Finance (No. 3) Bill

Debate between Richard Graham and Peter Dowd

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Peter Dowd]

My hon. Friend is right, and for the Tories that choice comes first, second and third, and it always will.

On one hand the Government are lengthening the qualifying time for investors from one year to two, but on the other hand they are ensuring that shareholders will be protected from falling below the 5% threshold needed to claim the relief when a company is sold. It is hard to see how this confused measure will tackle the growing cost of the relief.

Naturally, the Opposition, the Resolution Foundation and the IFS are not the only ones who have found this measure perplexing to say the least. The Chartered Institute of Taxation has raised deep concerns about its retroactive nature, its lack of clarity and the likelihood that the reforms will hit small businesses the hardest—the businesses that the hon. Member for Redditch (Rachel Maclean) no doubt had in mind in her intervention. Far from making the relief more equitable, this measure will instead insulate wealthier claimants who can rely on expensive tax advisers to navigate red tape, ensuring that the cost of the relief will continue to bloom.

The cost of corporate welfare has risen steadily under this Conservative Government. In fact, I would go so far as to say that it is the one form of welfare that Government Members support. In contrast, the Labour party is committed to undertaking a full and comprehensive review of corporate tax reliefs when—not if—we reach government. That is why we have tabled new clause 3, which would require the Government to undertake a full review of entrepreneurs’ relief. The review would consider the overall number of entrepreneurs in the United Kingdom, the annual cost of the relief, the cost per claim and the impact of the relief on productivity in the UK—productivity that is 15% below our comparators in the G7 and 35% below the Germans. The Government should be getting to grips with that fact, not fiddling around with entrepreneurs’ relief.

Government Members should ask themselves how they can justify the amount of money going to 52,000 people while our public services are falling into disrepair. This relief is clearly in need of urgent review to ensure that the taxpayer is not being ripped off. They should be clear that if they choose to vote against new clause 3, they are voting against the interests of taxpayers across the country. Again, this is £2.7 billion for 52,000 people.

I hope that Government Members will support our new clauses 1, 2 and 3, for the reasons that I have outlined. This authoritarian Government of the rich, by the rich, for the rich have lost all credibility to manage the affairs of this country. They no longer know what they stand for, nor do they have the courage to find out. This Bill of broken promises takes us no further forward in meeting this country’s mounting challenges, so I call on Members throughout the House to support Labour’s proposals to create a fairer society and a fairer tax system. If we are unable to change the Government’s course, we will challenge the Bill at every step of the way, notwithstanding the authoritarian shackles put on us by this authoritarian Government, and we will use it to put an end to this aimless and divided Government.

[Richard Graham]

It is a pleasure to follow the hon. Member for Bootle (Peter Dowd), although there were moments during his speech when I found myself wondering whether history was being rewritten in a remarkably creative way.

The changes that the Government have proposed come against a background of remarkable achievement in cutting the deficit by four fifths, reducing the unemployment rate to its lowest since the 1970s, giving 32 million people tax cuts and taking 1.7 million out of income tax altogether. Some of those things were denied by the hon. Gentleman, who claimed at one point that the rich were only getting richer. I think it therefore falls to me to offer a few statistics to put his comments into context.

The first comes from the Institute for Fiscal Studies analysis of what went on under the previous Labour Government. The hon. Gentleman, who is chuntering with his colleague the shadow Chancellor, should focus on that IFS analysis. The independent analysis from the IFS shows very clearly that on most measures income inequality during the 13 years of the previous Labour Government went up. Part of the reason for that was explained, helpfully, by the hon. Member for Norwich South (Clive Lewis) in an interesting interview with The Guardian the other day. He pointed out that the attitude of the previous Labour Government was, to quote the former deputy Prime Minister, Lord Mandelson, “intensely relaxed” about the filthy rich. The hon. Member for Norwich South rightly went on to say that during the 13 years of the Labour Government:

“The huge fortunes of those at the very top…were left almost untouched.”

That is why the work done by this Government, which for example includes scrapping child benefit in 2013 for those earning over £50,000, has led to the lowest tax gap for a very long time. The percentage of income tax paid by the top 1% has doubled under the Conservative Government. The hon. Member for Bootle therefore needs to think hard about that IFS analysis. Income inequality went up under the 13 years of the Labour Government and it has gone down in eight years under the Conservatives.

There are other points worth highlighting. For example, people on lower and middle incomes actually have more money in their pockets now than at the start of the financial crisis under the previous Labour Government. The gap, as I pointed out, between those on the lowest and highest incomes is lower than it was when the Labour Government left power in 2010. In fact, income inequality is now close to its lowest point since 1986. That is a remarkable achievement. Over the past 30 years, which include 13 of a Labour Government, income inequality narrowed sharply under this Conservative Government.

Labour Members have made a lot of points about employment, so it is worth highlighting that the growth in employment benefits most the poorest 20% of households. The employment rate is now up by more than seven percentage points on where it was before the financial crisis under Labour in 2007. Thanks to the national living wage, the income of the lowest earners has actually grown by almost 5% since 2015, higher than at any other point across the earnings distribution. The actual situation today in our economy for those working is therefore very different from that painted by those on the Opposition Benches and by the hon. Gentleman.

A crucial and major difference between the Labour party and the Government is on taxing business. The uncomfortable truth for Opposition Members who would like to tax business more is that since the Government cut corporation tax in 2010 receipts have gone up by 50%, generating an extra £20 billion in 2016 over what was generated in 2010. The extra £20 billion we found for the NHS above inflation for this five-year period does not come from nowhere; it comes from increased receipts and growth in the economy. That extra £20 billion raised from corporation tax, as a result of cutting corporation tax, is one of the critical economic differences between those on the Government side of the House and those on the Opposition side. The Opposition still believe that if they tax businesses more they will get more tax. The truth, however, is that if we tax businesses less we incentivise business and entrepreneurs, generating more tax receipts to put into our vital public services.

--- Later in debate ---

[Peter Dowd]

If the hon. Gentleman is so sure of his position, what is wrong with providing for a review of the effectiveness of entrepreneurs’ relief, as new clause 3 would do?

[Richard Graham]

The hon. Gentleman is kind to mention that, but the fact is that we on the Government side of the House believe strongly in incentivising the entrepreneurs. They are the ones producing the technologies of the future—Fintech, Edtech, every sort of tech—and the reason why this country has seen more investment in technology in London alone in the last year than Germany, Spain, Ireland, the Netherlands and France put together. These incentives to businesses are what generate the additional tax revenue I highlighted earlier.

The changes to gambling tax are among the most significant measures proposed. These are fundamentally about what is morally right, and I am delighted that the Government have found a way to do the right thing, not just by reducing the maximum stake for fixed odds betting terminals from £100 to £2, but by introducing it rapidly and by raising the remote gambling duty from 15% to 21%. If I could make one request of the excellent Minister, it would be that he consider other ways to reduce the amount of online gambling advertising and to raise more tax revenue from it.

This is an important discussion. Some of the facts offered earlier by the Opposition were completely astray from reality, and I strongly support what the Government are doing to incentive business, encourage more people into work and, above all, benefit the lowest earners. It is worth finishing with one last statistic from the OECD: the proportion of jobs that are low-paid is at its lowest level in this country for at least 20 years. That is a significant achievement on which we can hope to build yet further in the future.

Taxation (Cross-border Trade) Bill

Debate between Richard Graham and Peter Dowd

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

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

“That this House recognises that the UK will need considered and effective arrangements to ensure a customs and tariff regime, including the potential of a customs union with the European Union, is in place before the UK’s exit, in order to guarantee frictionless movement of goods at UK ports and the ability to levy customs duty and VAT and to protect manufacturing and other key industries through the power to enact protective tariffs, but declines to give a Second Reading to the Taxation (Cross-border Trade) Bill because the Government has failed to provide a coherent plan for the operation of the customs and tariff regime after the UK’s exit from the European Union or for the maintenance of frictionless movement of goods at UK ports, because the Bill is not accompanied by proposals to ensure that Her Majesty’s Revenue and Customs are properly resourced and organised to implement a new customs and VAT regime, because the needs of UK manufacturers and producers have not been properly reflected in the design of the proposals and because the Bill proposes to give excessive powers to Ministers without appropriate procedures for parliamentary consultation and scrutiny.”

Here we are at the start of another year, and it feels much the same as the last one—the same old empty Bills, long on rhetoric and short on detail. Yet always the Government’s default position is a fresh set of powers for Ministers, which is the one fixed point in a changing world. This Government seem to be taking back more control from Parliament as each day passes.

The Bill ostensibly sets out to create a functioning customs framework for the United Kingdom once we leave the European Union—hope springs eternal. We accept that such an arrangement is necessary, regardless of the UK’s future relationship with the EU or, indeed, the nature of its wider trading relationship, yet once again we have been denied any detail in the Bill itself, as hon. Members have identified. There is nothing to guarantee frictionless trade through the UK’s ports from the moment of exit, no measures properly to resource Her Majesty’s Revenue and Customs for the task and nowhere near sufficient detail on the powers and provisions of the Trade Remedies Authority that will be charged with ensuring that our vital British industries are protected. Only yesterday we saw the potentially disastrous consequences of that lack of detail, with reports on the likely result of the Government’s failure to address the EU VAT area for thousands of businesses.

In short, instead of setting up a stable customs framework, this Bill provides few of the policy or, indeed, practical considerations required for the task of leaving the European Union.

[Richard Graham]

It seems rather curious to criticise the Government for denying any detail while we are in the middle of a negotiation. How could the hon. Gentleman expect any Government to guarantee anything until that negotiation is complete?

[Peter Dowd]

This Government have guaranteed absolutely nothing whatsoever. Time after time, they hide behind the veil of negotiation.

Before addressing the Bill’s specific failures in meeting the Government’s objectives, I will raise the issue of the powers created by this Bill that enable Ministers to do whatever they want. The leave campaign’s central message, the one repeated time and again and printed across its campaign literature, was that leaving the European Union would allow the Parliaments and Assemblies of the UK to “take back control” of our law making. And yet again, every piece of legislation published by the Government relating to our exit creates more powers for Ministers, while ignoring Parliament completely. Parliament is in a persistent state of having its head patted—that is as much as Parliament is getting at the moment.

Savings (Government Contributions) Bill

Debate between Richard Graham and Peter Dowd

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 17th October 2016 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

We have had a number of contributions. The hon. Member for Newark (Robert Jenrick) told us about his grandparents getting to Blackpool courtesy of a jam-jar savings policy, which I thought was novel. The hon. Member for Ross, Skye and Lochaber (Ian Blackford) summed up the Government’s proposals as a missed opportunity, as undermining pension savings and as not tackling the real issue. The hon. Member for North West Hampshire (Kit Malthouse), who does not appear to be here, spoke of the diminution in the number of people with an asset base and said that, in his modest opinion, we should try to push on and get people to have a bigger asset base.

In an excellent contribution, my hon. Friend the Member for Harrow West (Mr Thomas) underlined the need for the Government to look afresh at the timescales in the Help to Save scheme and asked the Government to be more imaginative and reinforce the need to permit credit unions to participate in the scheme and the statutory right of payroll deductions of savings. The hon. Member for Gloucester (Richard Graham) gave us an enlightening exposition of his concerns that the proposal might be moving towards the death of the pension as we know it. I am not quite sure whether that was what he said, but that was the impression I got.

[Richard Graham]

Just to clarify, I said that the proposal risks undermining saving through a pension scheme and we do not want to do that.

[Peter Dowd]

I understand that clarification and I will touch on that topic in my speech.

Finally, the hon. Member for Morecambe and Lunesdale (David Morris), who supports the Government’s proposals, spoke about his experiences as a self-employed person and said that the proposal is not a supplementary pension but a means of saving.

Labour welcomes the sentiments expressed today on both sides of the House about the need to address savings overall. In general, anything that allows more people to save for the future is to be welcomed. Helping younger people and those on low incomes to save is a particularly legitimate and worthy objective, and the Government are right to consider policies to incentivise it. The majority of people on low incomes or in precarious work—categories sadly growing in Conservative Britain—are far from being in a position to save. Six years of Tory failures and austerity has led to many not knowing from where the next pound will come week in, week out. The Government’s clueless approach to exiting Europe simply compounds the problem on a macroeconomic level.

How is it possible for people to save when it is hardly possible for many to live properly on a weekly basis? How can a person save for the future when they can barely get through the day? The scandal of low retirement savings for the less well-off is an indictment on any notion of a cohesive society. One in seven pensioners lives in poverty and a further 1.2 million have incomes just above the poverty line. Distributional analysis by the Women’s Budget Group shows that single female pensioners will experience a whopping 20% drop in their living standards. It is unconscionable that people who have worked hard and contributed to society are forced to spend their final years in hardship and insecurity. We agree that there are problems that need to be solved urgently but the TUC states:

“Products such as… the forthcoming Lifetime ISA are disconnected from the world of work and prioritise goals other than retirement saving.”

As for the lifetime ISA, it is hard to see how its introduction even begins to tackle the problems to which I have just referred; not only does it represent a missed opportunity to build on the success of automatic enrolment, as those on the SNP Front Bench have said, but its introduction could serve as a distraction to tackling the real issues at hand. It misdirects valuable resources, as the money the Government are spending on this scheme is likely to benefit mostly those on higher incomes, as has been mentioned on a number of occasions. It also needlessly complicates the pensions and savings landscape—an arena already fraught with complexity. Perhaps most dangerously, it has the potential to undermine the emerging consensus that a pension ISA approach would be detrimental in the round. Indeed, it has the potential to introduce just such an approach through the back door. That is a concern and we are seeking assurances from the Government that it is not doing that.

In the months leading up to the Budget, the concept of replacing the existing systems of pensions tax relief with an ISA-style approach was widely debated and almost universally rejected as damaging to people’s retirement prospects. I wonder, as do many others, whether, after enduring an embarrassing rebuff, the Tories are back again with the same intent under the guise of this Bill. Many in the pensions industry have described the LISA as a “stealth” move towards pension ISAs. The Work and Pensions Committee has said that the Government are marketing the LISA as a pension product and there is a high risk that people will opt out of their workplace pension as a result. Let me be perfectly clear: people will not be better off saving into an ISA as opposed to a workplace pension. The Committee found that

“For most employees the decision to save in a LISA instead of through a workplace pension would be detrimental to their retirement savings.”