Finance (No. 3) Bill

Lindsay Hoyle Excerpts

Tuesday 3rd May 2011 Commons Chamber

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. As we know, we are debating the bank levy. There has been some stretching of the debate already, and we are in danger of stretching it even further. We have had a good debate so far, and I am sure that the hon. Gentleman will want to keep to the amendment.

[Mr Love]

I bow to your advice, Mr Hoyle. I will conclude my remarks about the lack of a growth strategy by saying that as an optimist, I believe that it is never too late. I hope the Government will think carefully and recognise that the growth strategy they produced on paper simply does not respond to the real needs of the economy.

I finish where I started, by commending the amendment to the Government. It poses no threat to them; it simply seeks to review the bank levy system that they are introducing. They will know, because they have spent a great deal of time on this, just how important the public think the role of the banks in getting our economy sorted out is. After all, it is widely perceived that the banks were the main cause of the problem in the first place, so people are looking to them to help our economy in a meaningful way. For the reasons that I have stated, the amendment will address some of those issues and provide an opportunity to examine how the levy is working in December. I hope that it will provide us with an opportunity to straighten out and ensure that the levy really addresses the needs of our country.

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[Chris Leslie]

On a point of order, Mr Hoyle. I understood that this was a Committee stage, and that we were considering the Bill in detail. Is it usual practice for a Minister responding to a debate not at least to give way and allow a dialogue on the clause in question?

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

That is not a point of order. It is up to the Minister to decide whether to give way, and I am sure that he heard the cries for him to do so.

[Mr Hoban]

Subsection (2)(a) of the amendment requires a report on

“the Government’s analysis behind the rate and threshold chosen for the bank levy”.

It might help Opposition Members if I explained how we designed the levy, and why we set the rate and threshold as we did. The levy is intended to ensure that the banking sector makes a fair and substantial contribution, reflecting the risks that it poses to the financial system and the wider economy. It is intended to encourage banks to move away from risky funding models, and complements the wider regulatory agenda to improve standards and enhance financial stability. During the crisis, it became clear that some banks had become over-reliant on short-term funding for long-term lending. When financial markets seized up, those banks were exposed.

I must emphasise that the levy is based on the liabilities of a bank, not on its assets. It is based on the bank’s deposits, its share capital and loans made to it, not on loans made by it. It applies to the global balance sheets of UK banks, building societies and banking and building society groups, and to the UK operations of banks from other countries.

In determining the scope of the levy, we concluded that foreign banks operating in the UK also posed potential risks to the UK financial system and the wider economy, whether they operated as branches or as subsidiaries. It therefore follows that they should contribute on the same basis, and branches and subsidiaries of foreign banking groups are included to ensure that they cannot avoid the levy by group restructuring. That will ensure the provision of a level playing field for all banks operating in the UK.

The levy will be paid by between 30 and 40 building societies and banking groups, and we have made it clear that we expect it to yield about £2.5 billion of revenues each year in its steady state. That appropriate contribution balances fairness with competitiveness, and the rates of the levy were chosen to allow it. We initially announced that a reduced rate would apply for 2011, recognising the uncertain market conditions prevailing at the time, but we no longer consider that to be necessary.

In December the Bank of England noted that the near-term outlook and resilience of the UK banking sector had improved. Markets also now have greater certainty about the timing and direction of regulatory change, with the Basel III regulatory reforms being introduced in 2013 and transition periods being extended to 2015. We therefore decided that from 1 March this year, the full rate of the levy should be introduced for 2011. The levy will now yield £2.5 billion in that year. The steady state target yield was set out last year, when we also announced our intention to make significant cuts in the main rate of corporation tax.

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[Mr Lammy]

On a point of order, Mr Hoyle. In Committee, when Ministers have not answered questions from Back Benchers, is it normal for them not even to give way? Surely the Financial Secretary could simply photocopy what he is reading out, and send that to all of us so we can go home?

[The Chairman]

That is not a point of order. It is up to the Minister to decide how he wishes to reply to the debate.

[Mr Hoban]

I think that is the best suggestion the right hon. Gentleman has so far made in this debate. I shall send a copy of my speech to all hon. Members who are interested in it, so they can then go home.

The levy is a permanent tax, and is part of our wider package of far-reaching reforms. It is designed to be consistent with global regulatory practices, drawing on proposals from the International Monetary Fund and reflecting emerging proposals from the Basel committee. Excessive risk taking in the financial sector was a significant contributory factor in the recent financial crisis. As I said earlier, the levy is intended to encourage banks to move away from riskier funding.

The levy should not be seen in isolation from other reforms to the banking system. Domestic, European and international banking reforms will change the landscape of banking. For example, Basel III will lead to higher capital levels, and its liquidity reforms will change the funding profiles of banks. There is a vigorous debate within the EU and the G20 about whether the holders of bank debt should be required to contribute to the recovery or resolution of banks, for example through the conversion of debt to equity. As I said earlier, we have established an independent commission on banking to consider structural and related non-structural reforms.

The hon. Member for Edmonton (Mr Love) raised issues to do with the implicit guarantee, to make sure the right reforms are in place so banks are not dependent on the guarantee from the taxpayer. We have tackled that issue, whereas when his party was in government, it failed to do so. I wish he would give us some credit for the action we have taken to reform the regulation of the banking system during the year in which this Government have been in office.

The final element of the report calls for information on the total tax revenues expected from banks in each year to 2016-17. We have been clear that we expect the levy to raise about £2.5 billion each year. We have also taken other steps to ensure that banks pay their fair share. The previous Government introduced the code of practice on taxation for banks, but they utterly failed to get banks to sign up to it. They talk tough now, but they failed when in government; only four of our leading 15 banks actually signed up to that code of practice when they were in office. By the end of November, however, all the top banks had signed up to the code, and by March 2011 some 200 banks had adopted it. We therefore need take no lessons from the Labour party about getting the banks to sign up to codes.

We are very clear that banks should make a contribution reflecting the risks they pose to the UK financial system and wider economy. While amendment 9 calls for a report, this Government are delivering action. We have already set out the reason for the rates chosen and the decision to set an allowance at £20 billion. We have been clear on how the bank levy fits with and complements our wider reform package and we have been clear that we expect revenues from banks to grow as the economy recovers. We have also secured agreement from the top banks on the tax revenues they expect to pay over the spending review period. We are raising more in this levy than the previous Government raised through their one-off bank payroll tax. Labour Members refused to introduce a bank levy when they were in government. We backed it where they have failed to act and I ask hon. Members to support the clause.

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[The Parliamentary Secretary to the Treasury (Mr Patrick McLoughlin)]

claimed to move the closure (Standing Order No. 36).

[The Chairman]

Order. I think it would be of interest to the House to hear from the hon. Member for Nottingham East (Chris Leslie), and I am sure that he will not take too long.

[Chris Leslie]

Thank you, Mr Hoyle. The Chief Whip really needs to take a breath and perhaps calm down for a moment. [Interruption.] I did not quite put it in the way that the Prime Minister might.

The Financial Secretary to the Treasury usually does act honourably by trying to respond to the debate, and probably he secretly would have done so today. Our debate was wide ranging and we covered a number of specific points on the detailed design of the bank levy, with which he entirely refused to engage. He refused to give way in this Committee stage of the Finance Bill, which shows the Government’s thinly veiled contempt for the parliamentary process. No debate, no scrutiny and no contributions came from those on the Government Benches, other than the speech by the right hon. Member for Wokingham (Mr Redwood). They have accepted absolutely no challenge and no scrutiny. They have put their heads down and ploughed on—the Lansley strategy of policy making in action.

The Financial Secretary gave no explanation of why the Government set the banking levy at this puny £2.6 billion or why they have given a very generous tax-free allowance of £20 billion to the banks. Their original design, as set out in June, could have netted £3.9 billion, but when the banks complained the figure went back down to £2.6 billion. He says that we should not criticise the levy for being set at such a low rate because the French levy will raise less, but of course it will because the French banking sector is smaller. The fact is that our banking levy is being set at a third of the rate that the French are pursuing. He did not answer any questions on the netting of derivatives, the double taxation treaties or what would happen in terms of accounting practice. He certainly did not address the outrage in the country, never mind in the House, about the continuing appalling abuse of bonuses in the banking system. That is an obscene ongoing process and although bonuses might reduce slightly in one year, that is offset by the increase in the salaries that those bankers are enjoying. He did not even address the new loophole he is introducing in the Bill so that those enjoying deferred bonuses will now be able to pay the tax rates in future years, thus perhaps avoiding the 50% income tax rate when eventually the Government scale back from that.

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[Kerry McCarthy (Bristol East) (Lab)]

I beg to move amendment 7, page 12, line 36, at end add—

‘(8) The Chancellor shall publish, within 3 months of the passing of this Act, an assessment of the impact of taxation on fuel prices.’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss clause stand part.

[Kerry McCarthy]

The backdrop to today’s debate is an economy that is flat-lining, as the Chief Secretary to the Treasury admitted last week. Since the Chancellor’s spending review, we have had no economic growth, and it is ordinary people who are hardest hit by that stagnation, with 2.5 million people out of work, including nearly 1 million young people—one in five 16 to 24-year-olds. An increasing number of people have been jobless for more than a year—nearly 850,000 and rising. This year, as the Government’s cuts start to bite, hundreds of thousands more people could lose their jobs. I believe that that is what the Minister of State at the Cabinet Office called an

“immediate national crisis in the form of less growth and jobs than we need.”

Apparently, it is what the Chancellor describes as “good news” and a sign that the economy is on the right track. Families are feeling the effects of the crisis in their pockets. Prices are still rising by more than 5% on the retail prices index, while earnings are growing at just 2% a year.

Rising fuel prices are a big part of this squeeze. According to the Office for National Statistics, fuel prices are currently one of the most significant contributors to consumer price inflation. According to this week’s figures from the Department of Energy and Climate Change, the average UK pump price is now £1.36 for a litre of petrol and £1.42 for a litre of diesel. I am sure that many Members will be aware that at their local petrol pumps prices are even higher. That means that petrol is more than 3p a litre more expensive than it was last month, or 15p more than this time last year, and that diesel is 3p more expensive than last month, or nearly 20p more than last year. Unfortunately, the 1p saving we got from the Chancellor’s cut in fuel duty lasted barely a week before price rises at the pumps wiped it out.

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[Mr Kevan Jones]

On a point of order, Mr Hoyle. You have many attributes, but you do not have eyes in the back of your head. Would it be possible for you to ask those Members behind the Chair to leave the Chamber in order to reduce the noise level, so that others can follow the debate?

[The Chairman]

I must admit that, if there was noise interference, I did not know where it was coming from and could not hear it in front of the Chair. I am sure that Members will be quieter in future.

[Kerry McCarthy]

I thank my hon. Friend the Member for North Durham (Mr Jones) for that, because it certainly seemed quite noisy from where I was standing.

As I was saying, as real incomes fall, spending on basic items such as food, energy and fuel makes up an increasing proportion of the average family’s weekly spend, as the Office for National Statistics acknowledged in March when it changed the make-up of its retail prices index basket. That means that families are increasingly vulnerable when prices rise quickly.

The Opposition accept that no Government can control the price of oil, which the global markets set, and that the situation in the middle east is affecting people in countries throughout the world, to which the UK is of course no exception, but the Government have control over fuel taxation, and that has a significant effect on pump prices. When so many people are out of work and real wages are falling, the Chancellor has a responsibility to do all he can to help business and to promote economic growth and jobs; and when ordinary working people are struggling to make ends meet, he has a responsibility to do everything possible to help them get on.

That is why we tabled amendment 7. It is important that Parliament has the opportunity to scrutinise the Government’s policies on fuel taxation and their total effect on fuel prices at the pump, because the Chancellor’s cut in fuel duty, as set out in clause 19, is not all that it seems. In January the Government decided to increase VAT on fuel from 17.5% to 20%, even though the Prime Minister told voters just before the election that he had “no plans” to increase VAT. Without that VAT rise, petrol would be almost 3p cheaper now, swamping the 1p cut that the Bill brings in.

The Federation of Small Businesses said that the UK’s small and medium-sized enterprises would be “severely affected” by that hike in fuel tax. A survey of its members in January pointed to the increase as the single biggest threat to their business—something that will resonate with Government Members, who I am sure have been lobbied by the FSB on that point. Some 89% of businesses that responded thought that the Government’s measures would add £2,000 to their costs over six months. A spokesperson for the FSB said in response to the January rise in fuel tax:

“The Government have said it is putting its faith in the private sector to put the economy on a firm footing, yet 36% said they will have to reduce investment in new products and services and 78% said their profitability will be reduced—hardly conducive to growth.”

Many small business people in my constituency are struggling to stay afloat, particularly in the face of cash-flow difficulties. The VAT increase at the beginning of this year was expected to put severe strain on their cash flow, so the Chancellor’s 1p reduction in fuel duty has to be seen in that context.

Some people will be able to cut down on their use of fuel or even stop using petrol all together. Some people are switching to cycling or to public transport, and for those who are able to do so that is a good thing. As an MP for Bristol, which saw investment from the previous Labour Government so that it could become the UK’s first cycling city, I welcome people taking up cycling.

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[Mr Chuka Umunna (Streatham) (Lab)]

Has my hon. Friend noticed the projections for the increase in household debt under this Government? The Office for Budget Responsibility is projecting that it will increase by more than £500 billion this year and over the next five years, and it is also saying that the reason for this is not only inflation but the comprehensive spending review and the Budget.

[The Chairman]

Order. We must keep questions to the subject of the amendment that we are dealing with.

[Kerry McCarthy]

Before the election, the Economic Secretary said in this House during a debate on fuel duty:

“What people want from the Government today is a helping hand to get them out of their financial troubles. Instead, what they see from the Government is no help at all. Far from providing a hand to pull them out of their troubles, the Government are pushing them further down into them.”—[Official Report, 16 July 2008; Vol. 479, c. 359.]

How astonishing, then, to find that that is exactly what she and her Government are doing. They may have made a show of helping people up with a small fuel duty cut, but that is after they have given them a much bigger push down with their VAT rise on fuel. Before the Chancellor gave his Budget statement, Labour Members called for him to look again at the fuel duty escalator, which I think the Economic Secretary is muttering about from a sedentary position. In previous Budgets, we cancelled or postponed fuel duty rises when pump prices were rising quickly. In the 2010 Budget, the then Labour Chancellor phased in the increase for that year in three stages to ease pressure on business and household incomes. In the 2008 Budget, the previous Government postponed the increase in fuel duty for six months, again to support the economy and help businesses and families. We therefore welcome the fact that the Chancellor has done so again in this Finance Bill. However, when that cut is put in context, we see that families and businesses are facing more pressure than before as a result of the Government’s policies on fuel tax.

This is not the only policy in the Bill that is not all that it seems when it is put in context. The Government have made much of their increase in the personal allowance for income tax. The Chancellor said:

“The increase in the personal tax allowance already announced will vastly exceed anything lost through employee NICs uprating”.—[Official Report, 23 March 2011; Vol. 525, c. 954.]

However, he failed to mention that the rise in the allowance is swamped by his VAT rise, which will take £450 a year, on average, from the pockets of families with children. Families earning as little as £31,000 could lose their child tax credits as the Government take £400 million out of the system, while the Government’s Welfare Reform Bill creates uncertainty for families over whether they will keep their child care support and free school meals. In a couple of years, a family with two children with a single earner earning just £44,000 could find that the Government have taken £1,750 a year away from them in child benefit. It is no wonder that the Institute for Fiscal Studies said that the Chancellor was

“giving with one hand…and taking away with lots and lots of other hands.”

Nor is it surprising that the economist Roger Bootle said today that household incomes were “all but certain” to fall.

All this comes at a time when Government cuts mean front-line cuts in services that people rely on—schools, the NHS, social care, even the police—and workers in those vital public sector jobs are facing redundancies. The Government may say that some factors are outside their control. When we were in government, oil prices rose substantially, as we are seeing now, but we left government with a proportional tax take on fuel lower than when we came into government—down from 75% to less than 65% on petrol and down from 74% to 64% on diesel. It is no coincidence that under the last Conservative Government fuel taxation shot up from 66% of the price of petrol in 1992 to 75% in 1997, and from 66% to 74% for diesel.

The Minister of State for International Development made the front pages in March, saying:

“if this does go wrong”,

referring to the Budget,

“£1.30 at the pump could look like a luxury, $200 a barrel is on the cards”.

He can hardly have expected that remark to put a stop to speculation in the oil markets.

Rather than helping people through the tough times, the Government seem to want to make things worse. There was an alternative for the Government. Before the Budget, we called on the Chancellor to scrap the hike in VAT on fuel. That would have been of genuine help to families and businesses.

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[Stewart Hosie]

On a point of order, Mr Hoyle. It is entirely up to the hon. Lady to give way as she sees fit, but when the Scottish National party moved to strike out the VAT rise, Labour most certainly did not vote for it. Could she correct herself—

[The Chairman]

Order. As Mr Hosie knows, that is not a point of order.

[Alison McGovern]

Thank you, Mr Hoyle. It would be testing your patience not to stick to the amendment, as I shall endeavour to do for the rest of my remarks.

All Members will realise that the average family, the average couple and the average pensioner are facing a more and more difficult situation as the money coming in has to be stretched even further, and with prices going up in the shops. That is people’s experience. The impact of taxation on fuel prices and its role in driving up inflation and driving down living standards requires investigation and careful thought. This is not just my view or that of just some economist: when I looked into the possible causes of rising inflation in the UK, the first person I thought might have the answer was the Governor of the Bank of England, who, in his letter to the Chancellor about why the Bank had not met the inflation target, cited the VAT rise as one of the inflationary pressures facing the country.

As I said, I am not some inflation hawk who holds to a 1980s antediluvian economic philosophy that inflation is necessarily bad. Some countries have had relatively high inflation as well as growth. However, the important thing about taxation and fuel prices, and their role in inflation, is that it is possible to build in inflationary expectations in the long term through some of these measures. I wonder whether the Government have really thought about what they are doing in not combating some of the issues related to rising prices that we have seen.

There is also an obvious link with people’s worry about the lack of investment at this time. There is no doubt that investment means jobs today and productivity tomorrow, and therefore a more effective economy that enables people to have a better standard of living at less cost. That has to be the aim. At the moment, the Government are balancing the books using VAT and extremely flat taxes that do not pay regard to people’s income. They are asking people in my constituency on relatively modest incomes to pay the same higher prices at the fuel pumps as people in the Chancellor’s constituency down the road in Tatton, who by and large—not universally—are a bit wealthier. That is not fair.

We have to consider carefully whether the increased taxation on fuel resulting from the VAT rise is having a negative impact on the economy in a wide-ranging sense. It is not only about whether fuel prices are up—obviously that could be the result of several things—but, most especially, about what that is doing to inflationary expectations. We need to consider whether it is having a damaging impact on the broader economy, and whether it is a disincentive to growth and productivity improvements in the UK. We also need to consider what it is doing to the living standards of people such as those whom I represent in Wirral and Merseyside who have seen living standards fall severely in the past two years.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I am sure that my hon. Friend would agree with the old adage, “You can’t fool all the people all the time”, but that is exactly what the Chancellor tried to do with his 1p tax cut to fuel duty. However, is it not the case that since the Budget, petrol prices have gone up several times more than that 1p tax bribe, and that the VAT increase in fuel duty is causing damage to motorists and businesses—

[The Chairman]

Order. Interventions must be short.

[Steve Rotheram]

It was short.

[The Chairman]

Order. I am ruling that interventions must be short and letting the Committee know that we will be taking only short interventions.

[Alison McGovern]

My hon. Friend makes an important, if a little lengthy point. People will not be fooled, because they will see fuel prices going up and ask themselves what the Government have done to help. People are connecting the impact on prices across the board with what happens when they fill up the tank. When they go to the shop, they see higher prices all around them and they wonder where they are coming from. There is one clear answer: No. 11 Downing street. The Chancellor has decided that people will have to pay more in the shops. Let us not imagine that he has said, “Well, I’m sorry everyone. These are tough times—we’re going to ask you to put your hands in your pockets until we can lower VAT again.” Rather, this is a permanent rise that will build in higher prices for the long term. Given the downward pressure on wages, the really worrying thing is that the rise is building in not only a reduction in quality of life, but inequality, which is very worrying and will hurt for many years to come.

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[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

On a point of order, Mr Hoyle. The amendment is very narrowly drawn. I have listened to the debate very carefully. Can you tell the Committee whether it is in order to discuss the matters that have been raised in it, ranging from the abolition of child benefit to the widening of the A1 and, now, the abuse of red diesel?

[The Chairman]

The Chair will decide that. I find it strange that the hon. Gentleman, who is a very senior Member of the House, is questioning the judgment of the Chair.

[Mike Gapes]

Red diesel is taxed at a lower level than other diesel. We are discussing the taxation of fuel and the need for a review of fuel taxation. Surely that is extremely pertinent to the terms of the amendment.

[Mike Gapes]

I entirely agree.

I believe that one of the difficulties in our economy, which affects our haulage industry, arises from our tax levels compared with levels in other European Union countries. We all know that if we drive across to France and fill a tank with diesel, or “gas oil” as they call it, it is possible to pay—depending on where we are—40%, 50% or 60% of the amount that we would pay in the United Kingdom. The haulage industry based on the other side of the channel therefore has a competitive advantage. The great lorries with Polish and other countries’ number plates that we see bringing goods into this country have a competitive advantage over those of our own haulage industry.

We need to look at these matters. I have to say that I think the Liberal Democrats were right. [Interruption.] Yes, occasionally they are right, and I think they were right when they said we need to look at road pricing. Unfortunately, the only person who has done anything serious about road pricing is, of course, the former Mayor of London, Ken Livingstone, who introduced the congestion charge, which the Conservatives have now accepted even though they opposed it when it was first introduced.

[The Chairman]

Order. I think we are now beginning to stray a little from the subject under discussion. I am sure we will return to the topic of the fuel levy.

[Geoffrey Clifton-Brown]

Hear, hear.

[The Chairman]

I do not think we really need to hear from the hon. Gentleman at this stage.

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[Mr James Gray (North Wiltshire) (Con)]

On a point of order, Mr Hoyle. I should apologise to you and the Committee for an inadvertent breach of the conventions of the House, namely that having chaired the Committee earlier this evening, I inadvertently forgot the convention that I should not vote. I have, in fact, voted twice in Divisions since then. I apologise for that oversight.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

The Committee is grateful for that explanation.

Clause 7

Increase in rate of supplementary charge

[Malcolm Bruce (Gordon) (LD)]

I beg to move amendment 13, page 2, line 36, leave out ‘for “20%” substitute “32%”’, and insert

‘after “a sum equal to 20% of its adjusted ring fence profits for that period”, insert “increasing by 1 per cent. for every $5 by which the reference hydrocarbon price exceeds $75 subject to a maximum rate of 32%”.’.

[The Chairman]

With this it will be convenient to discuss the following: amendment 14, page 2, line 36, at end insert—

‘(1A) A reference price will be determined by an independent arbiter agreed jointly between the Government and Oil and Gas UK and will determine separate prices for oil, gas and condensates.’.

Amendment 15, page 2, line 36, at end insert—

‘(1B) The increased charge shall not apply to fields producing more than 90 per cent. gas. Where a field produces oil and gas the charge will be based on the price of oil equivalent taking into account the ratios of oil to gas produced.’.

Amendment 16, page 2, line 36, at end insert—

‘(1C) The supplementary charge may be abated or offset against the cost of investment to increase production.’.

Amendment 2, page 3, line 2, leave out ‘24 March 2011’ and insert ‘30 September 2011’.

Amendment 17, page 3, line 2, after ‘2011’, insert

‘and before 30 September 2012’.

Amendment 3, page 3, line 4, leave out ‘24 March 2011’ and insert ‘30 September 2011’.

Amendment 18, page 3, line 4, after ‘2011’, insert ‘or 30 September 2012’.

Amendment 4, page 3, line 8, leave out ‘24 March 2011’ and insert ‘30 September 2011’.

Amendment 19, page 3, line 8, after ‘2011’, insert ‘or 30 September 2012’.

Government amendments 11 and 12.

Amendment 5, page 3, line 27, leave out ‘24 March 2011’ and insert ‘30 September 2011’.

Amendment 20, page 3, line 28, after ‘2011’, insert ‘or 30 September 2012’.

Amendment 10, page 4, line 7, at end add—

‘(11) The Chancellor shall produce, before 30 September 2011, an assessment of the impact of taxation of ring fence profits on business investment and growth including an assessment of the long-term sustainability of oil and gas exploration in the North Sea.’.

Clause stand part.

[Malcolm Bruce]

The purpose of this group of amendments is to persuade the Government to engage with the oil and gas industry to ensure that no major new investment opportunities are lost. I will explain the purpose of the main amendments, and I very much hope that Ministers will respond in a constructive way, because these are intended to be constructive proposals.

The Government are on record as saying that they understand the need for stability in the fiscal regime, and the Chancellor has described this as a Budget for growth. It is worth saying, however, that in contrast to the cautious way in which the Government have applied new taxes to banks, which have squandered our resources to the extent that many of them had to be nationalised, it is quite harsh to apply a marginal rate of tax of 82% to our single biggest industry. It is an industry that invests in real infrastructure and real engineering, and it takes risks in regard to weather, geology, exchange rates and cost unpredictability, as well as taxation.

I accept that the current spot price of Brent crude, at $125 a barrel, allows for unforeseen profits, at least for some fields. However, that does not apply to gas fields or to fields with large quantities of associated gas and, as Ministers will know, that is not the price that many operators actually realise, as they often contract their production at an average well below the spot peak.

I say in passing that the link between the oil tax changes and the fair fuel stabiliser are tenuous. Many of the companies operating in the North sea have no retail division, and there is no direct connection between their returns and the pump price. Also, the Government are themselves the recipient of a windfall. According to the Library brief and, I think, the Red Book, North sea profits are running at between £1.5 billion and £1.9 billion per annum over the next four years. That is additional revenue that was not anticipated in the pre-Budget statement in November. The Government have also received a VAT windfall on pump prices, averaging about 6p a litre. However, my point is not that there is no case for additional contributions from North sea operators and field shareholders. I do not take issue with the Government about that. My point is that this should be done after proper consultation and taking due account of the complex character of the mature North sea industry.

I have monitored the industry for 40 years. Indeed, 40 years ago this September, I started work as research and information officer for the North East Scotland Development Authority. Towards the end of that year, 1971, BP announced the successful commercial test of a well, which turned out to be the discovery of the Forties field. However, it is interesting to note that, believing that it had reached the end of its useful life, BP sold the Forties field to Apache in 2003. Since its acquisition of the field, Apache has greatly enhanced recovery from Forties and sees long-term potential for its development. It is worth noting that Apache has been one of the most vigorous critics of the Government’s policies, and that it questions whether its investment will be fully committed or realised.

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[The Chairman of Ways and Means]

Order. We are straying from the amendments if we start talking about job losses. Let us try to keep as close as we can to the amendments before us.

[Helen Goodman]

I entirely accept your guidance, Mr Hoyle.

There is obviously a supply chain for the oil and gas sector. Equally obviously, if we damage the financial viability of the oil and gas companies, there will be an impact further down the supply chain. It is worrying that the industry is predicting that 40,000 jobs will be lost. Those are 40,000 jobs that we can ill afford to lose at this time. This is absolutely typical of the measures being taken by the Government that, across the board, are not being thought through. The statement by Statoil that it is going to put on hold a $10 billion investment is very worrying.

We also need to pay attention to the fact that the North sea province is different. It is not only a mature province—we all understand what that means—but it is in a very competitive arena. The Government do not appear to understand what being in a competitive arena means, or that those companies have a choice about where they invest.

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[Helen Goodman]

There is also—

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Order. Can you face the Chair, please? Thank you.

[Helen Goodman]

There is also a problem with partnerships between the private sector and the universities.

Finance (No. 3) Bill

Lindsay Hoyle Excerpts

Tuesday 26th April 2011 Commons Chamber

[Jim McGovern (Dundee West) (Lab)]

The hon. Gentleman speaks about nuclear energy and fossil fuel energy. Does he have an opinion on the Scottish National party’s view on nuclear energy?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman must sit down. He has asked his question. Members should not just walk into the Chamber and intervene.

[Alec Shelbrooke]

I am not aware of the SNP’s policy. It may have escaped the notice of the hon. Gentleman, but I stand here as a Conservative Member of Parliament.

I have a final plea to the Minister. I know that there are problems with the European Union interfering in all aspects of alcohol and that we cannot do certain things, but can he look at putting higher taxation on non-draught beer? He may have done so already and it would be interesting to hear about that when he sums up. That does not involve saying that if beer is sold in a supermarket it will be taxed more, which brings competition law into play, but just that draught beer will not be taxed as much as other beers. The reason for raising tax on non-draught beer is that draught beer is served in pubs and publicans have a responsibility to ensure that people do not drink out of control, because they are licensed and controlled. I think that that idea would go some way towards countering the binge drinking problem. It may be that we cannot do that under European law, but I make the plea to the Minister. I will be interested to hear whether it is something that he has considered.

I support the Bill and believe that it is the only way we can secure growth. It is an intelligent and credible way forward that, frankly, is not just trying to get a good headline in The Guardian, which the shadow Chancellor seems keen on.

Amendment of the Law

Lindsay Hoyle Excerpts

Monday 28th March 2011 Commons Chamber

[Chris Bryant]

I am particularly glad that my right hon. Friend has reminded that lot over there on the Tory Benches that they fully supported Labour’s spending plans up until the end of 2008 and promised to spend the additional benefits of growth on the economy, which they never seem to remember. That lot on the Liberal Democrat Benches, when they were sitting over here on the Opposition Benches, urged even greater levels of spending, so we are not going to take any hypocrisy from them.

In addition, will my right hon. Friend remind that lot over there of one further piece of history? In 1924, George Lansbury—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. You have to be much shorter, Mr Bryant.

[Caroline Flint]

If my hon. Friend was going to point out that when we go into recession we have to ensure that we do not go into a depression, that is exactly what the Labour Government did. Things may look rosy from the leather seats of the Secretary of State’s new Government Jag, but for ordinary people, the Government’s plans are hurting but they are not working.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I remind Members that speeches are limited to six minutes, although I might look to reduce that to four. A huge number of Members wish to speak, and there is a lot of pressure today and tomorrow, so we might have to reduce the limit to four minutes.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. If people are going to intervene regularly, I am going to have to drop them down the list, because we are really struggling to fit everyone in.

--- Later in debate ---

[David Wright]

I will not.

In the Budget, we have seen that growth estimates have gone down for last year, this year and next year. Borrowing is up by £43.4 billion, and debt interest will be £17.6 billion higher. According to the Chancellor’s forecast, unemployment will go up by up to 200,000 every single year until 2015. That is a significant price for people to have to pay for what I believe are the sado-monetarist views of this Chancellor.

We have seen a massive squeeze on living standards right across the board. The hon. Member for Bury St Edmunds (Mr Ruffley) rightly spoke of the impact of inflation on the economy. People see it every time they go to their local supermarket as the costs of the core products that they buy rise significantly. There is an impact on the cost of food, as well as significant rises in the cost of fuel. It is interesting that the Chancellor’s much-heralded policy for cutting fuel costs was destroyed within two days of the Budget, when I saw a gentleman arguing with the staff in my local Sainsbury’s filling station. He said, “Hasn’t the price of petrol gone down?” and they said, “Yes, it went down on Budget day, but we put it back up again the day after.” That policy was blown out of the water as soon as it was announced, and, anyway, the Chancellor had already put a 3p a litre rise in the price of petrol into the system through the VAT increase.

It was interesting to listen to the Chancellor’s speech. It contained a complicated segment at the beginning on tax thresholds, which he went through very quickly. That was because it contained all the clawbacks relating to the changes in tax thresholds, following the debate on the consumer prices index and the retail prices index and the announcements of all the cash that he was giving out—actually, he did not give out that much cash; he gave out a bit. All the cash that went out had already been clawed back in the measures announced at the start of his speech. The impact of his decisions in last year’s Budget was that the average family with a child would be paying about £450 a year more in VAT anyway, so he had already wiped out any goodies to be given away in this year’s Budget by the approach he took last year.

There has been much debate about youth unemployment. The corporation tax cut from the Chancellor is one way of proceeding for a Budget strategy, but I believe he could have done something far more radical: instead of giving away that corporation tax cut, he could have spent the cash on a massive programme of employment, training and support for young people in the economy. He could have made that choice and, as I say, invested the money in training and skills for young people.

The Red Book is useful for looking at the Government’s overall strategy. The table on page 12 is headed “International consensus on fiscal consolidation”. It shows that we are up there as consolidators-in-chief with France, Turkey, Canada and Spain. There is, however, a significant outlier on this table—it is the United States. The table suggests that the US is going to move its fiscal consolidation position significantly next year, but I have my doubts. Let me explain what I think is going on.

I believe that the US is looking more carefully at where its economy is and is planning significant investment to lift its people out of recession. Obama’s programme on public spending and expenditure right across the board shows that he is not pursuing a strategy of significant fiscal consolidation, and I doubt whether he will next year either. He is trying to ensure that his economy recovers throughout this period of downturn and that it does not go into significant levels of depression.

Finally, the enterprise zones are positive, but infrastructure investment has to be put in place alongside them; otherwise, they will not work and local economies will be blighted. This is a Chancellor who has got it generally wrong in the Budget. He needs to change his strategy and adopt a plan B very—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

Amendment of the Law

Lindsay Hoyle Excerpts

Thursday 24th March 2011 Commons Chamber

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I am not sure quite which hallucinogenic substances are being ingested on the Opposition Benches, but if I may ask a question—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that we will reconsider the suggestion about drug taking.

[Jesse Norman]

I am happy to withdraw the suggestion and to make it clear that the substances in question were not hallucinogenic. May I simply ask the shadow Chancellor—

[Mr Deputy Speaker]

Order. Is there a suggestion that my ruling was wrong?

[Jesse Norman]

indicated dissent.

[Mr Deputy Speaker]

I take it that you have withdrawn the suggestion, Mr Norman. I accept that. Are you now going to pose a very quick question?

[Jesse Norman]

Will the shadow Chancellor enlighten us on why WPP left this country under the last Administration, and why it has now returned, as has been announced in the news today?

--- Later in debate ---

[Mr Umunna]

I will give way shortly.

I have come to the Chamber from this morning’s Treasury Committee sitting, where I asked Jonathan Portes, who until February was chief economist at the Cabinet Office, about this issue. I asked him whether abolishing the right to request flexible working for the parents of 17-year-olds would make a big difference in increasing GDP or growth. He made it very clear that scrapping the extension will “do nothing for growth”. I then asked HSBC’s chief economist whether he would be revising his GDP figures as a result of the scrapping of the measure, and he told me that he would not.

This measure seems to be a gimmick, which tends to suggest that the Government think that watering down employee rights is a substitute for a properly thought out growth strategy. All the figures I have just presented and all the arguments I have just made for the introduction of the extension, which was planned for April, are in the Government’s own impact assessment of the measure. Will the Government think again about it? I grant that they do not and will not accept our arguments to revise their plan for fiscal consolidation, but I suggest that it would be very wise for them to think again on this small measure.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I call Gavin Williamson, who has until 5.42 pm—about three minutes. I am sorry about that.

Financial Statement

Lindsay Hoyle Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Before I call the Chancellor of the Exchequer, it may be convenient to remind hon. Members that copies of the Budget resolutions will be available to them in the Vote Office at the end of the Chancellor’s speech. It may be also appropriate to remind Members that it is not the norm to intervene either on the Chancellor of the Exchequer or on the Leader of the Opposition.

Amendment of the Law

Lindsay Hoyle Excerpts

Wednesday 23rd March 2011 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

The Chancellor spoke for an hour, but one fact says it all, and he could not bring himself to mention it. Growth is down, last year, this year and next year. It is the same old Tories. It’s hurting, but it isn’t working.

What did the Chancellor say last year about growth? “Judge me on the figures.” Well, judge him we will. Every time he comes to the House, growth is downgraded. Last June, 2011 growth was down from 2.6% to 2.3%. In November, it was down again. In January, what did the Prime Minister say? His three priorities for the year were growth, growth, growth. And what has happened in this Budget? Growth is down, down, down. Taking account of all the measures—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We should show the Leader of the Opposition the same courtesy that was shown to the Chancellor of the Exchequer.

[Edward Miliband]

What is the Chancellor’s singular achievement? To deliver a budget for growth that downgrades the growth forecasts. Growth is down this year to 1.8%, and it is downgraded next year too. That did not happen by chance; it happened by choice—the Chancellor’s choice—and it was the wrong choice: to go too far and too fast. In the Chancellor’s own words in the June Budget, he chose to go £40 billion further and faster in tax rises and spending cuts than our plan to halve the deficit over four years. That pace of cuts has seen consumer confidence fall in almost every month since the general election.

In his first Budget, the Chancellor promised

“steady and sustained economic recovery”.—[Official Report, 22 June 2010; Vol. 512, c. 168.]

When last September’s growth figures were published, he took the credit. He called the figures “a vote of confidence” in the Government’s economic policy. But when the economy contracted in the fourth quarter, what did he do? He blamed the snow. Even he must appreciate the irony. While the Prime Minister was grounded from his Christmas trip to Thailand, the Chancellor was on the piste in Klosters. I suppose it was the right type of snow for a ski-ing holiday; it was just the wrong kind of snow for our economy.

What is it about the British snow? There was worse snow in Germany, a big freeze in France, and in the United States the worst blizzards for decades. Despite all that, those country’s economies grew in the fourth quarter. While our growth forecasts have worsened, theirs have improved. [Interruption.] The Chancellor should calm down a little. The German economy is forecast to grow more strongly than last year, and so is that of the United States. Growth in the world economy has been revised upwards. Which is the major country that is downgrading its growth forecasts? The United Kingdom. It is not the wrong type of snow that is to blame, but the wrong type of Chancellor—the wrong type of Chancellor in the wrong type of government with the wrong priorities for Britain—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Courtesy should be shown. The public out there also want to hear what the Opposition have to say. If there are Government Members who do not want to listen, will they please leave the Chamber? The public out there want to hear both sides of the argument. Some people may agree, and some may disagree.

[Edward Miliband]

Government Members shout and jeer, Mr Deputy Speaker, as unemployment hits a 17-year high. What more do we need to know about the Conservative party?

The Chancellor also promised in his June Budget that he would deliver “low inflation”, and what has happened? Inflation has risen, month after month after month. That did not simply happen by accident. It is happening because the Chancellor made the wrong decision on VAT. Same old taxes, same old Tories.

The Chancellor promised us falling unemployment too, and what has happened since he delivered his first Budget? Over 60,000 more people are now looking for work. To this Tory Government, just like those of the past, unemployment is a price worth paying. People who heard the Chancellor’s Budget speech today will wonder what world he was describing. [Interruption.] I think that the Chancellor should listen to this.

In the constituencies of more than 130 Members of Parliament, 10 people are chasing every vacancy. One in five young people is looking for work. Families are seeing their living standards squeezed, not just this year but year after year. What do the Government say to communities that are losing their jobs? Let me tell the House what they recently told the people of Newport, justifying the closure of their passport office. They said that the redundancy payments of the staff who were being sacked would provide a

“boost in trade for the local economy”.

What kind of planet do these people live on? On growth, on inflation, on unemployment, on the promises that he made, the Chancellor could not bring himself to admit that his second Budget tells the story of the failure of his first. At this stage of the recovery, growth should be powering ahead and unemployment should be falling fast. Every month that unemployment is higher than it should be stores up long-term damage for our country. Every month when growth is lower than it should be, that hits the future potential of our economy. The problem is that, instead of admitting it, the Chancellor refuses to change course. What did the Energy Secretary say? If the figures change, the Government

“should not be lashed to the mast”

of their reckless gamble. They should be willing to change and to think again.

It is not as if the Government have not had practice in the U-turn business. Indeed, they are becoming past masters at it. On forests, school sport, housing benefit for those looking for work and even the vanity photographer, they have been forced to climb down. It is on this, the issue that matters most, that they are least willing to change. At the weekend we learned something new about the Chancellor. Apparently, his political aspiration is to be a blend of Nigel Lawson and Michael Heseltine. Another comparison springs to mind. We see the same hubris and arrogance that we saw in the early 1990s, the same broken promises, the same view that unemployment is “a price worth paying”. The Chancellor is Norman Lamont with an iPod, and on his playlist, no doubt, is “Je Ne Regrette Rien”.

This is not a growth Budget. It is not a jobs Budget. It is a Budget for more of the same, from a complacent, arrogant Chancellor in a complacent, arrogant Government. It’s hurting, but it isn’t working.

Let us not forget that these are not just the Chancellor’s decisions, and they are not just the Prime Minister’s decisions; they are the Deputy Prime Minister’s decisions too. He is an accomplice to the Tory plan. When it comes to the economy, the man who coined the phrase “alarm-clock Britain” has the snooze button well and truly on. Nobody voted for this deficit plan, least of all his Liberal Democrat voters, who were told in promise after promise that he would never countenance it. If I can put it this way to him, it is no wonder nobody wants to share a platform with him.

On the measures in the Budget, I welcome the support for the armed forces, and on the measures the Chancellor proposes to support growth, we will look at them but there is little reason to believe they will make the difference to growth that we need. Indeed, the Justice Secretary fell asleep during the Chancellor’s speech, his growth strategy was so compelling. The Office for Budget Responsibility has already factored in every single measure he has just announced, and it still produced today’s downgraded growth forecast.

We cannot blame people for being sceptical when the Chancellor says he has a new flagship policy for growth, because they are asking what happened to his last flagship policy for growth at the centre of his June Budget. Does anyone remember the national insurance holiday? He was strangely silent about it today. In June, he took the credit at the Dispatch Box for helping 400,000 small firms, but how many have actually benefited? He has been strangely shy in revealing the figures, but someone let slip to the Financial Times that by mid-January it wasn’t 400,000, it wasn’t 40,000, it wasn’t even 4,000; it was less than 0.5% of the number he promised, just 1,500 businesses.

On the Chancellor’s incentives for small firms, we will look at the detail, but I have to say that his decision to cancel flexible working for families with children aged between 16 and 18 is extraordinary. This Prime Minister took the credit for championing that policy with Mumsnet, and then a few months later he takes the credit with small business for dumping it. We have to ask, has he got no shame? The idea that families needing flexibility imperil our economic future is, frankly, absurd, and it tells us all we need to know about this Government’s values and how they think our economy succeeds: greater insecurity as the route to greater prosperity. We take a different view. Flexible working is yet another broken promise from the broken-promise Prime Minister.

While we are on the subject of broken promises, let us remember what the Prime Minister said before the election: he said he would be the banker basher in chief. The Chancellor made great play of that in his Budget speech, but the reality is this: last year Labour’s bonus tax raised £3.5 billion—it is in the Red Book—and this year the bank levy raises just £1.9 billion; it is a Tory Government cutting taxes for the banks while they raise taxes for everybody else. He should have used the money from the bank levy to invest in the future jobs fund—which they abolished—to make a real difference to housing in this country and to boost enterprise.

They are failing on growth, and they are failing on living standards too. What did the Prime Minister say before the election to families receiving tax credits? He said that below £50,000 a year, their tax credits were safe. When Labour said otherwise, the Home Secretary said this:

“That is a lie, and it is irresponsible for Labour to be…worrying families needlessly.”

But what is the truth? Next year, over 1 million families with incomes as low as £26,000 will lose all their tax credits. The Government should be ashamed of their broken promises on tax credits.

That is part of the cost of living crisis they are imposing. The Chancellor trumpeted the rise in the personal allowance, and said everybody earning under £35,000 would be better off, but let us look at the facts. He came along in the June Budget and put up VAT, costing families £450 a year. Now he has the nerve to expect them to be grateful when he gives them a fraction of their own money back. What did the Institute for Fiscal Studies tell us this morning? It said:

“there is an awful lot of giving with one hand...and taking away with lots and lots of other hands.”

It is a classic Tory con.

What about their decision on petrol? The Chancellor has done the same thing again. He has cut duty by 1p, but he has whacked up VAT on fuel by 3p. Families won’t be fooled; it’s Del Boy economics. For a two-earner family, both on average wages, it will be 5p up in the basic rate of income tax and just 1p down next year. What do the British people know from history? They know that every Tory tax cut ends up costing them more; same old Tories, same old deceit.

We needed a Budget that changed the direction of economic policy. We needed a Budget that protected the promise of Britain that the next generation does better than the last. We needed a Budget that changed course on cutting too far and too fast. The Chancellor said at the weekend, with his customary modesty, that he had completed his rescue mission of the British economy. After this Budget, it is not the Chancellor who is rescuing the country; it is the country that needs rescuing from the Chancellor. When families look at this Budget—look at the squeeze on their living standards, look at the job losses in their communities—they will conclude: it’s hurting but it isn’t working.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

On a point of order, Mr Deputy Speaker. A former Chancellor of the Exchequer, Mr Hugh Dalton, resigned in 1947 for leaking part of his Budget to a journalist when on the way into the Chamber to deliver it. Given that we have heard nothing in the Chancellor’s statement today that had not already been trailed in the media on Monday, Tuesday and this morning, please will you, Mr Deputy Speaker, use the good offices of the Speaker to make sure that senior members of this Government make important statements to the House before going to the media?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The principle is clear, and it will have been heard by those on the Treasury Bench. We must now move on.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Many Members want to speak today—quite rightly—and we want to get as many in as possible. There is no time limit on speeches but brevity would help other people.

Budget Responsibility and National Audit Bill [Lords]

Lindsay Hoyle Excerpts

Tuesday 22nd March 2011 Commons Chamber

The elephant in the room is the implications of European Union policy. As Chairman of the European Scrutiny Committee, I can assure the shadow Minister, the hon. Member for Nottingham East, of the importance of this. He told me the other day that when he took on this job he had no idea just how much the European Union was affecting his functions. Indeed, the same goes for the Government. The European dimension overlays the provisions of the Bill. The duties that the Bill imposes will be subject to the requirements that European law will impose on top of them. That raises the second question referred to by the hon. Gentleman: the question of judicial authority.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman knows what I am going to say. I do not want to spoil what he is going to say on Third Reading, so it might be better if he stuck to the subject of the amendments. That would be more useful to us at this stage.

[Mr Cash]

I am very glad to be able to follow that advice. In order for the provisions contained in the amendments to be inserted in the Bill, it is essential for the House to be aware of the implications of judicial authority, the assertions of the Supreme Court in that context, and the sovereignty of Parliament. There is, for example, the question of fiscal policy and the charter, which is set out in clause 1(2) and to which the question of economic growth and job creation would be added by the amendments. Clause 6(3) states:

“The Office must, in the performance of its duty under section 4, act consistently with any guidance included in the Charter by virtue of this section.”

I am deeply worried about the legal status of the charter in this context.

As for fiscal policy, I remind the House that the other day, probably for the first time since 1640—Pym and Hampden and all that—the Government passed a motion saying that we were only primarily responsible for it. I voted against the motion—as did my hon. Friend the Member for Bury North (Mr Nuttall) and a number of others—but the whole House should have voted against it, because in fact we are exclusively responsible for fiscal policy, and that is what the Bill is supposed to be based on.

What worries me particularly is the inconsistency with fundamental questions that are in the background, involving the primacy of European law, sovereignty and judicial authority. I need make no further points, because in a nutshell, if those issues cannot be reconciled with what is in the Bill, and if the duties of the Office for Budget Responsibility are to examine and report on the sustainability of the public finances, to prepare “fiscal and economic forecasts”, to make assessments and analyse sustainability, and to act consistently with the charter as a matter of law, we are surely entitled to ask: which law will prevail?

Obviously, I agree with all the ideas that are being presented. We all want an efficient economy, we all want jobs and we all want growth. We cannot survive without growth, and we cannot generate the revenues to pay for the public sector without that growth in the private sector. What worries me is that all those ideas are being imposed through a Bill, rather than through the judgment of Ministers who are accountable to the House of Commons, and should not be required to refer back to the judicial authority of the courts or the alleged primacy of the European Union.

I fear that we are embarking on one of those Lewis Carroll-type situations. I am reminded of “The Hunting of the Snark”. Members may recall the phraseology. We know that we want it, we know it is there, but the question is, what is it going to do? I have a serious problem with the Bill for that reason. I fear that we are engaged in a process of wishful thinking rather than achievement, and that we are being locked into a withdrawal from parliamentary accountability—and, as some Members may know by now, I regard that as the ultimate test of our democratic system.

--- Later in debate ---

[Stewart Hosie]

rose—

[Mr. Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are not going to be drawn into the party politics of Scotland. Let us stick to the amendment.

[Ian Murray]

Thank you, Mr Deputy Speaker. I will resist the temptation to have another go at the Scottish National party in the Chamber, and will take your guidance.

I shall finish on two quick points. First, the level of borrowing before the financial crisis did not cause the recession. Every country in the world was affected, so it does not take a rocket scientist to work out that it was a worldwide financial crisis. The coalition Government’s propaganda—

Scotland Bill

Lindsay Hoyle Excerpts

Monday 14th March 2011 Commons Chamber

[Mr Davidson]

On a point of order, Mr Hoyle. According to the votes, eight nationalists have been voting on all these things, and now they are down to seven. Has somebody been kidnapped? [Laughter.]

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Now, then.

Clause 32 ordered to stand part of the Bill.

Clause 33

Maximum penalties which may be specified in subordinate legislation

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

I beg to move amendment 31, page 25, line 31, leave out ‘the amount specified as’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss Government amendment 32.

[David Mundell]

The Government have identified the need for these minor technical amendments to clause 33, which updates the maximum penalties that can be applied to criminal offences created in subordinate legislation made under the Scotland Act 1998. The amendments are sensible additions that will ensure consistency across the different legal systems within the UK. The first amendment is a minor technical amendment to ensure consistency in the terminology used to refer to fine limits for different jurisdictions, which are provided for in the amendments to section 113 of the Scotland Act made by clause 33.

The second amendment ensures that the correct terminology is used in relation to fine limits in section 113 for either-way offences created in relation to the law of England and Wales and Northern Ireland, with the statutory maximum rather than level 5 on the standard scale on summary conviction. Level 5 has meaning only in relation to summary-only offences by virtue of the definition in the Interpretation Act 1978. Clause 33, as introduced, makes this terminology change in relation to fine limits for Scots law offences, and the amendment makes the same change for offences that form part of the law of England and Wales and Northern Ireland.

The amendments will ensure consistency in the terminology used to describe the fine limits for offences created in the Scotland Act orders for each of the legal jurisdictions in the UK.

Amendment 31 agreed to.

Amendment made: 32, page 26, line 2, leave out from second ‘exceeding’ to end of line 3 and insert—

(i) in the case of a summary offence, level 5 on the standard scale,

(ii) in the case of an offence triable either way, the statutory maximum,’.—

(David Mundell.)

Clause 33, as amended, ordered to stand part of the Bill.

Clauses 34 to 37 ordered to stand part of the Bill.



Clause 38

Commencement

Amendments made: 65, page 28, line 5, leave out ‘made by statutory instrument’.

Amendment 66, page 28, line 9, leave out ‘made by statutory instrument’.—(David Mundell.)

Clause 38, as amended, ordered to stand part of the Bill.

Clause 39 ordered to stand part of the Bill.

New Clause 18

Orders

‘Any power to make an order conferred by this Act is exercisable by statutory instrument.’.—(David Mundell.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 1

Abolition of regional members of Scottish Parliament

‘(1) The Scotland Act 1998 is amended as follows.

(2) In section 1—

(a) in subsection (2) “Two members” is substituted for “One member”; and at the end there is inserted “save for those identified in paragraph 1(a) to (c) of Schedule 1, each of which shall return one member,”;

(b) subsection (3) is omitted.

(3) In section 5, subsections (1) and (3) to (9) are omitted.

(4) Sections 6, 7, 8 and 10 are omitted.

(5) In section 11, subsection (2) is substituted by—

“(2) A person is not entitled to vote as an elector in more than one constituency at a general election, and may cast no more than two votes at a poll for the return of constituency members.”.

(6) In section 12—

(a) in subsection (2), paragraphs (e) and (f) are omitted;

(b) subsection (3) is omitted;

(c) after subsection (4) the following subsection is inserted—

“(4A) The provision to be made under subsection (1) must include provision for—

(a) each elector to cast one or two votes of equal value, with no more than one vote to be given to any one candidate, in constituencies returning two members;

(b) the two candidates with the most valid votes to be elected in such constituencies.”.

(7) In Schedule 1—

(a) for paragraph 1 there is substituted—

“(1) The constituencies are—

(a) the Orkney Islands,

(b) the Shetland Islands

(c) the Western Isles [Na h-Eileanan An Iar], and

(d) the parliamentary constituencies in Scotland at the time of an ordinary or extraordinary general election for the Scottish Parliament, except the constituencies of Orkney and Shetland and Na h-Eileanan An Iar”;

(b) paragraphs 3 to 14 are omitted.’.—(Mr Donohoe.)

Brought up, and read the First time.

[Mr Donohoe]

I beg to move, That the clause be read a Second time.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss new clause 2 —Regional members of the Scottish Parliament—

‘(1) The Scotland Act 1998 is amended as follows.

(2) In section 81, after subsection (2), there is inserted—

“(2A) No provision shall be made under subsection (2) for any allowances for representative work in any constituency or region by a regional member in a registered political party or a group of such regional members; and no allowances may be made for offices or staff or related expenses incurred by such members other than in connection with or at the Parliament’s place of meeting or in connection with a committee meeting.

(2B) Any allowances paid to regional members in a registered political party shall be founded on the assumption that they are representatives of that party from the relevant region and not from any single constituency.”.

(3) In Schedule 3, after paragraph 2 , there is inserted—

2A The standing orders shall include provision for withdrawing from a regional member in a registered political party any or all of his rights and privileges as a member, including any allowances, if he is found to have purported to act, or has held himself out, as a constituency member for any single constituency or for a group of constituencies other than the region from which he was elected.”’.

[Mr Donohoe]

New clauses 1 and 2 relate to regional Members of the Scottish Parliament, who were introduced in an irksome move and have been with us for a long time—since the outset of the Scottish Parliament.

HM Revenue and Customs

Lindsay Hoyle Excerpts

Wednesday 2nd March 2011 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

The closure of tax offices is an important issue in north Wales. I hate to be parochial, but I represent an area in which about 20% of the working population are self-employed. The need for self-employment is paramount in north Wales, because the economy is so fragile that unless we create our own job opportunities, we cannot work at all. Unfortunately, over the past few years we have seen the downgrading of the Porthmadog, Bangor and Colwyn Bay tax offices. The 20% of the working population who are self-employed must now travel to Wrexham and even over the border to be served, which is a big problem. As the hon. Gentleman has pointed out, when a small business is forced to use an accountant because it is unable to talk to—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We must have short interventions.

[Mr Mudie]

I am sorry that you stopped the hon. Gentleman, Mr Deputy Speaker, because his was a better speech than mine. I do not think that he needed to use the word “parochial”, or even to apologise if he thought that he was being parochial. In fact, he was being regional. Here in London, it is assumed that any region above Watford can be written off. The hon. Gentleman has made an extremely valid point.

I know that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is sitting behind me, is a strong supporter of tax office staff. However, I agree with the Chairman of the Select Committee about the number of telephone calls that are not answered. At one stage, the figure was 43%. One of the professional witnesses who gave evidence to the Committee said that an HMRC tax manager had been in his office and observed that it took 12 minutes for a call to be answered and seven minutes simply to change a tax code. That simple transaction took 20 minutes. That is a witness’s statement, and a very good one. I am sure that the Minister has read all the evidence given to the Committee, and has noted that that particular witness described his experiences brilliantly.

[Mr Mudie]

That is an interesting point.

I am using up time rapidly, but let me mention in passing another feature of call centres. Telephoning 0845 numbers can be very expensive for pensioners—indeed, for everyone. The fact that people have to hold on for so long does not help, but in any case it is not the right way to decide complex matters. It is best for people to deal with those face to face. The best people in the whole business are the agents, as they are the professionals. They take the frustration and get angry about it—and they have given good evidence. The ordinary individuals are in the worst position, however. The professionals get used to things and can get on with other tasks, yet, as the professionals said, those who are not represented get the worst deal, and with office closures, cutting hours, and relying increasingly on telephone calls, e-mails and letters, the whole system knocks out a fair number of the population. That is what is happening. Plenty of Members want to speak, and they will spell out their constituents’ experiences.

Does the system need to be improved and will it be improved? I do not think it will, first because it goes against the grain—I will explain that. Sadly, every time witnesses from HMRC have appeared before us, they have been in a state of denial. If someone has a problem, there is no chance of their dealing with it unless they own up to it and accept it. I sympathise with them in a way, however. The hon. Member for Chichester said we are to blame and that is true; we are to blame, in particular the Ministers. It is hard for a civil servant to go before a Select Committee and say, “Yeah, I admit it; we can’t do this because we don’t have the people.”

We look for loyalty and a straight bat from civil servants, but the way we are doing things is not generally the best way to get a real dialogue. Therefore, when we have them before us in a couple of weeks, I am not sure that Dame Lesley will do anything other than give us the Geoff Boycott treatment, or even do a Pietersen and knock us out of the ground a couple of times. Because she and the management are in this state of denial, I cannot see things happening unless the Minister takes some steps. I really do think this comes down to staff and resources. Unless they are in place, we cannot load new jobs on.

Finally, let me describe a few points that should push the Minister to want to have a fresh look at resources. One of them is to do with what the Chairman of the Select Committee said about the integrity and reputation of the system, and real tax compliance in this country. If we frustrate and ignore people, and make it difficult for them to get explanations, one way or another, non-compliance will grow. There will be increasing disrespect for the system and the people in it, and a growing feeling that they are not here to help. The tax inspectors and staff are adamant that they are here to help however, and that has always been my experience at that level—when we can get to speak to someone, they are helpful.

If something is not done and we treat people in this way, they will respond in a manner that I think is natural, which is to say, “Get on with it”—I almost said “Sod it”—and “I am not complying.”

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We cannot say “Sod it.” I am sure the hon. Gentleman will withdraw that.

[Mr Mudie]

Well, I did withdraw it; I said I will not use the phrase “Sod it.”

I have made points about management being in denial and non-compliance. The next point is more current. We live in a time of austerity. It is a hard time and people’s wages and homes are being affected, yet the public are reading about Barclays paying £190 million on billions of pounds of profit, and about Vodafone being willing to pay £3 billion or £4 billion and having that available to pay to the Inland Revenue, but the Inland Revenue accepting £1.3 billion. This big multinational company is getting away with paying that amount of tax at a time when we are closing vital public services. We see Mr Green paying his wife through Monaco. In last Sunday’s papers, we read about a man with reputed wealth of £47 million being forced by someone he sacked to confess that he pays no tax at all because of the trust his father set up. Such stories are starting to resonate among ordinary people.

The Governor of the Bank of England came before the Treasury Committee yesterday, and at one stage in the evidence session he accepted that the anger we have witnessed in the past couple of years is nothing compared to what might happen when we see the real cuts, which are starting now. Last year, we talked a lot about cuts, but they amounted to only £6 billion. However, in Leeds recently, people invaded the council chamber when the budget was being fixed. There were people outside in wheelchairs whose benefits were being cut. Cuts were made to housing benefit. Students and trade unionists were also there. Some 1,000 jobs there are to go.

I genuinely say to the Government that a dangerous situation is brewing. A very affluent lady in America said, “Tax? That’s just for the little people.” That belief is starting to take hold in this country, as a lot of evidence shows. We need to get the tax people working properly. The tax gap is reckoned to be between £40 billion and £120 billion. We would not have these cuts if everybody paid their tax in a responsible fashion. That issue needs to be tackled, yet right now thousands of tax staff are being given their cards, when they could be dealing with it.

I want to finish by being helpful to the Minister. Another computer program is wending its way through the Department that has a crucial bearing on the Minister’s future. It deals with real-time initiatives and has very strict deadlines. It is for not only the Treasury but the Department for Work and Pensions, and it is a crucial factor in delivering the universal credit. I know that Treasury Ministers are very anxious to get universal credit in. To judge by past performance with computer systems, I wish the Minister luck. However, let me mark his card in this debate: all the signs from the Department are that, unless he gets a real grip and has a serious word with the Chancellor, that deadline will not be met. We are talking about not just one Whitehall Department negotiating a contract, but two, and when you put two Departments together, that leads, I fear, to trouble.

As an old friend of the Minister—we have worked together on the Treasury Committee and on other matters—I would not like that contract to be lost on his watch, and that is the third, and perhaps most compelling reason why he should do something about this problem.

Budget Responsibility and National Audit Bill [Lords]

Lindsay Hoyle Excerpts

Monday 14th February 2011 Commons Chamber

[Jacob Rees-Mogg (North East Somerset) (Con)]

I entirely agree with the hon. Lady on the difficulty of forecasting, as even the best economic forecasters get it wrong, but I wonder whether she was as shocked as I was to read in the Financial Times about the bullying of the International Monetary Fund by the Treasury and the Financial Services Authority. Was that not a pretty disgraceful way to behave?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are in danger of going off into past subjects. The hon. Lady may be tempted to answer, but we have to deal with the Bill before us and not with speculation in a newspaper about bullying. I think that we will stick to the Bill.

[Ms Eagle]

Thank you, Mr Deputy Speaker.

Let me be the first to say that the Opposition support an independent OBR, so long as it is indeed independent. In that respect, the OBR has some ground to make up and some points to prove after its very difficult start in life. Initially it was located a few doors down from the Chancellor in the Treasury and consisted entirely of Treasury civil servants. Its much vaunted “independence” was utterly compromised in June last year when it was unwisely bounced into the politically convenient early publication of employment forecasts, suspiciously just ahead of Prime Minister’s Question Time—the Minister did not refer to that incident. The forecasts themselves turned out to be controversial and the OBR ended up looking more like an offshoot of the propaganda machine inside Conservative central office than an independent and trusted forecasting organisation. Sir Alan Budd, the interim head of the OBR, announced his shock departure shortly afterwards. We may well have to wait until he writes his memoirs to find out exactly what really happened.

--- Later in debate ---

[Mr Mark Field]

Although the hon. Lady makes a fair point about explicit mandates, it is surely also the case that there was absolutely no explicit mandate for any of the actions taken by the erstwhile Government after 2008, given the situation that we found ourselves in.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are getting tempted once again. If Members stick to the Bill, that will be helpful.

[Ms Eagle]

There is a difference between having an economic policy that is put into place directly after a general election, when manifestos said one thing and the Government did another, and responding to a crisis that very few people saw coming and that threatened the entire infrastructure of the global banking system. There are obviously differences between those situations, but I respect the hon. Gentleman’s expertise in financial matters, particularly regarding the City.

The Government have chosen to cut public expenditure faster and deeper than any other country in the industrialised world except Iceland and Ireland. They have chosen to announce the deepest cuts in public spending in the UK since the second world war. Nine months into the life of this Government there is still no sign of any plan for jobs and growth, but sensible people know that without a plan for jobs and growth it will not be possible to get the deficit down as the OBR predicts it should come down. Meanwhile, the cuts are beginning to bite and the OBR has forecast that more than 330,000 public sector jobs will be lost. Some 10,000 police jobs have been announced as going so far, and there are reports that 250 Sure Start centres will close. Unemployment, which had begun to fall, is now rising again and inflation, which was low and falling when we left office, is now rising. All that is before the effects of the Government’s ill-advised decision to increase VAT. Growth has stalled.

[Mr Deputy Speaker]

Order. Hon. Members have been tempting us away from the Bill, but I am sure that the hon. Lady wants to stick to it. We do not want to be tempted through further interventions, so if she will keep to the Bill, that will be helpful.

[Ms Eagle]

The important issue is how the independent forecasts interact with what happens in the economy and how that can change and be affected by the Government’s economic decisions.

--- Later in debate ---

[Mr Bain]

I am grateful for that intervention, because it gives me the opportunity to compare and contrast the public sector net debt of 1996-97, which was 42.5%, with that of 2007-08, before the financial crisis—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am trying to allow some freedom, but we are in danger of straying off Second Reading and on to a general debate about the economy. Can we please come back to the debate in hand?

[Mr Bain]

I am very grateful for that guidance, Mr Deputy Speaker.

To conclude my response to the hon. Gentleman, public sector net debt in 2007-08 was 36.5%, so it was lower than that which we inherited when we came to office.

The analysis of the IFS, in chapter 2 of its green budget, produces the conclusion:

“The financial crisis and associated recession have reduced revenues and, to a greater extent, increased public spending as a share of national income. Without action, there would have been an unsustainable increase in borrowing and debt. The government’s spending cuts and tax rises are forecast to be sufficient to return the UK’s public finances to a sustainable position, but the same would have been true under the fiscal consolidation plan set out by Labour in its March 2010 Budget.”

I doubt that even Government Members would label the IFS a deficit denier, so a fiscal mandate that pays insufficient attention to the impact of higher growth and employment in bringing the public finances back to stability will fail the needs of the country.

We look forward to scrutinising the Bill in Committee, to improving the operation of the OBR and perhaps, during the Bill’s proceedings, to securing the change in fiscal mandate that would improve the economic prospects of the British people.

--- Later in debate ---

[Alec Shelbrooke]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are getting tempted into an area where we should not be. We are dealing with Second Reading. I am sure the hon. Member for Bristol West (Stephen Williams) will stick to that, and that Mr Shelbrooke’s intervention will be relevant to it, and not a history lesson for those in the Chamber.

[Alec Shelbrooke]

Thank you, Mr Deputy Speaker. My hon. Friend was trying to make the point that the key word in the name of the Office for Budget Responsibility is “responsibility”.