Finance Bill
Mel Stride Excerpts(7 years, 2 months ago)
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The Financial Secretary to the Treasury (Mel Stride)
The Finance Bill will be published on 8 September.
Explanatory notes on the Bill will be available in the Vote Office and the Printed Paper Office and placed in the Libraries of both Houses on 12 September.
Copies of the explanatory notes will also be available on gov.uk.
[HCWS107]
Oral Answers to Questions
Mel Stride Excerpts(7 years, 4 months ago)
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Bob Stewart (Beckenham) (Con)
5. What assessment he has made of how to balance the needs of (a) business and (b) the Exchequer in setting the corporation tax rate.
The Financial Secretary to the Treasury (Mel Stride)
This Government believe in a tax regime that is fair and competitive. Since 2010, we have reduced the headline corporation tax rate from 28% to 19%, allowing companies, big and small, to invest in expanding their business, boost wages, create jobs and lower prices. Onshore corporation tax receipts have also increased by over 50% despite the rate being lowered.
Bob Stewart
Does the Minister agree that if we raise corporation tax, it is normally passed on by business to customers, and that if we lower it, we hope that prices will come down?
Mel Stride
My hon. Friend is entirely right. It is important to remember that the burden of corporation tax does not just fall on shareholders. If we were to follow Labour’s policy of increasing corporation tax, we would see less investment, lower growth, lower productivity and, as the Institute for Fiscal Studies has said, lower wages and indeed higher prices.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Earlier, the Chancellor acknowledged that productivity is the key to economic growth and eliminating our public sector deficit. When manufacturing businesses invest, they often lose any benefits of corporation tax reduction because of higher business rates. That acts as a disincentive to invest and increase output and productivity. Why does he not cut business rates instead?
Mel Stride
This Government have done a great deal in terms of providing business rate reliefs, which were announced in previous Budgets and are, I think, well known to the House. There will be more to come on that in the Finance Bill.
Mr Philip Hollobone (Kettering) (Con)
Will the Minister tell the House by how much the corporation tax take has gone up since the corporation tax rate was cut?
Mel Stride
This is an important point. As the corporation tax rate has decreased to 19%—it will go down further to 17%—we have seen a 50% increase in the take, which is an amount in the order of £18 billion.
Annaliese Dodds (Oxford East) (Lab/Co-op)
Most economists prioritise building business confidence and improving infrastructure and skills over cutting corporate tax rates. Is the Minister aware that lowering corporate tax rates now presents the appearance of Britain trying to undercut countries with which we need to agree a decent Brexit deal—at a time when businesses are not confident in the Government’s leadership, but are instead “aghast” and “confused” at their approach to Brexit?
Mel Stride
We have seen a huge increase in employment in this country to a record level, and a record drop in unemployment to the lowest level since the mid-1970s. A lot of that has been driven by business. If the hon. Lady is seriously suggesting that the recipe for increasing the confidence of business is putting up its corporation tax to 26%, she has, I am afraid, missed the point.
Nicky Morgan (Loughborough) (Con)
8. What assessment he has made of recent trends in economic growth.
Catherine West (Hornsey and Wood Green) (Lab)
11. What plans he has to introduce measures to tackle tax avoidance and evasion carried out through non-domiciled status and offshore trusts.
The Financial Secretary to the Treasury (Mel Stride)
The UK has effective legislation to tackle avoidance involving offshore structures and we have announced our intention to legislate further, making it harder for non-doms to avoid paying tax on funds withdrawn from trusts. I am also pleased to say that we have been at the forefront of international work that has seen 100 countries commit to exchange financial information automatically.
Catherine West
The Conservative manifesto said that the Government would
“take a more proactive approach to transparency”.
Does the Minister believe that enough is being done to tackle companies that promote tax-avoidance schemes, or is there still a tendency for the big four accountancy firms to regulate the big four, via the big four, in order to protect the big four?
Mel Stride
The hon. Lady asks if enough is being done to clamp down on tax avoidance. I can assure her that it certainly is. Since 2010, we have raised £160 billion by way of clamping down on exactly those behaviours. In the forthcoming Finance Bill there will be further measures to make sure that over the scorecard period we are bringing in between £7 billion and £8 billion in addition, in corporate tax avoidance measures.
Robert Courts (Witney) (Con)
Will the Minister confirm that due to steps taken by this Government, the top 1% of people now pay 27% of income tax, and that that is a higher proportion than under the previous Labour Government?
Mel Stride
My hon. Friend is entirely right. The Labour party would constantly have us believe that somehow we are being soft on the wealthy and hard on the less well-off when the precise opposite is true. The top 1% pay over 27% of tax, and the wealthiest 3,000 people in our country pay as much as the poorest 9 million. Under Labour, the poor paid more tax relative to the wealthy, not less. No wonder that under our policies income inequality is at a 30-year low.
Neil Parish (Tiverton and Honiton) (Con)
12. If he will make an assessment of the potential merits of merging income tax and national insurance.
The Financial Secretary to the Treasury (Mel Stride)
The Government are committed to simplifying the tax system. In 2015, we asked the Office of Tax Simplification to provide an independent assessment of the alignment of income tax and national insurance contributions. We have already taken action in a number of places highlighted by the report. However, alignment now would cause significant upheaval for millions. Now is not the right time for further reform in this area.
Neil Parish
I welcome my right hon. Friend to his new ministerial role. Last year the Office of Tax Simplification said that bringing national insurance and income tax closer together would create a simpler and fairer system for business and taxpayers. As national insurance and income tax revenues go into the same pot, would it not be simpler and clearer to merge the two and have one single income tax?
Mel Stride
As I said, we recognise the value of merging national insurance and income tax where that is practical and achievable, and there are some measures coming up in the Bills in the autumn that will address that in certain circumstances, but to do it right across the piece at this stage is perhaps a long-term aspiration rather than one we will be addressing in the short term.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister will know that as people go into the higher tax threshold they stop paying more national insurance, so would one of the impacts of merging the two be to reveal that the British tax system is not as progressive as people think, and make the case for those with the broadest shoulders to pay more?
Mel Stride
The hon. Gentleman needs to recognise that national insurance and income tax function in different ways and have different roles in the tax system. We have one of the most progressive tax systems in the entire country. If we look at, for example, those earning above—[Interruption.] Well, by raising the personal tax allowance we have taken 3 million to 4 million people out of income tax altogether. For those earning over £100,000, where we removed the allowance, that, plus national insurance, means that the marginal rates are up to 62% at that level of income.
Diana Johnson (Kingston upon Hull North) (Lab)
14. What assessment he has made of trends in the level of public sector pay since 2010; and if he will make a statement.
The Financial Secretary to the Treasury (Mel Stride)
Since 2010 the headline corporation tax rate has been cut from 28% to 19%. Despite that, onshore corporation tax receipts have increased by more than 50%, from £36.2 billion in 2010-11 to £55.1 billion in 2016-17.
Jeremy Quin
According to KPMG, we have the second-most competitive tax regime anywhere in the G7. Does my hon. Friend agree that that encourages businesses to locate here and boosts our tax receipts?
Mel Stride
My hon. Friend is entirely right. The OECD has made it very clear that corporation tax increases are the most harmful tax increases for economic growth. By keeping business taxes down, in 2015-16 we saw a record number of inward investment projects creating more than 1,600 jobs per week.
Mr William Wragg (Hazel Grove) (Con)
T1. If he will make a statement on his departmental responsibilities.
Paul Masterton (East Renfrewshire) (Con)
T4. The UK Government have a strong record of supporting Scottish businesses, and the British Business Bank has provided nearly £1.5 million of support to small businesses in East Renfrewshire. However, many businesses in my constituency are disadvantaged compared with competitors and counterparts in England due to the Scottish Government’s approach to business rates. Will my right hon. Friend join me in calling for the Scottish Government to reverse their decision to double the large business supplement, restore rates parity on both sides of the border and allow Scottish businesses to compete on a level playing field?
The Financial Secretary to the Treasury (Mel Stride)
My hon. Friend is entirely right. The large business supplement is a devolved tax matter and the supplement in Scotland is double that in England. The consequences were best summed up by Liz Cameron, the chief executive officer of the Scottish Chambers of Commerce:
“Here in Scotland, we must ensure that we are seen to be the best place in the UK to do business and that will require a fundamental reassessment by the Scottish Government of its tax policies.”
Heidi Alexander (Lewisham East) (Lab)
The Chancellor will know from his own officials’ analysis that the difference between staying in the European economic area and a Canadian-type deal, which is essentially what the Government are now aiming for, is a hit to GDP of £16 billion, which is equivalent to a 4p rise in the basic rate of income tax. How can it not be right to stay in the EEA, at least for transition?
Bob Stewart (Beckenham) (Con)
T6. Several of my Beckenham constituents have suggested that the winter fuel allowance might be a taxable benefit. Is that being considered?
Ian Murray (Edinburgh South) (Lab)
One of the best boosts to economic growth is Government infrastructure spending, so will the Chancellor look down the back of the sofa where he found the £1 billion for the deal with the Democratic Unionist party and find more change to sign the Edinburgh city growth deal?
Craig Tracey (North Warwickshire) (Con)
Does my right hon. Friend agree that lowering corporation tax to 19% has incentivised business investment in North Warwickshire and Bedworth by companies such as Aldi, which has its headquarters there, and throughout the UK?
Mel Stride
My hon. Friend is right, and he is rightly a champion of business in his constituency. There is no doubt that lower taxes create wealth and in turn pay for the public services that we all desire—contrary to the party opposite. I share one exchange with the House—when my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) asked the shadow Chief Secretary if he was
“aware that tax as a percentage of GDP is going to be at its highest level since Harold Wilson was Prime Minister?”,
his response was:
“Let me put it like this: if we had a Labour Government, the percentage would be even higher.”—[Official Report, 18 April 2017; Vol. 624, c. 579.]
Margaret Greenwood (Wirral West) (Lab)
The TUC estimates that nurses, firefighters and border guards face losing more than £2,500 in real terms by 2020. For ambulance drivers, who earn significantly below the UK average wage, the figure is more than £1,800. Does the Minister agree that it is about time that we gave hard-working public sector workers the pay rise they deserve?
Finance Bill
Mel Stride Excerpts(7 years, 4 months ago)
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The Financial Secretary to the Treasury (Mel Stride)
The Finance Bill introduced in March 2017 provided for a number of changes to tax legislation that were withdrawn from the Bill after the calling of the general election. The then Financial Secretary to the Treasury confirmed at the point they were withdrawn that there was no policy change and that these provisions would be legislated for at the first opportunity in the new Parliament.
The Government confirm that intention. They expect to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions. Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.
The Finance Bill to be introduced will legislate for policies that have already been announced. In the case of some provisions that will apply from a time before the Bill is introduced, technical adjustments and additions to the versions contained in the March Bill will be made on introduction to ensure that they function as intended. To maximise certainty about the exact provisions that will apply, the Government are today publishing updated draft provisions.
The Finance Bill will include legislation for the Making Tax Digital (MTD) programme. Having listened carefully to the concerns raised by the Treasury Committee, parliamentarians and stakeholders, the Government are announcing policy changes that will be reflected in the legislation to be introduced. Businesses will not be mandated to use the MTD system until April 2019 and then only to meet VAT obligations. This will apply to businesses with turnover above the VAT threshold. Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able to opt in for other taxes, benefiting from a streamlined, digital experience.
The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
[HCWS47]
Balancing the Public Finances
Mel Stride Excerpts(7 years, 4 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Financial Secretary to the Treasury (Mel Stride)
It is a pleasure to speak under your chairmanship, Ms Ryan. I thank my right hon. Friend the Member for Forest of Dean (Mr Harper) for securing this extremely important debate and for the impassioned and meticulous way—we have grown used to that in his case—in which he dealt with some of the most important issues that our nation faces.
Many hon. Members have this morning gone back to 2010, as is right and proper, and set the debate in that context. Let us remind ourselves that in 2010 the deficit was 9.9% of GDP. To put that in context, the last time the Labour party put us into very deep and troublesome economic waters was in 1976, when the figure was somewhat lower but still led to the then Chancellor, Denis Healey, having to go cap in hand to the International Monetary Fund because this country was bust. That is the perilous background.
Over the past seven years we have made extremely good progress. We have reduced the deficit by three quarters and, according to OBR forecasts, are probably about two years ahead in terms of the interim targets that we have set and that have been discussed in this debate. One of the most spiriting aspects of the debate on the Government side of the Chamber has been the focus that was rightly placed on our huge economic achievements. Let us not forget that employment is at a record high, there are more women in employment now than at any other time in our history, unemployment is at its lowest level since the mid-1970s and, as many Members have rightly pointed out, we have sustained levels of economic growth that other members of the G7 would be proud of and wish to achieve.
However, as many Members have said, we cannot duck the fact that our level of indebtedness, which will peak at the end of this financial year at 89% of GDP, is too high. It is unsustainable. It is not just a burden on future generations, as has been pointed out, but means that we are vulnerable to external economic shocks. We need to get that level down.
Alex Chalk
Does my right hon. Friend agree that it is a sobering fact that in 2007 Greece had a debt to GDP ratio of 100%? The fact that ours is close to 90% means that we have to take this matter very seriously for our national security and that of future generations.
Mel Stride
My hon. Friend is absolutely right. If we do not start to see the figure coming down, it can only bode ill for the future. That is why we are so determined to get it down.
Turning to the contributions that have been made, my right hon. Friend the Member for Forest of Dean made important points about our record on growth and jobs, about the threat of interest rate hikes if we fail to get on top of our debt and about keeping taxes low, particularly for our businesses. Many Members have made the point that as we have reduced corporation taxes the actual tax yield has increased, which rather suggests that the Opposition’s policy of raising them would be counterproductive in every sense. He made very important points about public sector pay. Let us not forget that this is not just about controlling public sector pay and spending, but about preserving jobs. The OBR reckons that by sticking to our plans we are protecting about 200,000 jobs in the public sector. When we talk about the 10,000-plus more nurses and 10,000-plus more doctors in the NHS, one of the reasons we have them is that we have given ourselves the room to afford them.
If I may, I will turn now to the hon. Member for Islwyn (Chris Evans), who made an impassioned attempt to take on the powerful arguments from the Government side. He is somewhat outnumbered. He suggested that he was like Lieutenant Custer. Of course, at Custer’s last stand, which was in 1876 at the battle of the Little Bighorn, unfortunately Custer was annihilated: he lost five companies, two of his brothers, a nephew and a brother-in-law to boot. It is remarkable that the hon. Gentleman is still standing after the onslaught from the hordes on our side of the Chamber today.
The hon. Gentleman made one point about the tax gap. He bemoaned the fact that, at £36 billion, it is higher than we would like it to be. That is absolutely true, but what he did not mention is that it represents 6.5% of the tax that we raise and is at the lowest level for very many years. As another hon. Member pointed out, since 2010 we have had about 55 new tax avoidance measures that in total have raised no less than £140 billion, which is three times the size of the deficit we face.
My hon. Friend the Member for Witney (Robert Courts) delivered the essential truth that borrowing must be repaid and the intergenerational unfairness of failing to do so. He made important points about the cost of servicing our debt and that if we lose the confidence of financial markets, those costs will rocket, to our detriment. The hon. Member for Glasgow East (David Linden) referred to Brexit as an ideological obsession, but I say no, actually: it is respecting the democratic will of the people. Although I, probably like him, was on the other side of that argument.
My hon. Friend the Member for Redditch (Rachel Maclean) made some very important points. The Opposition always say that we are looking after the wealthiest in society, but the truth is a long way from that. Some 27% of tax is paid by the wealthiest 1% in this country. A statistic that could also have been used is that the wealthiest 3,000 people in our country pay as much tax as the poorest 9 million. We are doing a huge amount on the issue of income equality.
My hon. Friend the Member for Horsham (Jeremy Quin) made an impassioned speech in which he referred to the importance of keeping interest rates low by keeping on top of the debt. My hon. Friend the Member for South Suffolk (James Cartlidge) finished his contribution on the Queen’s Speech debate today, and I am glad that he did because he made some important points, particularly on productivity, and quite rightly referred to our £23 billion productivity investment fund.
My hon. Friend the Member for Chichester (Gillian Keegan) gave a powerful speech and referred, I think, to the shadow Secretary of State for Education’s performance on “The Andrew Marr Show” on Sunday, when the hon. Member for Ashton-under-Lyne (Angela Rayner) referred to Labour having a large abacus. I have to say that my jaw hit the Stride sofa when I heard her say that it would cost about £100 billion to wipe out student debt and that this was something they were looking at.
Mr Harper
The other point that the shadow Education Secretary made was putting her leader straight when she admitted that more working-class children were able to go to university with tuition fees and that it is simply not correct to keep asserting what he says, which is that fewer had done so. The fact that she put her leader right was spot on.
Mel Stride
As ever, my right hon. Friend is entirely correct.
My hon. Friend the Member for Dover (Charlie Elphicke) made important points about retaining the confidence of financial markets, and my hon. Friend the Member for South West Bedfordshire (Andrew Selous) talked about the importance of productivity, technical education, infrastructure, housing and all those elements, which matter.
The hon. Member for Aberdeen North (Kirsty Blackman) did at least welcome the personal allowance increases that we have implemented. They are now at £11,500 compared with about £6,500 in 2010, and will increase to £12,500 over the coming period. She made various comments about pressures on pay and wage growth, but one fact that I will share with her is that those in full-time work on the minimum wage have actually seen pay boosted by £1,400 a year going back to 2010. That is an achievement that this Government should be rightly proud of.
I very much welcome the hon. Member for Bootle (Peter Dowd) to his place and look forward to a constructive engagement over the weeks, months and years of this Government. He said that he has read the Conservative party manifesto. I urge him to read it again and again and to learn from it. I am afraid that even though he has read it, he has failed to explain how to square more spending and spending, taxing and taxing and borrowing and borrowing with future sustainable economic success.
May I finish with one overall observation? The Opposition are very keen at every turn to say that our commitment to what they call “austerity” and what I call “living within our means” is some form of harsh, uncaring cruelty. Surely the cruellest cut of all is when a politician struts the stage telling the audience that which they most dearly wish to hear, but knowing in his heart that he has no way of delivering it—knowing in his heart that what he suggests will lead to financial and economic ruin. When we look at that situation, what question do we have to ask? We have to ask: who will be most hurt if we go back to the days of 1976? The answer is the most vulnerable—the poorest—because they are the least nimble and the least well-resourced to get out of the way of the damage. They are the people who lose their jobs and cannot cope. They are the people who see interest rates on their mortgages go through the roof, and struggle to pay as a consequence. As many Members have also said, the others who suffer are the young and the as yet not born—those who end up being saddled with the debt of the profligacy of our generation and have to pay it down themselves.
I thank my right hon. Friend the Member for Forest of Dean for securing this debate. We must stay the course. We must make the hard choices. We must make it the first priority of this Government to have a responsible stewardship of our public finances.
Finance Bill (First sitting)
Mel Stride Excerpts(8 years, 4 months ago)
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The Lord Commissioner of Her Majesty's Treasury (Mel Stride)
You may take your jacket off, Sir Roger.
Finance Bill (Second sitting)
Mel Stride Excerpts(8 years, 4 months ago)
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The Chair
On behalf of Sir Roger Gale and myself and the Officers of the House, I thank the hon. Member for Wolverhampton South West for his kind words.
The Lord Commissioner of Her Majesty's Treasury (Mel Stride)
May I also associate myself with the generous comments that have been made?
Ordered, That further consideration be now adjourned. —(Mel Stride.)
Finance Bill (Fifth sitting)
Mel Stride Excerpts(9 years, 1 month ago)
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Mr Gauke
The UK is introducing a central register that is publicly available. We are leading the way on that; I am not aware at the moment of any other jurisdictions elsewhere that are pursuing that. We believe that we should set the benchmark, so I am pleased that we as a country are leading the way.
The hon. Gentleman mentioned HMRC resources and so on. He referred to headcount. He will be aware of the dramatic reductions in headcount that occurred under the last Labour Government. In the last Parliament, we invested more than £1 billion in HMRC to tackle evasion, avoidance and non-compliance between 2010 and 2015. We made more than 40 changes in tax laws, closing loopholes and introducing major reforms to the UK tax system. I think most people would agree that it is much harder to avoid and evade taxes now than it was five years ago. Over this Parliament, up to 2020-21, we will be investing more than £800 million in funding in HMRC for matters relating to evasion and general non-compliance, which will help HMRC tackle evasion.
We have a proud record. It is not purely about staff numbers, although as it happens, enforcement and compliance numbers were not reduced in the last Parliament; the reductions in head count were generally within personal tax. It is not simply about headcount; it is about making use of technology and information and acting efficiently. We have a proud record on that front and we will continue in that vein. The clause is part of that process.
Question put and agreed to.
Clause 46 accordingly ordered to stand part of the Bill.
The Lord Commissioner of Her Majesty's Treasury (Mel Stride)
I beg to move,
That further consideration be now adjourned.
The Chair
Before I put the Question, in fairness to Members and, in particular, members of staff, let me say that the Committee has made—without indecent haste and having studied each clause thoroughly—very considerable progress. It is conceivable that we might get to the end of the Bill today. I am conscious of the fact that some hon. Members have considerable distances to travel and may therefore wish to adjourn at an earlier stage. That is entirely a matter for the usual channels; it is not for me to decide. Ordinarily, I would suspend the Committee for a comfort break after about three hours, but I want to make it plain to hon. Members and to staff—because they need to know as well—that I am perfectly prepared to stay in the Chair and see this through if that is the wish of the Committee, but that is a matter for the usual channels to consider.
Question put and agreed to.
Finance Bill
Mel Stride Excerpts(10 years, 4 months ago)
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Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to follow the hon. Member for Cities of London and Westminster (Mark Field), who always speaks with great expertise in his field. I served on the Bill Committee—I have not missed a Finance Bill Committee since I entered the House. On the first Committee on which I served in 2010 I was full of enthusiasm and, having listened to the Minister, I am still filled with that enthusiasm as he has negotiated a thousand different ways to say no. I pay tribute to all the Members who served on that Committee.
As we approach the general election, the public are crying out for help to ease their burdens as the economy belatedly shows some green shoots of recovery. People around their kitchen tables wondering how they will pay their bills, those in the workplace who are worried about their job security, and those running a small business will judge the Bill on three tests—are taxes fair for my family and myself, do business taxes encourage growth and are they fair, and how will pensions reform—
Mel Stride (Central Devon) (Con)
The hon. Gentleman mentions business taxes. The shadow Minister was repeatedly pressed to say whether business taxes might rise under the next Government. We know from what the Opposition have said that business taxes could rise to 26.5%, the level that they are at in Canada. Does the hon. Gentleman share my concern that that could be a major brake on business development in the future?
Chris Evans
Of course I share the hon. Gentleman’s concern. I shared the concern that the very first act in the very first Budget of this Government was to put VAT up to 20%, increasing the tax burden by 2.5% for businesses all over the country. That was not exactly pro-business, but I am not here to talk about what the Tory Government have done or not done.
Let us deal with facts. Working people have seen their wages fall by £1,600 a year on average under this Government. Real wages will have fallen by 5.6% by the end of the Parliament. People feel worse off. On growth—the one test that the Tories said they would achieve—after three years of a flatlining economy, we see the economy growing by only 4.6%. The Chancellor does not talk about his forecast that the economy would grow by 9.2% in 2010. Our present rate of growth is far slower than that of America at 6.6% or Germany at 5.7%. GDP growth this year is still expected to be lower than the independent Office for Budget Responsibility forecast in 2010.
On borrowing, on which the Conservatives attacked the Labour Government, the present Government promised to balance the books by 2015, but borrowing will be £75 billion that year. Over this Parliament borrowing is forecast to be £190 billion more than planned at the time of the first spending review. National debt as a percentage of GDP is not forecast to start falling until 2016-17, breaking one of the Government’s own fiscal rules.
All the headlines following the Budget were about pension reform. Yes, annuities need to be reformed, and I support increased flexibility for people in retirement and reform of the pension market so that people get a better deal. However, the Labour party has consistently called for reforms to the annuities market and a cap on pension fund charges over the past three years. The Government have failed to reform the private pensions market to stop people being ripped off and to create a system that savers can trust. The Government are failing to prevent savers from being ripped off by delaying bringing in a cap on charges. This is costing savers up to £230,000. The Government are failing to make tax relief on pensions fair, with 15% of all relief—£4 billion—going to the richest 1% of taxpayers.
When we talk about the reform of pension markets and the ending of annuities, I believe we should set three tests. The first is the advice test. Is there robust advice for people providing for their retirement, with measures to prevent mis-selling? Forget the patronising “buy a Lamborghini”. I do not believe the people of Britain are so naive as to go out and buy a Lamborghini. As a former financial adviser, I am talking about good advice. With the reform of the annuities market there will be new products—products that we have not thought of before, such as bonds, investment trusts and all sorts of vehicles that people can invest in. Those will be complicated and people will need advice, but that will not be achieved by 15 minutes of guidance, where advisers cannot sell.
The second test is fairness. The new system must be fair, with those on middle and low incomes still being able to access products that give them the certainty they want in retirement. The billions we spend on pension tax relief must not benefit only those at the very top.
The third test is cost. The Government should ensure that this does not result in extra costs to the state, either through social care or through pensioners falling back on means-tested benefits, such as housing benefit. The Treasury must publish an analysis of the risks it considers when costing this policy. I was deeply concerned when the Minister said this afternoon that this change, which is the biggest ever to the pensions market, is still to be worked out and that a consultation on advice is still running. For those facing this change, advice is vital.
I talked for little short of half an hour yesterday on the other major change introduced in the Bill: exchanging employment rights for company shares. I will try to break it down into two fundamental arguments. First, if an employer has an employee they are suspicious of, why would they give them shares in the company? Equally, if a company wants to trade shares for rights, does that mean it trusts the employee? Will they be hard-working and industrious for that company? Secondly, if a company is going to dismiss an employee, why would it give them shares in the company anyway? Surely share save schemes should be used to reward employees for hard, industrious work, but that is not happening. We still need reform.
We have talked about a report and analysis. Even though the statistics now show that after a 33-week consultation only five of the 200 companies that responded said that they were interested in taking up the scheme, the Government still say that it is far too early to even think about a report.
As we bring to a conclusion our consideration of the Finance Bill, which I am sure all of us who served on the Bill Committee are excited about, the one question we have to ask ourselves is this: is it fair to the people of Britain? Based on the statistics, it is not. I will therefore be joining my colleagues in the Lobby tonight and voting against the Bill.
Oral Answers to Questions
Mel Stride Excerpts(10 years, 8 months ago)
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Danny Alexander
I think that the hon. Lady merits answers to all her questions. There is a good case for retaining the existing measures, but it is also important that we have an understanding, through the measures we use, of the wider factors that influence child poverty—the barriers to life chances and so on. I do not propose getting rid of the existing measures, which I think are important, but supplementing them with further measures to ensure that we have policies which are properly targeted to deal with the long-term causes of child poverty would help us all.
Mel Stride (Central Devon) (Con)
T3. Next month many thousands of my constituents will benefit from the £10,000 income tax personal allowance, something that I am proud has been introduced by a Conservative-led Government. I urge my right hon. Friend to ensure that in the upcoming Budget we continue to press down on personal tax and try, wherever possible, to freeze or reduce fuel duty, which is extremely important for my rural constituents.
Danny Alexander
I share the hon. Gentleman’s pride in the fact that the coalition Government have delivered that important measure, which is supporting 26 million working people in this country with an income tax cut worth about £700 a year. My pride is enhanced by being a member of the party that proposed it at the 2010 election.
Currency in Scotland after 2014
Mel Stride Excerpts(10 years, 9 months ago)
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Ian Murray
Let me make a little progress. I know that other hon. Members want to speak, but I will allow hon. Members to intervene.
It is not just an issue for Scotland. The rest of the UK—this is an important point, which other hon. Members have made in interventions—would have to agree. It appears from speculation in the press today—perhaps the Treasury Minister can indicate whether it is speculation—that there will not be an agreement on currency union, as it is undeliverable. If an agreement is not possible or is ruled out by the Treasury, what will be the Scottish Government’s plan B? [Interruption.] The nationalists are chuntering away about what they would do. I am happy to take an intervention if they want to tell the people of Scotland now what the Scottish nationalists’ plan B is for the currency should Scotland vote yes for independence. [Interruption.]
Ian Murray
That is a very timely intervention, because there is no doubt about this. Everyone in this room, everyone watching this debate and everyone in Scotland and the rest of the United Kingdom will know what happens when people do not pay their bills. When people default on their bills, they end up in a situation whereby the bills get higher. Interest and credit get higher and more difficult to get. Indeed, they are punished for ever more with an incredibly bad credit rating. In the context of an economy and a country, that is devastating for jobs and public services at the very least.
Mel Stride
The hon. Gentleman rightly highlights the problem of any two countries that go into a currency union and therefore have to get their budgets, spend and tax agreed between them, which in itself will be deeply problematic with an independent Scotland under SNP leadership certainly, but will he also recognise that the situation is even worse than that? In the event that, in that situation, Scotland overspent, it would in effect be down to London to decide that it was going to have to row back on that expenditure and cut expenditure north of the border.
Ian Murray
I am grateful for that intervention. Again, I can only emphasise what the Governor of the Bank of England said. It was a non-partisan speech; it was a technical speech about currency unions and that was the point that he made: those monetary, fiscal and spending stabilisers have to be in place; otherwise a currency union does not work.
What about business? We sell twice as much to the rest of the UK as we do to the rest of the world combined. Losing the pound would mean that every time a Scottish company sold to or bought from somewhere down south, they would incur the cost of exchanging money. That would result in higher prices for us all, as the supermarket bosses—again, we have been told by the First Minister to ignore them—warned us last week. We should listen to business. In a strong criticism of the SNP White Paper, the Institute of Chartered Accountants of Scotland has warned that there is
“a high degree of uncertainty as to what the currency of an independent Scotland will be.”
ICAS states that no alternatives have been set out in case the negotiations are unsuccessful, and warns:
“The choice of currency will have a very significant impact across the pensions sector, the economy and the country generally, and this will inevitably remain as a major uncertainty for the time being.”
We should listen to that warning from Scotland’s accountants. The SNP must tell us what currency it would use instead. Will it set up an unproven currency or rush to join the euro?
Guy Opperman
The arguments on fiscal regulation might appear dry and unexciting, particularly when addressed in the press, but they are utterly key to the future prosperity not only of the whole existing United Kingdom, but especially of Scotland if it were to become independent. Such aspects of fiscal regulation as my hon. Friend mentioned—how a bank would function; how a currency would be managed; what sort of interest rates would be managed; who is in charge of such matters—are totally unaddressed by the SNP. Frankly, they must be addressed if anyone is to have any faith in the SNP’s fiscal approach to the argument.
Mel Stride
My hon. Friend is making a powerful case. Does he agree that full currency union could have a devastating impact on the financial services sector in Scotland as banks migrate south to get the protection of the Bank of England as the lender of last resort?
Guy Opperman
I have no doubt that that would be the case.
I am mindful of your instructions, Mrs Riordan, so I must finish. If keeping the pound would not be possible as part of a formal sterling currency union; if the SNP no longer wishes to join the euro, which one can see; and if there is no prospect of an independent country with border control—my constituents are somewhat concerned that there might be a rerun of Hadrian’s wall—where are we? We will have a new Scottish currency. The expression that is used is “sterlingisation.” In its briefing on an independent Scottish currency, not part of a fiscal union, the House of Commons Library—I can assure the hon. Member for Perth and North Perthshire (Pete Wishart) that it certainly is independent—states that such a
“policy is often used by countries which have a poor economic record.”
I could not have put it better myself. It is the currency situation in Greece, Panama, El Salvador and Montenegro; it is not what we should be pursing.