Finance Bill

Debate between Mary Kelly Foy and Edward Leigh

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Sir Edward Leigh]

We have learned to expect that sort of behaviour. As Ronald Reagan said—we have heard about Roosevelt, so why can we not hear from Ronald Reagan, who was a better sort of Conservative as far as I am concerned?—when we tax something, we get less of it, and when we subsidise something, we get more of it. Research from the European Central Bank shows that when the tax burden is raised by 1%, economic growth is reduced by 0.13%. We have heard a lot about job creation, but that change means many fewer jobs. Every time we create taxes, we destroy jobs.

The Office for Budget Responsibility forecasts that the UK tax burden will grow to 34.6% of GDP by 2024, which is the highest tax burden for this country in more than half a century. We think of ourselves as a seafaring, deal-doing, trading nation, but how can we compete when the trend of tax burden is going the wrong way? That is how we will stifle job creation. We must look at a comprehensive reform of our economy, not the usual tinkering under the hood, and we can do some of that through regulatory reform. That is not aiming for deregulation—instead, the Government should ensure that the UK’s regulatory structure is simple, clear, and appropriate. That is the genesis of this entire debate: our tax system is not simple, not clear, and not straightforward.

If we radically simplify the tax system we will spur more activity, so it is a virtuous circle of benefit to the whole of our society. Imagine if all the money spent on corporate or personal tax avoidance—tax avoidance is perfectly legal, I say to the Minister—could be invested in productive activity instead. Imagine all those thousands of accountants going off and taking up machine tools—I know it is unlikely, but at least it is a thought. That would also be fairer, as it would no longer mean that the richer someone is, or the bigger their company, the more they are capable of exploiting complicated tax loopholes.

We know it is simplistic to base our economy on Singapore or Hong Kong—we are a larger country with more complex needs—but on tax policy, the example they have set is applicable. Let us consider per capita GDP of the UK, Singapore and Hong Kong. They were all more or less at a parity in 1989, about five years after I came to this House, with each at around $25,000 a year. All three countries have improved their GDP per capita, but the scale of the difference is notable. By 2016, six years into a Conservative Government, the UK, with its complex tax code, had a per capita GDP of $37,000. Low tax, simple tax Hong Kong was at more than $48,000, and Singapore at $65,000 to our $37,000. We neglect at our peril that opportunity for a huge growth in numbers of jobs, for our per capita GDP and for income for the Treasury. My simple point to the Minister is this: when he sums up, will he say something about tax simplification and tax reduction?

[Mary Kelly Foy (City of Durham) (Lab)]

We are facing an employment crisis unlike anything we have seen in a decade. The impact of coronavirus will undoubtedly weaken much of our infrastructure, leaving many workers unemployed, and businesses on the brink of collapse. Unfortunately, when lockdown ends, the Government seem intent on a return to normality and business as usual, stuck in the past when they should be learning lessons and looking to the future. The Government’s slow reaction cost us as we entered this pandemic, and they cannot repeat that mistake as we emerge from lockdown.

In contrast, my hon. Friend the Member for Oxford East (Anneliese Dodds) has proposed a back-to-work Budget that places jobs at the heart of the economic recovery. That does not mean a sticking plaster solution, however, or jobs with little or no protection for workers. The damage to our economy caused by this awful virus has been severe, but the economic structuring of society was already broken—skewed in favour of the wealthy rather than workers.

Over the last decade of Tory austerity, the Government have launched attack after attack on the rights and protections afforded to working people. Through the promotion of zero-hours contracts, ambiguity in employment status, low pay and lack of protection in the workplace, the Government have encouraged irresponsible employers and abandoned the country’s workers. Before lockdown, 9 million people living below the poverty line—3 million of them children—were in households with at least one person in work. The Government boast of record levels of employment, but they should be ashamed of the amount of in-work poverty. This economic model needs to end.

If this pandemic has shown us anything, it is that the people on whom society relies the most are those least rewarded in pay and respect. Whether it is the poorly paid nurse, the carer on a zero-hours contract or the retail and hospitality staff working shifts so long that they would not be out of place in Victorian society, the people of Britain deserve better. This pandemic has been devastating, but it provides us with an opportunity to shape the economy and society in a way that prioritises the environment and protects workers. That means better pay, shorter and more consistent working hours and job security. Workers need to be able to look ahead into the week knowing that they have work, that their wages will provide a decent standard of living and that their working hours will leave them the time and energy to live their life. The better the conditions and protection for workers, the better their quality of life and the greater their health, wellbeing and sense of worth—it really is that simple.

The pandemic has also exposed the lack of protections for staff in the workplace and how fragile health and safety standards are. The Government must begin to see employment law as a red line, rather than being advisory, and they must properly fund the Health and Safety Executive, so that safety in the workplace is properly enforced. When the Government finally begin to plan for our post-coronavirus society, they must accept that the status quo has not worked, and any attempt to return to business as usual will fail the public. The 33 million workers of Britain deserve more. When society needed them most during this pandemic, they delivered. It is time for the Government to do the same for them.