Oral Answers to Questions

Nick Smith Excerpts

Tuesday 11th March 2014 Commons Chamber

[Danny Alexander]

It is of course important that we make sure that people have more money in their pockets, and it is particularly important that that help is focused on those on lower earnings. That is why we have focused our attention on raising the income tax personal allowance. We have also, for example, frozen fuel duty and taken steps on energy bills. It is worth pointing out that increasing the personal allowance benefits 40p rate taxpayers by the same cash amount as basic rate taxpayers.

[Nick Smith (Blaenau Gwent) (Lab)]

T9. Eight hundred and twenty-five young people are desperately seeking work in Blaenau Gwent. This month, I will be asking local employers to sign up to offer work experience. Why does not the Chief Secretary listen and introduce a compulsory jobs guarantee to give these young people a chance?

[Danny Alexander]

I warmly welcome what the hon. Gentleman is doing to encourage employers in his constituency to offer work experience. The evidence of this Government’s work experience programme is that work experience is more effective than the future jobs fund and a great deal cheaper to deliver, so it is more cost-effective. He is on the right track in what he is doing in his constituency; his Front Benchers are on the wrong track.

National Infrastructure Plan

Nick Smith Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

I might have been able to give the right hon. Gentleman a page reference if he had asked a question about the national infrastructure plan. I think that expecting an answer from me about the voluminous range of papers on HS2 is a little bit too much, but I will make sure that he receives an answer from my friends at the Department for Transport.

[Nick Smith (Blaenau Gwent) (Lab)]

Will the Government consider bringing forward the electrification of the south Wales valleys line? That would make a big difference to boosting employment in a deprived area.

[Danny Alexander]

I agree with the hon. Gentleman about the importance of electrifying the south Wales valleys line. That is why the Government added it to the Network Rail plan; it was not there before. I will certainly look at the case for accelerating it, if possible. The structure of this country’s rail industry is such that Network Rail is given a regulatory set of obligations and has to work out for itself the most efficient way to deliver them, but I would be very happy to ask that question of Network Rail and to share any answers with the hon. Gentleman.

Multinational Companies and UK Corporation Tax

Nick Smith Excerpts

Thursday 27th June 2013 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

In the past 15 years, the world of e-commerce has become a fundamental part of our lives. It has shaped the way companies do business, how money is handled and many of our shopping habits, but it has also changed the nature of business on a global scale and therefore our ability to levy a fair level of taxation has fallen behind.

In my work with the Public Accounts Committee, I have seen the massive rewards for e-commerce leaders. As has been pointed out, Amazon alone made £4.3 billion of sales last year in the UK, yet by running its sales through Luxembourg it paid a meagre £2.4 million tax bill in 2012. That is less than one tenth of 1% of sales and that is just not good enough.

It would be remiss to ignore the thousands of jobs that such companies have created, but when our grants to those companies outpace the returns in tax, questions must be asked. In Wales alone, the Welsh Government have thrown millions at Amazon to bring it to Swansea. An £8.8 million regional selective assistance grant was given to bring the company into the city, while a £3 million link road entitled “Amazon way” finished construction late last year. So, we have a regional Government supporting regeneration and jobs, but the money from the Treasury used to fund that growth is not being recovered.

The Public Accounts Committee, of which I am a member, concluded that Her Majesty’s Revenue and Customs needs real teeth to be able to challenge the artificial nature of how businesses set up to avoid tax, as well as to be able to push against antiquated international tax laws. It is time for the Government to get a grip on tax avoidance.

E-commerce will increase as our appetite for doing our business online grows exponentially. Perhaps when he sums up, the Minister will reflect on examples such as the double benefit gained by Amazon thanks to the incentives it has received to set up in Wales and other places while we still suffer the loss of corporation tax revenue. I know the companies pay local rates and national insurance and have employees who pay tax too, but that does not excuse the times when they trouser our support and avoid corporation tax. Will the Government review the company support criteria in such cases? If companies like Amazon are not going to deliver, perhaps it is time that we all had a refund.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mr Gauke]

We did look at interest deductibility when we first came into office. However, in the corporate tax road map that we set out in 2010, we took the view that we were not going to change the rules fundamentally with regard to interest deductibility. What we have done, of course, is favour equity more by cutting corporation tax. My hon. Friend also raises wider issues about private equity and leverage that the Banking Commission is considering.

[Nick Smith (Blaenau Gwent) (Lab)]

18. What recent progress has been made on implementing the national infrastructure plan.

[The Chief Secretary to the Treasury (Danny Alexander)]

We have made significant progress in implementing the national infrastructure plan and published an update in December’s autumn statement alongside the latest version of the infrastructure pipeline. A further detailed delivery update on the top 40 infrastructure projects will be published alongside the Budget.

[Nick Smith]

Why did the Government cut infrastructure investment by £12.8 billion more than the plans they inherited?

[Danny Alexander]

The hon. Gentleman will know that in the 2010 spending review and the 2011 and 2012 autumn statements, we increased spending on infrastructure compared with the plans for capital spending that we inherited from the previous Government. Consequently, investment in infrastructure in this country is higher as a share of GDP over this Parliament than it was on average during the previous Government’s time in office.

Corporate Tax Avoidance

Nick Smith Excerpts

Monday 7th January 2013 Commons Chamber

[Ian Swales (Redcar) (LD)]

I beg to move,

That this House has considered the matter of corporate tax avoidance.

First, I thank the hon. Members from all parts of the House who supported my bid for a debate, and the Backbench Business Committee for scheduling it so quickly.

In October, the Government borrowed more than predicted, and the main reason given was lower than expected corporation tax receipts. In November, former City Minister Lord Myners said:

“Corporation tax for an MNC”—

a multinational company—

“operating in the UK is close to being a voluntary payment.”

In December, Eric Schmidt, chief executive officer of Google, said that he was proud that his company had avoided $2 billion of corporate income taxes worldwide in the last year. We have a crisis—a growing crisis of our national tax system operating in an international business environment. Lurid stories of tax avoidance appear almost every week, and Private Eye magazine deserves special mention for its exposure work. Vodafone, the Ritz hotel, bookmakers, water companies, care homes, professional services companies such as Accenture and CSC, and of course American behemoths including Apple, Google, Amazon, Microsoft, Facebook and Starbucks, are just a few of the examples. ActionAid says that 98 of the FTSE 100 companies have a subsidiary in a tax haven. The Government have fuelled the frenzy by doing private finance initiative and outsourcing deals with tax avoiders. We must also consider whether we can trust our media to report all this fairly, given that most of our national newspapers and their owners are themselves engaged in some form of tax avoidance.

Of course tax avoidance is not illegal, but that is why the Government must act. We are a long way from having fiscal union in Europe. Our tax systems are a cornerstone of sovereignty; they are resolutely national and I think they will remain so for as long as any of us are MPs. So when Amazon sat in front of the Public Accounts Committee recently and fielded many questions with the response that it ran a pan-European business from Luxembourg, it was not excusing itself, but vividly illustrating the problem. The French Government are already looking to levy huge extra tax payments from the company. It is totally unacceptable for EU legislation to be used to support national tax avoidance. Arguably some of that already contravenes the abuse concept in EU law, which deals with situations where a consequence was not intended when a law was made.

I was finance director of a billion-dollar global business in the mid-’90s. What has changed since then is the scale, complexity and aggression of the avoidance schemes. For example, we would never have set up legal entities in countries where we did not trade, solely to avoid tax.

[Nick Smith (Blaenau Gwent) (Lab)]

Sir Martin Sorrell has claimed that the tax that some companies pay is a matter “of judgment”. Avoidance such as that by Amazon, which the hon. Gentleman and I heard about at the Public Accounts Committee, has disadvantaged domestic businesses, which cannot relocate to lower tax regimes and shift their profits abroad. Does he agree that British businesses deserve a level playing field?

[Ian Swales]

I thank the hon. Gentleman for that intervention. I totally agree with him. The idea that large companies see their tax payments as voluntary, or as some kind of contribution they feel like making, is completely out of order. I will discuss the competition aspects later.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 11th December 2012 Commons Chamber

[Sajid Javid]

My hon. Friend has been an assiduous campaigner on this issue and I welcome the strength of his campaign. I am still reflecting and considering. I am aware that campaigners will come here tomorrow and intend to meet a couple from my own constituency.

[Nick Smith (Blaenau Gwent) (Lab)]

T10. Eleven jobseekers are chasing every vacancy in Blaenau Gwent. Does the Chancellor think that the Work programme will prove to be good value for money?

[Mr Osborne]

Yes, I do, and the CBI has welcomed it. I hope that the hon. Gentleman welcomes the fact that we have record employment in our country—a record number of women are working—and that youth unemployment has fallen recently as well.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr George Osborne]

I think we can do both; we can invest in local and regional transport networks. If my hon. Friend has specific schemes in Bedfordshire that she wants to bring to my attention or that of the Department for Transport, we will look at them very carefully, but that does not preclude us as country from taking the big infrastructure decisions—as we did with the M25 and as our predecessors did with the railways centuries ago—to invest in a railway system for the future. High-speed rail will connect the north to the south of England.

[Nick Smith (Blaenau Gwent) (Lab)]

Today, the Public Accounts Committee exposed very poor management of the Government’s regional growth fund. Can the Chancellor tell us how many extra jobs will be created by the national infrastructure plan which was announced last autumn?

[Mr Osborne]

I can write to the hon. Gentleman providing a specific jobs total for this year, but I can tell him now that the national infrastructure plan is already seeing the development of the trans-Pennine electrification, which we discussed earlier, the creation of 700 jobs in the north-east as we spend £600 million on new inter-city trains, and the huge Crossrail development across London, which, as I have seen, is employing many hundreds if not thousands of people. The plan is not just a plan for this year; it is also a plan for the future, and it shows that making difficult decisions about things such as welfare enables us to spend on things that will help the private sector to create jobs.

Bank of England (Appointment of Governor) Bill

Nick Smith Excerpts

Friday 6th July 2012 Commons Chamber

[Matthew Hancock]

It is to do with the appointment and dismissal of the Governor, and my argument is that the broad strategy of the Governor must be aligned with the broad economic strategy of the Government, and that this Bill could rend the two asunder.

What is currently happening in the eurozone serves as a definitive example of the problems that can arise when the views of Governments and of the leadership of a central bank diverge, and it shows what could happen if this Bill were to be enacted. The history is familiar to us all, so I will not go through it again in detail. Since the start of the sovereign debt crisis, the European Central Bank has injected euros and liquidity into the system, yet monetary policy in much of the eurozone remains very tight. That clearly harms some of the countries in the eurozone. There are tensions as a result of the relatively tight monetary policy and the need for some countries to tighten fiscal policy—there are no fiscal transfers between the members of that currency. That, compounded by weak banks, means that the monetary policy on the ground is even tighter. The lack of co-ordination between the ECB and the countries and Governments in the eurozone is highlighted on our television screens many nights of the week. Greek bond deals leapt more than 10 points to more than 100% when it was announced by the Government in November that there was to be a referendum on the bail-out package supported by the president of the ECB.

We have heard anecdotal evidence so far about the impact of a governor on financial markets and uncertainty. Adam Posen, who serves on the MPC, and Kenneth Kuttner wrote a paper in 2007 which found substantial academic evidence that the appointment of a central bank governor can have a direct impact on the markets, which my hon. Friend the Member for Spelthorne was speaking about. They concluded that

“financial markets tend to react to the appointment of a new central bank governor with larger-than-normal price changes, especially when a distinction is made between ‘newsworthy’ announcements…and those merely confirming an anticipated appointment.”

That is the problem that Members were talking about: uncertainty in the financial markets as a result of bank appointments becoming unclear and uncertain.

I want to take up the question of whether the Treasury Committee should have a veto. I said earlier that I am a member of the Standards and Privileges Committee, and I am also privileged to be on the Public Accounts Committee. That Committee’s power over the appointment of the Comptroller and Auditor General is, I think, similar to the power of veto that the Treasury Committee has over the OBR. The National Audit Office is obviously not Executive but merely a provider of sophisticated information about the Government and the wider world. That distinction between providing information in an independent way, separate from Government, and taking Executive action in the broad strategy set out by the Government is crucial.

As I come to a conclusion, I want briefly to consider the international evidence.

[Nick Smith (Blaenau Gwent) (Lab)]

I thank the hon. Gentleman for giving way. I know that he has been on his feet for close to an hour now, so he will not be aware that a Member from his own side, the hon. Member for Clacton (Mr Carswell), is saying on the Twittersphere that what is going on here is a Government ploy to talk out an attempt to make the Bank of England more democratically accountable. What does the hon. Member for West Suffolk (Matthew Hancock) say to that member of his own party?

[Jacob Rees-Mogg]

On a point of order, Mr Deputy Speaker. Is it really a proper proceeding if hon. Gentlemen do not come to the House to make their points but make them via Twitter? My hon. Friend the Member for Clacton (Mr Carswell) can come to this House and speak, rather than electronically communicating with us.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 24th April 2012 Commons Chamber

[Mr Osborne]

I am glad the hon. Gentleman reminds us that the previous Government bailed out the banks with no conditions attached, and we are having to pick up the mess. We want to help small business lending by using the Government’s balance sheet and the low interest rates we have earned with a credible deficit plan. We intend to increase competition in the high street: we sent Northern Rock back into the private sector with Virgin Money, a decision that was welcomed in the north-east of England, but opposed by the shadow Chancellor. We are taking the steps necessary, but yes, we are dealing with one enormous mess left to us by Labour.

[Nick Smith (Blaenau Gwent) (Lab)]

5. What assessment he has made of the effect on pensioners of the proposed changes to age-related income tax allowances.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

No one will pay more tax in 2013-14 than they do today as a result of the changes. There are no cash losers. The Government remain absolutely committed to supporting pensioners. We have introduced a triple guarantee for the basic state pension, ensuring that it will increase each and every year by the highest of earnings, prices or 2.5%. We have also protected other benefits that make a real difference to the lives of millions of pensioners.

[Nick Smith]

What does the Minister have to say to those who are turning 65 in just under a year’s time? They are set to be more than £25 a month worse off than they thought they would be, but they have no time to plan for that change.

[Mr Gauke]

Those who turn 65 next year will benefit from the biggest increase in the personal allowance that we have ever seen.

Finance (No. 4) Bill

Nick Smith Excerpts

Thursday 19th April 2012 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

I understand that age-related benefits were an idea put forward by Winston Churchill. Does my hon. Friend think that George Osborne knows better than Winston Churchill?

[Rachel Reeves]

Government Members would do well to look to Churchill rather than to their current leaders when deciding how to vote today.