National Minimum Wage

Mel Stride Excerpts

Wednesday 15th January 2014 Commons Chamber

[Rachel Reeves]

Work by the Institute for Fiscal Studies has shown that, taking account of all the changes to taxes, tax credits and benefits since the Government came into office, the average worker is now £850 worse off. The hon. Gentleman points to one thing, but the VAT increase means that people are worse off, as do the tax credit changes. Overall, when all those things are added up, people are worse off, not better off. I hope that he will stay a little longer than his colleague to hear a bit more of the debate.

We know that we need to build on the success of the national minimum wage, because today we face a new challenge: getting our economy working for working people and tackling the worst excesses of insecurity and exploitation in our labour market.

[Mel Stride (Central Devon) (Con)]

Further to the point made by my hon. Friend the Member for Braintree (Mr Newmark), does the hon. Lady not accept that the pressure on living standards is a function not just of wages, but of the costs that average families face? Will she thank the Government, as I do, for having frozen council tax during the period we have been in office, unlike her party, which doubled it during its period in office?

[Rachel Reeves]

If the hon. Gentleman looks at what has happened to living standards, he will see that the average worker is £1,600 worse off than they were in 2010. I am surprised that he applauds what the Government are doing—I certainly do not—because workers in his constituency are worse off, not better off, after three and a half years of Conservative government.

--- Later in debate ---

[Mr William Bain (Glasgow North East) (Lab)]

Nothing speaks more to how the economy simply does not work at the moment for ordinary people in this country than this Government’s record of dither and inaction on low pay. It should be genuinely shaming for every Member of this House that the United Kingdom had the fifth worst levels of poverty pay in the OECD in 2013. We should also remember today the tireless work of living wage campaigners, trade unions and those enlightened employers across the United Kingdom who accept that our country has no future as a low-skill, poverty-wage economy and who have achieved fairer deals for workers from the financial services sector through to local government.

Now the Government must meet their share of the responsibilities by using the procurement system more effectively to secure the living wage for workers through Government contracts wherever that is possible, because although the burden of poverty pay falls most heavily on the working poor, who are now using food banks in record numbers, it is paid for by every single taxpayer in this country. They are subsidising, through the tax and benefit systems, unacceptable levels of low wages paid by bad employers. That also damages the interests of good employers.

Over the past three decades, the share of growth finding its way into the pay packets of ordinary workers on the lower half of the income scale has slumped to just 12p in every £1 of GDP growth generated. Having denied for months that there is a cost of living crisis in our country, the Business Secretary and the Government now ring their hands, for ever pledging change in the future but failing to take the action needed now to enforce the minimum wage properly, to reverse its real-terms fall in value under this Government, or to produce any long-term plan to restore the broken link between growth, productivity and wage growth, which is vital to generating a lasting uplift in living standards for millions of people across our country.

The Chancellor has been sending out mixed messages over the past few weeks ahead of his Budget. He has briefed some newspapers that a significant uplift in the minimum wage is on the way, but other newspapers have received a different story. Whatever he announces on 19 March will be weighed against the fact that under his stewardship since May 2010 the real-terms value of the adult minimum wage has fallen by 50p an hour. He is also launching a £600 million stealth raid on work incentives for the low-paid through the freeze in the work allowance of universal credit for the next three years. A single parent with children will be up to £230 a year worse off as a result of that sneaky change buried deep in the documents that accompanied the autumn statement.

Business investment is flatlining, exports are poor, productivity is weak, the squeeze on wages is extending into 2015, and people are working longer hours than they did in 2008 but have a lot less to show for it. This is not a Government who can say that they have a credible long-term plan to boost the living standards of ordinary working people in Britain.

The Government should be enforcing the minimum wage better. The hon. Member for East Dunbartonshire (Jo Swinson) said that bad employers would be named and shamed, but we have seen nothing of that so far. The Office for National Statistics told me at the end of last month that nearly 300,000 people across our country are being paid less than the minimum wage, including 17,000 in Scotland, yet we have seen only two prosecutions over the past four years, and the average fine for each breach was only £1,500.

[Mel Stride]

Does the hon. Gentleman not welcome, as I do, the fact that we are moving from a fine of up to £5,000 per company to a fine of up to £20,000 per employee who does not receive the minimum wage? If 50 employees in a company were affected, presumably the fine could be as much as £1 million.

[Mr Bain]

I am grateful to the hon. Gentleman for his intervention, but that would simply mean that the maximum fine was only 40% of the maximum fine for fly-tipping in this country. Is he genuinely saying that there should not be an equivalence between the maximum fine for fly-tipping and the maximum fine for failing to pay the national minimum wage? I urge him to think again.

--- Later in debate ---

[Mr Brooks Newmark (Braintree) (Con)]

I am delighted to follow the robust speech by the hon. Member for Derby North (Chris Williamson). I am probably the first Conservative in the Chamber to begin mine by supporting the first part of the Opposition motion, which states:

“That this House celebrates the 15th anniversary of the introduction of the National Minimum Wage”.

I support the minimum wage, as I believe all Government Members do, because it is important to make work pay, to boost living standards and to tackle in-work poverty. I cannot, however, support the rest of the motion.

The Secretary of State for Business, Innovation and Skills recently said:

“Anyone entitled to the national minimum wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear—if you break the law, you will face action. As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due.”

[Mel Stride]

Does my hon. Friend agree that it is a significant step forward that the fines will now relate to the individuals who have not received the minimum wage, rather than to the companies?

[Mr Newmark]

I thank my hon. Friend for that intervention. I will go into that matter in a little more detail in a minute.

The Government are taking strong action to deal with the last Labour Government’s failure to have a robust system of enforcement for the national minimum wage. I welcome this week’s announcement that tougher financial penalties will be brought in to crack down on those who do not play by the rules.

Cost of Living

Mel Stride Excerpts

Wednesday 27th November 2013 Commons Chamber

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

The time that I have is nowhere near enough to address the magnitude of the cost of living crisis and the spectacular economic failure of the Government’s policies, but I will try my best.

The average wage in my constituency, after income tax and national insurance contributions, is £1,319 a month. That budget faces extraordinary pressure as every aspect of the cost of living is on the rise. The average energy bill is £110 per month, which over the course of the year amounts to nearly an entire month’s pay.

[Mel Stride (Central Devon) (Con)]

The hon. Lady has just stated that every aspect of the cost of living is on the rise under this Government. Does she recognise that council tax, a very important component of the cost of living, has decreased by 9.5% on average during the period of this Government, yet it doubled under the Labour party when it was in office?

[Mrs Lewell-Buck]

I thank the hon. Gentleman for that intervention, but he needs to look at the bigger picture, which is what I will go on to talk about—the cost of everyday living in general.

Water costs a further £30 per month to my constituents. Rent makes another significant impact. A single bedroom property costs £395 a month in the private rented sector. Social properties are, of course, cheaper, but as my hon. Friends have explained on numerous occasions, there are few such properties to go around. Council tax starts at £80, so we need to take that off the overall budget. We are talking about working people who, if they have children, will also need to cover the cost of child care. As Labour highlighted in last week’s debate, the cost of child care is rising five times faster than pay and now amounts to more than £100 per child per week for 25 hours. That is around £460 per month.

All this leaves the average individual in my constituency with just £244 to live on per month. That needs to cover food, transport, other bills as well as a multitude of other costs that are part of daily life. I admit that this is rather a crude calculation, but the fact is that people in South Shields living on this meagre income are the lucky ones. Despite everything, they have managed to hang on to their homes and provide for their families through sheer tenacity and the hard work ethic that permeates my constituency. But what about those who fall below the average? What about those on zero-hours contracts, the 3,592 unemployed, the elderly and frail, the homeless and the rough sleepers? And there are those who are affected by the Government’s bedroom tax, who will lose an extra £450 a year.

Five thousand children in my constituency live in poverty, and many of them live in households with a parent in work. Some 4,260 of my constituents live in fuel poverty, and 1,440 of them are affected by the bedroom tax. We have a rise in homelessness and a rise in rough sleepers, yet still this Government fail them. This is a Government led by a Prime Minister who said prior to the 2010 elections that the Conservatives

“are best placed to fight poverty in our country.”

This is an astonishing claim when we know that over a million people have fallen into poverty on his watch, including 300,000 children.

Women and the Cost of Living

Mel Stride Excerpts

Tuesday 19th November 2013 Commons Chamber

[Nicky Morgan]

I could not believe that the hon. Member for Ashfield did not want to hear from my hon. Friend, but, having heard his excellent intervention, I now understand why she did not do so.

[Mel Stride (Central Devon) (Con)]

Does my hon. Friend agree that it was unfortunate that the shadow Minister did not mention council tax? It is a major contributor to the cost of living but, due to the actions of this Government, it has fallen by 9.5% since 2010, having doubled during the time her party was in office.

[Nicky Morgan]

The shadow Minister also failed to mention fuel duty and the cut in income tax but, strangely enough, I am going to talk about those things in my speech.

This Government know full well that the best way for us to raise the living standards of both women and men in this country, and the best way to put money back into the pockets of hard-working people, is to create an environment in which our economy can grow and in which everyone can feel the benefit. That is exactly what we have spent the past three years doing: reducing the deficit, improving our tax system, investing in our skills and infrastructure and ensuring that all schools are good schools.

Finance Bill

Mel Stride Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Catherine McKinnell]

My hon. Friend has made a very good point. I should be interested to hear the Minister’s response to the figures that she has given, and to what she has said about the lost opportunities for growth. Those opportunities, moreover, have not just been lost over the last three years; the Government are planning on the basis of a further two years of lost economic growth, which simply defies common sense. According to the International Monetary Fund, they should be investing in infrastructure this year to boost economic growth and the housing market, and to encourage job creation and increased tax receipts. The Government seem to be ignoring not only what we are saying, but what the IMF is saying.

[Mel Stride (Central Devon) (Con)]

The hon. Lady has referred several times to the impact of Government policy on jobs. Does she not recognise and welcome the fact that under the present Government there are more people in work than at any other time in our history? We have created more than 1 million private sector jobs—three for every job lost in the public sector.

[Catherine McKinnell]

I acknowledge what the hon. Gentleman has said, but I do not think that it can be linked to the economic reality—the reality of what households and people are experiencing. Many people are in insecure work, many are on zero-hour contracts, and many are self-employed. People all over the country feel that their living standards are being squeezed to such an extent that they cannot afford to pay for what they need by the end of the week.

--- Later in debate ---

[Catherine McKinnell]

Yes, it was a huge blow for families across the country to see costs spiral overnight. This Government seem incredibly complacent about the impact their spending decisions have had, not only on families but on economic growth. We need to look at the facts. The Chancellor promised growth of 6% in 2010. He also promised that he had asked the country for all he would ask for and would not come back for more, but there he was last week, planning for more cuts in 2015 and completely failing to recognise both that his economic plan has resulted in 1% growth, not the 6% he promised, and that his increase in VAT was very much a part of the reason for that.

[Mel Stride]

May I press the hon. Lady for a third time on the question my hon. Friend the Minister has been asking? At this moment in time, given where we are with VAT at 20%, would she advocate, as her party has in the past, that it now be reduced to 17.5%? Also, is her party still in favour of the five-point plan for growth, of which the VAT reduction is but one part?

[Catherine McKinnell]

It is very strange that Government Members, who are in power and making the spending decisions that are having such an impact on families, are solely obsessed with what Labour would be doing. We are in opposition. The hon. Gentleman can speak to his Minister and implore him to make the necessary changes that will bring economic growth back to this country. That is what the Government need to be focused on. The Chancellor is so obsessed with his own economic failure—a failure to recognise that his plan has completely failed—that the Government simply obsess about and focus on what we would be doing, but we are not in government.

--- Later in debate ---

[Catherine McKinnell]

My hon. Friend tempts me to suggest a less than honourable motive for our tabling the new clause. I appreciate that there may be some scepticism about the Government’s commitment to investing in infrastructure and growth and that last week’s announcement was simply about planning for more cuts to public services rather than a genuine attempt to try to look for opportunities for growth. It must be said, however, that the spending review, which plans more cuts in 2015 and was accompanied by an infrastructure announcement on Thursday that was mostly reheated—I think my hon. Friend the Member for Nottingham East (Chris Leslie) described it as a “microwave statement” as its announcements had been reheated so many times—failed to impress anybody.

Liberal Democrat Members in particular should be concerned by statements from the Deputy Prime Minister. He has commented that

“the gap between intention, announcement and delivery is quite significant”.

He puts that rather mildly, and I would hope that by supporting our new clause the Government could take stock of the impact mot just of the 2013 spending round they announced last week but of the delay in delivering any of the projects that have already been announced, as well as the delay pursuant to the announcements that have been made for 2015. This is an important opportunity for the Government to take stock and consider why their economic plan has so catastrophically failed. That would mean that rather than planning for failure in 2015, they could take the steps necessary now to bring forward infrastructure investment and put into play the infrastructure investment that has already been announced so that we can start to create jobs and opportunities for communities up and down the country that are suffering from stagnation in the economy.

[Mel Stride]

The hon. Lady has made the link between infrastructure and its impact on the construction industry and jobs. Does she therefore welcome the recent survey by the ManpowerGroup of more than 2,000 companies in the construction sector, which concluded that we have the best outlook for construction job creation for five years?

[Catherine McKinnell]

I would welcome any signs of positivity in economic growth from any sector of our economy, especially the construction industry, which has suffered catastrophically from the cuts and stagnation in the economy over the past three years. I would indeed welcome that small piece of good news. It is a step in the right direction, but our amendment calls on the Government to take stock and do more.

--- Later in debate ---

[Mel Stride]

The hon. Lady talks about the importance of clamping down on tax avoidance, and the hon. Member for Corby (Andy Sawford) talks about tax avoidance in the context of share transactions. Does she, as I do, condemn the £1.65 million donation to her party by John Mills using precisely that type of scheme—a share donation—as means to “tax efficiently” avoid tax?

[Catherine McKinnell]

The hon. Gentleman seems to be expressing some consternation about his Chancellor’s new shares for rights scheme. I am not sure I heard him express the same concerns when this House debated and voted on that scheme. He knows that any donations made to the Labour party are made within all the rules on donations, and any tax due on those donations will be paid. I think he can rest assured that that is in hand.

Returning to the point made by my hon. Friend the Member for Corby (Andy Sawford), it is vital that when additional tax avoidance opportunities are created, HMRC has the resources to deal with them, and that it does not take its eye off other aspects of its activity, such as enforcing national minimum wage legislation and general customer service. We know that the National Audit Office report on HMRC’s customer service performance, which was published in December last year, contained some worrying figures on HMRC’s ability to handle customers.

We hope that the review that we are calling on the Government to undertake will look at HMRC’s ability to recover tax receipts and ensure that its customers, many of whom are not customers by choice, get the support they need in order to pay their tax—not just individuals, who are often dealing with tax credits and find that they need support from HMRC, but small businesses that need support in order to pay the right tax. It is not right that individuals and small businesses in particular, but large businesses too, are left struggling to pay the tax that they wish to pay HMRC voluntarily. The Government should be aware that there is a limit to the extent to which HMRC can do more with less, as they are asking of it in the spending review.

[Mel Stride]

Given the hon. Lady’s response to my previous intervention, I wanted to clarify the issue of John Mills and his donation to the Labour party. Does she accept that his donation is a case of tax avoidance—yes or no? [Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Mr Sawford, I do not need your help in chairing the debate in the Chamber today. I have done enough Finance Bills to know what is in order and what is not in order. The question that has been put is about tax receipts, excluding the reference to individuals, and that is in order.

--- Later in debate ---

[Debbie Abrahams]

On the hon. Gentleman’s final point, there is more to come in my speech: “And there’s more”, I promise—I never did a good impersonation of Frank Carson. On employment, however, the hon. Gentleman is wrong. Employment is lower than in 2008 and I will come on to that—those are official statistics, so he cannot refute them. At the end of 2010, our economy was growing, yet we have been bumbling along the bottom for three years. We had a double-dip recession and barely escaped a triple-dip recession. Growth has been downgraded at every turn.

[Mel Stride]

Will the hon. Lady give way?

[Debbie Abrahams]

No, I will not give way now, as I want to carry on with my argument. There may be an opportunity later.

Amazingly, just a few months after the Chancellor delivered his autumn statement, he had to halve his estimates for growth this year. We will be borrowing £245 billion more than planned since 2010, and as we have heard, the deficit will not be eradicated as the Government promised in 2010. In spite of being told how important austerity was for economic confidence and low interest rates, the triple A rating has been downgraded by not one but two credit rating agencies. The Government tried to blame everybody except themselves and said that austerity was the only way, only to receive an embarrassing rebuke from the chairman of the Office for Budget Responsibility who said that public spending cuts wiped 1.4% off growth last year. The International Monetary Fund followed suit shortly afterwards.

Should anyone wish to know how we relate to the rest of the world, we come 18th in the G20, due to our appalling economic performance. Even after the IMF revised its multiplier, the Chancellor remains steadfast. I could go on—[Interruption.] I am tempted. Our rate of inflation is way above the Bank of England’s 2% target. Employment is lower now than in 2008 and one in 10 people are underemployed. Whatever economic indicator we use, the Government are failing. By all accounts, the public are now starting to see that. Earnings are falling in real terms by 2%, and a recent poll showed that four out of five people feel that austerity is not working. As we have heard, the Chancellor is resolute and sticking fast. The Chancellor and the Prime Minister have also tried to pass this off as everybody else’s fault, but we need to examine the arguments put forward to explain why we are in this mess.

The previous Labour Government have been blamed, but that ignores the fact that this was a global financial crisis. We should remember that at the time the Chancellor and the Prime Minister failed to suggest that our financial institutions required more regulation. The Chancellor has tried to suggest that it is a public spending issue, but public spending as a percentage of GDP was 36.5% in 2007, compared to 42.5% in 1997. In other words, the Labour Government did repair the roof when the sun was shining. We brought down the deficit when we were in power, and it is outrageous to suggest anything else. After injecting funds into our banks, public spending rose to 60% of GDP, but the City’s debt was 245% of GDP. For this Government to pass the crisis off as a sovereign debt problem is absolutely outrageous. This was a problem in our financial institutions that they said nothing about when they were in opposition. They are still failing to grapple with this major issue. They have not managed to improve it.

The Government are trying to distract attention away from our financial institutions and blame what they refer to as shirkers and scroungers. Their attack on the social security budget is outrageous. We must not forget that 43% of social security is paid to older people through old age pensions. This attack is on our pensioners, and that is disgraceful. Growth of just 1% a year since 2010 would have generated £335 billion more. If growth had been 2% a year, that figure would have been £551 billion. Many economists have said that the lack of growth as a result of the failure of economic policy may not be recoverable.

On the areas taking the biggest hits in the spending review—I have just alluded to the Department for Work and Pensions—we must not forget local government. What will the cuts hit? They will hit our social care budget—the budget for the most vulnerable in our society. That is outrageous. Although the NHS budget has been protected, the Institute for Fiscal Studies predicts that job losses are likely to continue. We have already seen 300,000 people lose their jobs in the public sector. It is estimated that another 300,000 will lose their jobs in the next two years. The indirect effect of cuts to work and pensions, local government and the NHS will be to hit our pensioners and increase the number of children growing up in poverty, which will affect the rest of their lives, to more than 1.1 million. We are also seeing, for the first time in decades, life expectancy coming down in certain areas. I could go on, but I will finish there.

--- Later in debate ---

[Chris Leslie]

Madam Deputy Speaker, I am grateful for your protection from the sedentary chuntering of Government Members. They ignore anything they hear, not just from the Opposition but from the International Monetary Fund, which has pointed out that this has been the slowest recovery for a century. There has been barely 1% growth since the 2010 spending review, and the Chancellor predicted there would be 6% growth by now. Living standards have fallen and many families are finding it difficult to make ends meet. Life is much harder.

[Mel Stride]

The hon. Gentleman mentions the important pursuit of growth. Will he enlighten the House on what happened to his party’s five-point plan for growth, including his commitment to a reduction in VAT?

Finance (No. 2) Bill

Mel Stride Excerpts

Monday 15th April 2013 Commons Chamber

[Andy Sawford]

I thank my hon. Friend for bringing the real figures to the House. He is right that the Government are grossly exaggerating the total number of private sector jobs that have been created and, crucially, the nature of those jobs.

[Mel Stride (Central Devon) (Con)]

The hon. Gentleman is right to raise the huge problem of unemployment under all Governments. Is he aware that in his constituency, between 2005 and 2010—that is, under the last Government —the number of jobseeker’s allowance claimants rose by 103%, whereas the number has risen by just 8% for the duration of this Government?

[Andy Sawford]

If the hon. Gentleman is being honest, he knows that the figures that he is quoting reflect the impact of a huge global economic crash in 2008, which had a big impact on my constituency, not least because it is a manufacturing constituency. [Interruption.] The Economic Secretary is suggesting that because the figures go from 2005 to 2010, they reflect the Government’s record across the whole period. Government Members fail to say that the economy was growing for much of that time. We all acknowledge that a global crash happened in 2008 and that that caused unemployment. The critical thing is what we do about it.

Tax Fairness

Mel Stride Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mr Gauke]

Let us look at what was in the last Budget in respect of stamp duty and the cap on reliefs. We could also look at what we have done with regard to capital gains tax. The independent Institute for Fiscal Studies has made it clear that the top 20% are affected most by the fiscal consolidation policies that have been pursued in this Parliament. Those with broadest shoulders are bearing the greatest burden. However, we have an enormous deficit that we have to get down—a deficit that we inherited from the Opposition.

[Mel Stride (Central Devon) (Con)]

Will my hon. Friend confirm that the highest rate of income tax currently under this Government is higher than was the case in the previous Government’s 13 years, all bar the last couple of weeks?

[Mr Gauke]

My hon. Friend is right. The Labour Government were in office for 4,758 days. For all but 36 of those days, the highest rate of income tax was at 40p. Then it moved to 50p. There is a good question to ask the Opposition about why they kept it at 40p for so long. Why did they leave it until the fag-end of their Government, when it was clear that they would not be in government any more? The reason is that the 50p rate, predictably enough, did not do what it was supposed to do. It did not raise revenue, and an income tax that does not raise revenue is not something that a sensible Government would persevere with.

I turn to the mansion tax.

--- Later in debate ---

[Geraint Davies]

Exactly. The Chancellor, no less, decided to announce that half a million people would be sacked but did not say who they were, so people stopped spending and started saving, consumer confidence fell and the economy has been flatlining ever since.

[Mel Stride]

The hon. Gentleman refers to employment. Does he recognise the fact that there are 1 million new private sector jobs net, unemployment is falling and the level of employment, which is currently about 30 million, is the highest on record?

[Geraint Davies]

I am grateful to the hon. Gentleman for that intervention. If 1 million more people are in work but there is zero growth—in other words, there has been no overall increase in production—that implies that people who had been in full-time jobs are now in part-time jobs and that aggregate production has not increased, which is a complete failure. It is symptomatic of Tory Britain, with people scratching around for anything they can find in difficult times.

There has been some discussion of the 50p rate of tax. As I have mentioned, the reason the Treasury thinks it would not make any money from a 50p rate is that it knows that millionaires can move money between tax years, which is precisely what they have done. They knew that their Tory mates would reduce the top rate of tax the next year and so simply shifted their income to that year. The point that I had wanted to make in another intervention—I appreciate that two were taken—relates to the idea that the 50p rate does not work and is therefore dead. However, people earning between £32,000 and £42,000 already pay 52% marginal tax—12% for national insurance and 40% for income tax—but of course no one talks about that. How does that change their behaviour, and why is it fair that they pay the higher rate while people on £150,000 do not because they have accountants? It is ridiculous.

--- Later in debate ---

[Mark Reckless]

Who can tell with these things? My hon. Friend the Member for Bristol West (Stephen Williams) has given assurances, but the policy proposals that I cited have been submitted to the federal policy committee of his party. It is difficult as an outsider to judge how formal and important that is, but there are clearly Liberal Democrats who are talking about a broader tax on wealth and capital, including on jewellery. I think that would be a mistake.

It is unfortunate that the Opposition with this motion and our friends on the Liberal Democrat Benches have become so focused on the arbitrary sum of £2 million. The Government are doing very good things in raising tax from people who own high-value properties but have not been paying their fair share of tax. The Opposition and the Liberal Democrats seem to want to confine their efforts to rein in tax avoidance to those who own houses worth more than £2 million. I and my Conservative colleagues do not understand why we should be concerned about tax avoidance just when a person’s house is worth more than £2 million.

It is hugely welcome that the Government are bringing in the anti-avoidance measure of a 15% tax when homes that are worth more than £2 million are enveloped into a company, which is generally done for the purposes of tax avoidance. However, I am not entirely clear why we are doing that only for homes worth more than £2 million, except for the fact that that is the arbitrary number that has been chosen by the Liberal Democrats for such taxation. [Interruption.] The Opposition are calling out, but they did nothing about this matter for 13 years. It is a huge improvement that this Government are dealing with tax avoidance using properties worth more than £2 million.

[Mel Stride (Central Devon) (Con)]

Will my hon. Friend give way?

[Mark Reckless]

If I may, I will continue for a while.

There have been consultation papers and draft legislation on how the anti-avoidance measure will be introduced. There will be self-assessment, so there will be no need for the great costs of revaluing properties. I am sure that the Minister is keen to raise more money, so will he say whether there is any hope that the Government will take action against people who avoid the 5% tax on a property that is worth between £1 million and £2 million by putting it into a company?

Perhaps the Minister will assist me on another point. Where people have enveloped houses into a company there will be an annual charge of between 0.3% and 0.7% of the property’s value, which is welcome. Many of the papers have suggested that the purpose of that is to encourage people—or in this case companies—to de-envelope their properties, and the measure will come in only after 1 April 2013. Do the Government expect stamp duty to be paid on those de-enveloping transactions, so that if the property’s value is more than £2 million there will be a 7% charge, or do they expect the sale to be from a controlled company to the person controlling that company, perhaps at a nominal rate that will not attract stamp duty, in order to recoup some of the avoidance they may have made over previous years? I would be interested to hear the Minister’s response to that.

As well as dealing with tax avoidance on properties under £2 million, I would also like non-residents to make a fairer contribution. I was first alerted to the issue by the Chancellor when in opposition. He said that he found the situation extraordinary, and there was a great deal of resentment when he explained how it worked and about the exemption from capital gains tax for non-residents. I do not understand why a resident of this country must pay capital gains tax on the sale of their property—unless it is their principal residence—yet a non-resident is exempt from that tax.

A huge flow of overseas money has come to this country as people fear the break-up of the eurozone and there is a rush to safety, and much of that has gone into property in central London. We say to people who own those homes, “As long as you don’t live there and you stay overseas, we will give you a tax break and you won’t have to pay capital gains tax.” When we go to Mayfair or parts of Belgravia, it sometimes feels as if not many people are about. We are subsidising and giving a tax break to people as long as they do not live in this country, and I have never understood the purpose of that.

Given that the Labour party did nothing about that situation for 13 years, I was pleased that the Budget and Finance Bill contained measures to extend stamp duty to at least some overseas residents. The Government consultation states:

“The Government announced in the Budget that it will extend the Capital Gains Tax (CGT) regime from April 2013 to gains on the disposal of UK residential property by non-resident non-natural persons, such as companies. The measure creates a more equal treatment in the CGT regime between UK residents and non-residents, and brings the UK’s tax policy in line with that of other countries, many of whom already tax non-residents’ gains.”

If we want an equal regime between UK residents and non-residents, why are we extending CGT only to non-resident, non-natural persons—basically companies? Surely we should also extend it to natural persons who are resident overseas. Other countries are doing that; India and China have made moves in that direction, so why not us? Some industrialised countries do not do it, but none of those have such a pool of property that acts as a free piggy bank for overseas residents. We keep their wealth and capital completely secure in central London yet they pay no capital gains tax on it. Could we perhaps consider going further in that area and look at extending capital gains tax to overseas non-residents who are natural persons, rather than concentrating simply on companies?

I welcome what the Government are doing. The Liberal Democrats refer to a mansion tax on properties worth more than £2 million, but the Government are already doing substantial work to obtain a more proper tax take from such properties and we could look at whether that could go further. Obviously, I do not expect answers about what will be in the forthcoming Budget, but in some areas higher tax would be a good thing. I am not generally in favour of that, but where people avoid tax by putting houses into companies, even if they are worth less than £2 million, we should try to get the proper tax. Where overseas residents are doing nicely by securing capital in the UK but paying very little for the privilege, by taxing the capital gains they make on later sales of those houses it would be welcome to see them paying their share and doing a little to help us close the deficit, which, of course, is the great uniting purpose of the coalition.

--- Later in debate ---

[Sheila Gilmore]

Indeed, and back in the beginning the decision to go into coalition with the Conservatives—rather than, for example, entering into a looser agreement —was to facilitate many of these measures. In crucial votes of the kind I have mentioned, the Liberal Democrats have not broken rank at all. We have heard a lot of warm words, particularly from the Deputy Prime Minister, about things such as the mansion tax, but when we get down to it, they turn out to be only warm words and not something that Liberal Democrat Members are prepared to stand up for in this House and within the coalition.

Fairness is a large part of what we must all be about. Over the past three years, the very poorest people, those on low earnings or those who, for example, are unable to work because of illness and disability, are bearing substantial contributions that we are told cannot be alleviated because our economic recovery will be put at risk. Over the past few weeks we have had heated debates about the bedroom tax. The issue has been raised on numerous occasions and we have been told time and again that it is essential to make those savings to reduce the deficit.

[Mel Stride]

Given the under-occupancy subsidy—after all, a tax is where one earns money and the state comes and takes it away, but that is not what we are dealing with—does the hon. Lady have no sympathy for the quarter of a million people living in overcrowded accommodation and the 2 million families on the housing waiting list who are desperate for bedrooms that can be freed up through this measure?

[Sheila Gilmore]

I have great sympathy for people who are overcrowded and for those on the housing waiting list. The majority of people waiting for housing in my city are looking for small houses, so that could also cause certain problems.

Fundamentally, however, this is not a housing issue. If we want to make the issue about housing, we should deal with it as a housing issue and look at ways of encouraging and facilitating moves for people who want them. That is not necessarily happening. People have asked me, “Well, if I did move who would help me pay for this move? Who will reimburse me for the fact that I put my own kitchen into this house? My landlord did not quite get around to it, so when I was working a few years ago I put in that new kitchen. Is somebody now going to reimburse me for that? Are they going to help me with the cost of moving my things? Are they going to help me with the cost of setting up in a new place? I don’t think so.” If a local authority—some do—decided that it wanted to encourage people to move once they had outgrown their homes, it could do so. It might have a cost, but it would have a benefit.

If every single person suffering from the bedroom tax was able to move—

--- Later in debate ---

[Nic Dakin]

I am afraid my hon. Friend is also luring me down a route that I would rather not go down, because I would not like to face your ire, Mr Deputy Speaker.

[Mel Stride]

The hon. Gentleman is being exceedingly generous in giving way. As he has said, he is keen to talk about tax fairness. He referred earlier to the iniquity of reducing the top rate of tax for higher earners from 50p in the pound to 45p, which is coming up this April. Does he therefore not accept that, in his terms, the last Labour Government acted totally unfairly in having a top rate of just 40p in the pound right the way through until the last 36 days of his Government?

[Nic Dakin]

I thank the hon. Gentleman for his intervention, but I have not yet said that—I am going to say it later, so I will come to his point when that is appropriate.

I was describing the difficult choices that hard-working families are having to make to keep their heads above water. The obligation we face—those of us who govern, as well as those on the Opposition Benches—is to make difficult choices about where revenue is raised. It is therefore right and proper to look at ways of taxing people who have significant wealth, such as people who own properties valued at more than £2 million. Therefore, it is right and proper to look at ways of ensuring that that part of our nation makes a contribution in these difficult times.

We know that people of great wealth are sometimes quite imaginative and inventive when it comes to avoiding taxes. I commend the work of Government over the ages to find ways of tackling tax avoidance—this Government have done a number of things that are to be welcomed. Property is obviously difficult to hide. One of the big advantages of a property tax—a mansion tax, as expounded over the years by the Liberal Democrats in particular—is that it is difficult to avoid paying, because property is visually identifiable. As my hon. Friend the Member for Westminster North (Ms Buck) said earlier—she is no longer in her place—60% of high-value properties in London are owned by people from overseas. Indeed, I note the comments of the hon. Member for Rochester and Strood (Mark Reckless) on this issue. He made an intelligent and helpful contribution to the debate.

I am pleased to see the hon. Member for Eastleigh (Mike Thornton) in his place and I very much welcome him to the House. I am sure he will continue to build on his excellent maiden speech and make good contributions to the work of the House. However, prior to the by-election, the Deputy Prime Minister, writing in The Observer, described the Prime Minister as being “stuck in the past” for opposing the mansion tax. The Observer commented that this came

“amid signs that the Liberal Democrats are ready to challenge the Tories more vigorously over key aspects of economic policy.”

Today’s debate is an ideal opportunity for them to do that. The Deputy Prime Minister attacked the Prime Minister in his article, saying that the Conservatives were instinctively against fairer taxation

“even as people on lower incomes feel the pinch”.

He said that the plan for a mansion tax on properties worth more than £2 million, which was being backed by the Labour party, was an idea “whose time has come”, and said it was a “certainty” that some levy on high-value properties would be introduced soon. He continued:

“The Conservatives and opponents of fairer taxes have a choice. They can dig their heels in and remain stuck in the past. Or they can join with the Liberal Democrats and the chorus of voices seeking to make our tax system fair. Far better, surely, to move with the times.”

I very much welcome the Deputy Prime Minister’s rather prophetic contribution to this debate. It puzzles me that the Liberal Democrats who have spoken so far have indicated that they might not support the motion. However, a number of them have been here for a large part of the debate, so I hope they will be persuaded by the power of argument.

It is worth noting that the motion says:

“That this House believes that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.”

As my hon. Friend the Member for Nottingham East (Chris Leslie) said from the Opposition Front Bench, nothing could be simpler. Indeed, this is the sort of simple motion that the Business Secretary called for and that the Deputy Prime Minister called for before the Eastleigh by-election. Indeed, the hon. Member for Bristol West (Stephen Williams) confirmed today that he could have written it himself, so one wonders why the Liberal Democrats cannot support it. One is helped to understand why they cannot do so by reading the rather entertaining amendment, the middle of which

“notes that the part of the Coalition led by the Deputy Prime Minister…advocates a mansion tax on properties worth more than £2 million, as set out in his party’s manifesto, and the part of the Coalition led by the Prime Minister does not advocate a mansion tax”.

We have a pushmi-pullyu Government, pushing in one way and pulling in the other. We have a real pantomime horse, as my hon. Friend the Member for Nottingham East said, from a pantomime Government, but this is not pantomime time. It is a serious time, and a serious time requires serious politics. The Liberal Democrats have an opportunity to stand by their principles—to stand on the side of honest, hard-working people—by coming into the Lobby this afternoon to support our motion, which could have been written by the hon. Member for Bristol West.

--- Later in debate ---

[Mel Stride]

Was Denis Healey the same Chancellor who had to go cap in hand to the International Monetary Fund in the 1970s because this country was bankrupt?

[Kelvin Hopkins]

He did indeed go to the IMF, but I think it has now been recognised that that was unnecessary. We did not need to kowtow to the IMF or to impose those strictures. In fact, remarkably, the economy survived quite well during that time, although a mistake was made at the end. I shall not go into that now, Mr Deputy Speaker, because you would call me to order if I did, but it was the reason why things went wrong in 1979. Nevertheless, we survived the 1970s, although the oil price rose by five times in a very short period, which affected the whole world including Britain.

At that time, I was working for the Trades Union Congress and then in the trade union movement. I was an economist, and was lobbying the Government. I was at the TUC General Council when the £6 pay policy was agreed to. That was an historic moment. I thought it amazing that the trade unions had agreed to a cap on pay increases for everyone, but the reason they agreed to it was that it was fair. Everyone would receive a £6 pay rise. For someone with a low income that was a big rise, while for someone with a high income it was not very much, but it was fair, and was seen to be fair across the board.

Other Members are too young to remember this, but in those days the top rate of tax was 83p in the pound, and there was also a 15% surcharge on unearned income. Some of those whose income was entirely unearned, perhaps in property, were paying a 98% rate on the top part of their income. I thought that was pretty fair, but of course we cannot go back to those days.

--- Later in debate ---

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Luton North (Kelvin Hopkins)

This has been a good debate on what is really quite a simple premise—that our taxation system should be based on fairness and equity—but there have been some disappointing, although I would also say unsurprising, contributions from Government Members. The Minister’s speech in particular seemed to confirm that the Government have their head in the sand when it comes to their disastrous economic policies and performance. Manufacturing has fallen by 3% since last year, business confidence and investment are plummeting, growth is flatlining, and the economy desperately needs some emergency care. Borrowing is going up, not down, and it is rising to pay the price of the Government’s failure. My hon. Friend the Member for Swansea West (Geraint Davies) described the position very passionately.

The hon. Member for Bristol West (Stephen Williams) complained bitterly that the Opposition had been stealing the Liberal Democrats’ policy. He now admits that it is his policy. In fact, he could have written it himself. I therefore still hope that the Liberal Democrats will go through the Lobbies with us today to support what will be a very measured step towards ensuring that the cost of deficit reduction is borne by those with the broadest shoulders as well as by those who can bear it least but who are, at present, bearing the brunt.

[Mel Stride]

The hon. Lady referred to the hon. Member for Bristol West (Stephen Williams), who asked a simple question of her Front-Bench team: will a mansion tax be in the next Labour party manifesto, yes or no?

[Catherine McKinnell]

We gave a simple response to that question—[Interruption.] First, we challenged the Minister to say what would be in the Government’s Budget next week. He will not specify that, so we are not able to announce at this stage what will be in our manifesto in two years’ time. If it is appropriate and a mansion tax will seek to deal with the mess that we anticipate this Government are going to leave this country’s finance in, it is certainly something we will consider.

[Mel Stride]

Is the hon. Lady seriously suggesting that just because a Minister will not make a serious breach of parliamentary protocol by leaking a Budget in advance she will not inform the House whether her party will have a mansion tax in its next manifesto?

[Catherine McKinnell]

No. That illustrates why the Government were not giving away what they are going to do in next week’s Budget, but we have said clearly that if we were in government now, we would not be cutting taxes for millionaires. We would be looking to put in place a mansion tax, which the Liberal Democrats would support, and we would be using that to take a measured approach to deficit reduction. Unfortunately, we are not in government. The Chancellor is presiding over a flatlining economy, so we are suggesting a way for him to try to get some growth back into the economy —we hope that the Liberal Democrats will support us today and proposals will come forward.

Finance Bill

Mel Stride Excerpts

Tuesday 3rd July 2012 Commons Chamber

[Rushanara Ali]

The hon. Gentleman’s party is.

[Mel Stride (Central Devon) (Con)]

The hon. Lady is being very generous in giving way. The notion of very high bankers’ bonuses is nothing new, of course, as it has been going on for an awfully long time. Her party was in office for 13 years. Could she explain exactly what it did about that?

[Rushanara Ali]

After the financial crisis, as part of the deal, my party introduced the bankers’ bonus tax and we raised £3.5 billion that went towards the attempt to get people back into work that was so successful in constituencies such as mine. I urge the hon. Gentleman’s party to consider what works, and that did work. Instead of being partisan and ideological, his party should look at what works and enforce it. The people of this country will not forgive his Government for not acting, for creating a double-dip recession and for leaving so many people out of work. It is a disgrace and he should apologise, with his party, for presiding over two years of being in government in which they have caused a double-dip recession and much more unemployment. That is what his party should be focused on and addressing, not trying to score party political points. You are in government. Do something.

[Mel Stride]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Has the hon. Lady given way or has she concluded?

[Madam Deputy Speaker]

Good. May I remind everybody that I am not in government?

[Mel Stride]

It is a great shame that you are not, Madam Deputy Speaker.

Will the hon. Member for Bethnal Green and Bow (Rushanara Ali), by the same token, apologise for the doubling of unemployment under the previous Government?

[Rushanara Ali]

When my party was in government, we cut unemployment. We got a million young people into work. After the financial crisis, when unemployment started to increase, we did something about it. I urge the hon. Gentleman’s Government to do something about unemployment, instead of looking backwards. Do something about the unemployment rate which is causing so much damage to our country, instead of doing what his party did when it was in power in the 1980s, which was to go around telling people that unemployment was a price worth paying.

The hon. Gentleman’s party is demonstrating that the nasty party is back with a vengeance. That is devastating for people in constituencies such as mine. They do not want to see the nastiness of the party. They want jobs. I suggest that his party focuses on creating jobs and growth. That is what people want.

--- Later in debate ---

[Alison McGovern]

I thank my hon. Friend and neighbour in Merseyside for his intervention. He is quite right. The return to things such as the youth training scheme has been one of the most unfortunate aspects of the Government’s work in this area.

[Mel Stride]

The hon. Lady makes the important point that youth unemployment is deeply regrettable and has been rising recently, but she skips over the fact that youth unemployment has been rising since 2004, so most of the period of that rise actually occurred on her watch when the kinds of policies she is advocating were clearly not working.

[Alison McGovern]

The hon. Gentleman needs to be careful about apportioning blame, because although we have seen an extreme rise in youth unemployment over the past couple of years because of the recession—I will move on to the problem of demand in the economy later—under the Labour Government there was successful action to prevent levels of youth unemployment from rising to those we saw in the ’90s. If he wishes to, we can talk at length in the Chamber on another occasion about some of the structural reasons for young people’s unemployment, such as how skills are transferred in different ways, how small businesses recruit differently, which hits younger people more than it does those with experience in the economy, and why those patterns were starting to emerge from 2005. However, in new clause 13 we are trying to establish the urgency of getting money from a particular source and prioritising the needs of young people in my constituency and in his.

The Association of Chief Executives of Voluntary Organisations has done an important piece of work to calculate the cost to the Exchequer of young people being out of work, and, although I hope that Treasury Ministers will have already heard the figures that my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) cited, I want to alight on this one. If youth unemployment continues at current rates, by 2022 the cost to the Exchequer and to the economy in lost output is estimated to be £28 billion—on top of the human and social costs. That is a huge figure, and we as a country cannot afford to see this crisis continue.

I shall take a few moments, however, to consider not only the financial cost, huge and important though that is, but the impact of the crisis on individuals, on their pride and on their self-worth. I mentioned earlier the Government’s own research, carried out by the Department for Work and Pensions, into the future jobs fund, and if Ministers have not read it they would do well to do so. The research, first, considered the impact on young people who took part in the future jobs fund programme, and it is a shame that the hon. Member for Dover (Charlie Elphicke) has left his place, because I wanted to ask him—I tried to intervene on him to do so—whether he had met, spoken to or asked the opinion of any young person who took part in the future jobs fund.

Just in case hon. Members have not had the opportunity to read the research, however, I shall quote a young person and how they were feeling prior to the introduction of the future jobs fund. They said that they were

“feeling a bit low. I was about four and half, five months, unemployed and I thought ‘oh no, this isn’t good’. Most employers I spoke to, it was like if you’ve been unemployed for more than 2 months, it really puts people off. I knew how to do a job; it’s just the fact that I’d been unemployed for nearly 5 months. Almost half a year, which was quite embarrassing really. I know there was nothing out there, but it was still kind of embarrassing.”

Despite this person realising that aggregate demand and low job vacancy numbers had caused their problem, they blamed themselves, so I ask hon. Members to consider the impact of low self-esteem and poor mental health on the extra 65,000 young people who have become unemployed since 2010.

The research, secondly, asked young people how they felt about their work once they had taken part in a future jobs fund employment placement, and to me the following quotation says it all. On the question of what the most important gain was, one person said:

“Trust in my determination. Self belief, the belief from my employer that I am able to succeed”.

What more important thing could anybody have for success in life than self-belief? When people are left to languish on the dole, such self-esteem is undermined every single day.

Changes to the Budget

Mel Stride Excerpts

Monday 11th June 2012 Commons Chamber

[Mel Stride (Central Devon) (Con)]

May I pass on a huge thank you to the Chancellor and to the Minister from Pathfinder Park Homes, a manufacturer of static caravans in my constituency, which is delighted with the reversal on VAT? In its view, it has saved its business.

[Mr Gauke]

I am grateful to my hon. Friend for his comments, and I am sure that his constituents are grateful to him for the work he has done on this matter.

Oral Answers to Questions

Mel Stride Excerpts

Tuesday 24th January 2012 Commons Chamber

[Mel Stride (Central Devon) (Con)]

T7. Youth unemployment under the previous Government grew by more than 40%. That is 277,000 more young people out of work from the time they first came to office. Does my right hon. Friend agree that the best way to tackle youth unemployment is not to invest in wasteful schemes such as the future jobs fund, but to invest in skills for young people, which means apprenticeships, which this Government are delivering?

[Danny Alexander]

My hon. Friend is right to point out that youth unemployment has been rising since 2004, which suggests that it is a deep-rooted structural issue in our economy, not just the subject of political knockabout at the Dispatch Box. That is why we are, as a Government, investing far more in apprenticeships. That is a very good way to give young people the skills that they need to survive and thrive in today’s labour market. That is why, in relation to youth unemployment, we will not be deflected from the path that we are on.

Youth Unemployment and Bank Bonuses

Mel Stride Excerpts

Monday 23rd January 2012 Commons Chamber

[Richard Graham (Gloucester) (Con)]

It gives me huge pleasure to join this debate in which we can all surely agree with the hon. Member for Leeds West (Rachel Reeves) that youth unemployment is too high and must be reduced. As many hon. Members have said, none of us is complacent on this issue, so what to do? The hon. Lady had three main suggestions: spend more, lower VAT, and bash the bankers. There was also a possible fourth suggestion of bringing back the future jobs fund or, as she put it, creating 100,000 jobs. The first of those suggestions has been utterly discredited and the second did not work. On the third suggestion, no Government except those of the ex-USSR and the current Democratic People’s Republic of Korea create jobs. We must be clear that the business of government is about setting the conditions in which businesses can create jobs. It simply does not work when Governments try to create jobs.

On the future jobs fund, the evidence we looked at in the Select Committee on Work and Pensions was absolutely clear: it was expensive and public sector-dominated. It was useful and it did give experience, but no future jobs came from it.

[Mel Stride (Central Devon) (Con)]

My hon. Friend makes a powerful point about the future jobs fund—that it was basically about short-term jobs that did not last. Does he agree that this Government’s approach to apprenticeships and investing in young people and skills will give us sustainable, long-term jobs for the future?

[Richard Graham]

My hon. Friend is entirely right and brilliantly anticipates the thread of my argument.