Budget Resolutions and Economic Situation
Lindsay Hoyle Excerpts(10 years, 1 month ago)
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Edward Miliband (Doncaster North) (Lab)
The Chancellor spoke for nearly an hour, but he did not mention one central fact—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that the deputy Chief Whip knows better. We have not even got started. I hope that he will calm down.
Edward Miliband
The Chancellor spoke for nearly an hour, but he did not mention one central fact: the working people of Britain are worse off under the Tories. Living standards are down, month after month, year after year. In 2011, living standards, down; 2012, living standards, down; 2013, living standards, down. Since the election, working people’s living standards are £1,600 a year down. You are worse off under the Tories—[Interruption.]
Mr Deputy Speaker
Order. To be quite honest, I thought that the House was doing really well today. Courtesy was quite rightly shown to the Chancellor of the Exchequer. I expect the same courtesy to be shown to the Leader of the Opposition. I want to hear it, and your constituents want to hear it.
Edward Miliband
They do not want to talk about the falling living standards of people across this country, Mr Deputy Speaker.
The 2010 Tory manifesto promised an economy where people’s
“standard of living… rises steadily and sustainably”
but they have delivered exactly the opposite: standards of living falling sharply and steeply. Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people’s lives. Living standards have been falling for 44 out of 45 months under this Prime Minister, unmatched since records began. No amount of smoke and mirrors today can hide it. We already know the answer to the question that millions of people will be asking in 2015: “Are we better off now than we were five years ago?” The answer is no. They are worse off, much worse off—worse off under the Tories.
The Chancellor trumpeted the tax allowance today, but what he did not tell us is that it is the same old Tory trick. He did not tell us the rest of the story. He did not mention the 24 tax rises introduced since he became Chancellor. He forgot to mention that he put up VAT, taxed away child benefit, raised insurance tax and gave us the granny tax. It is a classic Tory con: give with one hand and take away far more with the other—same old Tories.
The Chancellor painted a picture of the country today that millions of people will simply not recognise. This is Cameron’s Britain 2014, with 350,000 people going to food banks, 400,000 disabled people paying the bedroom tax, 1 million more people paying 40p tax and 4.6 million families facing cuts to tax credits. But there is one group that is better off—much better off. We all know who they are: the Chancellor’s chums, the Prime Minister’s friends—[Interruption.] The Prime Minister rolls his eyes, because he does not want to talk about the millionaires’ tax cut. There was no mention of it in the Budget speech. They are the beneficiaries of this year’s millionaires’ tax cut.
If you are a City banker earning £5 million and feeling the squeeze, do not worry, because they feel your pain. This year that City banker was given a tax cut, and not just any tax cut. It is a tax cut worth £664 a day, £20,000 a month and more than £200,000 a year. So the Prime Minister chooses to afford a tax cut worth more than £200,000 a year for that banker, but he cannot afford a pay rise of £250 a year for a nurse. And these are the people who have the nerve to tell us that we are all in this together. It is Tory values and Tory choices—same old Tories. Of course, the leader of the Liberal Democrats is with them every step of the way. Day after day he claims that he does not support Tory policy, but day after day he votes for Tory policy.
Now, to listen to the Chancellor today, for a recovery that arrived three years later than he promised, he expects the country to be grateful. Back in 2010 he told us that by the end of 2014 the economy would have grown by nearly 12%. Today the figures show that it has been barely half that, and he wants the country to be grateful. Back in 2010 he said that the Government would clear the deficit in this Parliament, by 2014-15. Today he wants the country to be grateful because he says that he can do it by 2018-19. Three years ago he told us, in his 2011 Budget speech, that he would deliver an economy
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
But what has actually happened since then to the rebalancing he promised? Manufacturing output has fallen by 1.3%, construction output has fallen by 4.2% and infrastructure investment is down by 11.3%. Every time he comes to this House he promises a rebalancing, and every time he fails. The Chancellor talked about housing today, but what has he actually delivered? The Government have overseen the lowest level of house building since the 1920s and rents have risen twice as fast as wages.
At the heart of the argument we will have over the next 14 months is this question: whose recovery is it under the Tories? Under them, it is a recovery for the few, not the many. Bankers’ pay in London is rising five times faster than that of the average worker. This recovery is not working for working people whose living standards are falling. It is not working for the millions of women who see the gap between men and women’s pay rising. It is not working for the low-paid people promised by the Chancellor—[Interruption.]
Mr Deputy Speaker
Order. Mr Williamson, you are in danger of exploding, which would be good neither for you, nor for the Chamber. Come on. Let us listen.
Edward Miliband
They do not want to talk about the low-paid workers promised a £7 minimum wage by the Chancellor but given just 19p more an hour. Under this Government it is an economy of the privileged, by the privileged and for the privileged.
Instead of admitting the truth about what is happening in most people’s lives today, the Government want to tell them the opposite. They tell people that their wages are rising when they are falling, just like they tell people that their energy bills are falling when they are rising. They tell people that they are better off, but everyone knows the truth. They can change the shape of the pound—it does not matter if it is square, round or oval—but if you are £1,600 a year worse off, you are still £1,600 a year worse off. You are worse off under the Tories.
They cannot deliver because of what they believe. His global race is a race to the bottom. It means people being forced to do two or even three jobs to make ends meet, not knowing how many hours they will get from one week to the next, and with no idea what the future holds for their kids. Low wages, low skills, insecure work—that is how they think Britain succeeds. That is why they are not the solution to the cost of living crisis. They are the problem.
We needed a Budget today that would have made the long-term changes that our economy needs, in housing, banking and energy. But they cannot do it. They will not stand up to the vested interests. They will not tackle developers sitting on land, even though they cannot solve the housing crisis without that. They will not force the banks to improve competition even though small businesses say they need it. They will not stand up to the energy companies and freeze energy bills, even though the public support it. Same old Tories. We know what their long-term plan is: more tax cuts for the richest, while everyone else gets squeezed. [Interruption.]
Mr Deputy Speaker
Order. This is getting totally out of hand and we certainly do not want any more pointing. I am worrying about the danger to Anne Milton’s hearing; the way she is shouting is not good for her or the Chamber. I want to hear the rest of the speech in peace. I certainly do not want all the muttering and challenges that have been running along the Benches. I will take it more seriously if I have to get up next time.
Edward Miliband
We know what their long-term plan is: more tax cuts for the richest while everyone else gets squeezed. What does the Chancellor say about the people dragged into paying 40p tax? He says that they should be happy and that it is good news for them. So this is the new Osborne tax theory: if you are in the middle, paying 40p, you should be pleased to pay more, but if you are at the top, paying 50p, you should be helped to pay less. Same old Tories.
It is no wonder that even their own side think they are totally out of touch. Even now, after all the embarrassment of the millionaires’ tax cut, they will not rule out going further. Maybe today we can get the straight answer that we have not had so far. Will the Chancellor rule out a further tax cut for millionaires to 40p? Just nod your head if you will rule it out. Come on, come on. Just nod your head. Maybe the Prime Minister would like to. Just nod your head. [Interruption.]
Mr Deputy Speaker
Order. There may be an influence of the wolves and the pack running around. That can be used in the zoo, but it will not be used in this Chamber.
Edward Miliband
It is very simple—all the Prime Minister needs to do is to nod his head if he is going to rule out cutting the 45p tax to 40p in the next Parliament. Just nod your head. Come on. There we have it. There they go again—they will not rule it out. Does that not say it all about them? They really do believe that the way you make the rich work harder is to make them richer and the way you make everyone else work harder is by making them poorer.
Just as they paint a picture of the country that working people will not recognise, so, too, themselves. The Prime Minister is an expert in rebranding. Remember the huskies, the bike and the tree? That was before they said, “Cut the green crap.” What is the latest rebranding from the Bullingdon club? It is beyond parody. What do this lot now call themselves? [Interruption.]
Mr Deputy Speaker
Order. Mr Williamson, I will not tell you again. I am sure your roast beef is ready for you—you might be better off eating a little raw meat than giving us the noise that we are getting in here.
Edward Miliband
What do this lot now call themselves? They call themselves the workers’ party. Who is writing the manifesto for this workers’ party? We have a helpful answer from one Conservative MP:
“There are six people writing the manifesto…five…went to Eton”.
By my count, more Etonians are writing the manifesto than there are women in the Cabinet—no girls allowed. This week, we have heard it right from the top. Here is what the Prime Minister’s former best friend—[Interruption.] They do not like to hear it do they, Mr Deputy Speaker? Here is what his best friend—[Interruption.]
Mr Deputy Speaker
Order. If Members wish to go outside and show people, they can do so by all means. I certainly do not need you to hold up papers all the way through. Quite seriously, respect is due to the Leader of the Opposition the same way it was given to the Chancellor. I want to hear him; if you do not, there is the door—please leave.
Edward Miliband
Here is what the Prime Minister’s former best friend, his closest ally, the Education Secretary, had to say about the Prime Minister’s inner circle. He said it was ridiculous, preposterous, unlike anywhere else in the world. They know they are in trouble when even the Education Secretary calls them a bunch of out-of-touch elitists. Where is the Education Secretary? I think he has been banished. Ah—he is hiding! He has been consigned to the naughty step by the Prime Minister. It is time we listened to Baroness Warsi and took the whole Eton mess out of Downing street.
We do not need a party for the privileged few; we need a party for the many. That is why a Labour Government will freeze energy bills, guarantee jobs for unemployed young people, cut business rates, reform the banks, get 200,000 homes built a year and abolish the bedroom tax. This is the Budget that confirms that people are worse off under the Tories—a worse-off Budget from an out-of-touch Chancellor. Britain can do better than them. Britain needs a Labour Government.
Mr Deputy Speaker
Order. Before I bring in the next speaker, I announce an eight-minute limit.
Mr Tyrie
I do not know about the political agreement point, but of course the effects of the stabilisers operate on both the tax and the spending sides. I think the Government were right to do what they did.
The Government have also been right to see off calls fundamentally to alter fiscal policy by sharply relaxing deficit reduction and increasing public spending. One of the main reasons it was important that they did not listen to those calls is that credibility in fiscal policy is hard won. It is built up over time—over many years—and it can easily be squandered. The Government resisted that temptation.
I will say a few words about the historical context. Looking to the 1930s, when stagnation set in and the agony was prolonged, partly because automatic stabilisers were suppressed and partly because far from engaging in QE, the then coalition Government did exactly the opposite: they lengthened the maturity of the debt and sucked money out of the economy. That is why the 1930s were so painful.
Now that we have a recovery, some are complaining that it is not the one we ordered. They complain that the recovery is consumer-led or uneven across sectors, regions and income groups. Well, of course it is. All recoveries of any value trigger a reallocation of resources, and therefore all recoveries change the shape of the economy. A recovery rarely takes root where the jobs were lost or the firms failed; it was ever thus and it will be the same this time. As the Chancellor stressed in his speech, jobs are being created at a record rate, but we cannot expect those jobs to be in exactly the same places as the jobs lost in the downswing. I am confident that, as in all previous recoveries, if we can sustain this recovery—and even if it is uneven, as it will be—it will, in time, deepen and spread through the whole economy. The figures for previous upswings support that.
The crucial question now, though, will be whether we can sustain the deficit reduction plan. A threat to deficit reduction will come from siren voices who say, “With the recovery under way, we can go back to spending money we haven’t got.” We are already hearing that. We need to remind ourselves that we are still spending about £7 for every £6 we collect in tax. It is true that we are in better shape, but with a deficit of about 6.6% of GDP, as the Chancellor announced today, we will remain vulnerable to economic shocks unless we do more to tackle it.
Another risk to deficit reduction is one of simple arithmetic caused by ring-fencing—something that the Treasury Committee has flagged up on several occasions. It will become increasingly difficult to find cuts to an ever-shrinking share of non-ring-fenced departmental spending. In other words, with ring-fencing of nearly half departmental expenditure, finding these savings will get tougher year by year. The Chancellor has argued, rightly, that polling evidence shows that that ring-fencing reflects public preferences. I think that is true for health and education, but it is not supported in the area of overseas aid. Spending on aid has risen by over a third in real terms and will rise even more because it is linked to GDP. Politics always points to ever-more ring-fencing; economics to less. Eventually, ring-fencing will have to be revisited, however difficult it is for all political parties.
Perhaps I should say a little about the risks—
Fairness and Inequality
Lindsay Hoyle Excerpts(10 years, 3 months ago)
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Mr MacNeil
People who say that Wales’ tax take is not equivalent to its expenditure are quite short-sighted. They fail to realise that they are living in the United Kingdom, the tax take of which has not matched expenditure since 2001, and is not likely to do so until 2018. This is a UK that records a deficit year after year, and has a debt that grows year after year.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Obviously, Mr MacNeil will want to catch my eye to make his speech. I would not like him to use it all up now, so shorter interventions.
Jonathan Edwards
The point that is often forgotten is that despite the fact that London is one of the richest parts of the European Union and that communities such as mine in Carmarthenshire are at the bottom of the European wealth league, public expenditure per head is higher in London than it is in Wales—that is until very recent figures, which showed that Welsh spending had caught up. It is an incredible situation. I could not make this up.
The way in which monetary policy is formulated is also in severe need of reform. The week before last, I tabled an early-day motion calling for the Bank of England, or the Sterling Central Bank as it should be renamed, to be reformed better to take into account the economies of the UK when formulating monetary policy. The Governor should appear for scrutiny before the relevant Committees of the devolved legislatures, and meet with the devolved Governments, just as he has to with the Chancellor and the relevant Select Committees in Westminster.
In addition, the four external members of the Monetary Policy Committee should be nominated by the four nations, rather than hand-picked by the Chancellor of the day from the self-serving banking elite. [Interruption.] I am grateful to my friends from Northern Ireland who supported that early-day motion. There is an interesting story in the Western Mail about the need for the Welsh Government and the Northern Ireland Assembly to collaborate in the event of Scottish independence, be it a yes or a no vote, to ensure that we are not bombarded by Westminster. I hope that it might be a small step on the road to greater collaboration. Instead, what we have is a drive towards regional pay in the public sector, introduced by the previous UK Government and now developed by the coalition, which ghettoises low-wage economies outside London.
Labour has gone a step further, with a pledge to cap benefits on a geographical basis if it forms the next Government. That means that the unemployed and disabled in Wales will receive fewer payments than those who happen to live in London. Wales will have lost more than £1 billion during 2013-14 due to cuts in benefits. Those include payments that people in work receive to top-up low wages. That money would have been spent directly in the Welsh economy, but is now lost.
Rather than hitting the sick and unemployed with a stick and labelling them “scroungers”, why do we not embrace the active labour market programme employed so successfully in Sweden? It is an interventionist policy, in which the Swedish Government spend twice the amount per capita that is spent in the UK, creating tailored action plans. The programme has productivity and mental health benefits, so it ends up costing the taxpayer far less, as individuals are moved from social security into employment, and it eases considerable pressure on heath services.
It is increasingly clear that the Treasury has been re-infected with the British disease of basing growth on inflating house prices backed up with taxpayers’ cash—the Help to Buy policy. Far from rebalancing the economy, the Treasury is reintroducing boom and bust. Instead of delivering an equitable share of infrastructure investment across the UK, the Exchequer lavishes London with its grand design projects, be it the Olympics, Crossrail 1 and 2 or High Speed 2. UK Trade & Investment does not deliberately channel foreign direct investment into the poorest parts of the state, unlike its German counterpart, Germany Trade & Invest, which has a statutory duty to do so. Is it not sobering that despite the cold war and a physical wall between the east and west of its country, Germany today is far more balanced in geographical wealth than the UK?
Other places have shown the way. Germany is a federal republic, and the constitution requires fiscal equalisation among the Länder. That is a timeless requirement on all parts of government, and policies are required no matter the era. After reunification, when poorer East Germany joined developed West Germany, a massive effort meant a variety of measures were implemented, including financial transfers to poorer regions and industrial development policies.
The same could be done from Westminster, but it has not been. The alternative is the approach favoured by the London parties, whereby investment is concentrated in London and the south-east, and wealth inequalities continue to rise. It is clear that it is time for a change. Where are the voices in support of such a change? Who will turn back the tide of growing inequality? We know that we cannot rely on the Tories in London, so unashamed are they in their love of banking and the financial elite. Where is Labour? Why is it not standing up against inequality? Its amendment seeks to wreck our motion, absolving it of its role in creating rising inequality over the past decade, but it is bereft of policies.
Last week, some of Labour’s Wales-based Members defended the UK as a redistributive Union. They are deluding themselves, both about their record in government, as inequality rose during that period, and about the current situation. A closer examination of their voting record would suggest that their rhetoric is unsupported by action. I cite their abstention on the Welfare Reform Bill, which introduced the cruel and dreaded bedroom tax; their abstention on a cut in the top rate of income tax; and their refusal to support any measure to help to promote measures to provide the Welsh Government with the economic powers that they need to move the Welsh economy forward.
Caroline Lucas
For the benefit of us all and to enable a more enlightened debate, it would be helpful if the Government stopped pretending that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)was responsible for the collapse of Lehman Brothers. I blame the Labour party for a lot, but the idea that the current economic crisis was somehow caused by that is ludicrous. It was a global economic crisis and—
Stephen Crabb
I applaud the hon. Lady for her attempt to rescue the reputation of the former Chancellor of the Exchequer and Prime Minister. The truth is that the trajectory of public spending was already far too high, even before the banking collapse. There was a structural deficit that placed at risk the stability of the UK finances even before the banking collapse.
Andrea Leadsom (South Northamptonshire) (Con)
While Opposition Members would like to absolve Gordon Brown of any guilt over the collapse of the banking system, only this morning in the Treasury Committee we were looking still at the debacle of the Co-operative bank—
Mr Deputy Speaker
Order. When I say “Order” I expect the hon. Lady to sit down. The intervention is becoming a ramble, but more importantly we are talking about a Member of Parliament, not by name I hope.
Stephen Crabb
The choice still facing the United Kingdom is either to stick to the long-term economic plan to secure a better, more financially secure future for hard-working people and their families throughout the country, or to listen to the Opposition parties and the motion before us calling for a return to the days of spending and borrowing beyond our means, leaving our children and their children to pick up the bill.
Mr MacNeil
Devil the fear, as my old Irish mother would have said, devil the fear—no chance at all. I think the hon. Gentleman will see, as he pays more attention to the words to come, that the only Tories on this side of the House are probably the red Tories.
I listed the books I mentioned earlier for a reason. We must be aware that we do not have to reinvent the wheel to get people more opportunities and chances in life. Much of the research and science has been done, and the information has been gathered. Perhaps if we stopped, looked and learned from what is around us we would stop falling into the same traps that different generations have fallen into. Why should inequality matter—why is it important? Is it merely because a number of influential professors with Nobel prizes have written books? I would contend that they have put intellectual bones on our instinctive emotions of sympathy and empathy for our fellow people when we see them in situations that disturb us and we think are wrong. This is why nations have international aid budgets and why we give to charity. Sometimes it can be argued that the money is not always best directed, but nevertheless it is useful in the main. It shows an underlying striving for fairness and is a reproach against inequality within the broad set of people.
My first engagement with the idea of inequality was in the religious education class in Craigston primary school at the age of seven or eight, or perhaps even six, with Mrs MacCormick, God bless her. Looking back, I often think that we were really doing philosophy classes rather than RE classes. The example given was this: “If you’re given a box of chocolates at home would it be best to eat them all yourself or share them with your brothers and sisters who have not been given any chocolates?” I have to say that this scenario created a tension in my mind given my great love of chocolates. As you can see, Mr Deputy Speaker, I do not have so much a sweet tooth as a whole set of sweet teeth. I was caught in the tension between doing what was manifestly right and what I really wanted to do on another level. The consensus quickly grew in the class that it was best to share—even among six, seven or eight-year-olds. I am pleased to see you nodding in agreement, Mr Deputy Speaker.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I assure the hon. Gentleman that I was not nodding in agreement; I was just wondering whether there were inequalities within the chocolates.
Mr MacNeil
Very good, Mr Deputy Speaker.
It is a slight concern of mine, however, that the captains of industry, as they get called, or the high-bonus City bankers or hedge fund managers, have never had that experience at a young age and have not engaged meaningfully with sympathy for the situation that others may be in as they gobble all the chocolates of productivity that our economy has produced, believing instead that they are self-made men and self-made women who worship their own creators.
Michael Connarty
I would be quite willing to brief the hon. Gentleman later about the technicalities of why the vote was not called on that particular night.
The hon. Gentleman is talking about a sociological analysis, but some people have moved on since then and done a socialist analysis. When society is divided into those who support capital and those who support labour, what happens is that the forces of those who have the power in the land—the landed classes—join with the merchant class to support capital, and they have succeeded in increasing the value of capital by driving down the cost of labour. That is why we have the inequality we have, and that is the structure of the society we—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. It is very good to have a lecture, but not during an intervention. If the hon. Gentleman wants to catch my eye later, I am sure he will be able to do so and give me a lecture then.
Mr MacNeil
I thank the hon. Gentleman for that interesting intervention. As an MP for a left-of-centre party—sadly, the hon. Member for North East Somerset is no longer in his place to hear this—I am asking how it is possible that our society and, indeed, many other societies, particularly in the English-speaking world, can tolerate inequality, which has now grown to levels beyond those of the 1920s. Has something primitive been transmitted to our minds through the media? The belief that the poor are poor because they are undeserving and have not worked hard enough is a primitive thought. People have to be helped, because we are complex creatures living together in society. People have deep psychological needs and some can suffer from the paralysis of feeling swamped or depressed when they feel stuck or trapped.
Yesterday’s report by the Living Wage Commission, “Working for Poverty”, looked into the scale and problem of low pay and working poverty in the UK. The first shocking statistic I stumbled on came from the work of the Resolution Foundation, which had tracked low-paid workers for a decade between 2002 and 2012. Despite working for a decade, only 18% of those people had managed to escape low pay in that 10-year stretch. In other words, people in low pay had a four in five chance of remaining there.
The report further notes:
“1.3 million employees remained stuck in low pay for the subsequent decade, and a further 2.2 million workers held higher paid jobs but returned to low paid jobs by the end of the decade.”
That is and should be depressing. Imagine the feelings of the people we eyeball who have been living with that reality on a daily basis for a decade.
There is good news and bad news. Over the past decades, the wealth of this and other countries in the west has grown as productivity has increased. The bad news is that the fruits of that productivity have been disproportionately distributed. According to the BBC’s wealth gap analysis, as the wealth pie grew and there was more to slice up, many people got roughly the same slice of the pie while others took a share that would embarrass a lion.
Between 1997 and 2007, the income of the top 0.1% grew by 82% to an average of £1.179 million annually; the top 0.5% saw an increase of 66.5% to an average of £452,000 annually; and the top 1%, which, of course, includes the previous two groups, saw their income rise by 60%, but their rise was only about a quarter of that of the 0.1%.
Meanwhile, between 1997 and 2007—the happy decade, as some in financial circles call it, before the crash of six years ago—the bottom 90%, which includes most of society, saw their wages rise by only 17%, a disproportionate slice of the economic pie. Another way of looking at it is that the fraction of pay the bottom 90% were getting in comparison with the top 1% had fallen by a fifth over that decade. As Professor Stiglitz says:
“A corporate CEO will not exert less effort to make the company work well simply because his take-home pay is $10 million a year rather than $12 million.”
The “Working for Poverty” report contains a series of nuggets and goes fearlessly into some thought-provoking factors.
Mr Jim Hood (Lanark and Hamilton East) (Lab)
I am quite amazed that the hon. Gentleman is surprised that I and many other hon. Members are against his nationalism. To put my comment last week in context, I said that despite the lying of the SNP Government and the Westminster Government here, I would not support nationalism and would therefore vote against his Government. He should not be surprised, because I have always opposed nationalism. I always will oppose nationalism, because I do not make judgments about people on the basis of the side of the road or the side of the bed they were born on.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think the hon. Gentleman has got the message across.
Mr MacNeil
I am pleased that the hon. Gentleman has intervened, but I am surprised that he says he is against nationalism, because we live in nations. That is why we have the United Nations of about 193 nations. I am not sure exactly what structure he favours. Is he is in favour of the abolition of the Parliament in Westminster and of the UK state?
Mr Deputy Speaker
Order. The hon. Gentleman must sit down. I will be helpful: we have had a good debate about chocolates, and I want to get back to inequality. I certainly do not want to get bogged down in the rights and wrongs of abolition. I know that he is desperate to finish his speech on inequalities, and I am desperate to hear it.
Mr MacNeil
My speech is about making lives better for people wherever they are from and wherever they are worldwide. That is the important point to bear in mind.
The “Working for Poverty” report even touches on the untouchables of our society—football clubs. It states:
“Research from Citizens UK shows it would take a full-time cleaner 13 years to earn what top footballers earn in a week. Football clubs are important institutions in communities across the UK. They should be setting an example to employers nationwide.”
I must praise the columnist for The Observer Kevin McKenna who, like me, is a supporter of Celtic football club in Glasgow, the richest team in Scotland. Sadly, a few months ago, Celtic refused to pay the living wage to all its staff at the ground. It turned Mr McKenna’s stomach that those subject to such wage inequality could rub along, shoulder to shoulder, with people earning tens of thousands of pounds a week. That has also turned the stomachs of many football fans, especially given that Celtic had cashed in on the story of Brother Walfrid, a Marist brother who now lies at rest in Dumfries, who started Celtic as a means to help the poor of the Glasgow east end in the 1880s. I do not mean to single out Celtic, but to give an example of the toleration of those in even rich organisations for the shocking pay levels given to people the whites of whose eyes they see daily. Frankly, it removes the shine, lustre and glitz from the big football clubs of our land when we realise that gritty reality and see it up close.
Mr MacNeil
It is disappointing that more Members have not engaged in the issues of poverty and inequality. Cynics would say that if this were a debate on Members’ pay, conditions and benefits or any other reform of the House of Commons, the Benches would be full. Alas, we are debating a topic far removed from that. That is why I have tried to humanise the debate.
I was not going to read Becca’s story from the Living Wage Commission, but it is a cracker of a story. The report states that she
“lives in Leeds and has worked in minimum wage jobs since she was a teenager. Now in her thirties, she has a degree and wants to start up her own business, but she can not find the money or the time.”
She says:
“I have pretty much always worked for minimum wage. I worked in an office photocopying for two years, I have worked in customer service, I once sat watching a TV screen and counting cars on clickers. I’ve done all sorts.”
That is another example of a person who is trying to better herself, but who is—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have a good feel for the examples, as, I am sure, does the House. This should be the hon. Gentleman’s speech, not just a speech full of examples from other people. I have allowed a few examples to go, but I have heard enough for now. I want to hear from the hon. Gentleman, rather than other people.
Mr MacNeil
Thank you, Mr Deputy Speaker. It is because of my modesty and kindness that I want to share the wisdom of others. I do not see myself as the sole well of wisdom. [Interruption.] “Thankfully,” say my SNP colleagues.
We have to consider how poverty and inequality are affecting young people. I spoke to a young person recently who said, “It’s difficult being young. Houses are expensive. We have tons of student debt. The costs of living are rising and wages don’t go up. It’s sort of tough being young at the moment.” That young person was right. I was at university when student loans came in. I followed a demonstration against student loans that was led by a student who later became an MP. I later saw him on television backing Labour’s introduction of tuition fees in 1998. I cannot remember his constituency.
There has been a sharp rise in the number of 24 to 34-year-olds who are living at home with their parents. As Joe Stiglitz said, that is not due to a rush of filial devotion, but because they have no choice. The economic cards are stacked against them. Youth unemployment is high in many countries. It is too high in Scotland and higher still in the UK as a whole. Instead of getting on with their lives, the young find themselves in a holding pattern.
The SNP has done what it can in Scotland by keeping tuition fees at zero, which is saving families from paying £36,000 for a four-year degree. Families risk having to pay that if we vote no to independence. We know that there are cuts down the line and some people think that this is a something-for-nothing society and that certain things should be taken off the table. We do what we can with the powers that we have, but we want to do so much more.
An exciting proposal in the White Paper that will tackle inequality is to follow Sweden’s example on child care. Parents of early-years children in the UK face the highest child care costs in Europe. Parents in Scotland spend about 27% of household income on child care, compared with the OECD average of 12%. Independence would give us the opportunity to make transformational changes to the way in which Scotland provides child care services. That will allow women, in particular, to work without worrying about the cost of looking after their children. With independence, the benefits of their work, such as economic growth and tax revenue, will stay in Scotland and contribute to the costs of child care provision.
The Scottish Government plan to have a universal system of high-quality early learning and child care from the age of one up to school entry. At the end of the first year of an independent Scottish Parliament, every three and four-year-old and vulnerable two-year-old will be entitled to 1,140 hours of child care. That is the same amount of time as children spend in primary school each year and is equivalent to 30 hours per week over 38 weeks. That is an important aspiration. It demonstrates one way in which we should be moving our society forward. It would certainly be a way to reduce inequality.
It has been argued that inequality has caused the rise in household debt because people try to keep up with the Joneses. There are more pernicious examples of what inequality can do. Professor Paul Krugman states:
“Before the financial crisis of 2008 struck, I would often give talks to lay audiences about income inequality, in which I would point out that top income shares had risen to levels not seen since 1929. Invariably there would be questions about whether that meant that we were on the verge of another Great Depression—and I would declare that this wasn’t necessarily so”.
In the end, it turned out that that was the case. Once again, we are not arresting the growth in inequality. Are we on the verge of repeating the same mistake? I wish that we would learn, but we seem not to be doing so.
Some voices in the world are talking about inequality. Yesterday, the mayor of New York, Bill de Blasio, made a speech about tackling inequality in New York. My only criticism is that, when one looks at the detail, it is quite timid. The Pope has said:
“The promise was that when the glass was full, it would overflow, benefiting the poor. But what happens instead, is that when the glass is full, it magically gets bigger nothing ever comes out for the poor.”
The church and nation committee of the Church of Scotland addresses that issue frequently and, as I said, the Church of England’s Archbishop of York has also done great work. A number of US Senators are aware of the problems and what is happening.
In my view, Governments should concentrate on growth and jobs. The deficit obsession and austerity cult has taken demand from the economy and probably led to a slower recovery—we have probably lost years as a result of the policies that were followed. We cannot fully prove that because we do not have a controlled environment in which to do so scientifically, but the feeling among many economists is that growth has not returned as strongly as it should have done, and that when it did come back it was three years delayed.
We are in food-bank Britain; we have the bedroom tax hammering people. VAT, one of the most regressive taxes, has been increased to 20% in this Parliament. That is a real shame and something that hits people disproportionately. We have had the cut to the 50p tax rate. That probably cost £4 billion to £5 billion in revenues, although the Commons Library has stated that behaviour alteration should mean that it will cost only £0.5 billion. Only £0.5 billion? That means that the cut to the 50p rate of tax has cost the Exchequer and not raised any extra revenue.
In the debate last Thursday—I am coming to a conclusion, Mr Deputy Speaker—it was sad that many of those Members who had the opportunity to speak in a very time-limited debate made no real mention of the future, and there was no mention at all of poverty. Unfortunately, we seem to have made a god of money, and we treat those who do not get hold of it as somehow inferior beings. In fact, as somebody once remarked, the cure for cancer might well be found in a child living in a poor household. They should be given a helping hand and an opportunity for their future because—who knows?—they could help us some day.
I have a couple of final reflections. It was said of Nelson Mandela that he not only liberated the blacks in South Africa, but also the oppressors. When I look at inequality I see, of course, great insecurity at the bottom, but I also see insecurity at the top. People realise that when the safety nets are removed, they themselves are a step or an accident or two away from going down. If those people do not have a society with safety nets in place for their own security, they can never fully relax. They need to get more and gather more because—who knows?—they, a relative or a friend might need it.
That struck me very strongly when I was at Alabama state university on an exchange programme with a US Congressman and we went to see a game of American football. We were taken to the president’s box of the university, and there were people who had made it in life. I met a man from Leeds, but it struck me that despite having made it, the talk was all about health insurance, health care, and what sort of plan people had—conversations we do not have in this country. In reality, there was deep insecurity because the social nets were not there to help everybody. When the nets are not there for the poorest and most vulnerable, we, our friends, our relatives, the relatives of relatives and friends of friends, are all but one step away. It is not a nice situation to be in, and I could see the fear in the whites of their eyes. Even though they personally had made it in society, there was massive insecurity around them.
Just as Nelson Mandela liberated the blacks and the oppressors, so too does the arresting of inequality liberate the poor and the rich—not quite in equal measure, but it certainly liberates them both from the insecurity that inequality brings to us all. We should work to get rid of inequality, and I hope that when we have independence, we can prove that one of the best ways of fighting inequality and poverty is through the prosperity that I expect we shall bring to Scotland.
Guto Bebb
There is certainly an argument that to increase the minimum wage when, as things currently stand, the Government have already taken tax out of the minimum wage, would look as if they were kicking businesses for the sake of kicking them. I have supported the fact that the Government have increased the personal allowance dramatically, which has made work pay for people in many circumstances, but my point is that taking time over a decision is not something we should be ashamed of. Indeed, we should be proud of taking time to make the right decision on something that is so important for a constituency such as mine, where 27% of the working population are either self-employed or work for small businesses.
I must take issue with a few points raised by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in his opening remarks. He began his speech by talking about Hywel Dda, who was indeed classified as one of the better Welsh kings. I was, however, surprised to hear the hymn of praise to a royalist from an avowed republican. Indeed, in terms of Hywel Dda, or Hywel the Good, being good, perhaps the true title should be Hywel the not-so-good. In addition to being the man who classified and created Welsh law, he also ordered the execution—the murder, I should say—of his brother-in-law in order to take over the kingdom of Dyfed, which is the current constituency of the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Furthermore, so as to extend his kingdom to the north and take over the whole of Wales, he also dispossessed the two sons of Idwal Foel from Gwynedd. When giving examples, I think we must put the man in the context of his time. It is interesting to highlight, however, that the Hywel Dda laws were in many ways ahead of their time in trying to achieve a level of equality between the sexes—not something that we saw in other parts of the United Kingdom for a very long time.
I also take issue with the comments by the hon. Member for Carmarthen East and Dinefwr about a proportional system of electing people leading to greater engagement with the political process. It is an attractive argument, but one that can be rejected simply by looking at the situation in Wales. We have 40 Members of Parliament who are elected on a first-past-the-post basis, and 60 Members elected to the Welsh Assembly, which uses a version of proportional representation. In a constituency such as mine, however, 70% of the electorate—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am a bit worried that we are getting in to a debate on proportional representation. I presume the point is linked to fairness and equality somewhere.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. In fairness, the hon. Gentleman has had a good day. He has made a lot of interventions and he spoke for almost an hour, so to try to make another speech is unacceptable. A lot of Members want to get in.
Guto Bebb
I reject the hon. Gentleman’s argument. To have more equality, we need more jobs and economic opportunities. The hon. Gentleman argues that that would happen with more Government spending as a proportion of the economy. If that was the case, then Wales would be, by a long stretch, the most successful part of the United Kingdom, because there is no part of the UK more dependent on the public purse. The dependency on public spending in Wales has led to failure not over the past three or four years, but over a 15 to 20-year period. It has not led to economic growth or prosperity, and it has not led to economic opportunities. Indeed, the very reverse is true: the size of the state in Wales is one of the reasons why the rebuilding job being undertaken by the Westminster Government is so important. In a Welsh context, we have created an economy that is unbalanced and has not created the variety of jobs needed to support our young people and ensure that we have an equal society. I argue very strongly that anybody who says that the answer to all economic issues in a Welsh context is more public spending is simply wrong.
National Insurance (Contributions) Bill
Lindsay Hoyle Excerpts(10 years, 5 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Government new clause 5—Limited liability partnerships.
Government amendments 1 and 2
Mr Gauke
New clause 4 is needed as it addresses a tax issue arising under existing partnership tax rules where the immediate entitlement to partnership profits is restricted by the alternative investment fund managers directive—AIFMD. HMRC received further information about this during the partnerships review consultation. Following their discussions with the funds sector representatives and the Financial Conduct Authority with responsibility for the AIFMD implementation in the United Kingdom, the Government intend to put in place a statutory mechanism to address the issue, subject to parliamentary approval.
It is important to note that the vast majority of fund managers would not be affected; only those who operate through a partnership would be affected. Under existing partnership tax rules, tax is charged on profits as they are earned, rather than when they are received. An unfunded tax charge can therefore arise on profits that are allocated to an individual partner of an AIFM partnership and which are then deferred in line with the regulatory requirements of the AIFMD. That is because the partner cannot access the deferred profits in the year when they arise.
The new mechanism that the Government propose is designed in such a way as to meet the Government objective of a partnership review to achieve fairer taxation by stopping tax-motivated allocation of profits in mixed membership partnerships that typically include individual and corporate members. The new power introduced under new clause 4 will support the introduction of the mechanism and will be used to change the relevant national insurance contributions legislation by regulation, once the related Finance Bill 2014 legislation becomes law. It will also allow NICs legislation to be amended in future to reflect any subsequent changes to income tax legislation in that area, to maintain symmetry between tax and NICs positions.
New clause 5 and amendment 2 replace clause 13, which would have removed limits on the Treasury categorising members of limited liability partnerships who satisfy certain conditions as employed earners for the purposes of NICs, rather than self-employed earners. New clause 2 provides an express power to treat LLP members who meet certain conditions as employed earners for NICs purposes. Those conditions will be set out in regulations and will follow income tax legislation introduced in the Finance Bill 2014. Broadly, it will mean that the individual member of the LLP has no or little real economic interest or risk in the LLP, and instead will be rewarded by a fixed salary. Those conditions will be based on proposals on which HMRC has consulted, as part of the public consultation on changes to partnership tax and NICs rules. HMRC has been advised that in response to those proposals, structures with only corporate members were being promoted as a way around the proposed legislation. The schemes involved the individual establishing a personal service company or other intermediary, with that intermediary becoming a member of the LLP in place of the individual in order to avoid those provisions.
New clause 5 provides power to make regulations to achieve the policy objective of the measure, and counteract the artificial imposition of a company or intermediary to avoid the impact of the measure. Regulations will follow new income tax legislation in the Finance Bill 2014. That power will enable the reclassification by regulation of certain LLP members as employed earners for NICs purposes, even when they hide behind a company or intermediary.
The treatment of members of LLPs as self-employed was designed to replicate the position of traditional partnerships. The new clause will ensure that those tax rules are not used to create a tax advantage, and it creates a level playing field between partnerships that have not sought to misuse tax rules for LLPs and those that have done so. I appreciate that that was a rather technical explanation for rather technical new clauses, but I hope it was of use and that the House will agree that new clauses 4 and 5 be added to the Bill, instead of clauses 12 and 13.
Cost of Living
Lindsay Hoyle Excerpts(10 years, 5 months ago)
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Chris Leslie
I do not know whether you voted against those measures, Mr Deputy Speaker, but we appreciate any efforts to help alleviate the cost of living. Does the hon. Gentleman believe that when people fill up their tank at the petrol station, they think, “How grateful we are to the Conservatives for the cost of petrol today”? When it comes to the cost of living—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has been very generous so far, but he cannot give way to six people at once. Let us get our act together and try to get through the debate. There are 21 Members who want to speak, and I am sure that other Members will want to hear them.
Chris Leslie
Thank you, Mr Deputy Speaker. I am still on the first page of my speech. I remind Government Members that the profits of the energy companies, which in many ways are the drivers hurting many of our constituents, have risen astronomically in recent years. Since the general election, energy company profits are up from £2 billion to £3.7 billion. Members will have read in The Independent yesterday that profits were £30 per household at the time of the general election, that they rose to £53 per household in 2012 and that they are now expected to be £105 per household this year, and yet the Government continually cower in trepidation of the big six gas and electricity corporations. They are not just recoiling from any willingness to challenge their behaviour, but in their cowardice the Government defend the status quo as though nothing can be done.
Labour says that energy bills can and should be frozen while Parliament legislates to reset the energy market to one that provides true competition, reduces scope for excessive profiteering and offers reductions for customers when wholesale prices fall.
Mr Deputy Speaker
Order. Everybody else has sat down, but somehow the hon. Member for Vale of Glamorgan (Alun Cairns) feels he can hang around for another five minutes. I assure him that he cannot. The Minister will give way when he wishes to, not when the hon. Gentleman demands. [Interruption.] I do not need help from others, either.
Chris Leslie
I think that shows that we have touched a nerve. We know that the best we can expect from the autumn statement—[Interruption.]
Mr Deputy Speaker
Order. Did somebody shout out something about cowardice? No; okay, carry on.
Chris Leslie
I did not catch what was said, but we will see what Hansard records.
We know what will be in the autumn statement next week. The best we can expect is that the Chancellor will probably transfer about £100 or so off people’s energy bill and on to their tax bill instead. That is a ruse.
Robert Halfon
On a point of order, Mr Deputy Speaker. The hon. Gentleman has said that his Government tried to help motorists, but he inadvertently forgot to mention that they raised fuel duty 12 times.
Mr Deputy Speaker
I assure the hon. Gentleman that that is not a point of order. He has made that point on many occasions and I did not need reminding.
Mr Deputy Speaker
Order. We can all make a judgment about that, but it might be helpful to remind Members that there are many speakers to come, so if we are going to have interventions they have to be short and not speeches. I will be honest with Members: anyone on my list of speakers who makes a long intervention will go down the list accordingly.
Chris Leslie
The hon. Member for Vale of Glamorgan (Alun Cairns) is short in his contributions on most occasions. I note that he wanted to change the subject from energy prices. The problem is that, time after time, the Conservative party has no answers for the public, who want politicians—their elected representatives—to take action on the cost of living, particularly on energy prices. As long as the hon. Gentleman and all his colleagues let the rip-off merchants and unfair profiteers continue with business as usual, the public will take exception to the deceitful claim that we are all in it together.
Mr Ellwood
I urge the hon. Gentleman to be cautious about questioning whether this subject is being taken seriously by Government Members, because the record should note that there are more Government Members than Opposition Members present to debate this important issue. On energy, will he now concede that Labour failed to ensure that the lights will be kept on in this country by failing to invest in nuclear energy? More than six nuclear power stations have closed down. That is why energy prices have gone up—because we are not making our own energy.
Mr Deputy Speaker
Order. I asked for short interventions. Please shorten them, Mr Ellwood, or we will not take any more from you. I am sure you will want to get another one in later.
Chris Leslie
There are only another 18 months during which there will be more Conservative Members than Labour ones in this Chamber. I hope that the hon. Member for Bournemouth East (Mr Ellwood) is watching the clock, because they are running out of time.
The Prime Minister has broken not only that list of promises, but more records than most Prime Ministers over the decades, and not in a good way. How has he been a record breaker? Since entering No. 10 Downing street, he has delivered a record-breaking cost of living crisis, with wages failing to keep pace with prices for an unprecedented 40 out of his 41 months in office. That is the longest period of diminishing real wage values since records began.
A record-breaking number of people now rely on food banks just to get by—it has tripled in the past year alone—with more than 350,000 families requiring food parcels in the past six months.
Alun Cairns
On a point of order, Mr Deputy Speaker. The hon. Member for Cardiff South and Penarth (Stephen Doughty) has inadvertently misled the House in that the quotes attributed to me are wholly inaccurate. I ask him to withdraw what he said.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I do not know whether what was said is true or false, but the hon. Gentleman has put the facts on the record. I am sure that that point can be sorted out later, no doubt over a cup of tea.
Stephen Doughty
On a point of order, Mr Deputy Speaker. I am sorry to raise another point of order, but the hon. Member for Vale of Glamorgan suggested that I may have misled the House—
Mr Deputy Speaker
Order. Let me reassure both hon. Gentlemen that I am not going to decide who is right. You have each claimed that you are right and that the other is wrong. It is on the record, and people can make up their minds tomorrow. I want to continue with this debate.
Chris Leslie
My hon. Friend the Member for Cardiff South and Penarth may have time later to elaborate on the quote. It may be incorrect, and we will see whether journalists want to look into that.
Kwasi Kwarteng
I have no idea what the hon. Gentleman is talking about. I am very pleased and somewhat flattered that he should be referring to the Free Enterprise Group on the Floor of the House. What was the size of the deficit when his party left government in 2010? What was the absolute size of the deficit and what was the proportion of the deficit—
Chris Leslie
The national debt was about £800 million. The national debt—[Hon. Members: “The deficit.”] I know what the hon. Gentleman said. I could hear what he said. I am giving him the figures. The national debt—[Interruption.] It seems that Government Members do not want to talk about the national debt. The national debt was about £800 million. It is now £1.2 trillion. As Brucie might say, “Higher, higher!”
Mr Deputy Speaker
It had better be a point of order, Mr Newmark, if you want to get in early. I do not want to have to put you near the bottom, because I know that this matter is important to you.
Mr Deputy Speaker
Order. I was not taking a point of clarification, but a point of order.
Mr Newmark
It is a point of order, Mr Deputy Speaker. The hon. Member for Nottingham East (Chris Leslie) was asked a question about the deficit. Unfortunately, his answer was about debt. Rather like Rev. Paul Flowers, he does not know basic economics. [Interruption.]
Mr Deputy Speaker
Order. I will let that go. It is up to the shadow Minister how he wishes to answer the question. It is not for you, Mr Newmark, to waste the House’s time on an irrelevant—[Interruption.] Order. On an irrelevant point of order. If you do not mind, we will have no more.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. You also want to speak, Mr Davies. You are constantly on your feet. I want to hear Mr Leslie. I also want to hear what the Government have to say. I will not hear either of them with the amount of time we have taken so far.
Chris Leslie
That is a good point, Mr Deputy Speaker, so I will be brief in talking about the hon. Member for Spelthorne and the Free Enterprise Group. The Free Enterprise Group published plans to slap a 15% increase on essentials such as food and children’s clothes through VAT and to triple the tax on heating bills. A number of hon. Members who are in the Chamber today are members of the Free Enterprise Group. They might be shuffling away from the hon. Member for Spelthorne now.
Helen Jones (Warrington North) (Lab)
Does my hon. Friend realise that the reason why some of us worry about the proposals of the Free Enterprise Group is that they are all of a piece with what the Tories have done already, including a drop of £35 a week in real wages in my constituency, the imposition of the bedroom tax on the poorest people and, contrary to what they say, increases in council tax for the poorest people? The reason Tory Back Benchers worry about being seen as the party of the rich is that they are the party of the rich.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I am concerned because the debate has been going for 36 minutes already. The time limit on Back-Bench speeches is due to be five minutes. I do not want it to go below that. At this rate, a lot of Members will drop off the list.
Chris Leslie
I want to draw my remarks to a close, so I will not take any more interventions.
In a moment, my hon. Friends will be subjected to the Minister claiming that the Government alone are responsible for the long overdue return of economic growth. What he cannot grasp is that growth is appearing despite his policies, not because of them. As the Nobel prize-winning economist, Paul Krugman, said of the Government’s attitude just the other day,
“It’s like hitting yourself over the head with a baseball bat for years. Then, you stop hitting yourself with the baseball bat and say, ‘See? I feel much better now—hitting myself with a baseball bat was clearly the right thing to do’.”
That sums up their view perfectly. They do not understand that only the return of strong economic growth will tackle the deficit in any meaningful way. Three years on, they still have not cottoned on.
The reason we have a cost of living crisis is that the historic connection between economic growth and household wealth has been severed. Even though it looks like we are finally seeing some growth in some parts of the economy, that growth is not being shared fairly. Indeed, GDP per capita remains flat. I pay tribute to the companies and households that have managed to keep it together despite the Chancellor’s inaction. What we need now is help for those who are trying to do their best—the people who never complain, who never say that they should be at the front of the queue, who go to work and who manage as best they can. Those people need real help with their energy bills and child care costs. They need us to tackle low pay and to freeze business rates for small firms.
The challenge for the autumn statement is to take action now on the cost of living, not to use sleight of hand to pile more burdens on the taxpayer. We need long-term reforms that ensure that there is a balanced recovery that is built to last, not short-term, knee-jerk flip-flopping. We need fairness for the many, not tax cuts for the few. The Government are out of touch with the mood of the public—the wealthy elite are looking after the wealthy elite and are all in it together. They are timid in the face of excessive profiteering from big energy companies, while the rest get broken promises on the economy and the deficit from a Government who are lurching to the right and reverting to type. The British people cannot afford this Government any longer. Britain deserves better.
Helen Jones
On a point of order, Mr Deputy Speaker. I note that the Chief Secretary to the Treasury is not present. Can you investigate whether that is because the Lib Dem part of the coalition no longer takes responsibility for economic policy?
Mr Deputy Speaker (Mr Lindsay Hoyle)
As the hon. Lady well knows, that is not a point of order. It is certainly not a matter for the Chair and does not want to be. I call the Financial Secretary.
Sajid Javid
I give way to my hon. Friend the Member for Bedford (Richard Fuller).
Sajid Javid
I will give way to my hon. Friends in a moment. The Opposition spokesman talked about breaking records, so let us take a quick look at Labour’s record breakers—they are enough to make Roy Castle jump up and down with excitement. Labour gave this country the deepest recession in living memory, and the biggest budget deficit in our post-war history, and the largest in the G20. To answer the question from my hon. Friend the Member for Bedford (Richard Fuller), Labour was borrowing almost £160 billion—£300,000 a minute, or £5,000 every second. Labour gave this country the largest bail-out the world has ever seen. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I find it strange that I cannot hear the Financial Secretary because Government Members are making so much noise. I would have thought they ought to listen to him, just as I wish to hear him.
Sajid Javid
I think the House missed hearing about another record breaker that Labour gave this country, which was the largest bank bail-out the world has ever seen. That is Labour’s legacy, and if the Opposition spokesman wants to apologise, he is welcome to do so.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Lady has made her intervention. She cannot keep going.
Sajid Javid
The hon. Lady needs to check her figures. She will see that, as I have said, the sharpest rise in the debt-to-GDP ratio took place during the last 10 years of the Labour Government.
Living Standards
Lindsay Hoyle Excerpts(10 years, 8 months ago)
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Mr Gauke
The fact that we have credibility in our fiscal policy means that the Governor of the Bank of England has been able to say what he has said about the greater certainty for interest rates, which is helpful for businesses. If we throw away that fiscal credibility, we will make life more difficult for businesses wanting to get credit.
We have talked about what the motion contains. It says that we should get more people into work: we agree with that. Over the year, employment has increased by 301,000, and unemployment has fallen by 49,000. In July, the claimant count fell, for the ninth consecutive month, to 1.44 million, the lowest level since February 2009. This is the result of a Government who have created the right tax and regulatory environment for businesses to flourish. The proposals from the Opposition would put all of that at risk.
We hear about bringing forward capital investment. We also recognise the need for infrastructure investment to spur the jobs and growth of the future, and that is why in June the Chief Secretary unveiled the biggest public housing programme for more than 20 years; the largest programme of rail investment since Victorian times; the greatest investment in our roads since the 1970s; fast online access for the whole country; and the unlocking of massive investment in cleaner energy to power our economy forward. We have increased expertise in Whitehall and we are working hard to deliver those projects as soon as possible.
The cost of living is an important issue, and we recognise that times are tough for many people. But let us look at the difference between the parties. Whereas we have reduced income tax for 25 million people—we have increased the personal allowance—the previous Government doubled the rate of income tax on low-paid workers. This Government have ensured that we have credibility so that we have been able to keep mortgage rates low: the Opposition would lose our credibility. Council tax doubled under the previous Government: it has been frozen under us.
The previous Government raised fuel duty 12 times while in office and had plans to raise it six more times subsequently—the equivalent of 13p per litre—and we have frozen fuel duty. When we came to office, the UK had almost the highest child care costs in the world, and we will help families with child care. Energy bills soared under Labour. Between 1997 and 2010, the average domestic gas bill more than doubled. Electricity bills went up by more than 50% and Labour remains committed to an expensive 2030 decarbonisation target that will only add to energy bills, whereas this Government are forcing energy companies to put customers on the lowest tariff. When it comes to beer duty, Labour planned to raise the tax: we not only froze it, we cut it.
My hon. Friend the Member for West Worcestershire (Harriett Baldwin), in an excellent speech, asked how we ensure that we have the sustainable growth that we need. We need sustainable public finances—an argument that we have made consistently and that has been consistently opposed by the Opposition. We need a highly skilled work force, and that is why 500,000 apprenticeships have been undertaken under this Government. It is why we are undertaking ambitious educational reform. We need welfare reform, with a system that makes sure that work is rewarded—not something that we inherited from Labour. We need a competitive tax system that encourages investment in the United Kingdom, not one that drives it away. We need to deal with the regulatory burdens that prevent growth—we have undertaken planning reform, which will help to increase housing supply.
What do we get from the Opposition? We get a Labour party that presided over a squeeze in living standards from 2003; a Labour party that must accept some responsibility for the deepest recession in a century; a Labour party that doubled the rate of income tax on low-paid workers; a Labour party that planned for increase after increase in fuel duty; a Labour party that remains signed up to decarbonisation targets that would increase energy prices; a Labour party that has consistently set out an economic policy that would consist of more borrowing, an approach that would lead to higher mortgage rates and ultimately higher taxes; and a Labour party that has opposed our council tax freeze. For Opposition Members to lecture us on living standards is extraordinary. As President Obama might have said, it is the audacity of the hopeless.
If we want to help hard-working people—I think we all do—it is vital that we stick to the task. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are too many private conversations. I am struggling to hear the Minister.
Financial Services (Banking Reform) Bill
Lindsay Hoyle Excerpts(10 years, 10 months ago)
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Michael Fabricant (Lichfield) (Con)
On a point of order, Mr Deputy Speaker. In the light of the fact that the International Monetary Fund has upgraded the United Kingdom’s projection for growth, and that the European zone’s projection has been downgraded, I wonder whether you have been given any indication whether the Chancellor of the Exchequer will be making a statement, as I, for one, would like to congratulate him.
Mr Deputy Speaker (Mr Lindsay Hoyle)
On the last part of the hon. Gentleman’s question, I think that he has already achieved what he wants. The answer to the first part of his question is no.
Third Reading
Guy Opperman (Hexham) (Con)
After the global banking crash, my constituents in Northumberland wanted to see better banking, higher standards, fewer scandals, greater competition and a greater degree of choice and service. In the past three years, this Government have been on a slow but continual journey to reinvigorate British banking and clear up the mess that we inherited.
I believe that over the next couple of years smaller regional banks will spring up throughout this great country, and I want briefly to address the House on that matter. Paragraph 49 of the banking commission’s main summary gives an excellent summation of its views on competition in retail banking. I refer anybody interested in this to the grave and weighty paragraphs 313 to 343 of the larger volume, where they will see, in particular, the evidence of Anthony Thomson, the co-founder of Metro Bank, with whom I have worked at great length over the past two years to try to reinvigorate the regional banking market.
That culminated in a series of efforts that have been made with the various regulatory authorities, starting with meetings that my hon. Friend the Member for Chichester (Mr Tyrie) and I had in February 2012 with Mr Hector Sants, the then chief executive of the Financial Services Authority. Mr Sants followed that up by writing on 12 March 2012:
“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms…there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.
Those were wise words and a significant step by the then chief exec of the FSA.
Then came the Bill that became the Financial Services Act 2012, which, I am pleased to say, passed its Second Reading in this House on 23 April 2012. To my surprise, the Labour party voted against clause 5, which specifically emphasised
“the ease with which new entrants can enter the market, and…how far competition is encouraging innovation.”
Be that as it may, the banking commission and other parties hugely improved the approach to regional banking. I support the efforts of everyone involved and echo the words of the Minister and the shadow Minister.
Following a huge amount of effort outside this House to encourage regional banking, Mr Thomson and I held a conference in Gateshead on 7 June that was attended by 142 delegates, including the Minister. More important, however—this is of key relevance to the banking commission’s findings—Sam Woods, the director of the domestic UK banks division at the Prudential Regulation Authority, and Victoria Raffe, the director of authorisations at the Financial Conduct Authority, were also in attendance on that day. Those two people are in effect the gatekeepers of regional banking and of the authorisations and regulation that lie ahead. They were welcome and made the case that regional banks are the way ahead.
I for one expect at least three or four banks to spring up in the north-east over the next 12 to 18 months, ranging from asset-backed lenders such as Cambridge & Counties bank—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I know that the hon. Gentleman is going to draw his speech into the Third Reading, because this is the Third Reading debate. The two must come together and it would be helpful if that happened sooner rather than later.
Guy Opperman
I will totally draw it into Third Reading, Mr Deputy Speaker. Those particular persons are very much affected and are working hand in glove with the Bill, which I support wholeheartedly.
John Mann
I sit on the Treasury Select Committee; the hon. Gentleman served on it, so we have a modicum more information on these matters, as do other hon. Members, than our constituents. Nothing has changed for them, however. Fundamentally, there has been no segmentation of the market, which is why the new challenger banks are getting no further. Only a tiny, tiny proportion of business is going to them. We have not restructured, even though in RBS and Lloyds TSB we have the perfect opportunity, owing to the crisis, to restructure. Across the world, we see vast numbers of people suffering and Governments of every political persuasion being voted out because of the financial crisis and the decisions they have made. This Government might face the same dilemma. I am not commenting on whether the decisions on the deficit and debt are right or wrong economically, politically or socially—that is a critical debate, but it is a different debate—but the fact that we are in this situation and we are not addressing it for the future in anything but the most micro-management way is part of that weakness.
The Government might want to give themselves plaudits and say, “Well, perhaps we’re doing a little better than the Government of Greece or Spain,” or whichever Government it is. The Americans can slap themselves on the back and say, “Unlike the Brits, we’ve got our act together. We’ve targeted their banks. We’ve portrayed them as the wrongdoers. We’ve managed to shift some of the powers to ourselves,” which is precisely what is going on among the political, banking and business classes in Washington and New York. They are winning that battle.
I will end on this point. This is a world crisis. My research document proves that every one of the top 50 banks in the world, without exception, have been involved in criminality in recent times. That is staggering for any industry. For us to hold that industry together with sticking tape, not even with the most damaged and shattered elements, including those that have had to be nationalised, such as Lloyds TSB—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Mann, your time is up—that is the story of your life at the moment.
Financial Services (Banking Reform) Bill
Lindsay Hoyle Excerpts(10 years, 10 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 3—Professional standards—
‘After section 65 of FSMA 2000 insert—
“65A Professional Standards
(1) The regulator will raise standards of professionalism in financial services by mandating a licensing regime based on training and competence. This must—
(a) apply to all approved persons exercising controlled functions, regardless of financial sector;
(b) specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules;
(c) make provisions in connection with—
(i) the granting of a licence;
(ii) the refusal of a licence;
(iii) the withdrawal of a licence; and
(iv) the revalidation of a licensed person of a prescribed description whenever the appropriate regulator sees fit, either as a condition of the person continuing to hold a licence or of the person’s licence being restored;
(d) be evidenced by individuals holding an annual validation of competence;
(e) include specific provision for a Senior Persons Regime in relation to activities involving the exercise of a significant influence over a controlled function under section 59 of the Act.
(2) In section 59, remove “authorised” and insert “licensed” throughout the section.”.’.
New clause 4—Duty of Care—
‘At all times when carrying out core activities a ring-fenced body shall—
(a) be subject to a fiduciary duty towards its customers in the operation of core services; and
(b) be subject to a duty of care towards it customers across the financial services sector.’.
New clause 5—Remuneration reform—
‘Within six months of Royal Assent of this Act the Chancellor of the Exchequer shall, in consultation with the appropriate regulation, lay before Parliament proposals on reform of remuneration at UK financial institutions which shall include incentives to take account of the performance and stability of a UK financial institution over a five- to 10-year period.’.
New clause 7—Protection for whistleblowers—
‘(1) After section 43B(f) of the Employment Rights Act 1996 there is inserted—
“(g) that a breach of regulated activities under FSMA 2000 or the Financial Services Act 2012 has been committed, is being committed, or is likely to be committed.”.
(2) After section 43B(5) of the Employment Rights Act 1996 there is inserted—
“The chairman of the board of directors of any relevant UK financial institution will be informed of any protected disclosure made by a worker which qualifies under the terms of Part IVA of this Act.”.’.
New clause 11—Reckless misconduct in the management of a bank—
‘(1) Within the three months of Royal Assent of this Act the Government shall publish proposals for the creation of a new criminal offence of reckless misconduct in the management of a bank.
(2) The new offence in subsection (2) should cover those approved persons who are licensed under a Senior Persons Regime.
(3) The Government shall bring forward further proposals within three months of Royal Assent of this Act for the civil recovery of monies obtained by individuals who have been found guilty of reckless misconduct in the management of a bank.’.
New clause 13—Financial Services Crime Unit—
‘(1) The Treasury shall conduct a review into the creation of a Financial Services Crime Unit and consult on its proposals for the Financial Services Crime Unit’s powers and responsibilities.
(2) The Treasury shall lay its proposals before both Houses of Parliament no later than six months after this Act comes into force.’.
Stephen Barclay
In speaking to new clause 2, which I will not press to a vote, I wish to follow the line of argument pursued by my right hon. Friend the Member for Wokingham (Mr Redwood) on new clause 9. He drew attention to the tension created by building up capital while also lending more and used the analogy of driving with one foot on the accelerator and the other on the brake. If I may, I will take a step outside the car. With new clause 2, I wish to draw the House’s attention to a similar, I am sure unintended tension. The Government are taking a positive step forward, because in paragraphs 2.13 and 2.14 of their response to the parliamentary commission’s report, they make the welcome announcement that they accept the premise of reversing the burden of proof. In doing so, however, they will adopt a measure suggested in paragraphs 1170 and 1171 of the commission’s report that will create a potential handicap. A new condition will be attached to using that burden of proof, whereby the regulator must have concluded a successful enforcement action against the firm prior to doing so.
I do not think there can be any doubt about the merits of reversing the burden of proof. It is clear that if the regulator is required to sift through reams of e-mails looking for evidence to incriminate a senior banker, it will be a time-consuming and costly exercise. It is also highly likely that it will fail, because senior executives are not so stupid as to write boastful and wilful e-mails such as we saw from some of the LIBOR traders, who bragged of having their bottles of Bolly. Most senior executives are wise to the risks of e-mails and would not fall into such a trap. It is proportionate and reasonable to argue that senior executives who say that their hands-on leadership is sufficient to justify very high individual bonuses should also, on the other side of the coin, be able to demonstrate that they have personally acted reasonably.
The Government’s announcement that they will reverse the burden of proof is extremely welcome. However, the acceptance of paragraph 1171 of the Commission’s report could lead to a real impediment. If we open the door to personal enforcement, why would a chief executive wish to settle on behalf of their firm? We are trying to make it easier for the regulator to focus in a time-efficient and cost-effective manner on the individuals who should be held responsible, but that will be impeded by the additional requirement for enforcement to be concluded against the firm. The senior leadership whom we want to target will be incentivised to drag out proceedings and impede any settlement with the firm. I do not believe that is the Government’s intention, but I wished to draw the Minister’s attention to it so that the issue could be discussed in more detail and tackled in the other place.
I do not share the confidence of some colleagues who have spoken about the ability of criminal sanctions to operate effectively. They are a welcome tool to have, and many of our constituents would like the golden handcuffs to be replaced with the prison variety. Indeed, the images on US television of white-collar arrests and convictions have a powerful deterrent effect. My concern, however, is that if we look at the individual fines and enforcement to date, we see that the regulator has struggled to reach the evidential level required to prosecute individuals successfully. Now we are suggesting that it will have to meet a higher standard of proof to secure criminal convictions. It is a bit like asking a hurdler who has just failed at one level to jump over a much higher hurdle.
The reversal of the burden of proof is one aspect of what we need, and the deterrent effect of criminal sanctions is another, because it brings with it the power of the headline. The question is, will we fall into the trap that we so often fall into in this House of passing legislation that sounds tough but proves difficult to use in practice? My fear is that the standard of proof required of the regulator to deliver a criminal prosecution will make it a tool that is rarely used.
We therefore need to consider how we can target individuals, not firms, because that will drive the culture of firms. Currently, where there is wrongdoing, a firm will settle quickly and get a 30% discount. The more junior staff—the heads of the divisions responsible—are quickly exited, and the senior staff wilfully claim blindness, because the most controversial briefings are usually done orally. Reversing the burden of proof will address part of the ill, but through the new clause I wish to draw attention to the limitations of fines on firms, which at the end of the day penalise shareholders and pension funds. Our constituents pay twice—first for the bail-out, and then through the impact on their shareholding.
Margaret Thatcher Day Bill
Lindsay Hoyle Excerpts(10 years, 10 months ago)
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Thomas Docherty (Dunfermline and West Fife) (Lab)
On a point of order, Mr Deputy Speaker. Perhaps it would be helpful to the Government Whips if they were to read “Erskine May” to see how the process works.
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order, but it might have been helpful if they had struggled a little longer to get through the Lobby.
Mr Bone
I beg to move, That the Bill be now read a Second time.
The Bill would amend the Banking and Financial Dealings Act 1971 so that the last Monday in August is known as Margaret Thatcher day. Baroness Thatcher was without doubt one of the greatest Prime Ministers in living memory—[Interruption.]
Mr Deputy Speaker
Would Members please be quiet, because I am trying to hear Mr Bone. It would be helpful if those leaving the Chamber would do so quietly.
Mr Bone
Mrs Thatcher was a great stateswoman, a true patriot, and an inspiration to the masses. She not only did our country a great service but gave Britain back its pride and returned it to prosperity after some of the darkest economic days in recent decades. She gave us a legacy to be proud of. It is rare to find—
Mr Deputy Speaker
This had better be a serious point of order, Mr Docherty, because we are interrupting the hon. Gentleman’s speech for the third time. Are you serious or are you not?
Finance Bill
Lindsay Hoyle Excerpts(10 years, 10 months ago)
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Catherine McKinnell
I thank the Minister for his comprehensive account of new clause 7 and for responding to our queries. As he has said, the Government want to introduce a number of new clauses and amendments to the Bill. Could you clarify, Mr Deputy Speaker, whether we are dealing with just new clause 7 at this stage, or are we taking any other amendments?
Harriett Baldwin (West Worcestershire) (Con)
Is it appropriate, Mr Deputy Speaker, that I now speak to amendments 52 and 53, tabled in my name?
Mr Deputy Speaker
No.
Question put and agreed to.
New clause 7 read a Second time, and added to the Bill.
Clause 175
Election to be treated as domiciled in the United Kingdom
Mr Gauke
I beg to move amendment 1, page 105, leave out lines 4 to 13 and insert—
‘(3) Condition A is that, at any time on or after 6 April 2013 and during the period of 7 years ending with the date on which the election is made, the person had a spouse or civil partner who was domiciled in the United Kingdom.
(4) Condition B is that a person (“the deceased”) dies and, at any time on or after 6 April 2013 and within the period of 7 years ending with the date of death, the deceased was—
(a) domiciled in the United Kingdom, and
(b) the spouse or civil partner of the person who would, by virtue of the election, be treated as domiciled in the United Kingdom.’.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss Government amendments 2 to 7 and 35 to 51.
Mr Gauke
These Government amendments make important changes to the UK’s inheritance tax rules.
Amendments 1 to 7 will bring in greater flexibility and provide more individuals with the option to elect to be treated as UK domiciled for the purposes of inheritance tax. They demonstrate the Government’s willingness to listen to the views of external interested parties and act where there is a principled case for change.
Amendments 35 to 51 are being made as a result of comments by interested parties. They clarify the technical interpretation of the legislation and change the commencement provisions with respect to certain liabilities.
Let me turn first to amendments 1 to 7 to clause 175. The clause reforms the inheritance tax treatment of transfers between UK-domiciled individuals and their non-UK-domiciled spouses or civil partners. The changes allow individuals who are not domiciled in the United Kingdom but who have a UK-domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of inheritance tax.
The amendments are being made following comments from two key interested parties—the Chartered Institute of Taxation and the London Society of Chartered Accountants—about how the Finance Bill as drafted amends the inheritance tax treatment of spouses and civil partners not domiciled in the UK. Their further representations since the publication of the Bill in March have helped us understand the concerns raised in more detail. Considering the points raised has taken time, but the amendments will resolve these issues.
The clause as drafted stipulates that a person must be non-UK-domiciled and married at the time they make an election. Consequently, a person who has recently become UK domiciled would not be able to make a retrospective election that would cover a period when he or she had been non-domiciled. Effectively, they are trapped if they are not aware of the possible IHT consequences at the point just before they become UK domiciled—for example, if they decide to remain in the UK indefinitely after having children here. This might be especially harsh in situations where the original UK-domiciled spouse dies suddenly having made potentially exempt transfers to the surviving spouse.
Similarly, the Bill as drafted requires a person to remain married to, or in a civil partnership with, the UK-domiciled spouse or civil partner throughout the “relevant period” preceding the election, which can be up to seven years. Therefore, in circumstances where the marriage or civil partnership has been dissolved and the person is a non-domiciled individual, they are prevented from making an election retrospectively and hence prevented from gaining access to spousal relief for the period when they were married in return for their overseas assets being brought into IHT. That was not the intention of the policy.
Amendments 1 to 7 remove the condition that a person must be non-UK-domiciled at the time of making an election. They also remove the requirement that the person making the election is married or in a civil partnership with the UK-domiciled individual throughout the relevant period. The amended clause stipulates instead that they were married or in civil partnership at any time during the relevant period.
As a result of these amendments, individuals who are domiciled in the UK but who were previously domiciled elsewhere will be able to make a retrospective election. Similarly, the amendments will also enable individuals previously married or in a civil partnership to make a retrospective election following divorce or dissolution. This will ensure that changes in domicile or marriage status do not restrict the ability of individuals to elect to be within the UK inheritance tax system.
Amendment 1 simply removes a sub-paragraph that is no longer required as a consequence of amendments 2 to 6, while amendment 7 provides clarity that the provision for revoking an election applies only to the person who made the election and not to that person’s personal representatives.
Let me now turn to amendments 35 to 51 to schedule 34. Clause 174 and schedule 34 reform the inheritance tax treatment of outstanding liabilities. They introduce new conditions and restrictions on when a liability can be deducted from the value of an estate.
The current rules allow almost all outstanding liabilities at death to reduce the value of an estate, irrespective of how the borrowed moneys have been used, or whether the loan is repaid following the death. That creates opportunities for avoidance and can lead to decisions and arrangements being made purely for tax reasons. A range of contrived arrangements and avoidance schemes on the market seek to exploit the current rules. The number of those is expected to grow as other avoidance routes are closed off.
There is an inconsistency in how the current rules treat liabilities that are used to acquire assets that qualify for relief, but that are secured against different types of assets. That creates an advantageous tax position and distorts decision making by encouraging individuals to secure business loans against their personal property where there may be no need to do so. The Government believe that the tax system should neither encourage nor penalise the choice of one form of security over another.
Clause 174 and schedule 34 address those opportunities for avoidance and inconsistency in three ways. First, deductions will be disallowed where the loan has been used to acquire excluded property—that is, property which is excluded from the charge to inheritance tax. Secondly, where the loan has been used to acquire relievable property—that is, property which qualifies for a relief—the relief will be allowed against the net value of the property after deducting the loan. Thirdly, the loan will generally be allowable as a deduction only if it has been repaid from assets in the estate.
The Government are making those changes to improve the integrity and fairness of the inheritance tax system, close avoidance opportunities and remove the inconsistency in the treatment of loans.
Following the publication of the Finance Bill in March, Her Majesty’s Revenue and Customs has received comments from representative bodies, practitioners and individuals that have highlighted sections of the legislation that could be clarified. Interested parties have also expressed concern that the new provisions will apply retrospectively where individuals have secured business loans on their non-business property for commercial reasons, rather than for avoidance purposes, before the changes were announced. Those individuals would face a higher IHT bill if they died before the debt was repaid.
Amendments 35 to 49 clarify the interpretation of the legislation to ensure that it works as intended, and address some of the technical issues identified in feedback. If a loan has been used to acquire excluded property, which later becomes chargeable to IHT, amendment 37 will allow the deduction for the liability. Conversely, if chargeable property subsequently becomes excluded property, the amendment will deny the deduction.
Where a loan has been used to acquire relievable property and that property is given away before death, amendments 41 and 42 will ensure that the liability is not deducted again against other types of property if it has already been taken into account. Amendment 45 will widen the meaning of “estate” to allow the liability to be repaid from property that is usually treated as being outside a person’s estate for IHT purposes, such as foreign property that is owned by an individual who is not domiciled in the UK. Where a loan has not been repaid and the deduction is disallowed, amendment 47 will make it clear that the liability will not reduce the amount that would be eligible for the inheritance tax exemption for transfers between spouses or civil partners.
The Government recognise that some lenders may require security in the form of personal assets and that individuals who have secured existing loans against their personal property to finance business investment may not be able to restructure the loan or unwind the arrangements. Amendments 50 and 51 will therefore amend the commencement date so that the new rules dealing with liabilities incurred to acquire relievable property will apply only to new loans taken out on or after 6 April 2013. That will mean that someone who took out a business loan in the past secured against their other assets will not be affected by the new provisions.
The commencement date for the other provisions in schedule 34 will remain unchanged as the date of Royal Assent. Those provisions will apply to other liabilities, irrespective of when they were incurred.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are wandering away from the amendment, and I know the hon. Lady just wanted to make a point on the amendment.
Catherine McKinnell
My point relates specifically to the amendment, Mr Deputy Speaker. Many businesses that manage to obtain funding are often required to provide their home as security. If this provision has a detrimental impact on small businesses and puts family homes in jeopardy, will the Government keep it under review?
Mr Deputy Speaker
With this it will be convenient to discuss Government amendments 9 to 16.
Mr Gauke
Clause 14 and schedule 2 provide a wide-ranging simplification of the four tax advantaged employee share schemes, following recommendations by the Office of Tax Simplification. The Government are introducing amendments 8 to 16 to provide further clarity on the rules that apply where company events involving “general offers” take place. When clause 14 was discussed in Committee, we highlighted some of the improvements that we are making to simplify the tax advantaged employee share schemes, and I shall provide hon. Members with some background on the specific provisions relating to these amendments.
Current legislation allows employees affected by certain company events, such as takeovers, to exchange their original scheme shares or options for shares or options in the acquiring company. The schedule also creates new rights for participants to realise scheme shares or exercise options without tax liability in the event of a cash takeover of their company.
Earlier this year, a tax tribunal hearing a particular case published a decision on what constitutes a “general offer” for the whole of the ordinary share capital of a company. Following this decision, and a number of requests from taxpayers and advisers, the Government consider it desirable to clarify the scope of what constitutes a “general offer” for the purposes of the provisions. The amendments clarify the position across all four tax advantaged employee share schemes, and confirm the rules as they have been consistently applied by HMRC. Our aim is to remove any uncertainty for advisers and taxpayers, consistent with the general simplification theme of the changes. The amendments, alongside the changes that already form part of the Bill, demonstrate the Government’s commitment to simplifying and clarifying the tax rules where possible.
The Economic Secretary to the Treasury (Sajid Javid)
I beg to move amendment 17, page 205, line 7, after ‘(g)’, insert ‘or (4A)’.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Government amendments 18 to 29.
Amendment 52, page 213, line 2, at end insert—
‘(aa) the policy has an annual premium of £3,600 or less.’.
Amendment 53, page 213, line 2, at end insert—
‘(ab) the policy is subject to capital gains tax.’.
Sajid Javid
Amendments 17 to 29 make a number of technical changes to schedule 9 and clause 25 to ensure that the qualifying insurance policy regime works as intended. Let me set out some brief background to these changes. The qualifying policy regime was introduced in 1968 to preserve pre-existing tax treatment for traditional moderate value, long-term, regular premium savings policies that contain a significant element of life insurance.
No upper limit was set for the investment premiums that could be paid into a QP, which allowed individuals to obtain unlimited relief from higher rates of income tax. In the 2012 Budget, the Government announced a restriction to the tax relief available for QPs. Clause 25 and schedule 9 introduce an annual premium limit of £3,600 on qualifying life insurance policies. This restriction limits the amount of premiums payable into QPs for an individual to no more than £3,600 in any 12-month period, with effect from 6 April 2013.
This measure supports the Government’s objective of promoting fairness in the tax system by ensuring that tax reliefs for QPs are correctly targeted. Consultation since the Bill was introduced has continued and identified the need for Government amendments to clause 25 to deal with points of detail in 13 areas. None of these represents a change of policy; as I have said, they are technical adjustments to ensure that the rules operate effectively and as intended. The amendments have been discussed with industry representatives and have benefited from the comments received.
Let me briefly explain the amendments in slightly more detail. The purpose of the changes is to provide flexibility to deal with potential future exclusions from the non-assignment rule and potential future exclusions from the circumstances under which beneficiaries must make statements, to extend the period by which an individual must first make a statement and to clarify what information an insurer must provide and obtain from a policy beneficiary and what an insurer must provide to HMRC. In addition, a number of amendments make minor corrections or consequential changes to the more material changes that I have described.
If I may, Mr Deputy Speaker, I will speak to amendments 52 and 53, standing in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin), at the end of the debate.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I do not think that we need to worry about that. We should stick to the amendment.
Cathy Jamieson
Thank you for that guidance, Mr Deputy Speaker. I had feared that the Exchequer Secretary would jump up and ask a supplementary question about the Opposition’s position on cutting VAT.
Jack Dromey
There was an office block speculator called Harry Hyams. Those were the days when people could build office blocks and not pay rent on them, and they would appreciate two or three times in value every year. That happened against the background of a chronic housing crisis. We rightly protested against that and the incoming Labour Government rightly changed the law for—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are trying to deal with an amendment. Going down memory lane is all very well, Centre Point is very interesting and Mr Mann will always have a response, but I know that Members are desperate to get back to the amendment.
Jack Dromey
You are right, of course, Mr Deputy Speaker.
We are here to stand up for the people we represent, and we all see the impact of the housing crisis in our constituencies. I see the impact in the shortage of homes being built in Erdington—56 certified by the National House-Building Council in 2012—and the building worker, one of 79,000, who lost his job, a big man who burst into tears on his front doorstep in Marsh lane and said, “I’ve lost my job three times; I am desperate to provide for my family. I simply can’t cope any longer.” I also see the impact on the homeless families who come to my surgery—on one occasion, they had just been evicted—desperate for a decent home, and the young people in the Orchard project run by the YMCA in my constituency, where numbers of young homeless people double every year.
Finance Bill
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Chris Evans
When Conservative Members were talking about the Laffer curve, Ronald Reagan came to mind. For some reason, when the hon. Gentleman stood up, Ronald Reagan came to mind again, as I recalled him saying to Jimmy Carter in the 1980 election campaign, “There you go again.” The person sitting tonight at their kitchen table, worrying about paying the rent, the mortgage, the gas bill or the electric bill, and watching this debate—although given the time they will probably be watching “Pointless”—[Interruption.] I walked into that one. They might be watching ITV instead—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that is enough about television shows.
Chris Evans
I was just wondering what the man at the kitchen table was watching. I apologise, Mr Deputy Speaker. All we hear is the same old debate and the same charge that it is all the Labour Government’s fault, so let me challenge the hon. Member for Bedford (Richard Fuller).
Geraint Davies
I am grateful for my hon. Friend’s enormous generosity in giving way again. Is she aware—I am sure she is—that property prices in London have grown so much that some local authorities have greater asset value than the entirety of Wales? Therefore, the mansion tax is a sort of cap—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Davies, you were right when you said that you have intervened a lot. I do not mind you intervening but please do not take up so much time that you are almost making a speech.
Sheila Gilmore
I was not aware of the figure to which my hon. Friend the Member for Swansea West (Geraint Davies) refers, but if that is the case, it is a fascinating reflection on the huge differences between different parts of the country. If we do not do something about that soon, we will regret it in the near future.
Labour Members are constantly berated about the fact that we—the previous Government—abolished the 10p tax rate. At the same time, the current Government do not seem that keen on reintroducing it. We are accused of changing our mind, but it now appears that the Government are changing theirs. When the 10p tax rate was abolished, they attempted to make great political capital out of the issue—fair enough; that is what politics is about—and they have done so since by saying that it was a bad thing for us to have done and should not have happened. Now we are talking about reintroducing a 10p tax rate, and suddenly that is a bad thing to do. For people in low-paid employment—of whom there are many—there are advantages in having a more graduated taxation system that enables them to build up disposable income as they go. As we know, disposable income has fallen for many households in this country, which is a serious matter.
Looking specifically at the new clause, I hope it is not unreasonable to suggest that we consider and study such a measure. It perhaps prompts the question of why the Government are so against it, because if they are sure that a study would show that it would not be practicable or successful, there is nothing much to lose. From what the Minister said during an intervention, it sounds as if the Government may have already done some work on the provision, and on that basis, it should not be so difficult. People in the country want to see whether the measure could be a feasible means of ensuring that those who have asset wealth pay their fair share.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure that the hon. Lady must be getting to the point at which she links her remarks with the new clause. I am struggling to see the link at the moment.
Sheila Gilmore
The link is that some would argue that a mansion tax would be oppressive on people who may live in a house that is valued at more than £2 million, but have a very low income, and they should not be expected to find that payment. As has been suggested to my constituent and others, such people may wish to consider taking in a lodger, releasing some of their equity or downsizing. I suspect that downsizing with that type of property would be easy. I would hope, therefore, that such arguments would not be made against a mansion tax. I hope that the Government will support the new clause, because if their arguments are as strong as they say, they will be able to disprove our case very quickly.
Chris Evans
I, too, hope to see them in the Lobby, but I am sure that they will not be there. That is the wonderful thing about the Liberal Democrats: it is the only party that can support something—have the bare-faced cheek to stand up in favour of something—and then vote for the exact opposite in the Division Lobby. That is what the Liberal Democrats should remember: in the marginal seats that they need to hold on to, they will be judged on their priorities—[Interruption.] Does the hon. Member for Eastleigh want me to give way to him, or is he happy to listen? [Interruption.] Indeed, we do not usually hear from a Liberal Democrat.
The Liberal Democrats will be judged on their priorities, and their priorities have not been what they said they would be. They are not for the students; they are not for the elderly; they are not for the poorest paid in society: they are simply there to prop up this coalition Government. They are becoming nothing but voting fodder for this Tory Administration. I notice that the Tory Members were nodding when I said that. If any further proof were required about who is in the senior part of—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Evans, I gave you a little leniency on the earlier new clause, but on this one, we have got so far off the mark that I do not know how to drag you back. I am worried about the time ticking away, and it would be better for the House if you spoke to the new clause. I am sure that that is exactly what you are going to do next.
Chris Evans
I have the Bill in my hand, Mr Deputy Speaker, and I am going to come to the relevant clause.
Mr Deputy Speaker
Having the clause in the hon. Gentleman’s hand is not necessarily helpful; it is what he says that matters more.
Chris Evans
I was just coming on to that point, Mr Deputy Speaker, I just needed time.
Chris Evans
I ask anybody who says that this mansion tax cannot be introduced to read clause 92, which relates to the annual tax on enveloped dwellings. Under the heading of “Charge to tax”, it states:
“A tax (called ‘annual tax on enveloped dwellings’) is to be charged in accordance with this Part…Tax charged in respect of the chargeable interest if on one or more days in a chargeable period…the interest is a single-dwelling interest and has a taxable value of more than £2 million, and…a company, partnership or collective investment scheme meets the ownership condition with respect to the interest.”
That seems very much like a mansion tax to me. Clause 97 goes on to state:
“The amount of tax charged for a chargeable period with respect to a single-dwelling interest is stated in subsection (2) or (3).”
A table then sets out the annual chargeable amounts, highlighting the taxable value of the interest on the relevant day. It shows that if the property is worth more than £2 million but not more than £5 million, it would raise £15,000; if it is worth more than £5 million but not more than £10 million, it would raise £35,000; if it is worth more than £10 million but not more than £20 million, it would raise £70,000; and if it is worth more than £20 million, it would bring in a whopping great £140,000. If that is not a step towards a mansion tax, I do not know what it is. But still—
Mr Deputy Speaker
Order. I can cope a little bit with this speech. The Liberals may well want to hear the hon. Gentleman, but he has to address the Chair. Constantly looking at the Liberal is not helpful for Mr Thornton, but it would be helpful for Mr Evans if he were looking at the Deputy Speaker. I am sure that the rest of his speech will be conducted through this Chair, rather than through the Opposition chair—much as Mr Leslie would provide him with advice, he really should speak to this Chair.
Chris Evans
I am sorry, Mr Deputy Speaker. Much as I think the Liberal Democrats believe that the world revolves around them—[Interruption.]