Stella Creasy
Main Page: Stella Creasy (Labour (Co-op) - Walthamstow)Department Debates - View all Stella Creasy's debates with the HM Treasury
(7 years ago)
Commons ChamberThe hon. Lady raises an important point.
There is an assumption on the Opposition Benches that nothing is being done about these various issues. The right hon. Member for Barking referred to an element of the “Panorama” programme on the Panama papers that described income that had been diverted overseas and then loaned back to individuals. That is known as disguised remuneration. She rightly asked what the Government were doing about such practices. Let me point her in the direction of the Finance Bill that has just gone through this House. On the matter of disguised remuneration, individuals will be given until 2019 to clear up those arrangements. Otherwise, they will pay a penalty. It is as simple as that.
I want to make just a little more progress, as I am conscious of the time and the shortness of the debate.
In fact, we have brought in 75 measures since 2010 to clamp down on these practices. A further 35 will come in from 2015, raising £18.5 billion by 2020-21. One of the problems is that we have been so active in bringing in so many measures that, unfortunately, not all of them have been noticed. In last week’s debate, the right hon. Member for Barking raised the issue of taking action against those who promote tax avoidance schemes. Once again, she needs only to look at the Finance Bill—all 777 pages of it; it is very technical, and it will probably put her to sleep at night—in which she will find measures to deal with precisely what she was urging us to take action on last week. We have already done it!
Going after the tax gap is exactly what this Government are doing, and we have an exemplary record. We have the lowest tax gap in the entire world. It is the lowest in history—far lower than it was under the last Labour Government. The hon. Gentleman asked a specific question about tax officers. We need to move towards an HMRC that is ready and equipped for the 21st century. That does not mean a large number of scattered offices; it means hub offices with the necessary staff and technical skills to facilitate the transfer of knowledge and understanding in order to move forward.
I do not want to go global in my answer as I am talking about the general position in the UK property market, but it is undoubtedly true that a sense of great unfairness now pertains. Prices have risen so sharply and beyond the means even of those on relatively high incomes—let alone modest ones—particularly in London. Young professionals can be on £100,000 and still struggle to get on the ladder in significant parts of the capital. But it is not just about London. My constituency of South Suffolk and those in the counties around London know that the ripple of high prices in expensive areas comes out many miles—[Interruption.] The hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) is shaking his head, but many people move to my constituency because of the sheer cost of living in London.
The hon. Gentleman is talking about property prices. He just mentioned the Government’s decision to close the loophole whereby foreign owners of residential properties were avoiding capital gains tax. Does he regret not joining with the Opposition to close the loophole regarding commercial properties? That is having exactly the same impact on the property market.
It has to be said that the commercial sector is one area that has been much weaker since the Brexit vote, but the main issue of fairness from the point of view of taxpayers and first-time buyers relates to residential property. Making changes to tax is about not just tax avoidance, but about provisions such as the higher stamp duty we now levy on second-home ownership and properties purchased to rent out. The key point is that those measures have had a huge impact in supporting first-time buyers.
May I start by joining Members on both sides of the House who have congratulated my right hon. Friend the Member for Barking (Dame Margaret Hodge) on bringing this important debate? I also congratulate all the journalists involved in this investigation.
In my short contribution, I hope I might elicit from the Minister a modicum of regret for some of his recent actions. What we need to talk about today is tax avoidance, and, if I can, I want to take on the challenge put forward by the hon. Member for Morecambe and Lunesdale (David Morris). What precisely is the issue with these offshore companies? More specifically, why would anybody hold UK property and UK entities overseas?
When we look at those questions, these papers raise two clear issues for us. First and foremost, there is the case for transparency, and I want to use the example of private finance initiative companies to show why that is a problem. Secondly, there is the case for addressing the loopholes that this evidence has highlighted for us, which the hon. Member for Amber Valley (Nigel Mills) set out.
I will not give way at this point, because I have only two minutes left.
Nine offshore infrastructure companies own between 50% and 100% of the equity in 335 PFI companies, which account for 45% of all projects. Twelve companies have equity in 74% of all current projects. At this point, we do not know what tax is being held overseas as a result—tax that was part of the PFI value-for-money assessment. These papers reveal how that happens. Secondly, on avoidance of capital gains tax, these papers reveal that Blackstone avoided stamp duty and capital gains tax on UK commercial property to a value of around £66 billion.
These are all choices. At the end of the day, we know that the lawyers involved are like water moving towards the sea—they will follow the easiest route. The problem here is politicians, not lawyers.
Does my hon. Friend support country-by-country reporting, which will help some of the most deprived parts of the world?
Absolutely, and I concur with all those who have raised that.
We can take action in this House. Specifically, new clause 2 to the Finance Bill—as my right hon. Friend the Member for Don Valley (Caroline Flint) said, many of us brought forward proposals—looked at the tax loophole relating to capital gains tax on commercial property. I will take no lectures from Conservative Members about how wonderfully this Government are doing on tax avoidance, when, just two weeks ago, they voted down a measure that would have brought in £6 billion a year to our Exchequer and given British businesses a level playing field. The Paradise papers show exactly why there is a problem, and I have mentioned £66 billion of capital gains tax and stamp duty that we are not getting because companies are registered overseas.
Nor will I take lectures from the Minister about loans, given that he passed in the Finance Bill a measure to reduce the share relief that PFI companies can claim on their loans. Those companies own millions of pounds’-worth of our public sector, and are able to trade off the interest that they pay on those loans in overseas companies, but the Minister has just passed an amendment that will make sure they do not even have to pay any tax on that. Those companies can comfortably be held overseas so that we will not even see what is happening.
In the minute I have left, therefore, I want to make some simple proposals. As my hon. Friend the Member for Enfield, Southgate (Bambos Charalambous) said, we absolutely need a public register. However, we also need a moratorium on all public investment in these companies until we know precisely what tax we are missing, and until we can be confident that these offshore companies are not milking the British taxpayer twice—by not paying their taxes and by getting us to pay them through PFI and public infrastructure investments. We must also close the loophole on capital gains tax on commercial properties as a matter of urgency. Nobody who faces cuts in their public services can allow that to continue for a second longer.
Finally, we need to rethink the decision to give PFI companies the tax relief that the Government have just given them. I hope the Minister regrets his actions, because, frankly, this is not about the Paradise papers; it is about parasites bleeding money from our public sector.