Finance Bill (Second sitting)

Roger Mullin Excerpts

Thursday 30th June 2016 Public Bill Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship again, Mr Howarth. I will be brief. We on the Scottish National party Benches support the amendment. The issue of carried interest has also been of interest to us, as the Minister knows only too well. I commend the amendment, and if the Labour party wishes to press it to a vote, we will certainly support it.

[Mr Gauke]

Let me address the issue of complexity; I hope I can be helpful to the Committee on that. The new rules replace the badges of trade that previously outlined the tax treatment of carried interest. The badges of trade are based on complex case law, which means that the law was determined by a wide range of varied and outdated judicial decisions. Bringing these new rules into legislation removes ambiguity and makes the tax code easier to follow. Furthermore, much of the detail of the legislation comprises bespoke rules that apply to specific types of funds. Those specialised rules will help reduce the compliance burden for funds in practice. Asset managers are sophisticated taxpayers who often have personal advisers; we therefore anticipate it being easy for those individuals to follow these rules.

Very often, the measure of tax complexity is taken to be the length of the tax code. I confess that I have sat where the hon. Member for Wolverhampton South West is sitting and made that point myself; he has heard me make it. In this example, there are additional pages of legislation; however, they are replacing legislation that took up fewer pages but was based on case law, which can be very complicated. It is worth pointing out the limitations of pages as a measurement of complexity.

On the OECD recommendations, treating carried interest as a capital gain rather than income is the right approach. It keeps the UK in step with other countries and, as I said, it is the approach adopted consistently by previous Governments in this country over a long time. There is nothing particularly unusual about the way in which we treat carried interest in this country. I am conscious that this is a matter that we debate on a fairly regular basis; it is the second time we have debated it in a week. We are being consistent with what we have done in this country for some time and with what other countries do. I hope those points are helpful, but if the hon. Gentleman presses amendment 8, I will urge my colleagues to oppose it.

Question put and agreed to.

Clause 36 accordingly ordered to stand part of the Bill.

Clause 37

Income-based carried interest

Amendments made: 43, in clause 37, page 67, line 45, leave out “value” and insert “amount”.

Amendment 44, in clause 37, page 68, line 41, leave out “company” and insert “underlying scheme”.

Amendment 45, in clause 37, page 68, line 43, leave out “a company” and insert “an underlying scheme”.

Amendment 46, in clause 37, page 68, line 47, leave out “value” and insert “amount”.

Amendment 47, in clause 37, page 70, line 15, leave out “company” and insert “underlying scheme”.

Amendment 48, in clause 37, page 70, line 21, leave out “value” and insert “amount”.

Amendment 49, in clause 37, page 70, line 34, at end insert

“, or the acquisition of portfolios of investments from,”.— (Mr Gauke.)

UK Economy

Roger Mullin Excerpts

Wednesday 29th June 2016 Commons Chamber

[Jeremy Quin]

I did indeed. I worked in Her Majesty’s Treasury for the then Government, who are now the Opposition.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

That was your fault.

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[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I wish that we did not need to have this debate, because I wish that the majority had voted to stay within the European Union, but we are where we are. In the spirit of openness and transparency, it may be useful to set out that I well understand that the way in which I and my hon. Friends understand the problem and how we frame it is different from the way that people in other parts of the Chamber see it. In my view, the sovereign people whom I respect and on whose behalf I must act are the people of Scotland. I believe in a great continental principle of popular sovereignty. I do not believe in the principle of parliamentary sovereignty. That is why I am particularly concerned that my colleagues and I reflect on what is in the interests of Scotland at this time.

The hon. Member for Thirsk and Malton (Kevin Hollinrake) who is leaving—[Interruption.] He was leaving until I mentioned him. He made some of the best points in this debate thus far about the lack of a plan. Even Baldrick had a plan.

[Jake Berry (Rossendale and Darwen) (Con)]

A cunning plan!

[Roger Mullin]

A cunning plan at that. However, it would seem that the leave side had no plan and that the Government were unfortunately unprepared for this eventuality. The Prime Minister indicated at Prime Minister’s questions that we are having to spend the next few months modelling the alternatives without specifying what different scenarios were being planned for. Whatever the scenario, we must get some clarity about what we are going to say about Scotland’s place within the European Union. The Government cannot assume that we will meekly follow and be dragged out of the European Union against the will of the Scottish people. It is not our job to be dragged along; it is our job to represent the interests of Scotland and the Scottish people, and that we will do to the best of our ability.

At Prime Minister’s questions before the vote, I raised the case of Thomas and Elke Westen, originally from Germany, who lived in my constituency. Thomas runs a small business in the service sector. Elke is a distinguished artist in glass. They came to Scotland some years ago, bought an old home and refurbished it beautifully, created jobs in the community, and contributed to the community in lots of voluntary ways. Days before the vote, they decided that they could not stand the way in which they were being portrayed as immigrants and that they would leave the country for the period of the vote. They said that if the vote was to leave, they would want to leave Scotland permanently. They are in France at the moment. I am still in contact with them, and I am trying to persuade them to come back. I am aware that they are not the only people who feel that they have been hurt tremendously by the nature of the debate and let down by the Government. It is all very well for the Government now to say that they are welcome here when they denied them the vote in this referendum. Part of the problem we have in reassuring people is the way they have been treated up to now both by the Government and by those advocating a leave vote.

Elke and Thomas were small business people. There has been lots of discussion today about large businesses.

[Stephen Gethins]

My hon. Friend makes an excellent point about the impact on EU nationals. May I remind him that it was not just vote leave campaigners who denied the vote to EU nationals and 16 and 17 year olds, but the Government who were backing remain?

[Roger Mullin]

Absolutely. I thank my hon. Friend for reminding me of that.

[James Cartlidge]

I was there in Committee when we debated votes at 16 and foreign nationals. I made the point on foreign nationals, and it is a fact that if they had been allowed the vote, which is not the case in general elections, they could have swung the result. Even though I regret the result, we cannot underestimate how inflammatory that would have been, especially as we were not using the franchise from a general election.

[Roger Mullin]

That is a rather sad argument to make. We allowed EU nationals a vote in the Scottish referendum. Thomas and Elke Westen are as much Scots as I am and they have as much right to express their feelings about the country in which they have chosen to live. It is similar to the case of my older brother and sister who had to emigrate because they could not get the opportunities to work in their own land, which has been a big problem for Scotland. The countries in which they have gone to live have welcomed them and allowed them the vote. Excluding these people helped to introduce an element of xenophobia into the way in which the referendum has been conducted. I have great regard for the hon. Gentleman, but on that particular point, I am afraid that I completely disagree with him.

There are problems for our small and medium-sized enterprises. In my own constituency—I would be interested to hear whether this is shared elsewhere—two types of SMEs have been talking to me. The first group includes those SMEs that export, and their concerns are primarily about access to markets. Earlier, the argument was made that it was good that a falling pound would allow exports to be a little more competitive. In all honesty, I have not heard a single business person making that claim. What I have heard is that the problem will be in assuring exporters that they have access to markets. Without access to markets, the exchange rate is rather immaterial.

The second type of SMEs has included not exporters but importers. They are particularly concerned about what is happening with the currency level, and what the cost will be of bringing in the types of continental products that we have been so used to benefiting from over the past 20 or 30 years. There are different perspectives on the problem in SMEs that reflect real concerns that we will have to manage in this new situation. The Government will not be able to wait two years until an exit takes place to deal with this matter. They will have to think urgently about the kind of initiative that can be brought in to assist those SMEs that are living in a period of great uncertainty. When they have a period of great uncertainty, what effect will it have on their decision-making? They will not be going to the banks and borrowing for investment at a time when they are uncertain about how they are going to construct their future. My fear is that over time that uncertainty will lead to less and less investment, not merely by the large corporations, but by many of the small businesses at the heart of our communities.

Another issue of concern is research funding and academia in society. Many people have said, “Don’t worry. The contracts that have already been struck will not be ended,” so our great universities are safe in that regard. However, the universities’ fundamental concern is for the future of European collaboration in research. How will that happen if we have exited the EU? Will British academics have the same access to other academics and to future research projects? That is highly unlikely unless we regain our place in the European Union. What of those students in Scotland and elsewhere who have benefited from travel to continental Europe and those who benefit from the great universities of France, Germany, Italy and elsewhere? What are their prospects? Future generations will be denied the opportunities that others have had over the past 30 years. That can only be a tragedy for our society.

Finance Bill

Roger Mullin Excerpts

Tuesday 28th June 2016 Commons Chamber

That brings me on to new clause 9, tabled by my right hon. Friend the Member for Barking (Dame Margaret Hodge), which is supported by those on the Labour Front Bench. I will let my right hon. Friend explain its necessity and desirability to the House if she catches the eye of the Chair.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

In the light of our debate this morning, an appropriate opening remark would be to point out that I believe that in the next hour we are debating the most important part of this year’s Finance Bill. Many amendments have been spoken about already this morning, and I am sure that Members will forgive me if I try to make my remarks brief and to focus only on three matters: the appropriate changes discussed in amendment 1, tabled by the right hon. Member for Don Valley (Caroline Flint) and others; new clause 8, tabled by me; and new clause 9, tabled by the right hon. Member for Barking (Dame Margaret Hodge). Let me say at the outset that the Scottish National party supports both that amendment and that new clause.

I will be brief, because I want to allow more time for the right hon. Ladies to present their case as fully as they can. Let me say something in general about why we are concerned. We all know that there is huge concern among the public about the extent of tax evasion and hidden wealth. It was a growing concern before the release of the Panama papers, and I remember discussing it in this House in the first week in February. It has been fuelled by concerns as people become more aware of the hiding of money in tax havens by individuals, corporations and trusts.

Let us put this debate into a broader context. According to Jason Hickel of the London School of Economics, tax havens hide one sixth of the world’s total private wealth. He has estimated that at about $20 trillion. Whether that is very accurate or not, all observers would agree that the total amount of money involved is absolutely staggering in scale. Indeed, the Panama papers from Mossack Fonseca are just the tip of the iceberg as regards what we face in the world today.

Many issues need addressing. Neither this debate nor the proposed amendment and new clauses address them all, but they are a start. I have been very disappointed by some of the Minister’s reasoning, particularly that on amendment 1. It struck me that he started to redefine on at least three occasions what he meant by multinational. First, he seemed, in my view, to be speaking as though it was almost global in nature, then it became EU-specific, then it became about just a few countries. It struck me that it is not amendment 1 that has not been thought through thoroughly, but the Government’s response to it. If the right hon. Member for Don Valley proposes to press it to a vote, the SNP will certainly follow her into the Lobby.

We know that many different groups are involved. The amendments specifically refer to corporations, but more than corporations are involved. If we had tabled our own amendment, we might have chosen slightly broader amendments to encompass trusts, for example. Being reasonable, we must put ourselves in a position where we make the first step. Sometimes somebody needs to make the first step.

When the Minister was talking, he reminded me of the days when I used to trod through the library at Stirling University, taking students and showing them back copies of Hansard. We could look at back copies of Hansard from the 18th and 19th centuries, and the subject that arose more than any other in debates in the House was slavery. One of the arguments continually used against doing something to make slavery illegal was that it would not create a level playing field.

Somebody has to be first. This is not just about finance and technical considerations, but about fundamental ethical considerations. Those ethical considerations are why we hope that these matters will be pressed to a vote and we will support the right hon. Ladies in that.

[David Mowat]

The hon. Gentleman is right that somebody has to go first. I have one thought for him, and I would be interested in his view. His country relies quite heavily on the oil industry. Is he absolutely certain that it is right to impose something on Shell or BP that the Italian Government will not impose on Eni and the French Government will not impose on Total?

[Roger Mullin]

I thank the hon. Gentleman for being interested in my view. Although I understand the point that is being made as well as that being made by the Minister, I think that in these matters, for all large corporations that operate nationally, taking the first step puts them at a reputational advantage because they are seen to lead the way even though there might be occasions on which doing that appears to put them at some short-term commercial disadvantage. So this is not as simple as saying that anyone is necessarily incurring a commercial disadvantage. For those reasons, we would welcome these new clauses, and we are aware that they would also apply to important sectors of the Scottish economy.

I shall briefly say something about the Scottish National party’s new clause on whistleblowing. I am particularly grateful to the right hon. Member for Barking for asking the Minister why he would not support that new clause. Indeed, as she spoke, I thought that, rather than our pressing the new clause to a vote here, it might be best to engage in cross-party discussions on how best to construct a thorough way forward. I agree wholeheartedly with the right hon. Lady, because when we look at the number of cases that have involved taking whistleblowers to court, one wonders where the balance of the scales of justice lie.

I recognise that changes have been made to the requirements on whistleblowing, some of which come into effect this September in the banking sector, but the requirements oblige companies to do things such as appoint their own whistleblowers champions and report the amount of whistleblowing to their boards. Those things require a culture of willingness in companies. If the will is not there, the current processes will have next to no effect. We are not saying that we know precisely how to secure effective whistleblowing. That is why it would be useful to have some cross-party discussions, in which I am sure the right hon. Lady would be happy to engage. In that spirit, although we believe in the new clause, we will not press it to a vote and look forward to supporting the votes led by the right hon. Ladies.

[Caroline Flint]

I rise to support amendment 1, in my name and those of my hon. Friends the Members for Hackney South and Shoreditch (Meg Hillier) and for Houghton and Sunderland South (Bridget Phillipson) and the hon. Members for Amber Valley (Nigel Mills), for Southport (John Pugh) and for Edinburgh North and Leith (Deidre Brock). I am grateful for the support of six other members of the Public Accounts Committee who signed this amendment: my hon. Friends the Members for Islwyn (Chris Evans) and for Bristol South (Karin Smyth) and the hon. Members for Berwick-upon-Tweed (Mrs Trevelyan), for South Norfolk (Mr Bacon), for Peterborough (Mr Jackson) and for Warrington South (David Mowat). In total, 77 right hon. and hon. Members have signed the amendment, and it is a pleasure to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

Apart from the Labour party’s support, for which I am extremely grateful—particularly that of my hon. Friend the Member for Wolverhampton South West (Rob Marris), who has been fantastic in his liaison and advice—Scottish National party, Liberal Democrat, Ulster Unionist party, Social Democratic and Labour party, Plaid Cymru, Green party and UK Independence party Members, alongside a number of Conservative Members, and the independent hon. Member for North Down (Lady Hermon) support amendment 1. There is truly cross-party support, and I am therefore grateful to all those right hon. and hon. Members.

Amendment 1 also has the welcome support of the business-led Fair Tax Mark and the Tax Justice Network and that of development charities such as Christian Aid, the Catholic Agency for Overseas Development, Oxfam, Action Aid, the One Campaign and Save the Children.

It is understandable, given the momentous events of recent days that are creating ripples that reach all corners of our nations and across parties, if Members are a little distracted from the business that we are debating today, so let me be clear about what is at stake. If amendment 1 is agreed to, the Government’s requirement that companies publish their group tax strategy on their websites will include, for large multinational enterprises with bases in the UK, the headline details required on their revenues and taxes paid, in accordance with the OECD requirements for country-by-country reporting. In lay terms, this is Parliament’s Google moment.

I should like to clarify something: the amendment would require companies to publish everything that the Government already require them to report to HMRC. Yes, I agree with the Minister that it would not achieve worldwide reporting for any multinational enterprise, but it would catch not only those parts of a multinational enterprise that are in the UK but those that are over a certain size and have a turnover of more than £600 million.

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[Sammy Wilson]

Of course, all businesses will seek to emphasise the additional costs that the levy imposes on them. However, many businesses that face a shortage skills in Northern Ireland now recognise that there must be a means to ensure that we have a supply of skilled labour. Opinions differ on how to provide that supply of skilled labour and how the apprenticeship levy should be applied and used, but people now accept, given the importance of skilled labour to firms, that they have to pay for it.

[Roger Mullin]

I return to the earlier point that the hon. Gentleman was making about inward investment. Does he agree that, compared to Brexit, this measure is pretty marginal in its likely impact in encouraging inward investment? As I am sure we are both very concerned about inward investment, does he agree that we should have an urgent debate to consider the implications of the Brexit vote?

--- Later in debate ---

We are supportive of most of the measures up for discussion in this group of clauses, but I hope that the Minister will take account of the Opposition’s concerns that I have outlined about the entrepreneurs relief, investors relief and employee shareholder schemes. However, what we cannot support is such a huge, huge tax giveaway for the wealthiest in society with this cut to capital gains tax while our communities are completely starved of investment. We will therefore oppose clause 72.

[Roger Mullin]

I welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to her new post. If I recall correctly, one of the first debates that we took part in together was about that very important topic of whisky. It is appropriate that I mention that given the Minister’s condition.

[Rob Marris]

It was not from drinking whisky.

[Roger Mullin]

No, I know, but perhaps the Minister could take a few drams to relieve the pain. I certainly think that he deserves it given what he has put himself through over the past couple of days.

May I also say to the hon. Lady that we on the SNP Benches agree with everything that she has argued? I am delighted to say that we will be supporting her opposition to clause 72.

[Rob Marris]

That was a short speech.

[Roger Mullin]

It is not quite as short as that.

I want to speak to new clause 2, which is in my name, and I will begin with a quote that I have used before in this House:

“I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right.”

I entirely agreed with the Chancellor of the Exchequer when he said that in April 2012. That is precisely why we are bringing this new clause to the Floor of the House today. Many people in remunerated employment, working hard every day of the week, will be surprised to learn that the managing director of an average European firm can expect to receive around £8 million in remuneration. Private equity fund managers are able to shrink their bills by paying, as we have heard, only 28% in capital gains, rather than 45% in income tax simply because it is classified as carried interest. In effect, they are getting a remuneration for managing other people’s money, and therefore they should be taxed in the same way that other people are taxed—through income tax.

A fund manager’s ability to pay capital gains instead of income tax allows them to avoid paying national insurance on part of their income. I am well aware of the Minister’s technical explanations about why we are dealing with a different form of gain. However, that does not wash with people in society who are undertaking their work in most other occupations in life. The Government yesterday indicated that they were content to squeeze yet more money out of the contractor sector, affecting teachers, nurses, people in rural communities and the like. These are not the people who are aggressively avoiding tax. The people who are aggressively avoiding tax are people working in the City of London. They are avoiding paying the income tax that the rest of the people in society are quite happy to comply with.

The loopholes that continue are simply an example of the over-complication of our tax system, a matter that has been referred to by hon. Members on both sides of the House. As we look at the thousands upon thousands of pieces of paper in the tax code, it is clear that the bigger we make it the more we create the possibility of loopholes. Surely the time has come for a more fundamental review of all forms of business taxation, a matter that I know the hon. Member for East Antrim (Sammy Wilson) has raised in the past.

Indeed, some of the people gaining considerable sums of money have great sympathy with this. I would like to quote not some of the campaigners but one of the highest-paid people in the country, the head of the private equity firm Cerberus, Stephen Feinberg. He said in 2011, tellingly:

“In general, I think that all of us are way overpaid in this business. It is almost embarrassing.”

I do not think that we should allow this gentleman, the head of an investment fund, and others to be embarrassed any more. I think we should end their embarrassment by making sure that in the future they pay appropriate levels of income tax.

We also find ourselves in agreement with the OECD, which in May 2014 recommended in its position on tax

“taxing as ordinary income all remuneration, including fringe benefits, carried interest arrangements, and stock options”,

and that this should be paid as income tax.

We have evidence not just from campaigners but from people in the City who admit that this is an anomaly that needs closing, so I ask the Minister to give further consideration to this important move. I would also say in general that we welcome quite a lot of the technical changes that have been made on investment, entrepreneurs relief and the like. We want to encourage an entrepreneurial economy, but not at the cost of heightening income inequality and of further division in society.

[Mr Gauke]

I shall be relatively brief in responding to the debate. I addressed one of the issues that we have debated in my fairly lengthy remarks earlier and there is also a certain sense that these are issues we have debated in the past. I certainly remember debating the issue of carried interest with the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) in last year’s Finance Bill. He made very similar points and I am inclined to make very similar points in response, so I will not necessarily run through all that once again. I remind the hon. Gentleman that where we are talking about remuneration that is income, we are determined to ensure that it is taxed as income. As a Government we have shown a willingness to make changes in this area.

Let me turn to the wider issues of capital gains tax and yet again welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to her position. I wish her a long and distinguished period as shadow Chief Secretary, given that I understand that there might be uncertainty more generally on the Labour Front Bench. It is extremely important that our tax system is competitive and encourages investment, which will drive our economy forward in the future. A number of external bodies have welcomed the steps that we have taken in reducing CGT rates. The CBI and the Institute of Economic Affairs have welcomed these cuts as means to encouraging entrepreneurship and growth. A number of internal studies indicate that lower rates of CGT support equity investment in firms and promote higher-quality investment in start-ups. That is an important source of innovation and growth.

Finance Bill

Roger Mullin Excerpts

Monday 27th June 2016 Commons Chamber

Clause 18 deals with employment income provided through third parties. Most of this is fairly technical stuff. That does not mean that we should not scrutinise it, but I understand that there will be a consultation on this. Perhaps the Minister could provide a little more detail on that. Will he address the question of lower-paid individuals in small businesses, some of whom feel that these proposals are retrospective because they refer to pre-2011 arrangements? We in this House are always wary of anything that smacks of retrospectivity.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I rise to speak to amendment 180 and new clause 1, and to indicate our support for the Opposition on amendment 2. The hon. Member for Wolverhampton South West (Rob Marris) gave his reasoning behind amendment 2 with such typical eloquence that I have nothing of any substance to add to his remarks, other than to say that we will support the amendment when it is pressed to a vote.

Earlier, I raised a point of order with the Speaker, who encouraged me to say a few words at the beginning of my speech in this debate, so I hope you will indulge me, Sir Roger. We have just had an extraordinary and historic statement from the Prime Minister, in terms of the economy and Government finances, that served merely to clarify the fact that there is no clarity. We know that we face great challenges that will be relevant to much of the Bill, yet we do not know the detail of what the Treasury and its Ministers plan to do or how their actions are likely to affect the measures in the Bill.

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[Sammy Wilson (East Antrim) (DUP)]

Given the reduction in the number of people employed by HMRC, and the level of satisfaction with the service it provides, does the hon. Gentleman agree that it is understandable that many businesses turn to professionals whom they employ themselves rather than relying on HMRC?

[Roger Mullin]

I entirely agree with the hon. Gentleman, but the smallest enterprises—those employing perhaps their first or second employee and engaging in some kind of share ownership—are not in a position to pay a professional company £1,000 or £2,000 for the necessary valuation service, which was provided at no cost by HMRC. Organisations such as ProShare, which I think is based at University College London, have said that they are aware of a number of small businesses being discouraged from engaging in small-scale share ownership schemes precisely because the assistance that they were once afforded has been removed. If the demand for such services was so low, only a few people would have been needed to deliver them. The cost to the Government cannot therefore have been very great, so it seems somewhat perverse to abandon the service at a time when people are seeking to expand the number of share ownership schemes in society.

The hon. Member for Wolverhampton South West, for reasons that defy all understanding, did not think that our new clause 1 was dramatically superior to his new clause 3. No doubt he will attempt to convince the Committee of that argument later. New clause 1 proposes a review of the income tax treatment of workers providing services through intermediaries. We believe that this is particularly relevant in Scotland. The hon. Gentleman suggested earlier that the average return journey to and from work was 16.7 miles. Well, try telling that to people who live on the Isle of Skye and have to commute to places such as Fort William and Inverness. Try telling it to people who have to hop from island to island, such as the health workers who travel on ferries to service the islands and often need to stay overnight. Their situation is not remotely close to the average of 16 miles to travel to work.

A recent article in The Times Educational Supplement pointed out the proposal’s likely negative impact on the many aspects of the education sector that rely on people on particular types of contracts who do not enjoy the benefits of full-time employment. The Minister argued calmly, as he always does, that the change is a simply a matter of ensuring a level playing field. If he wanted a level playing field, he would be ensuring that workers employed through intermediaries benefit from sickness pay, holiday pay and many of the other advantages of full-time employment. They do not get those same benefits and cannot be compared with people in traditional forms of employment.

Indeed, I suspect that part of the problem is that the Government have misunderstood the needs of the modern labour market. People are no longer employed either in traditional ways or entirely self-employed in the way it is traditionally understood. Flexibilities in the labour market have developed in many ways over the past 10 or 20 years. Many such flexibilities play to and enable local economies, such as rural areas in Scotland or Northern Ireland, and specialist sectors, such as oil and gas, which need to import specialist services. These people might be based not in Scotland, but down here near London and may have to fly to provide their services. The proposal might have impacts that have not been thought through by the Government.

[Rob Marris]

Does the hon. Gentleman agree with UCATT, which says that such workers should be directly employed if possible? For example, UCATT has obtained agreements on behalf of workers to get employment rights in workplaces such as the Olympics or Hinkley Point. While there is a place, as the hon. Gentleman says, for employing specialist workers on oil rigs, for example, not permanently but through an intermediary, the starter for 10 or opening position should be to try to have direct employment so that people get the full panoply of rights.

[Roger Mullin]

I agree with the hon. Gentleman that it would be better for some in this community to achieve traditional forms of employment, but that is not the situation for the in excess of 1 million people in the UK who fall into this category.

Despite the Minister’s warm words, we intend to press new clause 1. It relates to a matter of some real import for the communities and the economy of Scotland. I have indicated that we are simply speaking to amendment 180, which we will not press, and we will support the Opposition’s amendment 2.

[Kelvin Hopkins (Luton North) (Lab)]

I rise to speak briefly on these amendments and new clauses. The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) was absolutely right to mention HMRC. Successive Governments have consistently understaffed HMRC, consistently arguing that they would make it more efficient or whatever. When I was first elected to this House 19 years ago, I remember going to my local VAT office and being told that every member of staff collects five times their salary. Being a logical sort of person, I wrote to the then Chancellor of the Exchequer and suggested that it was a good idea to employ more staff to collect more revenue for the Government. I received a letter back not from the Chancellor and not even from a junior Minister but from a civil servant, suggesting that HMRC was to save money by cutting staff. It was so irrational that it was just nonsense. That kind of nonsense has continued ever since—reducing the number of offices, making things more remote and so on. I was also not terribly impressed by the idea of having a benefits-distributing service—tax credits—going through HMRC rather than through the Department for Work and Pensions. I was not the only Opposition Member who was uneasy about that change.

I want to discuss new clause 3 and the tax treatment of workers employed through intermediaries and support my hon. Friend the Member for Wolverhampton South West (Rob Marris) on the Front Bench. It has long occurred to me that intermediaries and private agencies make lots of money out of both the public purse and the people they employ. That could be overcome if we instituted a substantial public ownership programme for agencies, particularly when the public sector is involved. If there was a local authority or NHS agency for nurses, the money would either go into the pockets of the staff employed through the agency or would be saved in public spending by the health service—everyone would benefit. However, the people who would lose would be in the private sector, which could not make profits out of employing people in this way. In that way, staffing and taxation could be properly regulated. There would be no cheating, irregularities or tax fiddles, because it would all be within the publicly accountable public sector.

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[Mr Gauke]

This Government are committed to a very substantial investment in our railways—the biggest rail building programme since Victorian times. As a Government, we have great ambitions; we intend to spend £60 billion on transport infrastructure over the course of this Parliament.

Turning to supporting testimonials, a point was raised about the definition of “customary”. To reassure the hon. Member for Wolverhampton South West, I point out that HMRC is committed to working with external bodies in the production of guidance on this, which will cover issues such as the definition of “customary”. He also asked about the numbers of testimonials that fall within the contractual or customary categories, or fall outside that. No figures are available, as employers have not had to report this to HMRC. It is worth pointing out that contractual and customary payments are treated as earnings and it is therefore not possible to disaggregate them from the PAYE system.

A number of points were raised on clause 14. It was asked whether this change would disadvantage rural communities. Workers in rural communities who are contracted directly cannot claim travel and subsistence on their ordinary home to work commute. This change equalises the tax treatment of workers employed through employment intermediaries with that of other workers. It addresses an imbalance in our tax system, ensuring that it is fair. It is a long-standing principle of the tax system that tax relief is not allowable for the expense of ordinary commuting—travelling from home to a permanent workplace. I made that point earlier.

In terms of whether it would reduce contractors’ ability to travel, creating a skills shortage or reducing flexibility and preventing growth, where businesses wish or need to recruit workers living some distance away, the Government expect businesses to pay a wage sufficient to attract workers without any special tax subsidy being necessary. This forms part of the Government’s plan to move to a high-wage economy with businesses meeting the costs of paying their workers a wage which does not require a top-up from the state. I should also make the point in this context that this change puts supply teachers —an example that I think was used in the course of the debate—who are engaged through an intermediary on the same terms as other supply teachers who are contracted directly or through an agency. Like other workers, supply teachers not engaged in this way would not receive tax relief on their travel and subsistence expenses on regular home to work travel.

Prior to the last general election, the Labour party said that it would stop umbrella companies exploiting tax relief. It stated this both in its published plan to tackle tax avoidance and subsequently in Parliament, and that is exactly what this change does, so I hope our measures in this area will have cross-party support.

The hon. Member for Aberdeen North (Kirsty Blackman) made a point about the impact on the Scottish oil industry. Employees with a permanent workplace at an offshore oil or gas installation are already exempt from income tax where they are provided with transfer transport, related accommodation, subsistence or local transport. These changes will not affect that exemption.

[Roger Mullin]

The only time in my life I had to operate through an umbrella company and would have been caught by these changes was when it was at the requirement of the Government because of the way in which they had constructed a contract. Do they intend going through every Department of the UK Government to ensure they no longer contract in this way?

[Mr Gauke]

The Government have done considerable work in recent years to ensure that Departments do not engage in arrangements that drive down the tax bill in a way that is not the intention of Parliament.

On clauses 16 and 17 and the issue of the withdrawal of the valuation check service, the Government believe that the impact will be negligible on employee share ownership. The Government do not expect the withdrawal of these services to have an impact on the take-up of employee ownership schemes. The valuation service has not been withdrawn for the most relevant two employee ownership schemes, including enterprise management incentives, company share option plans, savers who earn share option schemes, share incentive plans and the employee shareholder status.

This rather raises the question raised by the hon. Member for Wolverhampton South West as to why we have so many different schemes. Well, each of the tax advantage share schemes has a specific policy objective, reflected in the specific qualifying conditions. Share reward schemes are greatly valued by both companies and employees, and the Government believe that these schemes can have a positive impact on productivity.

Finally, on clause 18 and the concerns that this is retrospective legislation and that it is too complex, let me be clear that the changes introduced here are relatively straightforward. More complex proposals that were announced at the Budget will instead be legislated for in Finance Bill 2017, after the Government have consulted on the technical detail over the summer. One of the main purposes of the consultation will be to ensure that genuinely innocent arrangements are not affected. On the suggestion that the legislation is retrospective, the Government expect those who have avoided tax to pay their fair share. The Government intend to legislate for the new charge in Finance Bill 2017, following the consultation that I have just mentioned. The public and tax practitioners will be able to comment on that consultation.

Normal hard-working people do pay their taxes. They are paid a salary; they are not paid in loans. It is not right that those who use these schemes receive remuneration without paying tax on it. All affected scheme users will have the opportunity to repay their loans or to pay tax on them before the changes come into effect. This is in addition to the previous settled opportunities which closed in 2015.

I hope those points of clarification are helpful to the House. I hope, therefore, that the Government clauses and amendments can be supported, and I urge hon. Members proposing their own new clauses or amendments not to press them. If not, I urge my hon. Friends to oppose them.

Amendment 22 agreed to.

Amendments made: 23, page 14, line 10, at end insert—

“( ) In section 109 (priority of Chapter 5 over Chapter 1), after subsection (3) insert—

“(4) In a case where the cash equivalent of the benefit of the living accommodation is nil—

(a) subsections (2) and (3) do not apply, and

(b) the full amount mentioned in subsection (1)(b) constitutes earnings from the employment for the year under Chapter 1.””

Amendment 24, page 14, leave out lines 13 to 16 and insert —

““(1A) Where this Chapter applies to a car or van, the car or van is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is made available to the employee or member constitute a fair bargain).””

Amendment 25, page 14, line 35, at end insert—

“( ) In section 120 (benefit of car treated as earnings)—

(a) in subsection (2) after “case” insert “(including a case where the cash equivalent of the benefit of the car is nil)”, and

(b) after subsection (2) insert—

“(3) Any reference in this Act to a case where the cash equivalent of the benefit of a car is treated as the employee’s earnings for a year by virtue of this section includes a case where the cash equivalent is nil.”

( ) In section 154 (benefit of van treated as earnings)—

(a) the existing text becomes subsection (1) of that section, and

(b) after that subsection insert—

“(2) In such a case (including a case where the cash equivalent of the benefit of the van is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the van for that year.

(3) Any reference in this Act to a case where the cash equivalent of the benefit of a van is treated as the employee’s earnings for a year by virtue of this section includes a case where the cash equivalent is nil.””

Amendment 26, page 14, leave out lines 37 to 39 and insert—

““(1A) Where this Chapter applies to a loan—

(a) the loan is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms of the loan constitute a fair bargain), and

(b) sections 175 to 183 provide for the cash equivalent of the benefit of the loan (where it is a taxable cheap loan) to be treated as earnings in certain circumstances.”” —(Mr Gauke.)

Clause 7, as amended, ordered to stand part of the Bill.

Clauses 8 and 9 ordered to stand part of the Bill.

Clause 10

Diesel cars: appropriate percentage

Amendment proposed: 2, page 15, line 29, after “omit”, insert

“, except in the case of a low emissions vehicle,”.—(Rob Marris.)

Question put, That the amendment be made.

Draft Building Societies (Floating Charges and Other Provisions) order 2016

Roger Mullin Excerpts

Tuesday 14th June 2016 General Committees

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to serve under your chairmanship for the first time, Ms Buck. At one time in my life, I was an athlete and always keen to set records. I have never set one before; I think that I will try this time by saying that I support the draft order.

The Economy and Work

Roger Mullin Excerpts

Thursday 26th May 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

In the few minutes available, I shall primarily address issues relating to the criminal finance Bill. In introducing the subject, I can do no better than recognise the extremely thoughtful contribution of the right hon. and learned Member for Rushcliffe (Mr Clarke) on Tuesday. In his peroration, he made these comments in referring to the Bill:

“we in this country are very bad at dealing with white-collar crime, and there is growing awareness of that. If someone wishes to rob a bank, they go to the LIBOR market; they do not put on a balaclava and pick up a shotgun—that is much less profitable… I hope I can be reassured that the Bill will tackle not just tax evasion, which is quite rightly high on the public agenda, but money laundering.”

He concluded this part of his speech by saying:

“London is still the money-laundering capital of the world.”—[Official Report, 24 May 2016; Vol. 611, c. 450.]

The right hon. and learned Gentleman rightly pointed out the nature of the challenge we face. Many of the biggest crooks are working in the City of London. This is a major challenge that we should all be willing to address. It would be commendable if the Government eventually produced a very strong Bill, but as is sometimes said in my part of the world, “I hae ma doubts”.

If people’s behaviour and motivation are so important, that raises a fundamental concern in my mind about the flawed approach to economics that seems to dominate much of current thinking. We find that Treasury civil servants and central bankers have presided over not only corrupt practices and economic failure, but intellectual failure, too. For example, their devotion to what most people know as neo-classical economics led to their failure to anticipate the largest recession since the 1930s, and revealed their powerlessness as policymakers in the face of the subsequent stagnation of output.

The penchant of the neo-classicals for putting all their eggs in the basket of simple mathematical and statistical forecasting is based on remarkably few variables, which leads them to ignore economic problems that are not easy to measure—whether they be legal or illegal. Even Mervyn King in his book “The End of Alchemy” hinted at this critique when pointing out the failure of existing models to take into account critical changes such as the political reforms in China that led to its rapid growth. I add the inability to see how attractive the City of London has become to—

[Graham Evans]

Will the hon. Gentleman give way?

[Roger Mullin]

Certainly.

[Graham Evans]

The hon. Gentleman has mentioned London on several occasions, which makes me wonder whether there are no issues with people from Edinburgh. I remind him that Sir Fred Goodwin was a Scotsman in the Royal Bank of Scotland at the time. The hon. Gentleman should not insinuate that crooks end up only in London.

[Roger Mullin]

I thank the hon. Gentleman for the extra minute, but I never implied that at all. If he had been here at the beginning of my speech and was listening to it, he might have realised that I was citing the words of the right hon. and learned Member for Rushcliffe, who was sitting in the same place on Tuesday, and it was he who raised this very issue. If the hon. Gentleman wants to take issue with the castigation of the City of London, I suggest he looks to his own colleagues rather than to me.

Time does not permit me to go into a more detailed analysis of what needs to be done, so let me make a few suggestions. I think it would be useful if we vastly strengthened support for whistleblowing to give employees within banks and financial institutions greater confidence in raising issues such as suspected money laundering and the management of illegal assets.

As I reflect on what my hon. Friend the Member for Dundee East (Stewart Hosie) said, I believe it would be wise for the Treasury to convene a commission into the simplification of the tax code. Put simply, the more complicated we construct a tax code, the easier it is for those will mal intentions to find their way into securing gains for themselves at the expense of others. I hope we get a Bill of some substance. I hope that the Government truly wish to address those vested interests that do us all so much harm.

--- Later in debate ---

[George Kerevan]

Wait for it. This afternoon, the Chancellor promised us a better markets Bill to improve competition. We on the SNP Benches are in favour of that and will give it what help we can, depending on what is in the Bill. It is a matter of record that, in the UK, we have the most monopolised banking system in the western world. Four big banks dominate, with 80% of the market share. If we want genuine competition and better markets in finance, we need to have six, eight or 10 banks of a similar size. Until we have that, there will be no better markets or better competition.

Here is a tale: the two main regulatory bodies set up by this Government and this Chancellor to ensure more competition and better markets in finance—the Competition and Markets Authority and the Financial Conduct Authority—have failed to deliver. Why is that? There is a suspicion among SNP Members, and I suspect among Government Members, that those regulators are perhaps looking over their shoulder at the Chancellor and asking themselves, “Does the Chancellor really want us to close down, intervene in or break up those banks? Maybe we are being told to say one thing and to do another.” That is why, when we look at the small print of the Bill, we will want to see whether this is just shadow boxing and a subterfuge that allows the Chancellor to get up and say, “I’m in favour of competition, but actually—shush, shush—don’t do anything about it”, or whether it will really have teeth to take on the big banks.

I want very quickly to look at some of the things that are going on. The FCA has brokered a deal with the big banks on arbitration for small businesses who have suffered mis-selling and been bankrupted. Unfortunately, the FCA has turned a blind eye to the fact that the big banks are now signing up solicitors across the UK, including in Scotland, so that those solicitors, who are on the banks’ books and waiting for work, will not take up the cases of small businesses who feel that the arbitration process has gone against them and want to take the banks to court.

[Roger Mullin]

Corrupt.

[George Kerevan]

I hear from a sedentary position the word “corrupt”. I will not use that word, but I will certainly be looking to the Chancellor and this Government to make sure, through this Bill, that such practices by the big banks are done away with.

Finally, in my constituency of East Lothian, RBS has just announced the closure of its only branch in the town of Prestonpans. That is a surprise because the population of East Lothian is growing, and we are about to have 10,000 more houses in the general area of Prestonpans. Banks do that kind of thing: they do not care about their customers. This Bill has to reverse that, and that is the test we will apply to it.

UK Economy: Post-Referendum Assessment

Roger Mullin Excerpts

Monday 23rd May 2016 Commons Chamber

[Mr Gauke]

As I understand it, the leave campaign have made it clear that they would not want to go down the Norway route and be members of the EEA, because that would require continued contributions to the EU budget, continued compliance with EU regulations, and continuing to be signed up to free movement of labour. Given that the leave campaign is now focused almost exclusively on immigration, it would be strange to suggest that one option to take would be one that has been dismissed by the campaign to leave the European Union.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Here we go again. The Government seem determined to recycle “Project Fear”, based on Treasury projections invented on the back of its now famous neo-classical fag packet. If all the Government have to offer is fear, they do the cause of the EU no favours. There are many positive reasons for staying in the EU. Why is there no analysis of the emerging trading opportunities for business; why is there no analysis of the value of appropriate immigration to the labour market; and why is there not more respect for those of us who want to make a positive case for the EU?

[Mr Gauke]

I must admit that I am slightly confused by that contribution—my understanding was that the position of the Scottish National party was to favour remaining part of the European Union.

[Roger Mullin]

We want a positive case.

[Mr Gauke]

If the hon. Gentleman wants a positive case, let us put it this way: according to the shock scenario we have set out, in two years’ time, the UK economy will be 3.6% bigger if we stay in the EU than it will be if we leave. He criticises and wants to re-fight the Scottish independence referendum. May I just remind him—I suspect it will not be for the last time—that the Unionists won that referendum?

HMRC: Building our Future Plan

Roger Mullin Excerpts

Thursday 28th April 2016 Commons Chamber

[Chris Stephens]

My hon. Friend raises a fair point in that some workforces were told that offices would close if they voted for independence. To be fair, in my experience, workers in the shipyards and at HMRC came to an individual choice on the referendum. I do not think those scare stories were necessarily accepted by many parts of the workforce. However, again we hear the use of rhetoric around the constitution to say that places will close. We will find that it is not an independent Scotland that is closing those offices but a Tory Government.

In preparing for this debate, I came across a debate on the then Inland Revenue from over 30 years ago in the other place. A contribution by Baron Houghton of Sowerby, a former Chairman of the Public Accounts Committee and chair of the Inland Revenue Staff Association, stood out:

“the human factor is the ultimate right…and there is no substitute for it. No computers will deal with taxpayers who require consideration and attention, and to whom some measure of discretion or of consideration may be due.”—[Official Report, House of Lords, 20 July 1983; Vol. 443, c. 1199.]

Those words are as appropriate today as they were in 1983. They seem to me to be part of an ethos that all of us, across parties, should endorse as a cornerstone of public services. Sadly, those behind HMRC’s Building our Future plan are taking the wrecking ball to those foundations and not just demolishing the future of HMRC’s buildings but hammering the staff, the taxpayer, and the public. If they are allowed to proceed, towns and cities across these isles will be at the forefront of yet more ideological austerity. Hard- working and conscientious staff will once again be expected to clean up the mess, and taxpayers will foot the bill for the short-sightedness and short-termism of successive governments and Treasury Ministers. HMRC is not building a future—it is destroying it.

Fifteen years ago, the Inland Revenue and Customs and Excise combined had 701 offices across the country. Today we are being asked to accept that the 13 centres proposed by HMRC can possibly replicate that kind of coverage. Is there anyone who believes that the citizens of Penrith can better be served by a “super-centre” in Manchester, compared with Carlisle; those in Portlethen served better from Edinburgh than Aberdeen; or the people of Penzance served better from Bristol than Redruth? We are asked to believe that the best interests of the taxpayer and of society are met in a system that has staff in Glasgow travel halfway to Golspie to meet clients who have travelled halfway from Golspie to Glasgow, sitting down at some “neutral location” to discuss an individual’s sensitive and confidential tax affairs. I am told that one of these neutral locations is what can only be described as a hut in a public park. I am told—if I had not heard this with my own ears, I would not have believed it—that HMRC staff are advised to take a warm jumper and a bag of grit to these meetings during winter.

In truth, a look at the latest staff satisfaction survey from HMRC unfortunately makes this all too easy to believe. It would make some informative bedtime reading for those behind this closure programme. Fully 2% of staff strongly agree with the statements “I feel change is managed well in HMRC” and “When changes are made in HMRC they are usually for the better”, while 6% strongly agree that “I would recommend HMRC as a great place to work”, and 3% strongly agree that “HMRC as a whole is managed well”. On measure after measure, time after time, staff at HMRC are shown to be demoralised, demotivated, and depressed.

What other outcome in staff morale could result from the shuttering of office after office around the country? How enthused would anyone be knowing that, in a matter of months, their workplace is to be closed and that they and their friends and colleagues are to be relocated miles away? I suspect that if those behind this scheme were to be told tomorrow that their palatial offices were to be shuffled off from London to Norwich, Peterborough or Harwich—a journey that staff in these offices will be expected to do in reverse from next year —a murmur or two of discontent may well escape from their lips. Staff are entitled to ask exactly why a Government who invent catchphrase after catchphrase on regional policy—from the northern powerhouse to the midlands engine—are intent on such a centralising agenda. They may well ask why they are being shunted into sidings, rather than providing an express service to their communities.

I am sure that colleagues will touch later on the impact the closures will have on their constituencies, so I will not dwell too long on the specific towns and cities that will be hit, or on how hard they will be hit.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Does my hon. Friend agree that the loss of service will not only be geographic? Specific services are being abandoned. For example, HMRC has recently announced the abandonment of its valuation check service for small and medium-sized enterprises, thus completely compromising employee share ownership schemes.

[Chris Stephens]

I am aware of that and I hope to touch on it later. I thank my hon. Friend for his intervention.

Middlesbrough has the third highest unemployment rate in England, and nearly 3,000 people are already on the dole in Bootle, while Derry has the highest unemployment rate of any constituency. To see those places on a list guaranteed to create job losses at HMRC and in the wider community is to see a plan that will, in the words of the Public and Commercial Services Union,

“consciously increase unemployment in areas which are already employment blackspots.”

I suspect that the word “Mapeley” will come up in the course of this debate, so let me touch on it. I referred earlier to the more than 700 offices formerly used by HMRC. Mapeley Estates snapped up more than 130 of them for its offshore property portfolio after loading itself up with debt in order to front up its side of this rotten charade with the then Government: 84% of the funding that Mapeley obtained to acquire that lucrative contract came in the form of loans. That shabby deal with a shabby company comes to an end in 2021. For the privilege of renting publicly built offices sold off for a song, HMRC will have the

“right to occupy buildings, with leases based on market terms”

after that date. That is very generous of Mapeley.

I commend the National Audit Office on its 2009 report on the deal. It is redolent with phrases such as,

“the Department has not achieved value for money…The Department did not fully appreciate the risks… The Department has not had strong processes to monitor the overall cost of the contract and whether it is achieving value for money”.

The Exchequer Secretary admitted to this House last year that the end life of the Mapeley contracts represented a

“one-off opportunity to make this change to the estate footprint.”—[Official Report, 24 November 2015; Vol. 602, c. 1300.]

That is part of the truth behind the closures—a private finance initiative deal worth billions from the public purse, used to enrich a Bermuda-domiciled corporate entity, with the public left with nothing at the end of 20 years, except the right to sign a commercial lease.

I will end with the words of a PCS member and HMRC employee, my constituent Bobby Young, who is chair of the PCS Revenue and Customs branch:

“Whilst my branch welcomes the news of a slight increase of jobs in Glasgow, we absolutely oppose it if it comes at the cost of jobs elsewhere. Communities from Bathgate to Bootle will be devastated by these closures—that is not a price worth paying for the sake of a few extra jobs in Glasgow.”

If anyone should know about prices, it is an employee of Her Majesty’s Revenue and Customs. Sadly, it seems that their superiors know very little about value.

Bank of England and Financial Services Bill [Lords]

Roger Mullin Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Jonathan Edwards]

I fully agree with my hon. Friend on that point. I also agree with the points he made earlier about the north-south divide and the impact that monetary policy has had on that reality. It is no surprise that the UK is the most grotesquely unequal state in the EU in terms of geographical wealth, and one of the main reasons for that is that for far too long monetary policy has been determined in the interests of a very small part of it—namely, the square mile just down the Thames.

All current MPC members are either Bank staff or in one of the four positions nominated by the Treasury. Fittingly, there are four countries in the UK, which makes the MPC ripe for modification to ensure that all nations are represented when it comes to the highly important task of deciding interest rates. I am also interested in the emerging debate on changing the MPC’s remit with regard to setting interest rates. New clause 7 seeks to expand the mandated objectives of the MPC to include maximum employment. It is already specifically charged with keeping to an inflation target of 2%. Other central banks, such as the US Federal Reserve, to which reference was made in my exchange with the hon. Member for East Lothian, have a dual mandate that goes beyond inflation. In 1977, the US Congress amended the Federal Reserve Act 1913 and mandated the Federal Reserve to target long-term moderate interest rates and, critically, maximum employment. I heard with interest the Minister’s point that the Bank does consider the Government’s employment target, but there is a difference between that and a mandate for maximum or full employment.

New clause 8 seeks to improve the Bank’s accountability to Wales and the other devolved Governments. The British state is changing rapidly as powers and responsibility flow from Westminster to the devolved Administrations, although the pace is perhaps not as quick as those like me would want. We are not privy to the meetings between Treasury Ministers and the Governor and his senior team, but we can safely assume that they are frequent. On top of that, the Governor and his team meet the Treasury Committee at least five times a year. As I mentioned a moment ago, fiscal powers already exist in the devolved nations, with more planned, so I hope that the Bank and the Treasury agree that it is in their interests to strengthen relations with the devolved Governments and Parliaments. I am not aware of any formal structures for meetings between the Governor and Ministers of the devolved Governments, or for scrutiny of the Bank by the devolved Parliaments. In the interest of mutual respect, those structures need to be formalised.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

I thought that I would come along to listen this afternoon, but I was stung into action by the Minister’s peroration, in particular her comments on new clauses 2 and 3.

[Tommy Sheppard]

Does my hon. Friend share my sense of regret and bewilderment that the Government can so casually dismiss the proposal to amend the long name of the Bank of England? Does he agree that it is disingenuous of the Conservative Government to talk about a respect agenda that embraces the contributions of all the United Kingdom’s nations when they refuse to recognise those contributions at the first opportunity, and state that only England should be in the name of this most significant institution?

[Roger Mullin]

I agree entirely with my hon. Friend. Indeed, it is particularly apposite that he makes that point now, because as my hon. Friend the Member for East Lothian (George Kerevan) pointed out, the Bank of England is a very different kind of bank from a few short years ago. It has a much more political role than it did, and it makes decisions that have a wider impact than before. Its name surely now needs to reflect the impact of its decision making.

The second reason why my hon. Friend the Member for Edinburgh East (Tommy Sheppard) is entirely correct is because of the changed political climate in the UK. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) made similar points about the need to recognise the role of Wales. This is important. It is not a flimsy point; it is fundamental for people who want to see an important central institution that has proper regard for all the nations that it seeks to serve. A short while ago, I was looking at a list of the court of directors of the Bank of England. Looking at the representation provided by its 11 members, one would be inclined to rename it “the Bank of the City of London”, because there is little proper representation for the UK’s nations and regions.

I enjoyed the analogy the hon. Member for Carmarthen East and Dinefwr made with cricket. It is not a subject in which I can claim particular expertise. [Interruption.] Or interest? No, I have some interest in it. The hon. Gentleman pointed out that there is the England and Wales Cricket Board. One Mike Denness, born not far from where I was born in Scotland, was the captain of the English cricket team some years ago; again, I am showing my vintage.

We must have proper regard to all the nations represented in the United Kingdom. I was stung by the Minister’s comment that the Bank of England represents the whole of the United Kingdom, the implication being that it had always done so, but I do not think that is at all true, in terms of its policy making. The hon. Member for Bishop Auckland (Helen Goodman) and my hon. Friend the Member for East Lothian made the telling point that the Bank has had undue regard for one part of the UK. Many commentators would say that the interest rate setting policy of the Bank of England pre-2008 paid undue regard to the City of London and surrounding areas, and too little regard to the north of England, the Scottish economy, the Northern Ireland economy and the like.

That leads me nicely on to new clause 2 and why there should be representation for the nations and regions that make up the UK on the Bank of England’s court of directors. A short time ago, I had a quick look on the internet to see who these esteemed figures are, and unless I am proven to be incorrect—or the internet is incorrect—one is also a non-executive director of the Financial Conduct Authority. Such interlocking directorships do not serve economic policy and the financial sector well. Do we have such a tiny pool of appointable people that bodies with such an important relationship to one another have to be represented by the same directors? That is not a sign of strength in our appointing arrangements, but a position of extreme weakness.

Why are these things important? My hon. Friend the Member for East Lothian mentioned a word that has cropped up many times in Committee discussions: he talked about the importance of avoiding group-think. Many studies show it to have been part and parcel of the flawed decision making that contributed to the crash in 2008. If we want to avoid group-think, we need people who are willing to think differently and to ask the critical questions, and we need a chairman willing to seek out those with alternative views. I do not see that happening today.

Some years ago, I was sitting within the confines of a company that was considering a large proposal. A paper was presented, and the chairman quickly went around all the directors asking for their thoughts. Every single person around the table immediately said, “I think this is a really great paper and we should go with its suggestion.” The chairman, being extraordinarily wise, said, “I am extremely uncomfortable that we have an immediate consensus, so I am going to postpone this discussion until our next meeting. I want you to go away and generate some alternative, critical views.” That is the wise course of action; it is about not being sucked into group-think. For all those reasons, new clause 2 deserves the support of all those who do not want to replicate the mistakes of the past.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

Like many others in the Chamber and, as is clear, in the Treasury Committee, I welcome the progress made on the Bill but have serious concerns about it and, in particular, its role in the systematic gradual compromising of the independence of the two key regulators, the FCA and the Prudential Regulation Authority. Further to the Minister’s announcements in her opening remarks, which were touched on by many in this House, including my hon. Friend the Member for East Lothian (George Kerevan), I welcome the Government’s determination that more oversight is needed on the appointment of the chief executive of the FCA by the Chancellor. However, I have concerns about the new procedures, as announced. Until this legislation is in place, this is very much open for debate and I sincerely hope we will debate it thoroughly, in the way described by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

Another consideration is this: if the Treasury Committee recommends the appointment to be put forward as a motion to the House, the Government could simply whip votes to approve the Chancellor’s appointment. Select Committees provide substantially more apolitical deliberation of key specialised issues. For that reason, a direct Treasury Committee veto of the appointment needs to be considered.

Iraq Inquiry Report

Roger Mullin Excerpts

Thursday 14th April 2016 Commons Chamber

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will the hon. Gentleman give way?

[Sir Gerald Howarth]

I am afraid not. A great many other Members wish to speak.

Let us compare what has gone on in the last seven years with what went on after the Falklands campaign. Three weeks after the end of that war, the Prime Minister announced an inquiry, and the inquiry team took six months to deliberate and report. There were international ramifications, because the United States was initially tempted to take the side of its South American neighbour. I know that certain sensitivities will apply in this case in connection with the relationship between Prime Minister Tony Blair and President George W. Bush, but there were similar sensitivities in the case of the Falklands campaign. That inquiry cost £81,000, which at today’s prices is about £280,000.

This morning I was advised by a friend that the Chilcot report is likely to run to 2.5 million words and 12 volumes. Whether the interests of better understanding will be served by a report of that length I know not, but what I do know is that we in this House are right to demand that the report be published as quickly as possible.

--- Later in debate ---

[Tom Brake (Carshalton and Wallington) (LD)]

I think we will all be going off to see what is in The Sun as soon as this debate is over. May I thank the hon. Members for Beckenham (Bob Stewart) and for Gravesham (Mr Holloway) for providing us with some personal experiences that relate to the debate, and the right hon. Member for Haltemprice and Howden (Mr Davis) for securing it?

Today is perhaps not the day to go back over what happened as long ago as 2003 in relation to the Iraq war, but I will take the opportunity to remind people that when Charles Kennedy was leader of the Liberal Democrats we unanimously voted against the Iraq war in the Lobby—there were no exceptions—doing so on the basis that we thought the weapons inspectors should be given more time and that there was no UN backing for the action. The Iraq war still took place and many Members have cited statistics about it: the 179 British service personnel killed in Operation Telic; and the 4,000 to 5,000 UK casualties. There is a huge range of Iraqi casualties, with figures varying from 150,000 up to as high as 1 million. Clearly, we will never know the true figure.

The Chilcot inquiry was eventually set up to look into the detail and discuss this issue. In an intervention, the hon. Member for Perth and North Perthshire (Pete Wishart), who is no longer in his place, said that he thought Tony Blair should have “Iraq” tattooed on his forehead. Tony Blair does not need to have that done, because his visage is sufficient to remind people of his involvement and the action he took that led us into that war.

The remit of the Chilcot inquiry talks about examining

“the United Kingdom’s involvement in Iraq, including the way decisions were made and actions taken, to establish as accurately and reliably as possible what happened, and to identify lessons that can be learned.”

Clearly, there will, to some extent, be a focus on the individuals involved, but what worries me is that we are not yet in a position to identify the lessons that can be learned from the Iraq war because we have not yet had the inquiry report published. Since the Iraq war we have had the first involvement in Libya, and I am sure that had the Chilcot inquiry been published it would have helped with the decisions taken on that. It was not available when we were dealing with the Syria situation either.

Perhaps the report will be available for us on any proposal for the UK Government to be involved in further military action in Libya. I was worried that Parliament might be—I was going to say bounced but perhaps that is not the right word—advised at short notice about a debate where the Government would seek Parliament’s permission to get involved in further military operations in Libya. It seems that that possibility has receded, given that the Libyan Government have recently stated that they are not currently seeking that, but it may be something they seek in the future.

The Chilcot inquiry might also be able to flag up the risks of mission creep, particularly in relation to Libya, because although it is clear that many UK drone strikes are taking place in Syria and Iraq, it is not clear whether that is also happening in Libya, and there is a risk of further mission creep associated with that. Clearly, it would have been helpful to Members of Parliament who do not necessarily have access to the detailed briefings to have had the Chilcot inquiry published and available for us to refer to.

Another thing that worries me about the Chilcot inquiry is that it has gone on for a very long time but it is not entirely clear why that has been the case. Some have suggested that it was perhaps a lack of staff, although I know that Sir John Chilcot has said that he thought that when he wanted the extra staff he would get them, so perhaps it was not that. I know that some people have said that it was down to the Maxwellisation process, although I know other people who have been very closely involved who say that that is not the case. It is completely unclear what has led to this report taking seven years, so far, to not be published. I am not calling for an inquiry into the inquiry, but I hope that at some point someone will make it clear precisely where the weaknesses with the model were so that in future—if there is another inquiry into our involvement in Libya, for instance—we will follow the right path and not simply repeat the mistakes of the Chilcot inquiry.

For instance, the Maxwellisation process is probably something that, in any future inquiry, we would want to allow in respect of people at least having access to documents and being able to comment on them. Perhaps that has been taken advantage of to extend the process, but we simply do not know.

[Roger Mullin]

On the point about Maxwellisation, people such as myself who, in other lives, have written reports in academia and the like are at times puzzled by this process. It is one thing to get people to comment on the accuracy of facts, but it is entirely another thing to give people the opportunity to comment on the interpretation of those facts. The big concern that many people, including me, have is how this report from Chilcot can be truly independent if he allows people to challenge his interpretations.

[Tom Brake]

I thank the hon. Gentleman for that sound intervention, and perhaps in future inquiries what he has suggested, which is an ability to respond to the facts, will be what is required, rather than a response to the interpretation put on them. If that process was followed, we might get a much snappier report. I think we would all welcome that. As a number of Members have highlighted, the difficulty is that the longer this goes on, the weaker people’s memories are. The information that is available tends to disappear and as each month goes by we get less and less of a clear picture of what happened, as opposed to a clearer and clearer picture.

Some have suggested that the Leveson model of inquiry might have been more appropriate. If we consider how long Leveson took to report—it started in July 2011, and the first report was published on 29 November 2012, so it took 18 months to produce a 2,000-page document—we can see that it was certainly a snappier inquiry. I know that today’s debate is not on the subject of the Leveson inquiry, but I would like to take the opportunity to suggest that the Minister conveys to the Prime Minister in the strongest possible terms that we still expect the recommendations of the Leveson inquiry to be implemented, as we do Leveson part 2, and that that has not been forgotten and will not be allowed to go away.

Perhaps the Leveson model provides an answer in relation to Chilcot, but my final point is that, as others have indicated, we are now seven years on and are still waiting to know the full facts about Iraq. The families of service personnel, and particularly the 179 families affected by the deaths of our personnel there, need closure and will not get it until everything is in the public domain. As others have said, I hope that given the length of time and the Maxwellisation process, any redactions, if there are any, will be extremely limited, as it has already been through a significant sifting process that does not require any further deletions. Any further slippage in the deadline for publishing Chilcot will add insult to injury, which is why we need to know that the two-week period that has been mentioned is one that the Government will hold to, and nothing should be used as an excuse to hold it up further. I cannot fathom the suggestion that the EU referendum has some sort of bearing on this. I cannot see in what way it would affect this.

It is time that the Chilcot inquiry was published and it is time that people got the truth.