Finance Bill

Robert Jenrick Excerpts

Tuesday 31st October 2017 Commons Chamber

[John Redwood]

There is a huge difference between breaking the law and living within the law. However, where Governments of both persuasions and the coalition have put provisions into the tax code that encourage people to save or invest in a certain way to pay less tax, that surely is the will of Parliament and the will of those parties, and we cannot object if people and institutions take advantage of it. The right thing to do—as I think the Labour party is now trying to do in some ways—in respect of rich people who come to our country to undertake part of their affairs but not all of their affairs, is to ensure that we have settled on a law that we think is fair and then to enforce it. Obviously we should take a tough line were any of them to break our law, but we cannot object if they take advantage of measures that have been put into the tax code to encourage certain kinds of investing or saving behaviour, in exactly the same way that most MPs take advantage of the avoidance provisions to save through a pension scheme or an ISA.

The subject of this debate is whether the assets of very rich people—often productive assets that they have saved for, earned and accumulated before they came to the UK—are a suitable object of taxation if they choose to do some things in the UK in respect of which they are clearly subject to our law codes and have to pay our taxes. In the past, Labour Governments as well as Conservative Governments have taken the pragmatic view that there is an advantage in very rich entrepreneurial successful people coming to our country setting up businesses, making investments here and committing part of their capital to our country; that we will tax that fairly in exactly the same way that you or I would be taxed, Mr Speaker, if we were making such investments on a much smaller scale; and that that is fair to us as taxpayers and investors, but that it is not our business to try to tax their assets and income accumulated or earned elsewhere that they have established by other means before, which are presumably being taxed in those other countries and would normally be governed as well by some kind of double taxation arrangement or agreement.

I would therefore just say to Labour Members who think there is a huge crock of gold here, which for some unknown reason successive Labour, coalition and Conservative Governments have been reluctant to pluck, that maybe they did not do it in the past because there is not, and that maybe we are quite close to that point. If we go further and further encroach on the legitimate income and assets of foreigners coming here, which are asset and income not actually in this country, we might get to the point where more of them say, “I’d rather go somewhere else. Plenty of other countries around the world would actually welcome the money, investment and income I wish to spend, which is going to be taxable in that country. If they are prepared to not tax my other income and assets elsewhere, then they will have the benefit of me rather than not.”

The art of taxation is finding the right balance, so the host country gets enough out of it and where there is obviously a fair imposition of tax on anything they do in that country alongside fellow residents of that country, while not deterring so many that we are no longer a great centre for people with money, investment and talent who would otherwise come here.

[Robert Jenrick (Newark) (Con)]

Does my right hon. Friend agree that we do not make these decisions in isolation? We are competing with other countries, which might also like to host very rich individuals and investors. While we in the UK are making the climate more hostile and difficult to raise more money for our public services, the opposite is true in many other countries. In the EU, Malta, Portugal and, most prominently, Italy are moving in the other direction and creating their own non-dom regimes to draw away such individuals from the United Kingdom.

[John Redwood]

My hon. Friend anticipates my next point. We live in a global world. The richer people are, the more footloose they can be, and the better the tax and legal advice they can get. Most of them want to obey the law in the country they choose to live in and the countries they choose to operate in—they usually operate in several countries not just one, which creates genuine definitional problems about where they are truly resident and where is their main centre—and they will compare all the time, on good advice, the different regimes available. It is quite obvious that in the EU there is a lot of jealousy of London and the wider UK’s success in attracting talent and investment from around the world. As my hon. Friend says, regimes are being created in to tempt people away by giving them a better deal in other European countries.

I was about to draw the attention of the House to hugely important debates about to be undertaken in both the Senate and the House of Representatives in the United States of America. New York and other great centres are already very attractive magnets for rich people and large-scale investors. They are suggesting that they might take their top rate of tax down from 39.6% to 35%, simplify their income tax brackets from seven to just three, and take their corporation tax rate down from a very high headline 35% to an effective rather lower rate of 20% or even lower, because they are very serious about becoming tax competitive again. They will be a lure, just as surely as some European countries on the continent are trying to be more of a lure.

The Opposition would be well advised to understand how global the world is, how dynamic it is, and how, to maximise tax revenue, there is a need to set ways of taxing and rates of taxation that enable people to stay and pay.

--- Later in debate ---

[Alex Burghart]

I could not agree more with my right hon. Friend. She can rest assured that she is always welcome in Brentwood. There will always be a place next to me in the teashop where we can sit down to discuss exactly why Brentwood is such a wonderful place for women to work, raise their families and be part of the community.

My right hon. Friend is absolutely correct that we have to get the balance right if we are to maximise the tax take for the Treasury, and it is only through that tax take that we will be able to fund our world-class public services. An attempt to do anything more would undoubtedly mean that less would be available for our police services, health service and education system. Our constituents—our citizens—would then all suffer, so it is absolutely essential that we get the balance right. I do not believe that we do that if we actively discourage successful, wealthy business people from bringing their money here so that they can invest in our country. As my right hon. Friend points out, it is by getting the balance right that the Treasury, under the great guidance of my right hon. Friend the Financial Secretary and his predecessors, has managed to bring in an extra £160 billion since 2010 and to narrow the tax gap to an historically low level. That is a great achievement.

[Robert Jenrick]

I would like to put this into perspective so that our constituents can appreciate our achievements on the tax gap. Our tax gap is 6%, but the gap is 34% in Italy. If the European Union wants to tackle any tax gaps, it should look at other European countries. The tax gap in the United States is 19%, so a 6% tax gap here represents a huge achievement by this Government.

[Alex Burghart]

I am grateful to my hon. Friend for bringing those figures to the House. Our extraordinarily impressive figure illustrates the achievements of successive Conservative Chancellors in their work to improve the situation that they inherited in 2010.

My hon. Friend the Member for Chelmsford (Vicky Ford) raised an extremely important point about timing. Do we really want a review to kick in just as the Brexit process is reaching its climax? With all due respect to Opposition Members, I do not think that they have really thought about that.

This has been my first Finance Bill and I have enjoyed everything about it immensely. I have even enjoyed the speeches made by the shadow Minister, the hon. Member for Bootle (Peter Dowd). I have enjoyed his panache, his dapper dress sense and his ties, which make me feel slightly underdressed. In Committee, he enlightened us with his knowledge of Plutarch and made reference to the Beatles. I believe that he referred to Plutarch’s discussion of Pyrrhus’s victory over the Romans, which led to Pyrrhus saying, “One more such victory and we are lost.” Were new clause 1 to be agreed to, it would be a pyrrhic victory of great consequence. It would put billions of pounds of Treasury revenue at risk, which would in turn put our public services at risk. That would make my constituents very angry.

I know that the hon. Member for Bootle is fond of the Beatles, as am I. We have already had a comic turn from one Essex MP today. The House might recall that, once upon a time, John Lennon was asked why the Beatles were the greatest band in the world. He said it was because Paul McCartney was the greatest singer-songwriter in the world and because George Harrison was the greatest guitarist in the world. The interviewer said, “What about Ringo? Isn’t he the greatest drummer in the world?” Mr Lennon replied, “He’s not even the greatest drummer in the Beatles.”

--- Later in debate ---

[Anneliese Dodds]

If we are talking about payments made for discrimination in the context of a redundancy payment, yes, they are. That is our exact point, which is why we are discussing this matter about injury to feelings. We have had some comments in this House which appear to misunderstand the nature of injury to feelings payments. In some cases, these have been trivialised, almost suggesting that these payments are made because an employees’ nose has been put out of joint rather than something potentially more serious. But “injury to feelings” is a substantive legal category. Where there is genuine evidence of misuse of this category, that should be stamped out, but we have not been provided with such evidence as part of our deliberations on the Bill. Injury to feelings is related directly to discrimination experienced by a person because of their characteristics as an individual—their age, gender, sexual orientation, disability status or ethnicity. This should be taken seriously and it should not be a focus for penalising individuals, as is the case under these proposals. Again, as my hon. Friend suggested, this appears to be part of a piece, with more general measures watering down the protection to individuals suffering from discrimination at work, whether or not they take that discrimination to a tribunal. Clearly, tribunal fees have been struck down because of their discriminatory impact. Now measures are popping up that water down individuals’ protections in other ways.

[Robert Jenrick]

Just so that our constituents appreciate what is happening in the broader context, does the hon. Lady welcome the announcement that was made in September by the presidents of the employment tribunals of England and Wales that, in each of the three bands for injury to feelings, the maximum award is rising?

[Anneliese Dodds]

Again, I would be very careful to separate out tribunal awards that are made in the context of discrimination at work, which is not what we are talking about, from awards that might relate to redundancy, which is what we are focused on. In relation to discrimination generally, there has been a long-running discussion about what the rates should be for different bands. If one looks at the average award, or, even better, the median award, we are not talking about massive sums of money. It is very important that the public receive that message. For example, someone who has experienced discrimination on the basis of sexual orientation is generally receiving much less than £10,000—I regret that I cannot recall the exact figure. It is very important that we do not give the impression that people are somehow holding companies to ransom in this area. Indeed, that is perhaps underlying some of the change that has been forced on the Government through the court decision that we should not have tribunal fees, because these tribunals are being used not vexatiously, but purposely for people to protect their rights at work.

In conclusion, Labour’s message on this Finance Bill is clear. We felt that it offered an opportunity to reboot our economy, to deal with our massive productivity challenges and our cost of living crisis, and to shore up public finances by sealing loopholes for the very best-off people and biggest multinational companies. Instead, we have a series of missed opportunities and measures focused on soft targets, rather than on those who can afford expensive accountants and engage in complex schemes to avoid tax.