Protection of the EU’s Financial Interests
Roger Mullin Excerpts(8 years, 4 months ago)
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Mr Gauke
In terms of the UK’s action in this area, we have in place comprehensive procedures to ensure that EU funds comply with UK and EU rules, including a role in programme audits and preventive anti-fraud measures. The hon. Gentleman raises concerns about particular areas. Structural funds, for example, which are a sizeable part of the EU budget, have to be focused upon. The Commission set up a high level group on European structural investment funds simplification last year, whose work is ongoing. Although the agenda is in its early stages, the UK continues to engage actively by advising on simplified costs and financial instruments.
In agreeing the terms of the 2014 to 2020 structural funds regulations, the UK actively pushed for and achieved greater use of simplified costs, reductions in document retention periods, and lighter and more automated annual reporting. In terms of good practices, DCLG’s work in improving public procurement procedures was highlighted in an ECA special report last year. The Department has set up an internal network to review public procurement issues, including the issue of guidance, case studies and reviews of public procurement checks and audits.
As I have said, the UK takes this matter very seriously. Although the Commission has ultimate responsibility for implementation and management of the EU budget, we have a role in taking responsibility to push for reforms.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
It is a pleasure to serve under your chairmanship, Sir Edward. May I say I admire how you have generated such a beautiful gender balance on the bench beside you?
I have two questions, if I may. My first is for the Minister of State. I am interested in this issue because I have spent much of my life in parts of the developing world and on aid projects. I have a very precise question, but, by way of a short preamble, I have a lot of sympathy with those who are at times critical of agencies that operate internationally. At one stage in my life I was in Yemen to look at a college built with World Bank money and with United Nations Food and Agriculture Organisation development. My terms of reference were simple: we have built this building, now tell us what to do with it. It was not necessarily the best project that had been set up. The Minister mentioned the recent report, published on the EU website, on the amount of money wasted. He said that in his and the Government’s view, the report was “very good”. Will he explain precisely what “very good” is?
Mr Swayne
I was referring to the multilateral aid review that we carry out periodically. The last update was in 2011. We assess the effectiveness of all the multilateral organisations through which we operate as a prelude to deciding on what terms we are prepared to continue using them as development partners. The EU institutions are part of that review. Specifically, we judged their financial controls and their effectiveness in deploying the finance that they are given to deliver projects on the ground to be very good. I said that to counter the criticism set out a couple of weeks ago that they are too slow and that it will be 27.5 years before they can deploy the finance that they have been given. That is a snapshot, or the use of a management tool to draw a wholly inappropriate conclusion.
Roger Mullin
My supplementary to the Financial Secretary is also about the international aspects of fraud. Many projects funded through the European Union require multinational partnerships. I am aware that some fraud has occurred in more than one member state. Does he have a general view of how the UK compares with other EU member states on multinational projects?
Mr Gauke
There is a general view that the UK is strongly determined to address fraud. We have a strong record of budgetary discipline in the EU and with multinational projects, and we have demonstrated that we take fraud very seriously.
From the documents before us, it is hard to draw comparisons between the UK and other member states. There is no directly comparable error rate for the UK’s management of EU funds against which the ECA’s error rate for the EU budget can be measured. To our knowledge, there are no national accounts of major economies, including the UK’s, that can be meaningfully compared with the ECA’s audit of EU accounts. Only a few countries—the UK is one—produce whole of Government accounts. It is hard to compare precisely our record with those of other member states or countries outside the EU. The UK remains determined to root out fraud, wherever it might be.
Roger Mullin
Of course it is a terrible problem—absurd, in many ways—that for 21 years a budget of this scale has not been signed off. A major concern on which people have concentrated in this debate so far has been fraud. One thing that we know about fraud is that often it can be underestimated, particularly in situations of great complexity involving many partners. That is the situation that we face, so we must take it seriously, but if I knew what the solution was, I would have mentioned it long before now, because this is a difficult matter.
One of the things I agreed very much with in the Financial Secretary’s opening remarks was when he hinted that we needed to move much more towards being concerned about outcomes. As we know, many types of European projects involve a fascination with measuring every input—in education projects, for example, every partner often has to record every single teacher and every single hour worked every day on a particular project. More and more, as that builds up in many projects, with many partners, over many years, that can create circumstances in which those who are less scrupulous than others might find an easy way to massage how they record inputs, showing much less concern for moving projects further towards achieving the necessary outcomes. I am not sure of the solution, but the Financial Secretary was wise to say in his opening comments that the Government want to see more pressure towards concern about the impact and outcomes of such projects.
I also share some of the scepticism expressed by my hon. Friend the Member for Luton North—I hope he does not mind me calling him an hon. Friend—about practices in different countries. I hinted at that in my question earlier. Certainly people involved in education projects in the past have come to me and said that whereas in the UK a pretty conscientious approach is taken, they sometimes find that their partners in other countries have perhaps felt slightly less burdened by the need to dot every i and cross every t. Parts of the communities that we represent feel that at times our scrupulousness is not necessarily matched by that of other beneficiaries of EU funding. We do not know the comparative data, but it might be worthwhile raising with the European Union how we satisfy Governments about so many countries and so many participants.
I thank the Minister and the shadow Minister for their helpful and frank responses to the questions. With those few remarks, I will leave it there.
Tax Avoidance and Multinational Companies
Roger Mullin Excerpts(8 years, 4 months ago)
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Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
This is, undoubtedly, an important debate for all the people outside the House who have commented on the subject, which is of great concern. We are talking about a complex matter, which may require, in the longer run, fundamental reform and international co-operation. There are no easy fixes. The deal with Google needs to be scrutinised, for the sake of all who are concerned that it might be described as a sweetheart deal. That is why I fully supported my hon. Friend the Member for Dundee East (Stewart Hosie) in taking the initiative and being the first person to write to the European Commission to seek an independent examination of the settlement. There is a lack of transparency in the deal, but these are difficult matters, and we may have to look at changing some of the rules in the longer run.
To many people, the recent agreement between Google and HMRC is very obscure and opaque, and gives the appearance of being very generous to a large multinational corporation. It contrasts sharply with the experience of many local SMEs. I would be astonished if I were the only Member of the House who has received comments from innumerable small businesses about what they perceive as the unfairness of the deal. I want to quote the views of two SMEs in my constituency. First:
“It is galling that my business pays its taxes on time and in full, but huge corporations like Google do not and seem to be able to avoid doing so for years”,
says Jim Cruickshank of Cruickshank Glaziers. Secondly:
“It seems there are stringent rules for small domestic businesses but another much easier world for major companies. This often gives unfair competitive advantage to the large companies”,
says Stewart Murray of the Farm Shop, Kirkcaldy. That is a concern of many of our domestic businesses. Because of the complexity of their tax affairs and of how they can operate, many of the largest corporations find that they have—in many cases, legitimately, in this system—a major competitive advantage over domestic businesses.
Andrew Gwynne
Does that not show how SMEs across the United Kingdom feel they have been treated? Their impression is that there is one tax law for them and another for large multinational companies. Does it not also provide a contrast between the British approach and the approach of some of our European colleagues to the very same issues? They are holding out for a much better deal for their taxpayers.
Roger Mullin
Many people throughout Britain will think that the hon. Gentleman has made a very fair point. That is why I have been arguing that we must have a proper investigation and why, perhaps in the longer run, we need to do something about greater transparency. It will be very difficult for us to bring a proper critique to bear if we do not get such clarification.
It must, of course, be admitted that this is not a new phenomenon. I first became aware of concerns about multinationals paying their fair share of UK taxes back in the early 1970s, when I briefly worked for the multinational IBM, and I am aware of concerns predating that. This has not been going on for just one or two years; Governments have not been able to resolve this issue satisfactorily for decades, which emphasises its complexity. The issue has been around for a long time, regardless of whether this country had a Labour or Tory Government and regardless of which parties formed Governments in many other countries.
I remember that the concerns back in the early 1970s were about what was called “transfer pricing”. For example, a company could buy a handle from a parent company in another country and charge an exorbitant fee for it, which allowed them easily to transfer profits from one area to another. I would be the first to admit that there have been moves to tighten up many such matters since the 1970s, but it remains a fundamental problem to this day. Corporation tax seems to be very susceptible to avoidance by multinational corporations because of the way in which they can, quite legally, operate.
Mr Bacon
The Public Accounts Committee found that HMRC as a whole had only 65 specialists in transfer pricing, which was about the same as each of the big four accounting firms. Does the hon. Gentleman welcome this Government’s introduction of more transfer pricing specialists in HMRC?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I say to hon. Members who wish to speak but are now making interventions that I assume they will not mind if they go to the bottom of the list because they have almost used up their time?
Roger Mullin
I thank the hon. Gentleman for his intervention, because I must admit I was not aware that only 65 staff were involved in transfer pricing. That seems to me to be remarkably few, given the challenges they face. I would welcome anything that can be done to strengthen their numbers.
Times have changed. Back in the 1970s, it was never envisaged that huge multinational corporations could quickly arise as a result of operating in the world of the internet. The tax system, which has been built up over many years—as the hon. Member for Warrington South (David Mowat) mentioned, part of it dates from the 1920s or thereabouts—is singularly unable to deal with some of the types of international corporations, such as Facebook and Google, that there are today.
The world has changed fast in other regards. I am old enough to remember being able to go into a café and just ask for a coffee.
Roger Mullin
I am. Nowadays, I am delighted to say that I know about cappuccinos and other things.
Roger Mullin
Yes, throughout my constituency. There is wonderful cappuccino in Cowdenbeath, I have to say. The likes of Starbucks were not present years ago. The internationalisation of what seem to be simple products is a comparatively new phenomenon.
We must not lose sight of the fact that many more traditional players, not merely internet companies, are engaging in practices that may be legal, but create major challenges internationally. If I were to ask in a local pub quiz, which of course I rarely go to—
Roger Mullin
Quite. If I were to ask, “What is the biggest charity in the world?”, many people would say the Gates Foundation, which The Economist has estimated is worth about $37 billion. Few would say that the answer is, as The Economist pointed out a few years ago, the Stichting INGKA Foundation—a charitable body whose aims include
“the advancement of architecture and interior design”.
This charitable foundation owns INGKA Holding, which owns the IKEA group.
That set-up, which is admittedly much more complex than I have just described, operates and moves money across territories such as the Netherlands, Luxembourg, Switzerland and so on. The money is not even tracked within that foundation. The IKEA trademark is owned by another private company, Inter IKEA Systems. Just to operate IKEA’s stores, of which there are approximately 290 in the world, the charity has to make substantial yearly payments. Eventually, the trail is thought to lead back to the owning family. When there is such complexity—and it is even more complex than I have summarised—we can see the kind of international challenge there is. That is why I believe the current tax regimes to be ill-equipped to cope and why we need fundamental reform.
Let me give a glimpse of another tactic that is used—the offshoring of companies. There are approximately 19,000 businesses registered at a single address in the Cayman Islands. That must be a pretty big hoose, as we would say in Scotland.
Roger Mullin
Yes, full of IKEA furniture.
It has been claimed by Oxfam, although I have not checked this out, that 98 of the FTSE 100 companies have subsidiaries in tax havens. There is a wider ethical question to address. This is not merely about how international corporations may evade UK tax. Some countries are much more vulnerable than the UK. There are considerable concerns, as the hon. Member for Foyle (Mark Durkan) said, in the developing world. Some 30% of Africa’s wealth is held offshore. Research by the International Monetary Fund has found that developing countries lose $200 billion a year to tax avoidance—more than they get in all forms of foreign aid.
The UK needs to take a lead. Hopefully we will see that when the Prime Minister hosts the anti-corruption summit in May 2016, because the UK remains at the centre of a global network.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is three years since the Prime Minister promised to clamp down on tax evasion and to publish the details of UK-based companies and people in the overseas territories. Does the hon. Gentleman agree that the Prime Minister should fulfil his obligation? This is a manifesto commitment that he has failed to fulfil.
Roger Mullin
I agree with the hon. Lady, and hopefully the Prime Minister will fulfil that obligation in the conference that he will chair shortly. We shall wait and see.
I shall conclude with one other example that is close to the heart of the Scottish people: our historical links with Malawi. This week, ActionAid launched a new campaign, calling for the UK to negotiate a fairer tax treaty with Malawi. Every constituency in Scotland has strong historical links with Malawi. The UK tax treaty with Malawi was signed in 1955 when Malawi was under British colonial rule, and it limits the ability of the Malawi Government to collect tax revenue from UK firms that operate there, thereby preventing that poor country from raising money that it desperately needs.
It is right to hold a thorough investigation into the Google settlement, and we should press for greater transparency. We should also press the UK to take an international lead in addressing the corrupt tax avoidance practices of the many, and not just the few. Getting our own house in order would be a fine start.
Bank of England and Financial Services Bill [Lords]
Roger Mullin Excerpts(8 years, 4 months ago)
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Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
One disadvantage of being called late in the debate is that I always find myself completely rewriting what I thought was an excellent speech. I feel that I must reflect on some of the earlier contributions. I noted that, in her opening remarks, the Minister said that the Financial Conduct Authority would deal with things such as sharp practices. She talked about the importance of dealing with “groupthink”. The right hon. Member for Chichester (Mr Tyrie) talked about the importance of re-establishing trust in the proper conduct of business. The hon. Member for Leeds East (Richard Burgon) talked about his concerns about the public view of the behaviour of banks. These, and other, contributions make the case for the fundamental importance of what we are all trying to address: an issue of culture. That issue of culture cannot be wholly satisfied through changes in structure or regulation alone.
I was intrigued to hear my hon. Friend the Member for East Lothian (George Kerevan) come up with the East Lothian answer, as I shall call it from now on, which I think bears some repetition: getting people who lead great institutions to be like captains of a ship. What was it that characterised them? They took responsibility; they acted with high ethical standards; they were equipped not only technically, but culturally to lead and accept the highest of standards. If we could reinstitute that in many of our institutions today, there would be much less demand for some of the detailed regulation and structures we find ourselves having to deal with. I would like to deal with some of the issues of culture, because many of the technical matters have been well rehearsed in the debate so far.
Like many Members on the Opposition Benches, I have been concerned about the willingness of the Government to remove the reverse burden of proof for senior managers before it has even been tested. Without it, we could—I am not saying would—perpetuate a culture of failing to accept responsibility under the cloak of a form of collective responsibility that favours the consensus of the guilty over the scrutiny of behaviour. Culture is fundamentally important to understanding the crash of 2008.
What I do mean by culture? To me, it is about the way in which groups of people solve problems and reconcile dilemmas. It involves unconscious, taken-for-granted beliefs—their perceptions, thoughts and feelings that forge the values and behaviours within their organisations. It has been argued by many researchers that about 70% of all major organisational crises are a function of culture. That is why I have great sympathy with the Minister who is trying to deal with predominantly a cultural failure through mere regulation and changes to organisation alone.
I am sure many would argue with me that failures of culture were part and parcel of the failures at Enron, Northern Rock, Lehman Brothers, RBS and HBOS. In these cases, among other cultural problems they faced precisely the cultural problem the Minister mentioned in her opening remarks: the problem of groupthink at the highest levels.
One aspect of groupthink is present when groups are unwilling to listen to critical voices, preferring the easy comfort of a blind consensus born of common bonds. A classic example was, of course, found in HBOS, where it is widely recognised that the risk manager, Paul Moore, was sacked for raising concerns about the company’s strategy. He told the Treasury Committee in 2008 how he had predicted that the bank’s practices could “lead to disaster”. He informed the bank’s board of his concerns, but was sacked by Sir James Crosby, the bank’s former chief executive, deputy chairman of the Financial Services Authority and adviser to the then Prime Minister Gordon Brown. It tells us lots that someone who acted in such way should have reached such heady heights.
In his evidence, Mr Moore told MPs anyone whose eyes were not blinded by “money, power and pride” would have realised problems were mounting for HBOS and the other high street banks. Since his dismissal Mr Moore has been shunned by the financial community, to its shame. As Professor Andrew Kakabadse has recently put it, the cultural problem occurs when
“management intimately know what is happening and even know what to do to stem an oncoming catastrophe but are too emotionally paralysed to act. And this often because the boss does not want to hear bad news.”
Perhaps it has best been most eloquently, if somewhat brutally, summed up by the hon. Member for Huddersfield (Mr Sheerman) who has been quoted as saying in a review of Paul Moore’s recent book that he exposed
“the rottenness, deceit, and corruption of the malign gang that took over a successful British bank and drove it to ruin in a few short years. This gang has never been properly held to account or been brought to justice whilst Paul Moore...has never been compensated for his sacrifice.”
That is the rub of it: a lack of being held to account, a lack of effective external scrutiny, and to this day a lack of a fundamental inquiry into the culture and goings-on at these major institutions. That is a failure, and a failure upon which we address regulation and structural changes on shifting sands.
There have been other cultural failings, too—indeed too many to recite here—but they include sacrificing rigorous analysis for group harmony; making decisions as a cabal without any external critique; dealing with complex decisions in an overly intuitive manner with a prejudice in favour of an easy consensus; and a willingness to be led by strong directive individuals.
One of the fundamental concerns, which everybody in some way alluded to but we still remain to grapple with, is how and when we are going to fully understand the nature of the cultural crisis that afflicted our institutions. That is something we await to address.
HMRC and Google (Settlement)
Roger Mullin Excerpts(8 years, 5 months ago)
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Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Mr Speaker:
“O wad some Pow’r the giftie gie us/
To see oursels as ithers see us!”
I agree with the hon. Member for East Antrim (Sammy Wilson) that this will be seen by many small businesses the length and breadth of the country as unfair and not understandable. Surely, part of the problem, as a number of Members have said, is the sheer complexity of the system. Will the Government commit themselves to addressing that matter?
Mr Gauke
We always look to try to find ways to simplify the tax system. I would make the point that if a company operates in many jurisdictions, its tax affairs are inherently more complex than if it existed in just one country, but the Government are determined to ensure that where the economic activity occurs in the United Kingdom, we tax it in the United Kingdom.
Capital Markets Union
Roger Mullin Excerpts(8 years, 6 months ago)
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Harriett Baldwin
Let me take those points in turn. As a distinguished member of the Select Committee on the Treasury, my hon. Friend knows that the UK does not object in principle to financial transaction taxes. The UK has a financial transaction tax on stocks that are bought in the UK. However, the Government are concerned about the application of a financial transaction tax on instruments that could be traded elsewhere in the world, because if it were applied to something that is easily mobile and can be moved quickly to another jurisdiction, that is what would happen. There are no proposals in the capital markets union steps outlined today to harmonise taxation in any way. The Government stand strongly on our belief that taxation is a matter for member states and we continue to argue that case.
On the more general points about renegotiation and the Prime Minister’s letter to Donald Tusk, it is clear that the European Union needs to address the fact that nine countries continue to have their own currencies and 19 have chosen to adopt the euro. There is absolutely no prospect of the UK ever joining the euro, so as part of the renegotiation we need to make it clear across the 28 EU countries that positive initiatives such as this on capital markets must reflect the fact that this is a multi-currency single market for capital. We will fight vigorously against any proposals that threaten that. That is a key part of the renegotiation.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
It is a pleasure, Mr Hanson, to serve under your chairmanship for the first time. My question is on a fairly narrow point. On a number of occasions the Minister has mentioned risk, and some of the documents refer to risk. She will know that there is no unit of measurement for risk. I often think that Governments would be well advised to disaggregate risk into its different components so that they can be clearer about measuring probabilities and chances, and negative outcomes in financial terms, for example. I would like to hear her remarks about whether that would be worth while. I am asking because I was pleased to hear her remark about a rigorous impact assessment. It strikes me that in such an assessment particular care will have to be taken about how risk is measured.
Harriett Baldwin
I welcome the hon. Gentleman’s question about risk and I draw his attention to this incredibly thorough document. With his academic interest in such subjects, he will want to read the academic articles cited in this weighty tome. He will know that there are of course many risks in capital markets. Not only is there market risk, there is credit risk, regulatory risk and, in a multi-currency single market, currency risk. In a previous life, I specialised in this subject, so perhaps he and I could go for a drink some time and talk about leptokurtic distributions and other such esoteric matters, which might not fascinate the rest of the Committee as much as us.
Roger Mullin
My remarks are also based on having read next to nothing, since I received very little information in appropriate time to be able to study these matters. I have been helped considerably by the Minister’s opening statement, which was very clear and helpful. I will restrict my comments to matters she mentioned in her speech and some of the things to which the hon. Member for Leeds East referred.
Everyone would welcome any change that allowed for more effective and better competition than has been the case. From that point of view, I have no great objections to the proposals, although it is very early days before we find out whether we will eventually need legislation or other ways to implement the intended changes. Given the Minister’s remarks in her opening statement about concerns regarding the private pensions sector, will she say a little more about that when she sums up? It would also be very helpful indeed if she explained precisely why the Government are not in favour of binding mediation. Again, she indicated that but did not expand on it.
There might be concerns in some quarters about whether CMU is going to help long-term rather than short-term investment. If she could reflect on that and the need to secure longer-term commitment and investment for the benefit of the whole economy, it would be useful.
Finally, I am keen on the idea of creating markets that are more international in nature, enabling the simple saver, for example, to look more widely than the domestic market to save. It would be useful, not least from the Scottish perspective, if the Minister could say a little more about cross-border matters in this area.
Spending Review and Autumn Statement
Roger Mullin Excerpts(8 years, 7 months ago)
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Mr Osborne
I can give my hon. Friend that assurance. I am very keen to support the Porton science hub that he has championed and to make sure that as the public health laboratories move over a period of years, we build up a strong science hub there. That will be helped by the improved transport connections, including the huge billion-pound or so investment in the A303 past Stonehenge in his constituency.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Given the Chancellor’s unwillingness—surely not inability—to answer any of the questions posed by my hon. Friend the Member for Dundee East (Stewart Hosie), may I ask him again how much has been set aside for reconstruction in Syria?
Mr Osborne
The overseas aid budget, which is going up substantially as our economy grows, is being refocused so that as well as helping the world’s poorest— for example, in sub-Saharan Africa and in countries such as Pakistan—we will also have money to help those states on the borders of Europe that are fragile or failing. Some 50% of our overseas aid budget will go towards those fragile and failing states in the world. We are therefore able to increase the resources going to Lebanon, Jordan and the camps in Turkey that are helping the refugees of that terrible crisis. I hope the SNP will look carefully at the arguments that my right hon. Friend the Prime Minister will make tomorrow in this House.
HMRC Office Closures
Roger Mullin Excerpts(8 years, 7 months ago)
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Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
The debate has been very enlightening, and I thank every Member who has participated in it. I was going to begin by saying that the House was clearly divided on the matter, but I shall have to change that to “clearly not divided”, given the many fine contributions that we have heard from Conservative Members.
I was reminded that, many years ago, a sociologist called Georg Simmel had said that the most worrying thing was not people debating or arguing, because at least they were motivated enough to address the issue in question; the biggest problem arose, he said, when there was apathy and people did not participate. We have heard some tremendous contributions today, and witnessed some tremendous engagement. There is certainly no apathy in the House of Commons when it comes to this important issue. I remain of the view that the UK Government have made a serious error with their closure plans, and I think that the majority of those who have contributed to the debate would agree with that.
My hon. Friend the Member for Livingston (Hannah Bardell) pointed out that although some £34 billion was being lost through inefficient tax collection, the Government’s great idea was to close offices and make redundant the very staff we need to collect those taxes. She shone a light on a range of shortcomings in the Government’s plans, including the scale of office and personnel cuts.
In my summing up, I want to refer to everyone who has made a contribution today, as all the contributions have been important. I shall start with the Minister, who, with his usual calm and attempted reason, gave us a fine tour de force. I would like to pick him up on one or two points, however. I was particularly aggrieved when he used the Scottish Government as an example, saying, “Look at what they have done by bringing all those colleges together”, as though that were an example of the downsizing of an entire estate in Scotland. Nothing could be further from the truth. Let me give the Minister an example. There is now only one college in Ayrshire—Ayrshire college—but it retains not only its Ayrshire college campus but the campus that was James Watt college in Kilwinning. It has also retained the campus that was Kilmarnock college, and the Scottish Government are now investing £50 million to expand that campus.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I have met representatives of businesses in Ayrshire, and they have been nothing but complimentary about the courses at Ayrshire college and the students that come out of it. The college has just won three categories in the Scottish Qualifications Authority awards last week.
Roger Mullin
I thank my hon. Friend for that intervention. There are many hon. Members on these Benches who could say similar things about their colleges and the way in which they are served.
The Minister claimed that part of the reason for the proposed changes was to create greater efficiency. Well, that would be clever! As many Members have said, we currently have a rather inefficient way of gathering taxes. There are telephone calls that cannot be answered and letters that sometimes cannot even be opened, let alone responded to, yet the way we are supposed to solve this problem is to cut, cut and cut again. That does not make any sense.
The Minister also indicated that some of the closures would happen in such a way that it would be viable for the people affected to move from their current location to a new one.
Roger Mullin
My hon. Friend has just stolen my line. I was about to say, “Try that in Aberdeen.”
Tom Elliott (Fermanagh and South Tyrone) (UUP)
I might add, “Try that in Enniskillen.” People would have to go to Belfast, or even perhaps even across the Irish sea to Glasgow.
Roger Mullin
I agree with the hon. Gentleman entirely. I know Enniskillen and many other places in Northern Ireland very well. I am sure he would agree that many people, particularly in communities on the fringes near the border, might feel vulnerable and fear having to go to the big city of Belfast to have their needs met. A number of Members from Northern Ireland have pointed out the specialist nature of the needs of people there, because of cross-border issues and the like.
I have happily crossed swords with the hon. Member for Wolverhampton South West (Rob Marris) on a number of occasions. He made one of his typically thoughtful and detailed speeches, and we are grateful for that. He will forgive me if I cannot cover all the points he made, but one thing that struck me about his contribution was his comment that of course there is a need to have new technology and the best new ways of working, but that does not mean we need to deny the right of people to have human contact and get advice and guidance that can be provided only by human beings. We are not luddites opposing the Government—
Roger Mullin
Or robots. We are people who want to see a balanced way of providing a service to the people in this important area. The hon. Gentleman also talked about things he has rehearsed in other places, such as the problems of the tax gap and the great need to have people with real expertise to tackle different forms of tax evasion. He gave many helpful quotes from many different professional groups that are with us in opposing what the Government are planning.
The hon. Member for Shipley (Philip Davies) gave an especially fine analysis of the situation in his local area. I particularly enjoyed his comment that HMRC was proposing a cack-handed approach to finding locations to site its offices. He provided a compelling critique of the regional positioning that is taking place, and I thank him for that. My hon. Friend the Member for Dundee West (Chris Law) pointed out that his city, undergoing a £1 billion expansion in so many ways, is now to be denied a tax centre for the many thriving and developing small businesses and individuals in that great city of Dundee—what a ridiculous proposition. He also said that the Scottish Government have a policy of “no compulsory redundancies”, but we have not heard those words trip off the tongue of any Minister in this debate.
The hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) focused well on the issues of customer service that need addressing, giving a balanced critique of the Government yet cleverly still finding some areas to support—I pay tribute to her for being so adept at that. The hon. Member for Bootle (Peter Dowd) gave a fine, reasoned analysis, particularly of the human contact needed and the disrespect that has been shown in the way in which this announcement has been given to the public. He was the first to raise that point, but he will doubtless realise it was mirrored in what was said in many subsequent contributions. I want the Government to say something about that in a contrite manner when we hear from them shortly. Like others, the hon. Gentleman raised the need for impact assessments, including equality impact assessments. I have found no effective assessment of any sort connected with this major initiative, and that is completely ridiculous.
The hon. Member for Southend West (Sir David Amess) made another compelling case about location, even if it was surprisingly positive about the economic strategy being pursued by the Government. In the context of this debate, I will dwell on the fact that he, too, lent his voice to the critique that even people who believed in this type of policy would not choose the locations that have been chosen to enact it. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) pointed out how the significant, large and well-respected tax office in Cumbernauld is to be thrown to the wind, along with so many other offices in Scotland. He called, as have others, for much greater scrutiny of the Government’s proposals in this regard.
The hon. Member for Taunton Deane (Rebecca Pow) offered a paean to her Government, claiming that they were pursuing a policy of common sense, yet she, too, still managed to give a critique of the locations being chosen by the Government. Listening to almost all the contributions from Tory Members, it appears that they liked the policy but just did not agree with any one of the locations that have been chosen to enact it.
The hon. Member for Wrexham (Ian C. Lucas) talked about the appalling way in which this matter has been announced and pursued. He said that it showed disrespect to the House. I particularly liked his deep analysis of the situation, when he said “They don’t know their backside from their elbow.”
The hon. Member for Bexhill and Battle (Huw Merriman) gave the most loyal of speeches, but I have to say that I disagreed with almost every word of it. I could steal a line from someone else and say, “He had all the right words, but just in the wrong order.”
The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) mentioned the importance of the Welsh language and the need for an impact assessment. Something that was missing was the lack of concern about what is happening in the highlands and islands and the Gaelic-speaking communities in Scotland. We need to have proper impact analysis and proper care for the people in our communities.
The hon. Member for Dudley South (Mike Wood) called for effective care and support for the workers involved, as did my hon. Friend the Member for Glasgow South West (Chris Stephens), who made that point in at least six interventions. My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) pointed out the way in which three offices in her constituency are again being cast to the winds without any real and effective consideration. [Interruption.] I think that I am being encouraged to wind up.
Let me quickly mention the fact that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and the hon. Members for Sheffield, Heeley (Louise Haigh), for Middlesbrough (Andy McDonald), for Leeds North West (Greg Mulholland) and for Bradford East (Imran Hussain) were all stunning in their analysis.
The Economy
Roger Mullin Excerpts(8 years, 7 months ago)
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Harriett Baldwin
We agree that maintaining the science budget is incredibly important. As part of the £100 billion of infrastructure investment that we have already committed to, £6.9 billion will be going towards research infrastructure.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
If the Economic Secretary believes what she has just said about maintaining the science budget, why have the Government cut it in real terms by 10% in the past five years? They have made no commitment thus far to increase the science budget either, to such an extent that the UK is bottom in the G8 for investment in science.
Harriett Baldwin
The hon. Gentleman will know, and has just reiterated, that we have maintained the science budget, which has been one of the choices that we have made. We have secured £7 billion of investment per year for UK-based renewable energy projects. We are investing in major research facilities such as the new Turing Institute, the UK’s national institute for data science. Our science and innovation strategy sets out our long-term vision for the sector’s contribution to national prosperity.
Guaranteed Income for Retirees
Roger Mullin Excerpts(8 years, 7 months ago)
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Ian Blackford
I agree with my hon. Friend, although I come back to the fundamental point that what we need is reform of the annuity market. I am not sure that the products that may come to the market over the coming period will do what we need them to do, in allowing the level of consumer protection and choice that we are talking about.
Witnesses to the inquiry by the Work and Pensions Committee, such as the Financial Services Consumer Panel and the Pensions Policy Institute, said that it was essential to enable the policy to develop in the light of experience. The Committee recommended that the Government publish regularly data encompassing
“customer characteristics including pension pot size and other sources of retirement income…take-up of each channel of guidance and advice…reasons given for not taking up guidance and advice…subsequent decisions taken; and…reasons given for those decisions.”
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I congratulate my hon. Friend on securing this debate, which is extraordinarily timely. Does he agree that there is a particular challenge with the gender divide? Women in particular are exposed to difficulties, largely because their pension pots tend to be smaller. Added to that, the Women Against State Pension Inequality campaign pointed out that after the Pensions Act 2011, some women born in the 1950s were given little notice and utterly inadequate guidance in preparation for the sudden extension of the retirement age. Does my hon. Friend agree that, because of that and the inadequate information on pension freedom, women are exposed to particular risks?
Ian Blackford
Yes, I do, and I was going to come to the issues of gender, because they are important in the context of this debate. My hon. Friend makes some reasonable points. When we talk about the risk of pensioners exhausting their pension pot, we know that that is particularly true for women, given two factors. He alluded to the first, which is that women in general tend to have smaller pension pots. They also tend to have longer life expectancy, and there are particular issues in that regard. The second factor relates to the reforms to the state pension, which I argue have not allowed for a significant length of transition, thus yet again exposing women to a much greater extent than men to the negative side of the changes. I would like to see the House come back to that debate.
The Financial Services Consumer Panel and the Pensions Policy Institute called for a rolling research programme to tackle the longer-term consequences of pension freedom decisions. Some organisations have called for action to require providers to offer default options for people who do not make a decision. The Pensions Policy Institute has argued that that would mean people being offered something with an element of life expectancy insurance that would kick in at some point when they get older.
We must learn from experience elsewhere. The Social Market Foundation has looked at overseas experience to see whether there are lessons for the UK. The SMF report, “Golden Years? What freedom and choice will mean for UK pensioners”, modelled the potential long-term outcomes for UK retirees based on outcomes in Australia and the USA. It looked at three scenarios: a “cautious Australian” who decumulates their pension wealth by less than 1% a year; a “quick-spending Australian” who decumulates very quickly and exhausts their pot by the age of 75; and a “typical American” who draws down his pension pot by 8% a year. The report’s key findings include the conclusion that:
“UK retirees are at risk of pension pot exhaustion.”
Those who follow the “typical American” path or the “quick-spending Australian” path would on average exhaust their pot by retirement year 17 and year 10 respectively.
Retirees are at risk of low replacement rates. Retirees who over-consume in early years of retirement may enjoy a rate of income closer to their working income for some time, but will then face much lower rates later in life. Retirees are at risk of low incomes. The new state pension and pension credit mean that retirees are at a low risk of falling into poverty, but retirees are at substantial risk of falling below the 70% median low-income threshold in later life if they spend their pensions quickly.
Preservation of pension wealth is possible through under-consumption, but has big drawbacks. The “cautious Australian” path results in a very low risk of running out of pension wealth, but means that people would receive very low levels of income as a consequence. That can mean a reduced income and lower replacement rate, as well as subdued demand across the broader economy. Retirees face variation in investment returns and uncertain incomes. Investment returns can result in huge variations in incomes in retirement and in the age at which pension savings run out. There are significant risks to the state as a consequence. Decumulation paths could also mean fiscal risks to the state associated with the costs of increased claims for means-tested benefits.
Harriett Baldwin
I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing the debate and making a thoughtful, constructive contribution to our national debate on securing a guaranteed income for retirees. Perhaps I should not confess this, but if Wikipedia is correct, I am the one who should declare an interest as being closest to retirement age of all those speaking in the debate—but perhaps Wikipedia may not be accurate. That has happened before.
Harriett Baldwin
The hon. Gentleman wears it well.
The debate is timely, because we are just over six months into the pension freedoms, and are beginning to get data on what pensioners or retirees have been doing with those freedoms, and about use of the free and impartial guidance from Pension Wise, which was set up by the Government. As we speak, life expectancy is growing by about five hours a day in this country, which makes it all the more important that we have this debate and agree on the aspiration to ensure that hard-working people are in a position to fund a comfortable and, we hope, increasingly lengthy retirement.
Against the background that I have set out, the Government introduced radical reforms giving people freedom and choice in how they access their own hard-earned retirement savings, replacing an effective obligation on pensioners to purchase an annuity—a product that often they did not shop around for and that may not have been right for their circumstances.
Harriett Baldwin
Methinks the hon. Gentleman is worrying too much. At this point, I think we will just welcome the fact that £15 billion a year more is going into pension saving in this country. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) can say to her generation that the earlier they start, the better, given the cumulative impact of the wonders of compound interest. Nevertheless, I take on board the point the hon. Gentleman made.
The hon. Gentleman said that providers may not have time to get ready and may not have the right kinds of products. In fact, providers have stepped up to the challenge: the systems requirements were admittedly very challenging, but more than 90% of people are now being offered flexibility within their existing scheme and something like a quarter of the largest firms are planning to launch new products in the next six months, so there has been real innovation and engagement with what customers want. We have moved away from the inflexibility of the old annuity market.
The hon. Gentleman highlighted the recent data from the ABI stating that £4.7 billion was paid out in the first six months. The first six months will not necessarily be representative of the settled state of the market, because obviously there has been a lot of pent-up demand, but it is fair to say that in that six-month period £2.5 billion has been invested in income drawdown products and £2.2 billion in annuities. That does not suggest that people are shying away from the annuity market, which we hope continues to be successful and an important part of people’s retirement planning. I am delighted that so many people have already taken advantage of the freedoms and that many providers have stepped up to deliver for their members.
Many hon. Members asked about Pension Wise, the Government’s free and impartial guidance service. It, too, is playing an important role. There have been more than 30,000 guidance appointments and 1.7 million hits on its website so far. Hon. Members alleged that only one in 10 people are making use of Pension Wise, but we dispute that in the sense that people will be getting financial advice, sometimes from a regulated adviser, or they may get information, guidance or advice through their provider. There is a range of different ways in which people can inform themselves; Pension Wise is one of them. It is free, impartial and backed by the Government.
Pension Wise prompts users to consider their life expectancy and any health issues and lifestyle factors they have, and it links to the Office for National Statistics life expectancy calculator, which I am sure everyone in the room has visited. All in all, that is excellent news, but we are always on the lookout for ways to make the service more useful. Last month’s report from the Work and Pensions Committee, of which the hon. Member for Paisley and Renfrewshire South is a member, was welcome. It noted the progress we have already made in ensuring that the reforms deliver for consumers, but made it clear that the job is not yet done.
In line with the Committee’s recommendations, we are considering a number of developments to make Pension Wise even more useful. For example, we are looking at how appointments can be tailored to individuals. In the summer Budget, we opened it up to people from the age of 50 onwards, and we are developing more online tools for the website and calculators that people can use to see how the new pension freedoms relate to their particular circumstances. We are trying to make the website more interactive, and the team has done a fantastic job in delivering that to such a tight timeframe. We are looking to amend the content of Pension Wise appointments to ensure they are more tailored to people in the 50 to 55 age bracket, who are not yet able to take advantage of the pension freedoms but want to start thinking about the options available to them.
The hon. Member for Torfaen (Nick Thomas-Symonds) rightly mentioned the financial advice market review. I am delighted to hear that he supports the initiative. The Treasury and the Financial Conduct Authority are reviewing what he called the advice gap—the fact that between guidance and paid-for financial advice, there is a gap for ordinary people who do not want to pay for a financial adviser or are not able to afford one at their stage in life. The aim of the review is to come up with a package of reforms, along the lines of those that the hon. Gentleman outlined, to ensure the financial advice market works for everybody. I hope he will write to the review with his recommendations.
Advice, in and of itself, is not enough. It is important that we supplement our guidance provision and review it on an ongoing basis. We must ensure that we make the most of Pension Wise, which focuses on pension freedoms, the Money Advice Service, which focuses on some of the other aspects of financial markets, and the Pensions Advisory Service, which is run out of the Department for Work and Pensions. We must make those services more effective for consumers. Alongside the financial advice market review, we are also looking at the guidance and hope to have some findings ahead of next year’s Budget, so that people get the help they need to take such important long-term decisions.
Several hon. Members mentioned scams, and the Work and Pensions Committee report also flagged that risk, which we recognise is not new. Pension scammers were previously trying to get people to take money out of their pensions before the age of 55, causing a lot of harm in the marketplace, but I agree that it is an important matter. Given that consumers have been given unprecedented freedom and choice in how they access their retirement savings, we appreciate that fraudsters will use that as an opportunity to try and exploit people. An effective strategy to target scams must bring together all the relevant parts of Government and work with providers to focus on both the prevention and the disruption of scams. That is what we are doing and will continue to do. We have set up Project Bloom, a multi-agency taskforce led by the National Crime Agency, which is joining up the various Departments involved, the regulators, anti-fraud groups and police forces to tackle scams. It is worth reiterating here how important it is that we remind consumers that they should never engage with anyone who telephones them out of the blue offering help with their pension. I encourage all hon. Members to get that message out widely in their communities. I emphasise that Pension Wise will never call without a consumer having previously asked them to.
The pensions regulators have their own pension scam campaigns to raise awareness of the issue. The FCA runs ScamSmart and the Pensions Regulator runs Scorpion. Warnings are sent out with paperwork from pension providers and both of them give advice to businesses and consumers on how to protect against scams. Pension Wise also alerts customers to the risk of scams during guidance sessions and on its website, and firms have a duty to flag the risk of investment scams, when appropriate, to their members as part of the FCA’s retirement risk warning rules. The hon. Member for Paisley and Renfrewshire South, who asked me about this during a Work and Pensions Committee hearing, wanted to know about some of the numbers. So far this year, since the pension freedoms were launched, incidents reported to Action Fraud are lower than the year before, but I completely agree with her that we must remain on top of this. To be frank, we have to be tough, because one scam succeeding is one too many.
Moving on to women who have been affected by the change in pension age, I am probably one of the few women affected who actually welcomes the fact that I will be able to do this wonderful job for longer, but I realise that not everyone feels that way. To respond to the questions from the hon. Member for Torfaen about the number of meetings that have been held, the number of updates and the transition protection and his Hansard reference, which shows what an effective researcher he is—he is a published biographer—I will defer to my colleague Baroness Altman, who will write to him with the details.
The hon. Member for Paisley and Renfrewshire South also asked about the Pension Wise data and when it will be published. In ministerial speak, I believe that the word is “shortly” so it should be up on the website soon. We will write to the Chair of the Work and Pensions Committee as soon as that happens so that he is the first to know.
I have responded to most hon. Members’ points, but I will remain on my feet in case anyone feels that they have not had a chance to ask their question or to get one answered.
Roger Mullin
I thank the Minister for giving way at this late stage. Does she agree that, as I mentioned earlier, women face particular risks and therefore require particular additional support and guidance to ensure that they make the most of their futures?
Harriett Baldwin
I am sure that, like me, the hon. Gentleman is a passionate feminist and thinks it important that men and women have the same pension age. I appreciate, however, that the process of transition from the much earlier age at which women were retiring will, depending on people’s circumstances, have posed a range of challenges, of which the Government are well aware. As a constituency MP, I am also well aware of such issues. I will write to the hon. Member for Torfaen and the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) with more specific points from my noble colleague.
Shall I conclude with my impassioned concluding remarks, Mr Betts, or is everyone happy to stop there?
Finance Bill
Roger Mullin Excerpts(8 years, 8 months ago)
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Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I rise to support new clause 3, tabled in my name and those of my hon. Friends. I also welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to the Front Bench. I was pleased to hear the Minister talk about his desire to see fairness in the tax system. We all welcome that.
If you will allow me, Madam Deputy Speaker, I want to start with a quote I used in Committee:
“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.”
Those were the words, of course, of the Chancellor of the Exchequer, speaking in April 2012. He was right then, but we need to do more about it now. I acknowledge that, as the Minister said, some progress is being made in the clauses proposed by the Government in the Bill, and I welcome that, but for us they are not nearly sufficient. Not enough is being done, so we have brought back this new clause on Report.
As I also noted in Committee, support for our argument comes from many quarters. Of particular interest to me is the fact that in May 2014 the OECD, not known for its radical tax positions, released a raft of recommendations to tackle rising income inequality in the OECD area. They included
“taxing as ordinary income all remuneration, including fringe benefits, carried interest arrangements, and stock options.”
Private equity fund managers shrink their tax bills by arranging to pay what will now be 28% capital gains tax rather than 45% income tax on their carried interest. Carried interest is in effect their remuneration for managing other people’s money and should therefore be taxed as income tax. Their ability to pay capital gains tax on what is properly income also allows fund managers to avoid paying any national insurance contributions on a major portion of their income. I note, however, that those who would be affected if we closed the so-called Mayfair loophole are, as a group, the highest donors to the Conservative party, which might be purely accidental.
I also note that not closing the loophole costs the Treasury between £250 million to £600 million annually. But this Government, through their moves on tax credits, seem more intent on hammering someone earning, say, £15,000 per annum than on asking someone earning £15,000 per week simply to pay their fair share. Stephen Feinberg, head of the private equity firm Cerberus Capital Management, said back in 2011:
“In general, I think that all of us are way overpaid in this business. It is almost embarrassing.”
[Interruption.] Yes, I was rather surprised that it was “almost embarrassing.” I would have thought it was thoroughly embarrassing.
The average European PE firm’s managing director can expect to receive around £8 million per annum in total personal compensation. The largest funds pay out some £15 million or more. Some very junior people can earn £1 million. These figures will be conservative for many in the London area, which has some of the highest paid equity fund managers. In Committee some Members implied that no other developed country was moving to close this loophole. This is not so.
Mark Field
Does the hon. Gentleman recognise that the concept of carried interest is integral to the way that private equity and venture capital industries operate? The Government have been pretty robust at trying to draw the distinction to which he refers, between capital and income, and any abusive schemes will be closed down. Carried interest is not a con. It is the very nature of the way in which venture capital funds operate in investing the funds they have for future projects.
Roger Mullin
I thank the right hon. Gentleman. I do not think I accused anyone of being engaged in a con. It is not a con; it is perfectly legal, as George Osborne himself recognised in 2012. The issue is that, despite the technicalities, the ordinary member of the public will look at this and say, “Is this fair, particularly at this time in the development of our economy?” I am primarily driven by what is fair to the wider public in our society.
Mark Field
I do not want to get involved in a philosophical debate about fairness or otherwise in relation to the tax system. The hon. Gentleman is making a perfectly logical argument and one that I have some sympathy with—that in the longer term we should try to move towards a system whereby capital gains and income gains are considered at similar rates. The fact that there is such a big disparity between those rates causes the imbalance.
Roger Mullin
I agree with much of what the right hon. Gentleman says, but I would go wider. Our whole tax system is incredibly and unnecessarily complicated. Why do we not begin to think about moving towards an alignment, say, of income tax and national insurance in the longer term? There are many areas where the over-complication serves nobody’s interests well. It does not serve the Exchequer or the wider public, so I have some sympathy with the right hon. Gentleman’s argument. I return to the point I was trying to make before his two excellent interventions.
In Committee some Members implied that no other country in the world was doing anything to close the loophole. My recent research shows that that is not the case. For example, the Netherlands has already tackled the issue more thoroughly than we have in the UK. France has moved—perhaps not as far as some in France would have liked at the time—further than the UK to address the problem, and in other countries, such as Sweden and even the United States, it is a growing element of the political debate.
Sammy Wilson
Is that not the most important point? Provided the tax change does not impact upon the ability of the financial market to do its job, it is right to bring tax rates into line and to close the loophole. If closing the loophole were somehow to distort the financial market or make the financial market work less efficiently, I could understand the argument from the right hon. Member for Cities of London and Westminster (Mark Field), but that is not the case. It does not seem to have had that impact in other countries, so why should it do so here?
Roger Mullin
I thank the hon. Gentleman for that intervention. I point out that, as I am sure he fully understands, this issue is not unique to the United Kingdom; it has international resonance. It has particular resonance with people who are relatively poor and suffering under austerity. As I said in Committee, my constituency manager—we all know how well paid our constituency managers are—will pay an effective rate of tax that is higher than that paid by the vast majority of highly paid fund managers. That cannot be described as fair, as I think people in this country and elsewhere recognise.
Craig Mackinlay
I agree with my hon. Friend. I hope progress can be made on very many areas, not least on this one.
We should not be like a colony pleading with an empire power. This is clearly a rate that should be set here. I thank again the hon. Member for Dewsbury for raising this issue, which, important in itself, has opened a Pandora’s box on who governs this country.
Roger Mullin
I rise to speak to new clause 1, which also relates to VAT. I pay tribute to everyone who participated in the previous debate, particularly my hon. Friend the Member for Glasgow Central (Alison Thewliss) who, in Committee, was the first to raise this issue and moved new clause 2. At that time, we were favoured with support from the Labour Benches. They can look forward to us reciprocating that support this evening.
On Second Reading, I focused on the fire and rescue service and its punishment by the UK Government in relation to VAT. I should now like to focus in some detail on Police Scotland, which came into being in 2013. I should say that I have a prejudice in supporting the police, as I am a former academic adviser to the Scottish Police College, and have contributed in the past to training programmes for chief officers, police super- intendents and, most recently, crime analysts.
A key reason for the creation of Police Scotland was, according to the Scottish Government:
“Establishing a single service aims to ensure more equal access to national and specialist services and expertise such as major investigation teams whenever and wherever they are needed.”
Allow me to give a few examples of the effect of creating a single force. Assistant Chief Constable Malcolm Graham, speaking as recently as 29 September 2015, stated:
“Since the advent of Police Scotland, every murder committed has been detected.”
He is overly modest. Such has been the improvement in homicide detection that they have opened old, unsolved cases from when there were eight smaller forces and have already solved five of them. Police Scotland has improved the investigation of rape and sexual crimes across the entire country and is now able to treat rape as seriously as murder. The National Child Abuse Investigation Unit has been established as a specialist unit to support the investigation of complex child abuse and neglect across Scotland. Police Scotland has also been able to tackle intellectual property crime much more effectively, recovering about £20 million in criminal assets and making about 70 arrests. The result has been improvements on areas such as cross border co-operation and terrorism, as I discussed in Committee.
The Government, however, say we must abandon the improvements resulting from Police Scotland to satisfy some old rules established in the Value Added Tax Act 1994. Reflecting on the debate we have just had, this is one area on which the UK Government have it entirely within their power to act reasonably on a matter related to VAT. They have chosen to provide VAT exemptions to other public bodies elsewhere in the United Kingdom, while at the same time completely denying the right of the Scottish police and fire and rescue service to achieve an exemption.
Speaking to the Justice Committee of the Scottish Parliament last November, Chief Constable Sir Stephen House said:
“I do find it bewildering that we seem to be the only police service in the United Kingdom that is charged VAT. None of the 43 forces in England and Wales pay it. And the answer seems to come back from the Treasury, ‘oh, that’s because you’re a central government organisation’. Well, you’ve got the Police Service of Northern Ireland, they don’t pay VAT. And you’ve got the National Crime Agency and they don’t pay VAT—but we pay VAT. I just don’t understand the logic of it and I frankly don’t think the Scottish public would understand it either.”
Consider what the Government have been willing to do on VAT. At the stroke of a pen, the Government made central Government-funded academy schools in England exempt from VAT. For goodness sake, even the BBC does not have to pay VAT. When it suits the Government, and previous British Governments, they have little difficulty in allowing exemptions.
In Committee, the Minister said:
“If the Scottish Government are now reconsidering their position and wish to discuss how the service can be eligible once again for VAT refunds, the Treasury will happily engage with them to advise.”––[Official Report, Finance Public Bill Committee, 17 September 2015; c. 24.]
It is not the Scottish Government who need to reconsider their position, but the UK Government. Although we are talking significant sums for Police Scotland and the Scottish fire and rescue service—in total, in excess of £30 million per annum—it is a mere pittance compared with the overall UK budget. There is no economic rationale for continuing to deny VAT exemption. The Government seem simply to lack the decency to care about policing and fire and rescue services in Scotland. So much for the party of law and order. So much for the respect agenda. Its attitude has about it the stench of duplicity and blind prejudice.
Roger Mullin
In a style becoming familiar to this House, let me say that Barbara from Kirkcaldy says:
“This Finance Bill is a disgrace to hard-working people”,
and I always agree with my wife! It is a deliberate slight on the people of Scotland, and it deserves and will get no support from SNP Members. The Government have once again denied the rightful exemption of VAT for our emergency services. Once again, they are harming the environment, and once again they are favouring the rich. We oppose this Bill.
Mr Speaker
Thank you, Mr Mullin. There are 12 seconds remaining, but no hon. Member is getting to his or her feet. Time is running out, the moment is arriving—and I do believe that we are going to have the vote.