Exiting the European Union (Value Added Tax)

Peter Grant Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Peter Grant (Glenrothes) (SNP) [V]]

The SNP will not oppose these motions either, because, as with most statutory instruments, the choice is to approve or reject them in their entirety, and rejecting them in their entirety would mean failing to address some serious gaps in legislation left by the Government’s shambolic handling of Brexit.

Most of the first set of regulations, SI No. 1312, is non-contentious. In fact, if we are honest, most of it is necessary to put right yet another great British Brexit blunder. The now Foreign Secretary and former Brexit Secretary did not realise that we needed lots of boats at Dover to do cross-channel trade. Now we find that Treasury Ministers knew they had to legislate for goods crossing the channel on planes and boats but forgot that goods could also get across the channel in the channel tunnel on a train. Regulations 2 to 8—most of this SI —are almost entirely about correcting that blunder.

Regulation 10, which the Opposition spokesperson mentioned, concerns me. I hope that the Minister will be able to give some reassurances about who it will affect and how much it will affect them. The regulation removes the VAT exemption on fees charged for the management of qualifying pension funds established in an EU member state. The explanatory notes say that the change is necessary as a consequence of withdrawal from the European Union. Will the Minister expand on exactly why it is a necessary consequence? Surely the exemption could have been retained as part of the trade deal the Government are so proud of. Did the Government actively seek to end the exemption, did they try to retain it but have to negotiate it away during the negotiations, or did they just completely forget about it, as they seem to have completely forgotten about so much else? Is it necessary because the Government want to do it or because they have sleepwalked into a situation where they are, in effect, forced to do it? What assessment have they made of the impact of the removal of this exemption? Do they know how many people in the UK have their pensions managed by EU-based funds, possibly without the pension holder even realising it? What is the total value of such funds? How much additional tax does the Treasury expect will become due as a result of this proposal?

Pension holders affected by this change went into a long-term relationship with their pension fund based on the VAT rules that applied at the time. They had a reasonable expectation that the rules would not be significantly changed during the term of their pension, but they are now being told that the rules have been changed and it is up to their pension fund to cough up the tax that becomes due. It may not technically fit the definition of “retrospective legislation”, but that is what it will feel like to those people.

As well as the impact on UK residents whose pensions are managed by EU-based funds, what happens in the converse situation? Presumably, it will also be necessary for every EU member state to now start charging VAT on the management fees for every pension fund that an EU resident holds with a UK pension manager. I imagine that this will be a bigger issue. So what assessment have the Government made of the value to the UK economy of the big financial centres, such as Edinburgh and London, selling their pension management expertise to the European Union? What assessment have the Government made of the impact on the competitiveness of that part of our financial services industry if its customers are to start paying VAT and its competitors do not?

I turn to the second of the statutory instruments, the Value Added Tax (Miscellaneous Amendments to the Value Added Tax Act 1994 and Revocation) (EU Exit) Regulations 2020. All the amendments to legislation proposed here appear reasonable and necessary for the smooth operation of the Northern Ireland protocol. In that regard, may I urge those calling for the protocol to be completely scrapped to ask themselves: whose interests would be served by the British Government welching on such an important international agreement almost before the ink has even dried on it? The protocol is flawed, for two reasons: it attempts to resolve an almost insoluble contradiction, which the Government have continuously refused to acknowledge; and, like almost everything else of critical importance to Northern Ireland during the Brexit process, it was thrown together at the last minute.

This statutory instrument is needed because we saw exactly the same kind of last-minute rush job just before Christmas with the Taxation (Post-transition Period) Act 2020. That Act passed its entire proceedings in this House in about four and a half hours. Under the rules of the House at that time, virtual participation in debate was not allowed, so inevitably the number of Members who could take part was reduced and the degree of scrutiny afforded to the Bill was affected. The scrutiny was so affected that the day after that Act had received Royal Assent the Government had already had to table this statutory instrument to correct mistakes in their own legislation. Provisions that were essential to allow the economy in Northern Ireland to continue to operate were thrown together at the last minute. We should never forget that the unique concessions the Government have made to Northern Ireland in the Brexit process were not made out of any respect for the will of the people there; they were made because the Government’s original intended solution of acting unlawfully and tearing up international treaties eventually became a step too far even for some of their own most loyal supporters. Although we welcome the fact that the Government have been forced to give some recognition to the will of the people of Northern Ireland, who never voted for this Brexit chaos, surely they deserve better than to be continually treated as an afterthought.

These two sets of regulations are necessary to make up for the incompetence of the Government of a wannabe global power, who did not realise that boats were a useful way for people on an island to trade across its sea borders. This Government also then forgot there was a tunnel so that people could also cross a sea border on a train, and they still continually forget that 1.8 million of their own citizens do not need to cross the sea to get to the EU; they have only to cross the road. My final question to the Minister is: how many more pieces of additional legislation are we going to have to approve in order to clear up after this Government’s incompetence?

Covid-19 Support Schemes: Ineligible People

Peter Grant Excerpts

Wednesday 9th December 2020 Westminster Hall

[Peter Grant (Glenrothes) (SNP)]

I am pleased to be able to sum up in this debate for the Scottish National party. I commend the hon. Member for Twickenham (Munira Wilson) on securing the debate, and everyone who has contributed. As others have said, we could have filled this Chamber four or five times over with hon. Members who would have liked to take part, but realised there would not be space. I cannot be the only person who has noticed that today, again, nobody has defended the Government’s failure to support these 3 million people.

I also commend the campaign groups that are helping to make sure that this scandal will not go away—not this year, not next year, not any year—until it is addressed. I am sorry there is not time to mention by name all my constituents who have contacted me and asked for their plight to be publicised, let alone the people from outside my constituency who have been in touch over the past few days specifically because I was going to speak in this debate.

The first and most important point that must be made—it is one that the Government sometimes try to fudge—is that this is a deliberate policy decision. It is not that the Government could not have helped these people by now, had they wanted to; it is that, frankly, they do not seem to care enough to try. It has to be the UK Government who address the problem. None of the devolved Administrations has borrowing powers that would come anything close to the amount the UK Government are borrowing to fund their covid support package. By 2025, UK Government debt will be somewhere in the region of £2 trillion to £2.5 trillion. The devolved Administrations are not allowed to borrow money to this extent; if they were, I am sure that at least one, and possibly all three, would.

To the many harrowing stories we have heard today and in other debates, I can add that of my constituent Gemma, who moved from being employed to being self-employed early in 2019. For 2018-19, her PAYE income was higher than her self-employment income, and she did not qualify for support. She has now submitted her tax return for 2019-20, the period ending shortly before lockdown was imposed. Deliberate policy from the Government is that they ignore her accurate tax return for 2019-20 as evidence of what she was earning—what she would have earned this year. However, HMRC is happy to use the same tax return as evidence that she now owes them £9,000.

There was good reason why 2018-19 tax returns were used as a basis for the first scheme when it was announced last year, but now that the Government again have a scheme open for self-employed support applications, there is no excuse whatsoever to continue to exclude people simply because their 2018-19 tax return significantly understated their self-employment earnings.

There are some cases, such as that of Joanna in my constituency, where alleged employed earnings were significantly overstated. Joanna still runs a small business. Her family ran another business that failed because a serious accident befell a close family member who was involved in the business. To cope with that, they cashed in their pensions at exactly the wrong time in 2018-19. This meant that their pensions were counted towards her earned income. Had it been a few months earlier or later, it would not have counted, and Joanna would qualify for covid self-employment support. Now, they get nothing. Just like Gemma, Joanna’s tax return for 2019-20 will give a much more accurate picture of her earnings but it will be ignored by the Government. Again, of course, HMRC will quite happily use it as a basis for the tax she is due to pay them.

It would be easy just to say that this is happening because the Government do not care, but even if it was true that they genuinely could not care less about the plight of these 3 million people and their families, surely they care about the damage to the economy if these people disappear from wealth creating in the future. Let us not forget that this time last year all those people were working in their businesses, creating wealth and providing valued services to the local communities and beyond. Some were giving jobs to other people in the community. All were paying taxes into Government coffers. That is what they were doing this time last year. This time next year, or maybe even earlier, every one of them wants to be doing exactly the same—to be part of a post-covid shared economic recovery. To do that, they need support this time, this year.

I say to the Minister, even if the Government’s approach to these people is as callous as it sometimes appears, surely it is in our shared interest to help all those who want to be in business after covid to get into business or to stay in business. It is not about charity; it is simply about parity.

--- Later in debate ---

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Ms Rees. I congratulate the hon. Member for Twickenham (Munira Wilson) on securing the debate, and I thank the 14 Back-Bench Members for their contributions—I listened very carefully to each—which spoke powerfully to the many cases of hardship that I recognise exist throughout the country.

I acknowledge the article written by the hon. Member for Twickenham for The House magazine today, and the briefing by ExcludedUK, which was made available yesterday for the debate. I have looked at that carefully and shall take back the three-stage approach, and we will continue to see if we can move forward. I recognise that there is a sensitivity about Ministers standing up and listing all the measures that have been put in place so far, so I will go through some of that only briefly, but I will then move on to the context and rationale behind some of our decisions, and address some of the points that have been raised.

Clearly, the pandemic has profoundly affected the lives of countless people. As a Government, we have a moral obligation to protect jobs, livelihoods and our country’s economic capacity, a point that has been made and acknowledged by many Members during the debate. We have spent £280 billion on what has been one of the most comprehensive responses, including the job retention scheme, which protected 9.6 million jobs; the self-employment income support scheme, which provided grants to 2.7 million people; affordable loans for businesses, which we have adapted over time; extra help through the welfare system; bespoke interventions for different industries, such as the £1.57 billion for the creative industries; as well as other support, such as income tax time-to-pay arrangements, payments to those asked to self-isolate and grants for businesses required to close.

We have striven, as a Government, to provide support for as many individuals and businesses as we can, as rapidly as possible. That has meant taking some difficult decisions, however. I will set out the rationale for some of those decisions, particularly in relation to the self-employed, before moving on to how we have adapted our support schemes so far.

To give some context, when we designed those schemes, we had to keep some guiding principles in mind. First, the help must be targeted at those most in need. To achieve that, we obviously had to set clear rules. That is why we have said that those eligible to claim from the self-employment income support scheme must have made profits of no more than £50,000 from self-employed activity. I recognise that for those on the upper side of the £50,000 cut-off, that must feel unfair, but we did have to draw a line somewhere, and wherever we had drawn it, we would have had the same challenge.

According to HMRC data, those in that category had an average income of between £100,000 and £200,000. We have also said that support from that scheme must go to people whose main income is from their self-employed trade. That is why we also said that to claim, workers should make at least half of their income from self-employed activity. HMRC analysis shows that typically for those who make less than 50% of their income from self-employed sources, their profits are on average between £1,800 and £3,500 per year. That strongly suggests that self-employment is not their primary income source.

I now come to the second principle that we have used, which is the need to balance the Government’s duty to support individuals with our responsibility to protect taxpayers. Colleagues will be aware of the wide concern about fraud that continues to be, rightly, something that is raised in Select Committees and by those commentating on what we have done. To verify claims through the self-employment income support scheme, we needed to use data from an individual’s tax returns, and that means using returns from the year 2018-19. That has meant that people who became self-employed in 2019-20 have been unable to access the scheme, because HMRC does not yet hold complete tax return data to check their details.

We are listening closely to individuals who pay themselves through dividends, but that presents another challenge, which is that there is no practicable way of distinguishing between dividends derived from an individual’s own company and those from other sources.

I know that the past months have been very difficult for many people in the groups that I have mentioned, but I want to stress that we have not taken a dogmatic opposition position to any particular group and we continue—

[Peter Grant]

Will the Minister give way?

[John Glen]

I will be very happy to take just one intervention.

[Peter Grant]

I am grateful to the Minister for letting me intervene. It is patent nonsense to suggest that we cannot tell the difference between shareholders who are directors of a small company and shareholders who are anonymous investors in a big company that they know nothing about. Companies House holds all those records. Why, nine months later, have HMRC and the Treasury made no attempt to do a data-matching exercise between what HMRC holds and what Companies House holds?

[John Glen]

I thank the hon. Gentleman for his intervention. Of course, one of the challenges that we had to come to terms with was the need to deliver a scheme as quickly as possible, and to as many people as possible, within the context of a finite number of individuals who could verify that data. Short of introducing a scheme whereby people would need to manually go through and verify those different data sources—

[Peter Grant]

indicated dissent.

[John Glen]

The hon. Gentleman shakes his head, but that, practically, was the challenge that we, working with officials, had to overcome. We had to make a judgment as to how to reconcile those two realities.

I want to reiterate that we are not adopting dogmatic opposition to any particular group, or contribution or idea that could move this forward. We need to protect the taxpayer, but that has not overridden our determination to provide support and we will continue to think about how we can improve the way the schemes that I have mentioned are targeted.

We have adapted already. We extended the cut-off point by which workers needed to be on their company’s payroll to be eligible to be furloughed, allowing more workers to receive those payments, and that potentially includes freelancers paid through PAYE. Some workers may be able to benefit from the recent changes that allow employers to re-furlough workers who left their jobs between 23 September and 30 October. And since July, employers have been able to bring back previously furloughed workers while still claiming from the Government for any hours not worked. We have adapted the self-employment income support scheme to help new parents who have taken time out of work, along with self-employed armed forces reservists, who were previously not covered.

I would like to add that people who are ineligible for one scheme may still be able to get support from one of the many other sources that I mentioned earlier, and that was not an exhaustive list.

I recognise that many people in the groups that we have talked about today fully intend to continue in their current jobs. However, we are investing to help those who decide to seek new opportunities. My right hon. Friend the Chancellor of the Exchequer recently announced a £2.9 billion restart programme, which will provide intensive and tailored support to help people to find work.

I listened to the range of contributions from constituents across the country. It is very, very challenging for us to provide support for every single group that is struggling at this time, but I reiterate our willingness to continue to work with groups, including IPSE, the relevant APPG, the FSB and others, that bring forward proposals. My right hon. Friend the Financial Secretary to the Treasury is engaged in many of those conversations. As we move through into the new year, we will continue to look at the new schemes.

Our overriding goal has been to provide as much support as we can to people and businesses, and as rapidly as possible. We acknowledge that we have not been able to help everyone in the way that we would ideally want to, but that has not been a wilful disregard for their situation; it is based on the challenges of verifying. It is not attributing any blame to them either. We have succeeded in supporting millions of people and businesses through this intensely difficult time, and we will continue to do our very best until we have beaten coronavirus.

Lockdown: Economic Support

Peter Grant Excerpts

Tuesday 3rd November 2020 Commons Chamber

[Steve Barclay]

First, I refer to the answer I gave earlier about the universal nature of the package. Another such area that my hon. Friend did not mention is the fishing sector, which was particularly impacted not only through its supply of the restaurant trade but through its exports, which were also hit. We have listened to concerns there and put in some additional support. But the best way we will support businesses, whether in the wedding sector or elsewhere, is by getting the virus down. That is why we have taken the comprehensive measures that we have for the next four weeks. That is the best way to be able to open up these sectors and get the people who have been furloughed or supported through the self-employed scheme on to the job support scheme, where they will then qualify for the furlough bonus, which will be further support that is available.

[Peter Grant (Glenrothes) (SNP) [V]]

For all the Minister’s sweet talking, the simple fact is that nearly eight months after the first lockdown was imposed, millions of self-employed people and small businesses are still being excluded from Government support. He has spoken approvingly today of comments from a recent Public Accounts Committee report, so may I draw his attention to the Committee’s 20th report of this Session, unanimously agreed by a Committee with a Conservative majority?

The report says:

“The Committee is disappointed that, so long after the beginning of the pandemic, HMRC has still not made sufficient use of its data to identify small businesses which have been left out of previous support packages, and therefore maximise taxpayer eligibility for grant support.”

Can the Minister not accept that the Committee’s disappointment reflects a view widely held among all parties in the House and that it is time for the excluded 3 million to be supported by actions, not just words?

[Steve Barclay]

I am somewhat surprised that the hon. Gentleman talks of actions when, as a result of our ability to operate UK-wide, we have been able to support nearly 1 million jobs in Scotland. Some 65,000 businesses in Scotland have benefited from the UK Government loan schemes and, as of 31 August, 242,600 employments were furloughed, at a take-up rate of 10%. Significant support has been offered to businesses in Scotland, as indeed it has been to businesses throughout the UK. It is odd that the hon. Gentleman talks about actions and ignores the nearly 1 million jobs that have been supported as a result of the actions that the UK Government have taken.

Budget Resolutions

Peter Grant Excerpts

Monday 16th March 2020 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

I thank the hon. Member for Cleethorpes (Martin Vickers) for his generosity in giving me those 33 seconds.

It is becoming clear that this will be the first Budget of this financial year. I do not mean that as any criticism of those on the Treasury Bench, but it is clear that events are moving fast. The Government will want to introduce emergency legislation and may seek emergency powers, and it is clear that even the Budget announced last week has already been overtaken by events. However, let me make couple of remarks about it.

First, we will have a wider debate about the loan charge on Thursday, but I was disappointed that there were no more concessions for those caught up in that scandal. It amazes me that people who were caught up in it, rather than those directly responsible for it, are being chased for money. I hope the Government will also be a bit more specific about the measures they want to introduce to tackle the promotion of tax avoidance. I am not the only Member who is concerned about the reduction in staff at Her Majesty’s Revenue and Customs over the past 10 years.

Secondly, the Government committed during the election campaign to maintaining the free TV licence. Given that we are in a period where the main source of information for many people, particularly the elderly and those who live on their own, is television, the Government need to move quickly to take back control of that power from the BBC and give it back to the Department for Work and Pensions and maintain the free TV licence. Over the next few weeks and months, elderly people will need that box in the corner of their living room to get vital information on tackling coronavirus.

[Peter Grant]

The Conservatives have already changed their promise on that. In the 2017 manifesto, they promised to keep the free TV licence. Now they are promising to keep it as long as everybody else pays for it. Surely that is a bit like saying the Government will provide free bus fares for everybody, as long as the bus companies pay for them?

[Chris Stephens]

Yes, I agree. My hon. Friend’s point is well made.

There are a number of challenges that the Government now face. I am not the only Member over the past few days who has had constituents contact them to say they have already seen their hours reduced and shifts cancelled. They are being advised by employers that there will be no work for them, as people are being discouraged from going into nightclubs, bars and restaurants. The work in this sector is traditionally low paid and precarious. I hope the Government will now look at the models introduced by Denmark and Norway to address those issues, and sit down with trade unions and business to come up with a financial model that ensures wages are maintained for those who are low paid and in precarious work, including those on zero-hour contracts. In particular, I hope the Government are considering, as Norway has done, issues relating to the self-employed and carers.

On statutory sick pay, I have been contacted by constituents who are alarmed that some employers, including some large multinational employers, do not pay company sick pay from day one. Some pay it on day four and some pay it on day seven, leaving the state to pick up the tab. Because of the different schemes by different employers, some individuals will find themselves receiving only statutory sick pay from day one, which is not topped up by employers and their particular sick schemes. That will lead to a situation where some people—I am sure I am not the only Member to hear this—feel they will have to make a choice between public health and poverty, and their wages. We really need to look at the rate of statutory sick pay. If there was a European league table, the UK would be either in the relegation zone or not too far away from it. The statutory sick pay of other European countries far outstrips what is on offer in the United Kingdom.

On universal credit, we need to move away from an arrears-based system. The five-week wait, which other hon. Members have mentioned, needs to go now. The first payment should be the first payment. The DWP receives £50 million a month in advances returned from claimants. How much does that cost the Department to administrate and how much time are DWP staff taking on that when they could be processing online journals and other claims? I agree with hon. Members that there should be no evictions for rent arrears during this period and that there should be no sanctions.

I want to end by saying that the Treasury will now need to consider, over the next few days and weeks, whether there should be a people’s bailout. The amount of money the state had to spend on the bankers’ bailout will probably be similar to what it may have to spend to alleviate poverty and to get through the current crisis in the weeks ahead.

Tax Avoidance and Evasion

Peter Grant Excerpts

Tuesday 25th February 2020 Commons Chamber

[Steve Barclay]

As a point of principle, HMRC always seeks to collect the tax that it is due. One of the areas of innovation—I will come on to such areas as Making Tax Digital—is about making that easier for HMRC, but I appreciate that the right hon. Gentleman is making a point more about fraud than error. The underlying principle is that HMRC always looks to collect the tax that it is due, but if he has a specific point on a constituency basis, I know that my right hon. Friend the Financial Secretary to the Treasury will always be keen to discuss it with him, because he has a zeal for cracking down on any such practice.

The Government have done much to squeeze the tax gap: by ensuring that companies increasingly pay their way; by cracking down on offshore avoidance and evasion; by tackling tax avoidance schemes; by helping people to get their taxes right first time; and by investing in HMRC’s toolbox. If one looks at the actions being taken in terms of large businesses, they will see that there is an exceptional level of scrutiny. At any one time, HMRC is engaged with half the UK’s largest businesses and we have introduced specific measures to shape behaviours. For example, the diverted profits tax was introduced in 2015 to ensure that multinational companies pay UK tax in line with their UK activities. Under our rules, those companies either declare the correct amount of profits in the UK and pay the full amount of corporation tax on them, or they risk being charged a higher amount of diverted profits tax at a rate of 25%. It raises tax directly through encouraging changes in groups’ behaviour that, in turn, leads to increased tax receipts.

[Peter Grant (Glenrothes) (SNP)]

The Chief Secretary quoted a figure of 25% as a potential penalty. Will he tell us how much has been raised from those penalties so far? Has anyone been penalised as a result of failing to fall into line with this new incentive?

[Steve Barclay]

It is always good, 10 days into the job, to get specific challenging questions on the detail, but to answer that question—and I do not want to tempt hon. Members who usually come with in detailed questions such as that—the tax has raised £5 billion in additional revenue. On this occasion, I can satisfy the House, but I do not want to tempt fate with too many colleagues on this outing.

It is interesting that attitudes in large companies are changing. I am sure that there will be Members who will want them to change further, but since 2013 the proportion of large businesses agreeing that tax avoidance is acceptable has more than halved, moving from 45% to 21%. There is clearly more to do, but that shows a change in attitude within many large companies.

--- Later in debate ---

[Dame Margaret Hodge (Barking) (Lab)]

I welcome the debate this afternoon so early in the new Parliament, but the importance of tackling aggressive tax avoidance, tax evasion, economic crime and money laundering cannot be overstated, and this debate will not go away until the Government are seen to have taken far more action, not just uttering warm words of support in principle but demonstrating firm action in practice.

There is a lot of money at stake, and that is not just reflected in the tax gap, as others have suggested. The tax gap does not measure the money that we should be collecting in tax from, for example, the profits from the activities that big digital companies undertake here. Looking simply at the tax gap, as currently defined by HMRC, is not enough if we are serious about tackling tax avoidance, tax evasion and economic crime.

As I said, a lot of money is at stake, which is important when we have a new Government who have pledged to restore some of the cuts that they have implemented over the past decade and to invest in services and who want to level up living standards across the country. Fairness is at the heart of this debate, as has already been said. It is not about castigating the rich or anything like that; it is about ensuring that everybody pays their fair share of tax. Everybody should contribute to the common pot for the common good from the wealth they own or the income they receive. It is about ensuring that everybody is treated equally before the law. Until everybody in the nation, particularly the 85% who pay their tax automatically through the PAYE system, can be sure that there is fairness in who pays tax and how much they pay, we will not be able to raise the necessary revenue to fund the services that this country so desperately demands.

I urge the Government and the Chief Secretary to the Treasury to listen carefully to what is being said in today’s debate. There is a cross-party consensus on many of the issues, and the Government need to heed that. They will be unable to ignore the voice of Parliament, despite their increased majority, because to do so would be morally wrong and totally unprincipled.

Let me give a figure that has not been mentioned so far. The National Crime Agency estimates—the figure has not changed and, if anything, has gone up—that about £100 billion of illicit money flows through Britain each year. We have become the jurisdiction of choice for too many kleptocrats, too many criminals and too many people who want to launder their money. We will never build a global Britain on the back of dirty money. Post-Brexit Britain will not prosper by, at best, ignoring the extent of the problems of avoidance and economic crime or, at worst, facilitating it.

I ask the Government to respond to four current concerns. In 2018, the right hon. Member for Sutton Coldfield (Mr Mitchell), who is in America talking to elected representatives about how to tackle evasion and avoidance, and I led a successful cross-party campaign to place on the statute book an obligation on overseas territories to provide public registers of beneficial ownership. In 2019, the Crown dependencies, recognising that the will of Parliament was to include them in the legislation, voluntarily agreed to come along with that. We accepted a concession that registers should be implemented by 2023—too late, but it was better to have the scheme accepted by all parties. I remind Members of why the change is so important. We have already heard today that half the entities named in the Panama papers were registered in just one of our overseas territories: the British Virgin Islands. Secrecy enables wrongdoing, and we must understand that.

Our Crown dependencies are as complicit as the overseas territories, and I have two examples: Silvio Berlusconi was accused of bribing two judges, and the payments were allegedly made through a secret offshore branch of the Berlusconi empire, with funds sent to the judges’ bank accounts in Switzerland through a Jersey-based company; and Bono used a company in Guernsey to hide the profits he made in Lithuania.

We need public registers of beneficial ownership in both the Crown dependencies and the overseas territories. Transparency is a key tool in tackling evasion and economic crime. Global Witness has shown a thirst for open access to company data. Since 2015, when the paywall came down on UK company data searches, there have been, on average, 2 billion searches a year, compared with just 6 million a year before the pay wall came down. It has been used by individuals, investigative journalists, campaigning organisations and the voluntary sector, and it has been used by businesses to try to ensure other businesses are treated fairly.

What support have the Government now put in place to help the overseas territories and Crown dependencies implement public registers? Will the Minister confirm the 2023 date this afternoon? Has he taken any steps to bring that date forward? That would be perfectly possible.

Research from Tax Watch shows that, between them, the big five global digital companies—Google, Cisco, Facebook, Microsoft and Apple—paid £240 million in corporation tax in 2018. They should have paid £1.3 billion according to Tax Watch’s calculation of the activity they undertook here, the profits they made here and, therefore, the corporation tax bill that was liable here.

The Government’s proposed digital services tax is the beginning of an answer, but, by 2023, it will raise only around £400 million, which is a tiny start to ensuring that these large global corporations pay a proper amount of tax on digital services. It makes me so angry, because these companies are as dependent as anybody else on the services our tax provides. They need a well-educated workforce, which is provided from taxpayers’ money; they need a healthy workforce, which is provided from taxpayers’ money; and they need infrastructure—whether roads, the internet or whatever else—which is often also provided from taxpayers’ money.

[Peter Grant]

I am sorry to interrupt the right hon. Lady because she is making a valid point that those who are the most enthusiastic in giving advice about how to dodge taxes are often people who, in a previous life, benefited from other people’s taxes. Does she believe there is a bit of inconsistency in that some Members of Parliament who get significant support from tax advisers who promote themselves on giving advice about how to legally avoid taxes are themselves paid very handsomely indeed from other people’s taxes?

[Dame Margaret Hodge]

I am unaware of that specific allegation, but I will come on to facilitators, advisers and enablers who get away with far too much.

The only way we will start ensuring that digital companies pay the right amount of tax is by implementing country-by-country reporting. I asked the Chief Secretary and he did not reply, so I hope the Financial Secretary will reply to the question in his winding-up speech. When will this Government implement the country-by-country reporting that will allow us to see what activity takes place here, what profits are made here and, therefore, what fair tax should be paid here?

I reiterate to the Financial Secretary an issue that I raised with him in an Adjournment debate a couple of weeks ago, and to which he failed to reply at the time. Netflix has so far avoided public scrutiny, but it exports its profits by ensuring that subscribers pay into a server located in Holland. We reckon Netflix earned about £1 billion last year and paid no corporation tax, but in over two years it has benefited to the tune of £1 million from the high-end television tax relief. Not only was Netflix not paying tax, but it was benefiting from what is, in effect, a grant to encourage the production of content here in the UK.

I welcome such reliefs, but it seems utterly unacceptable that companies should benefit from grants offered through tax reliefs here in the UK yet behave in such an appalling way and refuse to pay their tax here. Now that we are Brexiting from Europe, surely it is not beyond the realms of possibility to introduce legislation so that companies will be eligible for such tax reliefs only if they show responsibility in how they behave and in paying their fair share of tax.

The other thing that really gets me with many of these American-headquartered companies is that the Americans, under Donald Trump, extract tax from profits earned through activity undertaken here in the UK. They extract tax at a lower rate but, nevertheless, they are getting more tax than we are, which is unacceptable. Americans are profiting from tax on profits and intellectual property created here in the UK.

I again ask the Minister what I asked him in the Adjournment debate and to which he refused to respond: will he extend the digital services tax to include streaming services? Will he stop those who deliberately avoid tax having access to grants and tax reliefs?

The hon. Member for Glasgow Central (Alison Thewliss) talked about creating a register of beneficial ownership of property, which David Cameron first promised us five years ago. Why is it important? The last figures I could get show that getting on towards 90,000 properties across the UK are owned by companies incorporated in tax havens.

The purchase and ownership of properties has become a key way in which money is laundered into the UK. Transparency International has established that one in 10 properties in just one London borough—Westminster —is owned by a company registered in an offshore secrecy jurisdiction. Private Eye claims that one in six properties sold in Kensington and Chelsea was bought by a company located in an offshore tax haven. This is a key way in which people launder money here.

The electoral register of Kensington and Chelsea is interesting. There has been a 10% decline in the register over the past decade or so, whereas registers have increased everywhere else in London. Why? Because people buy the properties and leave them empty. They simply use the purchase as a way of laundering money, and we know lots of that money comes out of Russia—about £70 billion has flowed out of Russia into the UK in the past 10 years.

When are we going to see that legislation? When will it be put before the House? When will we see the promise made a long time ago by a Conservative Prime Minister fulfilled by this Conservative Government?

Finally, the hon. Member for Glenrothes (Peter Grant) mentioned the role of advisers. It is the advisers who create these schemes. Whether they are banks, accountants, lawyers or just advisers on their own, they found schemes that are later deemed to be unlawful. Film tax credit and, most recently, the loan charge are good examples of schemes that have caused terrible hardship to people. I feel ambivalent about it because, of course, there is never something for nothing, and people should have been much more careful before they entered into such schemes. Nevertheless, they have led to suicides—they have been terrible schemes. Advisers always get away scot-free, whoever they are, and none of them is held properly to account. The law in this policy area is just too weak. In criminal law, we have to prove dishonesty to pursue a criminal prosecution, which is very difficult. In civil law, the penalties are ridiculously low and are limited to the amount of fee that the adviser would have gained. There is also what is known as a double reasonableness test: it cannot be regarded just as an unreasonable course of action; it also has to be demonstrated that it was unreasonable to think it was reasonable—I hope that makes sense to Members.

The calling to account of advisers, enablers and promoters would be a powerful tool. At a stroke we would kill off many of the schemes that are currently exploited, which lead to such tax loss in this country. I urge the Minister to bring forward legislation to toughen up the regime and to make it easier to hold the advisers, enablers and promoters to account.

In conclusion, it is vital to battle against tax evasion—it is vital to demonstrate fairness in our system, to ensure the proper funding of our public services, and to the building of a global Britain that is respected around the world for its values and integrity and that is seen as a good place to do business. The Government will pay a heavy price if they fail to respond properly to the issues that have been raised in this debate. They must not just give us warm words; they have to give us tough action. I hope that in my short contribution I have given the Minister some good ideas that he could easily implement and that would make the world of difference. I urge him to have regard to them.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to follow the hon. Member for Coventry South (Zarah Sultana). I share some of her concerns about ensuring that those with the broadest shoulders pay the most, following the lead of the shadow Chancellor, but it is useful to look at the facts. An interesting survey was carried out by PricewaterhouseCoopers and the BBC on the nations that have the highest proportion of tax on high earners, looking at people earning a quarter of a million pounds a year. The UK is the third highest taxing country in the world—only Italy and India are higher. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) shakes his head, but he can google that. We should clamp down on tax avoidance and tax evasion, but we cannot raise the taxes we want without the negative consequences of people shifting that wealth and income elsewhere.

[Peter Grant]

The shadow Chancellor said at the beginning of the debate that tax is about a lot more than just income tax. Can the hon. Gentleman confirm whether the statistic he just cited relates to all taxes paid by wealthy individuals or only income tax? Does he agree that, if he is only talking about income tax, that statistic is highly misleading?

[Kevin Hollinrake]

It related to income tax. [Interruption.] The point I was making was about income tax. The shadow Chancellor talked about raising taxes from the people who earn the most, and I was simply responding to that point. I have said in the Chamber many times that we should clamp down on tax avoidance and tax evasion.

The shadow Chancellor strikes me as the failed football manager turned TV pundit—having lost all his games by a wide margin, he suddenly complains when the incumbent manager is only winning his games 1-0. This Government have done far more to collect avoided and evaded taxes than the previous Administration—that is a fact. We can choose our opinions, but we cannot choose our facts. We need to go further. This is not just about the money; it is about creating a fair and level playing field and building confidence in the system, so that SMEs, which are the lifeblood of our economy and business, feel that they are not playing in a rigged game. It cannot be like that.

It is utterly wrong that we should countenance tax avoidance, because it undermines the level playing field for SMEs, and that has a tangible effect. For example, the Johnston Press, which owns The Yorkshire Post and many other titles around the country, was turning over £177 million in advertising revenue in 2008, and today, that figure is £22 million. There has been a transfer of revenue from areas such as regional press to online advertising, and particularly Google. Johnston Press will have paid its fair share of taxes, as most companies of that size do. Internationally, Google turns over about £100 billion. We know that around 10% of its turnover is in the UK—that is a stated fact—which is £10 billion. Its international profit margin is 22%, which means that it makes £2.2 billion. It should be paying £418 million in corporation tax at 19%, but it pays £67 million. That is simply iniquitous. It cannot be right, and it cannot be sustainable.

I am delighted that the Economic Secretary to the Treasury is on the Front Bench, because I want to give another example of where we are not maintaining a fair and level playing field. It relates to some of our banks and Cerberus. UK lenders who pay UK tax have sold their loan books to inactive lenders who work offshore and do not pay corporation tax or operate on the same regulatory playing field. Cerberus, which has bought loan books off Northern Rock and UK Asset Resolution, plays by a completely different set of rules. Its costs are therefore lower, which means that it can afford to pay more for those loan books. It does not properly look after its customers, nor does it have the responsibility to look after them and treat them fairly. We have to make an extra effort to ensure that everybody operates on a fair and level playing field. Cerberus paid £15,000 in corporation tax on six subsidiaries in 2015, despite working on a 20% profit margin.

In terms of my own business experience, our business grew to a point where we were making a reasonable profit. Our adviser—a normal accountant, not one of the big four—said, “How about trying this scheme to avoid tax?” It was perfectly legal, but we refused to take that option, because we did not think that it was right. We need to work harder with advisers and promoters to ensure that everybody pays their fair share of tax. The Government use the big four in many ways and take their advice, and it seems wrong that those very companies then go to large multinational companies and others and show them how to avoid tax.

One of the solutions is country-by-country reporting. We have a precedent for that, with the bookmakers’ point of consumption tax. The Labour party came up with a ruse that involved charging businesses in terms of where their economic activity, people and premises are, and there is very much a basis for that. We need to ensure that what the Government have done through the digital services tax and diverted profits tax narrows the gap for companies such as Google and Facebook.

We need to implement some other key measures, including on transparency about overseas entities and ownership of property, which is a way to avoid tax and move money around the world illegally and unfairly. We need to see measures on beneficial ownership in overseas territories brought forward to 2023. Finally, a corporate offence of failure to prevent economic crime and money laundering would reduce the amount of money that is illegally shifted out of the UK into foreign jurisdictions and increase the amount of tax that is paid.

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[Peter Grant (Glenrothes) (SNP)]

I am pleased to be able to take part in this debate and it strikes me that there is a fair amount of agreement, but somehow we seem to be managing to create disagreement instead of agreement, which I have to say is one of the hallmarks of this Parliament in comparison to other Parliaments around the world.

It does seem to me that when we have a discussion about tax, too often on the Government Benches there seems to be an underlying assumption that somehow tax, and income tax especially, is bad. Even though they cannot actively and publicly promote irresponsible tax avoidance, it almost seems as if in their heart of hearts they do not quite see what the problem is. For example, the oft-repeated and completely fallacious claim that Scotland is the highest taxed part of the United Kingdom is completely false. Why is it automatically a bad thing, even if it is true? If for somebody on my salary Scotland is the highest taxed part of the United Kingdom, that is good. If, for somebody struggling to get by on a low-paid, part-time job, Scotland is the lowest taxed part of the United Kingdom, surely that is also good. I sometimes wonder how many Government Members, in their deepest instincts, genuinely believe the conciliatory comments that we have heard from some of their colleagues today that tax is a good thing and that we should all be happy to pay our taxes. When we look at the Register of Members’ Financial Interests and at some of the companies that are bankrolling Conservative MPs, we have to wonder whether they are bankrolling them in the expectation of getting absolutely nothing back in return.

The hon. Member for Delyn (Rob Roberts) spoke about legitimate forms of tax avoidance, and I do not have a problem with that; I do not have a problem with the tax system giving incentives to people to encourage them to do things that provide a wider public benefit, such as giving money to genuine charitable organisations; investing in genuine businesses that need an injection of capital to grow and to create employment; and investing to make sure that their own and their family’s future is financially secure when they are no longer able to work. All those things provide a wider public benefit and it is right that the tax system should encourage them. What public benefit is provided when a company electronically transfers billions of pounds of profits into a non-existent letterbox in the Cayman Islands? That generates no public benefit to anybody, so why do we have a tax system that, either deliberately or unintentionally, encourages exactly that kind of behaviour?

Although some progress has been made, with a more aggressive approach to dealing with legalised tax avoidance than there was in the past, it still does not go anything like far enough. My hon. Friend the Member for Glasgow Central (Alison Thewliss) commented on how easy and cheap it is to set up a company structure for no reason other than to avoid taxes. Many of my constituents, and many in all of our constituencies, would find it easier to set up a company to dodge taxes than people are finding it to prove to the Home Office settled status scheme that they have the right to live and work here and pay their taxes. What kind of regime is it that makes it harder for people to live here and pay their taxes than it is for people to dodge their taxes?

A lot has already been said about the concept of the Scottish limited partnership. I recall that as a young student accountant many years ago I memorised the Partnership Act 1890 by heart. It is a short and fairly simple piece of legislation. I recall that at the time there was a reason why section 4(2) was a good idea—why it was a good idea that in Scotland a partnership had a legal entity of its own. I cannot remember what the benefit was, but I am pretty sure that our predecessors in 1890 did not put those 17 words into that Act just to allow the good reputation of Scotland’s financial services sector to be abused by international criminal gangs in order to launder billions of pounds of criminal funds through the wonderfully respected financial services centre that is the city of Edinburgh and indeed through other cities in Scotland.

My hon. Friend commented on the number of companies advertising their ability to set up tax-dodging companies for people and how easily we can find them on the internet. Such a partnership has been described as

“an ideal solution for those who prefer to operate…in the EU”—

this is perhaps a wee bit out of date—

“and to have a totally tax-free facility”.

That quote came from TBA & Associates Tax Business Advisors Ltd, whose registered office is not a million miles away from here.

In finishing, I wish to read out a quote from Shepherd and Wedderburn LLP, one of Scotland’s best known and most respected firms of commercial lawyers. It said:

“Scotland’s global reputation in the funds and financial services sector, as a respected and safe jurisdiction in which to undertake business, can be exploited by the Scottish LP in an effort to add credence to an otherwise fraudulent scheme.”

If even the businesses that are advising their big commercial clients on how to reduce their tax liability are flagging up the fact that the existence of that loophole in Scottish partnership legislation is a bad thing for the Scottish economy, how can the Government not understand that? If they are not prepared to act on it, they should give the Scottish Parliament the right to regulate that aspect of Scottish business. Believe me, the Scottish Parliament will deal with it very, very quickly.

Let me make one final comment. A lot has been said about the loan charge, both in this debate and in previous debates. I have seen worrying reports recently suggesting that HMRC is offering an easy ride to the companies that have made billions out of advising their clients to go into these schemes in return for co-operation—basically, this is about shopping their own clients to HMRC. Again, the little guy gets done and the big guy—the big business—gets off scot-free. I hope that the Minister will give a categorical assurance that no such offers have been made and no such offers ever will be made to the big companies who are the genuine villains of the loan charge scandal.

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[Peter Grant]

Will the Minister give way?

[Jesse Norman]

I am afraid that there is no time at all to do that, but I will pick up a couple of further points. Colleagues quite rightly had concerns about HMRC resourcing, and they are welcome to write to me if they want to discuss specific topics.

I mentioned the important point made by my hon. Friend the Member for Amber Valley, and I am pleased that he offered his qualified support for IR35. He is right that it is an important measure, and it will collect something like £1 billion of tax a year by the end of the period. As he will be aware, the Government are preparing to legislate to clarify the status of employment from a business standpoint, which is proper and correct.

I am surprised that the right hon. Member for North Durham (Mr Jones) was told that he could not be told anything. Of course, HMRC cannot discuss specific issues, but I hope that he will have a more interesting conversation than that.

I thanked my hon. Friend the Member for Delyn (Rob Roberts) for his constructive attitude, and he was right to focus on the privilege of paying tax. There is an element of truth in that, and we should properly defend it. With that in mind, let me sit down.

Question put.

Oral Answers to Questions

Peter Grant Excerpts

Tuesday 11th February 2020 Commons Chamber

[Mr Simon Clarke]

I had a good meeting yesterday with my hon. Friend and fellow Stoke and north Staffordshire MPs. The Government are supporting small firms across England through the network of 38 growth hubs, one of which is based on Stoke-on-Trent. In our manifesto, we announced our intention to create a national skills fund, which will help to transform the lives of people who have not got on the work ladder and lack qualifications, as well as people looking to return to work or to upskill.

[Peter Grant (Glenrothes) (SNP)]

Every year Scotland exports a quarter of a billion pounds worth of salmon to the European Union. This week, the Scottish Salmon Producers’ Organisation expressed serious concern about the continuing uncertainty of Brexit. What assessment has the Chancellor of the Exchequer made of the impact on this vital industry of the Chancellor of the Duchy Lancaster’s announcement that “as friction-free as possible” trade with the EU means “not friction-free at all”?

[Sajid Javid]

I assure the hon. Gentleman that we are working closely with the fishing industry, including salmon producers, to make sure that as we put in place our new free trade agreement, it will continue to thrive.

Andrey Lugvoy and Dmitri Kovtun Freezing Order 2020

Peter Grant Excerpts

Monday 10th February 2020 General Committees

[Peter Grant (Glenrothes) (SNP)]

I am grateful to be able to make a few comments. I will certainly support the measure, which is appropriate and proportionate, and is likely to be effective. It is always important, when imposing sanctions on anybody, to consider whether they will be effective both in preventing individuals from continuing to operate and in serving as a deterrent to others. The order meets those tests and I will support it—I do not imagine the Committee will divide.

I will make a few comments about the Government’s approach to protecting not only our democratic process but, in some cases, the lives and property of UK citizens, from what is clearly a very real and present threat from some acting on behalf of the Russian state, because there are inconsistencies in the Government’s action.

We do not have an Intelligence and Security Committee just now, and that troubles me. The hon. Member for Bootle said how polarised discussions have been in respect of some serious incidents. In the wake of the Salisbury attack, some people immediately decided that it was all a stitch-up with the British security services, but I was as convinced as I could be that that was not the case. I had a good friend and trusted colleague who was privy to information I could not see; I trusted his judgment when he said to me, “I can’t tell you why, but—believe me—the evidence I have seen convinces me that these people were attacked by agents acting on behalf of the Russian regime.” I was happy to support the Government on that basis.

What if the order was a new proposal just now and there had been suggestions that, in some way, the information coming through in intelligence reports was flawed? We do not have any public accountability mechanism for our security and intelligence services because the committee has not been reconstituted since the elections. I hope the Government will take steps to get that done as quickly as possible. Apart from anything else, we can then stop the withholding of the report into Russian interference in our democratic processes. We do not know why it was withheld before the election—we know the official reason, but we also know that that reason carries no credibility at all.

We support the Government in taking action against these individuals and, indirectly, against their sponsors—there is not much doubt, and the public inquiry was convinced, that they were acting not on their own but under direction from agents of the Russian state. However, if that same Russian state is being allowed to infiltrate our democratic process or even if the report says there is no evidence to suggest that is happening, we surely have a right to see that sooner rather than later.

While the Government have correctly taken action against these individuals, we should remember that the first person to be the subject of an unexplained wealth order in the United Kingdom was in the country only because their application to live here was fast-tracked for no better reason than she had lots of money to invest in the UK. No one checked where that money had come from at the time.

We must ask ourselves: are we so keen to get money from anywhere invested in the UK economy? Are we protecting ourselves, and are the Government protecting us, enough against people whose money may have come from very dark sources indeed? When people, whose only justification for having their application fast-tracked was that they had a lot of money, can donate part of that lot of money into the UK political party system, we can understand why some who are not part of the political establishment begin to wonder whether we are really protecting ourselves in full from not only the physical threat that these two individuals clearly posed to UK residents but the real threat of the undermining of our democratic processes.

In supporting the Government’s draft order, I ask the Government to confirm that the Intelligence and Security Committee will be reconstituted as quickly as possible, that the report into Russian interference in our democracy will be released as quickly as possible and that they will take steps to close any loopholes that allow people, through the avenue of political donations, to undermine the safeguards we should have to ensure that anyone who donates money to influence our political processes has come by that money lawfully and through proper means.

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[John Glen]

I am grateful to Members from across the Committee for their support for the new order. I will come to address the points made, but we should focus on the key point here. Absent any progress in bringing Lugovoy and Kovtun to justice, denying them access to the UK financial system, in combination with the European arrest warrants and the Interpol red notices that remain in place against them, continues to send a clear signal about how fundamentally we disapprove of the actions that they took, which led to Mr Litvinenko’s death.

The hon. Member for Bootle, perfectly reasonably and appropriately, made some points about the review of the codes of practice and ensuring that they are up to date with various pieces of legislation. He spoke about the need to bring and ensure continuing clarity and lack of ambiguity, and for the Government to be open and transparent in this area. Those codes are the responsibility of the Home Office, but I am sure they will have noted the points that he made.

The hon. Member for Glenrothes spoke about wider issues involving the Intelligence and Security Committee and its report into Russia. That Committee will be constituted in the very near future; it is not for the Government to tell the Committee when to publish its reports, but it would be good to get these matters into the public domain.

[Peter Grant]

I accept that the Government cannot tell the Committee when to publish the report, but they did tell the Committee when not to publish the report. Does the Minister understand that that causes considerable concern to a lot of people—and not only on the Opposition side of the House?

[John Glen]

I think the Government have made their position clear. It will be for the new Committee, once constituted, to determine the timings.

My hon. Friend the Member for Congleton made some points about the mechanics of how the asset freezing process works and the definition of those assets. It would probably be appropriate for me to write to her on that matter, because that is a technical process that I am not privy to this afternoon, and it would be difficult for me to give her satisfaction.

Draft Public Bodies (Abolition of Public Works Loan Commissioners) Order 2019

Peter Grant Excerpts

Monday 3rd February 2020 General Committees

[Peter Grant (Glenrothes) (SNP)]

I am pleased to contribute to the debate. The primary legislation under which the draft order is being brought forward—the Infrastructure Act 2015—relates almost exclusively to England and Wales, but the section about the public works loan commissioners extends to the whole United Kingdom, so those of us who represent Scottish constituencies have a keen interest in it.

I have a concern almost instinctively any time I see anything being done to return influence to Ministers, because, frankly, my people do not trust this Government. I am suspicious of any central Government who want to take influence back, whether to Ministers, to civil servants or to both. I am always interested to know why that needs to be done, and what difference it will make.

Paragraph 8.3 of the explanatory memorandum refers to the “effectiveness” of the new system, stating that

“Ministers will be able more directly to influence delivery, including addressing any issues that occur, and the implementation of policies.”

Can the Minister explain whose policies are being implemented? The whole point of having different councils in different areas is that different people might have different policy priorities. Is this a way for the Treasury to influence what does or does not get built to suit its priorities, rather than those of elected local governments?

That might seem fanciful, but some of us can remember the days when the UK Treasury controlled practically all borrowing by local authorities throughout the United Kingdom. I was a councillor at the time, and it was quite obvious that decisions about what councils were allowed to borrow, and what they could do with their borrowing, were not about controlling the public finances, but about imposing somebody else’s agenda on councils in Scotland. At that time, the district council of which I was a member had two Conservatives among its 40 members. The regional council of which I was a member had no Conservatives; there were more Communist than Conservative councillors. Effectively, the big capital spending priorities of that council, one of the biggest in the country, were determined more by decisions taken in Whitehall about what it was allowed to borrow than by local decisions. I seek assurances from the Minister that that will not be allowed to happen. To put some meat on those assurances, perhaps he could give an example of the kind of influence over the implementation of policies that he envisages the order being used for that cannot be exercised now.

Secondly, although I accept that there is an accountability issue when the functions of a Government Department are exercised by an arm’s length organisation, I am not sure that resolving the lack of accountability of the Public Works Loan Board would have been at the top of my list. Instead, we could talk about Her Majesty’s Revenue and Customs or the Prison Service, certainly in England and possibly in Wales as well. It is interesting that the Government are sometimes happy to have an accountability gap between who is responsible for policy and who is responsible for operational management. Do the Government accept that, if there is a lack of accountability in relation to the Public Works Loan Board, there is also a lack of accountability in relation to the operation of HMRC? Can we expect proposals to make it more accountable?

My final concern relates again to whose priorities will be implemented. We have already seen the Government prepare to remove not only local discretion but the discretion of the national devolved Parliaments on decisions about the allocation of money from the shared prosperity fund, which replaces the European funding that has been coming into the UK for many years. At the moment, in Scotland—I understand that the situation is similar in Wales—the national devolved Parliament has a significant influence over how those funds are allocated. The only objection that I have heard from Government Members about that is that sometimes the Parliaments of Scotland and Wales have different priorities from that of the United Kingdom, but that is why we have devolved Parliaments. If we could be sure that everybody’s priorities were the same, we would need only one Government; we would need only one MP, because we would not need any kind of discussion about priorities.

I look for an assurance that the measure, while seeming to be about making loans approval more efficient and accountable, is not yet another example of enabling central Government to decide, by the back door, what local authorities are allowed to do. I await an absolute assurance from the Minister; I hope he will tell me where he might imagine there would be a different decision as a result of the new set-up. I will then decide what to do. At the moment, there is a possibility that I will divide the Committee.

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[John Glen]

It is helpful to put this in context. The rate was a function of the prevailing gilt rates last year, and the change brought it back to the level of the previous year, so we should not see this as a great leap in interest rate that will have a major effect. It is questionable whether the advantageous window offered by the relationship to the historically very low gilt rate was creating a different sort of behaviour. Again, that is outside the scope of my comments. I am happy to look at these matters, which are under ongoing review.

Let me turn to the hon. Member for Glenrothes’s remarks. He expressed general concern about any Government Minister taking control of anything, because he has no confidence in the Government. This is not a matter of Government Ministers overruling local authorities; the change is a reform of governance, with no practical effect on local authorities. It is based on the prudential code; decisions on borrowing and spending are devolved, and that continues. The Government consulted on this in 2017, and found widespread support for it. I am told that when the commissioners have met annually to sign off the annual report, they have said that they were keen for this SI to pass. The SI is quite complicated because it makes many references to primary legislation, and was delayed because of the events of recent years.

[Peter Grant]

I am interested to hear the Minister say that there is no practical effect on local authorities. The Government’s explanatory memorandum claims that the process will become more effective for local authorities. Is that not a practical effect? Does the Minister intend to reply to my question about whose policies will be implemented more effectively?

[John Glen]

The process is more effective in so far as the ceremonial role, which did not meaningfully alter any decisions on the ground, is transferred to the Treasury. There, we can ensure that we have a quorate body meeting to oversee the borrowing, but it will not make any different arbitration decisions, because the existing group of commissioners do not make those decisions. I am sorry that there has been a misunderstanding, but the order is not a power grab by the Treasury.

Transferring the powers of the public works loans commissioners to the Treasury will place that crucial function on a secure platform, enabling the continuity of lending for essential local capital projects. Those investments are often fundamental to quality of life and economic development, and by passing the SI, we will enhance the robustness and resilience of the lending facility, thereby supporting local authorities in such endeavours. I hope that the Committee has found the sitting informative and will join me in supporting the Order.

Question put.

Growth Strategy

Peter Grant Excerpts

Tuesday 21st January 2020 Westminster Hall

[John Redwood]

Yes, I am happy for there to be attractive reasons why people should go to the parts of the economy that have been less heavily invested in and that are less pressurised. However, with cars the issue is demand; there is not enough demand for the very good cars that the industry currently makes. The Government want to change the kind of cars that people buy, but it will take time for Britain, or anywhere else for that matter, to be able to produce the millions of electric cars that the Government want us to buy, at a price and to a specification that people like.

So, this is a top-down revolution and the public are not yet fully engaged in it in the way that the Government would like them to be. When polled, the public say that electric cars are a very good idea. However, when they are then asked, “Well, when are you buying your electric car?”, the answer is, “Well, not yet. Not me. I want a better subsidy on the car, I want a lower price, I want a higher range”—whatever it is.

There are still issues about engaging the public, which is why we are getting this industrial dislocation. China has experienced exactly the same thing and one would have thought that China would have continuous growth in cars, because it is coming from a much lower level of car ownership and individual income. However, even in China car volume is down, because of the regulatory changes and the dislocation involved in going from traditional product to electric product.

In addition, the Minister and his colleagues should look at the issue of property. Property is a very important part of the UK economy. It is often an asset base for people to borrow against in order to develop their business, and it is often the main way in which individuals hold their personal wealth. By buying a house on a mortgage and gradually paying the mortgage off, property often becomes people’s principal asset, which gives them some wealth and financial stability.

However, we have a property market in the UK that has been damaged by the very high stamp duties that were introduced under the previous Government, and the Government should look at that issue very carefully. I do not think that the Government are even maximising the revenues from stamp duties, and it might not be a bad idea for them to ask, “What are the rates that would maximise the revenues?” At the higher price levels in property, transactions have been very badly affected; indeed, they have been massively reduced by the very high rates at the top end of the market. So, the Treasury constantly has to revise down its forecasts of how much revenue it collects from stamp duty.

A more free-flowing property market would be a very good thing, because it would create all sorts of other work for people who are in the refurbishment and removals business, and above all it would allow people to fit their property needs more closely to the property that they have. A lot of potential switching in the market is being frustrated: some people have houses too big for them but they do not fancy paying the stamp duty on the trade-down property, and other people would like a bigger property, but the stamp duty would be just such a big addition to the higher price that they would have to pay for that property.

[Peter Grant (Glenrothes) (SNP)]

I congratulate the right hon. Gentleman on securing the first Westminster Hall debate of the new Session. Does he agree that there has been a major problem in the United Kingdom for many decades, which is that people—for one reason or another—have been encouraged to treat the house that they live in not as a place to live but as a speculative investment, on which they expect to make money? Also, does he accept that many people have been severely stung, because they thought that they would be able to stretch for a mortgage that they could not afford, in order to sell the house for more money in 10 years’ time? If the value of the house does not increase in 10 years’ time, they have a problem. That situation caused the crash in 2007-08 and it has caused a number of minor crashes since then. Does he also agree that more needs to be done to make sure that people who only have the money that they are investing in their house are protected against the possibility of losing their house and everything else when the market crashes?

[John Redwood]

Most people buy a house because they want somewhere to live that is theirs, and that they can then do up and change in the way they see fit, subject to planning. But yes, of course, it is also a way of holding wealth, and I repeat what I said: for many people it becomes their largest single asset. I do not think that is a bad thing. I do not think that people are treating their main property as a trading counter; it is where they wish to live, and they will only move when they want a different house, mainly for living purposes. People would only be able to buy property speculatively if the property was their second or third house, and not many people are in the fortunate position of having such wealth.

There is no absolute protection against house prices going down; they do from time to time, as the hon. Member for Glenrothes (Peter Grant) pointed out. However, if someone’s aim is to live in a house long term, and if they have taken out an affordable mortgage, temporary fluctuations in house prices are not life-threatening or wealth-threatening to any worrying extent, and they will just live through the period when house prices dip because there has been a recession, or whatever.

Fortunately, we do not seem to be looking at such a situation in the immediate future, and it is very important that we have a growth strategy, so that the slowdown in the economy that we have experienced in recent months is turned around quickly and does not become something worse, which could have negative consequences in the way that the hon. Gentleman talked about.

So my No.1 message to the Government is not to underestimate the damage that clumsy taxes can do, and they may even end up costing the Treasury, as stamp duty has done, because it is not collecting as much as it should. That is probably the case with vehicle excise duty as well, because of the volume impact on new cars, which relates to a whole series of factors; it does not just relate to the vehicle excise duty, but that was another complication in the situation.

As the Minister has this particular responsibility, I urge him to look again at IR35. We want a very flexible economy in which people can choose flexible employment, rather than have it forced on them. We have had a relatively flexible small business sector, but it is being damaged by the top-down imposition of the IR35 rules. I hear all sorts of stories from across the country of people having to stop their contracting business or losing contracts because the big companies that might employ them are worried they might get dragged into a retrospective tax increase in employer and employee national insurance. That is damaging the small contracting sector, and I urge the Government not to carry on doing that when we want to encourage more self-employment and allow self-employed people to go on to build bigger businesses.

One of the Office for National Statistics figures I saw recently, which I found fascinating, was that in London there are more than 1,500 businesses per 10,000 people, whereas in the lower income parts of the country there are half that number. There is a huge gap between the volume of enterprise in London, which is the richest part of the country in terms of average incomes, and much of the rest of the country, where incomes could be higher. It is not easy to break into why there are so many more businesses in London. In part, it is because people are better off and have more spending money—demand is important in setting up a business—but it is also to do with the general business environment and the concentration of people, talent, enterprise and spending power that we see in the capital. We need to do something similar in other parts of the country. Building more businesses is crucial, and IR35 is getting in the way of doing that.

Some 4.5 million people in the country who work for themselves do not have any employees, and they are afraid of taking on an extra employee because of the implications, whether for regulation, tax or otherwise, or because they think it will be too difficult to manage. We need to look at that step up in building a business, when someone goes from just working for themselves to having an employee or two. It is important that we make that step as easy as possible, because if another million self-employed people decided that they wanted a single employee, that would be transformational. That would obviously create a lot of extra demand in the labour market.

We need to look at taxes on employment and the complications of employment. Anything that the Government can do to reduce the tax on employment is a very good idea. We cannot collect tax revenue just by taxing things we do not like, but where we have a choice, it is better to tax things we do not like rather than things we do like. All parties in the House like the ideas of well-paid jobs and of more work, so we need to work away in Government to see how we can reduce the burden of taxes on work such as the apprentice levy, the national insurance levy on both the employee and the employer and other concealed taxes on work.

We also need to look at taxes on entrepreneurship. A larger population of people who have great ideas, who can change markets and who can persuade others that they have something people might want to buy is vital to the process of creating a more prosperous United Kingdom. We need to ensure that the offer on capital gains tax in particular is a fair one. People who have built a business over the years should not feel that they will be taxed again on it all, because they have been taxed on the activity in the business. Capital gains has to be a fair regime, and I urge the Government to keep the enterprise allowance arrangements so that entrepreneurs can keep a lot of the benefits from building their business.

It is said that our productivity performance in recent years has been disappointing and that that is a puzzle. I do not quite understand why it is a puzzle; it is exactly what we would expect. We have had a major reduction in North sea oil output. The way the figures are calculated means that it is one of the most productive sectors, because labour productivity is based on the amount of revenue or value-added generated by an individual, and an individual in the oil industry produces a huge amount of revenue due to the windfall element in the oil price. We had a very big squeeze on many of the activities in the City that were apparently profitable before 2008. Those activities flattered the productivity figures, but some of the profits turned out not to be genuine, and a lot of them have been squeezed out. Again, a high-earning, apparently highly productive part of the economy has gone through a big change, and we have lost that.

We have been a successful economy—this is a strength—in creating lots of new jobs, but a lot of them are relatively low paid so they do not score very well under productivity scoring. If we compare our productivity with that for continental countries with unemployment rates two or three times as high as ours, their productivity is higher, because people we are employing on low pay here would be unemployed there, and the unemployed do not count in the productivity figures—they are just ignored as if they do not exist.

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[Peter Grant (Glenrothes) (SNP)]

I am pleased to begin the summing up in this debate, Mr Hollobone. I do not think my voice will last longer than 10 minutes, so there should be no concerns on that account.

I congratulate the right hon. Member for Wokingham (John Redwood) on having secured this debate, and the three Members who have already spoken—the hon. Members for Strangford (Jim Shannon), for Derby North (Amanda Solloway), and for Thirsk and Malton (Kevin Hollinrake). Maybe unsurprisingly, given the constituencies those Members represent, a lot of the focus in this debate has been on the serious imbalance in the economy of the United Kingdom, and indeed the economy of England, between London and the rest. I am interested to hear what the Minister has to say about finally addressing that issue, because if we look at England in isolation—I am sorry to say that isolation is where England is headed right now—the disconnect between the biggest city and the tens of millions who live in other parts of the country is quite stark. It is something that we do not see in successful economies across the rest of Europe, and it will hold back the wider economic potential of this nation.

I particularly congratulate the hon. Member for Derby North on her return to the House of Commons. I always thought ping-pong was what happened between the House of Lords and the House of Commons, but apparently Derby North has a game of ping-pong between the Conservative party and the Labour party. I do not know how long she will be able to stay this time, but I know that she will relish the challenge of staying a bit longer. I cannot, in all honesty, say that I wish her well in that, but I hope she will not take that too personally.

Interestingly, although we have heard a lot of ideas about how to improve economic growth, we have not stopped to think about what economic growth is, what it is for, and particularly who it is for. One of the reasons why I do not get too obsessed with fractions of a percentage up or down in economic growth is that it can mean a lot of different things depending on how we measure it, and it is quite possible to look as if we have strong economic growth when an awful lot of people are being left behind. Some 20 million or 30 million people in the United States of America live in poverty, so looking at the apparent success of the American economy tells us that growth in itself is not enough. If people get left behind—if we do not have inclusive growth—then our economic growth is not really delivering.

I am very pleased that, with the limited powers they have just now, the Scottish Government have prioritised inclusive growth in a lot of ways that do not immediately look as if they are about economic growth. An example is their success in getting more young people from deprived areas into university. Some 16.5% of first-time entrants into universities in Scotland come from the 20% most-deprived areas, which means that we are close to a position where young people growing up in those areas have just as much chance of going to a top-class university as people from other parts of Scotland. That is massive, especially as education is one of the best ways to improve a person’s life chances.

More importantly, even though university might not be the best thing for a lot of young people, they are the first people in their families to believe that university is for them. The attitude, “A university education isn’t for the likes of me because I’m from the wrong background”, is beginning to be dismantled. It is impossible to estimate the difference that that could make through time.

The First Minister has also supported improving the educational achievement, and therefore the life chances, of young people who have been in the care of local authorities at some point or who have come from families with severe problems. When I was a council leader, I looked at the stark difference in the educational attainment of those young people compared with others of a similar age. Their life chances were being affected almost before their lives had started.

Nicola Sturgeon’s commitment means that those young people now believe that they have every bit as much right to get into university, get a good job, start their own business and prosper in the world as anybody else. That is a major contributor to economic growth. Even if it does not add any percentage points to GDP growth, surely it is right to make sure that if we live in a prosperous society, and we want to call that society civilised, we measure its success not by how many millionaires there are but by how well the people at the lower end of the income scale are faring. There is a marked divergence in that area between the priorities of the Government in this Parliament and those of my Government in my national Parliament in Scotland.

I mentioned a number of features of inclusive economic growth in my contribution to the Queen’s Speech debate last night, which I will not repeat. In particular, I spoke about the marked contrast between the Scottish Government’s investment into my part of Fife to regenerate the local economy, and the UK Government’s lack of attention. For as long as we remain part of the United Kingdom, I will continue to call on the UK Government to step up to the plate and honour their responsibility in that regard.

We talk a lot about the exceptional economic strength of London and the south-east of England, although, as I have said, the imbalance between that and the other English regions will become a major problem, if it is not already. In terms of fundamental economic performance, however, if Scotland were a region of England, it would be the second or third best performing region of England on every economic indicator. Whether in the growth of inward investment, the growth of our exports or the growth of our economy generally, Scotland has a fundamentally strong economy. There is absolutely no doubt about that.

The single biggest threat to our economy is Brexit. Every analysis shows that, after Brexit, our economy will grow less than if we had stayed in the European Union. The Government’s response to the fact that all their analyses showed that Brexit was an economically bad idea was not to stop Brexit but to stop publishing the results of the economic analyses, because they were too embarrassing.

Today’s debate has been very interesting, but the definition of economic success that I have heard, and the direction that the proposals from down here for economic success would take people in, are not what people from my country want to take, so that will result in a significant divergence. I say to hon. Members who represent constituencies in what they call the north of England—although I am not sure Derby and Yorkshire are particularly far north—that one of the best things that could happen for the economy there would be to have our very own northern powerhouse in Scotland. I can see that coming in the not-too-distant future.

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[The Financial Secretary to the Treasury (Jesse Norman)]

It is a delight to be able to speak for the Government in this first Westminster Hall debate of the new decade, as well as of the new parliamentary term. I congratulate my right hon. Friend the Member for Wokingham (John Redwood) for initiating this debate and for his very wide-ranging and thoughtful speech. I am sure he will be as pleased as I am and as I know Members across the House will be that today’s economic news reinforces a picture of an economy that is growing. The International Monetary Fund predicts that the UK is about to grow faster over the next few years than its major rivals in the eurozone and many of the G7—Germany, France, Italy and also Japan. PwC’s chief executive survey now rates UK attractiveness highly once again—I think we are the fourth most attractive global destination for location for businesses. That is very far from the narrative of isolation that we are hearing from the SNP and indicates the continuing international connectivity and scope for investment in our economy.

As my hon. Friend the Member for Derby North (Amanda Solloway) pointed out—I rejoice to see her back in this House—we are in the extraordinary position of having had 10 years of continuous annual economic growth. That is a remarkable achievement, and I am sure she will be as pleased as I am to see that the latest information is that the jobs market is strengthening, even from its already very strong current position. That economic growth is an amazing fact. If someone had said in the lee of the 2008 financial crisis that, beginning with the Conservative Government of 2010, there would be a full decade of uninterrupted annual economic growth, I do not think there is a person in this country, let alone this Chamber, who would not have bitten their arm off. That is something that we should all delight in, but that we should acknowledge has limitations that we need to try to overcome.

One of the things that was most interesting about my right hon. Friend’s speech was the way in which he highlighted the change in economic policy. He focused on the fiscal change and on the transition from the Budget restraint of the last two Governments to the more expansionary fiscal policy that this Government have indicated in the spending round and that we may see in the Budget. I would suggest there is something slightly deeper going on. There is a change in the Government’s conception of economic policy. We are not thinking of economic policy in what might be called a more purely general equilibrium way, by which investment flows automatically to investable propositions and finds returns. We are determined as a Government to build more energy into that and to adopt a focus that is more specifically targeted on regional needs and identities, and it is that sense of economic policy that marks a distinct intellectual step forward. If anyone is interested, I tried to explain this in a piece in the Financial Times yesterday that highlights this transition.

I will say a bit about the interesting speeches that were made by my right hon. Friend and other Members. He is right to say that lower taxes can be part of a fiscally expansionary policy. He possibly ignores some of the differences between ourselves and the USA. Obviously, the US had a massive fiscal boost, which is something it could do partly because of the dollar’s extreme strength as the global reserve currency. Of course, that was accompanied by a significant—in this country, it would be politically contentious—deregulation in energy. There are important differences between the US economy and our own.

My right hon. Friend mentioned the constraints under which the motor industry operates, but he did not mention dieselgate, which was an absolutely disastrous blow to the credibility of the global diesel manufacturers. Nor did he mention the fact that current diesels are still very heavy emitters—even Euro 6, compared with current environmental standards. The Government have frozen fuel duty and grown VED only in real terms. It is about trying to strike a balance between a shift towards a greener economy, particularly a green transport economy—at a time when we have not quite got to the point in the S-curve where the supply of electric vehicles is coming through at enough scale to warrant people using them—while moderating and mitigating the impact on households.

My right hon. Friend and the hon. Member for Oxford East (Anneliese Dodds) touched on what he described as the top-down imposition of IR35 rules. As he knows, IR35 rules have not changed. All that has changed is the way IR35 is being assessed, and we have called for a review in order to ensure that its implementation can be as smooth as possible. He touched on the issue of public sector productivity—again, rightly—and there might well be scope for using things such as telemedicine to improve the productivity of the public sector, but an intrinsic difficulty is one of the economic laws that we bump up against: Baumol’s cost disease. The cost of services relative to manufacturing continues to escalate, and it is not possible in the public sector to have industrial-type improvements in productivity. We do not want teachers to have too many pupils in the class, and we do not want nurses to have too many people to examine and support, so productivity is intrinsically more limited. The Government must therefore be cleverer about how we use technology, which is the purpose of the new GovTech fund that we have announced.

I will pick up on some of the other themes of the debate before turning to another point. I agree with the comments made by the hon. Member for East Londonderry (Mr Campbell) about the importance of spreading wage growth across the UK, which was a point also made by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) in his very thoughtful speech. I also share the view of the hon. Member for Glenrothes (Peter Grant) that it is a mistake to see property as a speculative asset, and there is no doubt that the crash of 2008 was caused by a massive over-leveraging in the banking sector. As he will recall—Labour does not like it when I point this out—UK bank borrowing across the sector as a whole was 20 times equity for 40 years, encompassing 1960, 1970, 1980 and 1990. In 2000 it started to go up, and by 2017 it was 50 times equity. That was what fuelled the enormous speculative boom.

[Peter Grant]

Will the Minister give way?

[Jesse Norman]

I will not, because I am very short of time.

I share the concern expressed by the hon. Member for Strangford (Jim Shannon) about the toxic atmosphere in SW1.

I will mention another issue that is more specific and personal to me, and I hope colleagues will indulge me. In my constituency in Herefordshire, we have been trying to create a new model of higher education through what we call a new model institute in technology and engineering. It has attracted a great deal of attention across Government because it creates the possibility of significant regional economic growth that is closely tied to the creation of university campuses in cathedral cities such as Canterbury, York and Lincoln. I flag it now because, from a national perspective, it represents a portable model by which higher education of the most value-added kind, and that therefore has benefits for entrepreneurship and business formation, can be moved to all parts of the country, having been tested and developed in Herefordshire. One would think that this was something that Government at all levels would support. Her Majesty’s Government, in the form of the Department for Education, the Department for Business, Energy and Industrial Strategy, and the Ministry for Housing, Communities and Local Government, have been extremely supportive of it.

One might also think that the local enterprise partnership, the Marches LEP, would support it. I am sorry to tell colleagues that the Marches LEP—I say this having had at least a year of wrestling with it on this topic—has been absolutely diabolical in the way it has treated this very innovative project. It has received £23 million from Government and all the support one could imagine. It has received private sector investment, and investment from matched funds. The LEP, which by charter is supposed to support economic growth in the Marches, has done nothing but prevaricate and delay. Even now, it is seeking to impose a £5 million indemnity on Government investment, although the Government made it clear in letters from the Secretary of State and from senior civil servants as early as January 2019 that no such indemnity was required. The specific people involved—the then chairman of the LEP, Graham Wynn, and the chief executive, Gill Hamer—should be subjected to significant criticism in the House. I put it on record that this important opportunity for a portable model of regional growth in higher education, which was developed through a pioneering model of tech and engineering at university and which offers possibilities and creativity, has been ignored and is being actively undermined.

Having said that, let me congratulate my right hon. Friend the Member for Wokingham again on introducing this very wide-ranging and important debate, which has examined not merely specific policy change but the very basis of economics itself. I thank him for securing the debate.

Economy and Jobs

Peter Grant Excerpts

Monday 20th January 2020 Commons Chamber

[Sajid Javid]

I agree absolutely with my hon. Friend and will come to that topic in just a moment.

The foundation of our new economic plan is fiscal responsibility. It has taken a decade of hard work by the British people to turn our public finances around. The deficit has fallen from 10% of GDP in 2010 to just 1.8% today. We are not going to throw that away. We were elected on a platform to manage the public finances responsibly, so it is a matter of trust, as well as economic credibility, that we deliver on that promise to the British people. We will be bound by a credible new fiscal framework that will keep our borrowing and debt under control while allowing for new investment in levelling up and spreading opportunity throughout the country. At the Budget, I will publish a new charter for budget responsibility that will give effect to those rules, and the Office for Budget Responsibility will scrutinise our performance against them.

Thanks to the hard work of the British people, we have got that deficit down, and debt is under control. We can now afford to invest more in levelling up and spreading opportunity right across our country. The first step will be our national infrastructure strategy. Better infrastructure can boost people’s earning power by making it easier to find work. It can help businesses access new markets. It can help us thrive and grow. It can boost communities and places and improve standards of living. It is simply not good enough that we have fallen behind so many other countries on infrastructure, and the Government are going to fix that.

[Peter Grant (Glenrothes) (SNP)]

The Chancellor may be aware that a very welcome infrastructure announcement was made just before Christmas, when the Scottish Government gave the long-awaited confirmation that the Levenmouth rail link will be reinstated. Exactly how much money do the United Kingdom Government intend to put into that vital project?

[Sajid Javid]

I am afraid I did not catch the name of the project the hon. Gentleman mentioned. If he wants to stand up again and mention it, I will reply.

[Peter Grant]

The Levenmouth rail link—I can give the Chancellor a map if he wants to know where it is.

[Sajid Javid]

The good news for our citizens, whether in Scotland, England, Northern Ireland or Wales, is that our infrastructure revolution and the funds we intend to use to build new infrastructure will benefit every part of the United Kingdom. When we set out our plans and provide more detail in the forthcoming Budget, there will no doubt be a lot more investment in Scotland.

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[Peter Grant (Glenrothes) (SNP)]

I will ask for that in writing, Madam Deputy Speaker, because my wife will never believe that anybody asked me to speak for a bit longer than I had intended to.

I am very pleased to speak in this debate and I say, with all good grace, congratulations to all those who made their maiden speeches. Obviously, my preference was for my hon. Friend the Member for Gordon (Richard Thomson). I would have preferred not to have seen elected a number of those who spoke today, but they were. We have to accept the result and we look with considerable trepidation at what the implications of the Government’s new majority will be.

To all those who have been elected, having won the trust of their communities, and who have spoken with such pride about their constituencies, I offer my sincere congratulations. Those who drew a cheer from their own Benches when they said how long it had been since their party had won in their constituency were entitled to do that. I would only mention that by my own reckoning I am one of 25 SNP Members who are still the first and only SNP Member ever elected in their constituencies. The difference is that we plan to be the last MPs ever elected to those constituencies.

I wanted to speak about what the Queen’s Speech says about the economy in my constituency, but actually I need to talk about what it doesn’t say, because there is precious little, even in the 150-page dossier of propaganda from the Government at the back of the Queen’s Speech, that addresses the real problems facing far too many of my constituents. Most of the impact of their legislative programme will be negative. This week, Fife Council has published a consultative draft economic action plan for Mid Fife, an area that covers most of my constituency and most of the neighbouring constituency of Kirkcaldy and Cowdenbeath and a small part of North East Fife, down the east side of Leven. From any of the economic indicators for that part of Fife, it is immediately obvious that it should be a priority area for investment. The actions of Fife Council demonstrate that it agrees; the actions of the Scottish Government demonstrate that they agree; the actions of the UK Government demonstrate that, as the Chancellor proved today, most of them do not know where Levenmouth is, never mind understand its problems.

Mid Fife, as defined in that study, is below the national average on almost every measure of economic activity, though not through the fault of the people. They are as hard-working, charitable and honest as you will find anywhere, but they have been let down far too often. There are fewer businesses per head of population; the number of businesses is falling, contrary to what is happening in the rest of Fife and Scotland; of the businesses we do have, fewer provide knowledge intensive business services, which means that fewer of them are likely to generate the high-quality, high-paid jobs of the future; wages are well below the national average; and there are significantly fewer women in paid employment and significantly fewer households where more than one person is in paid work.

There are success stories. Over the years, there has been huge investment by Diageo, though some of that, I know, is a bitter pill to swallow as it has meant closures in other parts of Scotland. I only wish that some of the world-leading branded products Diageo sells around the world were actually marked “Made in Fife”. I wish it would stop trying to pretend they were made in a different country altogether, so next time you sip your Tanqueray or your Gordon’s, know it was made in Fife, not London.

Apart from that, it sometimes feels as if the only growth industry in Glenrothes and Levenmouth is food banks. Going through the names of some of these communities in Mid Fife, many will immediately see a pattern—I guarantee that if Dennis Skinner was still here, he would see the pattern. I am thinking of names such as Methil and Buckhaven, Kennoway, Balgonie, Wemyss, Dysart, Seafield, Kinglassie, Bowhill, Lochore and Ballingry—trace out those names on a map and you trace out the coalfields of Fife from a bygone age. The sad and shameful fact is that most of the economic and social problems that stretch across that swathe of Mid Fife were created not just by the pit closures but by the way they were closed and the utterly inhuman way the people and the communities that made these islands such a powerhouse in the world economy were treated: when their labour was no longer needed they were thrown on the scrapheap.

That is why, in communities where generations of people lived through those times and remember who treated the miners and their families and communities with such contempt, hon. Members will find that under a local government electoral system that gives a candidate a seat if they get 15% of first preference votes, there are still huge swathes of that part of Mid Fife that are Tory-free zones. It is maybe not surprising that, to the best of my knowledge, in the recent general election the Tory candidate never showed their face in the constituency. I certainly never saw them during the entire campaign.

That is not to understate the work done by community organisations, the local authority and the Scottish Government: the new Queensferry crossing, built without the evils of the private finance initiative, has been a huge boost to the economy; the building of a new school, Levenmouth Academy, funded in such a way that the net long-term cost to the council will be nil; the funding of the energy park in Fife—not helped by the UK Government sabotaging the renewables industry at every opportunity; and the recent commitment by the Scottish Government to reopening the rail link to Leven. Incidentally, rail networks in Scotland should be jointly operated by the Scottish and UK Governments. When will the UK Government honour their obligation to fund that alongside the Scottish Government?

Why is this particularly relevant to today’s debate and the wider debate on the Queen’s Speech? Well, we are facing another drastic change in employment related to the extraction of the earth’s natural resources, and I want to make sure we at least learn the lessons of what went wrong last time. Oil & Gas UK estimates that there are about 270,000 people in the UK whose jobs directly or indirectly depend on the oil and gas industry, and about 40%—about 101,000—of those jobs are in Scotland. Between 2019 and 2024, that industry is going to deliver £8.5 billion to the Treasury—not bad for an industry that in 2014 they said would be finished in five years. If we are serious about moving to a zero carbon economy—we have been talking about climate emergencies for the last several weeks at least—how many of those 270,000 jobs in the UK, including the 101,000 in Scotland, will still exist as they do now in 10, 15 or 20 years? If we do not expect those jobs to be there, what are those 101,000 people in Scotland and those 270,000 people across the UK going to do for a living?

The SNP is calling for all the £8.5 billion the Treasury expect to get from oil and gas to be reinvested in helping the industry to prepare for a carbon-free future and to helping communities such as those in many parts of Aberdeen and around Falkirk and Grangemouth to prepare so that, when the transition to a carbon-free economy comes, the people in those communities will be treated as human beings with rights and with a future, which is more than can be said about far too many of their predecessors in the communities I represent. It would be unforgiveable if the workers in Aberdeen in the future were treated as shabbily as those in Aberhill and other parts of Methil and Buckhaven were.

Finally, I have tried to get answers on the shared prosperity fund before. Several of the communities I have mentioned are helped enormously by community organisations that get significant amounts of money from the European Union, and that then brings in match funding and shared funding from others sources. I am genuinely worried that this will become a carve-up for the Government and that the money will go to Government pet projects that are not based on the priorities of the people of my constituency or the people who have been delivering projects in places such as Methil, Cardenden and Kinglassie. It will not even be run past anyone in the Scottish Government. I am concerned from answers on that from the Welsh Office that the Government are preparing a Cardiff bypass and a Holyrood bypass so that any money that does trickle into Scotland will be spent where a Conservative Government in London want it spent, not where the people in Fife and of Scotland think it should be going. That kind of contempt is one reason why I am as convinced as I ever have been that the MPs now on these Benches will be the last ones our country ever has to send to represent our people in this place.