Income tax (charge)

Nigel Evans Excerpts

Monday 16th March 2020 Commons Chamber

And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before we welcome Ed Argar back to the Dispatch Box, I would just like to point out that when the three Front-Bench speeches have finished, we will be immediately instituting a seven-minute limit on speeches.

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[Edward Argar]

The hon. Lady makes an important point, which is that throughout this challenge that we face as a country, we must ensure that everyone is treated with dignity and receives the care and support that they deserve. I was about to say that I know my right hon. Friend the Secretary of State will have heard what she said, but given he is in Cobra, he might not. I will ensure that he does. I will mention the matter to him, and in the context of the future tranches of guidance that will be coming forward in future days, the hon. Lady may want to raise the issue with him specifically later.

Modern buildings, more staff, an NHS that continues to truly serve its patients and a national response to coronavirus—that is what the Budget delivers. We can tackle this emergency while putting in place the long-term improvements that NHS clinicians are asking us for. We can fight the war against coronavirus as a united country, but we can also build the peace. We will stop at nothing to protect life and to protect and invest in our NHS. I commend the Budget to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

I point out that the statement on coronavirus will now be coming at 6 pm.

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[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

The seven-minute limit will not come in until after Peter Grant, but I know the next Member will bear in mind the fact that this debate is oversubscribed.

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[Peter Grant]

My hon. Friend makes a valid point. That is sometimes an indication of how important many of these businesses are in their local communities. Neighbours do not just see them as a business and they will support them. The difficulty is that, if neighbours, customers and clients lose their jobs and suddenly find that they have to get by on a wholly inadequate social security system, they will not be able to afford to put £4 or £5 over the bar in the local community-owned pub, whether or not they get a couple of pints in return.

I support many of these businesses as best I can—some of them are very co-operative, allowing me to hold advice surgeries on their premises—but if I do what a lot of colleagues are doing and begin to cancel surgeries, and if I do not go to the local coffee shop and sit for an hour or so talking to people, no one else will do that. By making that decision—I understand why people want me to make it—I might well be hastening the time when many of these valuable businesses can no longer continue. If they close temporarily now, some of them will not reopen.

It is not just cafés, catering and hospitality businesses—the same goes for locally owned hairdressers, bakers, craft shops, one or two-person printers and many other businesses. Independent retail businesses may be small individually, but cumulatively, they represent the financial wellbeing of a vast number of people on these islands, many of whom stand to lose not just their job and livelihood but the very home in which they live. For many of these establishments—I am thinking especially of small bed-and-breakfast businesses and guesthouses—their business is their house. Many others have mortgaged their house to finance the business. They stand to lose everything apart from the clothes they stand up in if things go wrong, and they will need help quickly.

I welcome the emergency measures that the Chancellor announced last week, but I do not think that they go far enough. I fear that a great many small and valued businesses in my constituency, and in all our constituencies, will close and never reopen. At the other end of the scale, we have heard severe warnings from some of the biggest and most iconic transport operators in the UK and elsewhere. British Airways, for example, has warned that its survival is not guaranteed if it gets it wrong.

This morning, my journey to Edinburgh airport was the quietest that I can remember in five years as an MP; I do not come down on the train all the time. The car park where I usually struggle to find a space was deserted—you could have played five-a-side football without bumping into a car. The flight on which I often struggle to get a seat was 30% full. That is not sustainable. What I prefer to do when it is realistic is come down on the train. If I had done that, I would have seen another drop in business, although I do not know whether it is as big. Train operators are struggling as well.

Hotel bookings in London and many other places have crashed. Comparing prices on hotel websites with what they were three or four weeks ago, I see they are a half or a quarter the price, or even less. Those businesses cannot survive that, and there are tens of thousands—perhaps hundreds of thousands—of jobs at stake. It is not about bailing out the billionaires who own those high-profile businesses. It is about protecting the rights of tens of thousands of workers whose livelihoods are on the line.

Despite the torrent of platitudes from the Government, and despite the welcome measures announced last week, many of those hundreds of thousands of people face being thrown on to the mercy of a social security system that was utterly unfit for purpose before this crisis, and will be even more unfit to deal with the challenges that it will face. While the changes that have been announced are welcome, we need a lot more, and we are going to need them an awful lot quicker.

Detailed spending plans for Government Departments are going to be published, but there are worrying indications that the Budget is stretching public finances to the absolute limit. Page 5 of the report from the Office for Budget Responsibility says that public sector debt is likely to increase by £125 billion in four years’ time. That is assuming 20% of the promised capital spend does not happen. We cannot rely on economic growth to make the debt less painful to repay in five or 10 years’ time than it would be now, because Brexit is going to slow our economic growth by at least 4%, even if we get a good deal. The OBR commented that

“Public finances are more vulnerable to adverse inflation and interest rate surprises than they were”.

It strikes me that the fundamental problem of the Blair-Brown Government was that, in effect, we had a Chancellor of the Exchequer who by instinct was a Keynesian but who tried to do Thatcherite economics, and it failed. Now we have a Government packed full of Thatcherites and they are having a wee shot at Keynesianism, and I do not think that will work either.

As my hon. Friends have highlighted, the OBR also warns us that its

“forecast assumes an orderly move to a new trading arrangement”,

first with the European Union and then with the rest of the world. Given that the minds of the UK Government and of all our current and potential trading partners are, quite understandably, fully occupied by covid-19 and will be until after the June 2020 deadline by which the Government say they need to have at least the basics of a trade agreement in place, surely the Government will now finally admit that enshrining the end of the transition period—December 2020—in law was an act of criminal recklessness. They might not have known what crisis was going to happen in the intervening period, but it did not take a genius to work out that something might go wrong.

Although the Government announcements on public spending have been welcomed in many quarters, and rightly so, if we look at the hard facts behind those announcements, we find that the long-term sustainability of our public services is, if anything, less secure after the Budget than it was before. That is not helped by an illogical and immoral approach to immigration, which will contribute to a 0.3% drop in GDP over four years. Ludicrously, that immigration, or rather anti-immigration, policy takes more money out of the public purse, because even the lower-paid migrant workers—the ones the current Secretary of State for Scotland was so shamefully contemptuous of last week, accusing them of coming here to work on low wages just to take advantage of our benefits and our services—pay three times as much in taxes as they take in benefits. So by deliberately stopping them coming here, by deliberately stopping them earning and paying their taxes, the UK Government are deliberately creating an additional black hole of £1 billion to £1.5 billion in our public finances.

Today, I heard the head of Scottish Care, who represents Scotland’s private sector care providers—and yes, I have issues relating to some of the private care providers in Scotland—say how moved he was by so many workers in the sector offering to move away from their families and become residents in care homes or hospitals for several weeks, just to make sure that the people they care for do not lose out if several members of staff have to phone in sick. They are the very workers whom the Government regard as burdens on our public services. As for the idea that hard-working, low-paid NHS workers should have to pay an extra flat-rate tax of £624 a head just for the privilege of continuing to work in our NHS, I cannot describe it in language that you would allow, Mr Deputy Speaker, because there is no parliamentary language robust enough to properly describe the sheer immorality of that proposal.

The Government will want to make a big noise about the new capital spending they announced—as I said, we will see when it actually happens—but we need to remember the very low baseline they are starting from. The National Education Union has pointed out that, in England, 3,731 schools need immediate repair and a further 9,972 will need significant work within two years at most, but the Treasury figures in the Red Book show that the Department for Education’s capital budget next year will be £100 million less than it is this year. How is that going to help? In contrast, the Scottish Government have replaced or substantially upgraded 928 schools since the Scottish National party came to power, and I am delighted that two thirds of all pupils attending secondary school in my constituency do so in schools that are less than seven years old. In Scotland, teacher numbers have increased for the fourth year in a row—[Interruption.] I hear muttering from the usual suspects on the Tory Benches. In Scotland, there are 7,485 teachers per 100,000 pupils; in England, the equivalent figure is 5,545.

I want to look at what the Government’s priorities appear to be. Working-age benefits are going up by 1.7%. If that was 1.7% on top of a similar increase every year for the past five or six years, it would not be too bad, but it is 1.7% on top of nothing for far too long. How can we defend a 1.7% increase in working-age benefits when MPs are getting 3%? I will not defend that to my constituents and I defy anyone in here to try to defend it to theirs. Perhaps one emergency step the Government need to take is temporarily to put Parliament back in charge of MPs’ pay rises and have this place unanimously agree that we are not taking a pay rise this year unless it is going to be at least matched by that for the lowest-paid workers in our society.

The new financial year starts in 16 days’ time. The Scottish Government, if they are lucky perhaps, have only just had confirmation of the full Barnett consequentials of this Budget—I am not convinced they have even got that yet. When we look at the potential impacts on the devolved finances of the covid-19 emergency, and we try to disentangle what additional funding is coming to the Scottish Government and what additional funding is not additional at all, as it has already been announced, it becomes quite difficult. I suggest to the Minister that this indicates that the current financial settlement—the fiscal settlement between the UK Government and the devolved Governments—needs to be completely revised, because it simply does not give the Scottish Government the flexibility they need to respond to this crisis in the same way as the UK Government need to be able to respond.

I saw a comment recently that pointed out that it is sad that it has taken a public emergency and a public crisis to force the Government to do some of the things they should have been doing previously. Even now, in responding to a public crisis, they have not acknowledged the tens of millions of private crises that have been going on in these islands in the past few years under this Administration. Far too many people are still living in poverty and that number will increase significantly as a result of the coronavirus crisis. It is essential that the Government look at their spending and taxation plans, initially to make sure that as many as possible of those whose domestic finances are severely disrupted by this crisis are back on their feet financially as soon as possible. The Government then have to acknowledge that we are starting from a position where far too many people on these islands are living in poverty or close to it, and that for that to happen in the fifth, sixth or seventh biggest economy in the world, depending who you believe, is utterly shameful. For any Government to be presiding over those levels of poverty 10 years after coming into office is something they cannot be proud about.

[Mr Deputy Speaker]

We now have a seven-minute limit.

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[Jack Dromey (Birmingham, Erdington) (Lab)]

A dark cloud is descending on our world, threatening the lives and livelihoods of millions of people across the globe. We have only to see what is happening in Italy to recognise just what could be coming to our own country. The health service, the police service and social care, already stretched by 10 years of austerity, are stretched even further. None the less, now is not the time to panic, nor is it the time to engage in politics as usual. There needs to be a unity of purpose across the House, particularly on two key objectives. The first is to protect our people, especially the elderly and vulnerable. The second is to minimise the impact on our economy, ensuring that, nationally and internationally, a global recession does not happen, and does not become a global depression.

Last week, the Chancellor said that manufacturing was going through a tough period. That may prove to be an understatement. We were facing a tough period before the advent of the virus. According to the Office for National Statistics, we started 2020 with a flatlining economy, and

“yet another decline in manufacturing, particularly the drinks, car and machinery industries.”

That is why Make UK, the old Engineering Employers’ Federation, rightly called on the Government yesterday to step in to limit coronavirus damage to prevent further drastic decline in manufacturing and large-scale job losses.

There were a series of positive messages in the Budget, which I welcomed—no doubt about it. Crucially, though, the Government need to do more during the next stages. It was welcome that the Budget included measures relating to the environmental transformation of the automotive industry, by which I mean the move to electric cars. For the next stage, it is important that we see further significant moves, of the kind that the Society of Motor Manufacturers and Traders has called for, on tax-free electric vehicles—£5,000 off VAT on vehicles alone—which would greatly boost the production and sale of electric vehicles. It was my own experience that led me to that view. During the global crash in 2008, when I was deputy general secretary of the old Transport and General Workers’ Union—we later became Unite—Tony Woodley and I were involved in negotiations with the then Labour Government on emergency measures, one of which was the scrappage scheme. As a consequence of that scheme, 400,000 cars were built. That avoided what could have been a catastrophe in the automotive industry. In the first six months of the scheme, notwithstanding what was happening in the global and domestic economy, we saw a 31% increase in the registration of new cars. Had it not been for that scrappage scheme, we would have seen the closure of those car plants.

With my right hon. Friend the Member for Wentworth and Dearne (John Healey), I was also involved in the negotiation of the Kickstart programme, which saw 115,000 homes built, some 110,000 jobs safeguarded and the saving of thousands of small and medium-sized businesses that would otherwise have gone to the wall. Those big measures were critical at the time. This Government need to think big going forward. Crucially, they need to bring together the voice of the world of work. The employers and the trade unions need to discuss the key next stage objectives especially, as the right hon. Member for Tunbridge Wells (Greg Clark) said in his excellent speech, in relation to short-term working. That has been called for by the SMMT, the aerospace, defence, security and space industries, Unite, the TUC, and the GMB.

I am talking about employers’ organisations and unions coming together to argue that such arrangements have the ability to protect the industrial capacity of British manufacturers. In particular, they pray in aid the German model, which was first used in 2008, significantly expanded and then followed by other countries such as Japan, Belgium, France, and Austria. That scheme created a fund to pay workers up to 60% of their foregone net wages if factory production were temporarily cut. The scheme allowed employers to cut production temporarily without cutting jobs, thereby maintaining vital capacity. It was credited by the OECD for saving 500,000 jobs in German industry. Back then, unemployment held at 7.5% in Germany—a rise of just 0.2%. The country therefore managed to preserve the capacity to undertake the rebuilding of the economy. Jobs were saved, pay continued, and experience and skills were retained.

That model is being used successfully in response to covid-19 in Denmark, where the Government have brought together unions and employers’ associations, and agreed a deal for affected industries whereby the state pays 75% of workers’ wages and employers pay 25%. Workers also give up five days of paid holiday, and in exchange there are no lay-offs. In the words of the Prime Minister of Denmark:

“If there’s a big drop in activity, and production is halted, we understand the need to send home employees. But we ask you: Don’t fire them”.

Only this afternoon, a major employer in my constituency that has invested massively in increasing its capacity—I cannot name the company—has said that it desperately needs short-term measures to preserve that capacity, if it is to be able to rebuild after the immediate challenges posed to the economy.

Although there are welcome measures in the Budget, the Government need to be more ambitious at the next stages and to work with the world of work. There is no question but that the threat posed is enormous and real, not only to life and limb, but to our economy and ability to recover. What we do now will determine whether we have recession or depression. The role of the Government, working with the world of work, is key to that process. I urge the Government to rise to that challenge.

[Mr Deputy Speaker (Mr Nigel Evans)]

There are three maiden speeches on the Government Benches, and the usual conventions apply. Although we can be flexible when the time limit hits zero, that limit is not elastic.