Tax Avoidance and Evasion

Oliver Dowden Excerpts

Tuesday 14th November 2017 Commons Chamber

[Mel Stride]

I am pleased that the right hon. Lady has raised this issue, because the robustness of this tax gap figure is extremely high. The International Monetary Fund says it sets one of the highest standards in the world. The figure is audited and agreed by the National Audit Office and is made public in HMRC’s annual report and accounts.

[Oliver Dowden (Hertsmere) (Con)]

The Minister rightly talks about the need for the wealthiest to pay their fair share. Does he agree that one of the most obscene things under the last Labour Government was the fact that cleaners were having to pay more tax than the hedge-fund owners who employed them? It was a Conservative Government who closed that so-called Mayfair loophole.

[Mel Stride]

My hon. Friend is entirely right. It is this Government, for example, who raised the personal allowance to £11,500, taking 3 million to 4 million of the lowest paid out of tax altogether. It is this Government who brought in the national living wage, and it is this Government who will go on ensuring that those who have the broadest shoulders pay their fair share of tax.

Budget Resolutions

Oliver Dowden Excerpts

Thursday 9th March 2017 Commons Chamber

[Sajid Javid]

One kept promise on which the hon. Lady could have focused is the creation of 2.7 million jobs in our economy since 2010. They call themselves the Labour party, Madam Deputy Speaker, but they could not care less.

[Oliver Dowden (Hertsmere) (Con)]

Does my right hon. Friend think that the £500 billion-worth of additional spending proposed by the Labour party would do anything to increase or reduce the deficit?

[Sajid Javid]

As always, my hon. Friend makes a good point. Conservative Members know that, if implemented, Labour’s plans would result in not only more spending but more debt. Labour Members would increase the deficit and return us to another Labour record-breaking recession if they ever had the chance.

Oral Answers to Questions

Oliver Dowden Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Hammond]

As we have made clear, the arrangements we have with the European Union, and with any of the organisations and funds the EU operates, remain to be discussed during the negotiation phase. If the hon. Gentleman is right and we end up not participating in such arrangements in the future, we will clearly have to make separate similar arrangements on a UK-only basis—or, indeed, on an individual nation within the UK basis.

[Oliver Dowden (Hertsmere) (Con)]

14. Does the Chancellor agree that alongside large-scale investment in infrastructure, such as the Thameslink upgrade, relatively small amounts of money on local roads and station facilities can rapidly improve journey times and therefore boost productivity?

[Mr Hammond]

I absolutely agree with my hon. Friend. It is often the smaller local projects that deliver the greatest benefit. They do not have the same kind of grandstanding possibilities around them and therefore are not always quite as favoured, but they are often the most effective way of intervening. They have another benefit: they can often be delivered very quickly by local levels of government, rather than having to go through many years of planning.

The Economy and Work

Oliver Dowden Excerpts

Thursday 26th May 2016 Commons Chamber

[John McDonnell]

I do not want to be discourteous to any Members, but as you suggest, Mr Deputy Speaker, I will take only a limited number of interventions.

On the crash, let us be clear—[Interruption.] Well, let us talk about the crash. The policy of deregulating the banking system, turning the City of London into a casino, was the policy pursued by the Conservative Government for the previous 30 years.

Let us move on to the criterion of growth. Growth has been revised downwards for every year for the rest of this decade, and when the OBR revised its forecasts downwards, the Chancellor’s entire Budget plan was shot to pieces. He has been left with a £4.8 billion black hole of committed spending, but there is no committed funding. It is nonsensical to claim, as the Government’s Queen’s Speech did, that the public finances are being placed on a “secure footing” when there are gaping holes in the Budget and the Institute for Fiscal Studies thinks there is only a 50:50 chance of meeting the Government’s own fiscal surplus target. This is betting the nation’s finances on the equivalent of tossing a coin. There is nothing responsible and there is nothing “secure” in setting unrealistic and politically motivated targets for public spending cuts.

It is useless to preach to us about the need for a “stronger economy” when, by his actions in office for six years, the Chancellor has methodically undermined the economy. This was his choice. Austerity was a political choice, not an economic necessity. We all now live and are still living with its consequences. Because it was the wrong choice to make, the Chancellor has failed, and it is the British people who are bearing the cost.

The Chancellor has piled failure upon failure, but at the centre of it all is the failure to sustain productivity. Productivity is the key to growth in any modern economy, and the surest way to achieve increased productivity is through increased investment. Increased investment means installing new equipment and replacing old infrastructure, yet business investment remains weak. When business investment is weak, the Government should step up to make sure vital, world-class infrastructure is provided—from high-speed rail to high-speed broadband. There is now consensus from the International Monetary Fund to the OECD, and from the CBI to the TUC, in urging Governments—not just in this country but across the world—about the need to invest in the future, but this Government are clinging to their fiscal surplus target, which is set actually to cut real-terms Government investment over the course of this Parliament. Mr Deputy Speaker, you could not imagine a more perverse and inadequate economic policy.

Behind the failure to invest lies the failure of our economic institutions. Too many of them have been captured by special interests or place short-term gain ahead of long-term growth. We have major corporations, which are sitting on a cash pile of up to £700 billion, paying out high salaries to senior executives while failing to invest. It is no wonder that in the past month we have seen a series of shareholders revolts against the remuneration packages of some chief executives.

We have a Business Department that does not actually believe in supporting business and refuses even to mention the words “industrial strategy”. In Her Majesty’s Revenue and Customs, we have a department for tax collection that does not believe in collecting taxes—not, at least, from major corporations. That was demonstrated by the fact that when it struck a deal with Google that reflected an effective tax rate in single digits, the Chancellor calls it a “major success”. I have written to the Chancellor to make sure he urgently contacts the French authorities, so that any information they find during their investigation into Google’s Paris headquarters is shared with us to give us a better understanding of Google’s operations in the UK.

[Oliver Dowden (Hertsmere) (Con)]

Will the hon. Gentleman tell us exactly how much money was raised from Google when Labour was last in power?

[John McDonnell]

It is interesting to note that the inquiry into Google was started under the Labour Government. It is also interesting that the last assessment that was made, not by us but by the Financial Times—an independent organisation—said that the measures introduced by that Labour Government would reap tax rewards 10 times greater than anything introduced by this Government. After six years, the Chancellor has no one to blame but himself.

The Queen’s Speech furnished us with plenty more unreal promises. The Government say that they

“will support aspiration and promote home ownership”.

Tell that to the hundreds of thousands of our young people who now have no serious chance of ever owning a home of their own. Home ownership has fallen to its lowest level in decades on this Chancellor’s watch. Rough sleeping has risen in London by 30% in the past year, the biggest rise since the current reporting procedures were introduced. Nearly 70,000 families are now living in temporary accommodation, including bed and breakfast accommodation. Nine in 10 under-35s on modest incomes could be frozen out of home ownership by 2025 according to independent analysis.

Energy BILL [ Lords ] (Fifth sitting)

Oliver Dowden Excerpts

Tuesday 2nd February 2016 Public Bill Committees

[Rishi Sunak (Richmond (Yorks)) (Con)]

rose—

[Oliver Dowden (Hertsmere) (Con)]

rose—

[Clive Lewis]

I will make some progress through the list before giving way. The Government are attempting to sell off the Green Investment Bank and have baled out of their manifesto commitment by cutting £1 billion from carbon capture and storage. The list goes on. The early closure of the renewables obligations is the next chapter in the long, sorry list that I have just read out.

[Oliver Dowden]

The hon. Gentleman missed out a few things from his list—for example, the fact that 98% of solar panels were introduced under this Government; or that wind power, which has trebled under this Government, is set to increase by another 50%; or that we are on course to meet our 30% renewables target; or that we have doubled investment in renewables. Perhaps the next time he reads out his list he can add those further points to provide some balance.

[Clive Lewis]

I will come back to that point. Let us have a look at the renewable energy country attractiveness index, which saw a major reshuffling of the 10 most attractive countries for renewable energy potential and growth. One of the biggest losers was the United Kingdom, which dropped out of the top 10 for the first time since the information was published back in 20013. It was specifically because

“a wave of policy announcements reducing or removing various forms of support for renewable energy projects has left investors and consumers baffled”.

--- Later in debate ---

[Clive Lewis]

I will come back to that. I am informed that it relates to climate change commitments, not the renewables that this Government and the previous coalition Government have invested in, or as my list just demonstrated, have been cutting left, right and centre. But let me give you a counter-quote from Neil Woodford, head of Equity Income, one of the best performing funds. In December 2014, he said:

“The electricity industry has for too long been the victim of a misguided, short-term and politically inspired policy mess. The Government has to be held to account for its policy decisions. As long as it (and its predecessors) believes that it can arbitrarily move goal posts in this way, without appropriate economic justification, the more likely it will be that the industry will continue to shun the necessary investment in electricity generation infrastructure that the economy so clearly needs.”

[Oliver Dowden]

Will the hon. Gentleman give way?

[Clive Lewis]

I will push on. I have a few more of those chocolate sweets I might give away. If successful, the Government will be going back on their own legislation and closing the renewables obligation for onshore wind a year earlier on 1 April 2016, a date that will not be lost on any hon. Members here. If successful, the Government will have adversely singled out the most cost-effective, low-carbon technology available to us, at a time when the Secretary of State herself admits that the UK is on track to miss its legally blinding EU obligation on renewable energy by an estimated 50 TWh hours, a shortfall of almost 25%.

The Government’s answer is ever more reliance on the EU emissions trading scheme—a scheme, as we have already heard while discussing clause 80, we need less reliance on in coming years, if we are to attain the most cost-effective pathway to our carbon budget commitments. So why is there an almost obsessive compulsion to attack one of the country’s most successful renewable forms of energy?

The only answer I can glean from the debate so far is that it boils down to a few ambiguous lines in the Tory party manifesto which it is fair to question. It says:

“We will end any new public subsidy for onshore wind.”

First, these are not public subsidies. Strictly speaking, the payments come out of bills, not the public purse. While the word “new” is also open to a broad interpretation, let us not forget that this is an existing, not a new subsidy—a subsidy that was already closing as part of the Energy Act 2013.

The Minister will also be aware of the huge amount of consensus and engagement with industry, proper consultation and pre-legislative scrutiny, that arrived at the 2017 wind-up day for the renewables obligation.

--- Later in debate ---

[Clive Lewis]

I will come to the point about the cost to billpayers later in my speech. Even with the retrospective grace period the Government have announced, many renewables companies will be adversely affected. Michael Rieley, senior policy manager for Scottish Renewables, said:

“However, many of our members will be bitterly disappointed that ministers are not going to allow projects which have submitted planning applications to be given a grace period.”

More importantly, as I have mentioned already, this retrospective chop-and-change approach by Government is damaging investor confidence in the wider energy sector.

[Oliver Dowden]

Will the hon. Gentleman give way to another East Anglian MP? [Interruption.] I do not agree with the designation but people at a higher pay grade have determined that.

[Clive Lewis]

I will give way.

[Oliver Dowden]

The hon. Gentleman talks about the poor investment record, and says that companies are being put off investment. Can he confirm that nearly £52 billion has been invested in renewables since 2010 when the Conservatives first came to power?

--- Later in debate ---

[Jonathan Reynolds]

It is a pleasure, Mr Bailey, to be on the Committee. I had not intended to make a speech about the group of amendments but, as ever, Government Members’ contributions have led me to get to my feet. Many of their arguments have not been robust enough; many of the positions advanced have, quite frankly, been flawed and deserve further attention.

My starting point is that anyone considering the needs of our energy system right now has to admit that the most pressing priority is to ensure that our credentials for investability are maintained and strengthened. Our energy system requires billions and billions of pounds of investment, partly because so much of our generating capacity is going off line in the next few years, at the end of its natural life; partly because the capacity market has not worked as well as was hoped in incentivising new gas; partly because Hinkley C is in as much trouble as it was always going to be—we do not know whether it will ever be there when we need it—and also because we need to take coal out of the system, as a clear priority shared by all political parties. The need, therefore, to ensure that our energy structure is an attractive jurisdiction in which to invest must absolutely be maintained.

Much of the argument that has been advanced has been about the changes to onshore wind being clearly signposted in the Tory manifesto—indeed, demanded by the windy caucus, which is a wonderful new term to add to our political discourse. I do not dispute that; ideological opposition to onshore wind has been a part of the modern Conservative party for some time. I do not disagree with the legitimacy of the move any more than I disagree with the legitimacy of all the other bad things the Conservative Government are doing to the UK, but my point is that there is surely a duty on the Government to ensure that the decision is taken in such a way as not to damage the UK’s overall credentials as a jurisdiction in which to invest.

[Oliver Dowden]

The hon. Gentleman says that he accepts the legitimacy of the Government’s pursuing the measure, given that it was in the Conservative manifesto. Does he therefore accept the illegitimacy of Members of the House of Lords—Labour and Liberal Democrat Members who lost the general election—seeking to remove the provisions from the Bill, against the will of the electorate, as expressed less than a year ago?

[Jonathan Reynolds]

The hon. Gentleman essentially asks whether I agree with the illegitimacy of parliamentary democracy, and I have to tell him that I am afraid I do not.

[Oliver Dowden]

Does the hon. Gentleman not accept the Salisbury convention, which is that if something is contained in a party’s manifesto and that party wins a majority, the other place should respect the will of the elected Chamber?

[Jonathan Reynolds]

That is not what I believe has happened; indeed, a small section of my comments will address that. I believe that two positions are advanced in the Conservative manifesto and the Bill: one is that the RO should close early for onshore wind and the other is that local communities should have the final say in the projects. When I get on to that section I will tell the hon. Gentleman why I believe that those two objectives are in competition and have led to contradictions in the Bill.

Our electricity system figures for the past 24 hours show that wind has contributed something like 14% of our overall electricity need, which is just 1% less than our traditional coal-generating capacity. The issue is not, therefore, insignificant. It is hugely important; right now, wind is keeping the lights on.

Small Businesses: Tax Reporting

Oliver Dowden Excerpts

Monday 25th January 2016 Westminster Hall

[Oliver Dowden (Hertsmere) (Con)]

I beg to move,

That this House has considered e-petition 115895 relating to tax reporting for small businesses and the self-employed.

Members may be aware that it was announced less than two hours ago that, sadly, my predecessor but one as the Member for Hertsmere, Lord Parkinson—Cecil Parkinson—has died aged 84 after a long battle with cancer. He was a towering figure nationally, playing a central role in the great reforming Thatcher Governments of the 1980s, but he was also a brilliant local MP. He served Hertsmere from the constituency’s creation until 1992. Time and again, local residents would recall him with tremendous warmth and fondness—something I experienced myself after I was selected as the candidate in 2014. My thoughts and prayers are with his wife, Ann, and the rest of their family. [Hon. Members: “Hear, hear.]

I thank you, Mr Davies, for chairing the debate, which I am introducing on behalf of the Petitions Committee, of which I am a member. I declare that I am an adviser to IPSE, the Association of Independent Professionals and the Self-Employed—details are in the Register of Members’ Financial Interests.

The petition calls on the Government to

“Scrap plans forcing self employed & small business to do 4 tax returns yearly”.

As of this morning, it had attracted 110,000 signatures.

As we all know from our constituencies, small businesses are the backbone of our local economies, employing thousands of people and generating wealth and prosperity for our communities. That was demonstrated to me last week when I had the pleasure of speaking to more than 50 small businessmen and women in Borehamwood. Their businesses ranged from financial services, through recruitment and solicitors, to digital markets. They were hard-working people from Bushey, Radlett and Potters Bar—I am sure Members have similar places in their constituency—and they all demonstrate tremendous energy and creativity. They are willing to put their careers and income on the line to build thriving businesses, and the national statistics bear that out.

According to the latest figures from the Federation of Small Businesses, small business accounts for 99% of all private sector business, with total employment of more than 15 million—more than 60% of all private sector employment in the UK—and turnover of almost £2 trillion. There is therefore understandable concern about any measures the Government might introduce that could distract small businesspeople from their already extremely demanding day-to-day work with additional new regulations or costs.

The wording of the petition and related press coverage reflect the worry that measures outlined in last year’s autumn statement might require small businesses to complete four tax returns annually. Understandably, given the time, effort and almost inevitable cost of employing an accountant to do the job, that is a cause for great concern.

I note from the Government’s response to the petition that they propose quarterly updates rather than full returns. Will the Minister, when he responds to the debate, expand on that point and put on the record unambiguously that the Government’s proposals do not amount to quarterly tax returns?

[Mrs Maria Miller (Basingstoke) (Con)]

I welcome the debate and the Minister’s commitment to modernising the tax system—that is important to my constituents. Does my hon. Friend agree that the Government could get rid of some of the concerns being expressed by our constituents were they to make the guiding principle of any change in the reporting of tax that it should reduce administration and red tape for business?

[Oliver Dowden]

I completely agree with the sentiments expressed by my right hon. Friend. I will come on to that point shortly—

[Caroline Lucas (Brighton, Pavilion) (Green)]

Will the hon. Gentleman give way?

[Oliver Dowden]

If the hon. Lady will give me one moment, I will finish answering the previous intervention.

When we seek to change the taxation of small businesses, it is vital that we should do so in a way that reduces the net impact on business.

[Caroline Lucas]

I thank the hon. Gentleman for giving way and I congratulate him on securing the debate. On the burden on small businesses, does he agree that there appears to be no evidence that all small businesses or self-employed people already keep track of their affairs digitally? Will the Minister tell us what his evidence base is for asserting that any change to the requirements will not be cumbersome for them? The assumption is that they are already keeping track of things digitally, but many constituents tell me that they are not. Therefore, the change will be a burden.

[Oliver Dowden]

I will come on to such points, but full consultation on any measures is important to inform exactly the situation faced by small businesses. The Chair of the Treasury Committee, my right hon. Friend the Member for Chichester (Mr Tyrie), has pointed out the specific problem of those without access to computers and IT altogether.

[Sammy Wilson (East Antrim) (DUP)]

Is the hon. Gentleman concerned about that point? In parts of my constituency especially, many small businesses do not have access to the internet at all, because the speeds are so low. To expect those businesses to exchange all that data with Her Majesty’s Revenue and Customs quarterly is unrealistic.

[Oliver Dowden]

There is an issue, but the Government have said in their response to the petition that they will consider it. I hope for clarification on the question of the speed of broadband connection—businesses in my and many other constituencies rely on fast broadband, so for it not to be in place makes things difficult—and on the broader point about ensuring that small businesspeople who fill out tax returns have sufficient skills to do so. I also hope for reassurance from the Minister about a training programme and other online resources to enable small businesses to have those skills.

Despite what the Government have said in their response to the petition, the proposals announced in the autumn statement raise a number of issues, some of which have already been mentioned in the debate. I, too, will address such matters before other Members have the opportunity to examine them in more detail.

The Petitions Committee recently undertook a public consultation via Twitter, and I thank the Clerks for their hard work, which made it possible. Unbelievably, in 24 hours we received 1,285 tweets from 565 contributors, all of which can be seen by searching #HOCpetitions. The responses reflect concerns also expressed to me by the Federation of Small Businesses. I will briefly address some of those concerns.

The proposed measures, as I understand the situation, form part of the Government’s “Making tax digital” proposals, which most people agree is the right direction of travel. An end to bureaucratic form filling and associated unnecessary complications, and full access to digital accounts, all of which are promised in “Making tax digital”, would certainly be welcome. I commend the Government for their commitment to that agenda.

As we all know, however, the path to new Government initiatives, in particular those involving new IT, rarely runs smoothly, and we only have to think back to the introduction of tax credits or to the Rural Payments Agency under the previous Government for the evidence. I therefore urge the Minister to proceed with caution.

I note from the Government response to the petition that there will be consultation throughout 2016 and voluntary introduction before full phasing in by 2020. Many people are concerned that users should be fully consulted and systems properly tested before full roll-out. Furthermore, the system should be properly secure.

[Mr Alan Mak (Havant) (Con)]

I thank my hon. Friend for securing the debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interests: I am the founder of two small businesses. He rightly said that the Government should ensure positive digital competency in respect of businesses being asked to participate in the scheme, but is he also aware that more than 99% of VAT returns are filed online? A high percentage of HMRC documents are already filed online, which should give the Government great confidence when they roll out the reforms.

[Oliver Dowden]

That is an important point. While there are questions to raise, it is important not to get carried away. The overall direction of Government travel is towards having a digital system for tax returns, and I hope that Members agree that that is the right thing to do. The questions are about the speed and pace of roll-out and appropriate consultation.

The difference between VAT and what is contemplated here is that VAT returns have a threshold, so the very smallest businesses do not fill them out, but they will do so in this case. That is an argument for caution. Another concern raised by petitioners is the nature and financial cost of digital reporting. It would therefore be helpful if the Government gave greater clarity on the scale, cost and nature of the information to be provided. Estimates suggest that businesses already pay on average £3,600 a year to ensure that they are compliant with their tax and regulatory obligations and we, as a Government, must take away from that, not add to it. Surely, that is the measure of any successful tax reform. It is therefore vital that the net effect of the measure is to reduce, not add to, that regulatory burden.

[Rachael Maskell (York Central) (Lab/Co-op)]

Is it not right that, before the Government proceed any further with their proposals, they make a full analysis of not only the financial cost and burden they will put on small businesses, but the cost in time and infrastructure?

[Oliver Dowden]

I hope that all that will be considered in the consultation that the Government have committed to undertake.

[James Cleverly (Braintree) (Con)]

Much of the correspondence I have received on this from small businesses and those who write about small business is based on what seems to be a misunderstanding, but concern may go a long way to either hampering or aiding implementation. Do not the Government need to give almost as much thought to the communication about implementation as to the implementation itself to give small businesses confidence that they have thought through the regulatory burden that this requirement might be perceived to bring?

[Oliver Dowden]

My hon. Friend makes an important point. As I alluded to earlier, a lot of press coverage has suggested that this requirement amounts to quarterly tax returns. Whatever reservations we may have, it is pretty clear that it does not amount to that. I would welcome the Minister’s explicit assurance about that.

Another concern raised by petitioners was that they would not have the software or skills to produce the required information. I would welcome a commitment to proper availability of information, software and, where necessary, training for small businesses. We all know the difficulties of getting in contact with HMRC by telephone, so I ask the Government to look at ways to ensure that such information is readily and easily available.

[Fiona Mactaggart (Slough) (Lab)]

I am struck that among those who are self-employed, the greatest growth has been in the over-50s. About a year ago, Saga produced a report that said that they were something like 25% of the growth, but it did not point out that those people are overwhelmingly women who have built a microbusiness and many of them do not have the skills to follow up on such requirements. Indeed, earlier this morning, I was talking to a self-employed woman—a physical trainer—in her 30s who said, “What? Do we have to do this every time? I can’t possibly afford an accountant. My business isn’t big enough to do that.” Many women do not have the skills needed to do that effectively, so will the hon. Gentleman press the Minister to ensure that they get the training that they need?

--- Later in debate ---

[Oliver Dowden]

The right hon. Lady makes an important point about the contribution of women to the economy. One of the Government’s great success stories is the rise in female labour participation. Many of those women are involved in small businesses or are self-employed. I hope that the consultation considers all those points carefully and looks at the impact on women who seek to enter the labour market through that route as well as those who have been in the labour market for a long time. As I said, I do not disagree with the direction of the Government’s reforms, but it is important that the consultation addresses those matters properly.

The Treasury Committee raised specific issues about how businesses that do not use computers will be able to adapt. It would be good to have more detail on that.

In conclusion, it is welcome that the Government are committed to digitising our tax service, as that should reduce costs and administrative burdens for business, but I look forward to the debate providing an opportunity to address and allay concerns that, in the process of introducing a digital tax system, the Government do not add to the burdens on business. As I said at the beginning of my remarks, small businesses are the lifeblood of our national economy, and I hope that these measures will aid the circulation of that blood rather than clog arteries.

--- Later in debate ---

[Oliver Dowden]

Thank you for your chairmanship, Mr Hanson. I will wind up very briefly indeed. I was reminded by Scottish Members that it is Burns night, so I shall not detain people for much longer at all.

I thank all hon. Members for their contributions. We have particularly benefited from the experience of those who are involved in small business, including my hon. Friends the Members for South Ribble (Seema Kennedy), for Morecambe and Lunesdale (David Morris) and for High Peak (Andrew Bingham). I was particularly struck by what was said by the hon. Member for Hove (Peter Kyle), who gave such a passionate defence of entrepreneurship. I think he managed to convince the hon. Member for Nottingham East (Chris Leslie), but I wish him good luck with the wider leadership of the Labour party; we will see how he gets on with that. I also thank the hon. Member for East Antrim (Sammy Wilson) for his very passionate speech.

Finally, I thank the Minister for his response. I had the pleasure of hearing him speak in the House this afternoon about Google’s tax affairs. He rushed straight to this debate and has distinguished himself in both. I am grateful to him for his explicit reassurance that the plans do not amount to quarterly tax returns, for his commitment to further consultation and for the fact that the Government are listening. Certainly, from my perspective, I will scrutinise the plans carefully as they continue to be rolled out, and I am sure that all Members will do so. We agree with the overall direction, but we are very keen to make sure that this is implemented properly.

Question put and agreed to.

Resolved,

That this House has considered e-petition 115895 relating to tax reporting for small businesses and the self-employed.

Welfare Reform and Work Bill

Oliver Dowden Excerpts

Tuesday 27th October 2015 Commons Chamber

[Owen Smith]

Let me be clear: tax credits are a success. They have kept people in work in this country, and we have seen a shift in the volume of single parents in work.

[Oliver Dowden (Hertsmere) (Con)]

Will the hon. Gentleman give way?

[Owen Smith]

I will in a moment.

In 1997 about 43% of single parents were in work in this country, and today it is 65%. The reason for that is tax credits. Tax credits have made it possible for thousands of constituents in my patch—and in the constituencies of all Members—to stay in work despite the decline in wages.

--- Later in debate ---

[Owen Smith]

I fear that may be correct, and Government’s lack of forethought, analysis and scrutiny on these measures, and the way they have tried to bowl them through both Houses in double quick time, is a measure of their fear that such analysis will reveal the fundamentally misconceived economics behind these cuts, which are unfortunately designed to make an ideological political point.

[Oliver Dowden]

The hon. Gentleman talks endlessly about the success of tax credits. Will he explain why spending on tax credits under the previous Labour Government rose from £6 billion to £30 billion, while at the same time in-work poverty rose by 20%? Why does he think that happened, if tax credits have been such a great success?

[Owen Smith]

The hon. Gentleman should start by explaining to the 3,700 constituents in his constituency who will lose out as a result of the measures for which he will no doubt vote and speak today—[Interruption.] I will answer the specific question he asks. The truth is that under the previous Labour Government, when this iteration of tax credits was introduced, the steady state amount of money we spent on tax credits was £23 billion per annum. In 2009-10, after the crisis, that went up to £30 billion. The bankers’ recession saw a spike in the necessary spending on tax credits, and it has stayed at £30 billion under his Government—another measure of this Government’s rotten economic record.

--- Later in debate ---

[Owen Smith]

Of course they should. If they had any guts they would do precisely that. There has been an abject failure on housing benefit. The bill has gone up and up and up. If the Bill is passed—I sincerely hope it does not pass after yesterday evening’s decision—housing benefit spending will go up some more. We know the Government have failed on that and they will continue to fail in the future.

Let us look, for a moment—

[Oliver Dowden]

Will the hon. Gentleman give way?

[Owen Smith]

I have given way once. I will move on and give way again in a moment.

--- Later in debate ---

[Owen Smith]

I will not—I have already given way a lot—but I will quote to Conservative Members some of their own people, who have recognised how mistaken this policy is. Let us take Lord Lawson, for example—hardly a bleeding-heart liberal, and someone I remember standing next to Mrs Thatcher during those dog days for my part of the world when the pits closed in south Wales. Lord Lawson referred in the other place yesterday to

“the great harm, or a great deal of the harm”,

being done “at the lowest end”. He continued:

“That is what needs to be looked at again; that is what concerns me.”

He said that the Chancellor would, of course,

“listen to this debate, but it is not just listening that is required. Change is required.”—[Official Report, House of Lords, 26 October 2015; Vol. 765, c. 1005.]

Let me also cite the hon. Member for South Cambridgeshire (Heidi Allen), who I thought spoke brilliantly, eloquently and forcefully last week. I shall quote just one part of her speech. She said:

“To pull ourselves out of debt, we should not be forcing those working families into it.”—[Official Report, 20 October 2015; Vol. 600, c. 876.]

We should not be forcing working families into debt to deal with the debt that the country has been left by the bankers’ recession and the failure of the Tory Government to fix it.

[Oliver Dowden]

The hon. Gentleman has still not answered a very simple question. If this measure saves more than £4 billion, how will the Labour party find that money? Will it cut spending on other measures such as health and education, will it increase taxes, or will it increase borrowing? There are only three options. Which one will the hon. Gentleman choose?

[Owen Smith]

I repeat that the hon. Gentleman should really answer the question asked by the 3,700 people in his constituency who will lose out if he votes with the Government today.

--- Later in debate ---

[Madam Deputy Speaker]

You see! Why can’t people just stand up? It is not difficult. Schoolchildren do it. Just stand up when you want to speak! I can now see a significant number of people wishing to speak. I cannot impose a time limit at this stage in the proceedings, but we have less than half an hour left in this debate, so I appeal for brevity: perhaps three or four minutes.

[Oliver Dowden]

I shall speak briefly against new clause 1. We as a nation need to be clear about the scale of the challenge that we face. The budget deficit has been halved, but it is still enormous and we are spending far more than we earn. Against that backdrop, the increase in welfare spending is an important element that must be addressed. The amount of spending on tax credits has risen from £6 billion when Gordon Brown first introduced them to £30 billion now. That money is being borrowed in order to pay for welfare. I do not think that borrowing money to pay for welfare expenditure is a sensible idea.

[Catherine West (Hornsey and Wood Green) (Lab)]

Let us look at the totality of welfare spending as though it were a cake. Is it not the case that the failure of the Government over the past five years to address the high cost of housing or to bring down the housing benefit bill is the key to solving your problem?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. It is not my problem. It is somebody else’s problem.

[Oliver Dowden]

We need to be clear about the problems with tax credits. Let me offer the House three facts. The first is that, under the last Labour Government, 1.4 million people remained on out-of-work benefits for almost the entire period. Secondly, the number of workless households doubled, and thirdly, the level of in-work poverty rose by 20%. So there has been a massive increase in expenditure on welfare and on tax credits, but it is not delivering the reduction in poverty that we all desire.

[Neil Coyle]

Does the hon. Gentleman not agree that tax credits have played a role in tackling in-work poverty?

[Oliver Dowden]

This is precisely the point that I would like to get on to. Despite the increased expenditure on tax credits, we continue to see these dreadful statistics on poverty, and that is because this is a flawed model that is based on taxing people on the minimum wage who can barely afford to pay tax, recycling that revenue through the welfare system and using it to top up low pay. That is not a sensible way to proceed.

[Ian Blackford]

rose—

[Oliver Dowden]

I will give way once more, but I am aware of Madam Deputy Speaker’s injunction.

[Ian Blackford]

We understand, from survey after survey, that millions of people in this country are going to be worse off as a result of these measures. What is the hon. Gentleman going to say to his constituents who come to him after next April having lost on average £1,300 of their income?

[Oliver Dowden]

I would say to those people that this Government have a clear and coherent plan for helping people on the lowest incomes that consists of three elements. The first is to increase the amount of money people can earn without paying any tax; by the end of this Parliament that will be increased to £12,500. That is lifting people working 35 hours a week on the minimum wage out of tax entirely. Secondly, we are introducing a national living wage which by the end of this Parliament will increase wages to £9 an hour. Thirdly, we are introducing a number of other measures such as free childcare which will help those in most need of it. That is a far better model—to move from a low-wage economy with high tax and high welfare to a higher wage, lower welfare and lower tax model.

Tax Credits

Oliver Dowden Excerpts

Tuesday 20th October 2015 Commons Chamber

[Ian Blackford]

Absolutely. I hope that we will go on and have a robust debate about productivity in this country and about skills and innovation, because driving investment into the economy will drive wages up and negate the need for tax credits. None of us has a fundamental desire to see the long-term existence of tax credits, but they can only be removed when wages are driven up. What we cannot do is what the Government are doing and cut tax credits ahead of increases in wages.

[Oliver Dowden (Hertsmere) (Con)]

rose—

[Ian Blackford]

I am going to make some progress, because I am aware of the time.

One has to ask about the moral compass of a Government who want to increase the inheritance tax threshold while the poorest in our society are being squeezed to such an extent. One nation, they tell us, but whose nation is that? It is not a country in which we want to live. Perhaps from an economic point of view we need to ask where the logic is in this policy. We are told that it is about getting the deficit down, but taking cash out of the pockets of the poorest means taking cash out of the economy and depressing economic activity. Those on low incomes tend to spend what money they have. This provision does not fix the deficit; it takes spending—[Interruption.] That is patronising? I will tell Government Members who is being patronised, and that is poor people in this country.

Let us make it clear, as we did during the election in Scotland, that we want to get the deficit down but that this is not the way to do it—[Hon. Members: “How?”] Members ask how we will do that, and I am happy to give them an answer since they have given me the opportunity. I remind them that we won the election in Scotland, with 56 MPs returned for the SNP, and we had a progressive message that we delivered to the people of Scotland of investing in our country by increasing spending by a modest 0.5% per annum that would have delivered additional spending in the UK of £140 billion and would have reduced the deficit to 2% of national income by the end of the decade. That is a much more responsible way to deal with the future of our country.

There is a philosophical question of whether effective support through tax credits for employers paying low wages excuses those employers from paying a real living wage that offers dignity for work. I would argue that we all want to reach a situation in which work pays, to the extent that those in work have a decent standard of living. The SNP has been championing a real living wage as a response to dealing with poverty and that would mean that hard-working families would become financially sustainable, driving up tax revenues, reducing the deficit, enhancing economic activity and, ultimately, leading to an enhanced fiscal position. The desire to make work pay, which the SNP fully supports through the idea of the living wage—the real living wage, not the Tory construct—has to go hand in hand with an environment that encourages productivity, but we know that that has not happened for the past eight years, with productivity flatlining and even the OBR’s forecast for the next four years showing only limited recovery in productivity. We cannot have sustained growth in wages unless we have growth in productivity.

[Oliver Dowden]

Will the hon. Gentleman give way?

[Ian Blackford]

No, I am going to make some progress.

We need a national debate about how we can strengthen and drive sustainable economic growth, driving up living standards and making work pay. We can only reach a high wage economy with investment in skills, innovation and business. That is not happening, and its absence is why we need the safety net of tax credits. That is why the Government must reconsider what they have voted through.

The Resolution Foundation has shown that the so-called living wage will boost wages by £4.5 billion by 2020, nowhere near the impact of the £13 billion of cuts to various working age benefits. It cannot be acceptable that working people pay such a price. We need to cut inequality, not drive it, which is what the Government are doing.

Let us come back to the example of the family losing £1,525 of their income next year. What will the Government say to such families when they are faced with difficult choices? Family budgets are already tight and something has to give.

Charter for Budget Responsibility

Oliver Dowden Excerpts

Wednesday 14th October 2015 Commons Chamber

[James Cleverly]

Will the hon. Gentleman give way?

[Oliver Dowden (Hertsmere) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

I will in due course.

It is increasingly clear that the charter and the fiscal mandate are not economic instruments, but political weapons. This is not an economic debate. It is about the politics of dismantling the welfare state, the closing down of the role of the state, and the redistribution of wealth from the majority to the minority. Austerity is not an economic necessity; it is a political choice.

European Union (Finance) Bill

Oliver Dowden Excerpts

Tuesday 23rd June 2015 Commons Chamber

[Mr Gauke]

First, I acknowledge the consistency with which the hon. Gentleman has approached these issues. If I recall correctly our debates in 2008 and 2009, he expressed clearly his dissatisfaction with the performance of the Government that he supported, in terms of surrendering part of the rebate.

The other point to make is that the hon. Gentleman should not underestimate the Prime Minister’s achievement in that negotiation. When he went to debate and negotiate on these matters, few believed that he would be able to reduce the overall budget in real terms, but he succeeded in doing so. Today’s debate is focused not so much on the expenditure side, although I think we will discuss expenditure thanks to the Opposition’s helpful amendment and new clauses—I was going to say “probing amendments”, but we shall see—but what happened was also very important on the revenue side. It was a considerable success that we were able to resist new types of member states’ contributions, new EU-wide taxes and attempts to reform the rebate. That is of some note.

[Oliver Dowden (Hertsmere) (Con)]

Will the Minister give way?

[Mr Gauke]

I will touch on the smaller changes to the own resources decision in a moment, but first it gives me great pleasure to give way to a fellow Hertfordshire Member of Parliament.

[Oliver Dowden]

I congratulate the Government on their success in keeping the EU budget down. Will the Minister confirm that the Government will continue to keep pressure on the EU to make sure that it continues to live within its means, not just for this budget settlement but for future budget settlements?

[Mr Gauke]

I will certainly make that assurance and indeed, I will set out in a little detail what we are doing in that field. I referred to my hon. Friend as a fellow Hertfordshire MP. However, if I remember correctly, at the time of the negotiation, he was part of the team in Downing Street who were involved in the undoubted success. It is characteristic of his modesty that he did not draw attention to that point, but I daresay that a lot of the credit for the successful negotiation lies in his hands.

Smaller changes to the own resources decision affect some member states’ contributions and the balance between the pillars of the own resources system. Those are somewhat detailed, but I hope it will be helpful to set them out for the Committee, because they are, in essence, at the heart of the Bill and clauses we are debating.

Specifically, the smaller changes include the following: the member states’ retention rate for traditional own resources—TOR—which covers member states’ collection costs for customs duties, is reduced from 25% to 20%. That change will have no impact on the ultimate cost of the EU budget to the UK on account of the UK rebate. For the period 2014 to 2020, the ORD also reintroduces the reduced rate of call for VAT-based contributions for Germany, the Netherlands and Sweden. Austria will revert from its reduced call rate over the 2007-2013 multi-annual financial framework to a standard call rate of 0.3% over the 2014-2020 MFF. The financial benefit of the changes to the UK depends on technical factors. Even so, on current estimates, those changes point to a benefit of approximately £150 million over the course of the MFF.