Finance Bill

Ruth George Excerpts

Tuesday 12th September 2017 Commons Chamber

[Mel Stride]

Thank you for that ruling, Madam Deputy Speaker; I am pleased that you will be able to hear me from now on. I entirely accept the point made by my hon. Friend the Member for Shipley (Philip Davies); if there is to be an insurrection, there must at least be some people present with whom to insurrect.

[Ruth George (High Peak) (Lab)]

Rather than proving that Conservative Members are able to count people on Benches—which at times is beneficial to them, but at many other times is not—perhaps the right hon. Gentleman could listen to all the small businesses who are squealing about the massive increases they have seen in business rates and the impact on business start-ups of the changes to universal credit that are going to prevent a lot of people from starting up as self-employed, hitting those in constituencies like mine where there is no support for them.

[Mel Stride]

I think the hon. Lady will have heard my—[Interruption.] The shadow Chancellor has arrived: the troops are in place, so let the insurrection commence.

The Bill will make our tax system fairer in a number of ways, but I want to focus now on how it strengthens our position in tackling tax avoidance and evasion. This is a Government who have already announced more than 75 measures to tackle evasion and avoidance since 2010, and we have secured almost £160 billion in additional tax revenue over this period. We have driven forward international action and will continue to do so. We have published one of the first public registers of beneficial ownership. We have reduced the tax gap to one of the lowest in the world. This Finance Bill introduces new policies to tackle aggressive tax planning, avoidance and evasion. It continues to crack down on disguised remuneration schemes, it introduces a new penalty for those who enable tax avoidance, and it clamps down further on online VAT fraud.

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[Mel Stride]

My hon. Friend is entirely right. We do put small businesses first, which is precisely why we listened so carefully to the feedback we received on our proposals and have made changes that will allow breathing space for businesses to prepare and for us to pilot further the plans we will introduce in due course.

As the vast majority of businesses already submit VAT returns on a quarterly basis, the transition to quarterly updates through Making Tax Digital should not be unduly onerous.

[Ruth George]

Although the delay in Making Tax Digital gives breathing space for very small firms, those firms will now face additional administrative requirements, possibly alongside Brexit and a dip in the economy. Is that not an added concern for businesses now that they have seen how onerous the proposals actually are?

[Mel Stride]

The hon. Lady may be aware that in the consultation we received the message from businesses that they broadly welcome these changes as we move into the digital age and do things more efficiently and effectively. However, businesses did have concerns, to which we have listened, about the timing and pace of the changes we originally proposed. The policy is robust, but the Government and I are determined to get the changes right and to make them at the right pace that suits those companies.

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[Ruth George]

Had the Treasury team shown the House some respect by publishing the Bill and the explanatory notes in time for us to read them and properly give the matter some scrutiny, Members from all parties, but particularly Conservative Members, might not have had to concentrate on old arguments about Labour from the election that have since been cleared up, and might instead have been able to look at the matter we are meant to be debating.

[John Redwood]

We think that this is a debate about the Finance Bill, and about how much money we raise and how we raise it. A very important question to consider when deciding how much money we raise is how much we need to spend. We are debating, in part, a very important promise that was made by the Opposition party. My electors—and many other Members’ electors—thought that that party would want to sustain it and come up with ideas about how to raise the odd £100 billion, but we now discover that that promise was not meant to be for any time other than the election and that it has now reneged on it. That is exactly what the people outside this House want to hear about. They want us to be topical and relevant to their lives. Very technical matters that deal with certain kinds of tax abuse are all very important to a limited number of people and in the interests of fairness, but what matters out there, and what should go back from this debate today, is this: does the principal party of opposition have any principles, or did it merely offer to cancel student debt before an election knowing full well that we cannot raise in this Finance Bill, or any other, £100 billion to deal with it?

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[Mr Harper]

I am very pleased that the measures in this Bill, which Opposition Front Benchers seem so unwilling to support, raise something like £1.6 billion—I am sure that the Financial Secretary will correct me if I am wrong—on top of the £1 billion we have raised from non-doms. Put together, that is £2.6 billion, which is more than the Labour party raised in all the time it was in government. If the hon. Lady compares Labour’s record in government with ours, she will see that we have been much more effective in raising taxes from non-doms to spend on our public services than her Government ever was.

[Ruth George]

How does the right hon. Gentleman think that the estimate of £1.6 billion to be raised by increased taxes on non-doms will be affected by the increase to two years in the time they have to transfer their funds into offshore trusts, thereby avoiding that increase in taxation? How will that impact on the figures?

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[Ruth George (High Peak) (Lab)]

It is a great pleasure to follow the two excellent maiden speeches of the hon. Member for Moray (Douglas Ross) and my hon. Friend the Member for Liverpool, Walton (Dan Carden). I will not try to expand on the points made so well by my hon. Friend the Member for Walthamstow (Stella Creasy). She gave us a masterclass in why Labour Members have no cause for shame on our economic record, whereas Government Members have many questions to answer. I look forward to hearing the replies to those questions in the Minister’s response.

As a relatively new Member of the House, I must echo the concern I expressed earlier today about how a Bill is not only of such weight and length, but has been published, together with the explanatory notes, only today. The right hon. Member for Wokingham (John Redwood) said that the Bill had been written at the time of the Budget back in March, but in that case why could it not have been published sooner? Anyone would think that the Government were keen to avoid scrutiny and to prevent Members from being able properly to debate what is in the Bill. That may be why so many speeches have been not about the Bill, but about the economic record of the Labour party.

I echo the points made by Members from both sides of the House who have set out the economic challenges of productivity that are so important to making sure we have an economy that is sustainable for the long term and works in the interests of all our people. The lack of certainty that certainly exists among businesses in my constituency and across the country is leading to a downturn in the level of investment that they are able to make. As my hon. Friend the Member for Walthamstow said, household incomes are dropping, and the higher taxes on lower-income households—VAT has an impact on households with very low incomes—means that they are now paying far more tax than they did in 2010. That has an impact on the incomes that, in lower-income households, are primarily spent in the UK, not overseas. Those are the people who support our economy and our local businesses on a day-to-day basis.

The same is true of public sector workers. We heard earlier about the way in which our public sector workers have been treated, and how the Government feel that they have not managed the economy well enough to be able to give our public sector workers the pay rise they deserve. That is a shame for millions of public sector workers, who work hard—day in, day out—to help all the people of this country.

[Louise Haigh (Sheffield, Heeley) (Lab)]

Does my hon. Friend share my concern that in today’s announcement by the Home Office of a 1% rise for the police with a 1% conciliatory bonus, it recommends that police forces pay for that out of their reserves, which are dwindling in the extreme, and does she agree that that would be fiscal irresponsibility in the extreme?

[Ruth George]

I absolutely agree. That is not the way to treat the public finances, and it is not the way to treat police forces, which have already had a 20% drop in their budgets since 2010. In my own area of Derbyshire, there are 341 fewer police officers, and the blue line is very thin indeed. The measures announced earlier today will do nothing to incentivise our hard-working police officers.

I was pleased to receive the assurances from the Financial Secretary earlier, with the guarantee that the £30,000 of tax-free money on termination of employment would continue and that there would be no taxation of discrimination compensation payments following a tribunal. However, Ministers need to recognise the ill feeling and hurt feelings that are often caused when an employee is made redundant. Those payments can be genuine and Ministers need to look again at that matter.

We should contrast the treatment of people on low incomes and public sector workers with the treatment of non-domiciles. The Government claim to be acting on non-doms, but the limit is only 15 out of the last 20 years for someone to be deemed a domicile. Even then, as I mentioned earlier, the Government have given them a loophole of two years to transfer their money to an offshore trust. That shows the attitude the Government take towards non-domiciles and tax avoidance by people who can afford to pay it. The Government claim that they will raise £1.6 billion from that measure, but they have no idea how much will be raised because they have created a loophole that I am sure non-doms and their advisers will be all too keen to take advantage of.

The Bill increases the scope of business investment relief

“to make it easier and more attractive to potential investors to bring their money in from overseas.”

That includes investments in commercial property. Although there has been a dip in commercial property prices in the City, that reflects market forces. That dip is important to encourage new firms to come into the City. We do not want those properties to be snapped up for tax relief purposes by non-doms who are simply seeking to make a quick buck. That will push up prices, making it harder and more expensive for companies seeking to trade in the UK to create real jobs and wealth in our country. Again, there is an extension of the time limit for those non-doms to avoid any clawback of their business investment relief when a company comes to the end of its profitability or to the end of an investment.

That is not a plan for investment in viable UK businesses; it is yet another loophole for the super-wealthy. It contrasts with the Government’s response to public sector workers and their entirely legitimate demands. I am afraid that that really shows whose side the Government are on.

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[Charlie Elphicke (Dover) (Con)]

I was fascinated by the discussion of student loans in the opening speeches, and it is pertinent that I return to that discussion in my opening remarks. Notwithstanding the Labour party’s desire to cover and obfuscate this matter in a haze of chaos and confusion, not to mention the odd car-crash interview by the shadow Secretary of State for Education, the hon. Member for Ashton-under-Lyne (Angela Rayner), from time to time—she is no longer in the Chamber, but she enjoys giving car-crash interviews, as does the shadow Secretary of State for Justice, the hon. Member for Leeds East (Richard Burgon)—the Labour party made a very clear pledge to write off £100 billion, and that sum is entirely unfunded.

[Ruth George]

On the question of car-crash interviews, the Prime Minister has no room for comment following the general election performance. The hon. Gentleman talks about trying to create confusion and obfuscation in manifestos, but why did the Conservative manifesto have no costings, unlike Labour’s manifesto, which was clearly costed and had no promise of a £100 billion debt write-off?

[Charlie Elphicke]

The hon. Lady makes a valiant attempt to gloss over a £100 billion black hole in her party’s costings, which would obviously have a massive impact on the public finances. That is a key concern, and it is central to what the Finance Bill is about.

[Charlie Elphicke]

My right hon. Friend makes a powerful point—she is completely correct. It is exactly my recollection that the people of Britain were sold a false prospectus by the Labour party.

[Ruth George]

rose—

[Charlie Elphicke]

I will let the hon. Lady have another go.

[Ruth George]

I will make it as clear as our manifesto made it during the election campaign. We said that there would be no university tuition fees from September 2017. We made no mention in the manifesto of students who have already gone to university or of writing off their debt. In fact my own children, who are in such a position, asked me about it, because it was not in the manifesto. Our manifesto was very clear, but there were absolutely no costings in the Conservative manifesto to give any clarity.

[Charlie Elphicke]

I hope the hon. Lady’s valiance and valour will be justly rewarded by the Leader of the Opposition in the coming days and weeks, because she makes great efforts on his behalf. Conservative Members recall the Leader of the Opposition’s words in the election campaign. It was very clear that he would write off that amount and that that would cost £100 billion, which would have caused massive problems. A Finance Bill would have been needed to raise massive amounts of tax had, heaven forfend, the Labour party prospered better in the election campaign than thankfully it did. Nevertheless, despite its claims to the contrary, Labour still lost the general election.

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[Charlie Elphicke]

My hon. Friend is absolutely right. The Leader of the Opposition’s words were, “I will sort it.” I will give way to the hon. Member for High Peak (Ruth George) for a third time, if she wants to make yet another valiant intervention, to explain what “I will sort it” means. I am sure she is able to explain that away, too. I think it is very clear.

[Ruth George]

rose—

[Mr Speaker]

Order. Before we proceed, I suggest that a little focus on the contents of the Finance Bill might be in order.

[Ruth George]

If the hon. Gentleman wants to decide that election pledges were made from any sort of wording that came from any politician or any party leader, I hope he will also be looking over pledges made by those on his side, which came with absolutely no costings whatsoever.

[Charlie Elphicke]

At least the third go was the best of the three, but we have covered that matter and, as you rightly and gently chide me, Mr Speaker, we need to move on to the contents of the Bill.

I will therefore move on to discuss non-doms and the background to the relevant clause. Some years ago, a pledge was made by a former Prime Minister, Tony Blair, to take action on the issue of non-doms, but it was one of these things that ended up in constant reviews. Every year there was going to be review and action was going to be taken, but every year no action whatsoever was taken against this ancient, 200-year-old tax loophole. That was because of the prawn cocktail circuit and the Labour Government wanting to snuggle up to their friends in the City and in big business, rather than securing the tax system for ordinary folk. We ended up with a situation in which the person cleaning an office could be paying more in tax than their boss. That was how it was under the last Labour Government.

As colleagues will recall, in 2007 we had a change of Prime Minister—Gordon Brown took over—and proposals were made by our former Chancellor, George Osborne, to end the non-domiciled tax loophole. The Labour party wants to tell us, and wants the House to believe, that this was all Labour’s idea, but it was not. We all remember that it was George Osborne who proposed ending the non-domiciled tax loophole. I remember that, because I was advising him when he was our shadow Chancellor, and I recall the Labour Government saying that this could not be done because of the US-UK tax treaty. They came up with all sorts of reasons why it could not be done. They said it could not be done because it would mean that nurses would not come to the UK, as they depended on their non-dom tax status. Labour came up with every “dog ate my homework” excuse as to why non-domiciled tax status should stay as it was. Colleagues will recall that after our party conference the opinion polls changed sharply because people loved the idea of the inheritance tax break that was to be funded by the excellent Conservative policy of ending this shameful loophole.

After that, partial action was taken on non-domicile tax. It is welcome that further action is being taken today, but we must bear in mind that Labour has never made the running on this issue. It has always been the Conservative party—the workers’ party that we are—on the side of hard-working people and the hard-working classes that has made the running, and forced action and reform, on this 200-year-old abuse of our tax system. Labour Members, now trying to make up ground, should hang their heads in shame at the fact that for so many years they took so little action on this matter.

Some other abuses of the tax system are touched on by this Bill, although not sufficiently and they ought to be touched on more. One of those relates to image rights. For too long, footballers have been able to say that money that they earn is not taxable income but is due to their image rights, and they are able to keep that money offshore. We should look at that, and I hope that the Government will consider introducing changes in Committee or on Report to make sure that image rights are properly captured as the disguised remuneration that they are. The Government are to be commended for taking a lot of action on disguised remuneration, but further action is needed on image rights to make sure that footballers and other sports stars have proper payments and that proper dues are paid to our tax system.

Finally, let me talk about the clauses in part 3 dealing with fulfilment houses. This sounds innocuous, but it is about overseas sellers who are failing to charge VAT on online sales. Let me explain briefly what happens. Say, for example, a small businessperson in a regular county such as Northamptonshire sells sunglasses and is doing really well. They are sourcing them from the far east and importing them to the UK, doing really great trade selling them on the internet through Amazon and eBay. They are registered as a trader and paying VAT—they are paying their dues. Suddenly, they find that those sunglasses are being sold on online platforms such as Amazon, eBay and Alibaba—these platforms are all the same—for 20% less. They think, “How can that be?”, because that is less than the price at which they are able to buy them and then do business. The answer is that the person they have been purchasing from has realised that they, too, can sell sunglasses on these online platforms and, because they are overseas, they can play a game and not account for VAT at all.

The measures in the Bill to try to stamp out such abuse, which costs the Exchequer between £1.5 billion and £2 billion a year—perhaps more; no one is quite certain—are welcome, but they do not go far enough. I would like Ministers to consider going further and, rather than a registration-type scheme, having a simple rule that says there is joint and several liability on the part of the online platform—let us say eBay—such that the platform itself has to account for VAT if it is not paid by the seller. As sure as eggs is eggs, the online platform will pretty soon ensure that VAT is paid and accounted for if it is on the hook itself if the VAT is not paid. I hope Ministers will consider that, be firm, and ensure that we are not lobbied by large multinationals such as eBay, which do not exactly pay a lot of tax in this country themselves because they claim to be elsewhere.

The Government should ensure that there is joint and several liability to make sure that the money is collected, because £2 billion of tax revenue per year is at stake. Goodness knows, we always hear Treasury Ministers, Government officials and the Treasury as a whole complaining that they find it so hard to come up with ideas as to how to raise taxes; well, here is one right before us. I urge Ministers to give full consideration to the possibility of going that bit further, tightening up the legislation and making sure that the tax is paid. It is important not only from the point of view of revenue, but from the point of view of ensuring there is a level, competitive playing field, so that small businesses in this country can compete fairly with overseas enterprises and the tax system is not tilted against the person who is working hard to make a living in this country.

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[Jack Brereton]

This is about keeping more of the money that people earn in their pockets, rather than it going into taxes.

It is a huge success that there are now more families in which parents are working, ensuring that our children and future generations have examples to look up to. It is a shocking indictment of Labour’s failures in government that so many children were living in households where no one went to work. We are doing more to support working families. We are increasing the amount of free childcare to 30 hours per week for three and four-year-olds, as well as introducing 15 hours per week for disadvantaged two-year-olds. The success we have seen is due to Conservative Governments’ financial policies. That is no more evident than from the enormous reductions in unemployment in my constituency.

[Ruth George]

As the hon. Gentleman is so concerned about working poverty and children in working households in poverty, what does he think of the Government’s proposals for universal credit, which will cut over £1,500 a year from 2.1 million working households?