Finance (No. 3) Bill

Ruth George Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Leo Docherty]

I am wholehearted in my support for the changes to entrepreneurs’ relief. I was in my constituency of Aldershot on Friday, visiting one of the many small and medium-sized enterprises that are the backbone of our economy there. Gemini Tec is one of the leading manufacturers of short circuit boards in the country, and that business is successful because of the entrepreneurs who have been driving it forward for the past 40 years. They do not ask any special favours from the Government. Indeed, they want the Government to keep out of their way and let them thrive. However, if the Government can in some way create an ecosystem and an atmosphere, through measures such as entrepreneurs’ relief, that is wholeheartedly to be commended. We have a tradition of tremendous innovation and creativity—not least in Aldershot, north Hampshire, the Blackwater Valley and Farnborough—and this drives a lot of the job creation that we are now seeing in this country. As I have said, this has led to the lowest rates of unemployment since 1975, the year before I was born.

[Ruth George (High Peak) (Lab)]

Does the hon. Gentleman believe that money to support entrepreneurs is being well spent through the Government giving an average of £450,000 in entrepreneurs’ relief each to just 6,000 entrepreneurs? Does he acknowledge that the Government will take £1.5 billion off the 300,000 small businesses that will lose out through the universal credit minimum income floor, which the Government are driving through?

[Leo Docherty]

This is not a debate on universal credit. This is actually about job creation. That is the more important point when it comes to entrepreneurs’ relief.

--- Later in debate ---

[Jack Brereton]

The hon. Gentleman will have seen the figures that show that debt is now coming down to lower levels than ever before, and we have seen the deficit back under control after the failings of the previous Labour Government who got us into an horrendous mess that working families in this country ended up paying for.

We are now seeing the numbers of low-paid workers at a record low, and we are seeing low taxpayers now paying record low levels of tax. The astonishing turnaround achieved in making work pay, not least through tax measures like those before us today, means that the Office for Budget Responsibility has now revised up its assumptions for the trend labour market participation rates and revised down its estimate of the equilibrium rate of employment. As the Treasury rightly highlights in the Red Book paragraph 1.15, both of these revisions raise the level of potential output, which is good news for the sustainability of the labour market boom which has undoubtedly been the greatest achievement of the policies pursued by this Conservative Government.

[Ruth George]

Would the hon. Gentleman not agree with the Institute for Fiscal Studies that the cumulative impact of personal tax and benefit reform since 2015 has been that the bottom two thirds of society is far worse off and that the only people who are better off under this Government’s policies are the top third?

[Jack Brereton]

I totally disagree. We have seen increases in the national living wage and reduced tax in this Budget, and further measures in this Budget to support UC.

--- Later in debate ---

[Alex Burghart]

My hon. Friend is too modest; I know not only that it was an excellent reform brought about under a Conservative Administration, where we went from the LEGO building-block approach to stamp duty that he described to something much smoother and more pristine, but that he was working in the Treasury at the time and was instrumental in bringing about that excellent reform. It has made stamp duty not only fairer, but much more sensible for anyone seeking to buy a property.

Let me turn to business, clause 38 and the necessary additional relief being given to entrepreneurs. As a number of hon. Members have made clear, these are people who are looking to start businesses, so as to employ people, and to create an economic dynamism in their communities and their areas. I go back to remarks made by my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) about how he has seen employment and business growth in his area. I was having a conversation earlier with another hon. Friend from the north-east, where the Conservatives again have seats in Parliament—that is no accident. We have seats in Parliament in the north-east because of the record levels of jobs growth and business growth that have happened in those constituencies since 2010. Voters understand success and successful policies when they see them, which is why people such as my hon. Friend are capable of winning seats such as Stoke-on-Trent South. This happened because of the enormous benefits of Conservative policy since 2010.

A measure in the Budget that has meant a great deal to my area has been the substantial improvement in business rates. As I say, Brentwood and Ongar is a hive of Thatcherite prosperity. It has a huge number of small, medium-sized and large enterprises within its boundaries, most of which have been built by the sweat of local people, and are the product of good, old-fashioned British graft and nous. People in my area are proud of their high streets and want to see them do well. They want their local retail areas to be bustling and thriving. These measures are an enormous shot in the arm for those smaller businesses, which add not only vibrancy and character, but employment and economic opportunity to our local areas. I cannot praise them highly enough.

In conclusion, this is a Budget to help the people who drive the economy. It is a Budget for the businesses that help drive the economy. It offers dynamism to the economy. It will help deliver the growth we need to grow our revenues and our public services, and offer a future for our children which has jobs and is not shackled by an enormous debt left by the previous Government.

[Ruth George]

With such disagreement on statistics between hon. Members on both sides of the House, it would be helpful to refer to an impartial observer from the United Nations who has spent the past two weeks going across the United Kingdom and looking at our levels of poverty and the associated political choices. It is a damning indictment of not just our country but our Government that he concluded:

“The experience of the United Kingdom, especially since 2010, underscores the conclusion that poverty is a political choice. Austerity could easily have spared the poor, if the political will had existed to do so. Resources were available to the Treasury at the last budget that could have transformed the situation of millions of people living in poverty, but the political choice was made to fund tax cuts for the wealthy instead.”

I find that absolutely shocking in this day and age, given that there is so much evidence on this, not just from the likes of the Institute for Fiscal Studies, but in every region and on every street in our country. I live in a relatively affluent constituency, but I have had thousands of constituents come to me suffering from poverty.

[Lyn Brown]

I am grateful to my hon. Friend for mentioning this, because the rapporteur came to my constituency last week and I sat through a harrowing three hours listening to the testimonies of people who are really in need and suffering. So I am genuinely grateful to her for raising this issue now.

[Ruth George]

I find it hard to believe that any of us, as Members of Parliament who are seen to be compassionate and caring people who represent our constituents, do not have struggling constituents coming to them. A single parent came to me who has had to give up his job because his child is disabled. He has found that he is going to lose the disability element of child tax credit and will be £1,500 a year worse off. He said, “This Government says that it will protect the most vulnerable in society. If they cannot protect disabled children, who is more vulnerable? Who are these people that they claim to be protecting?” Answers are there none.

As I said, the Institute for Fiscal Studies has shown that since 2015, the overall impact of tax and benefit reforms has hit the poorest two thirds of the population. They are the ones who have lost out—the poorest have lost out by a shocking 10% of their income. The only section of society to have gained is the richest third. The only difference the Budget will make to the incomes of the poorest 10% is that instead of their losing 10% of their income, they will now lose 9.8%. I am sorry, but when we are the fifth richest economy, that is just not good enough.

The previous speaker, the hon. Member for Brentwood and Ongar (Alex Burghart), praised the previous Secretary of State for Work and Pensions, the right hon. Member for Tatton (Ms McVey). Admittedly, she argued for Budget redistribution to people on universal credit, but the increase in the work allowance gives £630 a year to 2.4 million families. That will not make anyone better off: 3.2 million families were due to lose an average of £2,500 a year; now, those families will lose an average of £2,100 a year. The Budget will not make those people better off; it will make them very slightly less worse off.

When 14 million people—a fifth of the population—are in poverty, what do the Government have to say to them? What do they have to say to the 4 million people who live 50% below the poverty line, or to the 1.5 million who are destitute? Are they proud of those figures? Are they proud to meet people like my constituent Billy, who is doing his best? He suffers from a disability and has taken on some self-employed work, with tax credits. He has done his very best and recently took on an afternoon shift with Royal Mail, delivering the Christmas post. He has just found out that when that job ends after Christmas, he will be put on to universal credit. Because of the minimum income floor, he will have absolutely no income whatsoever to see him through until the months when he can work again as an entertainer. What do the Government have to say to people like Billy? How is he supposed to get by? He has sought to do his best and to do what the Government have asked people to do—go out and get a job—but people like him are punished for it.

When 8 million working people are in poverty, that is not a benefit to them. Two thirds of children living in poverty are in working households. Does the hon. Member for Brentwood and Ongar think that their parents’ employment is a gift? These children are still in poverty. Employment is a benefit only where it can lift a household and children out of poverty.

[Alex Burghart]

I fully respect the hon. Lady’s position on welfare—I often think it is a gift to the Government that she does not serve on the Front Bench—but it is slightly absurd to suggest that people are not better off in work. They are better off in work. We would all like people to earn more money in work, but to suggest, as Opposition Members often do, that work is no benefit is ludicrous. Work does help. It is a route out of poverty. The first stage of getting into work is not the conclusion of the journey.

[Ruth George]

I am afraid that for constituents like mine, about whom I was speaking earlier, work is not a route out of poverty. For them, trying a temporary job and moving into work is a fast route on to universal credit and into absolute poverty.

In spite of all the promises made to the House when cuts to universal credit were forced through after the 2015 Budget, not everyone will be protected as they move from legacy benefits to universal credit. Not even half the people who transfer from legacy benefits to universal credit will be protected from the average £2,100-worth of cuts. Managed migration has been delayed and reduced, and the criteria for transferring people from legacy benefits to universal credit have been widened so much that 4 million people will move on to universal credit naturally, with no protection whatsoever. Fewer than 3 million people will move over under managed migration. That is contrary to the promises that were made to the House when those cuts were brought in.

Some absolute anomalies in universal credit will seriously increase the amount of child poverty, which is why at the very least the Government have a duty to measure the impact of the provisions in their Budget. Some 3.2 million children are due to be affected by the two-child limit, and 1.4 million of those children live in families with four children or more, who will lose an average of £7,000 a year. That is a huge amount of money, which no family with children can afford to lose, much less the poorest and those households bringing up children on such low incomes. According to the Office for Budget Responsibility, £3.2 billion will be taken off people with disabilities by 2023.

What about the self-employed? The Government claim to support entrepreneurship, but their entrepreneurs’ relief enables 6,000 people making profits of more than £1 million on the sale of their business to benefit by an average of almost half a million pounds each. That costs this country and its economy £2.7 billion. People starting out in self-employment, on low earnings, such as my constituent Billy, are among the 430,000 who will lose an average of £3,000 a year, mostly because of the minimum income floor.

[Neil O’Brien]

Is the hon. Lady calling for entrepreneurs’ relief to be completely scrapped?

[Ruth George]

I believe that the relief should be reviewed, which is what new clause 3 would require. We could then see its impact on the most well off and on the poorest, and in particular its impact among those who aspire to be entrepreneurs and who aspire to bring themselves out of—

[Neil O’Brien]

So you don’t know.

[Ruth George]

That is what the new clause would require. If the Government wanted us to abolish entrepreneurs’ relief and had given us a Finance Bill that we could actually amend, and if they had the courage to put their policies to votes on the Floor of the House and to give us any alternative, other than to amend the Bill to require reviews, we would gladly do so. Perhaps the Minister could indicate from his sedentary position whether he is prepared to allow the Committee to make such an amendment to abolish entrepreneurs’ relief.

[The Financial Secretary to the Treasury (Mel Stride)]

rose—

[Mel Stride]

I was just going to say that, as the hon. Lady will know, all amendments need to be in scope and that that is ultimately a decision for Mr Speaker. I am sure that he has taken the appropriate decisions in this case—[Interruption.]

[Ruth George]

My hon. Friend the Member for West Ham (Lyn Brown) has just said from a sedentary position that the Government have set the parameters for the scope of amendments in this Bill. The same happened with the previous two Finance Bills that they brought to the House. They have not allowed any substantive amendments to the Bill. They will not allow their policies to be tested on the Floor of the House, because those policies have been found wanting in terms of redistribution of wealth from the best off in our society to the poorest. It is actually the poorest who pay 42% of their income, while the richest pay just 34%. How is that fair?

This Budget has done nothing to support the poorest people. After raising VAT to 20%, the Government have doubled insurance tax and are raising council tax across the country by 5% a year, hitting the poorest in our society and hitting those who can afford it the least. They are also hitting those who are homeowners with universal credit. We have heard that the Government aspire to support homeowners, so why is it that, under universal credit, 74% of people who lose out are actually homeowners? They have seen their clawback of income nearly doubling from 39% under the Labour Government to 63% under this Government, and it is going up to 75% for taxpayers.

If the Government disagree with our analysis that this Budget is not helping people in poverty and that it is actually entrenching the serious divides and the serious destitution and poverty within our society, they should prove their case by supporting our amendment for an equalities impact assessment. But they have form on this. I have been calling for an equalities impact assessment of universal credit changes since 2015 and since I first came to this House, and it has been refused. They are now refusing to hold one in this Budget. Anyone would think that this Government had something to hide. I know from people around my constituency, which is relatively affluent, that it is not just the poorest people who are appalled at the level of food bank use, the level of homelessness and the level of evictions that are being inflicted on the poorest people in our society. People across my constituency are writing to me, imploring me to stand up for the poorest, because otherwise we are poorer as a society.

[Rachel Maclean]

It is a pleasure to follow the hon. Member for High Peak (Ruth George). I rise to speak in favour of the Bill and against the Opposition amendments. I will start by correcting a comment that I made earlier. Just to correct the record, let me say that I incorrectly said—I apologise to the House—that the shadow Chancellor was on record saying that the fact that Labour’s numbers did not add up was largely irrelevant. I offer my apologies as it was not the shadow Chancellor who said that, but a Labour party adviser who wrote it in a book that was endorsed by the shadow Chancellor.