EU Budget (Surcharge)

Paul Flynn Excerpts

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

Sadly not is the short answer to my hon. Friend’s question. The Prime Minister we should credit for the rebate is Margaret Thatcher.

[Paul Flynn (Newport West) (Lab)]

May I try to help the Chancellor? He is in danger of becoming illiterate as well as innumerate. The word “result”, which he used once today and three times last week, can mean a win, a loss or a draw or, as in this case, a confidence trick.

[Mr Osborne]

I take it as a win for Britain. Again, I do not want to follow lessons from Labour MPs about how to negotiate in Europe when they gave up much of the rebate, signed us into the eurozone bail-outs, gave up many of our vetoes over many years and refused to give the British people a say in referendums in key treaties.

Wales Bill

Paul Flynn Excerpts

Tuesday 6th May 2014 Commons Chamber

[Mr Harper]

I will try to be relatively brief although I will say one or two things that I had not intended to say because I have been provoked by the previous contribution. First, the double standards are breathtaking. My hon. Friend the Member for Monmouth (David T. C. Davies) gave a perfectly reasonable speech and made it very clear that he was not attacking doctors and nurses but speaking about senior NHS professionals, yet he was accused of attacking doctors and nurses. The hon. Member for Llanelli (Nia Griffith) then proceeded to criticise standards of health care in England, yet somehow that is okay because she is just pointing out facts. Absolute nonsense. If we see things wrong in our constituencies it is our duty as elected Members to point them out. My hon. Friend was simply pointing out to the Committee problems in his constituency that had been raised by constituents. [Interruption.] I am not surprised that Labour Members do not want to hear this. The NHS is not performing well in Wales, and I will set out why my constituents in England are concerned about that.

I am happy with the confirmation from the hon. Member for Llanelli that if her party is elected to government it will sort out the Barnett formula for Wales and give it more money without that affecting funding for Scotland. As an English Member, it is quite clear to me which way the bill will be coming, so I will be pleased to tell my English constituents that another reason for not voting for the Labour party is that they will be facing a large bill to give more of their taxes to be spent by the Welsh Assembly Government, as well as the money they give to Scotland. I am grateful to the hon. Lady for that campaigning opportunity.

Amendments 12, 13 and 14 have been tabled by my hon. Friend the Member for Monmouth—my constituency neighbour—and my hon. Friend the Member for Aberconwy (Guto Bebb). I listened carefully to their arguments and I am happy to support the amendments as I think the principles they outline are sensible. My hon. Friend the Member for Aberconwy spoke about the Welsh Assembly Government’s policy of voice not choice. That would be fine if, when patients said something with their voice, somebody actually listened to them. The problem is that nobody listens, which is a real issue for my constituents.

[Paul Flynn (Newport West) (Lab)]

Will the hon. Gentleman give way?

[Mr Harper]

No, I will not give way; I will make some progress. [Hon. Members: “Go on!”] Oh, go on then.

[Paul Flynn]

Why does the hon. Gentleman think the Public Administration Committee, which has a Conservative Chair and majority, gave the health service ombudsman in Wales as the model and exemplar to follow? It said that that was the best service of the four countries, and it also recalled that Wales still has community health councils, which act splendidly as a source of receiving complaints and dealing with them.

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[Mr Harper]

I do not know where to start with that rather childish intervention. There is no vacancy, because my right hon. Friend is doing an outstandingly good job as Secretary of State for Wales, and I hope he continues in his post for a long time. He is doing an awful lot better than the shadow Secretary of State would do if, God forbid, he were ever to get the job.

I am concerned because my constituents are affected by the not very well thought-through devolution settlement—[Interruption.] The evidence is constituency correspondence, a very well attended public meeting with hundreds of local residents, and a very active local campaigning group. This is a real issue in my constituency and thousands of constituents are affected by it. I am doing my job as their Member of Parliament by setting out their views. I have been very reasonable in my argument and I look forward to the Secretary of State’s response. He is a Secretary of State who listens to and deals with issues brought to him by Members of Parliament—unlike the shadow Secretary of State—and I look forward to his response to the debate.

[Paul Flynn]

What is entirely novel in the debate on health, which I have never experienced in my 28 years in this House, is for Wales and the Welsh health service to be used as a political football to kick around to save the skins of Tory MPs and fulfil the ambitions of Lynton Crosby. He is the one who is using the issue not to make legitimate complaints—it is right that hon. Members raise legitimate complaints, as they always have—but for something entirely fresh. At every Prime Minister’s questions, when the attention of the whole nation is on this place, questions are distributed to Welsh Tory MPs, and to non-Welsh MPs who do not know the places they are talking about, that criticise the Welsh health service and create the impression that it is a poor, second-class service. This is a malicious deception: it is not true.

There is a lot wrong with the health service in every part of these islands. There are weaknesses and everyone can provide examples of particular cases, but what is the effect when the impression is given, week after week, example after example, that the Welsh health service is rubbish? What does that do to someone waiting for an operation or treatment to be told, again and again, that the service they are getting is second class? A big part of the healing process is confidence. If confidence is destroyed, that damages the health of the nation on a very deep level. What happens to the people working in the health service who do marvellous but thankless jobs—the jobs we turn up our noses at—when they come home and watch the television at night? There is a hallelujah chorus of Tory MPs saying that the service is bad, not good.

[David T. C. Davies]

Will the hon. Gentleman give way?

[Paul Flynn]

I will not give way. I will speak for only a very short time.

At the Conservative party conference in Wales, the Secretary of State for Wales, Assembly Members, the Secretary of State for Health and the Prime Minister lined up to talk about one subject: undermining the Welsh health service. It is, rightly, called the war on Wales. The damage that that does is enormous, and it is done to the whole reputation of Wales. That is not just happening in Wales; it is happening throughout the United Kingdom. This is how the Tories believe they are going to claw their way back to power, but I have news for them. There are now two Tory parties in Wales: the Joneses and the Farageists. The people will have a choice of which bit of bigotry they want to vote for next time. That will cut the reactionary vote in Wales in half and very few Welsh Tory MPs will be back here. When the Prime Minister says, from his lofty position, that there is a line between life and death at Offa’s Dyke, it will not be forgotten and it will never be forgiven.

[Mr David Jones]

It is a pleasure to serve under your chairmanship, Mr Crausby. It has been an interesting and lively debate. I will speak in the first instance to clauses 21 and 22.

Clause 21 confers on the Assembly the legislative competence to decide its own budgetary procedures. The effect of the clause is that the Assembly will be able to legislate to put in place budgetary procedures that take account of the Assembly’s and Welsh Ministers’ new powers under part 2 of the Bill. Clause 22 sets a requirement on the Secretary of State and Welsh Ministers to publish separate reports on the implementation and operation of the new tax and borrowing powers. Reports must first be published within a year of the Act passing and thereafter before each anniversary of the Act being passed. They must continue until a year after the new finance powers have been transferred fully to the Assembly and to the Welsh Ministers.

Wales Bill

Paul Flynn Excerpts

Wednesday 30th April 2014 Commons Chamber

[Susan Elan Jones]

If the hon. Gentleman looked back at the history, he would find that many people in the Labour party, including me, my hon. Friend the Member for Newport West (Paul Flynn) and many others, supported that pluralistic system, and I still do. People talk about this in terms of partisan analysis, but we have to remember that we too, as a party, have list Members in Mid Wales and West Wales.

I am pleased that people in constituencies who feel that every time they go out to vote in a Westminster election or a constituency election for the Assembly, their candidate is not going to get in, can now feel that, yes, their vote is going to matter. I appreciate that there has to be a balance in terms of constituency representation in a region, but this remains important. We could have put, say, the candidates who stood and lost in the Pembrokeshire seats on a list. There is no partisan advantage for us, but there is a basic issue of fairness. This cannot be a two-way bet.

[Paul Flynn (Newport West) (Lab)]

My hon. Friend may recall that the decision that many agreed to was taken on the grounds not of getting wider support but of its being good democracy. We have a system, as we still do, that cheats all but the two main parties. That is extraordinary. We had two elections where the Conservative party in Wales received 20% of the vote but had not a single MP in this House—a democratic outrage. The idea was that the Assembly was going to be set up not to have permanent one-party rule but to give all the other parties a fair chance of being represented.

[Susan Elan Jones]

That is right. It is important that on such constitutional issues we have this sort of open debate and are open to ideas, as my party certainly has been. It is possible to be progressive and pluralistic but to recognise that it would be nonsense to go back to the whole issue of dual candidacy in the Assembly. I am firmly of the view that someone should either stand for a constituency seat or be on the Assembly list. There is a very strong case—my hon. Friend the Member for Ynys Môn (Albert Owen) made it—for open lists. These are the sorts of things we should be looking at.

Yesterday evening, I came across a leaflet. It was nothing to do with politics; it was to do with recycling. I spotted on it a comment that I thought was so good that I wrote it down. It is not exactly clause 2 of this Bill, but it could be. It said:

“Within as little as 6 weeks, the empty can you put into your recycling bin could be back on the shelf as a new can of cola or a new tin of beans.”

That is why we think that the Government have got it wrong on this one.

Budget Resolutions and Economic Situation

Paul Flynn Excerpts

Thursday 21st March 2013 Commons Chamber

[Ed Balls]

The Government inherited a deficit reduction plan from the previous Government, but the Chancellor is wildly off track from our plan, which he used to call irresponsible. He is borrowing pretty much a quarter of a trillion pounds more. He said that he would get the deficit down, but the deficit reduction plan has stalled.

I have urged the Chancellor to change course, as in recent months have the International Monetary Fund, The Economist, the Mayor of London, the Business Secretary and the Home Secretary. They have all cast doubt on his plan. But yesterday we got more of the same. How did he describe the Budget? He described it as a “steady-as-she-goes Budget.” Steady as she goes? What kind of ship does he think he is on: the Titanic; the Mary Celeste?

There were some welcome measures. We have consistently called for a tax break for small firms taking on extra workers. The Government are now set to introduce a similar scheme, three years after the shadow Business Secretary and I urged them to. That is a welcome step forward. The Chancellor has finally joined Twitter, five years after I did. Maybe he will find out that his plan is going to fail five years after I worked it out, although by then he will be on the Opposition side of the House.

Yesterday there was no proper plan to kick-start our economy, no bank bonus tax to fund a youth jobs guarantee, no real action to get lending going to small firms, no proper investment in affordable homes and no return of the 10p starting rate to help millions of people, paid for by a mansions tax. Despite the welcome small change of 1p off a pint of beer—buy 320 pints and get one free, which might even be too much for the Foreign Secretary—and even after the increase in the personal allowance, an important point for the Liberal Democrats, families will still be worse off next year compared with this year because of the Chancellor’s tax and benefit changes.

[Paul Flynn (Newport West) (Lab)]

With all the voodoo economics and fiddles that have now been exposed, is not the Treasury exposed as the most disreputable massage parlour in Britain?

[Ed Balls]

I think it is a little unfair to tease this Chancellor about what goes on late at night in massage parlours. Perhaps he will correct me and tell me that it was not a massage parlour. I will take an intervention if he would like to clarify it; I cannot remember that chapter in the biography.

According to House of Commons Library figures, a one-earner family—[Interruption.] The Chancellor should listen to the reality of his plans and their impact on hard-working families in our country. According to the Library, a one-earner family on £20,000 a year with two children will be £381 a year worse off in 2013 compared with 2010, even with the personal allowance, because that is outweighed by the hit to tax credits for a working family. This is without taking into account the rise in VAT. By 2015, that family on £20,000 will be £600 a year worse off.

It is not just a case of being worse off under the Tories, but worse off under the Liberal Democrats too. In 16 days’ time, as the Chancellor, with the support of the Business Secretary, rams through the granny tax, the strivers tax and the bedroom tax, he is pressing ahead with a £3 billion tax cut for the very richest people in our country. In two weeks’ time, 13,000 millionaires will get an average tax cut of £100,000 each. Millions are paying more while millionaires get a tax cut.

Economic Policy

Paul Flynn Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

The great thing is that we, as a country, have experienced the shadow Chancellor’s economic policy, because he was the chief economic adviser to the Government. We had the biggest financial crisis in our history and the deepest recession for 100 years, and many people lost their jobs. We have had a dry run of what it would be like if he were ever allowed back.

[Paul Flynn (Newport West) (Lab)]

For the past three years, the Government have blamed all problems on the EU, the previous Government or the civil service. On what precise date will the Government take responsibility for the ineptocracy they have created?

[Mr Osborne]

Unless the hon. Gentleman can find anyone else to blame for the fact that there was an 11.5% budget deficit—[Interruption.] That was what we inherited from Labour, and we have cut it by a quarter. That just shows how economically illiterate Labour Back Benchers are.

Inward Investment (Wales)

Paul Flynn Excerpts

Thursday 29th November 2012 Westminster Hall

[David T. C. Davies (Monmouth) (Con)]

I am absolutely delighted to have the opportunity, which comes around once every couple of years, to speak as Chair of the Select Committee on Welsh Affairs about an issue that we think is particularly important. Today, that subject is inward investment in Wales and the Welsh economy.

The timing of this debate is a little unfortunate. As hon. Members will know, the Leveson report is being released at this very moment, so I apologise to Lord Leveson if we keep him off tomorrow’s front pages. I accept that some Members will have even more interest in Leveson than in the Welsh Affairs Committee, so I will try to keep my speech as brief as possible to be fair to those who also find that issue of interest.

When we published our report on inward investment in Wales in February, I think that I can fairly say that it was well received and comprehensive. We took evidence from a range of witnesses in business, as well as economists and politicians. We met Ministers from the UK Government and shadow Ministers from the Welsh Assembly Government. We would, of course, have liked to meet Ministers from the Welsh Assembly Government, but the Minister with responsibility for this area did not see fit to appear before the Committee, which was a shame. As well as being a little discourteous to the Committee—I can take the insult—that risks sending out the negative message that the Welsh Assembly Government and the UK Government are not working well together, which we do not want to happen.

We recognise that there is a problem with inward investment in Wales. Looking back, we can say that the ’80s and early ’90s were something of a boom era. Despite the fact that Wales has less than 5% of the UK’s population, we were getting about 15% of inward investment projects. By the late 1990s, however, things had started to decline. Between 1998 and 2008, some 171 foreign-owned companies closed their sites in Wales, with the loss of 31,000 jobs, and now things are getting worse. A parliamentary written answer from this Monday shows that the number of inward investment projects in Wales has declined from 68 in 2009-10 to just 26 in 2011-12, despite the fact that the UK as a whole remains the No. 1 destination for foreign direct investment in Europe.

There has been a shift in FDI away from Wales and towards London and the south-east of England, and the Committee wanted to know what we could do to improve the situation. We were, of course, clear that the traditional routes for attracting investment—low labour costs, grants and help with infrastructure—can no longer be relied on. We certainly do not want to compete on labour costs with countries such as China or India. It is important that we can offer a good standard of infrastructure so that we make Wales as appealing as we can for companies that might want to come here.

Lord Green of Hurstpierpoint, the Minister for Trade and Investment, told us that countries and overseas companies weigh up certain factors systematically, as if building up a grid, before deciding where to invest. Our report focused on three of those areas, the first of which was education, which obviously is devolved to Wales. It would merit its own inquiry, if we could find a way to conduct one without causing offence to the Welsh Assembly.

[Paul Flynn (Newport West) (Lab)]

The Government’s response to recommendation after recommendation in the Committee’s report is:

“This is a matter for the Welsh Government, who may wish to respond.”

Does not the hon. Gentleman think that his report has been weakened by the Committee’s trespassing beyond its own responsibilities? The Welsh Assembly Government are likely to respond negatively. The report would have been far better and more incisive if it had concentrated on matters that are the responsibility of this Parliament.

[David T. C. Davies]

The Welsh Affairs Committee is perfectly entitled to have an interest in anything affecting Wales. Although some in the Welsh Assembly might take the view that they are not willing to talk to the UK Government about things that they consider to be their own prerogative, it is noticeable that our Committee has considered such issues as defence, which the Ministry of Defence could say was its responsibility. We have also considered broadband, which is cross-cutting and affected by both UK Government and Welsh Assembly Government policy. We consider anything. I am proud to be Welsh and proud to be British, as hon. Members can see from my cufflinks. I make no apology for the fact that the Welsh Affairs Committee would be perfectly happy to consider anything affecting Wales.

[Paul Flynn]

Throughout the long history of Denbighshire county council, its longest ever meeting, which went on beyond midnight, was to decide the council’s policy on the war in Vietnam. That might have seemed to be a sensible thing to do, but I do not think that it had a great effect on world opinion or the conduct of the United States at that time. Does the hon. Gentleman think that his Committee is likely to end up in a position where it takes up any subject, whether or not it has any influence on or knowledge of it?

[David T. C. Davies]

First, although I was a mere boy at the time, I seem to remember that the hon. Gentleman was either a member of, or involved in, Newport council at the time when I lived there, and that he used to help with discussions of whether Wales should be a nuclear-free zone, so perhaps he has experience of long discussions about things over which he is likely to have little influence. Secondly, inward investment is clearly a cross-cutting issue that is affected by both Welsh Assembly and UK Government policy. I do not want this sitting to go on for as long as that meeting of Denbighshire county council—it is not a record that I am hoping to beat—so I would like to continue my speech.

--- Later in debate ---

[Paul Flynn]

rose—

[David T. C. Davies]

Which I shall do after I have given way to the hon. Gentleman for the third time.

[Paul Flynn]

The hon. Gentleman is being very generous. The nuclear-free Wales policy was a remarkable united expression by every county council in Wales—there were eight in 1981. “Nuclear-free” was about nuclear power, not nuclear weapons. Every county council passed an identical resolution saying that it did not want nuclear power stations in Wales but, sadly, the then Government defied that call.

[David T. C. Davies]

How times have changed, as Labour councils now seem to be very supportive of nuclear weapons and nuclear power stations. In 1981, there were no Conservative-led councils, but today there is one in my constituency, so things change for the better.

Returning to education, however, things are not changing for the better. Hon. Members will be aware of the recent OECD programme for international student assessment—PISA—report on education across numerous developed countries. Wales was not only below average for the developed world in subjects such as maths and science, but below average for the whole United Kingdom. The Committee hopes that the Welsh Assembly Government will address that situation. Speaking personally—to take off my Chair’s hat for a moment—I do not think that it will be addressed by setting up a completely separate examination system in Wales, which the Assembly is considering.

We considered the role of further and higher education, and universities are becoming increasingly prominent in investor decisions. We believe that although a lot of good work is going on between universities and industry, a great deal more can be done.

There are numerous studies about the economic benefits of good and efficient transport links. We should be concerned about the current quality of transport links in mid and north Wales, and about connectivity with the rest of Wales. We are exploring those issues in more detail in a current inquiry and our report will be published shortly.

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[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure, Mr Bone, to serve under the chairmanship of the star strike bowler of the parliamentary cricket team. I had not intended to speak, so I will keep my speech brief. I will be probably more disjointed than I usually am in my parliamentary contributions.

The report is hugely important—I congratulate the Chair of the Welsh Affairs Committee—and has been well-received, especially by the Welsh media, who gave it significant coverage. As we know, economic growth is driven by four interconnected factors, the first of which is household expenditure, which accounts for 62% of GDP growth in the UK. That is perhaps testament to overdependence on that specific component during the Labour years. The second factor is Government expenditure. We are witnessing more than £80 billion of cuts during the current comprehensive spending review, which is a major head wind for the course of the British state. The third and fourth factors are exports and business investment, in which foreign direct investment—FDI—plays a huge part. The report was very timely.

At one time, Wales was a world leader, or definitely a leader within the UK, in generating FDI. Behind my family home in Capel Hendre is an enormous industrial estate, with companies from Korea, Japan, the US and, indeed, all over the world, which is testament to its success. There have been concerns that we are over-reliant on foreign direct investment and not sufficiently promoting indigenous businesses, but there is now growing agreement that the pendulum has swung too far the other way. Unfortunately, Wales is now among the worse-performing constituent parts of the UK in terms of FDI.

We are living in an age of reductions in Government expenditure and of contraction in household expenditure. Recently, the consumer confidence index was at minus 30 —the lowest it has ever been—showing the huge economic head winds that are being faced. The hon. Member for Swansea West (Geraint Davies) wanted to appoint me as an exponent of austerity, but I assure him that I do not support the experiment of cutting Government expenditure. That policy was set by the Chancellor, so concentrating on the promotion of FDI in Wales is key to our economic well-being, and it is the one element that can help to stimulate the other two components—business investment and exports.

I want to highlight some of the report’s important recommendations. First, we need to work closely with UK Trade and Investment to help promote Wales as a destination for FDI, and I agree with comments made by Members from all parts of the Chamber. I welcome the announcement, following our report, that UKTI has based an official in Wales. We were the only component part of the United Kingdom not to have such a representative, so I am glad that that has been rectified.

I want the Department for Business, Innovation and Skills to instruct UKTI to pursue a similar path to Germany Trade and Invest, which has a remit to set specific targets for directing investment to the poorest parts of the state. That policy does not exist in the UK, but it would help to drive FDI into those areas, such as Wales, that are underperforming. Indeed, we could learn a lot from the example of German economic policy, which has enabled Germany to address huge wealth inequalities following reunification. It is incredible that, following 50 or 60 years of communism, its wealth levels are far more equal than the UK’s, but I shall not go down that road.

The signature recommendation in the report and the one most trailed in the press was the need to reuse the Welsh Development Agency brand. As a Plaid Cymru politician, I should take some credit for the original creation of the WDA, because it was the Plaid Cymru economic commission in the 1960s and 1970s—under Dafydd Wigley, Phil Williams and Eurfyl ap Gwilym—that first had the idea of the dedicated economic investment arm that later morphed into the WDA. I am not talking about reconstituting the WDA as it was when it was swallowed by the Welsh Government, but about reusing the brand. It is a global brand that, to this day, everybody recognises. The reality is that the successor bodies set up by the Welsh Government have nothing near the recognition of the WDA, so I want them urgently to reuse the brand.

[Paul Flynn]

I admire the skill of the Select Committee in choosing a day for this debate when there is no other subject to distract the media. One abiding impression of the report is that it is part of the begging bowl psychology in which we have one dominant partner in a relationship with another subservient partner, and we know which one is which. As it has come from the party, would not a more accurate title for this report have been, “One Hundred Shades of Blue”?

Income Tax

Paul Flynn Excerpts

Wednesday 28th November 2012 Commons Chamber

[Rachel Reeves]

Exactly that point about income profiling and not being able to estimate the impact of the tax because it has not been in place long enough was made by the IFS and the OBR. It is a shocking indictment of the Government’s priorities that the Chancellor has chosen at this time to give a tax cut to the few at the top—a tax break for millionaires—while asking working people to pay more. They are the same, old, out-of-touch Tories, and not one of their accomplices—the Liberal Democrats—had the nerve to stand up to the Chancellor.

[Paul Flynn (Newport West) (Lab)]

Studies show that those countries in the world that are happiest and have highest levels of contentment and well-being are the Scandinavian nations that have relatively high taxes and high minimum wages. Is it not strange for the Government to believe that we make the rich work harder by giving them more money but the poor work harder by taking money from them?

--- Later in debate ---

[Mr Gauke]

My hon. Friend displays an unusual degree of cynicism. I am still hopeful that Labour Members will share with us a desire for the UK to be a competitive environment for business that attracts high net worth and high-earning individuals to locate and pay tax in the UK, and that we can raise more revenue from them. Perhaps, however, my hon. Friend will turn out to be right and they will be driven more by their trade union paymasters.

[Paul Flynn]

Did the hon. Gentleman see the filmed interview with the treasurer of the Conservative party who demanded £250,000 for an invitation to dinner with the Prime Minister? Does not that give us an idea of the source of the Tory party’s funds?

[Mr Gauke]

I suspect, Mr Speaker, that you would not want us to be drawn into a lengthy debate about party funding. All I can say is that the Conservative party and this coalition Government will make decisions on tax policy on the basis of ensuring that we have a fair and competitive tax system, and that is exactly what we are doing.

Budget Leak Inquiry

Paul Flynn Excerpts

Thursday 22nd March 2012 Commons Chamber

[Mr Gauke]

I certainly agree that we do not want to return to the days when a Chancellor, in close co-operation with his special adviser, worked in a sort of secret bunker, not sharing any information with anyone, including the Prime Minister. That is not healthy, and, as we saw, it did not result in sensible tax policy making.

[Paul Flynn (Newport West) (Lab)]

Is not the most serious aspect of leaks the further degradation of ministerial code reform? The Public Administration Committee has been told by the previous independent adviser on the code that the Prime Minister himself is in breach of the code. If the Committee decides unanimously that the present adviser on the code is not fit to hold office, should Sir Alex Allan resign?

[Mr Gauke]

That is clearly not an issue for the Treasury. The Government will respond to the points that the hon. Gentleman has raised in due course.

Tax Avoidance (Public Servants)

Paul Flynn Excerpts

Thursday 2nd February 2012 Commons Chamber

[Danny Alexander]

My hon. Friend makes an important point. It is precisely the complexity of the tax system that creates some of the opportunities of which many people take advantage. That is why we have created the Office of Tax Simplification, which continually makes recommendations for ways in which we could simplify the tax system and tackle some of the avoidance schemes. The very complicated tax arrangements that we inherited are gradually being changed by this process, which is in the best interests of the country.

[Paul Flynn (Newport West) (Lab)]

Will the Chief Secretary to the Treasury be the first Minister to accept responsibility for the conduct of the coalition in creating an “ineptocracy” of greed?

[Danny Alexander]

I am not quite sure how that relates to the question on the Order Paper today. I do not accept that description of what the coalition is doing. We are cleaning up the terrible economic mess that we inherited from Labour, and we are doing so in a way that is fair and that asks those with broader shoulders to bear the greater share of the burden. Frankly, if the hon. Gentleman’s party had not made such a mess, the country would not be in this position.

Prevention of Nuclear Proliferation

Paul Flynn Excerpts

Tuesday 13th December 2011 Commons Chamber

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I beg to move,

That the Financial Restrictions (Iran) Order 2011 (S.I., 2011, No. 2775), dated 21 November 2011, a copy of which was laid before this House on 21 November, be approved.

Today I seek the support of the House for the financial restrictions measures against the Iranian banking sector that the Chancellor announced on 21 November. The Government have taken decisive action to respond to a significant threat against UK national interests by putting a stop to all business between UK financial institutions and those in Iran. The Treasury has laid the Financial Restrictions (Iran) Order 2011 before Parliament under the power in schedule 7 to the Counter-Terrorism Act 2008. This order contains restrictions requiring UK credit and financial institutions to cease business relationships and transactions with all banks operating in Iran, including their branches and subsidiaries, and with the Central Bank of Iran.

I turn first to the rationale behind the order. The Government have serious concerns about activity in Iran that facilitates the development or production of nuclear weapons. This concern has been repeatedly raised by the International Atomic Energy Agency, the UN body charged with monitoring Iran’s nuclear activities. Its latest report, in November, highlights its deepening concerns about

“possible military dimensions to Iran's nuclear programme”.

The restriction in the order was made in response to Iran’s nuclear activities, as highlighted by the IAEA, and the urgent calls from the Financial Action Task Force for counter-measures to be taken against Iran. Iran’s nuclear programme poses a significant risk to the UK’s national interests. This order seeks to address that.

[Paul Flynn (Newport West) (Lab)]

Is there not a danger, if we push Iran too hard, of it expelling the IAEA inspectors from the country? If that happens, instead of acting in the knowledge with which they provide us, we would be acting in ignorance.

[Mr Hoban]

It is important that we continue the twin-track approach—of engagement and challenge—that the Government have set out and which the previous Government also followed.

The November IAEA report documents Iran’s failure to co-operate fully with the agency and the possible military dimensions to Iran’s nuclear programme. The IAEA reports on Iran’s programme on a quarterly basis, but the November report set out its concerns in the strongest terms to date. It states that information available to the IAEA indicates that Iran has carried out activities relevant to the development of a nuclear explosive device. The report notes that

“while some of the activities identified have civilian as well as military applications, others are specific to nuclear weapons”.

The Government view these developments with the utmost concern.

In response to the November IAEA report, its board of governors issued a resolution expressing “deep and increasing concern” about the possible military dimensions of the Iranian nuclear programme. The board urged Iran to abide by its international obligations and called on it to engage seriously on the nuclear issue. These concerns are of the most serious nature and have far-reaching consequences for the UK’s interests and those of the region. Some 32 of the 35 countries on the board of governors supported the resolution.

--- Later in debate ---

[Paul Flynn]

Will the Minister give way?

[Mr Hoban]

I want to make some progress. This is a time-limited debate, and in looking at the number of Members present on both sides of the House, I am conscious that others wish to participate.

The Treasury asked various supervisors, including the Financial Services Authority, Her Majesty’s Revenue and Customs and other Government organisations, to publicise the restrictions and to provide information to firms on the requirements associated with them. Alongside the order, we published six general licences exempting specific activities from the restrictions. Those general licences enable credit and financial institutions with existing business relationships or transactions with the entities concerned to manage the cessation of business in an orderly and controlled way. The licences permit the provision of financial services for humanitarian purposes and of personal remittances between individuals here and in Iran. Further licences, whether general or individual, may be granted by the Treasury to manage the impact of the requirements on third parties. This approach is similar to that used in asset-freezing measures.

The restrictions apply requirements to persons operating in the UK financial sector, including FSA-authorised firms, money service businesses and insurers. Firms are required to establish whether any current or future business relationships or transactions are affected and comply with the requirements of the restrictions. Although the restrictions are given only to the financial sector, they will make it more difficult for other companies to trade with Iran. The UK Government actively discourage trade with Iran, and UK trade with the country has declined by 46% during the first eight months of this year in comparison with the same period in 2010.

As I said to my hon. Friend the Member for Wyre and Preston North (Mr Wallace), companies affected by the restrictions can apply for a licence of exemption, and we are willing to grant licences where UK companies are owed money under existing contracts that can only be paid via an Iranian bank to the company’s UK account. We will examine applications on a case-by-case basis.

The use of existing procedures means that firms will already have in place systems to meet obligations relating to financial sanctions and anti-money laundering, which should assist in minimising the burden of compliance with the restrictions. All institutions operating in the UK financial sector will need to ensure that they do not undertake new transactions or enter into new business relationships with any bank incorporated in Iran, including the central bank, and branches or subsidiaries. It is expected that compliance costs for the sector as a whole will be moderate, although any institution with significant business relationships with an Iranian bank will face higher costs.

Supervision of compliance with the restrictions will form part of the existing supervisory regime of entities such as the FSA, Her Majesty’s Revenue and Customs, the Office of Fair Trading, and the Department for Enterprise, Trade and Innovation in Northern Ireland. It is an offence to fail to comply with the requirements of the direction or intentionally to circumvent the requirements. Breaches may be subject to civil penalties imposed by supervisors, or to criminal prosecution. The maximum criminal penalties are: a fine not exceeding the statutory maximum, £5,000, in the magistrates court; or two years’ imprisonment or an unlimited fine in the Crown court. Those penalties are equivalent to those for breach of other financial sanctions regimes such as the EU asset-freezing regime in relation to Iran. The financial services sector takes very seriously the implementation of restrictions and sanctions, and takes steps to ensure its compliance with any restrictions.

To conclude, the order was issued by the Government to respond to the severe risk that Iran’s nuclear activities pose to the UK national interest. The measure is strong but necessary. Iran’s proliferation-sensitive activities are a serious and ongoing concern for the UK and the international community as a whole. It is vital that we continue to take steps to increase pressure on the Iranian regime and encourage Iran back to the negotiating table to find a diplomatic solution. For those reasons, I commend the order to the House.

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[Paul Flynn (Newport West) (Lab)]

The threat of war is far more serious than an increase in oil prices. The effect of a war, particularly if nuclear weapons were involved, would be almost unimaginable, particularly given the situation regarding Iran and its clients in Hezbollah and other groups. We should not treat this issue lightly or suggest that it is not important that we are seeing a new nuclear state because it would lead, I am certain, to others such as Turkey and Saudi Arabia also wishing to acquire nuclear weapons. The great fear is that a wall of sanctions can rapidly become a war of weapons. I have watched two terrible decisions being made in this House, and I believe we are on the brink of stumbling into another dreadful conflict.

When we went to join Bush’s war in Iraq, that decision was taken on the basis of a deception in the House. Eighty Labour MPs opposed the war and had signified their opposition to it, but during the debate they were bribed, bullied and bamboozled into abstaining or voting for the war. The majority on which that measure was passed was 179—coincidentally exactly the number of our brave troops who died in that war. If we had known the truth then, that war would not have taken place because 80 Labour MPs would have opposed it.

I have also seen the second-worst decision in my time here—the decision to go into Helmand province in 2006. At that time, only two British soldiers had died in the conflict. The figure is now 192. Again, the basis on which that decision was taken was the hope that not a shot would be fired and that we would be there for, at the most, three years for supervision purposes. We are now in grave danger of deepening the chasm of suspicion between ourselves and Iran.

There are reasons for saying that although the Arab awakening has not affected Iran in the same way as it has many other countries in the region, there is discontent in that country. There is division on almost all issues except one—the nuclear issue. If there is any way of guaranteeing that almost all sides of opinion in Iran join together it is the threat from outside—from us—which wants to deny it the possibility of having a nuclear power programme or the nuclear weapons that Israel, Pakistan and India already have. The great danger is that this escalation seems to be going on now. We should be seeking means of reducing the tension, building confidence and bridging the gap. We know the provocations that have taken place, but there is this grave danger. Unless we recognise the truth of the threat, we might find ourselves in another terrible situation of going along a slippery slope that could lead to warfare—in this case, possibly nuclear warfare.