The Economy

Richard Burden Excerpts

Thursday 24th October 2019 Commons Chamber

[Richard Burden (Birmingham, Northfield) (Lab)]

Last week, union representatives from Rolls-Royce came to see my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) and me. Rolls-Royce is one of the main anchors of the UK’s aerospace sector and has operations in no less than nine EU member states. They came to tell us about their worries, the most direct and immediate being the disastrous impact that a no-deal Brexit would have on their sector. They were also clear that avoiding a no-deal Brexit was not enough, and they left us in no doubt about the importance to the long-term health of their company and their sector of preserving the frictionless trade that is key to their sector’s success and that prevents the dislocation of the integrated operations of that company and its supply chains across the EU. In short, they echoed the very issues that the aerospace, food and drink, pharmaceuticals and automotive sectors had put to the Government in a letter just the week before.

Together those sectors employ more than 1 million people in this country and contribute £98 billion to the UK economy every year. They are very concerned about the downgrade that the Prime Minister’s political declaration will mean for the economic relationship between the UK and the EU—a downgrade not only from the close alignment we already have with the EU, but even from that envisaged in the political declaration brought forward by the right hon. Member for Maidenhead (Mrs May). That downgrade was forensically exposed by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) in Saturday’s debate.

I will give a few examples. The first is aerospace. Post Brexit, the UK will either be part of the European Union Aviation Safety Agency or it will not. EASA is a mechanism for aligning standards that ADS, the aerospace industry body, describes as “vital” for the sector. But we still have no clarity at all about whether the UK will remain a member.

Chemicals is not only a key industry in its own right, but an essential part of the aerospace supply chain. Sixty per cent. of UK chemical exports go to the EU and 75% of the UK’s chemical imports come from the EU. Chemicals or products containing them are bought, developed and sold backwards and forwards repeatedly between the EU and the UK. That can only happen without checks and delays and because they are governed by a common set of regulatory standards held in place by the UK’s being part of the EU’s REACH—registration, evaluation, authorisation and restriction of chemicals—safety programme. Will we stay part of that after Brexit? We simply do not know and the political declaration leaves us none the wiser.

The automotive sector is the UK’s biggest single exporter of goods. We know that WTO tariffs, which would immediately kick in in the event of a no-deal Brexit, would be a hammer blow for the industry. However, it is not just avoiding no deal that is important; it is also about having a common rulebook of regulatory standards that remove the need for checks on goods that move over national borders.

I say to Ministers that constantly repeating the mantra that they are looking to have a “best in class”—their words—free trade agreement just will not cut it. That will not cut it, unless they provide the real and specific answers that are needed to the real and specific questions that UK industry has put to them. Unless they do that, either we will be back to the disaster that a no-deal Brexit would mean for our economy, or we will end up with something so half-baked that UK competitiveness will end up in a not very slow-motion car crash.

Spring Statement

Richard Burden Excerpts

Wednesday 13th March 2019 Commons Chamber

[Mr Hammond]

The hon. Lady has a legitimate point. The funding as between schools and authorities is very unevenly distributed. That is why, when we put an extra £1.3 billion into the school system in 2017, we committed to a fair funding formula that would redistribute over time. That is happening. I understand that schools that are underfunded relative to the mean would like it to happen more quickly, but that has to be the answer. We have to move towards a fair distribution of funding between schools.

[Richard Burden (Birmingham, Northfield) (Lab)]

Does the Chancellor accept that his changes to vehicle excise duty penalise the cleanest diesels on the market while offering no incentive whatsoever to motorists to get rid of older, dirtier diesels, which has led to an increase in CO₂ emissions from new cars for the first time in a decade? When will he sort this out?

[Mr Hammond]

No, I do not accept that, but I accept that, because of the scandal of manipulated emissions test, we have a very difficult situation in the vehicle excise duty tables, whereby vehicles have turned out to have much higher emissions than was originally thought. We do have to address this issue, as I acknowledged in the last Budget, and we will address it.

European Union (Withdrawal) Act

Richard Burden Excerpts

Thursday 6th December 2018 Commons Chamber

[Mr Hammond]

The backstop remains as the ultimate default, but the agreement we have negotiated with the EU very importantly gives us the choice, if we are not ready to move to our new future partnership on 1 January 2021, to seek an extension of the implementation period for one or two further years. That is a very important part of the architecture of what we have negotiated. I make no bones about this—I have said it before. In my view, it would be much better for the UK to seek an extension of the implementation period if we need a further period of time before we are ready for the new long-term arrangements, rather than go into the backstop.

[Richard Burden (Birmingham, Northfield) (Lab)]

The Chancellor is making a very good case about what would happen if there were a no-deal Brexit. Indeed, in his opening remarks he described it as an act of “uncertainty and economic self-harm”. Given that the companies he has talked about, which depend so much on just-in-time deliveries in the motor industry and elsewhere, are most worried and concerned about the prospect of a no-deal Brexit, and as there is clearly not a majority in this House for a no-deal Brexit, although we may disagree about other things, why do we not unite and rule out that option?

[Mr Hammond]

The way to do that is to support the proposal that the Prime Minister has presented to the House, which represents a compromise, ensuring that we leave the EU and respect the referendum decision of the British people, but do so in a way designed to minimise any negative impact on our economy and maximise the opportunities for this country in the future.

Budget Resolutions

Richard Burden Excerpts

Thursday 9th March 2017 Commons Chamber

[Sajid Javid]

The hon. Lady rightly points to the challenge of ensuring that employers recognise the changes. Initiatives such as the new Institute of Apprenticeships, which is employer-led, will help to set the standards for the technical training. That will make a difference in ensuring that employers welcome the new qualifications.

The measures I have talked about so far will improve lives right across the country, but we recognise that local areas across Britain want greater control of their own services and infrastructure. The Government, the Greater London Authority and London Councils have reached an agreement on further devolution for our great capital city. This includes exploring a pilot for a development rights auction model and joint work to identify what elements of the criminal justice services can be delivered locally. We will also be agreeing a second health and social care memorandum of understanding to support work on prevention, integration and estates reform.

However, there is more to this country than its capital city. I should know: I was born in the north, raised in the south-west and elected in the midlands. Today, the Chancellor is in Dudley, launching our midlands engine strategy. This follows the northern powerhouse strategy published after the autumn statement.

[Richard Burden (Birmingham, Northfield) (Lab)]

The Secretary of State and I are both midlands Members of Parliament. I welcome the focus on the midlands in the Budget. There are some useful initiatives in it. Would he care to comment on the strategy being brought forward today by Midlands Connect? It is charged with looking at the transport infrastructure side of delivering the midlands engine, and in particular at east-west connectivity, and it makes it clear that, for the midlands engine to work and deliver its potential, it will need a long-term perspective and investment of £1 billion per annum over a 30-year period. What confidence can we have that that long-term commitment will be given?

[Sajid Javid]

As a midlands MP, the hon. Gentleman will understand that the devolution deal for the region will lead to additional funding of more than £1 billion over the next 30 years, which can be invested in priorities such as transport infrastructure. I believe that the right leadership is in place, and that that is exactly what will happen. That is why I am supporting Andy Street to become the next Mayor, and I hope that the hon. Gentleman will join me in expressing his support for him. Perhaps that is what he was just doing.

The hon. Gentleman will also be pleased to hear that this morning we published details of £392 million of additional funding for the midlands, allocated through the third local growth fund. That money will further unlock the region’s potential, funding infrastructure and creating jobs. Much of it will go to Birmingham, for example. The Budget includes £90 million for the north and £23 million for the midlands from a £220 million fund that addresses pinch points on the national road network. The Chancellor has launched a £690 million competition for local authorities across England to tackle urban congestion and get local transport networks moving again. That is a serious investment in our communities that will make a real difference to the daily lives of millions of people and countless businesses. We can make that investment precisely because of the fair, progressive changes that we are making to the tax system. We are levelling the playing field between employees and the self-employed, and 60% of the self-employed—the lowest earners—will gain from these reforms. We are also continuing to reduce corporation tax on all profitable companies, large and small, so that hard-working entrepreneurs keep most of the fruits of their labours.

We are taking a number of steps to make business rates fairer. I have never made any secret of my support for business, and for small businesses in particular. Seeing my dad’s shop struggle was one of the reasons I came into politics in the first place. From the biggest cities to the smallest villages, the local high street and the local pub form the heart of countless communities across our country. That is why the Chancellor and I listened closely when concerns were raised over this year’s business rate revaluation, and why I was happy to work with colleagues across Government to secure action.

The majority of business will see no increase or even a fall in their business rates, but I know that if someone’s rates are going up, it is no consolation to hear that someone else’s will be going down. The bigger picture will not pay their bills, so the Budget introduces three new schemes that will help businesses facing steep rises. The first involves additional support aimed specifically at small and rural businesses that are losing some or all of their rate relief and are facing large percentage increases in their bills as a result. The additional relief will limit the annual increase in the bill for an eligible business to the greater of either £600 or the cap in increase for small properties in the existing transitional relief scheme. That is 5% in real terms in 2017-18. No small business losing some or all of its relief as a result of the revaluation should see its bills rise by more than £50 a month in 2017-18.

The second measure is the establishment of a £300 million discretionary fund for local authorities to use over the next four years. Each billing authority will receive a share of this funding and will be able to use it to deliver targeted support to the most hard-pressed ratepayers in its area. This will allow local authorities to more than double the amount they spend on discretionary relief in 2017-18. Finally, there is a new relief for pubs. This will provide a flat £1,000 discount in 2017-18 on bills for all pubs with a rateable value below £100,000. My Department will be publishing full details later, but up to 36,000 pubs—that is approximately 90% of them— could benefit from the relief. The cost of all three models will be met in full with new money allocated by central Government.

Recent consultations have shown little appetite for wholesale reform of the business rate system. However, there is scope to reform the revaluation process, making it smoother and more frequent to avoid the dramatic increases that the present system can deliver. We will set out our preferred approach to delivering this in due course, and will consult on it before the next revaluation is due. In the medium term, we need to find a better way of taxing the digital part of the economy so that online businesses do not enjoy an unfair advantage. This is another example of the way in which this Government deliver lasting reform alongside immediate investment. It is the difference between a sticking plaster and long-term cure.

Local Government: Ethical Procurement

Richard Burden Excerpts

Tuesday 15th March 2016 Westminster Hall

[Richard Burden (Birmingham, Northfield) (Lab)]

I beg to move,

That this House has considered local government and ethical procurement.

I am grateful for the opportunity to have this debate. As I look around, I see right hon. and hon. Members with very different views on Israel and Palestine, and people who disagree about what incentives or pressure should apply to either side to secure equal rights, including the rights of statehood and the right to security for the peoples of both Palestine and Israel.

As chair of the Britain-Palestine all-party parliamentary group, I take a close interest in the situation in the middle east. However, this debate is not primarily about whether any of us takes this view or that view on how to bring peace there; I sought today’s debate to hold Ministers to account and to require them to be clear about what their policy announcements mean and do not mean. This debate is also about the ability of those who are responsible in public institutions to exercise the judgments that they are appointed to exercise within the law when they make decisions. That could be in respect of how local authorities are accountable to their electorates for making decisions or of the ability of pensions trustees to make judgments in line with their fiduciary duties.

I welcome the Minister here today to answer questions about the procurement policy note issued by the Cabinet Office on 17 February entitled “Putting a stop to public procurement boycotts” and about the proposed changes to the rules governing the local government pension scheme’s investments—for which I understand the Cabinet Office is also responsible, for some reason. I look to the Minister to answer what he will be asked clearly and without ambiguity. That is always important, but it is even more important on these matters because the Minister for the Cabinet Office and Paymaster General has volunteered very little about them to the House. That is in stark contrast to the amount of publicity he has sought to generate for his proposals outside the House.

For where this all starts, we need to go back to the Conservative party conference last October. A press release was issued in which the right hon. Gentleman was quoted. It was headlined “Government to stop ‘divisive’ town hall boycotts and sanctions” and said that action was going to be taken against the

“growing spread of militant divestment campaigns against UK defence and Israeli firms.”

However, that press release also contained a note to editors, as press releases often do, that suggested that a large number of the local authorities and public institutions that were apparently due to be targeted by the new rules had not resolved to divest from companies on the grounds that they were Israeli or of any other nationality. They had made or were in the course of making procurement or investment decisions on the basis of the behaviour of companies, irrespective of their nationality. In fact, the behaviour most frequently mentioned in the press release was financial involvement with illegal settlements in the west bank, about which local authorities and others were concerned.

I know that in October last year, collective Cabinet responsibility was perhaps expected rather more than it appears to be these days. However, it is rather surprising that the Minister for the Cabinet Office took such exception to public institutions seeking to avoid dealings with companies involved with illegal settlements, given that the Foreign Office’s own website carries very different advice.

[Jo Cox (Batley and Spen) (Lab)]

I congratulate my hon. Friend on securing this vital discussion. As he will be aware, the UK Trade & Investment website, which is sponsored by the Foreign Office, states:

“we do not encourage or offer support”

to firms that trade with illegal settlements. Does my hon. Friend agree that we find ourselves in a perverse situation? The Foreign Office is warning UK companies and private individuals against trading with the settlements, while the Department for Communities and Local Government and the Cabinet Office are threatening to make it illegal for public bodies to do so.

[Richard Burden]

My hon. Friend is absolutely right. It is worth quoting directly from that Foreign Office advice, which is there to this day. It says:

“Settlements are illegal under international law, constitute an obstacle to peace”

and “threaten” the “two-state solution”. It goes on:

“There are therefore clear risks related to economic and financial activities in the settlements, and”—

as my hon. Friend just said—

“we do not encourage or offer support to such activity. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognised as a legitimate part of Israel’s territory.”

[Imran Hussain (Bradford East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I thank my hon. Friend for securing such an important debate. Does he agree that local authorities are in fact a branch of the state and therefore have a duty to observe our obligations under international human rights law?

[Richard Burden]

I understand what my hon. Friend says, but this is also about different public institutions making judgments in line with the law and their best belief of what the situation is. I hope that all public institutions would pay due regard to international law.

[Andy Slaughter (Hammersmith) (Lab)]

Will my hon. Friend give way?

[Richard Burden]

Before giving way, I just want to finish this quote from the Foreign Office advice:

“This may result in disputed titles to the land, water, mineral or other natural resources which might be the subject of purchase or investment. EU citizens and businesses should also be aware of the potential reputational implications of getting involved in economic and financial activities in settlements, as well as possible abuses of the rights of individuals. Those contemplating any economic or financial involvement in settlements should seek appropriate legal advice.”

[Andy Slaughter]

Following the point that my hon. Friend the Member for Bradford East (Imran Hussain) just made, the Foreign Office guidance also talks about

“possible violations of international humanitarian law and human rights law”.

Indeed, the Foreign Office guidance is very clear, whereas the procurement policy note is very unclear. Does my hon. Friend the Member for Birmingham, Northfield (Richard Burden) agree that that may be intentional—that the actual aim is not to change the law, but to discourage and blackmail local authorities into not taking steps that may be perfectly legitimate and that the Foreign Office is encouraging them to take?

[Richard Burden]

The point that my hon. Friend makes is about the fear that a lot of people have about the agenda behind this procurement policy note.

[Stephen Pound (Ealing North) (Lab)]

My hon. Friend is constructing a very powerful case. Does he agree that this is about not necessarily Israel but a much wider issue? It is about the freedom of people in local government to do as I and five of my fellow councillors—who all subsequently became MPs—did in the London Borough of Ealing in 1982, when we were quite happy to disinvest in Barclays. Will my hon. Friend remind me about what element of parliamentary scrutiny or involvement there was when the statement was made by the Minister for the Cabinet Office in February this year? I do not recall it being mentioned on the Floor of the House at all.

[Richard Burden]

My hon. Friend is quite right. Parliamentary scrutiny of this matter has come down to a number of us having to ask questions—to which we have had not very detailed replies, I have to say—and to this debate. We had to apply for a debate in Westminster Hall to get any parliamentary scrutiny of this matter at all.

[Helen Goodman (Bishop Auckland) (Lab)]

I am grateful to my hon. Friend for securing this debate and for giving me an opportunity to ask him this question. I asked the Cabinet Office and a number of other Departments whether they had recently met people from the arms industry, the tobacco industry or, indeed, the Israeli embassy who may have lobbied for this measure. I am afraid that I did not get a substantive response from any of the Departments. Has my hon. Friend had any answers to questions such as that?

[Richard Burden]

I am afraid that my hon. Friend’s experience rather mirrors mine and that of a number of other hon. Members.

[Chloe Smith (Norwich North) (Con)]

This point is merely about the mechanics of parliamentary time. I simply wonder whether the hon. Gentleman knows how many procurement policy notes there have been in 2014, 2015 and 2016, and how many of those have merited parliamentary scrutiny in their own right.

--- Later in debate ---

[Richard Burden]

I have no idea about that, but if the hon. Lady thinks this is not a very significant public procurement note that merits parliamentary scrutiny, I wonder why the Minister for the Cabinet Office took the trouble of announcing it in a press conference with the Prime Minister of Israel on 17 February.

On 16 December, I asked the Secretary of State for International Development whether she agreed with the Foreign Office that it was perfectly reasonable for both public and private institutions to pay due regard to that Foreign Office advice when they make their own investment and procurement decisions. Her answer was unequivocal. She said:

“They should do that; that is good Foreign Office advice.”—[Official Report, 16 December 2015; Vol. 603, c. 1534.]

So my first question to the Minister is this: were civil servants consulted at all before the press release was issued at the Conservative party conference? I am happy to give way to him if he has a reply.

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

I was planning to wait until the end and collect what I am sure will be a whole series of questions. Perhaps that will allow me to wrap them all up together in a series of responses.

[Richard Burden]

I am very happy for that to happen. I give the Minister notice that there will be six questions on which I am seeking answers.

Did Ministers really take the view that public institutions should not have the same rights and concerns as private institutions when it comes to good business practice and corporate social responsibility? What was it that Ministers were trying to outlaw? The public procurement note published on 17 February appears to suggest much less than the Conservative press release of October; it appears to say that institutions should not impose a blanket ban on contracts with companies on the basis of the nationality of the companies concerned, in line with existing EU and World Trade Organisation rules. We know that the WTO forbids the use of quantitative restrictions, such as a ban on imports—phrased in terms of products originating in the “territory” of another WTO member.

On 9 March, in answer to a question from my hon. Friend the Member for Hammersmith (Andy Slaughter) about whether the occupied territories could be considered part of Israel, the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Bournemouth East (Mr Ellwood), was absolutely clear:

“The World Trade Organisation does not define the territory of its members. The UK does not recognise Israeli sovereignty over the territories occupied by Israel in 1967. We therefore do not consider the Occupied Palestinian Territories to be part of Israel.”

So my second question to the Minister is this: is there anything in this public procurement notice or that is intended by the Government that in any way changes that?

European Union rules are also mentioned in the public procurement notice. They allow public institutions, on a case-by-case basis, to exclude companies from tenders on the basis of their behaviour, specifically where grave misconduct may be involved. What could that mean? Let us turn again to the Government’s own documents—to their 2013 national action plan on implementing the UN guiding principles on human rights and business. An extract from that states that the UK Government

“are committed to ensuring that in UK Government procurement human rights related matters are reflected appropriately when purchasing goods, works and services. Under the public procurement rules public bodies may exclude tenderers from bidding for a contract opportunity in certain circumstances, including where there is information showing grave misconduct by a company in the course of its business or profession. Such misconduct might arise in cases where there are breaches of human rights.”

My third question to the Minister is therefore this: does the February 2016 public procurement note in any way change or add to that advice?

My fourth question is about whether the Minister considers that a breach of the fourth Geneva convention is a breach of human rights. If he does, would the public procurement note restrict a public institution from resolving not to deal with a company that was involved in aiding and abetting breaches of that convention?

If the public procurement note is prompting these and more questions, so, too, are the changes that the Cabinet Office says it is going to introduce in relation to investment decisions of local government pension funds. So my fifth question is this: pension fund trustees are already covered by a fiduciary duty, but will the changes being introduced in any way fetter the judgments that they make in line with that fiduciary duty in relation to, say, not investing in fossil fuels, tobacco or the arms trade?

My sixth question logically follows from that: in order to be clear on these points, will the Minister outline what plans he has for parliamentary scrutiny of these changes to pension fund guidance? Specifically, will he commit to consulting on any draft guidance he intends to issue in respect of local government pension scheme investments before it is published and before Parliament, through whatever procedure, is asked to make any kind of decision on these changes?

[Stephen Timms (East Ham) (Lab)]

My hon. Friend is setting out a clear set of questions, and he has made it clear that there is some ambiguity about precisely what the impact of the guidance note is. Is his reading of it that the kind of disinvestment by a local authority pension fund that was referred to earlier—Barclays and activities in South Africa—would be ruled out?

[Richard Burden]

I should say in answer to my right hon. Friend that I honestly do not know. That is the whole point—the Minister has to answer these questions. The wording of the Conservative party press release would certainly indicate to me that that kind of thing would be outlawed, but the Minister has to give specific answers today to these specific questions. That is important because it simply is not acceptable for councils, pension funds or other public institutions to feel threatened away from acting in line with their best judgments, in line with their duties, as a result of innuendo broadcast by the Cabinet Office Minister at the Conservative party conference—or indeed, broadcast more recently in Israel.

[Stephen Pound]

I am not entirely sure whether the Church of England is counted as an institution in this context, but does my hon. Friend realise that it would certainly be caught up in this guidance note?

--- Later in debate ---

[Richard Burden]

My hon. Friend is absolutely right about that; that could be a seventh question for the Minister.

The Minister no doubt spoke to his right hon. Friend the Minister for the Cabinet Office before this debate, so perhaps he knows why his right hon. Friend decided to launch this public procurement note not in a statement to the House or under any House procedure, but in a press conference alongside the Prime Minister of Israel. If the reason was that he wanted to make a point on the world stage about this Government’s opposition to generalised boycotts of Israel, then okay—if he wants to make that point—but why did he apparently not feel any need to utter a word about other parts of Government policy, such as the fact that settlements in the occupied territories are illegal?

Why was there not a word about the fact that Israel had only recently withdrawn co-operation from an independent delegation of UK lawyers acting on a Foreign Office-supported project, which has found that Israel’s treatment of Palestinian child prisoners breached article 76 of fourth Geneva convention and several articles of the UN convention on the rights of the child? Why did the right hon. Gentleman not find time to mention that in the first six weeks of 2016, over 400 Palestinians have been displaced from their homes? That is over half the total number of Palestinians displaced in the whole of 2015.

I suspect that the Minister for the Cabinet Office’s apparent failure to say a word publicly about those things during his visit illustrates a rather strange set of priorities and a highly selective approach to UK policies on the Israel-Palestine question. He will have to answer for himself about his priorities and inconsistencies, but the Minister here today has an obligation to answer, on behalf of the Government, the specific questions about the procurement policy note and the changes they intend for local authority pension regulations. I have asked this Minister six specific questions and I ask him to do the House the courtesy of giving six clear and unambiguous answers to those questions today.

[Several hon. Members rose—]

--- Later in debate ---

[Richard Burden]

I always thought that public procurement notes were meant to clarify procurement rules, but the Minister has just demonstrated the art of muddying them through his explanation of this procurement note. He said that the note is not Israel-specific; it just happens that the Minister for the Cabinet Office announced it in a Conservative party conference press release that was almost entirely devoted to the situation in the middle east, and then announced the public procurement note itself in Israel.

If settlements are illegal, I fail to see how trade with those settlements and co-operation with businesses involved in aiding and abetting illegality is not itself illegal. That is what the Foreign Office advice to business is about. I know that the Minister has had a problem today; for some time now, we have been trying to work out which Minister would reply to this debate. I get the impression that this is a parcel that has been passed from pillar to post.

[John Penrose]

We are a flexible team.

[Richard Burden]

Eminently flexible—with flexible rules as well, by the sound of it. My six questions have not been answered to my satisfaction, nor have the questions asked by other hon. Members. I ask the Minister to answer in writing.

Motion lapsed (Standing Order No. 10(6)).

Oral Answers to Questions

Richard Burden Excerpts

Wednesday 9th December 2015 Commons Chamber

The Prime Minister was asked—

[Richard Burden (Birmingham, Northfield) (Lab)]

Q1. If he will list his official engagements for Wednesday 9 December.

[The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)]

The Prime Minister is visiting Poland and Romania, and I have been asked to reply.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

[Richard Burden]

The Chancellor will know that, as Christmas draws closer, people who are having difficulty in making ends meet will not experience much good will in the season of good will if they fall into the clutches of loan sharks as they try to buy presents for their families, so why is he choosing now to cut the budget of the Birmingham-based England illegal money-lending team by a third, although it has helped 24,000 loan shark victims to get £63 million of illegal debts written off? Will he have a word with his friend the Business Secretary, who seems to be refusing to answer questions from the Daily Mirror on the subject?

[Mr Osborne]

Of course we take very seriously the issue of illegal loan sharks and, indeed, that of excessive interest charges on payday lending, which is why it was Conservatives who introduced the first ever cap on payday lending. As for the hon. Gentleman’s specific question about funding for illegal money laundering and loan shark teams, we are considering the imposition of a levy on the industry to meet the requirements that he has identified.

The Economy

Richard Burden Excerpts

Wednesday 26th November 2014 Commons Chamber

[Priti Patel]

We are confident about our plans; it is the Opposition who should be worried about theirs.

The second way to recovery is by securing jobs and employment, and supporting businesses and the private sector. There is no better route to opportunity and success in our economy than being able to get a job; it is perhaps the closest thing we have to a silver economic bullet. Someone in work brings home money and is contributing to the economy, as we have all seen across our constituencies, and this makes an enormous difference to all our constituents. The 2 million private sector jobs created since 2010 have transformed people’s lives, while offsetting the reduction in public sector jobs many times over. This is what it is about: creating the conditions of growth so that the under-25s at the beginning of their careers get the right start in their working and professional lives, as many hon. Members have said. That is why the number of young people claiming benefits has fallen by more than half.

[Richard Burden (Birmingham, Northfield) (Lab)]

Will the Minister explain why the majority of children growing up in poverty are coming from working households?

[Priti Patel]

The hon. Gentleman will know that child poverty is falling, and it is only by making work pay that we can reward the individuals who choose to go out to work and ensure that they are supported, not only through tax credits, but through the wider system, through child care—[Interruption.] The national minimum wage has gone up. Will Labour Members welcome that, because—[Interruption.] It went up last month. [Interruption.] The Opposition are belittling the fact that we have ensured that the national minimum wage has gone up, and that is part of sustaining families and helping them with the cost of living. This is not just about young people; it is about supporting parents as they return to work through our reforms to child care.

To those, particularly those in the Labour party, who point to some of the measures I have outlined as a sign of economic failure, I say two things. First, they should stop sneering at what this Government have done to give our young a hand up when it comes to employment opportunities. The apprenticeships schemes, training schemes, colleges and starter jobs are not to be sneered at—they are valued and welcome. This Government have rightly put out the helping hand to a generation abandoned by Labour by giving them the chance to train, get a profession and get on in life.

Secondly, job creation and wage increases do not happen simultaneously. If there is an exceptional rate of job creation—we have put one in place—of course that has an impact on average wages. Wage increases happen slightly later. However, as the Resolution Foundation, run by Gavin Kelly, a former special adviser to the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), has stated, when compositional changes in the labour market are accounted for, average wages for the first half of 2014 have grown in real terms. Encouragingly, the most recent monthly Office for National Statistics figures showed wage growth outstripping inflation, particularly so for the 84% of workers who were in continuous employment—those in exactly the same job as they were a year ago—who saw pay rises of 4.1%, which is double the rate of inflation.

The third way to get a recovery that works for the many is by allowing people to take home and keep more of the money they have earned: giving them more disposable income. That measure is conveniently not included in the £1,600 worse-off statistic frequently touted by the Labour party, which also does not take into account the huge increase in employment or a measure of inflation that has any credibility. Over the course of this Parliament, we will have cut the income tax of a typical taxpayer by £805, boosting the amount of money that 25 million people take home, and taken more than 3.2 million of our lower earners out of income tax altogether. These are the biggest reforms of income tax in generations.

We are cutting the cost of living, helping to make families more financially secure. We are freezing fuel duty—the Labour party was happy to increase that at every opportunity; freezing council tax; and reducing the costs of child care. Those measures are helping with the standard of living of people up and down this country.

Farmers Markets

Richard Burden Excerpts

Wednesday 5th March 2014 Commons Chamber

[Richard Burden (Birmingham, Northfield) (Lab)]

I am very grateful to have the opportunity to bring the issue of tax arrangements for farmers markets that act in the community interest to the attention of the House, and, perhaps more important, to that of the Treasury. I welcome the Minister to his place.

Farmers markets are important not only in the country but in urban communities such as my constituency of Birmingham Northfield, too. They enable local people to offer local produce directly, create new opportunities for farmers and small businesses, and help our town and suburban centres to thrive. I understand that there are approximately 750 farmers markets in the UK. Some, not many, are registered as community interest companies, and two of those are located in Birmingham. Kings Norton farmers market is in my constituency. Moseley farmers market is in the constituency of my hon. Friend the Member for Birmingham, Hall Green (Mr Godsiff), who had hoped to be here today. Unfortunately, he is unable to attend, but he feels as seriously about this issue as I do.

The local Kings Norton farmers market in my constituency is a really important part of our local community. It hosts more than 25 producers from within 40 miles of the city, provides sustainable and fresh food directly, and brings local people together every month. Furthermore, the local residents who founded the market wanted to make a difference and to give any profits accrued to good causes and charitable projects in our area. For example, the farmers market has been supporting local and national charities, as well as donating to local parks, schools and nature reserves in the past few years.

As community interest companies, these farmers markets are liable to corporation tax like many other companies. However, until October last year both farmers markets had, in practice, been exempt from it. Kings Norton was regarded as “dormant”, meaning it had not had to file an annual return since 2009, and Moseley was given an exemption under extra statutory concession C4. In 2013, however, under the jurisdiction of a new tax office—it moved from Glasgow to Norwich—both exemptions were removed. That has resulted in considerable concern and anxiety about the market, as well as a significant amount of bureaucracy for local residents who are running the company out of charitable good will.

I am perfectly aware that we cannot simply exempt community interest companies from the tax system altogether. During my attempts to support my local farmers market, a number of solutions have been proposed to me by Her Majesty’s Revenue and Customs and others, but unfortunately none of them has proved suitable. Let me briefly explain the reasons for that to the Minister, in the hope that we can consider some further solutions.

One suggestion is that the farmers market could seek charitable status itself. That is obviously true, but such a move would make a small and voluntary operation—involving the hosting of a market only once a month—fairly complex. The market would struggle to manage the additional responsibilities and scrutiny that rightly accompany such status. Another suggestion is that, given the farmers market’s commitment to donating its profits to charitable causes, it could file its annual return including the contributions made, and receive a full deduction. That is the good news; however, not all money spent in the interests of the community will qualify for charitable deduction on a tax return. Furthermore, large community projects require significant sums of money.

Kings Norton farmers market has been accruing multiple surpluses over a number of financial years, and has had in mind projects on which to spend them. For instance, it thought of donating £5,000 to the cost of the provision of a disabled persons’ access ramp at St Nicolas’ Church, which is next to the site of the market on Kings Norton Green. However, those surpluses are now subject to annual corporation tax, and in order to avoid their accrual and a subsequent loss for the community, the market has decided only to fund projects requiring smaller donations.

I think it important for the Minister to recognise the practical impact of the loss of that exemption. Larger-scale projects such as the disabled persons’ access ramp that I mentioned—or a proposed new bandstand for one of our local parks—are no longer financially viable, and it is our community that is poorer as a result. At a time when institutions such as local government are so strapped for cash, initiatives such as farmers markets, and charitable and other donations in support of local communities, are more important than ever.

Let me now ask the Minister some questions. First, given the impact that the removal of the exemption from corporation tax is having on the market and on my community, I should like to know what triggered it. In practice, the exemption had existed since 2009, but it was suddenly withdrawn in October 2013. At that time, we heard the Minister say that the Government had invested

“nearly 1 billion in additional compliance initiatives”

during the current Parliament, and that HMRC was “on track” to deliver higher tax revenues as a result. Was there a link? Was clamping down on small community interest companies, which accrue surpluses of or below £5,000 a year, part of the attempt to address non-compliance? Is that really HMRC’s idea of seriously tackling tax avoidance?

I do not dispute the fact that clamping down on aggressive tax avoidance must be a priority for HMRC, which estimates that the annual amount of tax lost through non-payment and avoidance stood at an eye-watering £35 billion in 2012, up £1 billion from 2011. What I do dispute is the approach that is being taken.

The United Kingdom’s tax authority is clearly failing to crack down on tax avoidance where it matters. I am sure that the Minister is well aware of the concerns that surround its approach to targeting. HMRC has failed to challenge the aggressive tax avoidance of many multinational companies which receive all the benefits of operating in the UK, but do not necessarily pay back their fair share. We all know that multinational companies such as Google and Amazon are paying little or no corporation tax in our country, despite running very expensive and extensive operations here. Starbucks has reported taxable profit in the UK just once in 15 years, and Vodafone has recently revealed that it paid “little to no” corporation tax in the UK, and its direct tax payments dropped by nearly 20% from 2012-13.

--- Later in debate ---

Motion made, and Question proposed, That this House do no adjourn.—(Amber Rudd.)

[Richard Burden]

As my right hon. Friend the Member for Barking (Margaret Hodge) has repeatedly argued, Her Majesty’s Revenue and Customs is not tackling this problem seriously enough and

“pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations.”

Further, at the same time as the farmers markets had their exemption removed, the Government decided to reduce the level of corporation tax on profits from overseas financing inside multinational companies to just 5%, which could actually be making tax avoidance easier for such firms. Is this not just yet another example of the Government’s skewed priorities when it comes to tackling tax evasion? It is important to address tax avoidance, but is it really the priority to address the issue of the tax of community interest companies that accrue small surpluses and want to invest them back in the local community? I hope that, in the light of these concerns and a rapidly increasing tax gap, the Government are actively looking at HMRC’s priorities and methods.

I also want to suggest how the Government could act in the interests of the small CICs that provide precisely the kind of local services and community support that the Prime Minister seemingly wanted to encourage when he was talking about the big society vision not so many years ago. Will the Minister consider the following options? Will he consider reviewing what is eligible for tax relief for community interest companies? Might he introduce some flexibility for small community interest companies, in terms of the surpluses they can accrue before having to pay corporation tax? Will he look into enabling CICs to accrue profits over more than a single financial year, as that might help? Might he also consider extending the corporation tax cut that the Government have given for overseas financing to multinationals to small community interest companies?

I hope the Minister will look into this issue seriously. Tax is always a complicated issue. I look forward to hearing his response because it is clear that it is not only tax avoidance and evasion which are the problem; the way in which tax collection and administration are managed and targeted needs to change. I hope the Government, who seem able to reform corporation tax to meet the needs of big business, will also consider what changes are needed to support small community interest companies that are providing vital local support.

The donations made by the farmers market I have been talking about are increasingly important in the context of unprecedented and devastating cuts to local government and services. Only yesterday Birmingham set its budget for the coming year. It has already had to save £375 million, and in the next financial year that will go up to £461 million. If the Prime Minister was serious when he said just a few years ago that he wanted to give people

“more power and control to improve their lives and communities”,

is it not right that he should be giving some practical support to CICs such as Kings Norton farmers market, which do precisely that?

In the light of the concerns I have raised, I hope that the Treasury will think seriously about how it uses fiscal policy to empower companies such as my local farmers market to act in the community interest.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman has outlined the case for local farmers markets and the benefits that accrue to the community through funding and assisting projects. That is an example of how farmers markets support the big society, which, as he said, the Government have decided to promote. Does he agree the Minister should look at these benefits for the community?

[Richard Burden]

The hon. Gentleman makes an excellent point. We are dealing with a decision about priorities. This is not about the principle of whether or not people should pay tax—of course they should. It is not about whether tax avoidance should be clamped down on—of course it should. It is about priorities, and something is going radically wrong if the priority for HMRC is to mess up the surpluses accrued by institutions such as Kings Norton farmers market, which benefit the local community, while, apparently, finding it much easier to aid tax cuts for much bigger institutions. The priorities are wrong. I am sure the Minister understands what I am saying and I look forward to his response.

--- Later in debate ---

[Mr Gauke]

Let me just elaborate on the point I was making and the reason we have a level playing field approach in this area. For example, a farmers market could operate in competition with other local businesses, and should not be given a competitive advantage over those other businesses purely by reason of being a CIC. A different regime is in place for charities, although one must bear in mind what applies in terms of trading there. CICs are under a different regulatory regime. They are, and have always been, chargeable to corporation tax on any trading profits, investment income or capital gains, but they are also able to take advantage of any corporation tax reliefs that are available.

HMRC treats some entities as dormant for corporation tax purposes when they are in fact active, but they must meet specific criteria to do so—for example, where a particular type of organisation has a corporation tax liability of £100 or lower. Rather than that being an exemption from the tax, this is an administrative issue based on a consideration of the costs that would be incurred through processing returns and collecting payments for such small amounts of tax.

As a general rule, a community interest company is unlikely to meet the specific criteria to be deemed to be dormant, but if the criteria were met, as appears to have been the case in the example given by the hon. Member for Birmingham, Northfield, HMRC would then review the matter periodically and decide whether to continue to treat the company as dormant or whether the company should start submitting tax returns. It should also be noted that the company itself is obliged to tell HMRC if its situation changes such that it is no longer within the criteria to be treated as dormant.

HMRC’s administrative discretion to depart from the strict statutory position is extremely limited. What we are talking about here, as far as I can tell, is essentially that a periodic review having been undertaken, an assessment was made that the farmers markets in question were liable to corporation tax. Although I accept the point that the great bulk of the tax gap that HMRC seeks to address will not be found from dealing with dormant companies or CICs, none the less it is appropriate that HMRC properly enforces the law, which we in Parliament have made, and ensures that companies or CICs are not treated as dormant when in fact they are not.

[Richard Burden]

I am following what the Minister is saying. Clearly, the badge of “dormant” should not just be seen as a flag of convenience to be used at any time. If I am reading him right, is he saying that there could be some flexibility in the definition of what is dormant? The judgment about what is and is not dormant is an administrative matter rather than something that is laid down by regulation or statute. Therefore, HMRC would have the potential to exercise some discretion.

[Mr Gauke]

Where a company or a CIC is active, there are very limited circumstances in which HMRC would treat that entity as dormant. Specific criteria must apply, and as I say, it is unlikely that a CIC would meet those criteria. HMRC’s administrative discretion to depart from the strict statutory position is extremely limited. It is not within HMRC’s powers to treat all CICs as exempt from tax, as the law is quite clear that CICs are chargeable to corporation tax.

I should make a broader point. The hon. Gentleman asks whether this is a question of priorities, what the position would be with large companies and so on. We could have a much lengthier debate on that subject alone. However, during this Parliament, HMRC has collected £23 billion from larger businesses as a consequence of its compliance activity. That is significantly up on the record of previous years and demonstrates a determination by HMRC to address compliance by large companies. I do not want to be over-deflected to this, but many larger company issues relate to how international tax laws work. The UK continues to lead the way in encouraging the OECD and the G7, the G8 and the G20 to focus on that work internationally.

To return to CICs, I should like to take this opportunity to reaffirm that the Government are committed to encouraging social enterprise. A social investment road map was published at the beginning of the year and set out the Government’s plans to encourage people to invest in social enterprises, including CICs, particularly with the introduction of a social investment tax relief.

I assume that the farmers markets to which the hon. Gentleman refers will benefit from the employment allowance if they have employees. If they do not have employees but pay business rates, they will benefit from the policies announced in the autumn statement in that respect.

I am sorry if I have not provided the hon. Gentleman with the answers that he hoped for, but I hope that I have provided him with a little more clarity on the issue. Although it is difficult to talk about individual cases given taxpayer confidentiality, I hope that I have clearly set out the position in respect of CICs.

Question put and agreed to.

Consumer Rights Bill

Richard Burden Excerpts

Tuesday 28th January 2014 Commons Chamber

[Vince Cable]

There have already been discussions with the Northern Ireland authorities, and we plan to introduce the same measures in Northern Ireland. There is agreement on the subject. I cannot say off the cuff where we are in relation to Scotland and Wales, but there are discussions with devolved authorities to try to ensure that this is widely applied. Everyone agrees that these are improvements and it would be desirable if everybody throughout the UK benefited from them.

[Richard Burden (Birmingham, Northfield) (Lab)]

I was so fascinated by what the Secretary of State would be saying today that when I realised that I had missed the start of his speech I came hotfoot over here.

My point also relates to the issue of public services. On premium rate phone lines, the Government have said that all Departments should migrate to the use of geographic phone lines—03 lines—or others to ensure that consumers will not be charged rip-off rates by Government Departments. I welcome that, but will he give us some indication about when that will happen? The promise is good, but consumers need action.

[Vince Cable]

The hon. Gentleman is correct that an undertaking was made, which I understand is in process. Different Departments are proceeding at different speeds, but there is a commitment to do this. If he wants more information on it, I will try to get it to him. It is a perfectly legitimate complaint that people have.

The consumer law enforcement powers establish a primary authority to improve co-ordination. The enhanced consumer measures relate to the law and the gap between criminal and civil law in relation to consumer enforcement. At the moment, consumers rarely get their money back when a business breaks consumer law. That is partly because criminal courts are reluctant to award consumers redress and enforcers are often unable to seek redress in the civil courts. There is a common law remedy, but it is often difficult to realise it. What then tends to happen is that the more extreme cowboys are prosecuted on criminal grounds, but compensation, particularly for lesser levels of abuse, is more difficult to obtain. The legislation will enhance consumer measures to give enforcers greater flexibility to get the best outcome for consumers.

National Infrastructure Plan

Richard Burden Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

My hon. Friend makes the case incredibly powerfully. We are investing in infrastructure up and down this country. We are delivering massive investment. He gave a list and I could give an even longer list from the north, the south, the midlands and across the whole of the United Kingdom. The Labour party has called for consensus on infrastructure. That consensus could best be achieved by Labour setting out its support for the best long-term plan for infrastructure this country has ever had.

[Richard Burden (Birmingham, Northfield) (Lab)]

If the Government’s record in delivering infrastructure projects is as the Chief Secretary claims, rather than as my hon. Friend the shadow Chief Secretary claims, why did the Financial Times this week quote John Cridland, director general of the CBI, accusing the Government of “talking the talk” rather than delivering on projects, and why did Richard Laudy, head of infrastructure at the construction law firm Pinsent Masons, echo the view of much of the industry when he said he expected more “smoke and mirrors” from the Government?

[Danny Alexander]

Some things are beyond the ken of most of us in this world and the editorial decisions of the Financial Times are one such matter. There has been a very strong welcome from industry for this plan and its previous iterations, including, as we have heard, from constituencies where projects are being taken forward. That is precisely because this Government are the first to have a long-term plan for infrastructure with a clear pipeline of projects that are being delivered up and down the country. The hon. Gentleman should welcome that.