Finance (No. 2) Bill

John Bercow Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

Second Reading

[Mr Speaker]

I must inform the House that I have selected the amendment in the name of the Leader of the Opposition.

--- Later in debate ---

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I have to leave later this evening to get back to my constituency so that I can have a tooth removed tomorrow morning. I am expecting that to be immensely painful, and in the last few moments I might have had a foretaste of what I will experience tomorrow.

The debate has made clearer than ever the tunnel vision of this Government, who are carrying on regardless, ignoring call after call to change economic course. Just as with the Budget, this Bill is not fit for purpose and not fit for the future. It falls woefully short of preparing the country for the challenges it faces: from the chaotic no-deal Brexit that this Government still will not rule out to the longest squeeze on wages since Napoleonic times; from record rates of child poverty to our slowdown in productivity, which is unique among comparator countries; and from what was, in the first half of this year, the third slowest GDP growth in the whole OECD to the huge regional disparities in investment that were set out with crystal clarity by my hon. Friends the Members for Bradford South (Judith Cummins), for Heywood and Middleton (Liz McInnes), for Easington (Grahame Morris) and for High Peak (Ruth George).

Mr Speaker, thank you very much for selecting our amendment, which I am formally moving because the official Opposition cannot accept the Bill as it stands. First, it does not provide measures to comprehensively lift the public sector pay cap. We will have to wait until next summer to ascertain even whether the conditional rises suggested by the Government will be put into place. Nor does it take action to boost the incomes of low and middle earners. As was powerfully argued by my hon. Friends the Members for Harrow West (Gareth Thomas) and for Walthamstow (Stella Creasy), such incomes have stagnated in recent years.

The change in the Bill to stamp duty will, according to the OBR, only increase house prices in the absence of action to decisively increase supply—[Interruption.] I am sorry, but that is the assessment of the OBR. I have read its assessment: the measure will fail to deal with our housing crisis in the absence of measures to increase supply—the kind of measures described so eloquently by my hon. Friend the Member for Easington. In that regard, I would add to the points made by my hon. Friend the Member for Harrow West, in that there is no action to promote alternative business forms. There is no action in the Bill to deal with the inequitable situation where some housing co-ops are facing higher rates of stamp duty than private housing providers.

The Bill also fails to reverse the Government’s 2015 cut to the bank levy, as so many of my hon. Friends have said. The Government are denying themselves £4.7 billion of tax revenues from banks over five years. As many have mentioned, the Bill also further reduces the scope of the bank levy. As we all know, that follows the Government’s decision to deny themselves yet more revenue by reducing the rates of corporation tax and income tax for the very best-off. Contrary to the Minister’s claims, the bank levy and the surcharge receipts are projected to fall under the Government’s plans from £4.6 billion in 2016 to £3.2 billion in 2022-23. Even I can calculate that that is a 30% fall from both those measures combined, so less money is coming from the banking sector, not more.

As my hon. Friend the Member for Bootle (Peter Dowd) set out, these tax cuts occur while experts are warning that children’s services are strained to breaking point after seven years of budget cuts. For example, we have seen the halving of funding for early intervention, despite the number of child protection plans doubling.

We have heard concerning details about local pressures on services, particularly from my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe). That hardly amounts to the Government following the principles of social responsibility, which the Financial Secretary said animated the Government.

This is at a time when the meagre measures in the Bill show, as my hon. Friend the Member for Walthamstow eloquently argued, that the Government have not learned the lessons of the Paradise papers. She mentioned a number of examples and I will throw in one of my own. In the previous Finance Bill, the Government restricted the tax deductibility of interest payments to intra-group companies, albeit taking the most permissive option offered by the OECD rather than tightening up significantly. That measure at least followed the OECD’s call for profit shifting to be counteracted. In clause 21 of this Bill, in contrast, we see not an attempt to counteract profit shifting, but instead just a new approach to assessing its value—incoherence!

That is compounded by the Government’s determination to push ahead with the restructuring of HMRC, which is leading to the loss of so many experienced staff at the very time when we desperately need them to protect Government revenues and to run our customs procedures. Staff numbers at HMRC and the Valuation Office Agency have plummeted by 17% between 2010 and the present day, and we heard just last week that the VOA will be cut even further. Its headcount will go down by a quarter at the same time as there are 200,000 outstanding appeals and valuations will be occurring more frequently.

In contrast to the Government’s giveaways to profitable corporations and the best-off taxpayers, the brunt of their cuts have, of course, fallen on those least able to afford them. Sadly, despite requests from a variety of people on both sides of the House for an equality impact assessment of the Finance Bill, which have been amplified by the Treasury and the Women and Equalities Committees, we still do not have one. Just last week, when the Chancellor was asked in the Treasury Committee about the existence of an equality impact assessment by my hon. Friend the Member for Wirral South (Alison McGovern), he had to ask a civil servant—and I use his phrase—“Do we have it?” The answer that came back, after some circumlocution, I took as, “No.” That response was frankly astonishing. It comes at the same time as a recent report by the Runnymede Trust and the Women’s Budget Group shows that as a result of tax and benefit changes and lost services since 2010, by 2020 it is the poorest families who will lose the most, with an average drop in living standards of about 17%. Lone parents, nine out of 10 of them lone mothers, and black and Asian households within the lowest income quintile will experience an average drop in their living standards of about a fifth.

Sadly, it seems as though the Government are unaware of these failings, since they have not introduced this Bill under an amendment of the law resolution. This flawed decision, as the hon. Member for Aberdeen North (Kirsty Blackman) indicated, limits Members’ ability to table amendments and thereby improve the Bill. As with the increased use of secondary legislation under the European Union (Withdrawal) Bill and the previous Finance Bill, we are again seeing reduced scrutiny and less ability for the House to debate very significant matters that our constituents rightly expect us to be able to influence in their names. This approach to a Finance Bill was perhaps acceptable just after a general election, as with the previous Finance Bill, but it is not acceptable as a matter of course, as was underlined by my right hon. Friend the Member for Barking (Dame Margaret Hodge).

In 2016, the Government agreed to exempt solar panels from an increase in domestic VAT after pressure within Parliament, yet there is no scope within the current arrangements for us to take similar action this year to counteract the Bill’s many failings. While I am on the topic of green measures, although the Minister and other Conservative Members made much of the Bill’s commitment to levy landfill tax on illegal waste dumps, I fear that without appropriate staff in the Environment Agency, we will not see where those dumps are, as many of us have discovered from our constituency casework. This is yet another measure seen just on paper and not in practice.

Despite all this—despite these failures—we are determined as an official Opposition to take every opportunity within the constrained environment we face to try to amend this Bill. It is what our constituents deserve and it is what parliamentary scrutiny deserves. I only wish we could do so in the manner that is merited through a proper debate and with the ability to table proper amendments.

[Mr Speaker]

Order. Before I call the Minister, I think that the hon. Lady was moving the amendment, was she not? [Interruption.] It would have been helpful for her specifically to say “and I so move.” [Interruption.] In that case, it was not audible, and it is not her fault that there was too much noise, but I am grateful for the confirmation that the amendment has been moved.

Amendment proposed: To leave out from “That” to the end of the Question and add:

“this House declines to give a Second Reading to the Finance (No. 2) Bill because it contains no measures to address the fact that the UK has the slowest economic growth in the G7 while the IFS warns of two decades of lost earnings growth, it fails to reverse the Government’s 2015 Bank Levy cut resulting in £4.7bn less in tax revenue from banks over five years and contains measures to further limit the scope of the Bank Levy resulting in a further fall in revenue, whilst at the same time crucial services that many children and families across the country desperately rely on are at risk due to seven years of budget cuts, it proposes a stamp duty cut that, according to the analysis of the OBR, will increase house prices, instead of helping to address the housing crisis through measures to build more affordable homes, it proposes policies without the benefit of an adequate Equalities Impact Assessment, it arises from a Budget which made no provision for lifting the public sector pay cap or addressing the funding crisis in social care and the NHS, it includes no measures properly to tackle tax avoidance and evasion and it is not based on an amendment of the law resolution, thus restricting the scope of amendments and reducing the House’s ability to properly scrutinise and improve the Bill.”—(Anneliese Dodds.)

Question proposed, That the amendment be made.

[The Exchequer Secretary to the Treasury (Andrew Jones)]

We have had a very comprehensive debate, as is fitting for a Finance Bill. I thank all Members who have contributed.

Some Members mentioned the public sector pay cap. They might not have noticed that it was lifted on 12 September in a statement made by the Chief Secretary to the Treasury. That was confirmed in the Budget on 22 November. Lots of Labour Members commented on the bank levy, failing to recognise that our changes will be raising taxation from the banking sector, and failing to remember that Labour voted against introducing the bank levy in 2011 and against introducing the bank surcharge in 2015.

Many Members have spoken at some length about transport schemes. They will be delighted to know that, excluding in the exceptional years following the financial crisis, public investment as a proportion of GDP will have reached its highest level in decades during this spending period. This includes a 50% increase in transport investment that is funding the biggest road programme in a generation. That will be welcomed by those who are interested in the A19, such as the hon. Member for Easington (Grahame Morris) and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). We are also seeing the biggest rail transformation in modern times, which will please many Members.

We heard some comments about tax evasion. It might be worth reminding the House that this Government have taken more action to clamp down on tax evasion than any other Government. The 100 measures we have introduced since 2010 have raised more than £160 billion. The Government’s pledge is that we will continue to act in that way. If Members want the clamping down on tax evasion to continue, they should support the Bill, because it includes measures to take that forward.

One key area that my constituents have raised with me is housing. They have highlighted the fact that in my constituency, the ratio of the average house price to the average salary has reached 14:1. Across England and Wales, the ratio has reached 8:1, which means that it has doubled in just two decades. I had a meeting this morning with the new Conservative Mayor of Cambridgeshire and Peterborough, who highlighted that in his area the ratio is more than 20:1.

The autumn Budget set out our plan to deliver the pledge we have made to the next generation, namely that the dream of home ownership will become a reality in this country once again. A comprehensive set of reforms will not just boost housing supply, but help those who are looking to buy now with the up-front costs that can often get in the way. The stamp duty measure in the Bill will make sure that the tax system does not act as a barrier to first-time buyers who are seeking to get on to the housing ladder.

Let me finish by saying that the Bill is central to the Government’s vision for a brighter future for Britain. It will help to deliver that vision by helping more people to purchase their own home, promoting further economic growth, and delivering a fair, balanced and sustainable tax system. Those are significant steps towards making us fit for the future. We are building on our progress and past successes. The economy is 15.8% bigger than it was in 2010. Unemployment is at its lowest level since 1975 and income inequality is at its lowest level since 1986. We have cut the deficit by more than two thirds and, based on our plans, the OBR expects debt to fall from next year. People have talked about unemployment, which has fallen significantly. Employment has increased by more than 3 million since 2010. Opposition Front Benchers often talk about employment in London, and perhaps they should be aware that employment in London has grown by nearly 900,000 during this period. This Bill builds on successes, and I commend it to the House. [Interruption.] I have run out of time, I am afraid. [Interruption.]

[Mr Speaker]

Order. I think the Minister has concluded his oration.

Question put, That the amendment be made.