Tax Fairness

Rehman Chishti Excerpts

Tuesday 12th March 2013 Commons Chamber

[Mr Gauke]

I take it from what the hon. Gentleman says that rather than raise the personal allowance, he would prefer us to spend more on the welfare bill. If that is the hon. Gentleman’s position, fair enough, but I do not agree. Raising the personal allowance, taking people out of income tax, and making sure that work pays, are all things that a sensible Government should do, and I am delighted that this coalition Government are able to do that.

I come now to the taxation of those on highest incomes, on which we have already touched. The top 1% of taxpayers, those with incomes of over £150,000 a year, will pay more than a quarter of all income tax, while the top 5% of taxpayers, those with income of £68,000 or more, will pay nearly half of income tax. We agree that it is important that we create a tax system that ensures that those who earn the most contribute the most, but it is also important that we create a tax system that works. Among other things, that means a tax system that does not damage our economy by undermining our international competitiveness.

The Government inherited a top rate of tax at 50p, a rate that our predecessors, who this afternoon have painted themselves as the party of taxing the rich more, had put in place for just 36 of their 4,758 days in power. The rate that they left us with was the highest top rate among major economies. The last Labour Chancellor had made it clear that it was temporary. It was also very clear that it was having an immediate impact on our competitiveness.

Let me say something that I hope is not controversial: the principal purpose of income tax is to raise revenue. So we commissioned HMRC to analyse just how effective the 50p rate was in raising revenue.

That HMRC report, laid before the House, set out thorough and compelling evidence on the impact of the 50p rate. It showed that the rate was uncompetitive, distortive and inefficient. Not only did it not raise much revenue, but it could even have cost the Exchequer money when the indirect impacts on other taxes were taken into account. This Government were not prepared to maintain a rate of income tax that was both ineffective at raising money and that left us with the highest statutory rate of income tax in the G20, so we acted, in the interests of the country, and the top rate of tax will fall to 45p from April this year. This will see our top rate of tax drop below that of Australia, Germany, Japan and Canada, which will send a signal to businesses taking decisions on investment and location that the UK is a competitive environment.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Has the Minister seen the KPMG report that states that Britain’s competitiveness is better than that of Switzerland and the United States and that that is a consequence of the measures taken by the Government?

[Mr Gauke]

My hon. Friend is absolutely right to raise that point in the context of the changes we have made to our corporate tax system. In 2009 KPMG commissioned a survey of tax professionals, asking them to name the three most competitive countries. The UK was nominated by just 16% of respondents. In 2012 KPMG undertook the same survey and the UK was nominated by 72% of respondents. That is a dramatic change, which we are proud of, and it will help our economy grow. We have also had the courage to reduce the 50p rate, which will help our competitiveness, too.

Oral Answers to Questions

Rehman Chishti Excerpts

Tuesday 11th September 2012 Commons Chamber

[Rehman Chishti (Gillingham and Rainham) (Con)]

6. What steps he has taken to help households with their cost of living.

[The Chief Secretary to the Treasury (Danny Alexander)]

The Government have taken wide-ranging action to support households. For example, we cut fuel duty last year and have deferred various increases planned by the Labour party. We are also helping those in work by raising the personal allowance by £1,100 in April next year, which is the largest cut in income tax for median earners in more than a decade. That is a substantial record of dealing with the big questions in the cost of living for families.

[Rehman Chishti]

I thank my right hon. Friend for that answer. There are concerns that fuel companies delay the reduction in petrol prices when the cost of crude oil falls. What action are the Government taking to ensure that companies pass on savings to motorists?

[Danny Alexander]

The hon. Gentleman raises an important point, and I sympathise greatly with families up and down the country who face the problem that he describes. That is why we have made decisions on fuel duty that mean that the price of petrol is roughly 10p a litre less than it would have been had we followed through the Labour party’s plans. The Office of Fair Trading has recently announced a call for information on the problem, and I urge him and Members in all parts of the House to pass on any information that they have. Having spoken to Clive Maxwell of the OFT, I know that it is committed to ensuring—

Youth Unemployment and Bank Bonuses

Rehman Chishti Excerpts

Monday 23rd January 2012 Commons Chamber

[Danny Alexander]

I am doing no such thing, because those announcements will be made in due course. I have said that bonuses in the banks that we own will have to be far lower than they were last year. The cash element of bonuses will be limited to £2,000 for all employees, but of course there are other parts to bonuses, too.

Returning our country to prosperity has been the founding purpose of the coalition Government, but in our determination to restore growth, we will put fairness at the very heart of our recovery, tackling gross inequity in senior pay and tackling the perils of youth unemployment to ensure that young people’s prospects are not blighted in the way that those of too many were in the 1980s.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Will the Chief Secretary give way?

[Danny Alexander]

No, I am going to make some progress now.

A fair and sustainable recovery demands leadership, and that is exactly what we are providing. Labour cannot be taken seriously on the economy until it admits the mistakes it made when it was in power. If Labour was really changing its position on the economy, the first thing it would do is say sorry. Sorry for letting youth unemployment get out of control, sorry for letting the banking sector get out of control, and sorry for letting the deficit and debt get out of—[Interruption.]

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[Mr George Mudie (Leeds East) (Lab)]

I want to raise three points. The hon. Member for Devizes (Claire Perry), who has left the Chamber, said that all we were proposing was a wish list. It is a wish list and I cannot understand why the Government are opposing it. Regardless of how they view our performance and their performance on youth unemployment, not enough is being done, and the first wish in the motion is for £2 billion to be put in to help with youth unemployment. I think that is a decent thing to have on a wish list. Secondly, we are asking for that money to come from the people who caused the difficulty, and that would be a very good thing.

I heard some of the comments directed at my hon. Friend the Member for Leeds West (Rachel Reeves) and I think of parallel universes. I envy Government Members if they have the situation that they described in their constituencies. I have represented my constituency for 20 years as an MP and 20 years as a councillor and it is probably in its saddest state since the ’80s, which were a desperate time. Unemployment among youngsters then was along the levels we are seeing now, and as a result their lives were blighted and their self-esteem and confidence went. That situation affected families and communities, and it was one of the saddest times to represent a community. When the Labour Government came in they put in a lot of money and effort and they made a difference, but they did not finish the job and those issues remain. Communities are blighted by low self-esteem, low confidence and low ambition, and the real fear now is that that will be entrenched beyond any help or hope. I do not understand how anyone can abuse the shadow Chief Secretary when she raises the issue of youth unemployment, or read a speech with the kind of blandness we have just heard, as though they were describing a perfect world. This is about people’s lives and their families’ lives being ruined.

[Rehman Chishti]

Looking at what we are doing now, does the hon. Gentleman welcome the Government’s pledge to put £150 million towards the creation of university technical colleges, which will improve the skills of our young people?

[Mr Mudie]

I would rather the Government had not trebled tuition fees. I would rather that instead of spending £150 million they were taking the opportunity to raise £2 billion to put into youth employment. This is a very serious, non-political matter and people’s lives are going to be ruined unless they get urgent help. We should see that as a priority, and we should have no compunction about taking that money from the people who caused this difficulty. Governments, rating agencies and regulators also played a part but the sheer greed and irresponsibility of the banking and financial industry takes my breath away.

Autumn Statement

Rehman Chishti Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

The issue of the Severn bridge tolls is different. There will come a point later in the decade when the question arises of what we do with the toll income and how it is allocated between England and Wales. I want to establish, in discussion with the Welsh Government in Cardiff, whether we can arrange to use the money from the tolls to support the M4 corridor in south Wales.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I welcome the Chancellor’s statement, and, in particular, the help given to commuters in my constituency who will save £67 on their season tickets to London. Will he confirm that the shadow Chancellor’s illegal fuel tax policy contravenes annex III of the EU directive on VAT?

[Mr Osborne]

It does. It is an illegal policy, which is a novel thing for an Opposition to advance. As I have said, fuel duty and taxes would be 10p higher if we had not acted in the Budget or in the autumn. [Interruption.] I still have not heard whether the shadow Chancellor supports what we have done on fuel duty. He will probably say yes, but he will not say how he would fund it. As, unfortunately, he did not discover at the Treasury, we must make the sums add up in order to keep the country’s books balanced and ensure that we stay out of a debt storm.

Fuel Prices and the Cost of Living

Rehman Chishti Excerpts

Wednesday 16th March 2011 Commons Chamber

[Ms Eagle]

It is clear that increases in fuel duty have knock-on effects on petrol prices, and that fuel prices in general have complex knock-on effects in an economy. The Government have to think about that as they approach the Budget.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Will the hon. Lady give way?

[Ms Eagle]

No. I have given way a few times, and I am going to get on with my remarks.

It is absolutely clear that increased fuel duty costs are eating further and further into already stretched household budgets, making the squeeze on living standards even worse. Businesses are suffering from problems caused by inflating commodity costs, tighter margins and restricted access to credit from the banks. Many are anxious about how they will get by in the next few years, and the continuing rise in the price of fuel is adding to that worry.

--- Later in debate ---

[Justine Greening]

Officials are not aware that the last Government sought any derogation in relation to VAT on fuel at any point in the past 13 years. In fact, if the shadow Chancellor had gone off to Europe with his influencing strategy, which was clearly so unsuccessful when he was running for the leadership, I doubt that there would have been any prospect whatever of his making any progress. The Labour party seems to have about as much understanding today of the economic situation that it has left our country in as it did of the situation two years ago, when it ran this country into the deepest and longest recession in living memory.

[Rehman Chishti]

Will my hon. Friend confirm that the shadow Chancellor was wrong in law when he said that there should a reversal of the VAT rise on fuel? Under EU directive 112 of 2006, that cannot legally be done.

[Justine Greening]

My hon. Friend is absolutely right. In fact, the EU directive on VAT states:

“Member States may apply either one or two reduced rates…The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.”

That annex does not include road fuel, and other amending articles do not permit a reduced rate or exemption to be applied to transport fuel. That in is European Council directive 2006/112/EC of 28 November 2006 on the common system of value added tax, at article 98 and annex III.

Oral Answers to Questions

Rehman Chishti Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Gauke]

It may come as a surprise to Opposition Members, but an entire Government are capable of working together. That was not the experience when the Treasury was being run by the current shadow Chancellor.

[Rehman Chishti (Gillingham and Rainham) (Con)]

5. What assessment he has made of recent trends in the size of the structural deficit.

[John Howell (Henley) (Con)]

11. What assessment he has made of recent trends in the size of the structural deficit.

[The Chief Secretary to the Treasury (Danny Alexander)]

The structural deficit was 8.8% of GDP in 2009-10. The Office for Budget Responsibility forecast is for it to be 7.6% in 2010-11, falling to 0.3% by 2015-16. More information is in the OBR’s forecast.

[Rehman Chishti]

OECD figures in November show that Britain entered the financial crisis with the largest structural budget deficit in the G7. Does the Chief Secretary believe that this country entered the crisis led by the biggest deficit deniers in the G7?

[Danny Alexander]

That is a very good question. The previous Government were running a structural deficit from 2001-02, with a structural deficit of 2.6% in 2007-08, the largest, as the hon. Gentleman says, in the G7 in 2007. They were deficit deniers then, they are deficit deniers now, and that is why they have no answers to the problems of our country today.

Oral Answers to Questions

Rehman Chishti Excerpts

Tuesday 21st December 2010 Commons Chamber

[Rehman Chishti (Gillingham and Rainham) (Con)]

4. What recent assessment he has made of the effectiveness of the private finance initiative.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

5. What recent assessment he has made of the effectiveness of the private finance initiative.

--- Later in debate ---

[The Chief Secretary to the Treasury (Danny Alexander)]

In the spending review the Government abolished the private finance initiative credit system, which provided Departments with a ring-fenced budget that could be used only to support local authority PFI projects. The change levelled the playing field between PFI and other forms of procurement.

[Rehman Chishti]

What does the Chief Secretary think of the comments made by the former Paymaster General, who said that PFI contracts were far too generous and too expensive?

[Danny Alexander]

That has a striking comment, coming from a Minister who was in the Department responsible for those things, and it reflects the general attitude towards public money that was prevalent under the previous Administration. There is a great deal of work that we can do as a Government to ensure that in future PFI is used only where it is absolutely necessary, and that we get best value for public money. That is how we should approach these things.

Comprehensive Spending Review

Rehman Chishti Excerpts

Thursday 28th October 2010 Commons Chamber

[Mel Stride (Central Devon) (Con)]

I have sat through most of this debate with a sense of growing incredulity at the collective amnesia and denial of Opposition Members who, quite simply, are unprepared to face up to the reality of the fiscal disaster they have bequeathed to us to attempt to clear up. Let me just remind them of some of the figures. [Interruption.] I am pleased to see that they find this so amusing: £270,000 per minute in debt interest, £120 million a day, £43 billion per year—which is more than we spend on education. That is a disgrace.

Let me put this in historical context. In 1976, when another Labour Chancellor, Denis Healey, went cap in hand to the International Monetary Fund because this country was busted, our deficit represented about 7% of GDP. Today, it stands at 11.4%. Our house is well and truly economically out of order. This will not only affect our children, who will have to pick up the strain in repaying the debt. It has also affected our standing in the world, because this country has the worst deficit in the G20. Our deficit is worse than that of many Latin American countries; Brazil has a nominal annual deficit, as of April 2010, of a little over 3%, compared with ours of 11.4%, so we are 300% behind Brazil. It has come to something when we have to look enviously at Latin America’s fiscal position.

Much has been said about how quickly the Government have determined to reduce the structural deficit over the lifetime of this Parliament, but many are on our side, including the OECD, the Bank of England and the Office for Budget Responsibility. Let us not forget that Labour’s plan and proposal, as far as there is one, is to halve our structural deficit over the period of the review. That would leave us with £100 billion in additional debt and an additional £5 billion in interest to pay on it. I see Labour Members sighing, but perhaps they could tell us what they are going to cut to find that extra £5 billion or what extra taxes they are going to raise to meet that requirement.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Does my hon. Friend agree that the International Monetary Fund’s statement was clear about the fact that what the Government are doing is right and proper, and will lead to growth in the long term?

[Mel Stride]

My hon. Friend is entirely correct, and there is no doubt that if the Government had not taken prompt action as we did in the emergency Budget in June, we would have been that close to a Greek-style economic meltdown.

--- Later in debate ---

[Stewart Hosie]

The Parliamentary Private Secretary is chuntering away about Scottish independence. It is interesting, is it not? He normally wants to deprecate countries such as Ireland and Iceland, but they still sit above the UK in the world prosperity league. I shall give him a copy of The Scotsman to look at later, before he decides on another ill-judged sedentary intervention.

The bottom line is that those defence cuts threaten to add to the 10,000 military job losses under Labour and to the £5.6 billion military underspend in Scotland under Labour. Far more importantly, they would represent a 25% reduction in the entire military footprint in Scotland. If the cuts go ahead, they will represent a 25% hollowing out of the entire economy of Moray. When Conservative Ministers say that we are all in it together, it strikes me that that is not absolutely true and that it is not absolutely fair.

The CSR was not just about the Scottish block but about other UK spending decisions, yet somehow Scotland was portrayed as doing better than most UK Departments. That is nothing but spin. The House of Commons Library makes it clear that the Department of Health, the Department for International Development, the Department of Energy and Climate Change, the Department for Work and Pensions, the Ministry of Defence, the Cabinet Office, the Treasury, the Law Officers, the Northern Ireland Office, the Department for Culture, Media and Sport, the Foreign and Commonwealth Office, Her Majesty’s Revenue and Customs and the Wales Office all did better. A little more substance and a little less spin would not go amiss.

That is important because the cuts represent £1.3 billion in cash terms next year and, above all expectations, there will be an £800 million cut in capital expenditure. That directly threatens 12,000 Scottish jobs. It is dreadfully disappointing—the cuts were announced on the same day as the Scottish quarter 2 GDP figures, which showed Scottish growth up at 1.3%, above the 1.2% for the UK, and confirmed the decision to have direct capital investment to protect jobs during the recession. That makes it all the more ludicrous that the Government would seek cuts of such magnitude before recovery is secure.

[Rehman Chishti]

Did the hon. Gentleman respond to the Government’s spending challenge with his own ideas about where the savings should be made, with £44 billion as a starting point?

[Stewart Hosie]

What I did, possibly before the hon. Gentleman was a Member of the House, was to table amendments to previous legislation to set out a much more sensible framework for a proper programme of fiscal consolidation, based on the successful New Zealand model, rather than the flawed Canadian model that his party and the Liberal party are now following.

One of the things that I find extraordinary, which the Chief Secretary could not explain earlier, was the lack of detail in the Government’s plans. The Department for Transport is expected, among other things, to reduce its administrative costs by one third—£100 million a year. The Department for Business, Innovation and Skills is expected, among other things, to reduce its administrative costs by £400 million. In the Home Office, the UK Border Agency is expected to cut its support function costs by £500 million.

I am not necessarily saying that that cannot be done: what I am asking is how. Which offices will close, how many jobs will be lost, how many staff will be sacked, and where are they located? Of the 42,000 job losses in the military—the 25,000 civilian and the 17,000 uniformed —which ones are those, in which units, where are they currently based, and when will they go? Why would not or could not the Chief Secretary give us that information today? It gives the impression that the Government are making it up as they go along.

I am aware that time is short and I know that many other Members want to speak, so I have a specific question for Treasury Ministers. Page 50 of the comprehensive spending review makes it clear that

“interest rates on Public Works Loan Board (PWLB) loans have been increased to 1 per cent above UK government gilts.”

It goes on to add, unsurprisingly:

“The amount of self-financed capital expenditure is forecast to fall by 17 per cent over the four years.”

This will bring in to the Government, according to the table on page 12, £1.3 billion. That will be about £120 million from Scotland.

Will the Minister please confirm that there will be a requirement in Scotland for another £120 million of cuts, and £1.3 billion of cuts throughout the whole of the UK, in order to find the money to pay the extra £1.3 billion in interest charges because of the increase on Public Works Loan Board loans? I would be grateful for confirmation of that today.

Oral Answers to Questions

Rehman Chishti Excerpts

Tuesday 12th October 2010 Commons Chamber

[Mr Osborne]

What I would say to my hon. Friend in response to his first point is yes, the procedure that I propose is exactly the same, unless he wants to volunteer some alternative method. On his second point, this is genuinely a matter that should be debated in the House in a non-partisan way, because it does not affect just this Parliament. There is a question of whether we want the OBR to be able to cost Opposition policies at the time of a general election. I propose to have discussions with Opposition party leaders about whether that is the appropriate thing to do, and it would be a legitimate matter for the House to debate and decide.

[Rehman Chishti (Gillingham and Rainham) (Con)]

9. What recent representations he has received on his Department’s spending challenge.

[The Economic Secretary to the Treasury (Justine Greening)]

Many, many people have got involved with the spending challenge review, and on the spending challenge website we received more than 100,000 suggestions from members of the public, including more than 60,000 from public sector workers. We also had correspondence across government, including 10,000 e-mails and letters to the Treasury alone. I know that many other Departments received similar correspondence. Finally, Ministers have been out and about across the country, and have had meetings in their Ministries with a range of stakeholders to make sure that we make the right decisions.

[Rehman Chishti]

Is there still time for new members of the shadow Cabinet to contribute to the spending challenge, given that they should have £44 billion of ideas to hand?

[Justine Greening]

No, it is not too late for members of the shadow Cabinet to get involved with this process. They had an opportunity last night, as you remember Mr Speaker, on the Finance (No. 2) Bill, but they failed to take it. I think that that may be because they do not have the capacity or the courage to come up with their own suggestions.

Equitable Life (Payments) Bill

Rehman Chishti Excerpts

Tuesday 14th September 2010 Commons Chamber

[Rehman Chishti (Gillingham and Rainham) (Con)]

Knowing that time is of the essence, I will apply the principle that brevity is a virtue and not a vice. Before I begin, I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on an absolutely super speech.

I very much welcome the Bill. Policyholders in my constituency were pushed from pillar to post by the Labour Government, and they had to get a judicial review. Even after that, the then Government would not accept responsibility. I welcome the current Government’s intention to gain justice for policyholders and the fact that, within five months of their coming into government, there is a plan for redress for policyholders in my constituency and the country more widely.

I welcome the fact that the Bill does not predetermine the amount of compensation to be paid. I urge the independent commission to implement the parliamentary ombudsman’s findings dated 28 July 2008, which recommended a scheme providing fair compensation to remedy any relative loss suffered by policyholders. Equally, however, when setting the compensation level we must take into account the financial situation in which we find ourselves as a result of the Labour Government’s mismanagement. The same report by the ombudsman stated that it was

“appropriate to consider the potential impact on the public purse of any payment of compensation”.

I share the concern of the ombudsman and policyholders about the Chadwick report, because it does not enable fair and transparent compensation.

I welcome the Bill and the fact that the Government are setting up an independent commission to oversee the design and delivery of the compensation scheme. I also welcome the fact that policyholders will start to recover and receive compensation by the middle of next year or sooner. Finally, I congratulate the Financial Secretary and the Treasury on bringing forward the Bill so swiftly.