Loan Charge 2019: Sir Amyas Morse Review

Ruth Cadbury Excerpts

Thursday 19th March 2020 Commons Chamber

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I thank the Backbench Business Committee for allowing the debate when I know they had a backlog of requests on many important issues. I also thank my fellow sponsors of this debate, my fellow chairs of the loan charge APPG, particularly the right hon. Member for Kingston and Surbiton (Sir Edward Davey), and the right hon. Member for Hemel Hempstead (Sir Mike Penning), who cannot attend today because he is dealing with a family medical emergency. We wish him well.

I also thank the officers of the loan charge APPG and the action group. I can confirm that the three co-chairs of the APPG, from three different parties, all endorse the APPG report that was released tonight and is on our website. It is a pleasure to follow so many Members who have described in vivid terms the experiences of their constituents, so I will not dwell on those too much. I have similar experiences.

This is a time of incredible worry for most people in this country for their loved ones, their neighbours and themselves, and many of our constituents—perhaps most of them—are facing catastrophic and even absolute loss of income. While this debate is wholly unrelated to the covid-19 virus, for the victims of the loan charge scandal, who are already worried about their financial futures, the coronavirus outbreak only heaps more agony on top.

I agree with the points that others have made about tax avoidance, but this is not about tax avoidance, which we abhor and would like to see closed down. This debate is about natural justice, as has been said by so many. When the APPG started, the Treasury and former members of the Government said there was no problem with the loan charge and it was a perfect piece of Government policy. They said there was no need for a review of the policy. The right hon. Member for Kingston and Surbiton tabled an amendment calling for a review, we had a debate in the Chamber almost a year ago and a Treasury report that was a whitewash, frankly. Meanwhile, more and more Members were being contacted by worried taxpayers describing the bullying of HMRC and their fears for themselves, their families and their work. We kept standing up, we kept asking questions and we kept lobbying Ministers.

The Prime Minister, in his leadership bid, promised to hold a full review of the loan charge. We have had the review, led by the highly respected Sir Amyas Morse, whose report was released on 20 December, and on the same day, HMRC released its response. For taxpayers, the Morse review means that they are looking to the future, but I have heard several extremely troubling cases from my constituents who face the loan charge. This is about HMRC behaviour. In one case, my constituents provided all the information asked for and heard nothing back for two years. They received a note from HMRC saying they were facing the loan charge with interest added, including for the two years when they had had complete radio silence from HMRC. How is that justified or proportionate? Based on evidence to us, and I assume to Sir Amyas, along with casework and conversations with colleagues, including some casework wholly unrelated to the loan charge, it feels as though HMRC is just not capable of providing a competent service.

Others today have rightly mentioned the anxiety and uncertainty of taxpayers as they are chased for almost immediate payment of sums that they just do not have, and without any justification for the amount demanded. Usually, any previous information that they may have sent to HMRC is completely ignored.

I just want to touch briefly on poorly paid and vulnerable people. The Morse review recommended that, after 10 years, the loan charge should no longer apply to people who earn less than £30,000 a year, but the Government rejected that recommendation. Let us remember that many of these people are working in the public services—in the NHS and local authorities—and many of them do not have accountants. Many were effectively in a position where they were told that, if they wanted this work, they had to sign up to this umbrella scheme. The head clients will now no longer contract with personal services companies, so these umbrella schemes are all that is available to them.

We have social workers, junior doctors, nurses, cleaners and so on facing many charges year after year. To address this injustice, Sir Amyas made a reasonable request. It was that HMRC should not chase loan charge payments between 2010 and 2016 if the individual made a reasonable disclosure, but the words “reasonable disclosure” were changed by the Treasury to “full disclosure”—a term which, according to tax experts, has little or no relevance in tax law.

Where do we go from here? For months and months, we have heard the Government say that this is not a retrospective matter, yet they made an agreement with Sir Amyas Morse and shifted the date that the loan charge applied from 1999 to 2010. If they can change their mind once, surely they can do it again. If the Government can defer the roll-out of IR35 to the private sector, as they did earlier this week following extensive concerns, they can change their mind on the loan charge, I hope. The new suggested cut-off date of 29 December 2010 is based on the law being clear, yet we know now that this was not the case. If the law was clear then why did we need the loan charge and another change in legislation in 2016?

I would like very briefly to list some of the concerns that are in our report but that have not yet been raised in this debate—[Interruption.] Madam Deputy Speaker is coughing at me, so I urge anyone reading Hansard or watching this debate to please look at the report that we released last night. It is on the loan charge action group and the loan charge all-party group website.

In finishing, let me return to a core question. Is applying the loan charge from 2010 justified and proportionate? The answer to that from the all-party group is, no, it is not. I would go further and ask: is HMRC abiding by Adam Smith’s principles of fair taxation, which were mentioned at the beginning of this debate. Furthermore, are HMRC and the Treasury abiding by the Nolan principles of public service, particularly selflessness, objectivity, accountability, openness, honesty and leadership? I urge the Government to listen to the strong opposition to this retrospective, unjust and unfair tax and, quite simply, to do the right thing.

--- Later in debate ---

[Jesse Norman]

I am very grateful to the hon. Gentleman, but if I may say so, I do not think that has been true. I think the conclusion colleagues have been pushing in this debate is that they disapprove thoroughly of tax avoidance, and their view is that this is not tax avoidance in many cases. If they accept that this is tax avoidance and that the issue is merely as to the remedy, that is of course a slightly different position, and one that I am happy to respond to.

I just want to make it clear that this is a form of tax avoidance. It goes to the wider issue as to whether people should have known what it was. The point is that it is tax avoidance, and it costs the Exchequer hundreds of millions of pounds a year. That has two effects: it deprives public services of the money they need to operate; and it forces other taxpayers to pay more to make up the shortfall.

The purpose of the loan charge was to combat this form of abusive tax avoidance. The loan charge was introduced as a new measure in 2017. Following a public campaign last year, we asked Sir Amyas Morse, as has been noted, to conduct a review of whether it was an appropriate policy response to the use of the disguised remuneration scheme. He had full control of the review’s management and recommendations. He took evidence from a very wide range of individuals affected, and he spoke to interest groups, MPs, tax specialists and many other stakeholders.

Again, the facts are not in doubt. Sir Amyas Morse, as has been recognised by colleagues today, is an individual of huge experience and great independence of mind, and he is widely respected across the House. He was independent in his review, and he was given wide scope in expert support. He produced a thorough and exacting piece of work—a 76-page, 30,000-word report—that drew on over 700 individual testimonies and impact statements, and which painstakingly worked through the issues before recommending notable changes to the policy, including substantial carve-outs as to who was affected. Sir Amyas was clinical and at times unsparing in his criticisms, including of Her Majesty’s Revenue and Customs and, be it said, of the Loan Charge Action Group. All but one of these recommendations were accepted by the Government.

Among those recommendations were two to which I want to draw the House’s particular attention. The first is Sir Amyas’s insistence, as we have heard across the House today, on the need for the Government to go further in going after and bringing to justice people who enable or promote tax avoidance schemes. I am therefore delighted that, as part of the Budget documentation we have produced today, we have published a policy document on “Tackling promoters of mass-marketed tax avoidance schemes”, and I draw the attention of all colleagues to it. It is a sober and thorough piece of work that looks at lots of different approaches as part of an integrated strategy.

The other thing that Sir Amyas pointed to—again, I think rightly, but also picking up on a widely anticipated and understood gap—is the importance of raising standards in the tax advice market. Again, I am pleased to say that, as part of the Budget documentation, we have published a call for evidence on this very topic, “Raising standards in the tax advice market”. I encourage all colleagues and their constituents to contribute to that approach.

[Ruth Cadbury]

I thank the right hon. Member for the points he is making about advice and information. However, I again come back to the fact that the low-paid and the averagely-paid—generally public sector workers—are still being sold these schemes. They cannot be paid through a personal services company, but they need to work freelance and locum, and this is still happening to them. If the Government see these schemes as contrived, why are they not doing more to stop the mass marketing of them, such as by making the promoters personally liable for defeated schemes and similar?

[Jesse Norman]

I have in my hand a detailed document designed to address this very issue. It goes through a whole range of different approaches and integrates them into a strategy. I would be delighted to have any input that she would like to make about other ways in which that can be improved and developed. We work on the basis of the law as it presently stands, and which we have inherited. It is itself the result of previous Parliaments, including of course the parliamentary consideration of the loan charge. We have to work with the hand we have got, and improve it as fast and as comprehensively as we can.

I will now address the motion directly and then, in the limited time I have, turn to the comments that have been made. Is the loan charge retrospective? Again, I think it is clear that it is not. It was introduced as a new measure in 2017. It taxes a loan outstanding at a future date. It does not change any law previously on the statute book.

It has been asked why the loan charge was introduced. In the words of Sir Amyas Morse, it

“offers an expedited means of collecting tax that is due”.

Is the loan charge unjust? Again, I would suggest not. If one asks the average man or woman in this country, I think they would say, “Everyone should pay their fair share of taxes. People are responsible for their own tax affairs. Real loans get repaid; if someone offered you a loan for which no repayment, no tax and no interest was due, it would probably be too good to be true.” And so it is.

The numbers seem to bear that out. More than 99.8% of the tax-paying population have never used a scheme. Even among the freelance population, the take-up has been only 2.5%. It is notable that Sir Amyas Morse was clear that he supported the essential purpose of the loan charge and that it should remain in force.

We have heard a lot about how the law was not settled in 2017. Again, as I said, I can do no better than refer colleagues to section A of the Morse review, which carefully reconstructs the history of the past 20 years of disguised remuneration.

Let me quickly turn to the many excellent contributions that have been made. I will start with the excellent contribution made as a point of order by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne), who pointed out the excellence of my book on Adam Smith—I thank him for that, although I defer to the hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey), as Kirkcaldy was, of course, Smith’s home town. My right hon. Friend the Member for New Forest West will recall—he taught economics so he must know about these things—that Smith not only set out the ideals of a well-functioning tax system, which we all aspire to achieve, but was, for the last 12 years of his life, a practising commissioner of customs, attempting to wrestle with an ever-evolving customs market and seeking to extract duty and tax due, and rightly so.

I would like to touch on the statesmanlike comments of the hon. Member for Bootle, the shadow Chief Secretary, which perhaps reflected his imminent expectation of taking my seat on this side of the aisle. He recognised that what people do not pay in tax due, someone else must. He is right about that. He noticed that if it looks too good to be true, it probably is. He is right to focus, as others have, on the enablers and promoters.

Budget Resolutions

Ruth Cadbury Excerpts

Monday 16th March 2020 Commons Chamber

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

Thanks to the 10 years of austerity Budgets and spending statements, our key public services have been cut to the bone and beyond, which means that they and the amazing people who work in them, who are already struggling with the day job, will now face incredible pressure and uncertainty in the weeks ahead. Although pouring money into the NHS is essential at this time, the crisis has exposed significant gaps after years of inadequate annual spending rounds. It has also exposed the state-sanctioned poverty policies of this Government.

The Government could learn from France, where households and businesses are being protected from going under with a €300 billion package. In Hounslow, after £140 million of cuts over 10 years, our council, like all local authorities, has simply no headroom available to address the covid-19 crisis in social care, in public health or through support for volunteering to ensure the safety of vulnerable people in self-isolation.

In the short and ever-diminishing time available, I will cover issues that have dominated my postbag and that, unless the Government address them, will continue to do so and continue to be relevant, even once we are over this crisis. There was nothing in the Budget to enable councillors or the London Mayor to properly serve our communities at this time. The growing number of children with special educational and development needs have no or inadequate additional specialist support, which could make a difference for their future. There was nothing in the Budget to address mental health, and specifically young people’s mental health, an issue raised with me at just about every secondary school I visit and in my constituency survey last year. The Government need to end the postcode lottery of mental health treatment and provide adequate funding for child and adolescent mental health services and for local early intervention services.

Another missed opportunity in the Budget was tackling violent crime, especially among young people, given the loss of 20,000 police officers, who are not going to be replaced quickly, and the new recruits who do have the innate knowledge of preventing and addressing crime that can only be learned over many years on the job. Alongside policing, council funding cuts mean that youth services have been cut by 70% since 2010, with the loss of the vast majority of experienced youth workers.

Although I welcome the £1 billion in the Budget to address cladding, I regret that there is nothing for those at the sharp end of the housing crisis. Purchase and even private rent are out of reach for many thousands of my constituents. More than 2,000 households are homeless in Hounslow and more are living in overcrowded or unsuitable housing. They will get permanent and adequate housing only with substantial and sustained Government action.

The elephant in the room in the Budget was the climate crisis. Billions for new roads were found and the freeze on fuel duty was upheld, but there was nothing for active travel or for solar, tidal or hydro power, which scream out for investment. I of course appreciate the fact that the Budget was delivered at a time of extreme uncertainty and that funding has gone to the NHS, but this is not a Budget for the people of this country and did not address the continuing underlying problems facing our society.

Oral Answers to Questions

Ruth Cadbury Excerpts

Tuesday 11th February 2020 Commons Chamber

[Jesse Norman]

HMRC did pursue these cases quite vigorously. Sir Amyas found, on the basis of detailed consideration, that the law was clear then, and therefore HMRC rightly believed that people would accommodate it. Of course, it pursued people who had been avoiding tax through disguised renumeration schemes for many years before that, and it will continue to do so for those that have been carved out by the loan charge review.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

The Treasury has accepted some of Sir Amyas Morse’s recommendations, but there is confusion about some of them. A constituent of mine got caught in a disguised renumeration scheme before 2010, and yet he is still not convinced that he is in the clear and has that fear hanging over him. What does the Financial Secretary have to say about that?

[Jesse Norman]

The hon. Lady is quite wrong. We accepted all but one of Sir Amyas’s recommendations, and we did not accept that one because the issue he raised was already being handled very well within the system. If the hon. Lady has a specific concern, she is very welcome to raise it with tax commissioners or, indeed, with me, although on an anonymised basis because obviously I cannot deal with specifics.

IR35 Tax Reforms

Ruth Cadbury Excerpts

Thursday 4th April 2019 Westminster Hall

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gapes. As hon. Members may know, I am vice-chair of the all-party parliamentary loan charge group. I was approached by an agency that employs doctors, nurses and healthcare assistants purely for the NHS, because there is an interconnection with the loan charge—the unintended consequences of IR35’s creation are why we have the whole problem with the loan charge.

Loan schemes were set up as a way of enabling people who are self-employed and freelancers not to be disbenefited and not to have to pay more tax than if they had gone through pay-as-you-earn. For many people, it was intended to remove the administrative burden of setting up their own companies. As the debate going on now in the main Chamber will show, many hon. Members from both sides of the House have lots of examples of the many distressing consequences of the way the loan charge has been handled by HMRC, particularly in the last three or four years.

I want to relay the concerns of the managing director, owner and founder of what was a significant recruiter of NHS workers, whose business has declined by more than 60% in recent years. The particular issue he has concerns about—I hope I can express it clearly, and I apologise if I do not get this entirely right—is the confusion in the NHS about whether freelance workers are PAYE or not. There is mixed communication, which is causing him difficulty in his business, but it is also causing difficulties for the workers concerned. These are low-paid, or medium-paid, people—some earn less than £30,000, and most less than £50,000 per annum.

Because of the inflexibility of NHS employment, those people choose to work on a freelance basis, day by day. London-based people could be sent to Southampton one day, Bath the next day and maybe somewhere in London the day after. They incur travel expenses. For long days, they incur costs that they would normally be able to claim against the company. However, if they are PAYE, they cannot claim those costs. They therefore make themselves unavailable to the NHS.

I also learned that this situation is one of the major causes—in addition to Brexit—of chronic shortages of clinicians, medical staff, nurses and nursing assistants in the NHS. For people who need to work flexibly, the work is just not worthwhile when they are being forced to go through PAYE. They are therefore working in the private health sector, where there is more flexibility and the restrictions do not apply, they are leaving the country, or they are leaving health and working in another, more flexible, sector, where they are better off.

I have been told that 99% of the firm’s agency workers are being unlawfully blanket-assessed in IR35 and forced into unlawful employment, without a fair assessment—approved NHS framework operators are enforcing the blanket assessment. NHS Improvement has stated that a fair and individual IR35 assessment must be carried out, but that is not happening; blanket assessments are not compliant with the legislation.

Under the new rules, the fee payer, which is the agency or third party paying the worker’s personal service company, is not allowed to carry out an IR35 status assessment to determine the proper IR35 status of the worker—I apologise for reading this out, but I will get it wrong if I do not. The fee payer is the closest party in the contractual chain to the worker’s personal service company. This is despite HMRC guidance that states that, where a public authority, agency or third party makes a payment to a worker’s intermediary on or after 6 April 2017, it decides if the rules apply and then deducts tax and primary NICs from the payment it makes and pays the employer’s NICs, and that is included in calculating the apprenticeship levy.

The HMRC check employment status for tax tool that is used to assess workers assumes mutuality of obligation, which is one of the main tests that has to be assessed in all engagements via IR35 determination. As a result of the assumption, the CEST tool is flawed. The importance of mutuality of obligation is demonstrated by the recent tribunal case of Dr R Narayan v. Community Based Care Health Ltd—I can make the details available. In the supply of people to NHS trusts, there appears to be no mutuality of obligation. The worker can cancel a shift at any time and will not be paid, which is key to that case. The NHS trust can cancel a shift at any time, and the worker will not be paid, as confirmed in the contracts of the agency I mentioned. However, 99% of the agency workers are blanket-assessed inside IR35 and forced into unlawful employment.

It appears that HMRC does not understand the IR35 rules. Apparently, it recently lost a tax case against Lorraine Kelly. If HMRC has lost approximately 50% of IR35 tax cases that it has brought against contractors, how can it implement an online tool to get a correct IR35 result? HMRC gets that right only 50% of the time when it goes to court, which has to be worrying.

I am very concerned about what I have heard from this agency, which is trying to do the right thing. Incidentally, it warns all its staff about the loan charge. It is an umbrella company but does not use the loan charge. I am absolutely convinced that the company is trying to do the right thing, but it is really concerned about the impact that the confusion between HMRC and the NHS is having on the ability to supply appropriately qualified staff to the NHS, as and when needed.

--- Later in debate ---

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Gapes, even though it looks as though that will be brief. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate. Those of us in the Chamber today share common ground on the problems of IR35. The hon. Gentleman said that we all wanted to see what was due to be collected in taxes being collected to pay for the services from which we all benefit. That is an important point to bear in mind, and we share that view, but that is not to take away from the difficulties that have been presented in the Chamber so eloquently today.

The hon. Gentleman referred to the Taylor review and the need to get the recommendations in play with some speed, and to the conflict between agencies and contractors. He also made a good point, on which we need to reflect, about our future relationship with the EU—the crisis that we currently face over EU membership. That should be food for thought for Ministers in relation to a possible delay to the further roll-out of IR35. The hon. Gentleman talked about his constituent and mentioned that large companies often have sophisticated tax systems and resources that are not available to those who are often affected.

[Sir David Amess in the Chair]

The hon. Member for Brentford and Isleworth (Ruth Cadbury) talked about the unintended consequences of IR35, moving on to the loan charge, which I will touch on in a few moments, and in particular the confusion in the NHS and other public bodies. She mentioned those working flexibly with the NHS to meets its needs. Another point that I agreed with was that the effect of rolling IR35 into Brexit is to increase the unattractiveness of going into such jobs and accelerate chronic staff shortages by trying to force into the PAYE system people who do not want to be in it.

The hon. Member for Clwyd South (Susan Elan Jones) also talked about public sector damage, but she reflected on it in terms of IR35 being applied to the private sector. She expressed concerns that this was the wrong time, given Brexit as well as IR35. She quoted her constituents’ worries about additional costs, shrinking talent pools, legal challenges, investment losses and the expenses incurred. She mentioned the impact on IT businesses specifically, which is to make some unviable or unable to operate at all.

The hon. Member for Glasgow North East (Mr Sweeney) talked about how, when IR35 was introduced, the issues around it became relevant and very present, showing up as a genuine concern for many people. He highlighted the real extra costs to businesses and, as was said earlier, the number of IR35 court cases lost by HMRC. The Government must reflect on that when they look at this. The hon. Gentleman also rightly talked about the lack of advice, warning or assistance from HMRC, moving on to the risk of the penalties incurred and of further extension of IR35 making it even less attractive to do business throughout the UK, especially in current circumstances.

The SNP has expressed concerns about the extension of IR35 since it was proposed in 2017. The UK Government must pay close attention to their own technical review and rule out extending IR35 rules until contractors’ concerns have been addressed. HMRC has been described as using a hammer to crack a nut, but this UK Government have had to be dragged kicking and screaming into tackling major, systematic tax avoidance and evasion. The extension was proposed through the Finance Act 2017, and since then the SNP concern has been about the key effect on contractors supplying public sector bodies. It is only right for such contractors to pay their fair share of tax, but they have been left with an unfairly high level of bureaucracy, making it even more difficult for them to play their flexible role within the economy, as those in the sector have confirmed. Experts have expressed concerns that IR35 does not even achieve its stated aim of equalising tax between those in its scope and employees.

IR35 has also made things more difficult for public sector organisations in rural communities, something I know a lot about, being a highland MP. In rural areas, we often rely on contractors to fill vacancies and to employ key staff—teachers, doctors, nurses and such key people in our communities—so we have great concerns about the further impact on contractors if IR35 is extended for the private sector in April 2020, as proposed.

We have expressed such concerns repeatedly. Indeed, my hon. Friend the Member for Aberdeen North (Kirsty Blackman) first warned the Chancellor about the risks of the expansion of IR35 during the April 2017 finance debate. The UK Government failed to listen then and, when we raised it again, later in 2017 and in 2018. Here we are in 2019, once again asking the Minister to listen. Will this be the day when ears are unblocked? I hope so. Will this be the day when the message gets through? Let us hope that as well. The UK Government should use the 2019 Budget and Finance Bill to address IR35’s negative impact on contracted staff and our public services.

Earlier today, in the main Chamber, the loan charge was being debated. That is distinct from IR35, but some tax advisers have reportedly informed clients that IR35 required them to utilise tax vehicles now being tackled by the loan charge. For tax professionals to advise clients to use such loopholes is plainly wrong. People should of course pay their fair share of tax to support public services, but the UK Government must now pursue organisations that facilitated such loans. For those caught up in loan charge issues, there is great concern that HMRC has failed to work constructively with those seeking a loan charge repayment.

[Ruth Cadbury]

I thank the hon. Gentleman for giving way, and my hon. Friend the Member for Rutherglen and Hamilton West (Ged Killen) for securing the debate—I am sorry, I should have done that earlier. I was in the loan charge debate, which has been suspended because rain is penetrating the main Chamber, so I came over to this debate. I want to add something now that I said in the other debate. Until the past three or four years, many of the early adopters of the loan charge were doing so with the strong advice of chartered accountants. In my earlier speech, I included at least two pieces of evidence to show that there was no uncertainty about the loan charge—it was legitimate. One was a memo written by an HMRC staff member in 2006 about loan arrangements being legitimate, fine and approved; the other was the Rangers case.

[Sir David Amess (in the Chair)]

Order. I am not sure whether the hon. Lady is making an intervention or a separate speech.

[Ruth Cadbury]

I hope that the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) will have a look at some of the contributions made during the other debate. Having done so, he will be able to agree with me that there is a lot of confusion and that people were not behaving illegally.

[Drew Hendry]

I thank the hon. Lady for that intervention, which allows me to agree with her—I too attended the early part of the main Chamber debate before coming here—and to say what a pleasure it is to serve under your chairmanship as well, Sir David. It is a particular problem that the companies that gave such advice are not being pursued, and the Minister must do something. As a final comment on the hon. Lady’s intervention, given the state of politics in this place, it is hardly surprising that the roof has fallen in on Westminster.

Among those caught up in the loan charge issues, there is great and heartfelt concern that HMRC has failed. It has failed to work constructively with those seeking a loan charge repayment plan to pay the taxes demanded. Often, that is bundled up with fines and additional costs. It cannot be right that people are pushed into desperation, or face the threat of losing their family home or of bankruptcy when a more thoughtful, flexible and fair approach should and must be taken. My hon. Friend the Member for Aberdeen North tabled early-day motion 2241, and I encourage Members to sign it. We hope that the UK Government and the Minister will force HMRC to change tack and work constructively with those seeking reasonable treatment of people due to pay fair tax payments for unpaid amounts and to remove the threat of bankruptcy and homelessness.

In conclusion, IR35 is not in a state to be further expanded at the moment. That has been clear throughout, in the comments by Members in this debate and from what we have heard about those who have experienced the effects, such as contractors and the people trying to deal with IR35 in our public services. It cannot be right for the Government to steam ahead without taking that into consideration.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Rutherglen and Hamilton West (Ged Killen) on securing this debate. It is also a pleasure to sit opposite the Minister. I had withdrawal symptoms after the end of the no-deal statutory instruments. I am afraid this subject has a similar level of complexity as the subjects we discussed in relation to no-deal preparations.

As many hon. Friends and Members have mentioned, IR35 arrangements are designed to operate in relation to workers involved in so-called off-payroll working. They cover situations where people work for a client through their own intermediary, often a personal service company. We have heard many examples in the debate. If people were providing their services directly, they would be classified as an employee. However, as a result of the arrangements, IR35 workers pay income tax and national insurance contributions in a different way to an employee. Individuals who work in such a manner benefit from increased flexibility and reduced tax liability, but the IR35 rules are intended to ensure that they pay broadly the same tax and national insurance contributions as an employee.

As we have discussed, the rules have applied to public sector bodies since 2017, and the Government confirmed at the 2018 Budget that they would extend the change to the private sector. The Government have just launched a technical consultation about the new arrangements.

Self-employment and contractual arrangements are a vital part of the UK economy. People who are genuinely self-employed deserve to be properly supported, while also ensuring that everyone pays the right amount of tax. However, there are real concerns that workers are being forced into self-employment by unscrupulous employers to avoid costs and their duties to workers. Both the law and the Exchequer are struggling to keep up on this issue—a point that has been made by various speakers today. HMRC estimates that it loses about £3 billion a year because of self-employment in name only.

There is a problem, but at the root of it is the gap between how work is characterised for tax purposes and how it is characterised for the purposes of employment legislation. The Taylor review was meant to clarify at least the latter, as was mentioned by my hon. Friend the Member for Clwyd South (Susan Elan Jones) in a speech that was characteristic of all the speeches today when she spelled out the experiences of her constituents, and appropriately so. The Taylor review had many flaws. I will not go into all of them now, but it suggested that, for example, sick pay could be traded for a weakening of minimum wage rules—certainly not something that I would support—and that came at the same time as the courts were recognising that many alleged self-employed workers were anything but.

However, the review did offer a number of recommendations that the Government have sadly been extremely slow to consider. The lack of clarity over the implementation of Taylor where it is warranted is leading to a huge number of problems, including the ones we have talked about, for genuinely self-employed contractors and for what we might call bogusly self-employed contractors, as well as for their employers, as they adapt to coverage by IR35, knowing that even the IR35 rules may be subject to change because of future alterations to employment law in the wake of the Taylor review.

It looks as though we will not see an immediate change, so HMRC is engaging in a process of what I call bricolage to try to bridge the gap, and the consequences are complicated and very confusing. The confusion was described appropriately by my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), who talked about a constituency case. She was kind enough to share the details of the case with me before the debate. She was absolutely right to raise the concerns of her constituent.

[Ruth Cadbury]

May I clarify that it was not a constituency case? The case was raised with me as a result of the work that I did on the loan charge.

[Anneliese Dodds]

I am grateful for that clarification. Regardless of where the individual was based in the country, the case was revelatory. In theory, with a levelling of the playing field upwards when the private sector is covered by IR35, some of the concerns about the leakage of highly skilled contractor staff from the public sector could be removed by the extension. However, the other problems that hon. Friends and Members have rightly referred to are still there, not least the problems that arise for small, often one-man or one-woman-band contractor companies that are trying to provide specialist skills on this basis, who may well end up being disadvantaged in relation to much larger providers of those specialist services. Surely we do not want that; surely we want to continue to have the innovation that exists in the complex ecology of different firms and freelancers offering such services.

We really need a joined-up approach to the issues that brings together the consideration of tax and employment law and levels up protections for the self-employed, as well as dealing with the current implications of the tax system that boost bogus self-employment. In the absence of that, we have the issues that we have been talking about today, and employers themselves are trying to find a third way through all of this, as we have seen with the GMB-Hermes deal recently, where a new employment classification has been created in the absence of any other way to improve the situation.

We do not have a coherent approach. It is unfortunate that, as Members have mentioned, the lessons have not been learned from the roll-out of IR35 to the public sector before it is rolled out to the private sector. I will not go through all of them now, as they were appropriately described by my hon. Friends, but one that I want to underline again is the concern about the finance and time that has to be spent by the self-employed who face uncertainty because of the new rules.

The kind of experience that individuals have had with the HMRC online tool, which has already been explained, is a common one. The tool is not based on all of the case law, and the case law itself is not very clear in how it directs us to determining the status of many different contractors, so it does not resolve the situation for many users. It puts an additional strain on contractors, including many individuals who, as has been mentioned, might be on quite low incomes and cannot absorb additional costs. The Government need to look at the issue at a legislative level, rather than the onus being on HMRC to try to deal with it in a technical and procedural manner. It simply cannot. A different approach needs to be taken. As we established in our previous general election manifesto, the burden of proof should be with the employer, so that the law assumes a worker is an employee unless the employer can prove otherwise. We need to be clear on that.

Concerns about the appeals process have been mentioned. I will not go into them in detail, but I will underline the questions asked by hon. Members. How can we be sure that the process will be fair when it is led by those who employ contractors effectively marking their own homework, in the memorable words of one hon. Friend?

The Institute of Chartered Accountants has stated that tax and benefit differentials between different types of work need to be addressed. There needs to be further consultation on what, if any, tax incentives are offered to the self-employed. That is one view from industry and it coincides with what was outlined in the Taylor report:

“Over the long term, in the interests of innovation, fair competition and sound public finances we need to make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people.”

That brings me back to the fundamental issue that I will close with, Sir David.

It is a fact that the tax and legal status of work is not aligned, not certain and not comprehensible. It is impossible for many of those caught up in it to understand the right way forward. My party has said that we need a proper commission to look at it in detail, to modernise the law around employment status and to look at how it interrelates with tax status. We have presented a 20-point plan for security and equality at work. We need to build on that through a consultation that includes the voices of the people affected. We have heard so many of them in the short time that we have had today.

--- Later in debate ---

[John Glen]

I am not aware of any distribution analysis, but I will check with officials, and if I can give clarification on that, I will do so by letter.

Non-compliance in the private sector remains a persistent and growing problem that, if left unchecked, will cost the taxpayer as much as £1.3 billion by 2023-24, according to the Government’s estimates. In last year’s Budget, the Government announced that we will extend the reform of off-payroll working rules to all sectors, including the private and voluntary sectors. That will help to address the issue of non-compliance and to ensure there is a level playing field for the public sector and other sectors when hiring contractors.

The Government have listened to the views of individuals and businesses and have decided that the reform will apply only to medium and large organisations. It will not extend to the smallest 1.5 million businesses. In addition, it will take effect from April 2020, to give businesses and other organisations time to prepare. The Government are consulting on the detailed design of the planned reform, and we are listening carefully to the representations made. Our aim is to provide the individuals and organisations concerned with greater certainty about how the off-payroll working rules will operate from April 2020 in all sectors, including about the actions they can take to prepare for the changes.

Hon. Members talked about HMRC’s check employment status for tax—CEST—tool and raised some questions about its effectiveness. CEST was developed in consultation with stakeholders, including tax specialists and contractors, to assist individuals and public authorities in making the correct determinations. HMRC will stand by the result of CEST, provided the information entered is accurate and in line with HMRC guidance. It gives an answer in 85% of cases, and where it does not, more detailed guidance and support are available through a telephone number for individuals.

To support organisations in applying the rules, HMRC will continue to review and improve CEST. HMRC has already held user research sessions, and will continue to work with stakeholders over the coming months to ensure that the tool and the wider guidance suit the needs of all sectors, and to address specific points raised during the consultation. Enhancements will be tested and rolled out before the reforms are introduced in 2020. I asked officials for greater clarity on what that is likely to mean, and we are talking about improved guidance, better phraseology and improved language that gives greater certainty to individuals who make inquiries.

The hon. Member for Brentford and Isleworth (Ruth Cadbury) mentioned the issue of blanket decisions in the example she gave. Members have expressed concern that businesses might take a blanket approach to applying the off-payroll working rules to contractors without looking at the facts of individual cases. Independent research suggests that has not generally been the case in the public sector, where the reform has been in place since April 2017. I cannot account for every case, but research was done to evaluate the issue because it was a legitimate area of concern. The vast majority of public bodies are making assessments on a case-by-case basis. I have looked into how that research was done— HMRC commissioned an external independent organisation to speak to central Government Departments, the NHS and local government departments to ascertain that.

Having listened to people’s concerns, we included proposals in our recently published consultation to help to ensure that processes are put in place for individuals to resolve disputes with their engagers directly and in real time. The proposals would put a legal requirement on engagers to have a status disagreement process in place, and would require them to consider evidence provided by an individual contractor and review their status determinations accordingly. HMRC is committed to working with organisations to ensure they make the correct status determinations, and will publish detailed support and guidance to help organisations prepare well ahead of April 2020.

[Ruth Cadbury]

I thank the Minister for his response. We look forward to that research. I hope he checks it with bodies such as the NHS and ensures that the different levels and layers of the NHS are looked at. I have been given evidence that different trusts are doing different things and that NHS Improvement and the framework providers in the NHS are providing conflicting advice, which of course causes a problem for agencies and for workers themselves.

[John Glen]

I am very happy to look into that and to see that that work is forensic enough to give a reliable read-out on actual behaviour.

Members also questioned whether there might be an additional burden on businesses that hire contractors, and raised concerns about introducing the reform at this time of uncertainty. As I mentioned, the reform simply enforces legislation that was introduced in 2000. Fundamentally, I believe it is fair that two people who work in a similar way pay broadly the same tax, and the businesses that hire individuals are best placed to determine whether these rules apply. Medium-sized and large organisations will have until April 2020 to implement the changes, and we will keep the existing rules for the smallest organisations, minimising administrative burdens for the vast majority of businesses and other organisations.

I turn now to employment rights, which the hon. Member for Oxford East (Anneliese Dodds) mentioned. I, too, have missed our exchanges in Delegated Legislation Committees, but it is good to be talking about another topic. Falling within the off-payroll working tax rules does not currently change an individual’s status for employment rights, as there is currently no direct link between employment taxes and those rights.

The Matthew Taylor review took place in summer 2017, and the good work plan was published in December 2018. As set out in that plan, the Government agree that reducing the differences between the tax and rights frameworks for employment status to a minimum is the right ambition. We will bring forward detailed proposals this year—I recognise the need for this to happen quickly—for how those frameworks could be aligned. In the meantime, it is right that the Government take action to improve compliance with existing rules. Those who wish to challenge their employment status for rights can take their case to an employment tribunal, regardless of their tax status.

Members suggested that there is a link between the off-payroll working rules and disguised remuneration schemes. Disguised remuneration arrangements have nothing to do with the off-payroll working rules; individuals are able to comply with those rules without entering into contrived avoidance. Trying to get around rules that are designed to ensure that everyone pays their fair share is not an excuse to use a tax avoidance scheme.

There was mention of some celebrated court cases. It is not appropriate for me to comment on individual cases. Obviously, many of those cases are very complex; only the very complicated cases make it to court. HMRC will work with businesses to ensure they are equipped to make the right determinations.

I want to be clear that this reform does not introduce a new tax but seeks to strengthen compliance with existing tax rules. The Government value immensely the contribution of the self-employed and flexible workers—various Members have made the point that they make up a much larger proportion of the UK workforce—and intend to protect them, but there are many legitimate commercial reasons for people to work through limited companies and for businesses to engage those companies, and that should not need to change. The off-payroll working rules exist to ensure that those individuals pay a fair amount of tax, and the Government believe it is right that we address non-compliance through these reforms.

I hope I have addressed the points that were raised. If there are any points I have not dealt with, I would be very happy to take on board the final remarks by the hon. Member for Rutherglen and Hamilton West and to write to any Member in lieu of responding appropriately.

Tax Avoidance, Evasion and Compliance

Ruth Cadbury Excerpts

Monday 4th March 2019 Commons Chamber

[Mel Stride]

I am sorry if the hon. Gentleman formed that opinion. We are certainly not going to prejudge any review on any aspect of tax, whatever it may be. I gently say to him, and to those who got involved in these schemes, that by and large when something looks too good to be true, it is too good to be true. Where hon. Members refer to very large demands for tax, we are, of necessity, looking at situations where very large amounts of money went through tax avoidance schemes. We have had debates in this House in which Members have raised tax demands, on behalf of their constituents, of up to £900,000. In those circumstances, about £2 million-worth of income would need to go through one of those schemes in order to result in an unpaid tax bill of that magnitude.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

The Minister needs to clarify whether he is just writing a report or whether he will genuinely do a serious review. He says that the bulk of the loan charge tax by volume has already been collected. However, 50,000 ordinary, hard-working people are in despair and living in limbo, waiting to know whether the tax returns they put to bed years ago are to be reopened.

I am the vice-chair of the all-party loan charge group, and last week we heard from the family of a man who committed suicide over a small amount. It was the shame and fear that he would go to prison that sent him over the edge. The Sunday Telegraph has reported on a leaked HMRC letter from 2011 that clearly shows that it knew it was out of time for pursuing these cases back then, so will the Financial Secretary now admit that the real reason for the loan charge is HMRC’s failure to act when it was legally entitled to do so and that that is no good reason to undermine the rule of law by retrospectively rewriting the rules?

[Mel Stride]

May I correct one thing the hon. Lady said? She said I suggested that the bulk of the money due under the disguised remuneration measures has already been collected, but I am pretty certain I said that, of the £1 billion that has been collected thus far, some 85% has come from companies, as opposed to individuals. HMRC will go for the company before the individual. We have to get back to the reasons for this charge, which I have just set out. As for whether it is retrospective as the hon. Lady says, I can assure her that there has been no time in our history as a taxing nation when this kind of structure—this kind of contrived arrangement, which is set up simply for the avoidance of taxation—has ever fallen appropriately within our tax code. It has never been right. These schemes have been taken through the courts, not just the general courts, but the Supreme Court, over a number of years and they have always been found to be defective and not to work.

Finance (No. 3) Bill

Ruth Cadbury Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Sir Edward Davey (Kingston and Surbiton) (LD)]

I thank the hon. Member for St Albans (Mrs Main) for her passionate speech. I also thank the right hon. Member for Loughborough (Nicky Morgan), who chairs the Treasury Committee, and right hon. and hon. Members from across the House, who have campaigned as a Parliament against this measure and supported new clause 26. It is my wish to divide the House on the new clause if the Minister does not accept it.

Let me make it crystal clear from the start that I support the Treasury’s aim of closing tax loopholes and stopping tax avoidance. The introduction of loan charges in the Finance Act 2017 to stop future abuse was correct, and the review my new clause proposes would not seek to prevent the Treasury from stopping that abuse from the 2016 Budget announcement. Instead—somewhat inelegantly, due to the rules of Finance Bill debate—new clause 26 aims to focus the minds of Treasury Ministers on the gross unfairness of the way the 2017 Act went about closing an unacceptable tax loophole.

I believe that the review envisaged in the new clause would reveal the unfairness of the retrospective nature of the current loan charge legislation in two ways. First, it would show how that retrospective nature is even more severe than non-retrospective but backward-looking proceedings for the recovery of lost tax elsewhere in our tax legislation. Secondly, it would show that the test of reasonableness included in proposed new section 36A, if applied to the loan charge, would in fact prevent any retrospective tax collection from the loan charge.

Let me remind the House why the Treasury should, after the review, ditch the retrospective nature of this measure, delay April’s implementation and amend the charge so it focuses only on payments made after 2016. It is because the loan charge, as introduced, offends against the rule of law. It is the sort of taxation that led the barons to rebel against King John and gave birth to Magna Carta. It is simply not acceptable for a Government to introduce a law that makes illegal something someone did years ago, when that action was considered legal. That is a clear principle.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I thank the right hon. Gentleman for giving way— I realise time is short—and for tabling new clause 26, which I, too, support. Does he agree that it is unreasonable for people to be expected to have kept records going back 20 years when they were reassured at the time that the scheme was legitimate?

[Sir Edward Davey]

The hon. Lady is absolutely right, and I thank her for her support. Let us remember that these people—our constituents—were given professional tax advice and behaved in a way they thought was right and lawful at the time.

Oral Answers to Questions

Ruth Cadbury Excerpts

Tuesday 3rd July 2018 Commons Chamber

[John Glen]

I have not personally had any such discussions, but the Exchequer Secretary will have done. We are supporting that business, and many others up and down the country, through the comprehensive industrial strategy that we are rolling out in different sectors.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

10. What recent discussions he has had with the Secretary of State for Education on changes in the level of funding per pupil in schools since 2010.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

We have protected schools’ budgets in real terms since 2010, and through our reforms to schools and the curriculum children’s results have improved, particularly in reading.

[Ruth Cadbury]

Will the Minister confirm that the additional £1.3 billion announced a year ago does not address the £1.5 billion shortfall in school budgets? So what advice does she have for the 88% of schools in this country facing real-terms budget cuts, despite the new funding formula?

[Elizabeth Truss]

I suggest the hon. Lady reads last week’s edition of Schools Week, which said that the unions had admitted that they had their sums wrong and in fact per-pupil funding was being protected in real terms in 2018-19 and 2019-20.

Customs and Borders

Ruth Cadbury Excerpts

Thursday 26th April 2018 Commons Chamber

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I welcome this debate and I support all the excellent points raised by those who, like me, support the motion—I will try hard not to repeat them. I am not alone in being somewhat bemused that the party in government is the party that generally prides itself on being pro-business and anti-bureaucracy. Nevertheless, the Government appear to be ignoring the pleading of businesses large and small, and they are leading this country towards a tsunami of additional paperwork as we move towards leaving the customs union and the EU, given the implications of all that paperwork for trade deals that we will now have to put in place for our trade with the EU. Leaving the customs union means the introduction of tariffs and non-tariff barriers to trade in goods with our largest trading partner. That involves 40% of our trade, and it means, as businesses tell us again and again, added delay and costs for manufacturers.

Before the recess I had the pleasure of visiting Honda in Swindon with the Industry and Parliament Trust. It said that

“outside a customs union, there is no such thing as a frictionless border.”

Motor manufacturers will be subject to 10% tariffs on cars, and 4.5% on components and parts, plus additional delay. Currently, if someone takes their car to the dealer because they need a new exhaust pipe, the order goes in today, and tomorrow the dealer will have that part and be able to fit it. I understand that once we are outside the customs union there will be a wait of up to five days for that new exhaust pipe. That is not just inconvenient for the car owner—it has an economic cost for the owner of a van who uses that van for business.

It was also good to see how Honda’s presence in Swindon has transformed that town since I was last there many years ago. There is no doubt that Swindon’s low unemployment rate and well-paid jobs—not just at Honda but at all its suppliers—are directly based on Honda being there, which is probably linked to the message that, as we have heard, Margaret Thatcher gave to the Japanese Government many years ago when she said that Britain would never leave the customs union. Now all that is at risk.

We will not see big-bang announcements by big manufacturers in those key sectors—not just the automotive industry, but pharmaceuticals and many others. Instead, we will see incremental decisions and loss of capacity, and incremental elements of production going to Europe where the biggest market will be. That will be a long-term cost for our economy. We cannot afford that.

Briefly, on borders and Northern Ireland, many of us will have seen in our Twitter feed the map of Switzerland and the hundreds of customs points. I remember County Fermanagh in the old days, before the Good Friday agreement, and we cannot go back to that.

I support the motion, calling on the Government to establish an effective customs union with the EU, and like other Members I believe we should stay in the single market as well, because 80% of our economy is in services.

[Mr Speaker]

Order. A three-minute limit now applies.

Oral Answers to Questions

Ruth Cadbury Excerpts

Tuesday 17th April 2018 Commons Chamber

[Elizabeth Truss]

I thank my hon. Friend for his question. There is indeed money that will be released as a result of our leaving the European Union. We are working on the spending review, which will take place next year, and part of the job of that spending review will be looking at how we allocate that money domestically.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

24. Many of my constituents work in the financial sector —the financial services sector, specifically. Does the Chancellor not recognise that the closest possible alignment with the single market is the best possible outcome for this vital sector?

European Affairs

Ruth Cadbury Excerpts

Thursday 15th March 2018 Commons Chamber

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

It is a pleasure to follow so many eloquent—and some long—contributions.

I wonder how many arch-Brexiteers have actually spoken to people who work in or run businesses to learn about the impacts of not only Brexit but uncertainty about Brexit, and how it is affecting decisions in their constituencies at this moment. I have done that, and I am going to share just two examples with the House. One is a specific small company, and the other is in a major sector. I would have covered more, but have had to cut and cut my speech as the second half of the afternoon has progressed.

The owner of a small and medium-sized enterprise, a research company, wished to remain anonymous, but wanted me to know his position. He wrote to me:

“I run a small business and have already lost out because of Brexit (due to the drop in sterling putting up the cost of our cloud computing by 20% and uncertainty over future research funding). There are lots of detailed questions for my business that I have no idea how to answer, and I don’t have armies of lawyers and accountants to work out for me. So much for the Tories cutting red tape. Such as, if there is a hard Brexit, will there be an uninterrupted service from all the cloud computing currently supplied via companies based in Ireland? Will I be able to access all my data and information on day one—or need new customs clearance or change my data protection set up? Will cloud computing be treated as an import with tariffs—and therefore add to my operating costs and accounting costs as I grapple with new HMRC rules? These are things that could tip my very small, struggling, business over the edge. I’m sure we’re not the only vulnerable SME.”

He goes on:

“More generally, MPs say they will protect jobs. In my sector income”—

rather than jobs—

“is already moving judging by conversations I am having with partners and in my networks. Contingency plans are already being enacted by SMEs. I know of companies who have set up offices in mainland EU and are starting to channel work through there, even if it is UK-based staff doing it, for now. I am being paid in Euro for some work that previously would have been in sterling, which exposes me to risks I can’t offset. This is all completely legal. Two of my most talented EU colleagues have left the UK because they ‘don’t feel welcome’—they both lived here as children but having become parents themselves believe the situation is too uncertain to keep their roots here…In my view, the loss to Britain will be this invisible drip-drip of lost talent and money rather than announcements of big job losses by big employers and will only become apparent when it is too late.”

Secondly, my constituency is home to a large number of broadcast organisations—household names such as Sky, and myriad others, many whose main market is not even in the UK—and many of my constituents work in broadcasting, including a few household names. The UK dominates Europe’s broadcasting sector due to the availability of skilled employees and English being the dominant language in the industry. Thanks to the country of origin principle, hundreds of international media organisations are based here and can broadcast to anywhere in the EU without restriction. The trade organisation COBA—the Commercial Broadcasters Association—fears:

“International broadcasters based here would, reluctantly, be forced to restructure their European operations”,

particularly with a hard Brexit. It said a month ago that Brexit could cost the TV market £1 billion per year in investment, put at risk thousands of jobs in the UK broadcasting sector, and undermine the sector’s long-term global competitiveness. It says:

“Like many sectors, broadcasters cannot wait until the cliff edge of March 2019 to make decisions about the future of their European businesses.”

So even if no deal is not the Government’s intention now, these companies are having to make a risk assessment, divert management resources into contingency planning and make a decision on whether the risk of no deal is too great—they will jump ship anyway, taking jobs and investment with them. This means additional cost on otherwise unnecessary contingency planning and diversion of management time and energy, or just cutting and running.

These are the real impacts of Brexit now. If we multiply this by tens of sectors and hundreds of thousands of businesses making millions of decisions about their future, we see that this is what is leading to the UK tumbling down the international growth tables. It undermines Government income that funds our vital public services and, as looks increasingly likely, makes our constituents poorer. The Government must wake up, and focus not on the outliers in their own party, but on the economic prospects of the UK and its place in the world.