is investment in this country’s economy. That is how to try to scare the public.

As happened in Canada, the next step is to say that if the cuts are not made, the consequences will be dire. Guess what the Canadian Liberals did? They threatened, “If we don’t do this, the IMF will come in tomorrow.” We heard that during the election campaign. There is nothing new about what is happening here. The Conservative party has clearly copied the Canadian model, and even adopted the playbook. Unfortunately, it has been able to con the Liberal Democrats into being its human shield.

--- Later in debate ---

[Clive Efford]

The hon. Gentleman misses the point. The point is what the Liberal Democrats said about capital gains tax before the election and what has happened afterwards. I cannot find any record of anybody saying, “Thank God we have the Liberal Democrats to water down this horrible Tory Budget.” No one is saying that—[Interruption.] As much as the Liberal Democrats try to dance on a pinhead over the VAT increases and how they have looked for an investigation into VAT so that they can all cuddle up at night and sleep well knowing that they have not made life awful for poor people—they claim that they have forced the Government into a review—what will they really do about it?

[Mr Kevan Jones]

In fact, the hon. Member for Solihull (Lorely Burt) not only did not make excuses for the increase, she tried to justify it.

[Clive Efford]

What we have heard in several debates is so much hand wringing that I have almost started to feel sorry for the Liberal Democrats. They must be in agony from all the crushed fingers they have from wringing their hands so tightly in trying to explain away the impact of the VAT increase.

--- Later in debate ---

[Clive Efford]

I agree with my hon. Friend. There are plenty of eminent economists saying that this is not the time to draw back the fiscal stimulus.

However, the point that I want to make is that the reduction in the debt that the then Chancellor was able to announce in the March Budget was due to the intervention of the Government. There was less unemployment, we were paying out less in unemployment benefit, and there were more people in work and more businesses; therefore, the tax income was higher than had been predicted, indicating that the way through the recession is not this austere Budget, but continuing with the stimulus until growth is stronger.

However, the worrying thing now is that, following the emergency Budget, businesses are starting to question whether growth is on its way. As the Financial Times has said:

“Britain’s…services sector expanded in June…at the slowest rate in 10 months…The Markit/CIPS UK services Purchasing Managers Index…for June was weaker than consensus forecasts among economists, showing a 54.4 headline reading, down from 55.4 in May. Economists had expected a more modest decline…of 55…It was the weakest reading since August 2009…Business expectations went from a reading of 72.1…to 64…The Services PMI is particularly closely watched because it accounts for the greatest share of private sector business output…‘Worrying signs for the UK service sector appeared in June as growth slowed in response to another below par increase in new business…Confidence declined to the greatest extent in 14 years of data collection in reaction to the government’s austere emergency budget, with concern expressed that the fiscal tightening could push the country back into recession.’”

According to the Financial Times:

“The Purchasing Managers’ Index figures came in amid signs that global manufacturing took a hit in June, with China, the US and the eurozone all seeing weaker growth in the sector. The report on exports came as a survey of credit conditions by the UK Bank of England underlined the concern at the prospects for demand in the UK. Credit conditions were expected to deteriorate by the most since the first quarter of 2009, when the recession was at its deepest.”

What we are seeing there is the extreme concern in the business sector since the Budget was announced—[Interruption.] I hope the Liberal Democrats are listening to this. The construction sector in particular accounts for 10% of our GDP, and public sector expenditure accounts for 40% of the construction industry. The announcement yesterday—such as it was—from the Secretary of State for Education that he was drastically cutting back on schemes such as Building Schools for the Future will make it even more difficult for the Government to deliver growth in employment and growth in the private sector, because they are rowing in completely the opposite direction.

[Mr Kevan Jones]

Does my hon. Friend agree that the VAT rise will have an effect on new house starts in the construction sector, which is very fragile in my constituency and many others? The increase will have a dramatic effect not only on new builds but on the local builders who rely on building extensions and loft conversions.

[Clive Efford]

It will indeed; my hon. Friend is absolutely right.

The Guardian website on Sunday 4 July stated:

“CBI disappointed by extra £4 billion capital spending cut. Spending on building and infrastructure projects, many of them to support private sector businesses, will fall faster than expected after the chancellor announced £6.2 billion emergency cuts three weeks ago, with £2 billion of the total from capital expenditure projects. The CBI said: ‘Capital investment is crucial to driving the economy forward and the government needs to make sure we get back to the long-run average of 2.25% of national income as soon as possible’.”

Are you listening on the Liberal Democrat Benches? What they are voting for is just above 1%.