Finance (No. 2) Bill

Rebecca Pow Excerpts

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give the Finance (No. 2) Bill a Second Reading because it derives from the 2017 Budget which confirmed the continuation of austerity, it fails to provide the necessary stimulus to compensate for the economic impact of Brexit, it fails to address the inequity of VAT being charged on the Scottish Police Authority and the Scottish Fire and Rescue Service, it fails to provide concrete measures to support the oil and gas industry, it increases Insurance Premium Tax above the level of inflation, it increases duty on Scotch whisky, and it is a wholly inadequate response to the economic challenges being faced by Scotland and the UK.”

We oppose this Finance Bill—well, someone has to—not so much because of what it does but because of what it does not do. Let me take as an example the inequity of Scotland’s police and fire and rescue authorities paying VAT. It is a long-standing problem, and this Government could and should have taken the opportunity of this Finance Bill to rectify it, but they did not. In the Budget, there was at least a recognition of the problems faced by Scotland’s oil and gas sector, but no specific measures were announced—just another options paper, which was effectively announced last year. This Finance Bill should have been the opportunity to make concrete proposals for UK content and for oil exploration and decommissioning allowances to ensure that the sector continues to thrive, to flourish and to provide substantial tax yields for decades, but of course it does not. It does, however, put up the duty on Scotch whisky, and increase insurance premium tax again by 20%, which is way above the rate of inflation. Effectively, the Bill treats the Scotch whisky industry and the insurance sector as cash cows for the Treasury.

Having said that, we do welcome some of the measures in the Bill, particularly those that are intended to clamp down on tax avoidance and evasion. I welcome what the Minister said about restricting the use of past losses, disguised remuneration, the initial penalties for tax avoidance enablers, and the removal of the permanent non-dom status. However, it is hard to see how this Bill will assist in any substantial way to address the long-term UK challenge of improving productivity or even helping to make society a little less unequal, which is vital to unlocking our growth potential. That is particularly the case when one considers that alongside this Finance Bill are a set of welfare proposals that do not support inclusive growth but, rather, drive a coach and horses through it. They include the cut of £30 a week to employment and support allowance for claimants placed in the work-related activity group; a 55% cut in the rate of ESA for disabled people under the age of 25; the freezing of the lower disabled child element of universal credit; and the changes for full-time students who receive disability living allowance or personal independence payments who are now not treated as having limited capability for work and are therefore not entitled to universal credit until they have been assessed, which means that they face long delays without support.

I do not want to digress too far from the Bill, but delivering those cuts when disabled people and those on low to middle incomes are already facing a barrage of cuts from this Government is a disgrace. Moreover, those cuts not only fly in the face of the Tory party’s last manifesto commitment to help more disabled people into the workplace—something that is vital—but undermine the essential drive for real inclusive growth, which is vital if we are to grow the economy and maximise our potential.

[Rebecca Pow (Taunton Deane) (Con)]

I just want to point out that, under the Scotland Act 2016, we are devolving benefits worth £2.8 billion to the Scottish Parliament. That is almost a fifth of Scottish spending. It would be really interesting to hear what the hon. Gentleman thinks about that. Indeed, he could even welcome the fact that this Government have created such a strong economy that Scotland is able to have that much money gifted to it.

[Stewart Hosie]

I am sure that the Scottish people will be delighted to hear that the hon. Lady thinks that somehow they do not pay taxes and that they are dependent on the largesse of ladies like her to fund our welfare system. We have had a very small amount of welfare devolved. If she wants to make such a contribution, she can read out the rest of the Whips’ briefing note when she catches your eye later, Mr Deputy Speaker. [Interruption.] The Tories can groan all they like, but they have called a snap election, and on the same day we are debating the Finance Bill.

In this Bill, the Minister wishes to reduce the dividend nil rate from 2018-19 from £5,000 to £2,000. I will listen carefully in the next 10 days or so to what the Government say about that. Perhaps they can prove that only very wealthy people benefit from that allowance and that it may be a reasonable change. Equally, it may be the case that many small and start-up business owners depend on that money to tide them over and that the measure will be nothing more than a tax on enterprise—a disincentive to start a business, to create jobs and to power local economies.

I did find it slightly jarring when the Minister explained that wealthy people could put lots more money in individual savings accounts. That is fantastic news for people who are already wealthy: they can save tax free. Let us juxtapose that with a change to the dividend nil rate from a modest £5,000 down to £2,000, which might act as a disincentive to people who genuinely want to start a business, while allowing already wealthy people to save tax free. That might be the kind of error we would have seen under the old fiscal charter and its requirement to run a permanent surplus quickly, almost irrespective of the economic conditions. However, the new fiscal charter is more flexible than the last one, which should make such a measure unnecessary. The Government are still targeting a surplus early in the next Parliament. Let us see how early it is in the next, next Parliament.

Again, without digressing too far, the numbers and the timescale for even a modest surplus within four or five years look precarious. The forecasts for a current account surplus are tiny, not even reaching 1.5% of GDP. If there is any external shock or capital flight if sterling suffers further devaluation, which is quite likely if the Brexit negotiations go wrong—again, highly possible—the figures could fall apart very quickly indeed.

At its heart, this is a Finance Bill delivered with the pretence that the hard Tory Brexit is not happening. It sits in splendid isolation from reality. We cannot assess whether it will assist with the challenges that lie ahead. We cannot even assess properly what the consequences of the limited measures in it will be, because the Office for Budget Responsibility told us about Brexit at the Budget:

“There is no meaningful basis for predicting the precise end-point of the negotiations as the basis for our forecast.”

In short, this Finance Bill, like the 2017 Budget, is effectively based on a central assumption that pretends that Brexit does not exist. That is a ridiculous thing to do, given that article 50 has already been triggered.

--- Later in debate ---

[Mr Rees-Mogg]

I do apologise for a lack of humility. I shall try to do better in that regard. I am, however, flattered that the hon. Gentleman remembers my speeches from years ago. I admire his attention to the debates in this House. The point I was making then was that a deficit of £150 billion a year, or 10% or 11% of GDP, was completely unsustainable. It is now down to about £50 billion and about 3.5% or 4% of GDP. It is at a manageable level. That is the achievement of the previous Chancellor and the current Chancellor.

[Rebecca Pow]

Is not one of the fundamental reasons why the economy is in safe hands with those of us on the Conservative Benches that Conservatives have an understanding of the importance of business? My hon. Friend is still in business. Unless one understands how business works and what makes it tick, we cannot raise the revenues necessary to pay for what we need in this country.

[Mr Rees-Mogg]

My hon. Friend comes from Somerset and her parents are constituents of mine. For both those reasons, she is invariably right and on this occasion particularly so. There is no money tree. It has to come from the success of businesses. It is a matter of balance. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) wishes to get away from that balance, but it had to be done at the right rate to ensure the least economic problems as taxes were raised and expenditure cut. That has been achieved.

--- Later in debate ---

[Rebecca Pow (Taunton Deane) (Con)]

There is much to welcome in this Finance Bill and I am very pleased to be taking part in this fascinating debate.

Contrary to the ill-informed comments of the hon. Member for Aberdeen North (Kirsty Blackman), this Bill provides the framework for making the UK one of the most competitive fiscal regimes for oil and gas in the world. I was going to intervene to make that point but decided to save it for my speech.

This Bill brings with it the specific tools we need to keep the economy soundly on track. It demonstrates that this Government have a clear understanding of what is needed to run the country, keeping it on a firm financial footing while enabling businesses to grow and thrive, as my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) said. It enables hard-working individuals and families to live within their means. It enables funds to be raised through our fair tax system to provide the necessary public services we all need. It enables us to have the vital funds to treat and to help those who are not so able to help themselves. That is always something essential that we, the Conservatives, should not and never will forget.

All this has been made possible in challenging times. I welcome the Chancellor’s announcement that we have just been able to allocate another £2 billion of additional funding for adult services, another £100 million to the NHS, and an additional £300 million to fund 16 to 19-year-olds in the new technical education system of T-levels. I applaud that because we absolutely have to skill up our young people to keep our economy strong and growing, but also, in this Brexit world, we need to be on top of our game to maintain and grow our global position.

I applaud the increase in the personal tax threshold to £11,500. This is often mentioned on the doorstep in Taunton Deane. People see it as a real bonus and a real benefit, and say thank you for it. Keeping corporation tax low generates more tax revenue, so that has to be applauded. Given the number of times that businesses collar me to mention this, I have definitely got the message, and certainly the Chancellor has.

I am not going to go on any more about the nitty-gritty of those aspects of the Bill because I want to turn to my own constituency. If the Government, with their solid plans for a strong economy, can get it right for Taunton Deane, they can get it right everywhere—and they are getting it right with their sound economic plan. Since I have been the MP for Taunton Deane, as I am absolutely delighted and honoured to be, it has attracted much more funding than ever before, especially for infrastructure. Traditionally, Taunton Deane, and indeed the rest of the south-west, has been completely underfunded under the Liberal Democrat regime that has held sway there, but this is changing, and I am delighted to be a part of that.

[Mrs Main]

Where are they?

[Rebecca Pow]

Indeed. Where are they, to speak up for themselves?

Having made a strong case with my Conservative local council, my Conservative county council, and the line-up of all the other Conservative MPs in Somerset, we have money coming forward to upgrade the A358 and create a super-expressway to the south-west. We have had £7 million for a smart motorway on the M5, £6 million for the Tone Way and the Creech Castle junction, and £4.6 million to upgrade Taunton rail station, which is the hub of the south-west and will welcome everyone to the south-west. This is absolutely phenomenal, and none of it would have been possible without a sound economy. It is helping to drive up productivity, which is much needed in the south-west, and it is working. It is creating jobs; indeed, unemployment has never been so low in Taunton Deane, at 3.6%. Get this right and everything works.

Finally, I will touch on an unusual area to mention in a finance debate, namely the environment. With a sound economy and appropriate funding, if we want to have healthy air, clean water, flood-resilient measures and wider catchment processes, and if we want to protect our special landscapes, including ancient trees and sites of special scientific interest, we need to fund farmers and landowners to manage the habitat appropriately for all of us. I say to the Chancellor that that will not happen without a thriving economy. If we want to encourage businesses not to use microbeads in their products, they need the time and money to invest in research, so they also need to be thriving. Indeed, if we want to encourage businesses to go along the lines of the circular economy, they need to invest to find the right way to do it. They might have to invest, but in the end it will pay dividends.

That all needs to be done within the positive framework of a sound economy. I applaud the steps that the Chancellor has taken. The right framework is in place, regardless of Brexit, so let us continue to build on it. Thank you, Madam Deputy Speaker, for including my name last on the list.