Finance (No. 2) Bill (First sitting)

Kirsty Blackman Excerpts

Tuesday 9th January 2018 Public Bill Committees

[The Chair]

Good morning and happy new year to you all. I have a few announcements to make; as there are a number of new Members on the Committee, they will be quite lengthy announcements, but they will set out the procedure for the whole Committee stage.

I remind Members that only water is to be drunk in the Committee Room—no hot drinks. I will pretend that I have not seen the one at the end of the room. That is a strict rule from the Chairman of Ways and Means. Mobile phones and iPads should be switched to silent. There are document boxes behind me, which people may find useful for storing their documents when the Committee is not sitting. I would appreciate it if Members followed those rules, so that I do not have to make many more speeches.

Neither I nor my fellow Chair will call Members to speak to starred amendments—amendments tabled without adequate notice. The notice period is three working days, so amendments should be tabled by the rise of the House on Monday for consideration on Thursday, and by the rise of the House on Thursday for consideration the following Tuesday.

Not everyone is familiar with Committee procedures, so let me explain them briefly. The Committee will be asked first to consider the programme motion. The Minister will move that motion, and we will then consider the amendments to it. There is a strict time limit of 30 minutes for that. We will proceed to a motion on written evidence and then begin line-by-line consideration of the Bill.

The selection list for today’s sitting is available at the end of the room. Amendments selected for debate have been grouped. Grouped amendments generally relate to the same or similar issues. The Member who tabled the lead amendment in a group will be asked to speak first. Other Members will then be free to catch my eye and speak to the amendments in that group only. A Member may speak more than once, depending on the subjects under discussion. At the end of debate on a group of amendments, I will call the Member who moved the lead amendment to speak again. They will need to indicate before they sit down whether they wish to withdraw that amendment or seek a decision on it. If any Member wishes to press an amendment in that group to a Division, they will need to let me know. I will work on the assumption that the Government wish the Committee to reach a decision on all Government amendments—we will nod at each other, Minister.

Please note that decisions on amendments will be taken not in the order on the selection list—the order in which they are debated—but in the order in which they appear on the amendment paper. Decisions on new clauses will therefore be taken after the conclusion of line-by-line consideration of the Bill. Where a group includes the words “clause stand part”, Members may make any remarks they wish to make on the content of the clause during the debate, and there will be no separate debate on the question that the clause stand part of the Bill. Where those words are not included on the selection list, Sir Roger and I will use our discretion in deciding whether to allow a separate stand part debate on individual clauses and schedules. Clause stand part debates begin with the Chair proposing the question that the clause stand part of the Bill; there is no need for a Minister or another Member to move that the clause stand part of the Bill.

As I indicated, I will first call the Minister to move the programme motion, as agreed by the Programming Sub-Committee, formally. I will then call Kirsty Blackman to move amendment (a). There will be a single debate on the selected amendments.

Motion made, and Question proposed,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 9 January) meet—

(a) at 2.00 pm on Tuesday 9 January;

(b) at 11.30 am and 2.00 pm on Thursday 11 January;

(c) at 9.25 am and 2.00 pm on Tuesday 16 January;

(d) at 11.30 am and 2.00 pm on Thursday 18 January;

(2) the proceedings shall be taken in the following order: Clauses 1 to 7; Clauses 9 to 11; Schedule 1; Clause 12; Schedule 2; Clause 13; Schedule 3; Clauses 14 to 16; Schedule 4; Clause 17; Schedule 5; Clause 18; Schedule 6; Clauses 19 to 23; Schedule 7; Clause 24; Schedule 8; Clauses 25 to 32; Clauses 34 and 35; Schedule 10; Clauses 36 to 39; Clause 42; Schedule 12; Clauses 43 to 50; new Clauses; new Schedules; remaining proceedings on the Bill;

(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 18 January.—(Mel Stride.)

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment (a), leave out line 4.

[The Chair]

With this it will be convenient to consider the following:

Amendment (b), in line 7, at end insert—

“(1A) The Committee shall hear oral evidence in accordance with the following Table—

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[Kirsty Blackman]

I appreciate the chance to speak, Mr Owen, and I thank you for being our Chairperson.

Last year, the Chartered Institute of Taxation, the Institute for Government and the Institute for Fiscal Studies produced the “Better Budgets” report about the parliamentary process for dealing with the Budget. They raised a number of concerns, some of which have already been dealt with by the Chancellor, such as the fact that there are two fiscal events a year; he has moved to having one fiscal event a year, which is welcome.

The beginning of the report summary says:

“During conversations with people across the tax system, from officials and experts through to practitioners and representative groups, we have heard that the exceptional processes around tax policy making—in particular, secrecy, more limited scrutiny and challenge, and the power of the Treasury—have led to an ever-lengthening tax code, beset by a series of problems: confusion for taxpayers, poor implementation, political reversals and constrained options.”

Some of those are issues with the Budget, but others are issues with the Finance Bill process. One of the report’s key suggestions, which I have been pursuing in this House, and will continue to, even if I do not win today, is about the fact that the Finance Bill Committee does not take evidence. We have been told that that is due to lack of time, and that scrutiny of the Finance Bill needs to be curtailed and completed in a very short period. However, measures in the Finance Bill are very technical, and we have a short time in Committee. If we added just one extra day, we could take evidence.

The “Better Budgets” report said:

“The lack of stages in the House of Lords should mean that the Finance Bill is subject to particularly intense scrutiny in the House of Commons. But the reverse tends to be true”.

It also said:

“debate on the Finance Bill could be improved by using some of the committee sessions to take oral evidence”.

The three programme motion amendments that I have tabled allow us to do that. The Bill has already been in Committee of the whole House. I think it is reasonable, after Committee of the whole House, to take evidence on the generally more technical measures debated in Public Bill Committee.

The three amendments that my hon. Friend the Member for Glasgow Central and I tabled suggest that this Thursday we take evidence from the Treasury, Her Majesty’s Revenue and Customs, the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chartered Institute of Taxation. All those organisations will know more about tax, and probably about the impact of the measures, than most of us in this room. Obviously, the Minister will have briefings, and a whole team who can explain the issues to him, but we need to hear from those organisations and to be able to question their representatives. I have been frustrated in the past when asking the Minister questions during debates on the Finance Bill. Perhaps I have had a bit of an answer towards the end of his speech—the Minister is quite good at attempting to give answers—but that is too late. If we had had that conversation with many other people at the beginning, we would all have been in a much better position. That would have meant much better scrutiny.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend makes a very good point on the need for evidence. Some of the written evidence submitted to the Committee —it was made available very late, I must say; it came yesterday at around 4 pm, which gives us very little time to read a huge amount of evidence—suggested that there are things that need to be changed and that people would like to see tweaked. However, without having oral evidence and being able to interrogate people for it, it is very difficult to weigh up the evidence in the context of the Bill.

[Kirsty Blackman]

I would go so far as to bet that all Committee members have not read all the written evidence that has been provided. I bet that they have not had time, given that the customs Bill is running at the same time, and the majority of us who are Front-Benching for that Bill are also Front-Benching for today’s Bill.

The timescale is not working. If we were to allow evidence sessions this Thursday, and then allowed the Public Bill Committee stage to stretch slightly—I am not sure it would even end up stretching as far as 18 January, because we could have a number of sittings before then—that would be a really positive change for the Committee. We would all be better informed, and it would be a good step for scrutiny and transparency, which the Government and the ministerial code suggest that we should have.

[Peter Dowd (Bootle) (Lab)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Owen. I have sympathy with the Scottish National party on their amendment to the programme motion, which would require the Government to ensure that there was an evidence sitting this week. This is my third Finance Bill since becoming shadow Chief Secretary to the Treasury, and I have made the point on each one that we should have evidence sittings. The argument might be made, “We have had three Bills; what’s the point?” However, there is a pretty compelling argument that having had three Finance Bills is all the more reason to not just pause for breath but catch up, and get some people in to give evidence. The point is well made, and it was also part of the context for the debate in the House yesterday.

This is not simply an event; it is part of a process. Most of the traditions or protocols that we follow in the House have a perfectly rational basis, but there are occasions—I think this is one, in the light of the three Finance Bills this year—when we might want at the very least to step back from them. Every other piece of legislation that passes through the House gets its day in court, so to speak, as regards giving evidence, and of course the complex changes made to UK tax laws and systems have far-reaching consequences for everyone and for the economy.

It is important that when matters are incredibly complex—and, let us be frank, many of the matters in question are complex—we should be able to tease out issues with experts. It is not that I do not believe the Financial Secretary to the Treasury and everything that he tells us; I do, implicitly. However, I am sure that he would like us to test his assertions, and we might want to do that with other people—and with other experts.

Several provisions in the Bill, and in previous Finance Bills, rewrite earlier measures and close loopholes. It is important for us to tease out those things, too. Why are we where we are, and what could we have done differently? Possibly we could not have done anything differently, but I am sure that if there had been evidence sittings for previous Finance Bills, the experts offering testimony might have pointed out to the Government technical pitfalls in some of the measures they wanted to introduce.

The amendment is in the spirit of attempting to move things on; it is not a wrecking proposal. I acknowledge that we will not win the debate, but it is important to state the need to push for evidence sittings. I do not think that I am alone in that view. Not only does the SNP take it, but so do many outside the House: the Institute for Fiscal Studies, the Institute for Government and the Chartered Institute of Taxation made a similar case in the report “Better Budgets: making tax policy better”, published in April 2016. Its authors pointed out that Finance Bills could be improved by oral evidence sittings, with little disturbance to the parliamentary timetable. I am sure that the Opposition would be more than happy to discuss parliamentary timetable issues with the Government.

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[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to serve under your chairmanship, Mr Owen. I look forward to vigorous debate on the Bill, today and in the sittings that will follow, as we take the Bill through the normal process.

The amendments from the hon. Member for Aberdeen South—

[Kirsty Blackman]

North.

[Mel Stride]

North; how could I get that wrong? The amendments would introduce a day for oral evidence sessions, and would extend the period over which we debated the Bill in Committee. I understand why the hon. Lady tabled them, but I am afraid that the Government will resist them, for several reasons, not least because there was a Programming Sub-Committee, at which at least Labour party Members were present, in which we discussed the programme motion, and it was agreed unanimously.

[Kirsty Blackman]

The Government changed the rules because they do not have a majority, so Scottish National party Members no longer have places on Programming Sub-Committees. We were therefore not able to make our case. We opposed that rule change, partly because we want to be on Programming Sub-Committees. If we had had the opportunity to make our case earlier, we would have done so.

[Mel Stride]

I thank the hon. Lady for her intervention. That is partly why I welcome her having the opportunity to have this debate today, as I said earlier. Let me start with the comment that the hon. Member for Bootle made about the Chair of the Treasury Committee. He urged me to engage with her on this matter, and of course I will do precisely as he asks.

Notwithstanding the fact that we had the opportunity in the Programming Sub-Committee to agree the programme motion or otherwise, several measures already give us a very high level of scrutiny of Finance Bills. We brought in a Government framework in 2010, under which, in a typical cycle, a Budget is followed by policy consultations, and much of the legislation that is to follow is then published in draft. In fact, around 60% of the Bill that we are looking at has been out there for consultation as draft legislation, despite the fact that this has been a rather unique cycle; the hon. Member for Bootle pointed out that this was his third Finance Bill.

These Bills have a very high level of scrutiny. We are moving to the new single fiscal event in the coming year; we will then have even more time to scrutinise Bills, because there will be more breathing space in that process, and obviously we will not have the interruption that we had last year.

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Wherever we end up is really a matter for the usual channels, among our parties. This relates to parliamentary process; it is not for the Committee to take the kind of decisions and make the kind of moves that hon. Lady and the hon. Member for Bootle seek. I reiterate that the Finance Bills are among the most scrutinised pieces of legislation that go through our Parliament. I therefore resist the amendments.

[Kirsty Blackman]

I thank the Minister for his response. He did not give a reason not to take evidence; he gave the reason why he thinks the status quo is okay. I still have not heard anybody say why evidence would be a bad thing. The Government have previously said that timescales would be an issue, but they are not. As we have a single fiscal event, putting an extra week—an extra day, actually—on to the Finance Bill Committee would not be a problem. Having evidence sessions would be better for the Committee and for the rotating Back Benchers on the Committee—we have people here who have not sat on a Finance Bill before. As I said previously, having an evidence session after the Committee of the whole House is not a problem, because generally we discuss the more technical parts of the Bill after that. What the Minister said about 60% means that 40% of the Bill has not been consulted on.

[Mel Stride]

I need to clarify that point. I said that 60% of the draft legislation was out there and was therefore consulted on. That certainly does not mean that 40% of the Bill was not consulted on, albeit that the legislation was not out there in draft.

[Kirsty Blackman]

In a number of places in the written evidence, various organisations said, “This was not consulted on in draft; we would have suggested these changes, if it had been.” The Committee is losing out because it does not take evidence. It would be better if it did. I do not understand why the Government are scared to take evidence.

[Peter Dowd]

Does the hon. Lady agree that it is important to understand the position that Parliament is in? The Government do not have an overall majority, notwithstanding the arrangement with the Democratic Unionist party. Their position has changed. Given that, and given that the Government have taken control of the Committees, again notwithstanding the fact that they do not have the majority as a party, the question of scrutiny has changed a little.

[Kirsty Blackman]

Absolutely. An added dimension is that because the Government do not have a majority, and because all the Brexit legislation is going through, there is an incredibly heavy legislative timetable with an incredible number of incredibly technical pieces of legislation. Therefore, it would be better for Members to have the opportunity to inform themselves. I do not think this is about increasing external organisations’ scrutiny, because, as the Minister said, there are a number of opportunities to do that. This is about giving Members the opportunity better to inform themselves and ask questions of those incredibly knowledgeable organisations so that we can make better decisions about tax law, and so that the Treasury does not create tax law that is not good and that it has to go back and fix a couple of years later. It would be better for everybody if members of the Committee were more informed and therefore able to take better decisions and make better laws.

Question put, That the amendment be made.

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[Mel Stride]

Clause 5 maintains the starting rate limit for savings income at its current level of £5,000 for 2018-19. As members of the Committee will be aware, the starting rate for savings applies to the taxable savings income of individuals with low earned incomes. The Government made significant changes to the starting rate for savings in 2015, lowering the rate from 10% to 0%, as well as extending the band to which it applies from £2,800 to £5,000. This welcome reform has done much to support savers on low incomes by reducing the tax they pay on the income they receive from their savings. Since then, savers have been further supported by the introduction of the personal savings allowance, which offers up to £1,000 of tax-free savings income.

The changes made by clause 5 will maintain the starting rate limit for savings at its current level of £5,000 for 2018-19 tax year. This change is being made to reflect the significant reforms made to support savers over the last couple of years, in addition to the substantial increases in the personal allowance. Most notably, in April 2016, the Government introduced the personal savings allowance, which will remove 18 million taxpayers from paying tax on their savings income in 2018-19. In April 2017, the annual individual savings account allowance increased by the largest ever amount, to £20,000.

[Kirsty Blackman]

It is admirable that the Government are making changes to make it easier for people to save. Would the Minster let us know how many people have begun saving as a result, and how much saving has increased for families? If there are now so many people who are employed, and so many who are using the personal allowance, surely they have loads of extra cash that they are now saving?

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[Mel Stride]

Clause 6 makes changes to allow marriage allowance to be claimed and backdated on behalf of deceased spouses and civil partners. Marriage allowance was introduced in 2015. It allows individuals to transfer 10% of their personal allowance to a spouse or civil partner if they are a basic rate taxpayer. Marriage allowance can currently be claimed and backdated by up to four years if taxpayers meet the qualifying condition. Currently, taxpayers cannot claim after a partner is deceased, even if they may have qualified in the current or previous years since its introduction.

I have heard representations from the Low Incomes Tax Reform Group highlighting the fact that it is unfair that this financial support is not available for people going through a period of considerable distress that accompanies the death of a partner. The changes made by clause 6 will put marriage allowance on a footing with other tax reliefs, where claims can be made by a personal representative after death on behalf of the deceased.

As a result, bereaved partners can now claim on behalf of their spouse or civil partner in the current year and any previous years where they were eligible, up to a maximum of four years. That will enable of thousands of extra people to claim the marriage allowance, worth £230 this year in tax relief, or up to £662 if backdated to its introduction. That will have a negligible cost to the Exchequer.

New clause 3 would include a review in six months’ time of the effects of the costs of the extension of the marriage allowance made by clause 6. It is the Government’s view that there is no need for a formal review of these changes. First, the new clause asks for a review of costs. As I have said, clause 6 is forecast to have a negligible cost, a judgment with which the independent Office for Budget Responsibility was content. Her Majesty’s Revenue and Customs also publishes the Exchequer cost of the main tax reliefs, including the marriage allowance, on an annual basis. The House will be able to examine the overall change in costs at that time.

Secondly, the new clause calls for a review of the effects of these changes. As the Committee would expect, we keep the effectiveness of the marriage allowance under review. Indeed, the clause was developed in response to concerns raised by the Low Income Tax Reform Group, a sign that the Government are willing to listen when concerns are raised. After six months, it will be too soon to tell how effective the policy has been, so a formal review would be a disproportionate response. I therefore urge the Committee to resist the new clause.

A total of 2.6 million couples have successfully applied for the marriage allowance and thousands more apply each week. That is a tax cut worth more than £400 million to couples on lower incomes. The changes being made by clause 6 mean that thousands more will be able to claim, recognising that bereaved partners going through extremely distressing times deserve all the support that they can get. I therefore commend the clause to the Committee.

[Kirsty Blackman]

The Scottish National party has a long-documented opposition to the married couples allowance, with which we have disagreed for a long time. The change the Minister suggests makes it slightly better and gets rid of one of our concerns, but it remains a tax relief that overwhelmingly benefits men. It remains a tax relief that leaves abused women out in the cold. Because they have to hand over part of the personal allowance, it is difficult for them to go back to work in some circumstances.

It remains a change that benefits only traditional nuclear families, whether people are in a civil partnership or are a heterosexual couple. Only those couples who choose to live together as married benefit. When the measure was first introduced, it was made clear that couples with children were less likely to benefit, because of the working structure that tends to exist with those couples. Apparently, only 15% of those who benefit from the scheme are women; it may even be less.

This issue has been raised by the Women’s Budget Group as one that creates further gender disparity in a society where we are trying to reduce the gender pay gap and make matters better by trying to create a situation where women can more easily go back to work and earn a reasonable amount of money.

The married couples allowance is incredibly flawed. Although this change makes it slightly better, it still has a huge number of problems. We will continue to support new clause 3 and press Government to get rid of the married couples allowance.

Taxation (Cross-border Trade) Bill

Kirsty Blackman Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

On the subject of the negotiations that the UK is having with countries with which it currently has free trade arrangements because it is part of the EU, and on the rules of origin issue, what discussions has the Minister had about cumulation and about whether the EU will accept UK-EU cumulation, or whether we will be required to have parts made only in the UK?

[Mel Stride]

As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.

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[Kirsty Blackman (Aberdeen North) (SNP)]

I am grateful for the opportunity to speak on the Taxation (Cross-border Trade) Bill, which I will call the customs Bill for ease during my speech. I am particularly delighted that we are considering it at the same time as the Finance Bill—that is excellent. I am not sure whether Hansard can capture my sarcasm there.

Is the Minister as concerned as I am about the issues that so many different organisations have raised? Perhaps the Minister and the teams in Her Majesty’s Revenue and Customs have been meeting the organisations that are raising concerns, but I do not think that they have been listening. Part of the problem for me is the wide range of organisations that are raising a wide range of issues. As many hon. Members have said, they include UK Steel, the Manufacturing Trade Remedies Alliance, the British Ceramic Confederation, the GMB and the TUC, but also the British Chambers of Commerce, the British Retail Consortium and the Law Society of Scotland. All those organisations have raised issues, which are not all specifically about trade remedies. There are therefore several problems with the Bill, not just with one aspect but across the measure.

The Bill has 166 pages and creates so many delegated authorities that the Government have had to produce an 174-page document detailing them. The majority relate to the negative procedure, though some relate to the affirmative procedure. In four instances, the UK Government create Henry VIII powers—the power to amend or repeal an Act of Parliament—which are particularly concerning. We have consistently raised concerns about Henry VIII powers, and we will continue to do that. The Chartered Institute of Taxation said:

“The Bill will, we understand, have the powers to amend primary legislation using secondary legislation; raising similar concerns around delegated powers as with the EU (Withdrawal) Bill.”

UK Steel said that

“key aspects of the UK’s trade legislation will evade proper parliamentary scrutiny”.

It is a major concern when UK Steel, a trade body that represents important manufacturers, makes such comments.

The number of organisations that are raising concerns is worrying for Members, as is the fact that so much of the Bill will dodge proper parliamentary scrutiny. Those who supported Brexit as a means to strengthen parliamentary sovereignty are being incredibly badly served yet again by the UK Government. Sovereignty for the Government is very different from sovereignty for Parliament. I urge the Minister to read the Law Society of Scotland briefing on the Bill. It suggests several amendments, and much of its concern is about the lack of requirement for Ministers to consult when making secondary legislation.

[Stephen Kerr (Stirling) (Con)]

The hon. Lady has mentioned at least twice the Law Society of Scotland briefing document, which I have in my hand. It is a very useful and positive contribution to informing Members of all parties about the Bill. I will quote from it so that we are all clear about the context. In its general remarks, the Law Society of Scotland says:

“We recognise the necessity for this Bill”.

That conclusively states that the Bill is a necessity. Does the hon. Lady accept that?

[Kirsty Blackman]

Because the UK Government decided that we are leaving the customs union and we will therefore need our own customs procedures, it is sensible, given that it was an entirely EU competence, for the UK to create its own customs framework. However, if the UK Government had done what we suggested and remained part of the customs union, the Bill would not be necessary. Although the Law Society of Scotland says that the Bill is necessary because of the decisions of the UK Government, it raises several concerns. I ask the Minister to read the briefing, which suggests a number of amendments, particularly on consultation.

[Hannah Bardell (Livingston) (SNP)]

Further to the point made by the hon. Member for Stirling (Stephen Kerr), has my hon. Friend seen the briefing from the Manufacturing Trade Remedies Alliance? It says:

“These proposals are much weaker than we have in the EU (and also weaker than those of most other Trading Nations). Weaker remedies cost jobs.”

Just because we have legislation—and bad legislation—it does not make what is happening a good thing.

[Kirsty Blackman]

I absolutely agree with my hon. Friend, who speaks for us on international trade. She is right about trade remedies and I will come on to that specific point later.

Although the Bill is general, it is also wide ranging. I want to consider some of the issues relating to HMRC that the Minister mentioned earlier. The new CDS software is set to replace CHIEF—customs handling of import and export freight—the current system, in 12 short months. The Public Accounts Committee report in November stated:

“It would be catastrophic if HMRC’s new customs system, the Customs Declaration System (CDS), is not ready in time and if there is no viable fall-back option.”

It expects the number of customs declarations that HMRC must process each year to increase fivefold. Every time I and other hon. Members have questioned the Minister about this, he has been particularly blasé and unflustered about the tight timetable. The PAC also said that HMRC’s timetable is incredibly tight, given the amount of work still to do. HMRC will only know by July 2018 whether the system works as intended—I am surprised that HMRC will only know by July 2018, but the Minister thinks it will all be fine—which is only one month before the first traders start to use it, and gives very little time to take remedial action if anything goes wrong.

It is vital for our exporting businesses that the customs software works. We have consistently raised concerns about this and we will continue to do so. I appreciate that the Minister is nodding, but we will keep the pressure on to ensure that it happens.

[Hannah Bardell]

My hon. Friend is making an excellent speech. How much faith does she have in the Government and the implementation of the software programme, given the disaster they are having with the change programme and the closure of HMRC offices?

[Kirsty Blackman]

UK businesses have several questions about the capacity of HMRC to deal with the volume of customs declarations, and many businesses will have to make customs declarations for the first time. Businesses are already concerned about the loss of the HMRC hotline that they could previously access. One business contacted HMRC with a query and received a reply seven months later. Seven months is not an appropriate timescale. If HMRC cannot respond to complaints and questions timeously now, how will it do so in the future after a fivefold increase in the need for customs declarations?

In a post-Brexit scenario, businesses will—in an incredibly short timescale and whether we have a trade deal or not—have to come to terms with new customs software. They will also have to come to terms with a new system of customs duties, ways to export and other massive changes. That means an incredible amount of uncertainty. When drafting the Bill, the Government could have been clearer about how the new customs system would work, therefore getting rid of a level of uncertainty. I know that they do not yet have a trade deal, but if they had been able to implement the software earlier or be clearer about how the processes will work, it would have been better for businesses.

Broadly speaking, businesses have been in favour of the replication of the Union customs code in the future. I mentioned the issue of rules of origin, and the Minister also referred to it earlier. There is a major problem with those rules. The Minister said that they should be determined by the UK Government in negotiation. As a side note, the current UCC, at 61.3, contains options for declaring origin. That does not appear to have been replicated in the primary legislation, and the British Chambers of Commerce, on behalf of its members, want to see certainty for the future on that matter.

Major problems are brewing on rules of origin, especially the duration of any transition agreement that the UK Government strike. At the very least, the Government need to negotiate interim free trade agreements with countries that the EU currently has FTAs with. Many of those trade deals allow UK companies to export because of the recognition of cumulation with EU content. For example, the trade deal that the EU has with South Korea, for example, says that

“a car will be originating in the EU if no more than 45% of the value of the inputs have been imported from outside Korea or the EU to manufacture it.”

So if the UK—in this brilliant scenario with its amazing negotiating team—manages to convince Korea, at least temporarily, to replicate the trade deal that it has with the EU, changing all references to “EU” to “UK”, for example, that will be all well and good, but it will not solve the issue of cumulation for many of our businesses. Take for example a widget that is created in the UK. It may have many parts from other EU countries. It may have 60% EU content, which it needs in order to be exported to South Korea. However, it may not have 60% UK content. Under the previous rules of origin system that we had as part of the EU, that worked fine and the widget could be exported to Korea. But if Korea says that it wants the widget to have 60% UK content, it will be a major issue for businesses which will no longer be able to export those widgets.

[Eddie Hughes (Walsall North) (Con)]

I am afraid that I am not very familiar with our trade level with South Korea. I wonder whether the hon. Lady has picked a particularly obscure example to demonstrate her point, rather than looking at the countries we will do substantial trade with in the future. I hope that I will be able to get some more information on that point.

[Kirsty Blackman]

I picked South Korea and car manufacturing because the percentage is particularly high. However, many other areas of trade and exports have percentage requirements. Because we have not needed rules of origin for products from the UK—we have been able to add all the EU content—it has not been a consideration for businesses. They have been able to export if they can prove that a certain percentage is from the EU. It is an issue not only for the trade deal with Korea, but for all sorts of trade deals that the UK has because it is part of the EU. The concern is not that we will not be able to do new trading, but that our current trading will become a major issue as of March 2019, if we do not get the appropriate rollover and grandfathering in place.

[Joanna Cherry (Edinburgh South West) (SNP)]

Perhaps my hon. Friend will join me in correcting the hon. Member for Walsall North (Eddie Hughes), as South Korea is very important for Scottish trade. As a result of the EU-negotiated deal, whisky goes to South Korea on a 0% tariff. The former chief executive of the Scottish Whisky Association has expressed the view that without the heft of the EU, Scottish whisky—the UK’s biggest export—would not have had the benefit of that deal.

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[Kirsty Blackman]

I appreciate that information.

There are so many technical issues that will have a major impact on jobs and manufacturing in UK. When I have asked the Government about this, the answers I received were pretty fluffy. I have asked about cumulation—mainly outside the Chamber—as it is a major issue that the UK Government have not taken seriously enough. It has been raised especially by the Society of Motor Manufacturers and Traders. If hon. Members look at how many times cumulation has been mentioned in the Chamber, they will find that it is very few.

[Vicky Ford]

I thank the hon. Lady for mentioning the incredibly important matter of cumulation. It is by cumulation that a British car that has components from other parts of Europe manages to be sold to third countries under existing agreements. My recollection is that the Minister said that the Department for International Trade would look to continue having agreement on cumulation, and that the Bill will give it the legal tools to continue such negotiations. Does the hon. Lady agree that the Bill is necessary as an enabling package to allow us to have a customs relationship with Europe and other parts of the world in the future?

[Kirsty Blackman]

I think that we should remain in the customs union and the single market, because then we would not have any of these issues. I appreciate that the Minister says that the Government are looking at this, but I am trying to make it clear how important this matter is, and I hope that I have been able to do that in my discussion of cumulation.

[Richard Graham]

The hon. and learned Member for Edinburgh South West (Joanna Cherry) raised the importance of the EU FTA deal with South Korea—indeed, it adds some £2 billion to our exports every year—but the interesting question is why the EU has been able to make free trade agreements only with South Korea and Vietnam. What about the rest of Asia? Does the SNP believe that sufficient progress has been made in expanding our trade, especially in Scottish whisky, across the whole of Asia, or could the process perhaps have been done more energetically and dynamically by Britain making its own free trade deals?

[Kirsty Blackman]

There are EU FTAs with many countries and we trade through them. Because the EU has such a large market, it is able to strike much better free trade agreements than the UK Government will be able to strike for their much smaller market. That is just the reality.

On the capacity of HMRC, I also want to talk about the issue of authorised economic operators, which was mentioned a lot in the customs White Paper. Relying on the AEO system causes a bit of a problem, as the UK is just not that good at either promoting or administering it. Some of the rules applied by HMRC are nearly impossible for many of the smaller operators to meet, such as the requirement we have heard about that the person who is in charge of customs in organisations has three years of customs experience. Some of our businesses have been trading exclusively with the EU, so they cannot meet that requirement very easily. HMRC must look at this as a matter of priority, and particularly consider the situation in Austria, where it takes less than three months for an initial AEO application to go through. Germany has increased the number of authorised economic operators incredibly successfully. The UK Government could benefit from looking at those countries when they consider making changes. It is not about making the regime slacker and enabling more people to jump through the hoops for AEOs; it is about making the process of applying for and getting AEO certification more accessible and streamlined. I know the UK Government have had representations on this matter, and I urge Ministers to consider them and act as soon as they can. We need to get the system in place as soon as possible so that companies can register and receive the certification to become AEOs in advance of the exit date.

As we heard earlier, there is also an HMRC capacity and streamlining problem in the area of VAT. That was also raised in the media recently in the context of the British Retail Consortium’s concerns. The changes to the VAT regime could create major cash-flow problems for businesses, and they might have to restructure or take on burdensome new cash-flow loans. The BRC says that there is no impact assessment produced by the Treasury about the costs of these measures in terms of additional compliance burdens for business, nor about what the costs of HMRC collecting and refunding these upfront costs would be. It seems that there is a real problem and that the required VAT changes have been pretty badly thought through.

I also want to raise the issue of virtual free trade zones. The Bill contemplates only physical free trade zones, but a virtual zone would allow businesses along the supply chain to benefit from simplifications and facilitations without having to incur the time and expense of individual applications, such as with inward processing relief. The British Chambers of Commerce has requested that the Treasury consider the possibility of including virtual free trade zones in its powers relating to designated free zones.

In the context of HMRC, I also want to mention import VAT on gifts from the EU, which I have spoken about before. Folk will be shocked when they get a bill because they have received a gift worth more than £39 from somebody in the EU. Such a system currently applies if people get a gift from elsewhere in the world, but the Government are suggesting that it should also apply in the case of goods from the EU. That is a major concern, because as there has been free movement and people have been able to live in other European countries, it is perfectly feasible that an awful lot of people will have family members in other EU countries and therefore will be likely to receive gifts of a value of over £39. I want to make it absolutely clear that if and when people start getting those bills, they will be totally caused by Brexit, leaving the customs union, and the proposed changes to VAT.

Trade remedies have been mentioned, particularly by Labour Members. Some of the evidence about the matter that the International Trade Committee received last year was concerning. The EU currently has anti-dumping and countervailing measures that would normally be expected to still be in place after Brexit day, such as a five-year measure that was put in place two years ago, meaning that it will have about two years to run at the time we leave the EU. Bernardine Adkins of the law firm Gowling WLG told the Committee that

“it won’t be possible to grandfather the measures, otherwise you will face problems with the World Trade Organization.”

If she is right, we have a pretty significant problem, especially because the call for evidence the Government issued at the end of November seems to suggest they do not know which trade remedies are relevant to UK companies. If the UK Government have to create a trade remedies agency, get it up and running, and furnish it with details that have not been provided in this Bill—how to conduct investigations, how subsidies are to be defined, how to assess if a UK industry has been injured, how to define a UK industry, and how to calculate the level of duties and guarantees needed to rectify the injury caused—and if they have do all that before putting in place even the trade remedies that currently exist, we have another problem.

UK Steel has been particularly vociferous in its criticism of this aspect of the Bill. It says that the chief and overriding concern is that schedules 4 and 5 to the Bill, concerning anti-dumping and anti-subsidy measures respectively, contain very little detail. It goes on to point out that for many of our major trading partners, including the EU and US, such issues are covered by primary legislation. The UK Government have chosen to deal with this through not primary legislation, but secondary legislation. That is yet another concern that we have about the Bill. The Bill does not even have the level of detail of the WTO agreements, so if the Government had included those, the Bill would have been substantially better.

The lesser duty rule is also a significant issue, as the UK Government are looking to go in that direction at a time when the EU is looking to move away from it. This is a concern for us, and for UK manufacturers and jobs in particular.

I and my party have general concerns about the loss of the customs union and the single market. We also have very specific concerns, which echo the views of businesses, about aspects of this Bill. A Fraser of Allander Institute report last year said that 134,000 jobs in Scotland are supported by trade with the EU, and Brexit threatens to cost our economy in Scotland £11 billion a year by 2030 and to result in many fewer jobs. The OECD highlighted in June last year:

“In case Brexit gets reversed by political decision…the positive impact on growth would be significant.”

There are major issues about tariffs if we leave the single market. The EU average tariff on imports from outside the EU was 5.2% in 2014. The average tariff on food was 15%. Skimmed milk exported into the EU from outside the single market attracts a tariff of 74%. If our organisations get hit by these tariffs when they are exporting—if we end up outside the EU single market and customs union as part of a no-deal scenario —we will not just have the problems I have mentioned about issues with the Bill, trade remedies and how HMRC will cope with all this. All these things are an incredible problem. Would it not be better and easier, and would it not be in the economic interests of everyone in this country, if the UK Government were to say, “Actually, we are going to stay in the single market and the customs union”?

--- Later in debate ---

[Julia Lopez (Hornchurch and Upminster) (Con)]

If we are to deliver Brexit, the UK needs to leave the customs union and establish its own customs regime. Without doing so, the UK will be precluded from striking its own free trade deals and left open to certain judgments from the European Court of Justice. I fear that those who believe we can honour the referendum result while staying in the single market or customs union are simply wishing to deliver Brexit in name only.

The Bill is widely drafted in order not to prejudice the eventual outcome of any deal we strike with the EU. It instead ensures that the UK can respond to its new status, whatever the circumstances in March 2019. That could include a no deal scenario—something that would represent a wasted opportunity of historic proportions on the EU’s part. Our Government have already made it clear that the UK wants to maintain free, frictionless trade with the EU and that they wish to maintain continuity with EU law at this stage on customs, excise and VAT to give businesses certainty.

There would be no need for chaos at customs or increased tariffs if our standalone regime could be linked closely to the EU’s, potentially in a new customs partnership. The question is whether the EU has the capacity to recognise its own interests and, more crucially, the interests of the people it governs. Until 2008’s financial crisis, global trade had been growing at up to twice the rate of global output for decades. Ever since, trade has slowed to be in line with, or sometimes below, growth in the global economy and political upheaval has followed.

As a founding World Trade Organisation member, the UK has long been a passionate advocate for liberalised trade. It is time to regain that leadership role and push back against the superficial allure of protectionism. The Bill sets the scene for that. While it introduces the potential for levying tariffs, giving us the tools to protect against dumping, it also allows us to adopt a unilateral trade preference scheme for developing countries to ensure trade further replaces aid as the primary poverty alleviation tool.

The Bill also aims to manage the flow of goods at our ports. Over the summer, I visited London Gateway, a state-of-the-art port in Essex with modern HMRC and Department for Environment, Food and Rural Affairs facilities and spare capacity. A logistical hub is being developed to deliver goods directly to London and the south-east rather than via midlands distribution centres. German grocer Lidl has already taken space there. The competition from nearby ports such as Tilbury, with its vast Amazon fulfilment centre, keeps freight costs low and ties into the Government’s ambitions to unlock the entire Thames Gateway with a new river crossing and more homes. This plan and these efficiencies strip out cost to retailers, helping to offset any potential increase in tariffs. Our customs systems are already highly efficient, but the Bill sets up an authorised economic operator scheme to indicate the fulfilment by exporters and importers of recognised compliance standards and makes provision for HMRC-approved warehouse operators. These measures should fast-track shipments. We now need to identify the sectors most exposed to any new cost and resource HMRC appropriately, which is what the Government are doing.

In my capacity as a member of the International Trade Select Committee, I would like to say something about tariff-free quotas. As an EU member, the UK is party to over 60 free trade agreements that permit our trading partners to export a certain volume of goods to the EU tariff-free. Along with the Trade Bill, this Bill provides the foundation for the continuation of these deals after Brexit. We hope that this grandfathering process will be straightforward, but our trading partners may use the opportunity to renegotiate terms, and rules of origin might add complexity to existing trade. Rules of origin define where a product was made and help to determine the application of quotas, preferential tariffs and trade remedies.

At present, the UK can export to the EU with no restrictions on the value of imported intermediates from third countries, and this will likely change once we are out of the customs union. Origin is generally conferred based on where a good was obtained or manufactured or where the last substantial transformation took place. Cumulation of origin allows for greater flexibility when using raw or semi-manufactured materials from certain third countries. Currently, as an EU member state, the UK benefits from the pan- Euro-Mediterranean cumulation zone.

Cumulative rules of origin may prove hard to negotiate, requiring trilateral discussion between the UK, the EU and the third country concerned. None the less, the UK’s departure from existing free trade agreements is not challenge-free for the EU either. Those FTAs were negotiated on the basis of access to an EU economy that included a UK market, which, in 2015, amounted to 17.5 % of the EU’s GDP, and which contains some of its most voracious consumers. If we withdraw that market from the FTA, there will inevitably be an impact on its functioning, if not on its legal character. The EU plans to remove the equivalent of the UK’s market share from the duty-free quotas that it offers its trading partners. Otherwise, EU domestic producers will have to compete with a greater inflow of tariff-free foreign goods. FTA partners, however, are understandably very unhappy at the prospect of a substantial reduction in their tariff-free quotas.

If the EU can think imaginatively and flexibly about a customs link to the UK economy, with potential agreement on rules of origin at least for a transition period, the potential problems of both sides can be addressed. The EU’s default arrangements relating to rules of origin are relatively liberal, and processes already exist for exporters to self-certify origins. Agreeing on those processes, and ensuring that businesses sign up to them now, should be a priority.

[Kirsty Blackman]

May I pursue the issue of tariff-rate quotas? Is it not the case that, even if countries receive the same amount in total—if they were previously able to distribute 100 tonnes of goods, and in future they could distribute 70 to the EU and 30 to the UK—they might challenge that on the basis that if the UK market collapses, they will not be able to transfer that amount to another country, as they currently can?

[Julia Lopez]

My point is that any issues relating to tariff-rate quotas will affect not just the UK but the EU, and it is therefore in the EU’s interests to try to reach an accommodation with the UK.

I welcome the Bill, which is about preparedness and which, given its wide drafting, allows for any negotiated outcome. I hope that it sets us up for a new chapter in our long history as a proud, global trading nation.

--- Later in debate ---

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

Ga’i ddymuno blwyddyn newydd dda i chi—may I wish you a happy new year, Mr Speaker?

I wish to confine my remarks to three key points. First, I wish to add my voice to those calling for our continued membership of the largest trading bloc in the world. Secondly, I wish to outline the concerns from Welsh ports, which would face immediate challenges to their existing position as a result of changes to our customs arrangements. Thirdly, the weakness of this Bill’s ability to protect our vital industries will form the final part of my speech, and we have heard many interesting contributions on that point already.

As promised, I wish first to reiterate to the British Government the illogicality of, and harm they will cause by, ripping us out of the customs union. A student of GCSE economics could explain the foundations of international trade as laid out by David Ricardo. His theory of comparative advantage is not complex to grasp. By specialising in particular industries, combined with free international trade, all nations will see positive results. The premise is simple: rather than creating a range of mediocre products, the highly specialised industries of each nation produce better goods, which are then traded internationally, satisfying domestic demand for the products made in other nations. Whether we agree that this commercial international order should be our goal or not, it has underpinned our economic approach to trade for centuries.

International marketplaces have moved on from Ricardo’s time. Instead of cloth and wine, the modern economy trades aeroplane wings, specialised steel products and microchips. To account for this complexity, policy makers have created institutions to manage commerce.

The European customs union is the greatest example of one such institution. By removing physical and financial barriers to trade, it has created the largest, richest, most powerful network of free-trading states in the world. As a result of our membership of the customs union, Welsh businesses can trade on a completely unfettered basis within the bloc, gaining access to 600 million consumers.

As a trading bloc, the EU customs union also applies a common external tariff on entering the bloc, and we should remind ourselves of the extra costs that will hit our exporters if we are no longer members and have no agreement on future tariffs. Carmarthenshire is known for its agricultural produce, so it is worth putting it on the record that the tariff for animal products can be more than 138%, with an average of 20%; the maximum tariff on dairy products can be as much as 134%, with an average of 45%.

I could also point to other major employers in Carmarthenshire who manufacture component parts for export and will obviously follow the upcoming negotiations with great interest. We should not be under any illusion: if it becomes burdensome, financially or through regulation, for those companies to move their goods, they will relocate. Our membership of the single market and the customs union has been invaluable in securing valuable foreign direct investment in areas such as my home communities in the Amman valley.

Before I am accused of scaremongering, today’s shambolic reshuffle was trailed in the press over the weekend as a reorganisation to prepare for a no-deal scenario. The 27 members of the EU are not the only ones with whom we will lose our existing free-trade arrangements. Sixty-seven countries have agreements with EU customs union members which must be grandfathered, although there continues to be some dispute about whether that is possible. The issue will be discussed in greater detail tomorrow when we deliberate on the Trade Bill.

By pulling my nation out of the European customs union in search of some false free-trade, low-tariff Brexit nirvana, the British Government risk the jobs and wages of my constituents. The Minister will undoubtedly claim that this is the will of the people. We can of course engage in a tit-for-tat argument over whether that is the case. However, that denies him the opportunity to outline the purported benefits of the British Government’s approach. For that reason, I ask him the following: if certainty is his aim, and the status quo is certainty, why is rolling the dice on more than half our imports and exports a good idea? Why is he gambling away my constituents’ jobs and wages? Why is he pulling us out of the customs union at all?

I also implore Labour Front Benchers to come to their senses. The constructive ambiguity of the Labour party’s Brexit position may offer marginal electoral advantage, but it provides the silver platter on which the Tories can serve up an extreme and damaging Brexit. Rather than playing hokey cokey with the single market and customs union, I ask Opposition Members to join us and take a clear stand to say we are better off in these great European economic institutions. Let there be no mistake: the Tories can deliver their current policy of an extreme Brexit only because the position of the Labour leadership is to leave the single market and the customs union after the transition phase.

[Kirsty Blackman]

Does my colleague agree that Opposition Front Benchers are not supporting a jobs-first Brexit? If they wanted a jobs-first Brexit, they would keep us in the single market and the customs union.

[Jonathan Edwards]

I am grateful for the intervention, and am aware that during the debate many honourable colleagues on the Labour Back Benches have made that exact point and implored Front Benchers to change their position. Some very interesting reports are coming out of the parliamentary Labour party meeting this evening.

Before the recess, the tangible and immediate chaos created by pulling us out of the customs union was vividly illustrated. The Prime Minister’s attempts to conclude phase 1 of the negotiations were almost scuppered by the issue of customs borders on the island of Ireland. Others will be able to expound with greater invested passion why no such border should exist. However, I would like to raise my concerns about the sea border that my nation shares with Ireland and thus the EU.

Wales and its ports are intimately linked with Ireland. Holyhead, Fishguard, and Pembroke Dock are vital trading links between Wales and the Republic of Ireland. Holyhead is the UK’s second largest port. In excess of 400,000 trucks pass through it every year. A hard maritime border between Wales and the Republic of Ireland will inevitably hit Holyhead hard, and I ask Ministers to read the excellent article of 4 January by my former university lecturer, Professor Richard Wyn Jones, on this specific issue facing Holyhead and his native isle of Ynys Môn, or Anglesey. In Holyhead there is simply no space in or around the port for the kind of infrastructure that will be required to process the number of lorries and trailers that currently pass through it. A hard border in Holyhead can yield only chaos. The same problems apply to Pembroke Dock and Fishguard.

The inevitable consequence of physical constraints in and around the ports is that freight will need to find ways to bypass Holyhead and Wales, especially if there is a soft border between the British state and the European Union in Northern Ireland. Without trade arrangements that mirror the outcomes of what we already have, Welsh ports will be in danger of becoming uncompetitive. With the intention of pulling us out of the customs union, the Bill and the actions of the Minister make it clear to the people of Holyhead that the Government consider their livelihoods to be dispensable.

Finally, I would like to highlight the concerns of an industry central to and symbolic of the Welsh economy—the steel sector. Primarily its concerns centre on trade defence provisions. These are found in clauses 13 and 14 and schedules 4 and 5. I am sure the Minister will have seen last week’s letter in the Financial Times from almost a dozen industry and union representatives highlighting the fact that these clauses

“set up a lighter-touch approach to illegal dumping by China and others than in the remaining EU and any other major economy.”

In the lead-up to the referendum, the exact opposite was promised by the leave side. In an ITV Cymru debate I took part in, Mr Nathan Gill from UKIP, speaking on behalf of the leave side, promised that a British Government freed from the shackles of Brussels would be able to impose prohibitive anti-dumping duties on China. I am sure that that clear promise influenced votes in some communities in south Wales. When he uttered those words, we know the British Government were selling the Welsh steel sector down the river. In March 2016, the British Government blocked attempts to strengthen EU trade defences against imports of cheap Chinese steel that devastated Port Talbot steelworks and took it to the brink of collapse—as we heard from the hon. Member for Aberavon (Stephen Kinnock) earlier. Yet again, it seems that the Government have little concern for steelworkers, preferring to seek dodgy deals with Trump’s America and cosying up to Beijing to protecting Welsh jobs and wages.

Fundamentally, the Bill would be wholly unnecessary, and its deficiencies of no concern, if the policy of the British Government followed the sensible path of remaining a member of the European customs union. For this reason and other reasons I have outlined, my Plaid Cymru colleagues and I will refuse to give the Bill a Second Reading and will vote against it tonight.

Finance (No. 2) Bill

Kirsty Blackman Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 19th December 2017 Commons Chamber

[Jim McMahon]

I believe it comes down to priorities. If the Government were determined to do something about this, having the evidence base would be of great benefit to them. They do not want to do anything about it, so the evidence base is a hindrance because the Opposition can use it to attack the Government about the fact that progress just is not being made. That is the real reason why the Government are not making progress, and why they are determined not to support the new clauses. It would be far better for the country if the Government were to step up, to be honest and to recognise that the country has some really ingrained challenges that we need to face. Understanding the scale of the challenge from day one is important in making sure that we get into a better position.

My challenge is this: why not? If the Government believe that they are doing the right thing, and that by virtue of their second female Prime Minister they are the party of gender equality and the champions of all that is equal, now is the time to prove it. Members have two choices: they can go through one or other of the voting Lobbies. Perhaps they have a third choice, which is to stay away completely. They can get behind the new clauses and support our request for the data set, which will inform decisions; they can shirk responsibility entirely and stay away from both voting Lobbies; or they can keep their heads down and maintain their own position on the Government Benches, and vote against new clause 6 because it happens to have come from the Opposition. I would say that that is not putting the interests of the country first.

[Kirsty Blackman (Aberdeen North) (SNP)]

I would like to start by correcting an omission that I made yesterday. I should have said that our thoughts are with the Chairman of Ways and Means and his family at this time. It sounds like a really horrendous thing for a family to go through, particularly at Christmas time.

I thank the shadow Minister, the hon. Member for Brent Central (Dawn Butler), not just for tabling new clause 6, but for the way in which she engaged with us in advance of the debate. I appreciate the time that she took to speak to us about the new clause so that we could discuss how it looked. I think it is absolutely brilliant; it is one of the best new clauses that we have seen when considering a Finance Bill, and I have tabled a few in my time. I want to speak in favour of the new clause and state our support for it.

I will start by covering why we need the new clause. Although there has been a bit of discussion, we have not talked about what it means in its widest sense. Subsection (2) talks about

“the impact of those provisions on households at different levels of income”,

as well as on protected characteristics, the public sector equality duty and

“equality in different parts of the UK and different regions of England.”

A lot of the debate today has focused on women, which is completely reasonable, but the new clause captures several other things that could have been more fully discussed.

Why do we need an assessment of the impact on various groups, particularly those mentioned in new clause 6? We need it because people in the protected groups or at the lower end of the income spectrum have been disproportionately hit by the actions of this UK Government, as can be seen in a number of ways. It can be seen in the fact that we have young people in jobs on zero-hours contracts. We have those jobs, and the Government say it is wonderful to have so many people in employment, but despite that, we are not seeing an increase in household disposable income because people are not receiving the wages they should receive for such employment. They are in precarious jobs and they are not receiving enough money, and the benefits freeze has been a major added factor. It means that people are earning even less, because the benefits freeze has hit them doubly.

The Government have caused another issue by reducing disability payments. The UN has said that the UK has not done enough to ensure that the UN convention on the rights of persons with disabilities is being met, and no Government in any developed country or nation should seek to be in such a position. We have not had a proper assessment of the impact on disabled people of the changes that this UK Government have made.

The UK Government have also not taken seriously their responsibility to young people in society. We have a living wage that people cannot live on: it is not calculated as something that people can live on; it is a pretendy living wage put forward by the Government. It is not applicable to people younger than 25. Therefore, we have a living wage that people cannot actually live on, but the Government somehow think that the labour of people under 25 is worth less than that of those over 25, even though they may be in exactly the same job and should therefore be earning the same amount.

As has been pretty widely covered, the Budget and successive policies of this UK Government have a disproportionate impact on single parents, the majority of whom are women. We see a disproportionate number of them coming through the doors at our surgeries. Do you know what, Mr Owen? It is absolutely and totally ridiculous that we are seeing a rise in rickets in this country. We are seeing people who cannot afford to eat or to give their children nutritious food because of the decisions of this UK Government.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Does my hon. Friend agree it is a scandal that many children will be getting food and presents this Christmas only through the actions of food banks and charities, such as Moray Firth Radio’s Cash for Kids in my constituency? That should not be allowed to happen. With universal credit, this is happening far too often across the nations of the UK.

[Kirsty Blackman]

I absolutely agree. This year—in 2017—my office has referred 35 people to food banks, and we have gone to the food bank on five occasions on behalf of constituents who have come through the door and told us that they have not eaten for a number of days. This is supposed to be a country that cares for people who are just about managing, but it is failing them. The people who go to food banks nowadays are working. They are not earning enough money from their jobs to feed their families, so they are having to go to food banks.

We have seen this Government attack people who have protected characteristics, but we have not seen any impact assessments because the Government do not want to admit what they are doing. We have seen attacks on the WASPI women, who, despite having worked all their lives, are being asked to wait even longer for their pensions. We have seen changes with the rape clause and the two-child policy, meaning that women should not have more than two children and, if they conceive as a result of rape, they must write that down on a form and say so explicitly. Why should they have to relive that just to please this Government? We have seen increasing household debt—that has been raised as an issue by the Bank of England—and decreasing household savings. We have seen young women unable to go to school because they cannot afford tampons and towels to provide themselves with a basic level of human dignity.

Another change that has not been talked about hugely in this place is the attack on a group of people with protected characteristics. A massive and increasing number of people come to my surgery because they have no recourse to public funds. It is a particular issue with those fleeing domestic violence, the majority of whom are women. The UK Government have determined that they should have access to public funds for only six weeks if they are from outside the EEA, and not at all if they are from inside the EEA. If they have been living on a joint income with their partner and are fleeing domestic violence, they have no protection from the UK Government because they are giving them no recourse to public funds. That is an attack on a group of people with protected characteristics, and we should no longer tolerate that.

The hon. Members for Oldham West and Royton (Jim McMahon) and for Brent Central (Dawn Butler) mentioned what local authorities have to do in relation to impact assessments. I was a local councillor for eight years before being elected to this place. When we produced budgetary measures, or anything we were going to do in the city that would have an impact on communities, we had to produce an impact assessment specifying how it would affect people with those protected characteristics. If a local authority making decisions for the third largest city in Scotland has to do that, why are the UK Government making decisions that affect every man, woman and child across these islands without producing an impact assessment? Is it because they are ashamed of what they are doing and unwilling to be honest with the people?

In Scotland we are looking at having a progressive taxation system. We are lifting the pay freeze and next year we will be the fairest taxed part of the United Kingdom. [Interruption.] The hon. Member for Beverley and Holderness (Graham Stuart) says that we will be the highest taxed part. Some 70% of taxpayers in Scotland will pay no more tax next year than they do this year. Only the highest earners will be paying moderately more. [Interruption.] No one earning less than £33,000 next year will pay any more income tax than they would in England.

[Chris Stephens]

Is it not a bit rich for some Government Members to try to shout down my hon. Friend, complaining about people on high incomes paying a bit more tax but saying nothing about disabled individuals losing £30 a week in benefits?

[Kirsty Blackman]

Absolutely. If Government Members cared about what they were doing to disabled people, they would produce the impact assessments that are being requested today, and they would be honest about the changes they have made and how the heaviest impact has been on the most vulnerable in society.

There are folk who have been left behind by this Government. There are folk who have been failed by the safety net. Those are the people we see—I am sure that Government Members see them, too—walking into our surgeries on a regular basis. They say, “I have worked hard all my life, but I still cannot afford to feed myself and my family.” People who have worked every day for years now find that their state pension is being pushed back as a result of this Government’s policies. People find themselves homeless because they have made one or perhaps two bad decisions in their lifetime, which is far fewer than those of us who have bought a safety net and have support structures in place are able to make.

We need a culture change. The conversations we have had in this Chamber are along the same lines as those that have been had in the context of the #metoo hashtag. Women have come forward with #metoo to say that they have been sexually harassed, sexually assaulted or even raped, and people have replied, “We don’t believe you,” “It can’t be that bad,” or “You’re trying to make a big thing of this.” What the SNP and the Opposition are trying to do in this debate is to highlight the fact that these disadvantaged groups are being actively disadvantaged by the UK Government’s policies. We are asking the UK Government to produce the impact assessments, because if they deny that that is the case, they should not be scared of producing them.

--- Later in debate ---

I support my hon. Friend the Member for Oxford East. This Bill is weak; it needs to be much stronger. I look to a Labour Government in the very near future to introduce serious measures to deal with tax avoidance and tax evasion.

[Kirsty Blackman]

The discussion that we had earlier today and that we are having now in relation to tax avoidance really goes to the heart of the question: what kind of country do the Government want to be in charge of. It was clear from the earlier debate that the Government do not want to be in charge of a country that is open and upfront about tax changes and the impacts that they will have. They also have issues with tax avoidance and evasion and with the choices that they make. Their choices are very much not the ones that Scottish National party Members would make, nor indeed, I think, ones that Labour would make.

On the issue of the tax gap in particular, the UK Government took the decision that it was more important to have immigration officers who were concerned with ensuring that the “wrong sort of people” did not get into the country than it was to have customs officers. We have ended up in a situation where there are very few customs inspections, which is a major contributor to our tax gap. We are talking about tax avoidance and tax evasion and about going forward into a situation in which we will need to make many more customs checks, when the UK Government have got rid of most of the people who know what they are talking about in relation to customs. We have a major problem that needs to be solved if we are to fix those issues.

A Transparency International report mentioned 766 UK companies that had avoided tax. A quarter of those companies are still active in the United Kingdom. The UK Government do not seem to have taken any action to ensure that they cannot dodge tax in the way that they have. Among the actions that we have been talking about is protection for whistleblowers. We continue to call for whistleblowers to be better protected. It is really important for people to feel that they can come forward safely and that they can uncover major problems that exist at the heart of some organisations that operate within this country, and at the heart of some schemes that operate within these islands. If the UK Government produced stronger guidance and stronger protection for whistleblowers, it would allow and encourage more people to come forward.

On the issues around the general anti-avoidance rule and the complexity of the tax code, we have been consistent in our criticism of how complex the tax code is. Someone posted a picture recently of the new version of the UK tax code that had just appeared: the thing was almost as tall as me. An absolutely huge number of bits of paper are required to make up the tax code. Is it any wonder that there are unintended loopholes that people can exploit? If the tax code was much simpler, if there were fewer tax reliefs and if the UK Government chose instead to give money to people rather than a tax relief, it would make things slightly better.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

The hon. Lady suggested that there is a confusion in the tax codes. It is only in recent days that the Scottish SNP Government have introduced a raft of new bands for tax and indeed increased tax. I find that anomaly quite strange.

[Kirsty Blackman]

It is not actually a raft of new tax bands. As far as I know, it is one more band in the tax system with slightly different numbers for the pennies. But that is only in relation to income tax. Some 70% of people will pay less tax and 55% will pay less tax than they would in England. Does the hon. Gentleman believe, therefore, that the English system is taxing people unfairly compared to the Scottish system?

[Mel Stride]

I thank the hon. Lady for indulging me. She says that 70% of Scottish taxpayers will pay less tax, but will she accept the fact that that is largely due to the changes made by the UK Government in raising the personal allowance?

[Kirsty Blackman]

The Scottish Government’s new starter rate of 19%, rather than 20%, for the first £2,000 that people earn is really positive. It is an incredibly progressive taxation measure, and it is something that the UK Government cannot claim; it is something that the Scottish Government are doing.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

If Conservative Members wish to debate the progressive taxation system introduced by the Scottish Government, maybe they should stand for the Scottish Parliament.

--- Later in debate ---

[Kirsty Blackman]

I thank my hon. Friend for his comments. I do, however, want to say one more thing on the Scottish tax system, so I hope he will indulge me.

The Scottish tax system is progressive. It is making a difference by ensuring that people who earn under £24,000 pay less tax. That is a positive measure and a good way forward. If members of the UK Government have concerns about the Scottish Parliament’s choices on tax, perhaps it would be better for them to support an increase in the block grant. They could also tell us whether they would cut the money that is going to be made up from the Scottish Government’s tax changes from education, local authorities or the health service.

I will bring the Committee back to tax avoidance. I am sorry, Sir Roger, for testing your patience slightly. The Scottish National party has been consistent in its criticism of Scottish limited partnerships. My former colleague, Roger Mullin, was like a dog with a bone; he would not let go of this matter. That was to his credit because the UK Government decided to make changes to the SLP regime as they recognised that it is massively used for tax avoidance and dodging. There was a review of SLPs, but we are yet to see changes as a result. Will the Minister let us know at least the timeline for making those changes in order to ensure that SLPs are no longer used as a tax-dodging mechanism? This is an important change that really needs to be made, preferably sooner rather than later.

Talking about the UK Government not working as they should regarding tax avoidance and evasion, the Panama papers and the Paradise papers have both been published in my time as an MP. It is very clear that the tax system—not just the global tax system, but even the system in the UK—is failing. It is allowing people and organisations to dodge tax. It is all well and good to talk about overseas trusts. In fact, this frustrates me a huge amount because the Government try to give the impression that overseas trusts are used by organisations such as rural churches in order to fix their roofs. It is not the case that they are used by organisations like that; they are used by people who are trying to dodge tax. We need the hardest possible line on that.

We cannot see the United Kingdom turn into a low-tax, deregulated tax haven. If the UK Government are deciding what kind of country they want the United Kingdom to be, they should not choose one that involves deregulation. With Brexit, they have the opportunity to put their stamp on the future, but I am incredibly concerned about the way that it will go. In bringing back control, some of the reins that have perhaps been put on the UK Government will be taken off and they will be free, for example, to take away the working time directive, and to make changes to our world-class social security system, fair society and good business practices. That is incredibly concerning.

We have called before, and we will not stop calling, for powers to deal with tax avoidance and evasion to be devolved to the Scottish Parliament. We believe that we would do a better job because we could not really do a worse one. We would put forward a fair and moral tax system and a general anti-avoidance rule in order to discourage people from dodging tax, and we would ensure that our tax gap was way smaller than the UK Government’s.

[Mel Stride]

This Government are committed to bearing down on tax avoidance, evasion and non-compliance like no other Government in history. While I have enormous respect for the hon. Member for Oxford East (Anneliese Dodds), the shadow Minister, and I respect the spirited nature of her attack on our record, I am afraid she is misguided.

We have a strong record. We have brought in and protected £160 billion of potentially avoided tax since 2010 as a result of over 100 measures that we have brought in. We have, as we have heard in the debate, one of the lowest tax gaps in the entire world, at just 6%. Contrary to some of the suggestions from those on the Labour Benches, that is a robust and firm figure; it is described by the IMF as one of the most robust in the world. It is, indeed, produced by HMRC, but it is produced to strict guidelines set out by the Office for National Statistics.

Finance (No. 2) Bill

Kirsty Blackman Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Stephen Kerr]

I am delighted to offer a comment on that, because that is exactly in line with the point that I am trying to make, which is that the Laffer curve is exactly that—we increase revenue as we reduce taxation rates. It is very much at the core of what we believe on the Government Benches. At one time, it was what the SNP also stood by, but now the Financial Secretary in the Scottish Government has not even heard of Laffer. He told a Select Committee in Holyrood that he had never heard of the Laffer curve. That is where we are at in Scotland. When it comes to incentive, hard work and industry—I am referring this to the bank levy and the bankers’ bonuses that were mentioned by Opposition Front Benchers—we are now at a point where £33,000 a year is classified in Scotland as “rich”. I think that that is dismal. We are talking not about people with yachts in the marina bays of the west of Scotland, but doctors, teachers and middle managers—the working men and women of Scotland. Therefore, when it comes to the bank levy and to bankers’ bonuses, and we talk about incentives to work hard, to exercise initiative and to take a few risks, it is just not on in Scotland now. The Scottish Government are sending out a clear message, which I find dismal and dismaying, that that is not the kind of Scotland that they want. It is the kind of Scotland that I want. It is the kind of United Kingdom that I want, which is why I unreservedly stand to support the Bill.

[Kirsty Blackman (Aberdeen North) (SNP)]

You will be delighted to know, Sir Roger, that I will be talking about the bank levy and the new clauses that have been tabled both by the Opposition and by our party. I wish to start by saying that I have rarely been more embarrassed to be part of this House than I am this evening. This debate followed hot on the heels of a statement on bullying and harassment and we ended up in a situation in which there was a ping-pong between Government Back Benchers and the Opposition Front-Bench team. It just was not acceptable. I appreciate the fact, Sir Roger, that you intervened and brought Members back to the matter under discussion.

[James Cartlidge]

Will the hon. Lady give way?

[Kirsty Blackman]

No, I will not give way.

The other concern about the tone of this debate thus far is that it has basically been a history lesson. Both sides have been talking about the history and how we have ended up in this situation. Very few people have spoken at any length about the future and about how the bank levy in the future will affect the tax take of the Treasury, as well has how it could be made to be more fair and ensure that we redistribute taxes and wealth in a positive way.

The SNP has a manifesto commitment to support the reversal of the reduction in the bank levy. We stand by that commitment and have been consistent in our views on that. We have also been consistent in supporting the introduction of a tax on bankers’ bonuses.

I am pleased with the way in which Labour’s new clause 1 has been written; there is a lot to commend it to the Committee. The suggestion of looking at the effects on revenue of the bank levy compared to the bank payroll tax is utterly sensible. It strikes me that this information should be in the public domain, so that we can all talk from a position of knowledge about the actual effects that this has had, rather than the projected effect that the Treasury thought it would have when it was first put in place or even thinks it might have now. It is totally reasonable for us to ask for a review of these things.

We would be able to go further and ask for more drastic changes if the Government had proposed an amendment of the law resolution, which would allow us to be more flexible in tabling amendments. As I think I have said before—if not, I am quite happy to say it now—the fact that the Conservative Government are not proposing an amendment of the law resolution means that future Labour Governments will be likely to do the same thing, so this creates a situation whereby the House is less transparent and there is less Opposition scrutiny. It would be much better for all parties if there was an amendment of the law resolution.

New clause 1 states that the proposed review would consider

“the effectiveness of the levy in reflecting risks to the financial system and the wider UK economy arising from the banking sector”.

That is key. Despite all that has happened since the financial crash, there are concerns about ensuring that banks continue to make less risky propositions and continue to be safe places for people to put their money. It is reasonable to look at the bank levy in the context of discouraging risky behaviour by banks, and the reference to the incoming revenue is key.

New clause 11, tabled by the SNP, would deal with two things: inclusive growth and equality. We will hear an awful lot in the debate tomorrow about equality, and this should apply across all measures. The review proposed in our new clause would consider whether reducing the bank levy would disproportionately affect, for example, people of a certain gender or people who are not wealthy. People who work for banks are more likely to be male and wealthy. Therefore, reducing the bank levy is more likely to support them than it is to support groups that are disadvantaged in the first place.

We in the SNP have been absolutely clear and consistent in our support of inclusive growth. We have also been clear that things such as quantitative easing—certainly since the first round of QE—do very little to support those people at the bottom of the pile or to inject money into the real economy, but actually have a disproportionate effect in organisations such as those in the FTSE 100. We will keep being clear that inclusive growth is important, which is why we have proposed progressive options for taxation. Particularly in this place, it is difficult to get any sensible answers from the Government about how their proposals will affect people across the spectrum. That is not necessarily because the Government have not done the work; they may have done the work, but they are unwilling to publish it. They do not produce comprehensive reviews of how the tax takes have changed as a result of the changes they have made to the tax system.

Hon. Members will be unsurprised to hear me calling again for the Government to be more transparent, but that is what I am doing. I will also be very clear that we are keen to support new clause 1 if Labour decides to push it to a vote.

[James Cartlidge]

It is a pleasure, as always, to follow the hon. Member for Aberdeen North (Kirsty Blackman). Interestingly, she mentioned inclusive growth, to which I will return shortly. It is also a pleasure to follow my hon. Friend the Member for Stirling (Stephen Kerr), whose speech was a real tour de force. The hon. Member for Aberdeen North criticised him for not talking about the future and dwelling on the past. Actually, he was talking about the present—the challenges facing his constituency today, in the here and now. The bank levy is incredibly important because it is all about the future prosperity of those constituents, so I very much welcome my hon. Friend’s comments.

Interestingly, the Opposition’s new clause 3 gives us a good way of looking at the bank levy as it stands. Subsection (2) of new clause 3, which would affect schedule 9—the schedule that contains the details about the bank levy—states:

“No later than 31 October 2020, the Chancellor of the Exchequer shall lay before the House of Commons an account of the effects of the proposed changes in Part 1 of Schedule 9—(a) on the public revenue, (b) in reflecting risks to the financial system and the wider UK economy arising from the banking sector, and (c) in encouraging banks to move away from riskier funding models.”

I accept that those three points are incredibly germane. In fact, let us not wait until 31 October 2020. Let us stand here now and think about how a review would fit under Labour’s very own new clause.

Look at subsection (2)(a) of new clause 3, which is about the impact “on the public revenue”. What do we see? Well, the banking sector paid 58% more tax in 2016-17 than in 2009-10. That is under a Conservative Government. The average amount paid by the banks every year since 2010 has been 13% higher than under Labour. In 2016, the Government introduced an additional tax on banks—the 8% corporation tax surcharge, which we have been discussing—which will raise nearly £9 billion by 2022.

--- Later in debate ---

[James Cartlidge]

My hon. Friend is absolutely right. The types of borrowing that I have talked about were the reality, but what have we done since? It is no longer possible to get self-certified mortgages. It is very difficult—almost impossible—to get interest-only mortgages as a residential purchaser.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[James Cartlidge]

The hon. Lady did not give way to me, but because I believe in inclusive growth and equality, I will give way to her.

[Kirsty Blackman]

The hon. Gentleman is making a very sensible case about the issues there were with mortgages before, but there are currently issues with consumer credit. The Bank of England has raised concerns about, for example, the card credit that people are taking out, and the fact that half of households have less than £100 in savings. When is he going to take the punchbowl away?

[James Cartlidge]

I did say that I would come to the current position on credit. I want to finish on the analysis of the three tenets in new clause 22 under which Labour says that we should consider how the bank levy has worked. According to subsection (2)(c), we should look at it in terms of

“encouraging banks to move away from riskier funding models.”

It is quite amusing to see a Labour new clause that contains the phrase

“encouraging banks to move away”.

My colleagues will appreciate that the whole point of reforming the bank levy is not to encourage banks to move away, but to encourage them to stay here and create wealth and jobs. Let us not forget that in all the figures we have heard about, we have not heard the key one. Banks contribute £116 billion of value added to our economy, not including any of the tax take.

Finance (No. 2) Bill

Kirsty Blackman Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Mel Stride]

Yes, my hon. Friend is entirely right. We have made huge progress in making sure that the banks are fit and able to withstand whatever external shocks there might be. The Bank of England has been heavily engaged in that, as have the Government, and we are in a much more secure position—certainly than we were when we inherited the economy we saw when we first came to office in 2010.

[Kirsty Blackman (Aberdeen North) (SNP)]

The Minister is being very generous in allowing interventions. I was concerned by the response he gave to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone). Given the Government’s stake in RBS, does he not feel that they should take some responsibility and use their influence to convince RBS not to go ahead with these closures? There have been over 90 since the start of the year, and this cannot continue.

--- Later in debate ---

[Kirsty Blackman]

I was not particularly pleased with the answer that the Minister gave to the right hon. Member for Barking (Dame Margaret Hodge) as to why the Government have not tabled an amendment of the law resolution, which would allow the Opposition to put forward more measures in relation to tax avoidance and evasion, for example. Why did they not put forward an amendment of the law resolution?

[Mel Stride]

We did not have an amendment of the law resolution on the previous Finance Bill, so we are carrying on with the situation that pertained to that Bill. As I explained, what matters is that we have an opportunity fully to scrutinise in this House the various measures provided and amendments that may be tabled in relation to those measures. There is nothing preventing that. As I have outlined, the Bill will go through its various stages, allowing for very thorough scrutiny.

Together, the measures that I mentioned continue the Government’s sustained crusade against tax avoidance, evasion and non-compliance—an endeavour that we will pursue with undiminished vigour right through the course of this Parliament. Let no one ever doubt, for even the briefest moment, this Government’s commitment to hard-pressed families, and to championing business and the wealth creators of the future. On the matter of taxation as set out in the Bill, let no one misunderstand us: we will continue to keep taxes competitive and fair, but we will also continue our vigorous and ceaseless drive to bear down on avoidance and evasion so that all pay their due. We will ensure that all pay a just and fair share for the support of our vital public services: for doctors, paramedics and nurses; for our police, our teachers, our fire services, and our brave armed forces who make our country so great. I commend the Bill to the House.

--- Later in debate ---

[Kirsty Blackman]

I agree that employee share ownership schemes are a good thing, and I would like to see an increase in them, but does the hon. Gentleman agree that the issue that people have is not that they do not know about or cannot access employee ownership schemes, but that they do not have the money to save, given that 50% of households have less than £100 of savings? Is not that the biggest problem?

[Kit Malthouse]

The hon. Lady refers to schemes that require the employees to pay for the shares. In my view, businesses should be allowed to gift shares to their employees, and that should not necessarily form part of their remuneration package. At the moment, there are a series of ways for companies to give shares to their employees, but none is particularly tax efficient or confers particular advantages to a company. I would like a company that had a certain percentage of its shares in employees’ hands to pay a lower corporation tax rate than one that failed to involve its employees in the balance sheet. That would address the general idea that the Prime Minister has talked about—that employees should be more involved in the way that businesses, especially large businesses, are run. If shareholders at the annual general meeting every year are also employees, so much to the good. Dynamising and democratising capital has to be the way forward.

--- Later in debate ---

[Kirsty Blackman (Aberdeen North) (SNP)]

I am really pleased to have the opportunity to stand here on behalf of the Scottish National party for the Second Reading debate of this year’s third Finance Bill.

First, I would like to tackle the issue of the amendment of the law motion, which I have already raised with the Financial Secretary. I am particularly concerned that the Government are doing their best to use the rules of the House to dodge proper scrutiny and transparency. It is not the normal state of play to have no amendment of the law motion after a substantive Budget. I get that it is not easy for Ministers to try to hold a minority Government together when their Members are simultaneously pointing in about 300 different directions. Even so, they should be keen to come before the House, stand up for what they believe in, and allow proper scrutiny.

I would like to take the opportunity again to highlight deficiencies in the Budget process. The “Better Budgets” report, published by the Chartered Institute of Taxation, the IFS and the Institute for Government, pointed out several ways in which scrutiny could be improved. One suggestion is for the Finance Public Bill Committee to take evidence in public. I am firmly of the opinion that such a change would improve scrutiny and increase Committee members’ understanding of a Budget’s measures. This will be my third Finance Bill Committee, so I feel that I can now speak with some expertise on the subject. I urge the Minister to consider this request once more, given that the previous two Finance Bill Committees I served on sat for only six sittings each. We have extra time in the legislative timetable before us, and two hearings on the first day, for example, would not stretch that. That has been the Government’s main objection, so I push the Minister to consider the proposal again.

Let me turn to economic impact assessments on particular tax measures. The Minister will be pleased to know that my point is not about Brexit, but the fact that the Government failed to carry out impact assessments on Brexit is not particularly surprising given that the tax measures that come forward in Budgets do not have economic impact assessments attached to them either. Whenever Ministers are asked about reviewing tax reliefs, we are told that they are regularly kept under review and that reviews consistently happen. Last year, however, I asked parliamentary questions on this matter, and the answers I received on the Government’s scrutiny of the tax reliefs that they had put in place were not very satisfactory. The Government were not particularly clear about whether the tax reliefs had achieved their aims. They were also not able to tell me how much money they had cost or gained for the Exchequer. If the Government are going to put forward tax reliefs—I agree that they should in certain circumstances, as they can be a good thing to encourage investment—they need to explain to the House whether they have worked. What is the point of having an absolutely massive tax code with a huge number of tax reliefs if we do not know whether they are incentivising people to do good things?

[Stephen Kerr]

Will the hon. Lady share with the House the economic and revenue impact of the SNP Scottish Government’s land and buildings transaction tax?

[Kirsty Blackman]

The hon. Gentleman has spoken to me before about the land and buildings transaction tax. I refer him to my earlier answer: 93% of people who have paid the tax in Scotland on properties over £40,000 paid either less than they would have done in England, or no tax at all.

[Stephen Kerr]

Will the hon. Lady give way?

[Kirsty Blackman]

I will not let the hon. Gentleman intervene again. He is becoming one of my more regular commentators. I appreciate his interest, but I am going to make some progress.

On scrutiny and the amendment of the law motion, the SNP and the Labour party have been clear that the Government have not gone far enough on tax avoidance, so we would like the opportunity to table amendments. I am sure the Minister does not imagine that he and his team have a monopoly on good ideas. An amendment of the law resolution would have allowed the Opposition to put forward what the Government might consider to be good ideas to reduce the amount of tax avoidance. That would be a better situation for everybody. There are 650 Members of the House, many of whom have a lot of expertise and do not sit on the Government Benches. An amendment of the law resolution would allow better amendments to come forward to make better law.

The Budget and the Bill can be criticised for what they do not include, as well as for what they do. First, there is still no acceptance of the economic impact of Brexit and there are no taxation measures to fix that. In the 12 months to June, real household disposable income shrank by 1.1%. That is the longest period of falling living standards in six years. The increase in the price of food means that families are £7.74 a week worse off, and that is before we leave the European Union, the single market and the customs union. Coupled with what the IFS says about there now being two decades of wage stagnation instead of one, and the threat of 80,000 jobs being lost in Scotland, things are looking pretty bleak. The Minister and various Members have already spoken about the public sector pay cap. That does no good for increasing incomes. I would like the Government to change their mind on the public sector pay cap and to fund changes to it.

I have already called for the Chancellor to bring forward an emergency Budget and I have no hesitation in doing so again. Given that the UK and the EU have now come up with a deal on the payment of billions of pounds by the UK to the EU, the Chancellor needs to tell us how that will be paid for. We have already had two Budgets this year, but I would have no aversion to seeing another one to take that payment into account and explain where the money will come from.

We cannot continue to have the Chancellor pulling rabbits out of hats on Budget day. I believe firmly that there must be more openness and transparency, and better scrutiny. I would welcome it if the Opposition parties could move meaningful amendments on the Floor of this House, if nothing else to show how much better we could do things. Every time that the shadow Minister took an intervention from Conservative Members, they asked how his party would pay for things. If he had the opportunity to move meaningful amendments, he would be able to set out tax measures that he and his party thought appropriate. That would avoid the accusation about the magic money tree. The Government have chosen their route so that they can avoid scrutiny, but they then criticise the Opposition for not carrying out proper scrutiny. That is not a good way to run things.

I welcome the UK Government’s change to VAT liabilities for the Scottish police and fire services. My colleagues and I have raised this matter inside and outside the House over 140 times. It is particularly convenient that the Chancellor should suddenly U-turn and fix this inconsistency for Scotland’s services at exactly the same time as he should need to do so for combined authorities, police and crime commissioners and the London fire commissioner. If he now agrees that these liabilities should not apply, surely they should not have applied in the first place. Our police and fire services would very much like the £140 million in VAT that they have paid so far to be returned. I eagerly await Scottish Tory Members, using all the power they apparently have, joining us to convince the Chancellor to pay back that £140 million. If they do not do so, they will have to explain why to police and fire services in Scotland.

[Stephen Kerr]

Will the hon. Lady give way?

[Kirsty Blackman]

I will not.

On transferable tax history, I am pleased that the UK Government have committed to changing the tax regime for late-life oil and gas assets. The Minister nods, because he has heard me go on about this on a number of occasions. I welcome the change. I ask him to work with stakeholder groups on a deal for the oil and gas sector. Given the changes to the oil price, there is still a feeling of pessimism around Aberdeen on some days. I would like the UK Government to commit to supporting the Oil and Gas Authority’s “Vision 2035” for the sector, which I think has cross-party support. This is incredibly important. It is critical to the future of the north-east of Scotland in particular, but also that of the United Kingdom as a whole, for the oil and gas sector to be supported and for our supply chain to be anchored in the UK so that it can continue to pay taxes even when North sea oil has run out. “Vision 2035” is key, and it is part of the sector deal that Oil & Gas UK and other stakeholder groups are seeking. I hope very much that the Minister will sit at the table with those groups and ensure that what they need for the future—what they need to ensure that they continue to pay tax—is realised in a sector deal.

As we have heard, the Bill makes changes to allow first-time buyers to get on to the housing ladder. I have already made clear my concerns about the changes to land and buildings taxation that are proposed, which echo concerns that have been raised by the Office for Budget Responsibility, as well as a number of experts. To improve access to the housing market, the UK Government should follow Scotland’s lead and commit themselves to more social housing.

I spent eight years as a local authority councillor. By far the biggest part of my casework was presented by people who came through the door and said that they were unable to obtain a secure tenancy in a social house in the knowledge that the landlord would not chuck them out in a year provided that they continued to pay rent. The fact that that problem still exists, in Scotland and throughout England, is due to Margaret Thatcher’s right to buy. Unlike us in Scotland, the UK Government have not made any reductions in the scheme, and council housing stock has been decimated as a result. We in Scotland are trying to right the damage that has been done. We are focusing on social housing and will continue to do so, and I urge the UK Government to do the same.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend is making a very good point about the right to buy. Apparently about 40% of the houses that were sold off as a result of the scheme are now in the private rented sector, and a greater cost is being incurred in the form of housing benefits, so the policy does not even make economic sense.

[Kirsty Blackman]

I agree with my hon. Friend. Having observed the real-life impact on people who came through my door, who were having to squash themselves into two-bedroom council houses with their parents, brothers, sisters and children, I am certain that we need to build up our council housing stock, and that is what we continue to do in Scotland.

The last substantive issue that I want to raise is the unfairness that faces the WASPI women. The UK Government continue to fail those women. They could have made changes in this Budget and the Bill, but they failed to do so. We will not rest until fairness is won for the WASPI women.

There are so many problems with the Bill. It does not fix the many unfairnesses that the UK have created. Wages continue not to rise, and people and families are feeling poorer as a result of continued austerity and economic mismanagement. This Government are not strong and stable, and they are not helping those who are “just about managing”.

--- Later in debate ---

[Luke Graham]

Well, education is another area that I could touch on. Reading scores and mathematics and science results are down in Scotland since 2006. England and Northern Ireland now outperform Scotland in every category.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Luke Graham]

I will not, because I am conscious of time.

Under the SNP, more money goes in but fewer services are delivered. With a record like that, it is disappointing for Conservative Members that SNP Members stand in this Chamber and criticise what this Budget has delivered for Scotland. There is £2 billion extra for Scotland.

[Kirsty Blackman]

No, there is not.

[Luke Graham]

Yes, there is, and there is a real-terms increase, as the hon. Lady knows. There has been a whisky duty freeze, and police and fire service VAT has been returned to Scotland. Those are good things. I hope that colleagues in all parties in Holyrood can use this funding productively and work constructively so that the two levels of Scottish government can work together and deliver for their constituents.

Exiting the EU: Costs

Kirsty Blackman Excerpts

Wednesday 29th November 2017 Commons Chamber

[Elizabeth Truss]

My right hon. Friend makes a very fair point. Whatever happens, we will not be paying anything like what we would have paid as an EU member. That represents a considerable saving to the British taxpayer.

[Kirsty Blackman (Aberdeen North) (SNP)]

I thank the hon. Member for Nottingham East (Mr Leslie) for bringing this matter to the House.

There would be no newspaper rumours about the sum if the Government actually told us what the sum was. Nobody voted for this disastrous, disorganised EU exit. People voted for £350 million a week for the NHS, not to spend £40 billion or £50 billion just to be worse off. Our public services must not pay the price for this Brexit mess. It surprised us all when the Prime Minister found a magic money tree earlier this year, so surely the Government cannot have been lucky enough to find two. Given that last week’s Budget did not make provision for this £40 billion or £50 billion, will the Chancellor now bring forward an emergency Budget to explain where he is finding the money?

[Elizabeth Truss]

When the hon. Lady stood up, I thought that she was going to thank the Government for the £2 billion additional spending power that we gave to the Scottish Government in the Budget, which they will no doubt be able to use to improve their public services. As I have said before—and, indeed, as has been pointed out by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds)—talking about the money now would cut across the negotiations and prevent us from getting the best possible deal. That is not in anyone’s interests.

Draft Risk Transformation Regulations 2017 Draft Risk Transformation (Tax) Regulations 2017

Kirsty Blackman Excerpts

Wednesday 29th November 2017 General Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

It is an absolute delight to be on a Delegated Legislation Committee. It has been far too long since I had the pleasure of coming to one of these rooms to discuss something incredibly technical. I have several questions for the Minister, following what the hon. Member for Amber Valley said about attracting this kind of work and these kinds of opportunities to the UK.

I am not exactly clear why this stuff does not take place in the UK already, or about the Government’s moves relating to the tax treatment and the enabling legislation that the Minister talked about. This measure was mooted in the Budget in 2015, and this is the follow-through. My concerns are about the assessment of its impact. The legislation has been presented to us, but I am not clear how much tax will come to the UK Treasury as a result of it and what the economic benefits will be. How many jobs will it create, if any?

I am also not clear about the issues that the insurance industry is set to face with Brexit, which the shadow Minister alluded to. It is incredibly concerned about dropping off the cliff edge because of the legislation that means that it can no longer communicate with customers who do not live in the UK if we do not have a deal that covers that with the EU. I am not clear whether this will do any good in countering those issues and concerns—particularly those relating to Brexit.

I am not clear about why this should be exempt from corporation tax. Like the hon. Member for Amber Valley, I have concerns about creating something new that is exempt from corporation tax. I would welcome the Minister’s views on how the Government will ensure that this statutory instrument is used only by the companies and organisations that should be using it.

The shadow Minister called for an assessment, to be published fairly quickly, of the impact of the regulations—an assessment not just of how many times the legislation is used, but of the tax-take that has been lost and the economic benefit that has arisen. Given the Government’s focus on job numbers, it is really important that that comes out more when we discuss new regulations and vehicles.

I think the Minister pretty much answered the question about the requirement to deduct income tax. I understood from what he said that the income tax will be paid by the people who receive it, whichever country they happen to be in. That is why the protected cell company does not need to deduct income tax.

My last question is about the consultation responses. The papers we have state that the 19 consultation responses were largely positive and in favour of the proposal. It would be useful if the Minister could tell us how many consultation responses were sought and/or received from organisations that are not set to benefit directly from the regulations. It would be useful to know how many people who do not have a beneficial interest in them responded to the consultation. If the respondents were all people who will benefit, of course they are going to write back and say, “It’s a wonderful thing.” It would be useful to have a bit more clarity about that. I am sorry I have given the Minister an absolute string of questions, but that is the technical nature of DL Committees.

Budget Resolutions

Kirsty Blackman Excerpts

Thursday 23rd November 2017 Commons Chamber

[Sajid Javid]

Yes, I am very happy to confirm that for my hon. Friend. The new funding that the Chancellor announced yesterday will be available immediately.

The most recent additions to the local government family are the combined authorities, led by the six directly elected Mayors. Under this Budget, they will be able to improve local transport with half a new £1.7 billion transforming cities fund. The remainder will be open to competition by other English cities. A second devolution deal has been agreed with the incredible Andy Street in the West Midlands; a whole new devolution deal has been struck north of the Tyne; and we are developing a local industrial strategy with Greater Manchester. We are investing £300 million to ensure that HS2 infrastructure can accommodate future northern powerhouse and midlands engine rail improvements.

This kind of devolution is how to deliver growth and opportunity right across the country. It is how to boost productivity and secure new jobs and increased security for hard-working people wherever they live. It underlines the fact that this is a Budget for the whole country: a Budget for the many, not the few. [Interruption.] That has woken up Labour Members, and perhaps my next point will as well. On Tuesday night, almost 24 hours before the Budget was delivered, the Leader of the Opposition emailed his supporters to call on them to oppose everything the Chancellor was going to say. I know that Marx once said:

“Whatever it is, I’m against it,”

but that was Groucho, not Karl. It is great that Labour Members have found a new source of inspiration, but their economic plans are no laughing matter.

On Sky News yesterday, the shadow Housing Minister said that people should look at what the Institute of Fiscal Studies said about the spending plans in his party’s manifesto, so I did. I took a look, and it said:

“What Labour actually want you to hear is that the spending increases they promise…would be funded by tax increases solely affecting the rich and companies. This would not happen… In the longer term, much of the cost is likely to be passed to workers through lower wages or consumers through higher prices.”

Those are not my words, but those of the independent IFS.

[Kirsty Blackman (Aberdeen North) (SNP)]

Is the Secretary of State aware that the IFS has just issued a press release saying that workers are now facing two lost decades of earnings growth?

[Sajid Javid]

I am aware—far more than the Labour party, despite its name—that what workers want is work. That is why we should celebrate the fact that we have more people employed today than at any time in our history, and we have the lowest unemployment rate in 40 years.

Labour Members talk a good game, but all they have are blank cheques they know will never be cashed and empty promises they know they will never be able to keep. Over and again, the shadow Chancellor refuses to say how much his spending plans would cost, how much he would have to borrow and how much debt he would pile on to the next generation. He says that he does not “need a number”, because that is “what iPads are for”. He even accused one reporter of wanting him to “pluck a figure” out of thin air. Well, no, we do not want him to pluck a finger out of thin air—[Interruption.] A figure, and a finger as well. He is good at putting up the finger—we know that. We want him to tell the British people how much his plans would cost. His failure to do so can mean one of only two things: either he has no idea what the cost would be, in which case he is not fit to be Chancellor, or he does know, but is refusing to share his dirty little secret because he is all too aware of how shameful it is.

--- Later in debate ---

[Kirsty Blackman (Aberdeen North) (SNP)]

It is an honour to speak on behalf of the Scottish National party on this second day of debate on the second 2017 Budget.

This Budget is no better than the last one. The UK Government are in chaos. Cabinet infighting means that they are hamstrung and unable to take even the most basic decisions. Brexit, and the likely economic fall-out, is set to have a dramatic impact on the household budgets of very many people. Unlike the Government, the Office for Budget Responsibility has taken that threat seriously and downgraded our GDP figures accordingly. That is the worst downgrade in the OBR’s projections since its creation seven years ago.

The outlook for GDP growth is worse on all counts than even the OBR’s projections in spring. GDP might seem like an ethereal concept to people, and unrelated to their daily lives, but here are the ramifications of this drastic downgrading. The Resolution Foundation has said that it equates to £1,000 a year in wages, which is £19 a week less to spend on essentials such as food and electricity. How will low-income families cope if their spending is slashed by an extra £19 a week? The TUC has pointed out that that is an £800 decrease in wages even from the prediction in March. The Fraser of Allander Institute reported that the GDP damage of a hard Brexit could cost Scotland 80,000 jobs. That is 80,000 people not paying tax to the Treasury; 80,000 folk having to struggle through the jobcentre system, and whose journey back to employment has been made even more painful and less dignified by the number of jobcentres closed by this UK Government.

The Scottish Government estimate that a hard Brexit could reduce GDP in Scotland by £11 billion a year by 2030. That is up to £3.7 billion a year less to spend on public services—£3.7 billion would pay the salary of 185,000 new police officers, 161,000 new teachers, or 168,000 new nurses, and that is only the impact in Scotland.

On the block grant, the Chancellor announced largesse for Scotland—£2 billion—but that is smoke and mirrors because £1.1 billion of that is financial transaction money. It cannot be used to pay for vital frontline public services, and it has to be paid back. If the Chancellor was going to make an announcement for Scotland, he should have made an actual announcement of real money that could be spent by the Scottish Government at their discretion on frontline services.

Between 2010-11 and 2019-20, Scotland’s budget has seen a cut of £2.6 billion in real terms. Next year, the Scottish Government will have more than £200 million less to spend on frontline public services. Over the next two years, the Scottish block grant for day-to-day services has been reduced by £531 million. Is this £2 billion more for the Scottish Government to spend? Is it tatties!

The Chancellor has announced that VAT for Scottish police and fire services will not apply as of April next year. He agreed that it was unfair to charge VAT on those services, but he has not agreed to give us the rebate that we are owed—£140 million is owed to Scotland.

[Stephen Kerr (Stirling) (Con)]

Is it not a fact that the SNP Government were given good notice and warning that the impact of their centralisation of the Scottish police and the Scottish fire and rescue services would create this situation? Was it not Scottish Conservative Members who lobbied Ministers to get the SNP Government out of the mess they created?

[Kirsty Blackman]

Not long ago, Murdo Fraser, a Scottish Conservative MSP, said in the Scottish Parliament that Scotland should not have the money paid back because it was the SNP’s fault for centralising the services. The Scottish Tories supported that centralisation—it was in their manifesto. The Chancellor has agreed that the VAT was unfair and that it was taking money from front-line public services, yet he is refusing to refund it. We have raised the issue and called for the change to be made 140 times. As far as I am aware, the Scottish Tories have raised it once in this House—once! It is ridiculous for them to suggest that pressure from them has twisted the Chancellor’s arm. In fact, it that were true and if the Chancellor was willing to listen only to representations from Conservative Members of Parliament, what does that say about the Chancellor’s honour?

On money for Scotland—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I am listening very carefully to what the hon. Lady is saying. She is choosing her words carefully and I am sure she is not impugning the honour of any Member of this House. She asked a rhetorical question and I am sure she will not push it any further than that.

[Kirsty Blackman]

Thank you, Madam Deputy Speaker. I will not push it any further than that.

The other thing that the SNP has been calling for—the Scottish Tories have so far been unwilling to do so, it seems—is £190 million convergence uplift that is owed to our farmers. That money should go to Scottish farmers and we will continue to push for that.

If the UK Government were not in such chaos, they would have recognised the folly of Brexit. Even if they do decide to proceed with this incredibly damaging policy, there is certainty they could give now that would reduce, slightly, the economic harm we will see. They could abandon their net migration cap of 100,000 people. That would help to keep our public services fully staffed. Earlier this year, the Nursing and Midwifery Council produced its annual report on the number of registered nurses and midwives. Compared with the period from 2012 to 2016, registrations in the last year were down 46% from Ireland, 86% from Italy, 87% from Romania and 95% from Spain. These are trained nurses and midwives registered to work in the UK in our NHS, to work in our frontline services and to work to provide nursing and midwifery care for people who are in incredibly vulnerable states, and the Government are closing the door on them. They are ensuring that fewer people come. They are ensuring that our public services will be worse staffed as a result.

On housing, we need workers from the EU. In London alone, a third of construction workers are from the EU. The Government cannot say they intend to build more housing, while at the same time shutting the door to many skilled construction workers.

The Chancellor has announced a wonderful new policy of no stamp duty for first-time buyers who are buying a house for less than £300,000 in England and Wales. In time-honoured tradition, one of the Chancellor’s biggest Budget commitments has fallen apart in less than 24 hours. The OBR confirms that it expects the policy to increase house prices. Implementing the policy is costing £3.2 billion, but the OBR expects 3,500 houses to change hands as a result. That means the Government are subsidising each house by £924,000 each. One tax expert I follow on Twitter said that virtually every tax expert thinks that this policy sucks.

[Stephen Kerr]

Would the hon. Lady care to share with the House the effects of the SNP Government’s land and buildings transaction tax, which has been an unmitigated disaster and caused untold turmoil in the Scottish property market? Perhaps she should be fuller in her disclosure to the House of the effect her Scottish Government have had on the Scottish property market.

[Kirsty Blackman]

You know what, Madam Deputy Speaker? I was just about to talk about the Scottish land and buildings transaction tax. I was just about to talk about the fact that it is way more progressive than the position put forward by the UK Government. Before I get on to that, however, I want to make it clear that the Scottish Government are investing £3 billion in affordable housing. Fifty thousand affordable homes will be built over the course of the Scottish Parliament, 35,000 of which will be for social rent—something sadly missing from the UK Government’s proposals. We are incredibly supportive of social housing, council housing and housing association housing. It is very important that there are more properties for social rent.

On the land and buildings transaction tax, those buying a house for less than £145,000 in Scotland pay no stamp duty. Buying a house for £180,000 attracts a stamp duty charge of only £600. It is possible to buy a fairly reasonable three-bedroom semi-detached house in many places in Scotland for less than £180,000. First-time buyers will pay only £600 in stamp duty and that has been in place for the past two years. Actually, £180,000 is much more realistic for a first-time buyer than £300,000. How many first-time buyers, without inherited wealth, have got £30,000 in the bank to put down for a deposit? The effect of the LBTT in Scotland was that over the first two years 93% of those buying a house in Scotland worth more than £40,000 paid either no stamp duty at all or less than they would have in England. The hon. Member for Stirling (Stephen Kerr) said that that was an unmitigated disaster. Clearly, he has not read the figures. Some 93%—a significant portion—of those buying a house over £40,000 paid less than they would down here.

The action our Government have taken was thought through, unlike the piecemeal approach the UK Government take. Successive Chancellors have insisted on the right to pull rabbits out of hats at Budgets. This has led to the drastic unravelling that occurs after almost every Budget. If the Chancellor was collegiate and consulted on measures, and if he approached issues such as stamp duty, small business taxation or income tax with the intention to review the whole system, we would see much better policy decisions being made. We need more coherence and less drama from Chancellors. They should not be trying to pull rabbits out of hats. They should be trying to create a system that works, rather than a system that will give them a big headline the day after Budget day.

Mr Deputy Speaker, if you were to ask someone under 30 whether they expect to have a pension, they will likely tell you that they do not. If you ask them whether they will be able to afford to buy a house, they will likely laugh at you. But, most importantly, if you ask them about their security, how precarious their current housing situation is and how precarious their current work situation is, they will tell you how difficult it is to save for the future. They will tell you how difficult it is to build a stable life when their landlords move them on every year and when they have to share with other people. They will tell you how difficult it is to save for the future when they are working on zero-hours contracts. The Chancellor’s pretendy national living wage is not enough to live on—it does not even apply to under-26s—and what they need is not a cut in stamp duty or to be able to save £20,000 in an ISA tax free, but for their income to be consistently and substantially higher than their expenditure. They need an increase in the minimum wage. They need a decrease in rents and a decrease in the cost of living. In the past year, the price of vegetables has gone up 2%, the price of fish has gone up 10%, the price of electricity has gone up 11%, the price of butter has gone up 12% and the price of kids’ clothes has gone up 3%. When we have wage stagnation, how do we expect people to be able to afford the most basic of essentials?

Millennials, people under 30, need a decrease in rents. The typical millennial has actually earned £8,000 less during their twenties than those in the preceding generation. An economic time bomb is ticking. Household debts continue to rise. Interest rates are going up—a major problem, given the increase in household debt. Increasing the personal allowance is welcome news from the Chancellor, but it is not enough. He is increasing it by £350. That is £350 that people will not pay 20% tax on. That is pennies in the grand scheme of things. That will not make the difference we would see with a real living wage. I have already mentioned the issues raised by the IFS, which is predicting two decades of lost wage growth.

The UK Government continue to fail. The Budget did not help. This Government are in chaos and the Chancellor has taken no real action to undo the years of austerity and wage stagnation that punishes our most vulnerable. The Government should tear this Budget up and start again: with spending commitments that increase wages and help our most vulnerable; with fairness for the WASPI women; with a U-turn on the benefits freeze; and with the devolution of powers on tax avoidance to Scotland, so we can tackle it properly. Mr Chancellor, I have a message for you: you are harming the whole of the UK, and the SNP will fight you every step of the way.

--- Later in debate ---

[Stephen Kerr (Stirling) (Con)]

I am delighted to have this opportunity to speak in the Budget debate. I am quietly satisfied to have been found guilty by no less a personage than the Chancellor of bending his ear. I have no hesitation in saying that my Scottish Conservative colleagues and I have indeed been bending his ear, and we will continue to bend the ears of any and all colleagues in the best interests of Scotland and the people of Scotland. Further, I have no hesitation in saying that we on these Benches have achieved more for Scotland in the five months since we entered this House than Scottish National party Members have achieved in the past two and a half years, if not longer.

I wanted to hear a responsible and measured Budget that will continue to tackle the deficit and the debt while making properly considered investment decisions that will create the right conditions to produce prosperity in our country. The cost of servicing the national debt is now an extraordinary burden on the public finances, and it is surely immoral to pile up such a debt and leave it to our children and grandchildren to pay it down later. I hope that all seven—it is soon to be eight—of our grandchildren will be glad of this Conservative Government’s fiscal responsibility and the part that their grandfather played in sustaining it. Without fiscal responsibility, we cannot afford defence, health, education or any other of our immensely valuable public services on which the Government spend taxpayers’ money.

I congratulate the Chancellor on his forward-looking positivity. He described a future full of change and challenges, yes, but also opportunity. His Budget speech presented a picture of a Government who are getting on with the business of governing and bringing about the change that our country needs as we embrace the future, including the fourth industrial revolution, with all the opportunities coming in its wake, and of course Brexit. I welcome the much needed investment in R and D and the necessary investment to prepare for our departure from the European Union and to make plans for all possible outcomes, including the possibility that few of us would prefer: no deal.

The Budget clearly shows the value of Scottish Conservative Members to this House. Scotland was at the heart of the Budget, and Scotland is at the heart of the Union. We have a Budget before us that is good for Scotland, and we engaged positively with the Budget process to secure our city deals and tax changes, to bring about a resurgence of activity in the oil and gas sector in the North Sea and to allow Police Scotland and the Scottish fire and rescue service to receive VAT refunds. That all goes to show what can be achieved when Scotland’s place at the heart of the Union is embraced rather than scorned.

I am pleased by and welcome the universal credit reforms, and I was grateful for the news on fuel duty and spirits duty. As an aside, I was also grateful to hear my right hon. Friend the Prime Minister give my hon. Friend the Member for Angus (Kirstene Hair) a clear indication yesterday that the next phase of the broadband roll-out of local full-fibre networks and 5G in Scotland will be delivered in partnership with local authorities instead of the Scottish Government, who have gone about the first roll-out phase extremely slowly.

As we begin the implementation of the Stirling region deal, 2018 will be a seminal year for Stirling. We have a transformative vision for Stirling, including the creation of a national aquaculture innovation centre to build on that growth industry, and by enhancing the UK’s position as the world capital of fashion by creating a UK tartan centre to leverage this great iconic product across the world. We will see improvements in rural and urban infrastructure to enhance economic conditions and economic prospects right across Stirling.

[Kirsty Blackman]

How does the hon. Gentleman feel about his neighbouring city of Dundee no longer being able to be a European city of culture because this Government are dragging us out of the European Union?

[Stephen Kerr]

The Government are not dragging us out; the people of this country voted in the referendum on the UK’s membership of the EU.

There are many questions that could be asked of the SNP Government. For example, will the Scottish Government lift their broadband tax? In England, new broadband infrastructure will attract tax relief, so we are waiting for the Scottish Government to act. Will the SNP Government match the Chancellor’s commitment to remove stamp duty for first-time buyers by removing said buyers from having to pay the discredited land and buildings transaction tax? We will wait and see. Will the SNP Government continue to make Scotland the highest taxed part of the United Kingdom? Will they press on with their plans to increase personal taxes for everyone in Scotland earning over £24,000 a year, which is the average income in Scotland? It is a disgrace. It is hardly progressive politics. The SNP want to foment grievance, and the people of Scotland are seeing through that. We need a Conservative Government in Holyrood with Ruth Davidson as First Minister. That is the only way that we will be able to realise the full benefits of Scotland’s place at the heart of the United Kingdom. I am proud to be present in the Chamber for my first Budget debate as Stirling’s Member of Parliament, and I welcome this Budget.

Duties of Customs

Kirsty Blackman Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I am pleased that the Government have finally brought forward something that is at least a bit more solid than things were previously, albeit not yet very solid.

The customs White Paper says that we should refer to the future partnership agreement and to the Northern Ireland position paper, and the Northern Ireland position paper says that we should refer to the customs White Paper—this is a complete guddle! Having read all these things, not only am I still not clear about how customs will look after the UK leaves the EU, but I am not clear about how the UK Government want customs to look. The only thing that I am even vaguely clear about is that they want the process to be as close to frictionless as possible, yet they have not made any clear commitments about exactly how they expect that to work. Let us look at some of the things they have said in their various papers. With regard to Northern Ireland, for example, they want to agree

“at an early stage a time-limited interim period, linked to the speed at which implementation of the new arrangements could take place, that allows for a smooth and orderly transition.”

I might be wrong, but I think that now is an early stage. In fact, before now would have been a good time at which to make decisions and commitments, and to be clear to business about at least what the direction of travel is, but we are not there yet. We are very close to Brexit day. Brexit day is coming in March 2019—who knows at what time?—and the Government have not been clear with businesses about even their aspirations for how customs will look.

It is undoubtedly the case that we benefit from being members of the EU single market and members of the customs union. Even those who are most vociferously in favour of Brexit agree that we benefit from those things. The lower estimate of the effect on GDP due to leaving the customs union and the single market is that we will lose 3.8%. The upper estimate of the effect of the trade deals that we will strike with Japan, the USA, the Association of Southeast Asian Nations, Canada, Australia, New Zealand and India all added together is a gain of 2.37 percentage points. That is significantly less than the 3.8% that we are going to lose, so even on the best estimates, we are going to be down. The EU is pretty close to striking a trade deal with some of those countries anyway, so the benefits to us are notional rather than actual.

The single market and the customs union continue to benefit us. We are told by the independent and respected Fraser of Allander Institute that a hard Brexit could cost Scotland 5% in GDP growth. A really interesting paper by the National Institute of Economic and Social Research told us last year that if we have these free trade arrangements instead of being a member of the single market and customs union, Scotland will lose £5 billion of exports in services alone. That is very significant. Analysis by the Scottish Government states that Scottish GDP could be around £11 billion a year lower by 2030 than would be the case if Brexit did not occur.

For those reasons and many others, we in the SNP have been clear from the beginning that we are against Brexit. We are against driving off this cliff, and we are against the incredibly hard landing that will happen when the Brexit bus hits the bottom. Despite our opposition to all these things, we are trying in this House to mitigate the impacts of Brexit. If the Government are determined to drive us off this cliff, we will try to make sure that there are fewer spiky things at the bottom for us to be impaled on.

I do not know how many Members have read the Government’s White Paper on customs, but it refers to the Government’s two proposed scenarios for the working of the future customs relationship. It also talks about contingency options for if the Government do not achieve their aspirational, bespoke deal—nobody has ever managed to get such a deal, and the Government do not really know what it is—and I think that people at home will be really interested to hear what it says. In a contingency situation, there would not be a £15 VAT-free threshold on parcels posted to people by family members, businesses and organisations in the EU. The Ways and Means motions that we are supposed to be agreeing today would allow the Government to charge VAT on gifts sent to people from the EU, which is ridiculous. If somebody gets a parcel worth less than £15 from a person in America, no VAT is payable on it, but the Government propose that such an exemption would not apply to things that came from the EU in a contingency situation. A lot of people would be pretty unhappy to discover that they will have to pay a customs charge on presents or other items that have come from the EU. Such things have not been spelled out to people or fully discussed.

I have referred to the various papers—I think we are up to four—that the Government have published on this matter. They have been pretty comprehensively savaged not just by experts, but by businesses, which are the real experts in this area. The Minister talked about roll-on/roll-off ports and the speed at which things have to come through ports. The Government have tried and failed to solve the problems with Operation Stack at Dover. Only last week, the Under-Secretary of State for Transport, the hon. Member for Hereford and South Herefordshire (Jesse Norman), put out a statement to say, “Our plans for sorting out Operation Stack are, basically, dead in the water, and we’re going to have to start again. But don’t worry: we’ll definitely have something done by March 2019 when the UK leaves the customs union and the single market.”

[Colin Clark (Gordon) (Con)]

The hon. Lady will agree that the oil and gas industry, which is important to both our constituencies, largely trades internationally outside the EU. It does not fear international trade. Is it wrong?

[Kirsty Blackman]

I am not saying that anybody should fear international trade. International trade is a very good thing, particularly for productivity, for example, which the oil and gas industry has been quite good at bringing up. The more international trade a country has, the better its productivity growth, but Brexit is not going to result in more international trade—[Interruption.] Brexit is going to result in the UK having more say over the terms of some trade deals with third countries. It will not result in more international trade, because the EU is international—it is made up of a number of other countries—and there is going to be a reduction in frictionless trade to the EU as a result of the changes. [Interruption.]

[Peter Grant (Glenrothes) (SNP)]

My hon. Friend will have noticed that Conservative Members are expressing a fair degree of anger. Clearly some of them do not believe her when she says that Brexit will not lead to an increase in international trade. The Government have carried out assessments, so is it not the case that if they wanted to demonstrate that Brexit would lead to an increase in international trade, they could quite easily publish those assessments and we could find out for ourselves?

[Kirsty Blackman]

I absolutely agree.

Monique Ebell from the National Institute of Economic and Social Research has written a report that compares participation in very comprehensive free trade agreements with membership of an organisation such as the single market, which is pretty much unparalleled in its encouragement of cross-border trade. Being part of a very close free trade arrangement does not give the same access to trade in services or goods as membership of the single market. Even if we had a comprehensive free trade agreement with every country in the world, we would still lose out as a result of Brexit.

[Dr Murrison]

I am listening with a great deal of interest to what the hon. Lady has to say. The amendments she tabled express commendable encouragement to the European Union, which does her great credit. However, in the interests of being balanced and fair, is she also concerned for much of Africa and South America? At the moment, they suffer the whip end of the customs union, as it makes the export of raw food products to Europe virtually impossible for many of them. Would she like to comment on that, since I am sure that the SNP is very concerned to promote the wellbeing of people in those countries?

[Kirsty Blackman]

The hon. Gentleman raises an interesting case. I have not looked into all the impacts, but the WTO gives developing countries tariff protection, for example. It is likely that some of these things balance out, but I have not looked into the exact details. I am aware that some Brexit supporters are suddenly concerned about how developing countries will cope with international trade, although they were not particularly worried about that before.

I want to move on to talk specifically about some of the impacts of the proposed changes. I have mentioned the problems that people sending and receiving parcels might face. The Government’s “Future customs” paper states:

“Trade is a key driver of growth and prosperity. It stimulates greater business efficiency and higher productivity, sharing knowledge and innovation across the globe.”

It goes on to say that trade

“provides a foundation for stronger and more prosperous communities. It ensures more people can access a wider choice of goods at lower cost”.

Those are all arguments for staying in the customs union, not leaving it.

All the Government’s papers refer to consulting businesses. In all our conversations, the Government have said that they have spoken to businesses. The problem is that although businesses are lobbying the Government as loudly as they possibly can about the impacts of Brexit, the Government are not listening. The Government have an aspirational picture of how wonderful Brexit is going to be and no matter how much evidence to the contrary they are provided with, they continue to push on. Even Conservative Members who supported remain are suggesting, in the main, that we will have benefits from Brexit. In my eyes, that is not right.

The customs declaration service was mentioned by the hon. Member for Yeovil (Mr Fysh). The Minister is generally very good at explaining such things. He has said that he hopes to have pilots soon, with the service up and running by January 2019, but three months is not enough to test a customs declaration service fully. It is not enough to allow businesses to iron out all the problems that might arise or to get used to the red tape.

I want to go back to the issues raised by some of the Government’s aspirations and ideas that are, honestly, unworkable. One of the nine principles they have set out for what they expect to do to deal with trade between Northern Ireland and Ireland is:

“Consider how best to protect the integrity of both the EU Customs Union, Single Market and trade policy, and the new independent UK customs regime, internal market and trade policy, in the context of finding flexible and imaginative solutions, while recognising that the solution will need to go beyond any previous precedents.”

That is an aspiration without a solution. They are not putting forward a potential solution. They cannot even think of anything to square this circle, fix this problem or dig themselves out of the hole into which they have fallen.

This is an unmitigated disaster. The changes that the Government propose, particularly the customs duties that will be put on goods coming from the EU, or leaving the UK to go to the EU, are a disaster for businesses and for people at home. Some of those goods cross the border several times. For organisations such as car manufacturers or aerospace companies, sometimes the widgets—for want of a better word—cross from the UK to the EU and back many times before there is a finished product. If there has to be a customs declaration each time, and if there is an increase of even a few minutes in the time taken on each occasion, real problems will be caused to a huge number of businesses.

Businesses are speaking to the Government and raising concerns, but the Government are not listening. They now need to give businesses a clear direction. They need to make it absolutely clear today that their intention is that we will not have customs duties between the UK and the EU, so they should support the amendments.

--- Later in debate ---

[Ruth Cadbury]

Will the hon. Gentleman give way?

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Ross Thomson]

No. I want to make more progress.

Furthermore, striking new trade deals will unlock the potential of many more Scottish businesses, helping them to make their mark around the world and boosting our economy at home, too. If we are to seize these opportunities and make the greatest possible success of them, Britain needs to be ready on day one of our exit from the EU for new trade relationships. On this point, the clock is now ticking.

[Ross Thomson]

No.

That is why this customs Bill is so important. Irrespective of any agreements reached between the UK and the EU as part of the negotiation and exit process, the UK will need primary legislation to create its own stand-alone customs regime, and to amend the VAT and excise regimes so that they can function effectively after the UK has left the EU.

The Bill will create a framework that lasts for a new UK customs regime. It will lay before us the necessary foundations to allow new arrangements on customs to be put in place depending on whatever the outcomes of the Brexit negotiations are, such as the implementation of a negotiated settlement with the EU, or leaving the EU without an agreement on customs.

I am sure that all Members of this House want our withdrawal from the EU to provide as much certainty and continuity as is possible for our businesses, employees and consumers. Currently, as the majority of rules governing customs in the UK are contained in directly applicable EU law, such as the Union customs code, it is important at this stage that new domestic legislation is brought forward and put in place for when we leave the EU in March 2019.

In the longer term, depending on the outcome of the negotiations with the EU, the Government will want to consult on possible changes to this law to help UK businesses, but now is the time to help businesses in all of our constituencies by providing the continuity of the existing rules, wherever possible.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Ross Thomson]

No.

Furthermore, the Government will ensure, as they do at present, that their future customs regime is consistent with internationally agreed rules and arrangements. What does this mean in practice? As we all know, trade is not just about the trade deals that we strike or where the growing markets are in the world; it is also about the tariffs, regulatory barriers and terms of trade that we decide to set as part of a new UK policy. The Bill therefore enables the UK to establish a new UK tariff, charge customs duty on goods, set and vary rates of customs duty, and suspend or relieve duty at import in certain circumstances. The UK will be able to set preferential duties and additional duties—for example, to implement a preferential tariff applicable to developing countries.

--- Later in debate ---

[Kirsty Blackman]

I am loth to interrupt the hon. Gentleman’s excellent speech, but I am slightly concerned that he keeps talking about the views of experts. We know that Government Members are not keen on the view of experts. Does he think they might listen this time?

[Ian Murray]

I can answer the hon. Lady’s intervention in one word: no. They clearly are not going to listen to the experts on these issues. In fact, they have sown the seed of doubt that none of us should listen to experts, and the country will be much diminished as a result.

I want to touch on two more sectors. The chemicals sector is another key driver of the UK economy. We have a great chemicals sector—one of the key chemicals sectors across the EU—and it has said that

“the best way to guarantee no adverse disruption to business and trade…and to guarantee only one adjustment before reaching a final agreement with the EU, is to seek to retain our existing membership of the Single Market and Customs Union”.

So we have the automotive industry body—the one we all trust—and the pharmaceuticals sector, and we now have the chemicals sector, yet the Minister has come to the Dispatch Box and said, “Don’t worry. We’ll put more people in place to help all this along”. I suggest that the customs union might be an answer to this particular question.

I will finish with the shipping sector—the very sector that takes the goods from these islands to the continent. The UK shipping sector has warned that the UK is facing an “absolute catastrophe” if it does not sort out a “frictionless and seamless” border at Dover and other ports. The Government keep talking about a frictionless and seamless border but cannot tell us what it means. I suggest that the best way to maintain or enhance the border—to make it frictionless and seamless and operate as a single market—is to maintain our status in the customs union.

If we were starting from scratch—with a blank sheet of paper—and seeking to determine the best way for an island nation to trade with other nations, it would be to have a customs union with those nations. Under such an agreement, we would not need to use the word “frictionless”, because there would be absolutely no friction at all, and it would be completely seamless. The best way to highlight how seamlessly and how frictionlessly a single market and a customs union can operate is to look at the markets between Scotland, Wales and England. They have a completely seamless border: they are completely free market, completely single market, completely customs-free.

I am delighted to see that the Secretary of State for Environment, Food and Rural Affairs has joined us. At the time of the referendum, he claimed, along with me—and I have said this to his colleague the hon. Member for Aberdeen South—that one of the key arguments against an independent Scotland was the lack of a border at Berwick. Now he is arguing the opposite in the context of Northern Ireland and the island of Ireland. That is completely contradictory, and he cannot tell us how it will be resolved. How could it not have been resolved in the Scottish context?

As a member of the customs union, the UK is party to preferential trade agreements. We want to walk away from those agreements, and make our own. It is likely that, outside the customs union, the UK would need to renegotiate many, if not all, of those agreements with those who would become third parties. It is not as easy as just rolling over those agreements, which is what the Government seem to want to do.

I am conscious of time, Mr Deputy Speaker, so let me move on a little. I want to talk about Northern Ireland and the Republic. [Interruption.] I know that the Government do not like to hear these arguments, because they have no answers to them, but I think it important for them to be highlighted in the House. If the Government can provide only limited time for the European Union (Withdrawal) Bill, they may as well rehearse some of the arguments today. We have until 10 pm, after all, and if the hon. Member for Gainsborough (Sir Edward Leigh) wants to intervene and waste time, he is more than welcome to do so.

We have already talked about the massive queues at our ports, airports and rail terminals. Now, as I have said, I want to say a little about Northern Ireland and the Republic. The Foreign Affairs Committee visited Dublin and the border on Thursday and Friday last week to consider the consequences of our leaving the European Union. Let me say again to the Minister that if he wants to name any organisation in either Northern Ireland or the Republic which thinks that Brexit will be good for the isles of Ireland, let him please do so, because I have not heard of any, and am unlikely to hear of any. In fact, the only two people I heard supporting our withdrawal from the customs union and the single market in the context of the isles of Ireland were the two Brexiteers on the Foreign Affairs Committee. Some of the words used were “catastrophic”, “irreconcilable” and “unsolvable”.

I simply cannot understand how the Minister can table motions such as this to pave the way for major Bills without having the basic answers to these questions, while using meaningless phrases such as “frictionless” and “seamless”. I am very concerned about the Belfast agreement, or Good Friday agreement, which is underpinned by the European Union, underpinned by a seamless border, and underpinned by a single market in the island of Ireland. It is almost impossible for the Government to reconcile wanting no borders, and frictionless and seamless trade, with the route that they are taking with a non-deal Brexit.

I have another suggestion, which the Minister may recognise. The way to have a seamless and frictionless border between Northern Ireland and the Republic is the customs union. That would mean that trade in goods could go across the border, unfettered, seamless, and I may even push it to frictionless, which is what the Government have been saying all along.

Our Committee travelled from Cavan—Cavan County Council hosted us on Thursday evening—to drive on to the motorway back to Dublin. It is a distance of about four and a half miles, and we were in a minibus. We crossed the border seven times just to travel a short distance. That is irreconcilable. Many people in Northern Ireland and the Republic who spoke to the Committee—and I am sure that the Minister will be pleased to read its conclusions when they are published—said that it was intellectually incoherent to argue that it was possible to have no border while requiring a border. It is not possible to have frictionless and seamless trade while having to check goods, and it is not possible to have a border at sea level while trying to ensure that the Good Friday agreement is maintained.

Former president Mary McAleese spoke to us in great depth about the passion for the Good Friday agreement. Let me say to the Minister and the Government, in all seriousness, that they ruin that agreement at their peril. It is something of which everyone should be incredibly proud. The way in which the Government are going about the Brexit negotiations, the way in which they are treating the border between Northern Ireland and the Republic, the way in which they are fooling the public that it is possible to have everything and not have everything, is indeed wrong. Michel Barnier, the chief negotiator whom we all know so well now, has said to the Government, particularly in relation to the issue of Ireland, that they cannot have their cake and eat it. Something will have to give, and that is why I tabled the amendments. The Minister must think very seriously about that physical border.

Let me end by saying a little about the Labour party’s position. I think that we are right on this issue, and our position is written into the documents that we have here. We want to stay in the customs union, if possible. I agree with my hon. Friend the Member for Bootle, who tabled the amendments about parliamentary scrutiny. We should always press such amendments, because the Government, who talk of taking back control, are not giving control to Parliament.

All the issues relating to Ireland, to trade, to tariffs and what will happen in the future, to jobs, to borders and to tailbacks at customs can be resolved if the United Kingdom at least leaves on the table—regardless of whether we agree—the possibility of remaining members of the single market and the customs union. That would take away all these concerns. When we reach the end of the process, whether or not there is a meaningful vote in this place, the Minister and his Government will know when the jobs start leaving this country, when borders start being erected, when customs becomes more difficult, when trade becomes much more difficult, when public services become much more difficult to fund, when debt rises and deficit rises, that his Government have let the people down by not telling them the truth about the consequences of leaving the single market and the customs union.

That is why I tabled my amendments, and I hope that many of my right hon. and hon. Friends will join me in the Lobbies.

Tax Avoidance and Evasion

Kirsty Blackman Excerpts

Tuesday 14th November 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

Thank you, Mr Speaker. It is not common for me to exceed 10 minutes, so I will try to stick to that. Let me start by thanking you for granting this debate under Standing Order No. 24, as I very much appreciate that, and the right hon. Member for Barking (Dame Margaret Hodge) for securing it. I also wish to thank all the journalists who have done all the work on the Paradise papers. They have done a huge amount of work in investigating this, exposing the issues and bringing them to the attention of the international media as well as this House. They deserve to be thanked for that.

I normally have quite a lot of time for the Minister—I find him to be often wrong but generally reasonable—but the speech he made today was badly pitched. The one made by the right hon. Member for Sutton Coldfield (Mr Mitchell) was much better, in that he talked not only about resting on the laurels of all the great things the Government have done, but about what the Government were going to do and could to in the future. [Interruption.] And should do, absolutely. I hope the Minister listens to the voices from across the House and what they are calling for. As has been said, this is not a party political issue. I do not have a huge amount of respect for the actions of either the Labour Government or the Conservative Government on tax avoidance and evasion. I do not think either party has done a particularly good job on that. A huge amount more can be done, as Members from across the House would agree.

Transparency International looked into companies dodging tax and found 766 UK companies that were involved in corruption and money laundering, to the tune of £80 billion. A quarter of those companies that were investigated by Transparency International are still active—the UK Government could take action on those organisations. The UK Government are making a number of incredibly ill-advised and not great decisions at the moment, on things such as closing HMRC offices and their continued pursuance of austerity. The only reason the Government are tackling Scottish limited partnerships is the work done by a number of journalists, as well as colleagues from my side of the House. I appreciate that the Government have taken action on that, but it took a very long time for them to be convinced by MPs such as Roger Mullin to make any move on it.

As I said, not only this UK Government but previous ones have successively failed to crack down on this. The UK tax code is out of hand and requires simplification. The changes the UK Government are making, in conjunction with the Office of Tax Simplification, have not gone far enough. It still requires a van to carry the tax code; people can no longer carry it, because it is so significant. The potential for loopholes and for people to dodge things as a result of that incredibly complicated tax code is ridiculous. The hon. Member for Bootle (Peter Dowd), the shadow Minister, talked about the UK Government previously calling for the EU’s sanctions around tax dodging to be watered down. That was grim action for them to take, particularly in the wake of the Paradise papers, when this call came. The UK Government should be leading by example. They should not just be saying, “Oh, we’ve got the tax gap down to 6%.” They should be saying, “The tax gap is still 6%. We have a huge amount of work to do to crack down on that final 6%.” The UK has the opportunity to lead the world in this regard and it should do so.

[Luke Graham (Ochil and South Perthshire) (Con)]

Does the hon. Lady think the introduction of further tax bands and thus further complication by the SNP Administration in Edinburgh is an additional complication or a simplification of the UK tax code?

[Kirsty Blackman]

The hon. Gentleman is confusing income tax with a number of other types of tax. What has happened in Scotland in relation to the paper that has been produced, which sets out a number of options and their effects, and then consults on them, is way more transparent than any action that any UK Government take in advance of any Budget, where they pull rabbits out of hats. The Scottish Government have entered into dialogue with the other parties, which have the opportunity to take that chance to criticise or to praise. They should do that, as he should. The Scottish Government and the SNP have called for this area to be devolved to Scotland because we think we would do a better job.

As everyone knows, tax evasion is illegal, but the Paradise papers highlighted that tax avoidance is immoral.

[David Linden (Glasgow East) (SNP)]

On the Paradise papers, does my hon. Friend share my concern at seeing the Duchy of Lancaster’s investment in BrightHouse, a company that exploits constituents in vulnerable areas such as mine with extortionate annual percentage rates of 70%? Does she find that immoral as well?

[Kirsty Blackman]

I agree with my hon. Friend on that, as I, too, have constituents who are exploited by organisations such as BrightHouse. It is not a company that anyone reputable should be investing in.

It is not that difficult for people to pay the tax that they owe; it is not that difficult to say to a financial adviser—this is for those who have bags of cash—“I would like my money to grow, but I wouldn’t like it to grow by avoiding the tax that I owe.” It would be easy for people to say that. It is clear that some people lack a moral compass. Where they are taking decisions to engage in aggressive tax avoidance, the Government must legislate so that they can no longer do so—to provide that moral compass for people and make sure that the tax is paid when it is owed. We must have the best possible tax rules in place. We must simplify the tax code. We must crack down on evasion, and we must legislate to reduce avoidance. The Government are in an untenable position: they cannot continue to implement austerity while leaving a tax gap.

[Angus Brendan MacNeil]

We note that many of the tax avoiders do not avoid using our roads, our schools and our hospitals, and they certainly do not avoid using the police to look after their lumps of money, here, there and everywhere.

[Kirsty Blackman]

I absolutely agree with my hon. Friend from the Western Isles. People, however much they are earning and however much tax they are paying, are using public services. Our party aspires to have brilliant public services. We aspire to have people working in our public services who are paid a reasonable amount and do not have to face a pay cap. The only way we can provide the public services and benefits system we want is by having a system where people pay the tax they owe. We continue to call for this to be devolved to Scotland because we think we would take better decisions. In the absence of devolution, we would like the UK Government to take actual action, rather than just saying, “Look how great we are.”

[Several hon. Members rose—]