Mortgage Market

Miriam Cates Excerpts

Tuesday 13th June 2023 Commons Chamber

[Andrew Griffith]

I can give the hon. Lady the reassurance that the wellbeing of the nation’s mortgage holders, savers, pensioners and investors is the whole of my focus, as it is of all of my colleagues on the Treasury Bench. As Members on both side of the House will know, it is a feature of the UK mortgage market that from time to time mortgage deals are withdrawn from the market and repriced. As of now, there are more than 5,000 mortgage offers from different suppliers, at different tenures, in the market. It remains my focus to ensure that those who seek to buy a first home or to remortgage their home have the most competitive offers available.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

One of the biggest challenges facing our country is the inability of young people to afford to buy a home because of inflated house prices. Although recent interest rate rises have compounded the problem, is not the real problem that interest rates were far too low for far too long, turning savers away from saving and into property investment instead, and thus pushing up the price of property as an asset? Does my hon. Friend agree that this is not an easy problem to solve, but that one possible answer would be for local authorities to build homes that can be bought at a reduced rate, not by investors, but by local young people?

[Andrew Griffith]

I thank my hon. Friend who does a wonderful job of advocacy for her constituents, including those who seek to buy their first home. This Government, through a variety of measures to support householders in general, have helped more than 800,000 people, of all types, to purchase a property since 2010. That represents a city of approximately the size of Liverpool, such is the scale of the endeavours. It is of course important that we get the nation building, and part of that is about providing the economic stability whereby people are willing to make investments for the longer term.

Financial Services and Markets Bill

Miriam Cates Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

The Minister ignored my question before, using time as the reason why. He has to do better than that. We have to understand what is being done to urgently tackle the damage that these companies have done. I can tell him that I heard all these stories before in relation to legal loan sharks, and we still have thousands of people in debt because of Wonga. Let us not make the same mistakes again. Let us regulate the buy now, pay later lenders and make sure that this Christmas does not turn into a terrible January for all our constituents.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I rise to speak in support of new clause 27, tabled by my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart). As she said, it would prohibit payment service providers from refusing to supply a customer based on the customer exercising their lawful right to freedom of expression.

On 15 September, PayPal notified the Free Speech Union that it had closed its account with immediate effect. The reason given was that the Free Speech Union had breached the company’s acceptable use policy, but no further information was forthcoming. The accounts of UsForThem, the Daily Sceptic and the journalist Toby Young were also terminated. It is still not entirely clear why PayPal closed the accounts, but the apparently common theme among those organisations and individuals is that they have each become prominent champions of free speech, expressing critical, non-conforming opinions and asking challenging questions.

The effect of PayPal’s decision was to temporarily disrupt the ability of those organisations to operate. In some cases, their accounts were frozen, thereby denying them access to their funds. In the light of that, 42 peers and MPs wrote to the then Business Secretary, my right hon. Friend the Member for North East Somerset (Mr Rees-Mogg), and to the Minister currently on the Front Bench. PayPal then restored the accounts of UsForThem and the Free Speech Union. Although PayPal’s actions may seem unjustifiable, payment providers and high street banks may terminate the accounts of groups on the basis of lawful speech, so long as adequate notice is given. As the law stands, the only thing that PayPal did wrong was not to give sufficient notice of the closure.

Sadly, the actions of PayPal in September were not a one-off. It also closed the accounts of the UK Medical Freedom Alliance and Law or Fiction, both of which are opposed to lockdowns, and it has not reopened either of them. It is therefore hard to avoid interpreting PayPal’s actions as an orchestrated, politically motivated move to restrict certain views within the UK. This is unacceptable.

In an increasingly cashless society—we have heard a lot about the merits of cash today—access to a digital payment system is not a luxury, but a basic requirement for participation in society. No campaigning organisation can function without the ability to perform financial transactions. Imagine if the suffragettes had not been allowed to have or use cash, or if those campaigning for Brexit had been refused a bank account. Freedom of speech and freedom of expression are foundational to democracy, and there can be no meaningful freedom of expression without the ability to conduct financial transactions.

It is of course right that in the UK private companies can choose which customers they do and do not want to do business with, but this is based on the assumption that there is a functional marketplace with healthy competition and that companies are regulated by, and compliant with, UK law and regulations. PayPal is eight times larger than its nearest competitor. It is a Californian company with its European headquarters in Luxembourg. Are we happy to delegate important powers relating to freedom of speech and expression to unaccountable global tech firms?

Of course, unlike socialists, conservatives want markets to operate freely, without unnecessary bureaucracy and state control. But as conservatives, unlike liberals or libertarians, we understand that there must be limits to this freedom, because without limits, human beings and organisations will sometimes—perhaps often—put their own interests before the best interests of customers and societies. As UK national conservatives, we believe that the proper bodies to set the bounds of free speech and political opinions in the UK are the UK Parliament and UK courts. That is why we must act to legally prevent payment providers from closing accounts of the basis of political beliefs, because if we do not, big global companies will put their own interests—financial, reputational and political—before any moral duty to act fairly.

The principle of using law to protect free speech is well established. The Equality Act 2010 prohibits discrimination on the grounds of religious or philosophical beliefs, but this protects individuals, not organisations, which is why it cannot be used in this case. The Government are also acting to protect free speech in universities, and the Higher Education (Freedom of Speech) Bill is today making its passage through the other place.

The PayPal saga identified a gap in our free speech protection that must be filled with appropriate legislation, which is why I support new clause 27. I thank the Minister for his engagement on this issue, which I know he takes very seriously—I was delighted by his opening remarks and commitment to work further on it. I very much hope that, following the evidence that he will gather, he will legislate if it is appropriate to do so. I appreciate his assurances on that.

I want to finish with a recent example of what happens when free speech is threatened. I know we do not want to think back to covid, but we had lockdowns and school closures. In fact, UK schools were closed for longer than those in almost any other country in Europe, and our children missed more face-to-face learning than those in any country other than Italy. The effects on children have been absolutely horrendous and will last a generation. They include lost learning, an increase in eating disorders, self-harm, a loss of socialisation, exposure to domestic violence—I could go on and on. [Interruption.] But I will not, because you are clearly telling me not to, Madam Deputy Speaker.

The Government now say that doing that was a mistake and that there was not sufficient evidence, but one reason that schools were reopened and children were eventually protected was the effective campaigning of the group UsForThem, which—unlike so many—stood up for children and their welfare. Its views were unpopular and it was said to be spreading misinformation. Imagine if its bank account had been cancelled two years ago—where we would be now? We need this protection. I appreciate the Minister’s commitment and I look forward to working with him further.

[Olivia Blake]

The Bill is important because it presents an opportunity to set out a new, responsible and green vision for the City and financial services, but the Government are squandering that opportunity. That is why I rise to speak in support of amendments that would enshrine climate protections and harness the power of the City to act as a force for people and planet.

Let us look at the resources in that sector. Globally, privately invested financial assets are expected to reach $145.4 trillion by 2025—a 250% growth in less than 20 years. In the UK, pension assets amount to a staggering £2.7 trillion. The financial challenge for decarbonising the economy is significant. The UN has estimated that, globally, we require £90 trillion of infrastructure investment by 2030 alone. In the UK, private investment in carbon-cutting activities needs to grow by an extra £140 billion over the next five years to reach our net zero goals. We should mobilise the huge resources in the finance system to meet the existential challenge of the climate crisis. Instead, financial institutions are adding fuel to the fire, as I mentioned.

Britain is a financial giant and is the biggest net exporter of financial services in the world. I support new clause 6, tabled by my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), because we need a strategy for how we use that influence to reshape the system in accordance with climate priorities. However, those climate priorities are not the priorities in the Bill. Rather than making it a statutory aim of regulators to ensure compliance with our net zero aims and protect our natural environment, the Bill makes the main aim of regulation growth and competitiveness in the sector. In fact, although it is supposed to represent the Government’s vision for the future of financial services, it does not mention “nature” once. That is why I support new clause 25, which aims not for growth and competitiveness on its own, but for a regulatory regime designed for long-term economic resilience, climate safety and nature restoration.

The science is clear: complying with our net zero and Paris agreement obligations means keeping dirty fossil fuels in the ground, so we should encourage divestment in fossil fuels and put an end to fossil fuel extraction. New clauses 21 and 26 have my full support because they rightly restrict and provide disincentives for that kind of harmful investment. We need not only to incentivise fossil fuel divestment, but to ensure that investors make demands of companies on climate action.

I tabled new clauses 8 and 9 because we need to raise the bar on stewardship rules, putting ethical engagement with companies on the climate crisis and much more at the heart of investor activity. I support amendments 23 to 27 because they would reinstate the position limit rules on the kinds of awful things that we have seen relating to speculating on food and betting on hunger. We should stand firmly against that, especially given global heating.

I will finish by saying a few words about fraud. My constituents have been frustrated by the lack of accountability in the financial services sector. Some fraud victims are passed from pillar to post in trying to access justice, so I welcome new clause 1, which tasks the Government with creating a national strategy on preventing fraud. Although these will not be pressed to a separate vote, I draw the House’s attention to my new clause 26 and my amendment 20, which make clear the responsibility for reporting fraud and compensating victims. I also express my support for new clause 2, which would ensure that everyone has access to essential in-person banking services.

We need financial services that work for people and planet. As the clock ticks on climate action, now is the time to pull every lever and seize every opportunity to decarbonise our economy and society. However, the Bill has presented us with more of the same agenda—deregulation and lip service to climate goals. As the slogan goes, we need “system change not climate change.” I am afraid that without significant changes, the Bill will deliver the opposite.

Tackling Short-term and Long-term Cost of Living Increases

Miriam Cates Excerpts

Tuesday 17th May 2022 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Prices have indeed soared in recent months, driven by a number of global factors such as covid and the war in Ukraine. Millions of people are finding it harder to make ends meet. So far, the Government have provided £22 billion of support, including the council tax rebate, a cut to fuel duty and the household support fund, but the heartbreaking stories we have heard in this debate, for example those shared by the hon. Member for Sheffield Central (Paul Blomfield), show that we need to do more. In particular, I think we should urgently review universal credit rates. However, we must also be mindful of the inflationary pressures of pumping more borrowed money into the economy and the long-term debt implications for our children and grandchildren.

I welcome the Bills announced in the Queen’s Speech to tackle the cost of living in the long term by addressing some of the structural issues that have caused prices to rise and wages to stagnate. I welcome the energy security Bill, which will secure our energy supply; I welcome the Schools Bill and the higher education Bill, which will drive up standards and offer a lifetime loan entitlement so that people can upskill at any point in their lives. We should also reconsider whether some of the £11 billion a year cost of higher education should be redirected to vocational and technical education to meet skills demands.

I welcome the procurement Bill and the Brexit freedoms Bill. We must make sure that this legislation provides opportunities for British industry, especially the UK steel industry, to win public sector contracts.

I support many of the planning reforms laid out in the levelling up Bill, but we must build far more homes so as to have an impact on prices. We should focus on developing whole new towns, and build hundreds of thousands of social houses, restoring the hope of having a decent home to young people.

The Bills laid out in the Queen’s Speech will do much to tackle the cost of living in the long term, growing the economy and tackling rising prices, but the elephant in the room is taxation. The biggest cost in many people’s lives now is the state, with taxation levels at a 70-year high. Many Conservative Members, and our constituents, are deeply uncomfortable with this level of taxation. However, not so long ago, when the welfare state was born, life expectancy was 65, people started work at 15, and few lived long into retirement, while the state was not required to pay for childcare or adult social care because women and the wider community provided it unpaid. Now, longer life expectancy, many years spent in education and retirement, and ever better healthcare have increased, probably permanently, the cost of the state.

So what can be done? We might not be able to reduce the overall tax burden significantly, although economic growth, improving our health and strengthening our social fabric will help, but we can reform our taxation system to share the burden more fairly. Our system of individual income taxation takes no account of how many people each income supports, so a single person earning the average salary of £30,000 a year is obviously better off than a single-earner family of four where the earning parent’s wage is also £30,000. The single person has only themselves to support, yet the family have to feed, clothe and heat four people, but both pay more or less the same amount of tax. This individualistic approach to taxation means that to have the same standard of living as a single person on a wage of £30,000, a family of four must earn £74,500—an unachievable figure for many. That makes us an outlier. Many other countries, such as France, Germany and the US, take into account the number of people an income supports. Our system makes it very hard for families to work their way out of poverty, discourages family stability, and fails to recognise the important contribution that parents make to society.

I welcome the Bills introduced in the Queen’s Speech, which will tackle the cost of living in the long term, but we must be realistic about taxation—yes, reducing it where possible, but prioritising reforms that tackle generational inequalities and put children first.

Working People’s Finances: Government Policy

Miriam Cates Excerpts

Tuesday 21st September 2021 Commons Chamber

[Bridget Phillipson]

We would not be cutting it in the first place. We would replace universal credit with a better and fairer system that supports people into work. If the hon. Member wants to have a discussion about semantics, I suggest she has a chat with her constituents and sees how she gets on, arguing about the distinction between a temporary uplift and a cut. It is more than £1,000 a year from families’ budgets—that is what really matters.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

The hon. Lady has made it clear that Labour wants to keep the temporary uplift. However, given that Labour does not support increasing national insurance, which is a very broad-based tax, how does it propose to pay for a permanent £6 billion a year increase in public spending? How would she pay for a blanket extension of £20 a week for every single universal credit claimant—it is not targeted to families or those with children in particular—in a way that is fair and does not involve raising taxes?

[Bridget Phillipson]

First, it is worth considering why the increase to universal credit was put in place. It was because, during the pandemic, the Government had to recognise that universal credit had been set at an inadequate level on which families might survive. On the hon. Lady’s wider point, I have a long list of places where we could find some money, if she is interested: the 1.9 million pieces of personal protective equipment, worth £2.8 billion, procured by the Government that were useless; the stamp duty holiday that was a £1 billion-giveaway to landlords and second homeowners—I could be mistaken, but I do not recall her objecting to that—and the hundreds of millions of pounds about to be wasted on the Prime Minister’s vanity yacht. That is before we get to the Test and Trace system that the National Audit Office said had not worked properly and had had a “minimal impact” on transmissions, literally wasting billions. This is about choices. There is always money for the Government’s projects, their friends and their people, yet when it comes to dealing with some of the poorest families in our community—those who have got us through the pandemic—I am afraid they are told that there is nothing for them.

--- Later in debate ---

[Mr Clarke]

I want to make progress because it is important that we reflect on the employment situation in the United Kingdom. Our joblessness rate is now lower than that of the United States, lower than that of Canada and lower than those of France, Italy and Spain. People have been coming off the furlough scheme very rapidly now, and the numbers are down to 5.1 million in January to 1.6 million at the end of July, while almost half of those people still on the scheme, lest we forget, are already working through flexible furlough. The number of people claiming self-employment grants has fallen significantly, too. But that is not all: broader economic growth has exceeded expectations as restrictions have been lifted.

[Miriam Cates]

My right hon. Friend refers to the furlough scheme, which has of course been a phenomenally successful scheme. It has been credited with preventing mass unemployment and saving the job market. Does he not agree that Opposition cries that we are clobbering working people absolutely do not stack up when we consider the furlough scheme?

[Mr Clarke]

I thank my hon. Friend for her point, and this is absolutely right. The furlough scheme has been absolutely essential to supporting the UK throughout this very difficult period. It has been an historic success, and we only need to consider how serious the employment situation would have been had we failed to intervene and failed to show the decisive leadership that this Government have shown.

--- Later in debate ---

[Miriam Cates (Penistone and Stocksbridge) (Con)]

It is a pleasure to follow my constituency neighbour, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), and it was a delight to hear the maiden speech by my hon. Friend the Member for Hartlepool (Jill Mortimer) earlier. As a fellow MP in a post-industrial area, I absolutely recognise what my hon. Friend said about the importance of levelling up being about not only materially restoring to northern areas the opportunities that have been given to the south, but honouring those areas for their contribution to the wealth of this nation over hundreds of years.

Throughout my whole adult life, inflation rates and interest rates have been remarkably stable. That is not normal historically, and when I speak to constituents or more senior Members and hear about what life was like in the ’70s and for many decades before, I realise that the inflation that is a threat now is very different from the stability we have enjoyed in previous years. It is a concern.

My constituents are worried: they are worried about energy prices, and we have heard much about that over recent days; they are worried about commodity and construction prices; and they are worried about shortages. I have just heard from a major importer in my constituency who is concerned about the cost of shipping. The cost of a shipping container from China has risen from around $2,000 a container last November to getting on for $20,000 now. That will have a huge inflationary pressure, given how much we import.

It is also the case, though, that wages are rising and our job market is buoyant. Our plan for jobs is working. We have heard much about the furlough scheme, which has rescued our economy from the fate of mass unemployment. We have a record number of job vacancies—more than 1 million—and businesses in my constituency of Penistone and Stockbridge are hiring people of all ages for all different types of jobs.

We have heard Brexit being blamed for the situation that we find ourselves in, and there is no doubt that Brexit has caused changes in our economy. I draw the attention of hon. Members to an article by Matthew Lynn in this week’s Spectator entitled “Who’s afraid of rising wages?” It starts:

“During the Brexit referendum, Stuart Rose, the former boss of Marks & Spencer, and chair of the Remain campaign claimed that if Britain left the EU, wages ‘will go up’. This was, he added, in a rare moment of candour, ‘not necessarily a good thing’. But the idea that salaries might rise was exactly the reason that a great many people voted for Brexit.”

Why should we be afraid of rising wages? It is what the Opposition have been calling for. More competition for employees will lead to rising wages, and we are seeing that: Costa, for example, is paying over 5% more. On average, wages have risen 8% over the past three months, and, from April, this Government raised the national living wage to £8.91.

We must remember that we are still in economic shock. We are coming out of an extraordinary period of time, but things will settle. In fact, the International Monetary Fund has forecast that the UK will have the highest growth in the G7 this year, so while there are concerns around inflation and the cost of living, which must be addressed, there is also a good chance that we will have a fairer jobs market at the end of this.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

Will the hon. Lady share with us the solution to the seasonal agricultural workers scheme, which is not adequate for farmers to be able to employ enough people to pick crops in the field and to avoid the situation that we are seeing in Scotland where many fields of crops are just being left to rot because of the lack of workers?

[Miriam Cates]

The hon. Lady makes an excellent point. While, overall, on a macro level, having more jobs available for British workers will push wages up, it is of course the case that certain sectors will need specific interventions to save them, and I would support any such measures.

While there are concerns like the one the hon. Lady has raised, and concerns in the wider economy, our plan for jobs is working and the future is optimistic. None the less, there are some long-term structural issues with the cost of living and threats to living standards that must be addressed, and this is the moment to do so. We must find a solution for the sake of future generations.

First, housing affordability is a key driver of problems with the cost of living. Solving the housing crisis will unlock many issues, such as generational inequality, and it will reduce the cost of living. I am delighted that the Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend the Member for Surrey Heath (Michael Gove), has been appointed to look at this specific problem, because it is very important. Many of the serious issues that Members have raised in this House today would be much aided by a reduction in the cost of housing.

Secondly, we also need to look at fairer finance for families. Again, much has been said about the changes to universal credit, but I want to consider what we could do in our taxation system to make life fairer and cheaper for families. Unlike many countries, the UK has an individualistic tax system. We tax individuals rather than households, which means that we do not take into account the number of dependants in a particular house, and that can make life very expensive for families. Some families on low and middle incomes can end up paying around 30% more tax than individuals living on their own. When we couple that with the way that benefits are clawed back as people earn more, some families can effectively face a marginal tax rate of 75%, making it very difficult for them to get out of poverty. We must recognise the importance of raising children not just for the nuclear family, but for our whole society. We need to look at how we can make it less expensive for families to exist and to raise their children.

[Alison Thewliss]

The hon. Member is making an interesting point about support for families. Does she agree that the UK Government’s two-child benefit cap punishes those who have a larger family and puts them in a position where they cannot work their way out of poverty?

[Miriam Cates]

What is far more significant is the way in which we tax individuals—potentially spreading people’s income tax allowance and things like that—rather than looking at household income; that would give families far more choice about how they spend their income and organise their lives, and make family life much more affordable.

Thirdly, we have to address the long-term affordability of our public spending commitments. The welfare state that we have today was designed 80 years ago, when life was very different. Demographics were different then. There was no paid-for childcare or paid-for social care. Most women did not work. There was a huge amount of free care and community living going on that we just do not have, or that there is not nearly as much of, today. Of course, people then also spent a far higher percentage of their life working, whereas now people spend much longer in education and much, much longer in retirement, which means that proportionally, over the course of someone’s life, they are spending far less time paying tax and paying for insurance—paying for the benefits that we all want to enjoy.

The Office for Budget Responsibility forecasts that public sector net debt could rise to 300% of GDP by 2070. We just cannot continue in the way that we are now. We need a reset. We need to redesign our public spending and welfare state for modern life and modern demographics. I think we have already established that we cannot tax our way out of this. Of course, we should be trying to grow our way out of it, but we also need a fundamental redesign of the welfare state and public spending.

We also need much more emphasis on community solutions and prevention. It has been an honour to be part of the early years review of my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), whose start for life recommendations look at the importance of the first 1,001 days of a child’s life. If we get that period right, we can prevent so many problems that destroy people’s lives in the long term and which are incredibly expensive for public spending. We must spend more and invest in the early years and health prevention. About 40% of the NHS budget is spent on preventable and lifestyle diseases. We have to tackle those things if the state is going to be affordable in the long term. Of course we should innovate, use technology and look at what other countries are doing to address these issues.

We should be concerned about the cost of living. Families up and down the country are struggling, and there are families that are not able to take advantage of opportunities in jobs and higher wages. But this Government have taken action on jobs over the last 18 months, and that is bearing fruit. As our economy is reset, we now have an important opportunity to solve some of the structural issues that we face.

[Mr Richard Holden (North West Durham) (Con)]

One thing that the Government could look at is the 2017 plan to extend pensions auto-enrolment to people who are 18-plus, rather than 22-plus, and to low-paid workers. Does my hon. Friend agree that the Government should take that forward at the earliest opportunity as part of a long-term solution?

[Miriam Cates]

I absolutely agree. In my speech on national insurance contributions a couple of weeks ago, I made the point that the auto-enrolment scheme was a fantastic invention and that we could extend it, as my hon. Friend says, but also that we could look at using it as a model to help contribute to social care, so that people pay into it now and reap the rewards later.

We have to address some of the structural issues that I have discussed. Now is an excellent time to do that, and I would welcome the opportunity to work with Ministers and colleagues across the House to look at innovative solutions to do that.

Health and Social Care Levy

Miriam Cates Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Jake Berry]

What a brilliant suggestion—one that I was about to make myself. I think that the Government should think about both the £86,000 contribution and regional house prices when considering that damping floor.

Thirdly, ours is an area with historically high unemployment. National insurance, as we have all called it during election campaigns, is in fact a jobs tax. It is a disincentive to the creation of new jobs, and those already in work will see, for instance, pay rises suspended as the wage bill goes up for employers just for employing people in their businesses. That is why I think that national insurance is the wrong tax to use for the people in my constituency. They are hit just as hard by this appalling social care issue as people anywhere else, but, for us, I would have much preferred it if the Government had looked at income tax, which, as we heard from the Chair of the Treasury Select Committee himself—my right hon. Friend the Member for Central Devon (Mel Stride)— would be much less regressive.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

My constituency has similar house prices, and I know that my constituents share these concerns. As for the point about income tax, the advantage of taking this tax from national insurance is that the cost is shared between workers and businesses, but smaller businesses will not pay, for reasons that the Minister has already given. Is this not a better way of sharing cost across business and employees, which will actually affect lower earners in our constituencies less than the income tax alternative?

[Jake Berry]

I thank my hon. Friend for making that point, but I do not agree with her. I do not think that we have to consign ourselves to one tax to deal with this issue. It is perfectly possible to put up income tax, which is a much fairer way of taxing people across the income scale, and, of course, picks up wealthy pensioners with very large pensions, picks up dividend income, and picks up rental income, which was mentioned from the Opposition Front Bench. It picks up all of our income, while at the same time allowing us to look at different ways to tax business. I have said before that I think we should have an online sales tax—an Amazon tax, as it is called—which the Treasury has previously said could release about £2 billion. That is not enough, but we could increase employers’ NI only, and we could increase corporation tax. This problem needs to be tackled with a cocktail of funding, not just one tax. But if we are to use just one tax, I do not believe that NI is the correct one.

--- Later in debate ---

[Miriam Cates (Penistone and Stocksbridge) (Con)]

It is an honour to follow my hon. Friend the Member for Wellingborough (Mr Bone).

I am in absolutely no doubt that we need to raise the money to enable the NHS to recover from the pandemic. It would be wrong to raise this money through more borrowing. We should not expect our children and grandchildren to settle the debt at some time in the future; we need a plan to pay for it now.

The criticisms of this motion come not so much from the fact that the Government are choosing to raise the money, but more from the way in which it is being raised. Those criticisms centre around one concept: the idea of fairness. As we have heard in this debate, fairness is extremely important for Conservatives. If the Government are to be the force for good that they should be, we need to ensure that our policies are as fair as possible—that benefits and costs fall in a fair and equitable way across the population. I accept that there is some unfairness around using national insurance to raise the levy, but in order to raise the cash required, we must use a broad-based tax. A VAT rise would have a disproportionate impact on those with low incomes and using income tax would not incur a contribution from businesses. Of course, businesses very much benefit from health and social care, as huge numbers of people would have to leave the workforce if those services did not exist.

On reflection, I think that using national insurance to raise this levy is a fair way to proceed, especially given that my right hon. Friend the Chancellor has made sure that dividends and working people of pensionable age are included. I support the motion today because we have to acknowledge that politics is not about striving for perfect solutions. It is about finding the best solutions possible within the financial, practical and moral constraints that bind us all. However, although the money raised through this motion will be a start, it will not be enough.

We have to accept that health and care costs are many times higher now than they once were. I echo the comments of my hon. Friends the Members for Wycombe (Mr Baker) and for Milton Keynes North (Ben Everitt) on this point. When the welfare state was born, life expectancy was about 65. Many people left school in their early teens and entered the workplace. In the 1940s, an individual might well spend fewer than 20 years of their lives not working. Now people can spend more than 40 years of their life not working. Simply put, during our working lives we must now pay a lot more —double, or perhaps more—in taxation, pension contributions and insurance to fund our decades of economic inactivity. We cannot escape that fact.

So in raising any additional money in future we must be far-sighted, inventive, creative and look to other countries, as other hon. Members have said. In addition to taxation, we could look to build on the success of our automatic enrolment model for workplace pensions or consider some form of contributory insurance scheme. But we must also be clear that there are alternatives to ever-increasing bills for health and social care, so I hope to see extensive consideration of local, community and capability approaches in the White Paper. We must not forget the crucial role of the family. How can we help families to look after their own relatives’ wealth for longer and with appropriate support?

I acknowledge and understand that there are criticisms of this motion, but doing nothing is not an option. When it comes to finding a pragmatic solution to such a difficult and urgent issue, I am convinced that this is a fair approach for now.

Finance Bill

Miriam Cates Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con) [V]]

It is a pleasure to speak on Report of the Finance Bill. Over the past 14 months, the Government’s main concern has been to protect the UK from the worst impacts of the global pandemic. We have seen a comprehensive public health response to slow the spread of coronavirus, and more recently to deliver mass vaccinations on an unprecedented scale, but the Government have also delivered a comprehensive financial response to secure jobs and livelihoods, and to protect the economy. This response has been hugely successful and the most recent Office for Budget Responsibility forecast suggests that the UK economy will recover six months earlier than previously thought. However, essential though this financial response has been, it has cost the taxpayer £407 billion, the majority of which has been debt. This year, we have borrowed a staggering 17% of GDP.

As we emerge from the pandemic, it is imperative that we begin to plan how that debt will be repaid and the deficit reduced. One of the tools at our disposal is to raise levels of taxation, and it is right that any increases should fall on the broadest shoulders. While many small and medium-sized enterprises in my constituency have struggled this year, some of the UK’s biggest businesses have made significant profits. It is only large, often international, companies with profits of over a quarter of a million pounds a year that will be required to pay the highest rate of corporation tax, as stipulated by clause 6.

It is not only the UK that is reconsidering business taxation. Current global efforts to update corporation tax frameworks in response to modern challenges are ongoing, and we have seen reports today of those international negotiations and the positive steps that are being taken to address the current practice by some multinational companies of shifting profits to low-tax jurisdictions. I absolutely support the efforts to end that practice, but I oppose new clause 23, which would compel the Government to publish, within six months of enactment, a review of the impact on corporation taxation revenues of a global minimum rate. Since those matters are still subject to international negotiation, any assessments mandated by the new clause would be purely speculative and a complete waste of resources.

Taxation is not a penalty and should not be an ideology. It is a tool—a mechanism that we can use to ensure that the state can afford to pay for the infrastructure and services that citizens expect. Taxation levels must balance the requirements of those services with the rights of individuals and businesses to have as much agency as possible over their own financial resources. There is no absolute right or wrong level of taxation. Tax rates should change with the times and challenges we face.

The Opposition have spent the past year calling for more taxpayers’ money to be spent on supporting businesses, welfare and health, and they have often rightly framed that demand in moral terms, highlighting the impact of the pandemic on those who have been hardest hit. But all resources are limited, even the state’s. Just as public spending has a moral dimension, so does public debt. It is morally wrong to leave difficult decisions for future generations, rack up eye-watering interest payments for our children and grandchildren, and risk the security of our economy. That is why we must have a plan for reducing our debts. Increasing corporation tax for the largest businesses is an important part of that.

I said that taxation policy is a tool—a mechanism for raising money—but it can also be a catalyst for growth and investment. With the introduction of the super deduction and freeports, which will be discussed when we debate the next group of amendments, I am confident that, unamended, this Finance Bill will kick-start our recovery and help businesses across the country to build back better.

[Zarah Sultana (Coventry South) (Lab)]

I remember when the pandemic first hit and the Chancellor said that we would all be in it together. Well, the reality has not turned out that way. It has been the story of the many and the few. For the many, it has meant food bank use rocketing—it is up 33% on a year ago. Universal credit claimants have doubled in my constituency and child poverty now affects more than one in three children in Coventry South—nearly 7,000 kids in my constituency alone—and nearly 4.5 million across the country.

While the majority have struggled with falling wages, unemployment and rents that they cannot afford, for a wealthy few it has been a bonanza. Last week The Sunday Times rich list revealed a record growth in UK billionaires, of whom there are now 171 in total. Their wealth stands at £600 billion—up nearly 25%. Amazon, which this year has raked in record revenues of £38 billion across Europe, paid nothing in corporation tax. This is not just a broken economic model—it is not just unfair and unequal—it is rigged. It is redistribution, but not in the way that we might traditionally understand: it is taking from the many and giving it to the few. That is what is happening when we see that food bank use is up 35% and billionaire wealth is up 25%. This Conservative Government not only refuse to tackle that but aid and abet it.

There is nothing in the Bill to tackle the tax loophole that means that income earned through wealth, owned overwhelmingly by the rich, is taxed at a lower rate than income earned through work. There is nothing in the Bill to fairly tax the obscene profit that companies such as Amazon have made during the pandemic, with the Government refusing to embrace a windfall tax. There is nothing in the Bill to provide the necessary investment in Her Majesty’s Revenue and Customs to tackle tax avoidance and evasion by the super-rich and big businesses. Instead, the Government are standing by as the tax gap stands in excess of £35 billion.

What is in the Bill is £15 billion more in annual cuts to Government Departments and a super deduction tax cut in capital spending that the rich are already reported to be using to purchase jacuzzis. To top it all off, there is the Tory Government’s refusal to embrace plans to tackle global tax avoidance. The plans put forward by the US could prevent the likes of Amazon, Google and Facebook from dodging tax and refusing to pay their fair share, and end the race to the bottom on corporate tax rates. Even at a moderate rate of 21%, such a measure could raise £13.5 billion for the UK Treasury, according to Tax Justice UK.

We should not really be surprised by the Government as they are on the side of big business and the super-rich. For a decade they have been cutting taxes while cutting the budgets of schools and hospitals throughout the country. They are also funded by a third of UK billionaires and, of course, they are led by the super-rich, too—not just an old Etonian Prime Minister who complains that his £150,000 salary is not enough, but a Chancellor who went from an elite private school to Oxford to investment banking, before becoming the wealthiest Member of Parliament in this House and using his power to cut the services of the working class.

Instead of this rigged and rotten system, we could make the super-rich pay their fair share to fund our public services and end poverty for all. That is the least the Government should be doing, so they should back the plan for a global minimum corporation tax. They should also back my proposed new clause, which would shine a light on the scandal of tax dodging. Instead of entrenching inequality, the Government could be building an economy for all.

Finance (No. 2) Bill

Miriam Cates Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[John McDonnell]

Following on from my right hon. Friend the Member for Barking (Dame Margaret Hodge), I find it almost incredible that we are having this debate at all, given what we know about the track record of abuse of this type of tax deduction, as she so eloquently pointed out. The Minister is right to suggest that amendment 11, tabled in my name and those of other right hon. and hon. Friends, would have the effect of removing the provision of capital allowance super deductions.

There has been considerable evidence, and concern, from economic think-tanks and Committees of this House that tax reliefs have failed to deliver their stated objectives and, worse, that they have often had unintended consequences through the creation of perverse incentives. Members have raised example after example in recent years, including the entrepreneurs allowance, the patent box and the tonnage tax, all of which have not only failed in their objectives but lined the pockets of company directors and shareholders, exactly as my right hon. Friend said. Accountants, lawyers and others have been using them effectively for tax avoidance. The scope for perverse incentives and unintended consequences is even greater with these super deductions. If the Chancellor wants a sweetener to go alongside his corporation tax rises, surely at a time of rising unemployment it is more urgent to incentivise job retention through a temporary cut to employers’ national insurance contributions rather than introduce what has been described as this dog’s dinner of untargeted super deductions in clauses 9 to 14.



Unlike Ministers, in dealing with business, I do not believe in a something-for-nothing culture. If the Government are giving tax breaks to businesses, the Government, as guardians of the public purse and the public interest, should demand something in return. New clause 1, in my name and those of other hon. and right hon. Members, asks simply that, in return for companies being eligible for these super deductions, they should pay their workers the real living wage and should recognise trade unions for collective bargaining purposes—two simple things that reflect that they are responsible employers.

I regret very much the Minister’s reference to these as “burdensome” requirements. Paying a decent wage and recognising trade unions are not a burden, but actually things that enhance the role of an individual company. As has been said in debate after debate, even by Government Ministers, in many instances the greater involvement of the workers in a company increases productivity. These are just low barriers for companies to pass. It does not take long to recognise a trade union or to be accredited as paying the living wage. Companies that do not currently meet these extra criteria could easily do so during the passage of this Bill and its enactment.

I also back the Front-Bench amendments in the name of the Leader of the Opposition, and I pay tribute to my hon. Friend the Member for Ealing North (James Murray). He is right that companies such as Amazon that dodge their taxes and evade their responsibilities to their workers should not be given tax breaks on top. The Chancellor of the Exchequer made much of his compact with unions and business groups over the furlough scheme. This modest new clause 1 puts in legislation the approach I am putting forward. I believe that it is within the spirit of that relationship between Government, trade unions and employers, and I just urge the Government to think again about accepting it.

New clause 2, in my name and those of other hon. and right hon. Members, combines a request for an evidence base for super-deductions in respect of capital allowances and to explore what economic benefits could be derived from attaching social and environmental conditions to the receipt of super deductions. I heard one hon. Member in this debate say that the Treasury monitors these policies and does indeed review them; unfortunately, it does not.

Historically, tax reliefs have been introduced, and over the years an accumulation of tax reliefs have never been reviewed and never really been tested for their effectiveness in the way they should be. The Office for Budget Responsibility stated in its March “Economic and fiscal outlook” that the super deductions, as others have said, are expected to cost at least £25 billion in total between 2021-22 and 2023-24. This is a huge commitment, and it is surely in the public interest that we have an assessment of policies’ effectiveness and also ensure they deliver on social and environmental goals.

In new clause 6, I seek to create an evidence base on which this House can assess the merits and drawbacks of the super deduction policy. The Public Accounts Committee has previously looked into the operation of UK tax reliefs, and its findings painted a worrying picture. These reliefs already cost more than £100 billion a year in forgone tax, and HMRC does not even know how many reliefs exist or monitor their cost, let alone their effectiveness. Let me quote my right hon. Friend the Member for Barking, who is the former Chair of the Committee. She said:

“HM Treasury and HM Revenue and Customs…do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.”

She went on:

“HMRC does not effectively monitor changes in the cost of tax reliefs so is slow in identifying instances where a relief is being exploited for a purpose”

beyond what Parliament intended. I think that is an accurate but damning indictment and one that should concern the whole House, but especially Treasury Ministers.

New clause 6 specifically recommends that the Public Accounts Committee is tasked with reviewing the effectiveness of existing capital allowances and that this House then votes on the clauses that provide for super deductions in the light of that evidence. I urge the Government to get a grip on the whole process of tax reliefs. We have seen how they can be abused. We have seen how ineffective they can be. We have also seen an industry develop, with accountants and lawyers who have profiteered from tax reliefs that the Government have introduced over decades. To add now to that abuse of taxpayers’ money in this way, I deeply regret. I urge the Government to think again. I give the Government this warning: in a few years’ time, if the Bill goes through as it is now, I bet we will be returning to this debate with example after example of how this system has been abused, to all our cost.

[Miriam Cates (Penistone and Stocksbridge) (Con) [V]]

I wish to speak to the numerous amendments and new clauses relating to corporation tax changes and the new super deduction.

As the previous speaker, the right hon. Member for Hayes and Harlington (John McDonnell), will no doubt keenly remember, raising corporation tax was one of the pillars of Labour’s 2019 manifesto. We frequently hear Labour Members expressing the view that big businesses should pay their fair share of tax. I completely agree, and that is why I fully support the Government’s proposals to increase corporation tax with a new maximum rate of 25% for those businesses with profits of over a quarter of million pounds from April 2023. Unlike a rise in income tax or national insurance, which affects taxpayers in a blanket way regardless of personal financial circumstances, corporation tax is only paid when profits are made—no profit, no tax due. And where profits are made, it is of course absolutely right that a proportion of those profits is returned to the taxpayer, because without the infrastructure, education, security and health services that the state provides, those businesses would clearly be much less profitable.

Members across the House like to champion small and local businesses, and rightly so. These businesses will, in the vast majority of cases, continue to pay the lower rate of corporation tax. In my constituency, we have 2,890 registered businesses, with 88% having fewer than 10 employees. These are not the kind of companies that generally make profits exceeding a quarter of a million pounds a year. The corporation tax rise will only affect the very largest and most profitable businesses. In fact, only 10% of businesses will pay the new higher rate. The Government are right to delay the increase until 2023, as it gives companies time to plan as we emerge from a period of uncertainty, but it is wrong to say that the impact of the pandemic means that the change should not take place at all. Yes, many businesses have struggled during the pandemic, but some businesses have prospered hugely, often due to circumstances for which they can take no credit. Online traders and the big supermarkets have seen their revenues increase substantially purely because other retailers have been legally forced to close. It is therefore right for the Exchequer to recoup some of those additional revenues through taxation. These measures must therefore pass without the proposed amendments, some of which could allow large businesses to restructure to avoid the high rates of tax.

We all want UK businesses to be profitable, but we also want those profits to result in higher wages, better training and reinvestment in our economy so that profits can be shared fairly across society and not just concentrated among shareholders or the most highly paid executives. In other words, we need businesses to be more productive. Low productivity has been a thorn in the flesh of the UK economy for some time. The proposed super deduction is therefore exactly the measure we need to encourage the reinvestment of profits through large-scale investment, turning crisis into opportunity and setting UK businesses on a new path to innovation, productivity and growth. The OBR has predicted that this will increase business investment by 9% and lift us from 30th in the OECD’s world rankings for business investment to first. This is the right moment for this incentive, when many businesses have been forced to pivot or have seized opportunities presented by the pandemic, and now is the time to invest. That is why I oppose the amendments to the super deduction clauses, which would ultimately delay and reduce its effectiveness.

Our economy is an ecosystem, with the private sector, the public sector, our communities, individual employees and employers existing interdependently in a multitude of symbiotic relationships. Each element of this ecosystem has obligations and responsibilities to the other parts. For businesses, these responsibilities include paying fair levels of tax and making investment decisions in the best interests of our whole society. It is the Government’s role to encourage businesses to act for the common good. The unamended measures in this Bill will be successful in doing just that.

Exiting the European Union (Excise)

Miriam Cates Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I am sure that every Member of the House would want the UK to have a fair and dynamic tax system that responds to the needs of UK citizens and reflects the economic circumstances of the time. In order to achieve that, our tax regulations must evolve and adapt, supporting society’s wider objectives and strengthening our local and national finances.

It is impossible not to recognise the enormous changes that have taken place in UK society over the past year. Even if we were to set aside the impact of the pandemic, in the hope that we will soon be able to return to what used to be normal life, the nature of the UK’s place in the world has changed—as has the way we interact with our global friends and partners. The removal of the VAT retail export scheme is a recognition of that change. We have left the EU and its customs union, and now find ourselves in a position to re-evaluate how we choose to apply taxes and duties to consumers engaging in international travel. We have the chance to treat people from different countries in the world equally, with no inherent tax status attached to being an EU visitor to the UK, compared with being a visitor from anywhere else.

A fair tax system should not allow wealthy international travellers relief from local taxes, as if they simply arrive, make purchases and leave the UK again without any other interaction with our economy. Those visitors benefit from a vibrant and thriving UK economy, our infrastructure and our connectivity, and our economy relies on everyone paying their share of tax. We do not give VAT refunds for hotel rooms, meals or theatre tickets, so why should a handbag or new coat be treated any differently? Consumer goods that are purchased in the UK should be subject to normal UK tax rules, and that should apply regardless of the country in which the purchaser happens to pay their income tax.

That is not to say that people are not welcome to come and spend their money here in the UK. We have some outstanding retail opportunities, and I hope that many people from around the world will visit this country again, once it is safe to do so. But it is not unreasonable to expect those visitors to pay a small amount in the process. It is also the case that, even for those who did use VAT RES, once the administration costs had been included, the savings accounted for less than 6% of the total trip costs on average. Given the wealth of those using the scheme, it is highly unlikely that the existing scheme affected their decision to travel to or shop in the UK. In fact, the USA, which has no countrywide VAT RES scheme, is the top country outside Asia on China’s most-visited list, ahead of any European countries that do have tax-free shopping.

International travel and high-end retail are luxuries, and it is wrong to deprive UK taxpayers in places such as Penistone and Stocksbridge to benefit international travellers. Preventing a loss to our tax base to the tune of £1.4 billion will help us to spread the benefits of international travel across the whole UK, instead of, as at present, concentrating it in London and the south-east.

On a final note, I am pleased that this statutory instrument provides duty-free sales for UK residents visiting the EU, for the first time in 20 years. The UK travel industry has suffered enormously over the past year, and this measure will support regional airports and ports across the country. Many more UK residents travel to EU than non-EU destinations in normal times, so the changes to duty free should significantly benefit local economies as well as, of course, consumers.

The regulations implemented by this statutory instrument are fair to the UK taxpayer, fair to travellers and fair to consumers, and as fairness should be at the heart of our tax system, I am pleased to support it.

Taxation (Post-transition Period) Bill

Miriam Cates Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Miriam Cates (Penistone and Stocksbridge) (Con)]

The existence and contents of the Bill encapsulate the opportunities and complexities that we, the United Kingdom of Great Britain and Northern Ireland, face as we reach the end of the transition period. As we regain control of our money, borders and laws, we have the opportunity to innovate and, in relation to taxation, to remould our regulations around the values and requirements of our modern UK economy.

For example, the Bill introduces some administrative and procedural VAT changes that not only are legally necessary, but allow us to tackle non-compliance and to support our high streets to compete with online sales. That is important in the current economic climate where, for nearly nine months, our high streets have faced unprecedented restrictions and sales have plummeted, while online retailers have traded unhindered and made record profits. I therefore support the measures in the Bill that stipulate that VAT is due from online sales by companies that import goods into the UK. That will ensure a more level playing field for our bricks-and-mortar retailers.

Another opportunity presented by our departure from the EU and the end of the transition period is our potential ability to crack down on tax evasion. The Bill also makes technical provisions on that issue. As well as realising the administrative opportunities that we can embrace as we leave the EU, the Bill reflects some of the complexities that have inevitably arisen as we, an historic Union of four distinct nations, seek to disentangle ourselves from 40 years of economic and increasingly political union with our European neighbours.

During the referendum campaign in 2016, I was not actively involved in politics and I was not a member of a political party, but I agonised over my vote. I was torn between the moral conviction that our UK Parliament should be sovereign and the practical acknowledgement that any divorce after 40 years of union will be complicated and messy—of course, both are true. Following 17 million votes to leave the EU, it is right and democratic to leave, but is also a complex and challenging process that has tested our determination and resolve for three and a half years. That is why the Bill must also make provision for all the circumstances that we may face following the outcome of ongoing trade negotiations. We cannot gloss over or underestimate these complexities or pretend that they should not exist. The history of the relationship between each of our four nations is unique, and it is based on cultural and relational settlements as much as law and statute. Whatever the outcome of the trade negotiations, we must ensure that we have a VAT and customs framework in place to allow trade across the UK to continue as seamlessly as possible. That is what this Bill will achieve, and it is why I support it as a sensible, responsible and necessary piece of legislation.

Financial Services Bill (Fourth sitting)

Miriam Cates Excerpts

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[The Chair]

I open the questioning to other members of the Committee. Does anyone else have questions? I call Miriam Cates.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Q You said that consumers expect different things in different markets. In your briefing note, you said that the Bill will allow the FCA to develop a methodology that is more accurate and that works for the UK market. Can you give an example of a characteristic that is specific to the UK market and how the Bill will help to meet those expectations?

Hugh Savill: If you are buying insurance in the UK, you tend to buy it online for general insurance, or you will quite often use an independent financial adviser to buy life insurance and savings policies. That does not happen on the continent of Europe. There, there is a little shop in most small towns, and people go and buy their general insurance from that shop. If they want savings policies, whether that be insurance or other kinds of savings vehicles, they will go to their bank, so it is a completely different approach and entry into financial services.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Q Thank you very much for giving evidence today, Hugh. One quick question about the market access arrangements: do you think there will be any price implications from those for UK consumers? Could we see price inflation via premiums increase as a result?

Hugh Savill: Sorry, from the market access arrangements, did you say?