Finance (No. 2) Bill

Sandy Martin Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Sandy Martin (Ipswich) (Lab)]

Will the hon. Gentleman explain how we can know there is a level playing field and that such levies are fair if there is not complete transparency?

[Stephen Kerr]

I was about to describe the level playing field as I see it. The Bill will remove any disincentive there might have been for banks to base themselves in the UK, which is important. I remind all Members of the reputation that our country and particularly the City has. I think we would all agree that the City is the financial capital of the world.

With respect to the bank levy, the banks’ contribution must go beyond the paying of taxes, as outlined in the Bill. Given the banking sector’s behaviour—I referred to the comments by the hon. Member for Bootle about saints and sinners earlier, but I am generalising now—the banking industry does have a responsibility to make a fairer contribution to society, which is what the measures taken by the Government since 2010 and 2015 have made happen.

Let me mention in passing the Financial Conduct Authority’s report on the Royal Bank of Scotland and its treatment of small and medium-sized business customers.

--- Later in debate ---

[James Cartlidge]

It is a pleasure, as always, to follow the hon. Member for Aberdeen North (Kirsty Blackman). Interestingly, she mentioned inclusive growth, to which I will return shortly. It is also a pleasure to follow my hon. Friend the Member for Stirling (Stephen Kerr), whose speech was a real tour de force. The hon. Member for Aberdeen North criticised him for not talking about the future and dwelling on the past. Actually, he was talking about the present—the challenges facing his constituency today, in the here and now. The bank levy is incredibly important because it is all about the future prosperity of those constituents, so I very much welcome my hon. Friend’s comments.

Interestingly, the Opposition’s new clause 3 gives us a good way of looking at the bank levy as it stands. Subsection (2) of new clause 3, which would affect schedule 9—the schedule that contains the details about the bank levy—states:

“No later than 31 October 2020, the Chancellor of the Exchequer shall lay before the House of Commons an account of the effects of the proposed changes in Part 1 of Schedule 9—(a) on the public revenue, (b) in reflecting risks to the financial system and the wider UK economy arising from the banking sector, and (c) in encouraging banks to move away from riskier funding models.”

I accept that those three points are incredibly germane. In fact, let us not wait until 31 October 2020. Let us stand here now and think about how a review would fit under Labour’s very own new clause.

Look at subsection (2)(a) of new clause 3, which is about the impact “on the public revenue”. What do we see? Well, the banking sector paid 58% more tax in 2016-17 than in 2009-10. That is under a Conservative Government. The average amount paid by the banks every year since 2010 has been 13% higher than under Labour. In 2016, the Government introduced an additional tax on banks—the 8% corporation tax surcharge, which we have been discussing—which will raise nearly £9 billion by 2022.

[Sandy Martin]

rose—

[James Cartlidge]

I give way to my Suffolk colleague.

[Sandy Martin]

In 2009-10, the banks were recovering from the worst position they had been in since the 1930s. In many cases, they went under and needed Government support to get out. Does the hon. Gentleman accept that it would therefore have been extraordinary if the banks were not making more profit in 2016-17 than they were in 2009-10, that that is the reason why there is more take from the bank levy than there was in 2009-10, and that it is not simply because the Conservatives have reduced the amount of it?

[James Cartlidge]

I consider the hon. Gentleman to be a friend because we work together in Suffolk as MPs; we are always happy to do that. I will be coming to the issue of the crash and the way in which the banks went back to the 1930s, as he puts it, because I experienced that myself.

--- Later in debate ---

[James Cartlidge]

I am happy to have that debate. I will tell the hon. Gentleman what I said. I started a mortgage broking company in 2004—we have expanded since then, and I should declare that I still have interests in that business. I wrote an article for The Guardian in 2004 about the next general election. [Interruption.] Just a closet Marxist. At the time, the big issue being talked about was public services, but I said—this was in 2004—that the big risk we were not talking about was consumer debt. I knew that because, having just started a business in that area, I was stunned by what was happening in mortgage finance, which, of course, was the type of borrowing that laid the seeds for our destruction in 2008.

[Sandy Martin]

May I tell the hon. Gentleman how prescient he was in 2004? He was clearly right. Does he have the same concern about the rising level of private debt now?

[James Cartlidge]

The hon. Gentleman makes a very good point, and I will come back to that once I have set out the context of my remarks. The key point is this: there are some concerns, but in a growing economy, consumer debt will tend to rise, so we have to separate out that which is perfectly acceptable and that which may give cause for concern. I will come back to that point, but it is very fair.

In respect of proposed subsection (2)(b) of the Labour new clause, which talks about

“reflecting risks to the financial system”,

we conclude by reminding ourselves that it was the very explosion of the financial system that created the need for this bank levy. As I say, we have to debate the past—why we are here in the first place and where this all came from—and the fact that we are on a journey. The reason this tax is being tapered off is that the banking sector is once again becoming profitable, and we are allowing it to flourish again as a free enterprise-based banking system, but, of course, in the context of very strict regulation and a prudential regime.

Let me go back to the point about personal experience. It amazes me when members of the Labour party stand up and, like Pontius Pilate, wash their hands of the huge impact of that crash. At the time, many of us approached the regulator—the Financial Services Authority—which Gordon Brown launched early in the first Parliament after Labour won in 1997. He claimed that that would avoid future financial crises. We must remember that and have accountability.

--- Later in debate ---

[Robert Courts]

I am very grateful to my right hon. Friend for making that point. His constituency is very similar to mine in that respect. I welcome this measure and I anticipate that my constituents will as well.

Those brief comments are the only ones I wish to make. I very much welcome this measure because it is in the interests of west Oxfordshire, in particular Brize Norton. It helps to bring forward the offer to which my right hon. Friend refers. We have to accept that there is a change in expectation on the part of many members of the armed forces and this is welcome.

[Sandy Martin]

I am concerned about the lack of impact that financial incentives for first-time buyers appear to be having on encouraging housebuilding. The recent pay-offs for Persimmon Homes executives are surely good evidence that a substantial proportion, if not all, of the Government’s money is going into exceptional profits for private housebuilders, rather than genuinely making homes more affordable. We need to know that any money or tax incentives that the Government put into housing will genuinely help people to achieve the housing they need.

The cost of housing for residents is not just about the building itself, but the costs of running the building. New houses are still being built which make short-term savings for the builders at the cost of a long-term expense for their owners or tenants, and also at a long-term cost to the environment. Ipswich Borough Council had a substantial plan to install solar PV panels on all suitable roofs on its substantial council housing estate. It was all set to go in 2013 when the Government moved the goalposts and blew a hole in the business case. The Government seem to be willing to promise vast sums as guarantees for new nuclear powers stations, but they are not willing to use the extensive potential tax powers at their disposal either to incentivise housebuilders to install photovoltaics in original buildings or to adequately incentivise owners to install them on existing buildings.

Increasing the number of solar panels on the roofs of this country would be one of the most cost-effective ways of generating the electricity we need. It would be more beneficial to the residents of those buildings. It would take effect far sooner than waiting for the construction of nuclear power stations and it would predominantly employ working people and small businesses in this country.

Many of us were hoping that the Government would have found further substantial incentives for solar panels in the Bill. I can only hope that a review of the operation of housing finances and an equality impact assessment of the way the Bill will affect low-paid people might encourage the Government to look again at how they can make housing less expensive for those who live in it.

[Alison McGovern]

I want to talk about the cut to stamp duty for first-time buyers, but before I do so I would like to take the opportunity to briefly remind Ministers on the Treasury Bench that in March my constituency suffered a terrible disaster: the gas explosion in New Ferry. The Department for Communities and Local Government currently has Wirral Council’s plan for the rebuild. I trust that, in the context of discussing new housing, Treasury Ministers will look kindly on the plan should it come before them.

I want to argue against the cut to stamp duty and for the Opposition amendment, which calls for a review of the policy, and a review of the place of first-time buyers in the housing market and the supply of housing. My argument against this specific policy is, first, that it looks set to fail against the targets the Government have set themselves; and secondly, that in the current economic context it is simply the wrong policy priority. Perhaps we might consider this policy if we were experiencing the same growth as other countries in Europe or we had dealt with our budget deficit, but even if it was not set to work against what the Government have tried to achieve, it would still be the wrong policy because it is not the country’s priority.

I imagine this policy coming before Treasury Ministers during the Budget preparations and their thinking to themselves, “Well, this might be attractive on the face of it, but ought we not to ask our bevvy of economists here in the Treasury what the likely impact might be?” The hon. Member for Spelthorne (Kwasi Kwarteng) just rolled his eyes at me, and he did so because he knows as well as I do—we have debated it often enough—that the advice from the OBR was entirely predictable.

It was entirely predictable that anyone looking at the policy in the current economic climate would say that we have clear, credible evidence from previous changes to stamp duty that the value of this tax change will accrue not to first-time buyers but to those who already own properties. That is what the OBR says, and it is what advice from the specialists in the Treasury would have told Ministers. I do not know—I have no evidence of this—but I have confidence in the Government Economic Service and I think they would have told Ministers that.

Furthermore, it is very unlikely that the Treasury does not have the full analysis requested by my right hon. Friend the Member for Warley (John Spellar). All Members across the House know in their own minds whether their constituencies will benefit from this, and all members of the Cabinet know whether constituents in their constituencies—which are largely in the south-east of England—will benefit. Those of us who have watched house prices in our constituencies barely grow at all in the past 10 years will know that our constituents will benefit very little from this very expensive tax change.