Finance Bill

Sarah Newton Excerpts

Tuesday 3rd July 2012 Commons Chamber

[Catherine McKinnell]

My hon. Friend makes a valid point. Since June 2011 we have lost more than 100,000 public sector jobs, which means that there have been redundancies at a rate of one a minute since the Government took office. Yet the private sector, which the Prime Minister anticipated would flood in to create jobs, has simply not delivered. It has created only half that number of jobs, leaving the other half of those people on the dole and claiming benefits. That is pushing Government borrowing up, not down.

The measures that we suggest would boost the economy and people’s spending power and ensure that we are not saddled with taxes that no one can afford. We want to see the economy moving into growth again.

[Sarah Newton (Truro and Falmouth) (Con)]

When I came into the Chamber to listen to the opening part of this debate, I did not anticipate speaking. However, I am very pleased to have caught your eye, Mr Deputy Speaker, because I felt utterly compelled to join in, notwithstanding my current incapacity. It has been an illuminating debate.

I listened to the shadow Minister’s speech and the interventions of her colleagues, and I find it staggering that they are not going to listen to the submissions of my constituents on the pasty tax, caravans or fundraising for places of worship, on which many people work so hard. Oh no—their opinions do not count for anything to the Opposition. They are not going to listen to all the representations that have led to the Government’s sensible proposals. The listening exercise to improve and amend the Budget has led to proposals that respond directly to all the concerns expressed by my constituents, and I dare say by the constituents of a great number of colleagues.

[Julie Hilling]

I am really very confused. My constituents have been saying exactly the same thing, which is why Labour Members have been arguing against this dreadful Budget in the Chamber, the Public Bill Committee and wherever we can. We have said that the Government should not put VAT on pasties, caravans, hairdressers’ chairs and so on. I agree with the hon. Lady about that. Thank heavens, the Government listened to us a bit in the end, but sadly not enough.

[Sarah Newton]

It is surprising to me that, as far as we are aware from the comments of the shadow Minister, the Opposition will be voting against the very improvements that the hon. Lady says they have been working so hard to achieve. I do not doubt her good intentions or that she has been working very hard to represent her constituents, but if she was truly doing so, she would walk through the Lobby with the Government this evening, because they have listened thoroughly.

Let us take the pasty tax, for example. It will not surprise Members that I am keen to talk about pasties, because not only am I a big fan and regular consumer of them, but I represent Cornwall, where they are an incredibly important industry. When I listened to the Budget some months ago, it was clear to me that the Government were doing exactly the right thing. They had seen some dreadful anomalies in VAT on food that had led to huge unfairness. Independent owners of fish and chip shops in my constituency had to pay VAT, but other outlets selling hot takeaway foods did not. The Government’s attempt to sort out VAT struck me as perfectly reasonable.

We all know that what is really holding back growth in our economy is that for too long, small businesses have been massively overburdened by a dreadfully confused and muddled-up tax code. Under the last Government, the tax code multiplied and multiplied. We would probably have to use a wheelbarrow to carry all its volumes into the Chamber. The current Government are making a very reasonable effort to simplify some of the taxes that are such a burden on businesses in my constituency. They have listened carefully to the representations that have been made and are now going to create a level playing field for all people producing and selling takeaway food. That will benefit independent bakers in small businesses throughout Cornwall who bake pasties.

[Mr Graham Stuart]

As my hon. Friend is aware, the Government inherited the largest overspend and deficit in the developed world, so it was right for them to probe every possible area of tax revenue. It was also right for them to listen to people when representations were made and to respect parliamentary democracy. Does she agree that if the Labour party had listened to Back Benchers when it was in power, we would not have got into the mess that we are in and we would not have the vast deficit that the Government are having so valiantly to fight to reduce?

[Sarah Newton]

My hon. Friend makes his point as passionately and persuasively as always, and he is absolutely right.

To return to pasties—one of my favourite subjects—when I listened to the Budget, it was clear to me that there was a problem with the proposals as they stood. Some of the architects of those proposals clearly did not understand how pasties are baked in Cornwall. Within hours I spoke to my hon. Friend the Exchequer Secretary, who clearly understood the problem that I described to him. He said the Government realised that there could be some complications and unforeseen consequences, hence the reason for their consultation. Colleagues from around the country responded positively to that consultation, and their concerns have now been met.

I am staggered by what the Opposition wish to inflict on our country by not supporting the Government tonight. In the nightmarish scenario that they won the Division, we would return to the situation in which the Treasury wastes hundreds of thousands of pounds of taxpayers’ money every year having to fight litigation cases against multi-million-pound companies that are trying to avoid paying VAT. The extremely complicated tax code that was developed under Labour over its 13 years was a lawyers charter. I have nothing against lawyers—I am married to a very good lawyer—but that ever-increasing and complicated tax code means that, not unreasonably, companies try to avoid paying tax. That causes Her Majesty’s Revenue and Customs to be tied up in court, spending hundreds of thousands of pounds on lawyers fees that it could be spending in a far better way.

It beggars belief, but what the Labour party is saying tonight is, “We are on the side of companies trying to avoid tax. We are on the side of lawyers who are constantly taking HMRC to court.” What a dreadful waste of taxpayers’ money. The Government are trying to have a fair and simple tax system that everybody in the country can understand, so that we are not caught out by those who avoid taxation.

[Sheila Gilmore]

I wonder whether the hon. Lady has noticed the size of the Bill. It is apparently one of the biggest Finance Bills ever, which suggests that the tax code is being added to all the time. Would it not have been easier for the Government never to have made their VAT proposal in the first place?

[Sarah Newton]

No. As I have said—very clearly, I hope—the Government’s change will bring about a lot of clarity and be beneficial. For example, new schedule 1 clarifies what constitutes takeaway food and hot food. I accept the point that my hon. Friend the Exchequer Secretary made that we can never be 100% certain that companies will not litigate to try to wriggle their way out of paying their taxes, but the added clarity will be welcome to pasty makers. They will understand the situation that applies to pasties that are made and consumed in the way that they are in Cornwall.

For the benefit of Opposition Members who do not seem to understand what master bakers do in pasty shops in Cornwall, I will explain that each day they get up very early to make high-quality bread, cakes and buns as well as pasties. They cook them on their premises so that they are beautiful and freshly made. Throughout the course of the day, anybody can buy freshly made bread, cakes, buns, scones or pasties. Thanks to the clarification in the new schedule, we can continue doing that in the certain knowledge that we will not pay VAT. Labour Members, however, who, feeling peckish on their way home tonight, decide to pop into the West Cornwall Pasty store, perhaps at the station, will, as in every other takeaway food outlet at the station, quite rightly pay VAT, because those pasties are deliberately kept warm all day long alongside other takeaway food. It is only right and proper, therefore, that they pay VAT.

--- Later in debate ---

[Jake Berry]

Of course, it was not just a pasty tax; it would also have affected the fantastic Cissy Greens pie shop in Haslingden. We are dancing from the River Ogden to the River Irwell in celebration of the fact that we can enjoy our Cissy Greens pies without VAT.

[Sarah Newton]

My hon. Friend makes a good point. This affects master bakers, whether of pork pies, sausage rolls, steak pies or chicken pies, the length and breadth of the country. Those self-employed, highly skilled master craftsmen can carry on producing their much-loved regional foods, which we enjoy all over the country and which make our country so distinct, as we celebrate our rich and varied food heritage. I hope that that addresses any misapprehensions among Labour Members about the benefits of the pasty tax.

Much has been made of the Government’s U-turns. I welcome having a Government who, when they launch a consultation, as they did after the Budget, actually listen to representations on a range of measures, and I am pleased that the Chancellor is driving our economy in the right direction. We have to reduce our deficit and get our expenditure under control. The hard-working families and small businesses in my constituency understand that, and frankly will feel let down by this retread idea of a 2.5% reduction in VAT—the only proposal we hear from Opposition Members. But, of course, we do not know whether that will be their proposal tomorrow, next week or next month, because the shadow Minister could only say that it was the proposal today. If that is their only proposal and if it is only for today, how can families in my constituency have any confidence that they would drive the economy in a better direction? I am confident that the Chancellor is on the right road, and I am certain that focusing on the Budget, making sensible changes along the way, is the right way to go.

[John Mann]

Does the hon. Lady agree that it is good news that the Chancellor listened to me on pasties, on caravans—after I invited him on holiday with the Prime Minister and me in a caravan—and on petrol? Does she also agree that it would be even better news if he also listened to me on churches and VAT on listed buildings?

[Sarah Newton]

I am glad that the hon. Gentleman makes that intervention, because I was going to talk about that issue. First, however, I would like to make a little more progress on the analogy I was drawing to the House’s attention. We all get behind the wheel of a car from time to time—sadly, at the moment, I cannot, but I hope to be back there before too long—and when on a journey we are often certain of our destination, but sometimes we are not as good navigators as we would like and have to put on our sat-nav to help us, and sometimes we get an instruction from that irritating person on the sat-nav saying, “As soon as the road ahead is safe and permits, please do a U-turn.” At that point, do we throw up our hands in horror and say, “Oh, it’s just appalling to have to make a U-turn”, or do we think, sensibly, that to reach our destination in a safe and timely way it is appropriate to make the occasional U-turn? I have no problem with the Government making U-turns if it gets us to our destination in a timely and safe way.

The hon. Gentleman asked me about the changes to listed buildings. Having the beautiful Truro cathedral in my constituency, I was concerned about the proposals and immediately consulted the diocese and a wide range of churches in my constituency about their implications. I brought all that information to the Chancellor’s attention, as, I am sure, did Members across the House, and I was satisfied with his response. The Second Church Estates Commissioner, my hon. Friend the hon. Member for Banbury (Sir Tony Baldry), is to be congratulated on how he co-ordinated all our efforts and on the work he has done with the Church Commissioners and the Treasury. Their solution is both practical and actionable, and has met with the perfect satisfaction of churches in my constituency.

I know that many Members wish to join in the debate, so I shall conclude. It is immensely important that we have a Government who listen, who consult on proposals and who then act on them. Whether on fuel duty, pasty taxes, caravan taxes or fuel taxes, my constituents are immensely pleased and relieved that the Government have listened and helped hard-working people and small businesses during these difficult times.

[Mr Frank Field]

I want to speak to new clause 3, although it might first be appropriate to pick up on one theme from the speech by the hon. Member for Truro and Falmouth (Sarah Newton). She said she was pleased that the Chancellor was creating a level playing field. Well, if there is any area of the country where it would be difficult to create level playing fields, it would be in Truro. But anyway, I am pleased that she is satisfied.

I wish to make a plea for a level playing field for young people in my constituency and other constituencies who go to sixth-form colleges, and I wish to compare their tax position with that of young people undertaking sixth-form studies in school. In a recent Westminster Hall debate, led by my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), we discussed how poorer young people in sixth-form colleges or similar establishments were discriminated against in respect of free school dinners compared with young people in school. Here is yet another example of discrimination against young people, depending on the institution they attend.

I plead again with the Government, in respect of VAT, to treat sixth-form colleges as we treat schools with sixth forms. In Birkenhead, most pupils have no option but to attend sixth-form college if they want to undertake post-16 studies because the sixth forms of most of the schools were pooled together in that one enterprise. The VAT on services that the college purchases, but which schools do not pay, adds £300,000 to the college budget—a reduction of 4% in that budget.

My plea to the Chancellor will be brief and simple;I will not go up and down the country lanes, visiting various constituents, bakers and so on. He hoped to create a level playing field for taxation for sixth-form colleges and sixth forms in schools by the end of the Parliament. That was a noble objective, but the 2015 election, as it draws ever nearer, will certainly concentrate Government Members’ minds not only on small U-turns but perhaps on more major ones.

The Institute for Fiscal Studies undertook an analysis of the Government’s public expenditure changes which showed that the part of the education system that will be most handicapped and suffer the largest cuts by 2015 will be colleges of further education. Indeed, they will experience a 20% real-terms cut in their budgets by 2015. I know that it would not be in order to ask the Minister to respond to that, but given that the Government’s policies are making the playing field even more unequal for sixth-form colleges, compared with the treatment of sixth forms in schools, let me make a plea for him to concede that point and exempt sixth-form colleges, whose students are of an age that if they were not at college, they would be in school.