Autumn Statement Resolutions

Debate between Mel Stride and John Redwood

Monday 27th November 2023 Commons Chamber

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests. Noting the good words from the Chancellor in favour of self-employment, and noting the national insurance measures to help, are there things that the Department for Work and Pensions is doing, or can do, so that self-employment is an option for people who are currently without work but who may have a lot to offer?

[Mel Stride]

My right hon. Friend is right to draw attention to the self-employed and to the national insurance changes that my right hon. Friend the Chancellor announced in his autumn statement. Of course, my Department does a huge amount to support the self-employed. Many of our programmes are open to self-employed people to ensure that we are there to support them with the wages that they are able to bring home in self-employment, and we will continue to do exactly that.

A compassionate Government also need to be honest about the significant challenge that we face with the rising number of people leaving the labour market due to ill health or disability. Around 2.6 million people are currently off work with a long-term physical or, increasingly, mental health condition. Given the positive impact that work has, not just on finances but on health and wellbeing, there is a clear need to do more to help and encourage those people. In a tight labour market, with employers looking to fill nearly 1 million vacancies, there is also a wider economic imperative. Every time someone returns to work, they benefit and everyone benefits. It helps the economy to grow, debt to fall and inflation to decline still further.

Just as importantly, given the waste of human potential that inactivity often represents, there is a moral case to act. That is why, with the £2.5 billion-worth of investment over the next five years, our back to work plan will help thousands of disabled people and those with health conditions to stay in work, or if they fall out of it, to move quickly back with the right support. A key part of our approach is bringing together employment and health support, because we know that work and health go hand in hand.

Work Capability Assessment Consultation

Debate between Mel Stride and John Redwood

Tuesday 5th September 2023 Commons Chamber

[Mel Stride]

I thank the hon. Lady for her remarks. It is gratifying that she agrees with much of the premise I set out. She recognises the importance of work and that 2.5 million people, or thereabouts, are on long-term sick and disability benefits—we are all equally concerned that the number is growing. She also argues that the work capability assessment, in its current form, is not fit for its required purpose, which is exactly why we are coming forward with these reforms. She refers to the PIP assessment requirements, which are not relevant to the work capability assessments that we are discussing and that are subject to the current consultation.

We clearly have a plan. The hon. Lady has been in her position for a very short period, and I respect and understand that. I invite her to look closely at the announcements that were made—the £2 billion-worth of support at the last fiscal statement, including our White Paper reforms in exactly the area where she is seeking progress; the universal support; and the WorkWell programme. She mentioned working with local providers, and there is a huge drive on that. As for mental health, we are consulting on occupational health across businesses to make sure that we get in right at the start where people may otherwise end up on a long-term health journey. We are also working closely with the NHS on getting employment advisers involved, for example, in talking therapies, which we know are so effective in addressing mental health concerns.

[John Redwood (Wokingham) (Con)]

I strongly support the initiative to help more people who are long-term sick and disabled into work where they wish to do that. My query is: why on earth is it going to take so long? We need to be doing this now, to ease our workplace shortages and to give those people earlier support and hope. Will my right hon. Friend please work with his officials to speed it all up?

State Pension Age: Review

Debate between Mel Stride and John Redwood

Thursday 30th March 2023 Commons Chamber

[Mel Stride]

The hon. Gentleman raises several points. First, on the publication of Baroness Neville-Rolfe’s report, I have always been clear that we would publish that at or around the time that my report of the review was released, and that is precisely what we have done, including by giving advance sight of my report and her report to the Opposition.

I believe that the hon. Gentleman’s remarks about pensioner poverty are misplaced. Pensioner poverty has fallen since 2009-10, as has poverty across other cohorts of the economy. He will, of course, be aware of the huge amount that this Government have been doing by way of intervention to ensure that we support low-income households, and pensioners up and down this country—many millions of them—with billions of pounds of targeted transfer payments, which will be going out over the coming months.

Finally, the hon. Gentleman mentioned the WASPI women. He will know that I am not able to comment on that matter as it is subject to a current inquiry by the parliamentary ombudsman.

[John Redwood (Wokingham) (Con)]

What would be the saving were the Government to raise the age by one year to 68?

[Mel Stride]

That is a beautiful question because it is precise; it requires an answer that one cannot duck. I will write to my right hon. Friend with that information.

Labour Market Activity

Debate between Mel Stride and John Redwood

Tuesday 28th February 2023 Commons Chamber

[Mel Stride]

I give way to my right hon. Friend the Member for Wokingham (John Redwood).

[John Redwood]

I am very grateful to the Secretary of State, who is right to point out the excellent record on employment, which is a great strength of our economy. Is he, like me, a bit worried about the fall in self-employment more recently, and will he have a word with the Chancellor? I think some of that is to do with changes in tax rules that now impede the self-employed in getting contracts from companies.

[Mel Stride]

My right hon. Friend makes a really important point, and this Government are absolutely committed to encouraging self-employment. I think it is fair to point out that in the past some apparent growth in self-employment has been due to individuals incorporating themselves for tax purposes, and it may be that more recently some of that effect has started to unwind. However, I totally agree with my right hon. Friend, and I am sure the Chancellor has heard his words, because he has made the point many times before that it is really important that we support the self-employed.

--- Later in debate ---

[Mel Stride]

I think it is the hon. Gentleman who has misunderstood what has been said here. There is a distinction between payroll employment, which is clearly those who are on PAYE employed by an employer, and somebody who is self-employed, which is a totally different matter. The statistic, or the fact that I presented, was simply that the level of payroll employment is currently at a record high in this country.

[John Redwood]

I want to clarify that I think there is an issue with capacity in things such as plumbing, jobbing building and that kind of thing. We are short of capacity there, and we need to look at why those trades have been afflicted by some of this decline.

[Mel Stride]

My right hon. Friend is absolutely right, and that is why we have stood up important programmes, such as sector-based work programmes, and it is why skills and apprenticeships are so important—[Interruption] —as are skills bootcamps, as an hon. Friend reminds me.

This motion is wrong on unemployment and employment, but it is also wrong on economic inactivity, because while it is true that economic inactivity rose during the pandemic, it is also true that, with the notable exception of the United States, in most countries it has gone back down to broadly where it was before the pandemic. That has not happened in the UK. It is not true to say that working-age inactivity rates have not been on a long-term decline. They have in this country, and the trajectory has been downwards. The level of economic inactivity in the UK is lower than in the United States, France and Italy. It is below the EU average, and it is below the average of OECD countries.

While there has been some softening in recent months on the level of economic inactivity in the United Kingdom, I accept that there is a lot more work to be done, which is why the Prime Minister has asked me to work across Government to review how we approach these issues, particularly in respect of disability, the long-term sick and those who are over 50 and have retired early.

Before I come to those cohorts, let me state clearly what lies at the heart of this Government’s success on unemployment and employment: the key Conservative belief that we should make work pay. The universal credit roll-out has been a huge success, despite the fact that the Leader of the Opposition suggested as recently as 2021 that it should be scrapped. We have enhanced universal credit by improving the taper, dropping it from 63% to 55%. We have increased the work allowance by £500. In terms of making work pay, for the very lowest paid we will be increasing the national living wage by 9.7% this April. We have stood up a number of important programmes that have helped to encourage people into work, among them Restart and our youth offer.

Budget Resolutions

Debate between Mel Stride and John Redwood

Wednesday 27th October 2021 Commons Chamber

[Mel Stride]

My hon. Friend is absolutely right. I will come to the matter of wages and wage growth momentarily, but let me dwell on the challenges facing the economy.

Another thing that the OBR points out is the increased sensitivity to interest rate rises—the Chancellor made this point—and the damage that they can do to the public finances. I think my right hon. Friend gave the example of a 1% rise leading to a £23 billion increase in debt servicing costs. To put that in perspective, it would wipe out the value of the corporation tax increases and income tax threshold freezes that my right hon. Friend announced in the last Budget. That would be gone in one enormous gulp, so we must be careful about the vulnerability we have. Though we have low interest rates, and interest rates might move up in baby steps, that applies to a very large debt indeed.

Let me touch on inflation—I am pleased that my right hon. Friend spent quite a lot of time on it during his speech—and its impact on interest rates. We have already seen the Monetary Policy Committee beginning to divide on whether rates should go up, and there is an expectation, certainly in the markets, that rates will start to increase. We have seen 10-year gilts going up in more recent times, and it is possible that quantitative easing will start to unwind —perhaps passively initially—when we reach a certain trigger level of interest rates, so it is important that this credible plan is there to deliver on those fiscal targets.

The history, however, is not good in that respect. We have had Chancellor after Chancellor failing to meet their fiscal targets; they have either abandoned them completely or delayed or modified them in some form. Depending on what happens to demand in the economy relative to supply, there may be a case for fiscal stimulus even further down the line. One thinks of the removal of the universal credit uplift, the energy price increases, the labour market demand-supply mismatches and the rise in taxes, often taking demand out of the economy. None the less, and setting that to one side, the Chancellor’s default position must be to stick to those fiscal targets and resist the huge cacophony of demands for more and more expenditure, particularly the day-to-day expenditure that he is rightly targeting in his fiscal rules.

Some of those demands might end up being necessary. If we do not get back to the pattern of demand for public transport that we had before we locked down, it is conceivable that further subsidy will need to go to the public transport sector. Other areas, such as the health service, might have additional demands, but I point out to my right hon. Friend—he knows this more than most —that the NHS public expenditure take has risen in the last 10 years from 32% to 42%. He must get very good at saying no to Ministers when it is necessary to do so, and telling them to go back to their Departments, work harder and get more out of what they are given. That is a lesson for us all, incidentally, particularly those of us on this side of the House.

If we fail in that endeavour and inflation takes off, interest rates go through the roof, the cost of servicing our debt becomes ruinous and international markets lose faith in our economy, we will be back broadly where we were in 1992 when we had Black Wednesday. Conservative Members will remember the long, hard lesson of that: it took us a generation to re-establish our ability to look the electorate in the eye and say, “We can offer a fiscally responsible Government.”

There were some announcements on tax today. May I say first that the drop in the bank surcharge is absolutely the right thing to do? We are putting corporation tax rates up to 25% from 19%, so it would be absurd to cripple our financial institutions with uncompetitive international tax rates.

I was particularly delighted by the shift in the universal credit taper rate from 63% to 55%. That will help countless low-paid families to earn more and keep more of their money, and encourage more people into work. When I was a Treasury Minister, we looked endlessly at this and I pushed really hard on it. I know how expensive it is to do that—my right hon. Friend the Chancellor suggested £2 billion a year—so I take my hat off to him for having grasped that particular nettle.

My right hon. Friend is also right to set out an aspiration to get taxes down before the end of this Parliament. The same pattern occurred under Lady Thatcher, who is much referred to when we talk about tax. In the early years of the Thatcher Government, the tax burden rose quite strongly, and it was my right hon. Friend’s hero Lord Lawson who was able to bring tax rates down. Let us hope that my right hon. Friend is in a position to emulate that in due course.

I turn briefly to inflation, which is right at the core of what is happening in the economy. The threat to the public finances from inflation cannot be overstated. The big debate now is whether price surges and increases in inflationary expectations will be transitory or more persistent. My right hon. Friend referred to the surge in demand relative to supply, which of course will lead to price increases; all else being equal, one might imagine that it will pass relatively quickly.

We have seen the commodity, transport and energy price increases that my right hon. Friend referred to, but there are other price increases that we might expect to be stickier. There are bottlenecks that are often outside our control—a south-east Asian chip manufacturer can have a bottleneck that results in our being unable to produce cars in the United Kingdom. Structurally, the labour market has changed: as a consequence of the pandemic, there is now greater demand for goods relative to services. It will take time to mop that up.

The Bank of England MPC has expressed increasing concerns, in different ways, about inflation and has been constantly deferring the moment at which it believes inflation will peak. There is a debate as to when deferred “transitory” becomes “persistent”, but the huge danger is that we will go into a wage price spiral. One way in which that might happen is if we talk up wages by inducing companies to put them up without a coincident increase in productivity. That will simply feed the inflationary tiger. We have to be very careful on that point.

[John Redwood (Wokingham) (Con)]

Does my right hon. Friend agree that we need to be very careful about believing any of these forecasts from the OBR and the Bank of England? They said that inflation would be down at under 2% just a few months ago and have now had to change their mind. Does he also agree that when Lord Lawson cut income tax rates, we had a surge of extra revenue?

[Mel Stride]

It is certainly the case that the Bank of England’s projections on inflation have been under-baked. In fact, if we go back in time, we can see that its recent revisions have been more dramatic, which really illustrates my point. I have a feeling that there will be rather more inflationary pressure than many people imagine.

Some of the drivers of inflation are outside the control of my right hon. Friend the Chancellor, but some are very much within it. One of those is immigration. I totally accept the comment from my right hon. Friend the Prime Minister that we do not want to instinctively

“reach for that…lever of uncontrolled immigration”.

He is absolutely right: this country left the EU to get control of our immigration. However, what we must not do is avoid pulling the lever where there are genuine pinch points in the labour market in the shorter term. If we do not act to bring in skills if necessary, we will simply encumber businesses in a way that may mean many going out of business, and replace them with imports, which can also be inflationary.

The other such area is skills. Further to the point that the Chair of the Select Committee on Education, my right hon. Friend the Member for Harlow (Robert Halfon), made about the importance of skills, I was really pleased by the announcements from my right hon. Friend the Chancellor about post-16 T-levels and lifelong learning. Those announcements are vital to repurposing the workforce to get the challenges of the future sorted.

In the longer term, there is a huge opportunity for us in this country. We are a world leader in life sciences, FinTech, financial services and the digital sector and we have opportunities in artificial intelligence, robotics and genetics, but if we are to grasp those opportunities, we have to get the level of business investment up. I think that my right hon. Friend referred to that level increasing over time; that may be true, but it is still quite a long way below where it ought to be, looking at it historically.

The super deduction is a very important move that the Chancellor has already made, and the extension of the annual investment allowance to 2023 is very welcome, but I think we may need to look even deeper at how, beyond the end of the super deduction, we can continue to see business investment rise.

On research and development, it seems to me that in the plethora of announcements, figures, dates, schemes and adjustments to relief that my right hon. Friend identified, we may have slipped on our target of hitting £22 billion by 2024-25—if I heard him correctly, it has slipped to 2026-27—and I am not quite sure where we are on our target of 2.4% of GDP by 2027. Those are vital targets for us to meet in the longer term.

Finally, there needs to be an overarching examination of how the recovery is balanced. Those hit hardest by the pandemic have been the poorest in our society, who are much more likely to have faced the impact of lockdown and loss of income, and young people. My Committee will look very closely at all the issues that I have raised, including that point.

Once again, I welcome the Budget. The Chancellor has been in a very difficult position and I think he has put forward a very positive set of proposals. The devil will be in the detail; my Committee will look forward to examining that detail, including with my right hon. Friend on Monday.

Health and Social Care Levy

Debate between Mel Stride and John Redwood

1st reading
Wednesday 8th September 2021 Commons Chamber

[Mel Stride]

I will come back to the hon. Gentleman’s point, but let me just stick with the options. The second option was to lean into growth, to assume that we could grow our way out of this problem. We have just had a huge contraction of the economy. We are not yet back up to the pre-pandemic level, although the Bank of England thinks that we may arrive at that point some time towards the end of the year, and we have many headwinds to growth ahead of us, not least the bottlenecks in supply chains, the labour shortages that we have witnessed in certain areas, and many other issues.

The third thing that the Treasury could have done is to borrow more money, and that is probably what the Opposition would have done in this situation. Despite the fact that the Bank of England now seems to feel that there is more money—I suspect that the Office for Budget Responsibility will confirm that around the time of the Budget— because the economy is doing a bit better than we expected, probably to the tune of about £25 billion, it would be a very brave Chancellor who started to borrow yet more and more, knowing that one day it is possible that the markets might turn around and look at the United Kingdom and decide that they no longer have confidence to lend to us. That would be a very dark day.

[John Redwood]

Will my right hon. Friend give way?

[Mel Stride]

I will not, actually, because I am very low on time.

That is the sword of Damocles that hangs regularly over the head of our Chancellor, so that leads us to taxation. If we look at taxation and the amounts involved here, there are only three taxes that we could consider. About two thirds of all tax is raised through income tax, national insurance and VAT. We then ask ourselves, “What criteria are we going to apply to the tax measures to test whether they are the right ones or not?” There are at least two. One is that we should look after the least advantaged in our society—the lowest-paid—and the second is that we should look after those who are the youngest, who have borne the greatest brunt of the economic consequences of the pandemic.

Budget Resolutions

Debate between Mel Stride and John Redwood

Wednesday 11th March 2020 Commons Chamber

[Mel Stride (Central Devon) (Con)]

There is no doubt that this Budget has been framed against one of the most challenging moments in this country’s economic history. As the Chancellor set out, many fundamentals of our economy are strong: record levels of employment; the lowest level of unemployment since 1974; low and stable inflation; and real wages that have risen over a two-year period. Nevertheless, the Chancellor was equally right to point to the huge challenges that lie ahead. He did not mention the trade deal that we are negotiating with the European Union, or—at least explicitly—the many accelerating challenges around climate change. Instead, he rightly and substantially focused on the challenge of coronavirus.

These challenges often emerge without much warning. In 2013, the then newly appointed Governor of the Bank of England, Mark Carney, was asked by the Treasury Committee about what he saw as the main challenges over the coming years, and he did not mention one of the three external challenges that I have just presented. These things come at us pretty fast and are sometimes very unexpected, and the Chancellor is to be congratulated on looking closely at those challenges, and coming up with robust responses.

None the less, at the heart of this Budget hangs an important question: are the fiscal rules to which we are working robust enough, and do the spending and taxation proposals in the Budget—we will, of course, pick over them in some detail over the coming hours and days— stack up in terms of maintaining the fiscal responsibility that the markets expect of us? I think the Chancellor said that he was fundamentally sticking to the rules in the Conservative party manifesto to ensure that day-to-day spending is in balance over a three-year horizon. I think the Chancellor also suggested that, given the OBR’s forecasts, in about 2022-23 the head- room around those rules would be something in the order of £12 billion. That is all well and good—that is a reasonable level of firepower—but he also pointed out that the impact of coronavirus will not, because the cycle of the Budget forecasting by the OBR will have had a cut-off about two weeks or more ago, have been taken fully into account. I suspect that one of the key questions we will be putting to the Chancellor of the Exchequer, when he appears before our Treasury Committee this time next week, will be to probe the figures around the headroom that is assumed in those particular numbers.

[John Redwood (Wokingham) (Con)]

Does my right hon. Friend not accept that in these very exceptional circumstances the rules have to be flexed for the temporary expenditure on the virus consequences, just as even the EU has said it to Italy, where Italy obviously has a very difficult problem?

[Mel Stride]

My right hon. Friend is absolutely right that we flex the rules to accommodate the circumstances. My point is that when we talk about headroom within our fiscal rules, we have to make sure that the number we are focused on is as accurate as possible. Given what is happening with coronavirus and the fact that the OBR struck its forecasts some time ago, the current forecasts are almost certainly already out of date.

Leaving the EU: Economic Impact of Proposed Deal

Debate between Mel Stride and John Redwood

Wednesday 20th February 2019 Commons Chamber

[Mel Stride]

The hon. Gentleman accuses Government Members of having a lack of clarity on the issues around Brexit. I find that slightly rich coming from the Labour Front Bench, given that the position of the Leader of the Opposition has flip-flopped as to whether to be in or out of the customs union, and whether or not to honour the pledge that he appeared to make at his party conference for a second referendum, which appears to have been parked now. It seems to me that the Opposition are trying to ride at least two horses on this issue, if not more, and we know what happens if you do that, Mr Speaker—it tends to get rather painful in the end, as we are perhaps seeing in more recent events.

The hon. Gentleman refers to the parliamentary defeat that the Government suffered more recently. He chose to overlook the fact that the House did unite around a particular way forward, and that is to seek changes to the backstop arrangements. That is now the main focus of the negotiations that are continuing in Brussels. He referred to various impacts of employers’ decisions and changes, and the impact on the economy and employment, which gives me a good opportunity to remind him of some facts. As a country, we have about the highest level of employment in our history; we have the lowest level of unemployment since the mid-1970s; and we have halved youth unemployment since 2010. Lest it be forgotten, every Labour Government in history have always left office with unemployment higher than it was when they entered office.

[John Redwood (Wokingham) (Con)]

Will the Treasury issue a codicil or a clarification of its economic forecasts, looking at what happens if we leave in March under the managed World Trade Organisation model, when we spend the £39 billion-plus of the withdrawal agreement on boosting public services and boosting our economy at home? We are bound to be better off—is that not true?

[Mel Stride]

It is important to recognise that the modelling is on the basis of the status quo, so the model would not take into account factors of the kind that my right hon. Friend has raised, or indeed changes in productivity or trade flows and other factors. It will be for individual Members to assess the specific issues that he raised, in that context.

Making Tax Digital

Debate between Mel Stride and John Redwood

Tuesday 19th February 2019 Commons Chamber

[Mel Stride]

I thank the hon. Lady for her various questions and will deal with them in turn. She referred to the matter of awareness and the 81% figure. We would expect that figure to rise through time quite strongly, not least because of our communications programme. We will be writing by the end of this month to the 1.2 million businesses and individuals in scope of this measure. We of course have our VAT helpline for where there are queries, and there is a huge amount of information available on gov.uk.

The hon. Lady made a pertinent and perfectly reasonable point about how businesses and individuals will navigate their way around the various software suppliers and the 160 different products. First, all that information is available on gov.uk, and, secondly, we will shortly be releasing further information that will allow businesses to put in their requirements and then reduce that number of products to a subset that is particularly relevant to their needs.

The hon. Lady asked about the resources put into MTD compared with those put into our Brexit preparations. That of course probably begs several other questions as to what aspects of our preparation for Brexit she wishes to make for that particular comparison, and I would be very happy to discuss that with her in further detail after this statement.

[John Redwood (Wokingham) (Con)]

Is there a short and comprehensible guide for small businesses in my constituency that are worried about this but have been concentrating on serving their customers, because it is not necessarily their first priority to get alongside this? They now know they have got to do it, however, and they need something short and simple so they do not have to waste too much time fiddling around with how to comply with the tax authorities.

[Mel Stride]

The short answer is yes; it can be found on gov.uk. Indeed we have also produced a partnership pack for intermediaries, which sets out in very clear language exactly what is involved and what will be expected of those businesses and individuals.

Leaving the EU: Economic Analysis

Debate between Mel Stride and John Redwood

Wednesday 28th November 2018 Commons Chamber

[Mel Stride]

The hon. Lady is arguing to remain in the European Union. That would not respect the will of the British people as expressed in the referendum, the largest turnout in any electoral event in this country’s history. She talks about the imposition of trade barriers and the impact on the economy. There would be few impacts worse, I suggest, than Scotland becoming independent and having a customs barrier between ourselves and Scotland.

[John Redwood (Wokingham) (Con)]

Will the Treasury publish the average 25-year growth rate in the last 25 years before we joined the European Economic Community and the average 25-year growth rate since 1992, when we have been in the full single market? In Treasury terms, this will show a massive loss of income and output as a result of belonging to those things, so the sooner we get out, the better.

[Mel Stride]

My right hon. Friend seems to have already availed himself of precisely that information to make his point. What I can assure him is that Stephen Nickell, formerly of the independent Office for Budget Responsibility, will, at the behest of the Treasury Committee, be looking at all the facts and figures and the model that we have employed in this respect. He will be given access to officials across all Departments to assist him in doing just that.

Finance (No. 3) Bill

Debate between Mel Stride and John Redwood

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Mel Stride]

My hon. Friend is absolutely right. The Labour party will tax and tax, borrow and borrow and spend and spend. The Conservative party is reducing the tax burden. Collectively, we have now taken more than 4 million people out of tax altogether, which has disproportionately helped those on lower incomes.

[John Redwood (Wokingham) (Con)]

In the third quarter, the UK rate of growth was three times the rate of growth in the eurozone. Is that the wonders of the Brexit vote, or something else?

Leaving the EU: UK Ports (Customs)

Debate between Mel Stride and John Redwood

Monday 19th March 2018 Commons Chamber

[Mel Stride]

Well, we waited a long time to get to the end of that, and I am not sure whether we are any wiser as a consequence.

As the hon. Gentleman will know, we are leaving the customs union, and I set out in my opening remarks the two models that we are intent upon progressing with our European partners. I also stressed that we will arrive at a solution that is as frictionless as possible. I have been down to Dover to meet the organisation that runs the port, and also the Border Force personnel who are engaged with it, and I am fully familiar with the importance of a frictionless border. Of course, the other important news that we have had today is that we have concluded, subject to the European Council meeting this week, an implementation period for the arrangements, which will not only give us additional valuable time to provide certainty to businesses, but ensure that we have all the arrangements in place for a successful customs system going forward.

[John Redwood (Wokingham) (Con)]

Will the Minister confirm that we currently have friction-free and successful trade with the rest of the world under WTO terms and its facilitation of a trade agreement? If there is no free trade agreement with the EU after March 2019, we can have exactly the same friction-free trade with them, with Germany trading as China and America do today.

European Affairs

Debate between Mel Stride and John Redwood

Thursday 15th March 2018 Commons Chamber

[Mel Stride]

It is standard practice for the Government to use non-disclosure agreements, and delivering a seamless post-Brexit border is a top priority for us. Non-disclosure agreements with key delivery partners for the border are crucial to the open exchange of information and opinion on options and scenarios, and they ensure that all planning negotiations and decisions are based on what is achievable and most appropriate for the UK to ensure a safe and secure border.

In respect of our future trading relationship, draft EU negotiating guidelines have been circulated to the EU for comment, and we expect final guidelines to be formally adopted next week at the March European Council. We trust that these will provide the flexibility to allow the EU to think creatively about our future relationship, and, looking ahead, we are confident that we will conclude a deal on the entire withdrawal agreement by the European Council in October. This confidence is not just grounded in our mutual interest of striking a deal, but also because we enter these negotiations from a point of striking similarity: our rules, regulations, and commitment to free trade and high standards are the same. So, as we build this new relationship, we are doing so from a common starting point.

The next milestone in the negotiations will be an agreement of an implementation period. We saw the implementation period prioritised in the Chancellor’s Mansion House speech and the Prime Minister’s Florence speech, alongside a frictionless customs arrangement and a comprehensive agreement on trade in goods and services. The implementation period is the essential first step to ensure that we can all experience an orderly exit from the EU, plan accordingly, and enjoy certainty during the transition.

[John Redwood (Wokingham) (Con)]

How can we possibly agree an implementation period when at the moment we do not have anything to implement?

[Mel Stride]

While being ingenious in his use of language, my right hon. Friend will I am sure agree with me that the purpose of the implementation period is to make sure we have a period of certainty for business, so that when we end up with our final withdrawal agreement we only have one set of changes to make from where we are now to where we will be at that point. That is the purpose of the implementation period.

Taxation (Cross-border Trade) Bill

Debate between Mel Stride and John Redwood

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

The important point is that we are in discussions with HMRC about its funding—[Interruption.] If I may, I will answer the hon. Gentleman’s question. We are discussing with HMRC the funding arrangements it will need in the 2018-19 financial year. As he suggested, Jon Thompson has said that between 3,000 and 5,000 staff will perhaps be required. Incidentally, they need not be new recruits; they may be people who are reallocated from other parts of HMRC as we change priorities, depending on how the negotiations pan out. I am very confident that an organisation of in excess of 50,000 people will be capable of recruiting sufficient individuals of the right calibre and with the right skills to ensure that the job is done.

[John Redwood (Wokingham) (Con)]

Will the Minister confirm that on our current frontiers with the rest of the EU, excise, VAT, general taxation and currency are all different on the other side of the channel or the other side of the border with the Republic of Ireland, and that that all works very smoothly and mainly electronically today? Why do people think there would be a bigger problem if we needed to add another line to the electronic register because there was a customs charge as well?

[Mel Stride]

My right hon. Friend makes a very important point. There is no doubt that we can foresee an end state in which a very frictionless process pertains on the borders between the EU27 and the United Kingdom as a separate customs territory. There are many examples around the world of technology in particular facilitating the free flow of goods across international boundaries.

--- Later in debate ---

[Mel Stride]

As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.

[John Redwood]

Will the Minister confirm that the European Union made it clear to the United Kingdom that we cannot stay in the customs union and single market if we will not pay contributions or accept freedom of movement?

[Mel Stride]

It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.

It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.

The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.

The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.

Finance Bill

Debate between Mel Stride and John Redwood

Tuesday 31st October 2017 Commons Chamber

[John Redwood]

I entirely agree. I pointed out at the beginning that Labour in office was probably more gentle on this group of people than the Conservative party in office has been. I think Labour came to that judgment for good reasons. Labour Members disagree with their previous Governments, but they will discover that that is the luxury of opposition and that Governments are responsible for sustaining as well as growing the revenues. It is very easy to get rid of revenue by annoying people and companies. It is far more difficult to systematically build up a good tax base by promoting economic growth.

[Mel Stride]

Does my right hon. Friend agree that when the Opposition refer to non-doms as tax dodgers, they are referring not just to the super wealthy, but to many tens of thousands of individuals who come over here who do not have overseas assets on which to draw, who make a contribution to our economy and who pay all their taxes in the normal manner in this country?

[John Redwood]

Yes, it is very offensive language to call people tax dodgers. If they willingly come to our country, make a big investment in our country, spend a lot of their money in our country and pay all legal dues that this Parliament requires of them, I do not think calling them tax dodgers is wise, friendly or helpful. That is why I began my remarks by asking the hon. Member for Bootle (Peter Dowd) if he could draw a distinction between a non-dom who came here, paid all legal taxes but was, in his terms, dodging taxes on wealth legally held elsewhere, and a Labour MP who deliberately puts their savings money into an ISA or the pension fund to avoid paying tax. It seems to me that they are very comparable and I do not regard either as tax dodgers.

I do not think my Labour colleagues are tax dodgers because they take advantage of the savings breaks that both Conservative and Labour Governments offer UK taxpayers. Similarly, I do not regard a rich person from abroad who pays all legal dues here with no questions over their tax affairs as a tax dodger. I think they are a welcome contributor to greater growth and prosperity in our country, and we could think of a nicer way to sum them up.

I urge the House to resist the blandishments of the Labour party in opposition, to remember the stance of the Labour party in government, which was rather wiser, and to unite behind what I hope my colleague on the Front Bench will be saying, which is that we welcome talent, industry, enterprise and money into this country and that we want to have a fair basis for taxation that does not deter them from coming.

Policy for Growth

Debate between Mel Stride and John Redwood

Thursday 11th November 2010 Commons Chamber

[Mr Redwood]

I shall not give way, because many colleagues want to join in. The hon. Gentleman knows that I normally give way generously, but too many people want to join in.

If we allow public sector inflation to take off, that £92 billion extra will be needed to pay for the extra costs and wages and will not be available for real increases in programmes that most colleagues would like.

[Mel Stride (Central Devon) (Con)]

Will my right hon. Friend give way?

[Mr Redwood]

I shall not because we have to make progress. The £92 billion will go further if we can avoid high inflation. The Government should tell the Bank of England that the single objective is to get prices down, as it was asked to do, and to keep them down. More quantitative easing is not compatible with that aim.

My second point, which many colleagues will probably wish to address from their own, personal constituency experiences, concerns the lack of credit for business. Those two points are not contradictory, because while there has been a lot of money creation from which the public sector has benefited greatly by borrowing huge sums at very low prices, there has been a strict rationing of credit, particularly to smaller businesses, and a huge restriction on the balance sheets of the leading banks. One figure with which the House can never grapple is that the Royal Bank of Scotland—the state nationalised bank in all but name; we own most of the shares—has been on a drastic slimming course. It had a balance sheet of £2.2 trillion when it came into the public sector and by the end of this year, according to its plan, that figure will be down by £1 trillion—£1 trillion will have disappeared from the balance sheet. It is a global bank but quite a bit of that has an impact on the British economy.

It is not surprising in that climate that it is difficult for small businesses to get the money they want. So my second piece of policy advice to the Government is that they should tell the banking regulator that enough is enough. The bank balance sheets, which were trashed in 2007 by very lax regulation, are now in danger of being strangled by very tight regulation. The tier 1 capital ratios for example, which in some cases reached a scandalously low 4% in 2007 on Labour’s watch when it did not seem to care about these things, are now at about 10%. That is job done for the time being. We could, by all means, come back to it if we have rapid growth and if there are incipient signs that there is too much credit, but that is not the current situation. We should take the brakes off a bit, particularly for the small business sector.

My third point is that we need to get some of that credit into the big projects that the country needs. I hope that Ministers will make urgent moves to clear the ground on planning, regulation and general background so that the country can again get on with building power stations, transport links and the broadband links it needs to fuel growth. While I hope that all or most of those projects will be privately financed—another reason why we need to fix the banks more quickly—I hope that Ministers in this Government, unlike in the previous Government, will make rapid decisions so that the private sector can get on with that job.

Let me address two final issues. First, in order to collect £176 billion extra in tax in year five, from year zero in the plan, the Government need to optimise their tax rates. They accepted in their Budget statement that to go above 28% on capital gains tax would lead to a reduction in revenue. I welcome the development of wisdom in the Treasury on this important point, but I have bad news—28% is not the optimising rate for capital gains tax and 50% is not the optimising rate for income tax. I would like to tax the rich more—that will surprise colleagues and delight the Opposition—but the way to do that is to cut the rates. We need to do that to attract them here, keep them here and make them honest here, and we need to have rates that maximise the revenue from the rich—the sooner the better—to hit those targets.

Colleagues will be delighted to hear that I have come to my final point. We were promised deregulation and were told that there was going to be a mighty freedom Bill. The Deputy Prime Minister was supposedly toiling away in his enormous room in the Cabinet Office that was inherited from the Lord Mandelson regime and no expense was to be spared in making sure that we had a really big deregulation Bill. I now hear rumours that it is going to be a civil liberties Bill from the Home Office. Will the Minister, who has responsibility for small businesses, champion a proper deregulation Bill? Deregulation is the tax cut for business that does not cost the Treasury a penny. Indeed, it could be the tax cut for business that saved the Government money as well.

There is too much needless regulation and too much regulation that does not do the job. Labour introduced extremely complicated mortgage regulation and more of it is out there. It obviously failed. As soon as we had all the regulation, the mortgage banks went down—something that they had never done before—because the wrong thing was being regulated. I want to regulate the cash, capital and solvency of those banks, but to make it easier for people to borrow money. Does the Minister know that the mortgage market is seizing up through too much of the wrong kind of regulation? Will he get on and fix it? I hope colleagues have a great debate.