Budget Resolutions

Debate between Sammy Wilson and George Kerevan

Wednesday 8th March 2017 Commons Chamber

[Sammy Wilson]

There are real dangers. Consumer spending is a huge component of GDP, and of course we need buoyant consumer spending, which is one reason why the constant talking down of the economy is not good for future economic growth. At the same time, we have to recognise that focused public investment in the economy is, first, affordable and, secondly, desirable, yet the Chancellor seems to be resistant to undertaking such investment.

[George Kerevan]

On that point, does the hon. Gentleman agree that, rather than the Chancellor keeping his investment war chest for another two years, it would be better to spend the money now on infrastructure and offset anything that might come in future?

[Sammy Wilson]

There is a strong case for saying that, especially given the way in which Government fixed capital spending is due to fall over the next year. Of course, as interest rates are low and are predicted to go up, now is the time to borrow and spend.

My second issue has been raised by a number of Members, but it needs to be restated, because it is so important to constituencies like mine, that there will be an increase in tax, through national insurance contributions, for the self-employed. I serve a constituency that is about half rural. Many of my constituents depend on self-employment for work. We have lost a number of jobs through big manufacturing closures over the past couple of years, and many of the people who lost their job have moved into self-employment. Local enterprise agencies in my constituency, according to figures they recently gave me, have encouraged some 1,400 people into self-employment through training. Many of those people start by taking a risk with their redundancy money. They work long hours for not a great deal of money, and they do not have the benefits and security that people in full-time employment have.

The Government say, “The system has been abused, so we have to level up the tax paid.” We do not do that in other areas of taxation. The BBC, for example, gets its top presenters to go into self-employment to avoid taxation. If that is an abuse, stop it, but do not impose additional costs on people who help to bring up the United Kingdom’s employment figures and bring down the unemployment figures by taking risks and going into self-employment. The Chancellor tried to downplay the amount of money involved, but many self-employed people are struggling at the margins because they are trying to get businesses up and running. The difference in taxation will be significant for them. The Government have got that one wrong. Hopefully, the issue will not come back to bite them; it has not been very well explained.

The last issue I shall raise is housing. One way to increase employment and, of course, productivity in the economy is by having a good housing stock that enables people to move around easily. However, if we look at the figures, we find that housing investment is due to fall by 50% this year and stay at a low level. The statistics attached to the Budget indicate that house prices will go up by more than twice the rate of inflation as a result. That will make the average house price around nine times the average salary, which will mean that many young people will never have the chance to own their own house. At the same time, the restrictions on buy to let mean there will be increased costs for the rental market. It is disappointing that the Chancellor did not make any proposals on how he will deal with the housing issue, because it is as much part of making the economy fit for the future as it is part of giving people the opportunity to have a decent home.

Budget Resolutions and Economic Situation

Debate between Sammy Wilson and George Kerevan

Tuesday 22nd March 2016 Commons Chamber

[George Kerevan]

I utterly accept that point. This is at the core of what I am saying. The kind of business rate cuts for small companies that the Chancellor has belatedly introduced in this Budget have long been available in Scotland. What has happened to productivity in Scotland? Despite the Scottish Government’s limited drivers for economic growth, productivity in Scotland has gone up 4.4% since the recession. That is more than four times what this Chancellor has managed to deliver. In Scotland, our limited tax powers have forced us to concentrate on the supply side, and my bill of fare against the Chancellor is that he does not do that. Yes, there are lots of bits and pieces in the Budget that I welcome—particularly the move to clamp down on transfer pricing in multinational companies—but in the end, there is no strategy. The Chancellor has no strategy apart from his rendezvous with 2020 and trying to run a budget surplus.

[Sammy Wilson]

Does the hon. Gentleman accept that he is perhaps being a bit harsh? There are many supply-side measures in this Budget, including improved investment in infrastructure and the digital economy and cuts in corporation tax and business rates, all of which should help investment and therefore increase productivity.

[George Kerevan]

Indeed, and I welcome all the supply-side measures, but—[Interruption.] Wait for it! We have had five Budgets in the past 15 months. Why did those measures not appear in the last four of them? In fact, if we count today as well as last week, we have had six Budgets in that time. Why did those measures not appear before? This is not about the Treasury officials, who are bright men and women; this is about the fact that there is no strategy apart from trying to run a budget surplus in a particular year, because the Chancellor knows that if he does not deliver in 2020, what is left of his reputation after this week will be in shreds.

Bank of England and Financial Services Bill [Lords]

Debate between Sammy Wilson and George Kerevan

Monday 1st February 2016 Commons Chamber

[George Kerevan (East Lothian) (SNP)]

I will try to do so, Madam Deputy Speaker.

It is always a great pleasure to follow the right hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee. Ninety-nine times out of 100, I would bow to his wise words. Indeed, his repository of knowledge often leads me to think that he should be one of the regulators, rather than sitting on the Back Benches in Parliament. However, in this instance, it pains me that I cannot follow him or the hon. Member for Wyre Forest (Mark Garnier).

I will try to get the right hon. Member for Chichester to understand why those of us on the Opposition Benches cannot accept the Bill as it stands. Fundamentally, it is about the shift away from the reverse burden of proof. Given the backlog of distrust on the banking system and given that the reverse burden of proof was put into legislation and is just about to come into operation in March, to shift away from it now will only make the public less likely to accept what is going on and to make them fear that the banks are being let off the hook yet again. I would say to him and the Minister that it would have been much better to let the legislation run for a few years to see how it worked in practice.

The right hon. Member for Chichester gave us a very good reason for saying that, after so much legislation, it was perhaps time to pause while we made sure that it works in practice. However, his argument can be turned against him, because we are changing legislation at the last moment, after we passed it two years ago, but not implemented it. We should do that: we should see how the reverse burden of proof works. That is why I support the hon. Member for Leeds East (Richard Burgon) in opposing the Bill as it stands.

[Sammy Wilson]

Does the hon. Gentleman accept that one piece of evidence about why the reverse burden of proof would have been an effective brake on the excesses of the banks is the fact that bankers themselves are not keen on it? They knew that it would be an effective tool and were fearful of it.

[George Kerevan]

I am trying to avoid pointing the finger and drawing inferences. What I will do, in agreeing with the hon. Gentleman, is to quote the right hon. Member for Chichester. I hope he will forgive me for doing so. When the LIBOR scandal emerged in 2014, after the Banking Commission, he said:

“As time passes, the pressure for reform will weaken”—

it is, is it not?—

“The old system failed disastrously…Maintaining or resuscitating parts of the failed system, whether at the behest of bank lobbying or for the convenience of regulators, must not be permitted to happen.”

I think we are getting both: we are getting bank lobbying, but we are also getting the regulators wanting a quiet time.

The hon. Member for Wyre Forest made a reasonable point. He said that by extending the senior managers and certification regime, the Bill will place in law a very detailed duty of responsibility on senior bankers to take all reasonable steps to prevent wrongdoing. However, at the same time, it will place the onus on the regulators to prove that that responsibility was discharged. Suddenly, it gives the regulators a job—

Finance Bill

Debate between Sammy Wilson and George Kerevan

Monday 26th October 2015 Commons Chamber

[Sammy Wilson]

I accept that the provisions would not be retrospective. Nevertheless, older cars tend to more polluting and would therefore, under the new clause, carry the higher rates of duty.

The second argument that has been made is about the sale of low-emission cars, whereby it is said that the duty that will be imposed, which is a small percentage of the cost of a new car, will distort the market or dissuade people from purchasing one. When people are purchasing a new car, whether it is a hybrid car or a low-polluting car, the last thing on their minds when deciding to lay out £20,000, £25,000 or £30,000 will be whether they will pay a couple of hundred pounds in vehicle excise duty. It is argued that this will hurt the car market and the emerging market for more energy-efficient cars, but the price elasticity of such cars, or their running cost, is unlikely to impact on the demand for them.

I think the Government have got the balance right on this one. Yes, we do have to consider the detrimental impact of emissions that come from cars, and there should be a tax on that, but we must also recognise that a vehicle is very important for most families across the United Kingdom. As lower-income families tend to have older cars, a regime that ramps up tax payments according to the car’s age and emissions would be unfair. The proposal in the Bill is therefore acceptable.

I have a question that the Minister did not give a clear answer to, and I hope he will do so when he sums up. On the road fund that is being proposed as a result of the money that is collected, given that infrastructure developments are devolved issues in Northern Ireland, Scotland and Wales, it will be important to know how exactly that fund will be allocated. Will there be separate accounting for the tax that is collected in each of the areas? Will it be done on the basis of Barnett consequentials or will some other regime be put in place? It is important that we know that, because if this is to be one of the ways in which infrastructure developments are to be financed in future, there needs to be certainty for devolved Administrations as to what money is likely to be coming their way and how it will be calculated.

[George Kerevan (East Lothian) (SNP)]

I want to make a brief contribution on new clause 3. The Minister, elegantly as he does, fobbed us off by saying, “We’re having a consultation and so on, but meanwhile we’ll press on regardless.” However, there is still a major issue regarding a potential tax loophole that has not been closed.

I accept that fund managers are remunerated on two different and distinct levels: they are paid for the work they do as investment managers and also receive a reward for hazarding their own capital. I also accept that there is a gain in having fund managers hazard some of their own capital, perhaps more so than they do at the moment. Unfortunately, though, if we charge very different marginal rates on the income component and on the hazarding their own money component, we will create the capacity for a loophole in paying the lower tax on the capital gain and less on the income.

It does not matter what short-term changes the Minister makes to try to prevent existing ways in which hedge funds allow the personal investment component of the investment to be organised, because people will just think up new ones. We have to close the loophole at source. The obvious way to do that would be to go back to a previous situation in which income tax and capital gains tax were charged at the same marginal rate.

Unfortunately, for the past several decades we have proceeded down a road of constantly cutting taxes on capital. I think there was a case in the 1990s for cutting marginal rates of tax on capital, because it was a difficult economic period and we had to encourage investment, but the Government have transformed that into an ideological demand that we always go on cutting taxes. Indeed, one of the core philosophies of the Finance Bill is to cut corporation tax even more, despite the fact that, on both a UK and a global level, we have pyramided up corporate surpluses, which are not being used. The current problem is not to find more loose capital, but to find fiscal incentives to make the owners of capital invest it.

The inherent philosophical problem with which the Government present us in the Bill is the imbalance created when marginal rates of taxation on capital are pushed lower and lower while significant taxes on labour are not reduced effectively and significantly. Our new clause 3 is specifically designed to force the Government to respond to the philosophical principle that the loophole should not be created in the first place. I do not think that the Minister has answered that effectively, which is why we will press new clause 3 to a vote.