Breathing Space Scheme

Neil O'Brien Excerpts

Wednesday 19th June 2019 Commons Chamber

[Mr Speaker]

Order. Unless I am much mistaken, the hon. Member for Harborough (Neil O'Brien) is in danger of being rather a naughty man. I am advised that he beetled into the Chamber halfway through the response from the Opposition Front-Bench spokesman—[Interruption.] I was advised that he came through the double doors. I do not know whether he toddled out for some reason and then came back. If he is telling me —[Interruption.] The hon. Member for Bexhill and Battle (Huw Merriman) is chuntering from a sedentary position, and gesticulating as well, and in a manner not altogether helpful at this juncture to the Chair. If the hon. Member for Harborough says to me explicitly that he was here at the very start of the statement, I am happy to indulge him. Otherwise, I would say that he should count his lucky stars, because after all he did get in at Prime Minister’s questions, so he has had a jolly good day.

[Neil O'Brien (Harborough) (Con)]

I take your advice, Mr Speaker. You think I was not here at the very start, and you are surely correct, so I will sit down.

[Mr Speaker]

Well, it is merely a question of remaining seated. After that Socratic dialogue, we will leave it for now. The hon. Gentleman can bank his PMQ. Very well done.

Spring Statement

Neil O'Brien Excerpts

Wednesday 13th March 2019 Commons Chamber

[Mr Hammond]

I shall look forward to it.

Today is not a fiscal event, and the opportunity to look at spending priorities in the round will happen at the spending review. What I have described today is a world where improving public finances mean that, if we can lift the Brexit cloud from our economy and get that certainty restored, we will have choices. Frankly, that is something we have not enjoyed in this country for a decade now, because of the consequences of the crisis under the previous Labour Government.

If the hon. Lady wants to talk to me about schools, I am happy to talk about our record on schools, with the attainment gap narrowing, record rates of disadvantaged 18-year-olds going to university, and 84% of children being taught in good or outstanding schools compared with 66% in 2010. Those are outcomes of which we are proud.

[Neil O’Brien (Harborough) (Con)]

May I ask the Chancellor’s view on the question of poverty? Under the previous Labour Government, we saw 1 million men and women thrown on the dole. Under this Government, unemployment is down to its lowest rate for 40 years. Yet we hear the argument from the Opposition that work is not the way out of poverty; only spending ever more on benefits is the answer. Am I correct in noting that, in reality, when a workless couple move from being out of work into full-time work, their chances of being in poverty drop from 38% to a negligible less than 1%, so work is the way out of poverty? What assessment has the Chancellor made of the combined effects of cutting taxes for the lowest-paid, reducing unemployment to the lowest level for 40 years and the new national living wage, and what assessment has he made of his intention to go further today in boosting the proud achievement of the national living wage of reducing poverty further?

[Mr Hammond]

We have seen the proportion of people on low pay falling to its lowest level in 20 years. I have already mentioned the statistics on the number of people in work, and I agree with him that being in work is the only sustainable way out of poverty. He is right: the previous Labour Government left 1.4 million people languishing on out-of-work benefits, and anyone who thinks that that is a good outcome—[Interruption.] Absolutely true: they should be ashamed of themselves. I can assure my hon. Friends that this issue is high on our agenda, and that we are looking at ways of maintaining the record we have built up, which is exactly the one I want to deliver.

Value Added Tax Bill

Neil O'Brien Excerpts

Friday 8th February 2019 Commons Chamber

[Sir Christopher Chope]

I disagree with my hon. Friend; he is taking a conservative view rather than looking at the dynamic effect on the economy of making tax reductions. My hon. Friend is not yet a Parliamentary Private Secretary in the Treasury and that is why he is able to participate in this debate, but I know that he would very much like to be a Treasury Minister in due course. When we were in opposition and I was a shadow Minister, my hon. Friend was an important adviser in that Ministry. I know that he has a keen interest in the Bill. One of my concerns is that the Treasury is not always on the side of the dear British consumer, and I am putting the case on behalf of the consumer today.

Let us remind ourselves of the history of VAT. When the Labour Government came into office in 1974, they attempted to introduce extra rates of VAT. One way and another, things were changed around, but eventually Denis Healey reduced the higher rate to 12.5% in April 1976. Geoffrey Howe organised an increase in VAT when he was the Conservative Chancellor. He raised the standard rate from 8% to 15% in June 1979, but in so doing abolished the higher rate.

After that, the rate stayed the same until 1991, but was then raised from 15% to 17.5% by Norman Lamont, now Lord Lamont, when he was Chancellor. At the 1992 general election, the Conservatives were elected—unfortunately, I was not among them; I was defeated in that election—on a promise not to extend the scope of VAT. In March 1993, Norman Lamont announced that domestic fuel and power, which had previously been zero-rated, would have VAT levied at 8% from April 1994. My Bill would take us back to the time before 1994 when there was no VAT on domestic fuel and power. That is one the most important parts of my Bill.

This issue is close to my heart, not least because I was present during the by-election campaign in Christchurch in July 1993, when the biggest issue on the doorsteps was the Government’s imposing VAT on fuel, reneging on their manifesto commitments. That by-election saw the largest ever swing against the Conservatives, and a Conservative majority of more than 20,000 was converted into a Liberal Democrat majority of more than 17,000. That was my inheritance when I became the prospective parliamentary candidate. I know that my constituents feel strongly about VAT on domestic fuel and power, and I hope that the Government regret the decision that was taken then, over which they were subsequently not able to have any control. Although the Labour Government eventually reduced the rate to 5%, under European Union rules it is not possible for this sovereign Parliament to reduce VAT below 5% when it has already been set in train. That opportunity will be available to us as soon as we leave the EU.

Another criticism of VAT is that it is regressive because it is paid by all consumers whether they be rich or poor, young or old. The poorest spend a larger proportion of their disposable income on VAT than those who are financially much better off. The Office for National Statistics report has shown that in 2009-10 the poorest 20% spent 8.7% of their gross income on VAT while the richest 20% spent only 4%. That is another reason why reducing or eliminating VAT on various goods and services would be an effective way of creating a dynamic effect in the economy, and would be fair and equitable at the same time.

I have outlined some of the general issues relating to the Bill. It paves the way for sharing and securing for consumers and businesses one of the key benefits of leaving the EU on 29 March, taking back control over indirect tax policy on goods and services.

The first key element of the Bill is to enable the Government to raise the maximum turnover thresholds for exemption from the requirement to register for VAT. That is set out in clause 1. We in the United Kingdom have a registration threshold of £85,000, the highest in the EU. In my submission, it is not high enough. That is why I have put in clause 1 a suggestion that there be a modest initial increase in the threshold to £104,000 and that the threshold for deregistration should be £100,000. The consequence would be that many small businesses would be taken out of VAT and consumers would be saved the cost of VAT on the services provided by them.

I am delighted that my hon. Friend the Exchequer Secretary to the Treasury is on the Front Bench to answer this debate. I have been perplexed about Government policy on VAT thresholds. Currently the threshold is £85,000 and that was due to be the situation until March 2020, but under EU law it is open to the Government to increase the thresholds every year in real terms. That has traditionally been what has happened. However, the present Government, for reasons that I hope my hon. Friend will be able to explain, have decided to freeze the threshold until the end of March 2022. The consequence, apart from giving some extra money to the Treasury through what is effectively a stealth tax, is that many more small businesses will be caught up in VAT registration.

The current threshold means that 3.5 million businesses do not have to account for VAT, which is half of all businesses in the United Kingdom. We know how important small business is. It provides half of all the private sector jobs and accounts for more than a third of our national income. Why would it not be sensible for the Government’s policy to be to increase the VAT threshold to the maximum that is allowable under EU law rather than freeze the threshold, thereby making it difficult to increase it in the future by a significant amount?

The Government issued a consultation paper on the VAT threshold and called for evidence following a paper the Chancellor commissioned from the Office of Tax Simplification, and that consultation made it clear that the threshold cost the Exchequer £2.1 billion in 2017-18—the cost has not risen since because the threshold has not been increasing as it was before that date.

Following the OTS paper, the Government consulted on whether to increase or reduce the threshold. A table annexed to the call for evidence showed that the £81,000 threshold in 2014-15 had deterred 50% of sole proprietor and partnership businesses from increasing their economic activity for fear of passing the threshold. What a ridiculous artificial constraint on enterprise! Surely, we should be encouraging businesses to expand, not introducing measures that deter that activity.

The consultation concentrated on the large number of businesses just below the threshold and on what could be done to reduce the cliff edge and smooth the transition for businesses registering for VAT. Following the consultation, the Government concluded that nothing had been decided—in that respect, it was not an unusual process of public consultation. Paragraph 4.35 of the paper that summarised the responses reads:

“Many responses committed to the view that an increase to the threshold would make it much easier for newly-registered businesses to cope with the administrative and financial implications of registration. For example, if the threshold were to be raised to £100,000, businesses would likely be able to afford the cost of professional advice to cope with the administrative burden, while also being more able to absorb the cost of VAT. One representative body felt that the administrative burden would only be taken out of the equation if the threshold was much higher. The UK is currently unable to increase the level of its VAT registration threshold in real terms, under EU law, but there may be scope to review this in the future.”

It will come as no surprise to the Minister to learn that I took the figure of £100,000 in my Bill from that paragraph. I have not gone as far as the OTS suggested in its original paper, but I could see the merit, if the Bill ever gets into Committee, of raising the threshold to something like £500,000. Then we would be talking only about really substantial businesses having to pay VAT, which would significantly reduce the burden on business and encourage entrepreneurial activity in our enterprise society.

[Neil O’Brien (Harborough) (Con)]

What estimate has my hon. Friend made of the cost to the Exchequer of increasing the threshold to that level?

[Sir Christopher Chope]

The estimate made is not mine but comes from the OTS paper:

“Raising the threshold significantly, for example to £500,000, would potentially impact around 800,000 businesses. Of those, between 400,000 and 600,000 businesses might choose to deregister, while 200,000–400,000 might choose to remain…registered. This would simplify the tax obligations for businesses that chose to deregister, reduce VAT-related competitive distortions between registered and unregistered small businesses, and reduce the administrative burden on those businesses. However, raising the threshold to such a high level would cut the funds available for public services by between £3bn and £6bn a year.”

My hon. Friend will be conscious, however, that those figures are much lower than the £39 billion figure that is on the lips of most members of the public, if not Members of this House, as we prepare to leave the EU on 29 March, when we will have the opportunity to save ourselves £39 billion.

[Neil O’Brien]

I congratulate my hon. Friend on introducing the Bill to discuss this important issue and this potentially big simplification, but am I right that the £6 billion price tag is roughly equivalent to half the budget for the entire police force of England? This is a substantial sum. Beyond the £39 billion, does he have an suggestions for how to raise enough money to make good the hole?

[Sir Christopher Chope]

I do. It is a mistake to look at these issues without considering the dynamic behavioural effects flowing from changes in the regulatory environment. We are all agreed—certainly the Treasury and the Chancellor have expressed concern about it—that the country is suffering from a crisis in productivity, and it is clear from the OTS reports and the consultation that people in the engine room of our economy find VAT to be very burdensome and that it adversely affects their productivity. The problem of productivity centres around this bunching issue. Why are we inhibiting businesses from expanding and becoming more economically productive by imposing an artificial threshold? To an extent, it has been imposed on us by the EU, but we can break free on 29 March. I hope my hon. Friend will take a dynamic perspective and not just look at the straight line figures produced by the Treasury.

--- Later in debate ---

[Sir Christopher Chope]

My hon. Friend makes a brilliant point. This used to be at the heart of Conservative thinking and policy making on the Treasury Bench. It was that dynamic thinking that was behind past decisions to significantly reduce the top rates of tax. I hope we can rediscover that much more dynamic approach to the behavioural consequences of high taxes and artificial thresholds.

[Neil O’Brien]

I thank my hon. Friend for being so generous in giving way again. I think he is wrong to say that it is not the approach of our Front Benchers to think in dynamic terms: the Treasury has produced a wonderful paper showing that a third of the cuts in corporation tax are made up for by dynamic gains. Active work is being done on this; it is a Conservative belief. However, I would only ask my hon. Friend what proportion of the £4 billion or £6 billion loss to the Exchequer that he is talking about does he think might be made up for by dynamic effects? I agree that there are dynamic effects and I agree that this is a wonderful simplification; I just caution him that another Conservative principle is sound money and not running a huge £150 billion a year deficit like Labour did.

[Sir Christopher Chope]

Obviously, we are all united in wanting to be fiscally and financially prudent, and, going back to the intervention of my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), having looked at the evidence that came forward on this issue, I was horrified to see that, for example, if some cafés in tourist resorts think they are going to exceed the VAT threshold in a particular quarter they will close down for a week or two. What contribution does that make to the UK economy? How ridiculous is that, with the consequence that people are not being employed in those cafés and so on? I agree it is desirable that more work be done on this, and that in a sense is the purpose of today’s debate: to try to get people to think about the radical ways in which we could change VAT now that we are going to have the freedom to do it. VAT is the third largest tax in this country; it generates £120 billion or thereabouts. Surely we should now be looking at our ability to examine the best way in which that tax on goods and services can be applied so that it delivers the best productivity results and does not lead to the distortions we have been speaking about.

There is a problem with the Treasury approach to a lot of this. It produces a document setting out the cost of reliefs. It says that not having VAT on food—having zero rating on food—costs the Exchequer some £18 billion a year. We should look at that not in the context of saying, “We can’t afford to lose £18 billion,” but in the context of saying, “Why should we be charging people who want to go off and buy some food £18 billion?” The mere fact that the Treasury continues to draw up estimated costs of principal tax reliefs shows that it is looking at this from the wrong end of the telescope. The Treasury also says the reduced rate for domestic fuel and power is costing the Exchequer £4.85 billion. What an extraordinary approach that is, as it implies that the Treasury might be minded to put domestic fuel and power VAT back up to 20%. This gives me the feeling that the mindset in the Treasury needs a lot of alteration and that at the moment it is far too negative and unimaginative on a lot of these issues.

Our inability to increase the threshold or meaningfully alter the design of VAT without the unanimous agreement of all other member states is a big problem. It has not stopped the EU Commission of course publishing proposals to cap the thresholds at €85,000 from July 2022 and establishing a new EU-wide threshold of €100,000. That is another example of the statist expansionist agenda of the European Union about which the British people spoke so strongly in the referendum just over two years ago.

The EU Commission is proposing changes that will affect tourism, construction, accommodation, food, traders, professional and scientific and IT service providers and so on, and we could still be faced with an €85,000 VAT threshold if we do not leave the EU on 29 March. If we stay in the EU under some transitional arrangements without knowing what the final outcome will be, throughout that period we will be subject to EU laws relating to VAT. Bearing in mind that the VAT thresholds across the rest of the EU are often only about €20,000 rather than €85,000, we could find the law being changed against us because we would not have a veto. We would be outside the EU so we would not be able to veto this, but we could find that our VAT law was made even more restrictive than at present, although many of our constituents will have thought that we had actually left the EU and got rid of this gross interference in our lives.

I mentioned earlier the compliance costs for VAT. One survey cited by the Treasury found that for UK small and medium-sized enterprises over 40% of all financial costs of tax compliance and 50% of time costs are due to VAT, and that statistic has been confirmed by the Federation of Small Businesses. VAT is particularly unattractive to businesses providing business-to-consumer activities, because they tend to be more labour-intensive, and labour of course is not subject to VAT. We must also think about the impact of VAT on consumers and the cost of living.

I hope I have been able to make a strong case in relation to clause 1, and I shall now turn to clause 2. It sets out the second element of the Bill, which is to make provision for the exemption of certain goods and services from liability to VAT and for connected purposes. The goods and services that are subject to VAT are set out in the Value Added Tax Act 1994 and clause 2 would ensure that domestic fuel or power in group 17, fitness items in group 18, goods subject to excise duties in group 19, insulating materials for home improvement in group 20, repairs and improvements to historic buildings in group 21 and women’s sanitary products in group 22 would all be exempt from VAT, rather than being subject to VAT as they are at present.

--- Later in debate ---

[Sir Christopher Chope]

I am glad that my hon. Friend made that intervention, because if he looks at clause 4, he will see that I am saying that the Treasury may by regulations define “fitness equipment”. If and when the Bill gets on the statute book, he should engage in discussions with the Treasury about what he believes to be the best definition of fitness equipment, so that the measure achieves the objective that I just articulated and does not enable people to avoid paying VAT.

[Neil O’Brien]

Given that lawyers spent several decades arguing over whether a teacake was a type of biscuit, I caution my hon. Friend that allowing the Treasury to define “fitness equipment” and other general terms has the potential to be a bean feast for lawyers.

[Sir Christopher Chope]

The problem with the teacake or the Jaffa Cake case—

[Neil O’Brien]

That is a separate case.

[Sir Christopher Chope]

Yes, but the problem is that all that was subject to decisions by the European Court of Justice. Can my hon. Friend think of anything more ridiculous? If the matter had been under the control of our domestic laws set by Parliament, we would have been able to amend a finance Bill to redefine something, and the situation could have been changed overnight. However, because this all comes under the complex regime in the European Union, all of which is subject to the European Court of Justice, lawyers who specialise in this area can have a field day. The volume of law on VAT is vast, and surely there is a case for keeping it much simpler and well defined.

It would also be useful to have more transparency over what is subject to VAT. Supermarkets do not currently provide VAT receipts, so people do not know whether the digestive biscuits or the Jaffa Cakes that they just bought were or were not subject to VAT. However, there are various blogs that enable people to discover the best value items to purchase that are not subject to VAT but are quite similar to other products that are subject to VAT.

Speaking of transparency, clause 2(2)(c) would exempt from VAT goods that are already subject to excise duties, because I strongly believe that we should not have double taxation. Why should somebody who is paying duty on petrol then also have to pay VAT on that duty?

Oral Answers to Questions

Neil O'Brien Excerpts

Tuesday 29th January 2019 Commons Chamber

[Vicky Ford (Chelmsford) (Con)]

3. What steps he is taking to increase earnings for the lowest paid.

[Neil O’Brien (Harborough) (Con)]

4. What steps he is taking to increase earnings for the lowest paid.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The national living wage was introduced by my predecessor. It will rise to £8.21 from April this year. In total, it will have delivered a pay rise of over £2,750 for a full-time minimum wage worker since its introduction in 2016. While we are proud of that achievement, my hon. Friend the Member for Chelmsford (Vicky Ford) will know that in the long term, sustainable pay growth relies on improving productivity. That is why we are investing heavily in infrastructure and are delivering a national retraining scheme to ensure that people are equipped for the technology revolution ahead.

[Mr Hammond]

The Government are committed to supporting savers at all levels of income and at all stages of life. In September 2018, we introduced Help to Save, which is targeted at people on low incomes and which Martin Lewis of moneysavingexpert.com described as

“a very clever scheme”

that

“enables people possibly to have the best of both worlds”.

It pays a 50% bonus on savings of up to £50 made by working families on low incomes. We have 80,000 accounts open already, and we expect the numbers to rise substantially over the next few months.

[Neil O’Brien]

My constituency has a quarter more businesses and 6,700 more people in work than in 2010, and Harborough district has seen the fastest growth in wages anywhere in the east midlands over the last five years, but we cannot rest on our laurels. To accommodate 230 more jobs, Harborough District Council is building a new “grow on space”. Will the Chancellor come and visit it once it is complete?

[Mr Hammond]

The sting was in the tale. I am delighted to welcome the new jobs that have been created in Harborough through the action of the council, no doubt with strong encouragement from my hon. Friend. The Government are keeping taxes low and are helping start-ups to access the support that they need. That is why 3.4 million new jobs and 1.2 million more businesses have been created since 2010. With regard to his generous invitation, as I visited his constituency and had the pleasure of seeing what was going on there only very recently, if he does not mind, I will offer it to one of my team.

Oral Answers to Questions

Neil O'Brien Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Hammond]

First, I should make it clear that the additional support we are providing to Crossrail is in the form of a loan that will be repaid to the Government by London, so it is London taxpayers and London farepayers who will meet the cost of the overrun. The north-west is now the second-highest region in the UK for transport investment: per capita investment has risen from £648 per year between 2006-07 and 2009-10 to £1,129 a year between 2014-15 and 2017-18.

[Neil O'Brien (Harborough) (Con)]

It is very welcome that today’s figures show that wages are rising, unemployment is falling and we have a record number of people in work, but we still need more good jobs in Leicestershire. So, when the Leicestershire industrial strategy comes forward with exciting plans to boost the life sciences and small satellite manufacturing, will the Treasury look closely at getting behind it?

[Mr Hammond]

The Treasury will look closely at that.

Leaving the EU: Economic Analysis

Neil O'Brien Excerpts

Wednesday 28th November 2018 Commons Chamber

[Mel Stride]

I am slightly surprised by the hon. Lady’s question, because that is the very purpose of the information we are discussing. That information has been set out in great detail. As my right hon. Friend the Chair of the Treasury Select Committee has exhorted, it is incumbent on us all, given the magnitude and importance of the decisions we are about to take, to go away and digest that information in great detail.

[Neil O'Brien (Harborough) (Con)]

The recession under the last Labour Government was the worst since the second world war and saw GDP fall by 7% and unemployment increase by 1 million. How would the effect of moving from a deal-based Brexit to a no-deal Brexit compare with that terrible outcome under the last Labour Government? Does my right hon. Friend agree that, because modelling future differences in regulation are involved, the process of modelling Brexit is a fundamentally uncertain one and that we should be very cautious and understand that there will be inevitable uncertainty in any forecast?

[Mel Stride]

My hon. Friend is absolutely right in his latter point about uncertainty. Of course, this is simply a set of estimated outcomes, and everybody in the House will look at it closely and form their own opinion upon it. The impacts of a no-deal Brexit are estimated within the papers, but he is absolutely right that what we inherited in 2010—the largest peacetime deficit in our history—is a very frightening comparison to contend with.

Finance (No. 3) Bill

Neil O'Brien Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Alex Burghart]

I have no doubt that a cut in stamp duty will help homebuyers across the country, in my hon. Friend’s constituency and in mine. I am lucky to represent a constituency in Essex, near London. Our area has much to recommend it, but the price of housing is high. We are going through a programme of home building, reflecting the Government’s broader ambitions. I know from knocking on doors and speaking to young people and their parents that it is difficult to get on that housing ladder. Every incremental improvement that this Government can make on things such as stamp duty helps to make the dream of home ownership a reality for those young people and their families.

[Neil O'Brien (Harborough) (Con)]

On my hon. Friend’s point about incrementalism, does he recognise that the welcome cut in stamp duty for first-time buyers comes on top of ending the crazy slab-based system of stamp duty land tax which was built up under Gordon Brown? This Government got rid of it, so that we no longer had a situation where paying £1 more for a house triggers a tax increase that could be worth thousands and thousands of pounds.

[Alex Burghart]

My hon. Friend is too modest; I know not only that it was an excellent reform brought about under a Conservative Administration, where we went from the LEGO building-block approach to stamp duty that he described to something much smoother and more pristine, but that he was working in the Treasury at the time and was instrumental in bringing about that excellent reform. It has made stamp duty not only fairer, but much more sensible for anyone seeking to buy a property.

Let me turn to business, clause 38 and the necessary additional relief being given to entrepreneurs. As a number of hon. Members have made clear, these are people who are looking to start businesses, so as to employ people, and to create an economic dynamism in their communities and their areas. I go back to remarks made by my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) about how he has seen employment and business growth in his area. I was having a conversation earlier with another hon. Friend from the north-east, where the Conservatives again have seats in Parliament—that is no accident. We have seats in Parliament in the north-east because of the record levels of jobs growth and business growth that have happened in those constituencies since 2010. Voters understand success and successful policies when they see them, which is why people such as my hon. Friend are capable of winning seats such as Stoke-on-Trent South. This happened because of the enormous benefits of Conservative policy since 2010.

A measure in the Budget that has meant a great deal to my area has been the substantial improvement in business rates. As I say, Brentwood and Ongar is a hive of Thatcherite prosperity. It has a huge number of small, medium-sized and large enterprises within its boundaries, most of which have been built by the sweat of local people, and are the product of good, old-fashioned British graft and nous. People in my area are proud of their high streets and want to see them do well. They want their local retail areas to be bustling and thriving. These measures are an enormous shot in the arm for those smaller businesses, which add not only vibrancy and character, but employment and economic opportunity to our local areas. I cannot praise them highly enough.

In conclusion, this is a Budget to help the people who drive the economy. It is a Budget for the businesses that help drive the economy. It offers dynamism to the economy. It will help deliver the growth we need to grow our revenues and our public services, and offer a future for our children which has jobs and is not shackled by an enormous debt left by the previous Government.

--- Later in debate ---

[Ruth George]

I am afraid that for constituents like mine, about whom I was speaking earlier, work is not a route out of poverty. For them, trying a temporary job and moving into work is a fast route on to universal credit and into absolute poverty.

In spite of all the promises made to the House when cuts to universal credit were forced through after the 2015 Budget, not everyone will be protected as they move from legacy benefits to universal credit. Not even half the people who transfer from legacy benefits to universal credit will be protected from the average £2,100-worth of cuts. Managed migration has been delayed and reduced, and the criteria for transferring people from legacy benefits to universal credit have been widened so much that 4 million people will move on to universal credit naturally, with no protection whatsoever. Fewer than 3 million people will move over under managed migration. That is contrary to the promises that were made to the House when those cuts were brought in.

Some absolute anomalies in universal credit will seriously increase the amount of child poverty, which is why at the very least the Government have a duty to measure the impact of the provisions in their Budget. Some 3.2 million children are due to be affected by the two-child limit, and 1.4 million of those children live in families with four children or more, who will lose an average of £7,000 a year. That is a huge amount of money, which no family with children can afford to lose, much less the poorest and those households bringing up children on such low incomes. According to the Office for Budget Responsibility, £3.2 billion will be taken off people with disabilities by 2023.

What about the self-employed? The Government claim to support entrepreneurship, but their entrepreneurs’ relief enables 6,000 people making profits of more than £1 million on the sale of their business to benefit by an average of almost half a million pounds each. That costs this country and its economy £2.7 billion. People starting out in self-employment, on low earnings, such as my constituent Billy, are among the 430,000 who will lose an average of £3,000 a year, mostly because of the minimum income floor.

[Neil O’Brien]

Is the hon. Lady calling for entrepreneurs’ relief to be completely scrapped?

[Ruth George]

I believe that the relief should be reviewed, which is what new clause 3 would require. We could then see its impact on the most well off and on the poorest, and in particular its impact among those who aspire to be entrepreneurs and who aspire to bring themselves out of—

[Neil O’Brien]

So you don’t know.

[Ruth George]

That is what the new clause would require. If the Government wanted us to abolish entrepreneurs’ relief and had given us a Finance Bill that we could actually amend, and if they had the courage to put their policies to votes on the Floor of the House and to give us any alternative, other than to amend the Bill to require reviews, we would gladly do so. Perhaps the Minister could indicate from his sedentary position whether he is prepared to allow the Committee to make such an amendment to abolish entrepreneurs’ relief.

Oral Answers to Questions

Neil O'Brien Excerpts

Tuesday 6th November 2018 Commons Chamber

[Robert Jenrick]

The hon. Gentleman may not be aware of this, but real wages are rising. The Government believe that the best way to support working people across the country is to get them into work. Employment is now at its highest level in my lifetime, with 3 million more jobs created and 1 million fewer people on the dole.

[Neil O’Brien (Harborough) (Con)]

6. What plans he has to raise additional tax revenues from multinational digital businesses.

[The Chancellor of the Exchequer (Mr Philip Hammond)]

The Government have announced that we will be introducing a digital services tax on the UK revenues of large social media platforms, search engines and online marketplaces. The tax is expected to raise around £1.5 billion over four years, ensuring that digital businesses make a fair contribution to the public finances.

[Neil O’Brien]

Members of Market Harborough chamber of commerce and my local Federation of Small Businesses have for some time been calling for the Chancellor to bring in a new tax on the digital giants and to use the proceeds to help small businesses on the high street. First, may I congratulate the Chancellor on taking such sensible economic advice? Secondly, can he tell us how much small businesses will benefit by?

[Mr Hammond]

I am grateful to my hon. Friend and his constituents for the advice; and, while we are at it, I wish him a happy birthday. The digital services tax aims to improve sustainability and fairness in the tax system. Separately, the Government have announced measures to support small retailers by cutting their business rates by one third for two years. Just to put that in a local context for my hon. Friend, there are 660 retail properties in Harborough local authority area with a rateable value of below £51,000, which means that there are 660 properties that could benefit.

Five-year Land Supply

Neil O'Brien Excerpts

Wednesday 4th July 2018 Westminster Hall

[Neil O'Brien (Harborough) (Con)]

I congratulate my hon. Friend the Member for South Suffolk (James Cartlidge) on securing this important debate and on his thoughtful speech.

Let me take a step back. Why is it that the centre of Government in the UK has felt the need over successive generations—from the planning by appeal of the 1980s, to the regional spatial strategies of the 1990s, to the five-year land supply—to have some vehicle to ensure that councils come up with local plans and that they deliver housing? Why is it that so many people oppose new housing in our country and so many councils oppose what developers come up with?

I think that there are two underlying reasons why people oppose so much new development. First, we build in the wrong places. Too much development is tacked on to the end of existing villages and towns, without the proper infrastructure—the new roads, parking spaces, GP surgeries and school places—that is necessary to support it. There is a terrible example of that in my own constituency on the Gartree Road, where the local Lib Dem-run council has decided to put in its own local plan a proposal for a large site on a road that is already congested, with the proposed houses being pushed right up against existing residents’ homes, when there is no need for that to be the case.

Secondly, there is no benefit or compensation for existing residents who are affected by new development. On Farndon Fields in my constituency, residents have to put up with construction traffic coming past their new homes, as well as dust and noise from the construction site, and there is no pay-off or compensation of any kind for them for putting up with all that.

How can we remedy these underlying reasons why so many of us oppose new development? The first thing we need to do is capture more of the benefits of development for the community. At the moment, only around a quarter of that huge uplift in value that we see when planning permission is granted is captured by the local community, with the overwhelming majority going to the lucky landowner and the developer. Other countries capture far more value from development for the community, which is then ploughed into decent landscaping, greater separation areas, more green space and better infrastructure for the community.

The second thing we need to do is give councils greater discretion over how they spend the revenues they get from the community infrastructure levy and section 106 agreements. Although we capture more value than we did 10 years ago, once we take out the amount that is spent on social and affordable housing, less money is actually being spent now in real terms than 10 years ago on landscaping, community infrastructure and all the things that benefit existing residents. Therefore, let us give councils more discretion over the way they spend those revenues.

Finally, let us make sure that councils have the powers—be it through compulsory purchase order, or through their ability to buy and control land—to do what local councils in other countries in Europe, the US and Asia already do: provide a lead role in assembling and preparing land for development. That is the norm in most of the rest of the world; the UK is unusual in not having that arrangement. That is why a UK council cannot control the speed with which a developer builds out.

In fact, in the UK the one thing that is not up for negotiation is the price paid to the landowner. Everything else can go hang. The amount of social contributions can be pushed down by the developer, and the speed of build-out can be extended over many, many years in order to keep the price up. The only thing that is fixed in our system is the price paid to the landowner. Let us turn the system around and have a more European-style approach to the matter.

As well as doing all those things, let us have a different approach to the way we go about development. In more rural or suburban areas, such as mine, I would love to see more development happening in stand-alone developments, so that we can provide infrastructure and a whole planned approach to a new community, rather than tacking things on and overloading all of our existing villages and towns. Let us build new communities where we will disturb fewer people.

[Alec Shelbrooke]

On that point, I share my hon. Friend’s view that when there is the demand to build such huge numbers of homes, there should be a stand-alone community. However, the phrase “stand-alone” must mean stand-alone, and not a community that is dumped in a place, such as the Parlington estate in my constituency, which would have a massive effect on the villages around it? Development needs to be stand-alone.

[Neil O'Brien]

My hon. Friend is absolutely right and we are lucky to have with us here today one of the Members for Milton Keynes, because Milton Keynes shows us what proper, planned development can do; it can create nice places that lots of people want to live in.

I would like to see more of the development in this country happening in our cities. Changes such as the development of the modern knowledge-based economy mean that our cities are both where support for new development is highest and where the demand for new development is highest. Let us try to build more in our cities. Let us help inner-city councils build more, by liberalising building up, by giving them devolved powers over public transport, and by giving them the powers to assemble land, in order to unlock fragmented brownfield sites, so that we can actually get more built in our cities. That is how we can have a new approach.

My hon. Friend the Member for South Suffolk is right to raise the issue of the five-year land supply. At the moment we have three tests on local councils: the requirement to have a local plan, the five-year land supply and the new delivery test that will be coming in over the coming year. Effectively, we have a belt and two braces. Of those three tests, the most opaque is the five-year land supply. It is extremely difficult for a council to know whether it has a five-year land supply, and it is extremely easy for developers to game that process and keep councils deliberately below the five-year land supply to stop them getting control over development in their area. It is the weakest of the three existing tests.

I end by agreeing strongly with my hon. Friend the Member for South Suffolk. He said, “It is perfectly reasonable to expect our councils to have a local plan, but how can we impose these tests on them without giving them the tools to control developers, development and where things happen?” The heartbreaking thing in many constituencies is where a council wants to do good development and build a real new community with proper infrastructure and a real heart, or the community has worked for two years to come up with a neighbourhood plan that works for the specific circumstances in that area, and developers come along, game the system and cut off at the knees our local elected representatives and the people who have worked hard to build neighbourhood plans. That is the killer in those situations. There is nothing more corrosive for public support for our current planning system than when we see councils that want to be brave and do good new development have their good plans cut off at the knees by developers gaming the system.

Banking Misconduct and the FCA

Neil O'Brien Excerpts

Thursday 10th May 2018 Commons Chamber

[Neil O’Brien (Harborough) (Con)]

I congratulate the hon. Member for East Lothian (Martin Whitfield) and the all-party group on fair business banking on securing the debate. I follow very powerful speeches by the right hon. Member for North Norfolk (Norman Lamb) and my hon. Friend the Member for Dumfries and Galloway (Mr Jack).

A constituent of mine, Mark Nicholson, had an experience with HSBC that raises exactly the issue as many of the RBS cases. He has been in dispute with that bank for eight long, stressful years. His business initially had a cash-flow problem, through no fault of his, and the bank turned his secured loan first into an overdraft and then offered him a nine-year loan. However, despite complying with every single condition, the promised nine-year loan was never forthcoming and he was instead put on a treadmill and offered a series of short, one-year loans at increasingly high interest rates, with increasingly high charges.

In 2014, the Financial Ombudsman Service ruled against HSBC, telling it to restructure the loan and to repay all the charges. Instead of complying with the spirit of the ruling, the bank seized on a lack of detail in it to offer my constituent an onerous loan. After a second ruling, he is still in dispute. The bank is refusing to share the details of how it has calculated the demands that it is making of him, and at the end of this month he faces a court hearing in which he could lose the house that he has lived in for nearly 30 years. It is exactly as my right hon. Friend the Member for Loughborough (Nicky Morgan) said of RBS: it is a case of the pursuit of profits through made-up fees, high interest rates and the attempt to acquire equity and property. I have written to John Flint, the chief executive of HSBC, to support my constituent in this matter, and I plead with him to think again about the way in which his bank is treating my constituent.

The theme of today’s debate is the other institutions that surround this important problem. Although the Financial Ombudsman Service has done good work and has helped some people, we must ask two questions: first, does it have the power and authority to make large financial institutions fear it and comply with its rulings? For my constituent and others, we can see that that is not the case. Secondly, does it have the technical capacity to cope with some of the more complex cases that it faces? Another constituent is involved in a technical insurance case, and the Financial Ombudsman Service has not been able to do what we need it to do, which is to level the playing field between large financial institutions with a lot of firepower and ordinary members of the public.

Let me quote some of the things that Channel 4’s “Dispatches” discovered when it did an undercover investigation into what was going on in the Financial Ombudsman Service. It talked to trainers and people working within the organisation. Here are some quotes from what it heard:

“Training was not adequate. We rushed through complicated financial issues and processes. I often didn’t know what I was doing.”

“I’m not proud to admit it but I’ve done it myself—just taken a chance and just slung stuff through, with any old decision.”

“For more complex cases, the right decision isn’t always reached. Legitimate claims are being missed.”

“even now I look at an investment case and I don’t know what to ask for.”

“Sometimes I’ve not even heard of the products. I have to Google what it is first.”

“11,000 cases fell into a black hole. Two years later we find out they’ve not been looked at and we had to work our way through them all.”

“Some post was two years old. There were cases saying I am going to lose my house.”

That is simply not good enough. We need to replace the FOS with something that is fit for purpose, because my constituent also faces losing his house.

It is worth noting that over the last eight years we have made a lot of progress on reforming the financial system. We have introduced measures to increase competition and to encourage challenger banks. We have seen the ring-fencing of retail banking from investment banking. We have replaced the failed tripartite system and ended “too big to fail”. We have higher capital requirements, the bank levy and the tougher claw-back regime. A lot has been done, but a lot more needs to be done. The next step now should be to replace the Financial Ombudsman Service, which could do more to help our constituents, with something that has proper expertise and the ability to make large financial institutions, which so often behave in a cruel, high-handed way, frightened of it and get justice for our constituents.