Andrey Lugovoy and Dmitri Kovtun Freezing Order 2016

Stephen Doughty Excerpts

Monday 22nd February 2016 General Committees

[The Economic Secretary to the Treasury (Harriett Baldwin)]

I beg to move,

That the Committee has considered the Andrey Lugovoy and Dmitri Kovtun Freezing Order 2016 (S.I. 2016, No. 67).

It is a pleasure to serve under your chairmanship, Mr Pritchard. I would like to make the Committee aware that some minor errors were made when the order was laid; they did not impact on the substance of the order and have now been corrected by way of a correction slip.

The order was laid before the House on 22 January, in response to the Litvinenko inquiry report published on 21 January. As Members will be aware, Alexander Litvinenko was a former officer of the Russian Federal Security Service and a British citizen. He was killed in London in 2006, and the Litvinenko inquiry was the independent inquiry into his death. I am sure Members will echo my right hon. Friend the Home Secretary’s thanks to Sir Robert Owen, the chairman of the inquiry. His conclusions were clear yet deeply disturbing, and I would like to highlight some of those conclusions today, as they provide essential background to this debate.

One of the inquiry’s key findings was that Mr Litvinenko was deliberately poisoned by two Russian nationals: Andrey Lugovoy and Dmitri Kovtun. Those individuals killed him using polonium-210, a radioactive isotope. The Litvinenko inquiry also found that the killing of Mr Litvinenko was probably authorised by Nikolai Patrushev, head of the Russian Federal Security Service at the time, and by President Putin.

In response to those conclusions, the Treasury imposed an asset freeze on Mr Lugovoy and Mr Kovtun, the two individuals directly implicated in Mr Litvinenko’s tragic death. That was done by making an order under the Anti-terrorism, Crime and Security Act 2001. The order was debated in the other place on 10 February. I would like to set out again why that was an appropriate and proportionate response and why this House should also approve the order.

The Metropolitan police launched a murder investigation shortly following Mr Litvinenko’s death. Mr Lugovoy and Mr Kovtun are the prime suspects in that investigation. The Crown Prosecution Service has sought extradition of the chief suspect, Mr Lugovoy, from Russia, but Russia has consistently refused to comply with that request. There are now Interpol notices and European arrest warrants against them, and the Metropolitan police investigation is still open.

However, in response to Sir Robert Owen’s unequivocal finding that Mr Lugovoy and Mr Kovtun killed Mr Litvinenko, the Government took the view that it was appropriate to take further steps. That is why the Home Secretary wrote to the independent Director of Public Prosecutions, asking her to consider whether further action could be taken. That is also why, following the inquiry’s report, the Treasury moved swiftly to impose an asset freeze on the two individuals responsible for Mr Litvinenko’s death. The Treasury was satisfied that Mr Lugovoy’s and Mr Kovtun’s roles in Mr Litvinenko’s death clearly fulfilled the criteria under the 2001 Act that give the Treasury powers, including making a freezing order, when a threat to the life of a UK national has been or is likely to be taken by non-UK residents.

We believe that the order will be a deterrent and a signal that this Government will not tolerate such activity on British soil. The asset freeze prohibits UK persons from making funds available to Mr Lugovoy and Mr Kovtun and denies the men access to the UK financial system. In circumstances where it is necessary for frozen funds to be used, those wishing to do so must seek a licence from the Treasury.

I am sure all hon. Members will agree that the ideal response to the killing of a British citizen on the streets of London is to bring those responsible to trial in a British court. However, until that can be done, the asset freeze, together with the other measures that the Government have already taken, sends a clear message that we will defend our national security and rule of law.

Some people responded to the inquiry’s conclusions with calls for us to radically reform our relationship with Russia, yet as the Home Secretary set out, the findings of the report do not come as a surprise. Indeed, the roles of Mr Lugovoy and Mr Kovtun and the probable involvement of the Russian state are consistent with the long-held assessments of successive UK Governments. Those assessments informed the response by the then Government in 2007, which included visa restrictions and the expulsion of certain officials from the Russian embassy in London. The conclusions of the inquiry confirm that successive Governments have been right to keep those measures in force to date.

This is not business as usual with Russia; our relationship with the Russian state is heavily conditioned. The Government have reinforced that message. Following the publication of the inquiry’s report, we made very clear to the Moscow Government our profound concerns, and the Russian ambassador was summoned to the Foreign Office in London. We will continue to demand that the Russian Government do more to co-operate with the investigation into Mr Litvinenko’s death. Such co-operation must include the extradition of the main suspects and the provision of satisfactory answers, and Russia must account for the role of its security services.

We are clear about the wider threats that Russia poses, which the Government have outlined in the national security strategy. In particular, we have long been aware of Russia’s disregard for international norms and principles, which is why we led the call in the EU for sanctions in relation to Russia’s actions in Crimea and eastern Ukraine. That is why, when we engage with Russia on a variety of issues, including the fight against Daesh, we do so guardedly and with our eyes wide open.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Minister is making a strong case for the order, which I completely support. She mentioned the EU and political co-operation on targeting some of Russia’s behaviour in Europe, but the order refers to actions on European economic area firms and relevant institutions. Will she explain how we are going to co-operate across Europe to deal with these two individuals and prevent them from behaving as they have been throughout Europe, not just in the UK?

[Harriett Baldwin]

My right hon. Friend the Home Secretary has written to her counterparts in all 27 EU member states, so that they are also aware of the conclusions in this important report and are able take action accordingly should these gentlemen appear in their jurisdictions.

I hope that my words have assured the Committee that the asset freeze imposed on Mr Lugovoy and Mr Kovtun is an appropriate and proportionate response to their role in Alexander Litvinenko’s death. The Government believe that, in addition to the steps taken in 2007, the order is a proportionate measure that is necessary to send a clear message to those who might wish to undertake similar acts in future. I commend the order to the Committee and hope that all Members support the motion.

Tax Avoidance (HSBC)

Stephen Doughty Excerpts

Monday 9th February 2015 Commons Chamber

[Mr Gauke]

As my hon. Friend says, £31 billion has been raised from large businesses as a consequence of HMRC’s compliance activity. That underlines our determination, and HMRC’s determination, to collect the tax that is due under the law.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Will the Minister remind the House how much the Chancellor said would be raised by the Swiss tax deal, how much has actually been realised, and why he thinks the Chancellor got his sums so wrong, as he has in relation to so many other issues?

[Mr Gauke]

It was forecast that we would raise about £3 billion. The amount that we have raised so far is just short of £1 billion, and we expect that to rise to £1.2 billion. Other measures that we have introduced have raised more than the forecast amount, and that £1.2 billion would not have been raised had we not entered into the deal.

Charter for Budget Responsibility

Stephen Doughty Excerpts

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

I will explain the nature of the fiscal charter and how it works in a moment. I am sure that the hon. Gentleman will then see the stark difference between our position and the position of the Conservatives. He will probably find that he agrees much more with our position than with theirs.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The point that my right hon. Friend has made about low pay and tax revenues is crucial, but is it not also the case that since 2010 the Government have spent £25 billion more on social security than they originally planned to spend because of that failure on low pay and the failure to deal with the cost-of-living crisis?

[Ed Balls]

That is true. If we compare the welfare spending plans that the Chancellor set out in 2010 to the actual outturns, we see that he has overspent in this Parliament by £25 billion. He has spent £25 billion more on disability and housing benefits because of what has happened to the economy. The former Chancellor, the right hon. and learned Member for Rushcliffe (Mr Clarke), is right. We have to deal with the big issues rather than playing silly political games.

Autumn Statement

Stephen Doughty Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

I think everyone in this House knows what an incredible job the hospice movement and hospice charities do. I am a patron of the East Cheshire hospice. From the conversations I have had with my hon. Friend and his colleagues, I know what a brilliant job the hospice in his area does. This measure is something that hospices have long asked for. They have been unfairly discriminated against, in comparison with the NHS, when it comes to VAT. We are going to refund that VAT and give the hospice movement the support it deserves in recognition of the brilliant job it does.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Chancellor has made a number of statements today on infrastructure, but of course developing our infrastructure requires a thriving UK steel industry and supply chain. Will he explain why he and the Secretary of State for Business, Innovation and Skills have chosen not to bring forward the energy-intensive industries compensation package that he announced in the Budget earlier this year? Does he believe that the UK steel industry faces a level playing field, and if not, what is he going to do about it?

[Mr Osborne]

I have long thought that there is a challenge in ensuring that commitments to reduce carbon are consistent with having a vibrant and successful steel industry and other energy-intensive industries. What we hear when we go to Port Talbot and elsewhere is a real concern that UK energy prices could be higher than they are on the rest of the continent of Europe if we adopt measures such as a decarbonisation target. That is why the Conservative party is not in favour of a decarbonisation target. Unfortunately, the Labour party is in favour of it and the steel industry might be one of the industries that will bear the cost.

School Admissions Bill

Stephen Doughty Excerpts

Friday 7th November 2014 Commons Chamber

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a rare honour and privilege for me to speak from the Dispatch Box. Indeed, it is first time I have had that honour and privilege. I hope that Members, including the hon. Member for Christchurch (Mr Chope) and the Minister, will indulge me if I make any mistakes.

It has been a privilege to listen to the hon. Member for Christchurch—who has a long and distinguished history in the House, and whom I have heard speak on many occasions—and to learn about some interesting and concerning cases and some of the discrepancies that exist in the school admissions system.

The hon. Gentleman also compellingly set out the circumstances that face children and families where a parent has a terminally or seriously disabling illness. I know from my own constituency the impact of such circumstances on many aspects of the lives of families and children. They not only impact on educational provision and travel to school, but many of the young people take on caring responsibilities, which have very significant impacts on their lives.

As many Members on both sides of the House will know, school admissions come up time and again in our constituency surgeries and in our inboxes. The School Standards and Framework Act 1998 remains to this day a signature piece in the last Labour Government’s reform agenda. It enshrined in law a limit of 30 on infant class sizes. Unfortunately, we have seen a 200% rise in the number of infants taught in classes of more than 30 since the formation of this coalition Government and following their decision to relax the rules on infant class sizes.

The legislation we passed in 1998 abolished grant-maintained schools, prohibited the expansion of partial selection and, crucially for this debate, introduced an admissions code and the Office of the Schools Adjudicator. We are proud of having taken that step forward, putting fairness into the system and seeking to ensure that every child got a fair start.

Labour Members welcome the recent decision by Ministers, although late to the party, to allow all schools, including maintained schools, to prioritise admission for children who are eligible for free school meals—those in receipt of the pupil premium. My hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) made the case for that in June 2013, and we have committed to going further, because while we have seen big improvements following the last Labour Government’s reforms, we can be confident that although the letter of the code is enforced, it is not always followed in spirit.

In the last report from the schools adjudicator published last November, Elizabeth Passmore concluded that the system is so complicated that parents may need to study for several years before applying for a case. I therefore ask the Minister what action the Government are taking to address the complications presented by the schools adjudicator?

As I said, we have gone further. The appeals process for academies and free schools is at present too opaque. Many academies will have nothing to fear, but to ensure greater transparency and parity Labour has committed to extending the powers of the local government ombudsman to investigate academies and free schools on admissions, because parents should not have to write to the Secretary of State to complain about the processes of a local school. Under Labour, local authorities will also have the power to direct all schools to admit hard-to-place children, and to ensure that all schools fulfil their commitment to equitable access—both to the letter and the spirit.

I thank the hon. Member for Christchurch (Mr Chope) for bringing forward this Bill and for raising this important issue, and I ask the Minister to respond to the following questions. First, what consultations and discussions have Ministers and officials had with the groups representing children with terminally ill or seriously disabled parents, and with organisations representing children with caring responsibilities? Secondly, during recent revisions of the code undertaken by this Government, what consideration was given to this specific group? Thirdly, are the Government undertaking, or do they plan to undertake, scoping work to determine the feasibility and merits of making the changes suggested by the hon. Gentleman? There are some important questions here, and the hon. Gentleman has raised some important cases, and I am grateful for the fact we have had the time to debate this matter today.

Office for Budget Responsibility (Manifesto Audits)

Stephen Doughty Excerpts

Wednesday 25th June 2014 Commons Chamber

[Ed Balls]

Either we find reasons not to proceed or we proceed. I spoke to Mr Chote last Friday. I will come to our conversation in a moment. It deals directly with that matter.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Given the cross-party approach and the interest, which my right hon. Friend has set out clearly, does he think that one of the reasons why the Chancellor and the Government have not agreed to the measure may be that they want to make misleading claims about the Opposition’s policies in the run-up to the election?

[Ed Balls]

Were the Chancellor to say that the proposals in our manifesto were uncosted and simultaneously try to block our manifesto from being independently audited by the OBR, that would look as if he had a political motive. But as I said, I am still hoping that cross-party consensus will break out in the course of my speech. My hon. Friend is being too pessimistic. Let us give it another 10 minutes.

Oral Answers to Questions

Stephen Doughty Excerpts

Tuesday 24th June 2014 Commons Chamber

[Mr George Osborne]

I am sorry, but when the hon. Gentleman was talking about an excellent Deputy Prime Minister I assumed he was talking about the leader of the Liberal Democrats rather than John Prescott—perhaps the hon. Gentleman was just being ironic about Lord Prescott. Lord Prescott was on the television yesterday boasting that he had set out a plan in 2004, and then someone pointed out that nothing had happened to his plan since. We are talking about improving the links from the Greater Merseyside region across Manchester and Leeds to Hull, and indeed across all parts of the north. High-speed rail is part of this, but it is only part of it: this is also about solving local bottlenecks, such as with the money we are putting into the M62, and about speeding up the commuter trains, which is what the northern hub is all about. This is a coherent plan to back a northern powerhouse.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T4. Despite the Chancellor’s boasts, the former Tory Chancellor admitted recently that people have “not yet felt any sense of recovery”.Does this Chancellor agree with him, yes or no?

[Mr Osborne]

I agree with the previous Deputy Prime Minister, John Prescott, who said that Labour gets “smashed on the economy”.

The Economy and Living Standards

Stephen Doughty Excerpts

Thursday 12th June 2014 Commons Chamber

[Chris Leslie]

That is why we want to see the full detail of the advice and guidance that need to be put in place. The Government do not like hearing it, but these are the questions that have to be answered. Those answers were not in the Queen’s Speech.

It was not a long-term economic plan that we got in the Queen’s Speech, but a set of short-term obsessions focused on political calculations. The Queen took less than 10 minutes to read out the speech that she was given, yet for most of our constituents it offers zero progress on their concerns. The parties in government think that all is fine with the economy—everything is going perfectly well—but how detached from reality can they get?

The Financial Secretary will no doubt speak shortly and she can quote all the economic data she likes, but I have to tell her that for many people this is an economy that is about low pay, zero hours and, for those who are struggling, food banks. She can quote GDP statistics in recent months, but we are seeing an economy where the very wealthiest 1% in society are doing particularly well and seeing their share of the cake grow while the rest of the population are seeing their share shrink further and further. The Government may be satisfied with this state of affairs, but the Opposition are not.

In the remaining 11 months before the general election, we should have a substantial and meaningful legislative programme which tackles some of these problems, rather than the set of headlines and press releases that have been strung together for effect.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Will my hon. Friend give way?

[Chris Leslie]

No. I have only a few more minutes.

I wanted also to focus on the Infrastructure Bill that the Chancellor has brought forward—the so-called Infrastructure Bill. Third time lucky. The last two infrastructure Bills certainly did not do the trick, nor did the 11 infrastructure plans and strategies that the Government have published since the last general election, or the 79 press releases that we have had on infrastructure since then. We know that this Chancellor is obsessed with presentation, not with getting diggers in the ground.

Let us look at the problems that this country is facing. There are 5 million people on low pay in our country today, yet there is nothing in the Queen’s Speech to incentivise the living wage, which would make a real difference. Bank lending to small businesses that need real help is falling, but banking reform has been inadequate and is not the action that we need. There is a cost of living crisis, with prices yet again exceeding wages, according to the latest economic data. Yet no action has been taken on the big six energy companies, which continue to fail to pass on to their customers even reductions in wholesale energy prices.

The state of affairs in housing is one in which demand goes higher and higher, but house building is at its lowest since the 1920s. I must say to the Chancellor that if he thinks that a new town in Ebbsfleet adds up to a housing strategy, he is sorely mistaken. Yes, we have Help to Buy, but we need “Help to Build” alongside it if we are to tackle that particular problem. Tenants in insecure accommodation are being ripped off by letting agents.

On child poverty, it is predicted that 3.5 million children will be in poverty over the next few years, which is five times the Government’s original estimate, but that does not even get a reference in the Queen’s Speech. As my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) pointed out, 20 million meals have been served in food banks in the past year, which is a badge of shame for the Government, but there is no reference to that in the Queen’s Speech. The national health service is, of course, under more strain than ever before, but there was not a single word about it in the Queen’s Speech.

With all those problems, what have the Government been doing for the past week? They have been feuding among themselves, with Cabinet Ministers briefing against one another and not just two parties in coalition but at least four factions vying for political control. Somebody somewhere has got to get a grip and to show some real leadership and good government, rather than allowing this appalling state of affairs and factionalisation to continue.

I must tell Government Members that, day by day, we are seeing a coalition that is less a coalition than a conspiracy for inaction. [Interruption.] I will give way to the Chancellor if he wants to talk about food banks, child poverty or housing strategy. They are not interested in those matters, however, because the Queen’s Speech is an artifice—it is all about presentation and the spin that they want to put on these issues.

Where is the Government’s ambition and sense of urgency about the problems in the country today? The legislative torpor in the Queen’s Speech is absolutely appalling. They have turned the House of Commons into the most expensive waiting room in history. In this Queen’s Speech, they are treading water for another year. We know that their legacy will be the slowest economic recovery for 100 years. This will not do, and our constituents will not stand for it. The fact that we have to wait a further year for the general election is a tragedy for the millions of people who need real help now. The Government are squandering the chance for change in this country and, with it, the potential that our country should have, which is why Opposition Members believe that Britain deserves much better than this.

Finance (No. 2) Bill

Stephen Doughty Excerpts

Tuesday 1st April 2014 Commons Chamber

[Danny Alexander]

I am grateful to my hon. Friend for his comments. The House should note that he drew these matters to my attention in the preparation of the Budget, and he has campaigned assiduously to ensure that those important bodies are treated similarly to other emergency services in that respect.

Having set such competitive tax rates—rates designed specifically to support businesses—everyone in this House rightly expects those taxes to be paid, and this Bill continues the Government’s firm action against the persistent minority who continue to seek out unacceptable ways to reduce or delay paying the taxes they owe. We are tackling avoidance by large businesses by taking action in this Bill to close down avoidance schemes involving the transfer of profits among group companies and closing a number of other loopholes.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I am interested to hear the right hon. Gentleman talking about tax avoidance. How much of the amount the Chancellor claimed would be raised from the deal with Switzerland was actually recovered by the UK?

[Danny Alexander]

We anticipate that that deal will bring in about £1.7 billion. That is less than was originally forecast but it is a great deal more than would have happened had we continued the previous Government’s position of not having any such deal in place. I draw the hon. Gentleman’s attention to the many other Labour tax loopholes this Government have closed. I particularly draw his attention to measures on partnerships, where the revenues expected now far exceed those originally forecast. I draw his attention to the measures on disguised remuneration, which his party voted against in this House, disgracefully trying to allow people to continue to disguise loans as remuneration—his party should be ashamed of that. I draw his attention to the annual tax on envelope dwellings, a measure this Government have introduced to ensure that people who seek to own properties through companies pay a proper amount of tax. That measure is raising five times more than was originally forecast. So I will take no lessons from him or any other Labour Member on tackling avoidance and evasion.

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[Danny Alexander]

I encourage the hon. Lady to read the detailed analysis published by HMRC more than a year ago.

Let me deal with some of the measures to tackle—

[Stephen Doughty]

rose—

[Danny Alexander]

I have given way to the hon. Gentleman previously, so I am going to make some progress.

This Finance Bill also tackles avoidance by wealthy individuals by preventing high-earning, non-domiciled individuals from using dual employment contracts artificially to reduce their UK tax liability. We are tackling the avoidance of employment taxes by taking action to prevent offshore and onshore employment intermediaries from avoiding their obligations. We are tackling the avoidance of taxes on residential property through the use of corporate envelopes by creating new bands for the annual tax on enveloped dwellings and extending the related stamp duty land tax and capital gains tax charges. In addition, the Bill also creates a new requirement that users of avoidance schemes which have been defeated in another party’s litigation, or which fall within the scope of the disclosure of tax avoidance scheme rules or the general anti-abuse rule, which this Government have introduced, should pay the disputed tax up front. That will bring forward almost £5 billion of revenue over the next five years and will ensure that those who knowingly enter avoidance schemes cannot hold on to the disputed tax but have to pay up front, like all other taxpayers. Those actions will radically reduce both the incentives and the opportunity for individuals and businesses to engage in abusive behaviour.

Let me now deal with the ways in which this Finance Bill will help people in work. This Government have an incredibly proud record of reducing tax for the lowest paid. Not only are we delivering our coalition commitment to raise the income tax personal allowance to £10,000 this week, but we are going further. This Finance Bill legislates to set the personal allowance at £10,500 in 2015-16. I never tire of telling the House that that policy has travelled from the front page of the Liberal Democrat election manifesto to the pockets of tens of millions of people, in all parts of the UK.

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[Chris Leslie]

I know that Government Members like to expunge history from their memory banks, but there was a global banking crisis—I know this is a shock to some of them—which, from 2008 onwards, caused significant fiscal impact, which reduced revenues into the Exchequer and meant that tax rates had to be reappraised. It was at that point that the 50p rate was felt necessary, as one of the measures of fairness that we needed to put in place. I am proud that that Government took that step. It was not universally popular, as I know from Government Members, but necessary in order to help to reduce the deficit, whereas the Government chose to raise VAT and pull the rug from underneath growth that was beginning to come through in 2010.

I want to continue to scrutinise some of the details in the Finance Bill, because it contains a number of troubling changes. On capital allowances, my hon. Friends intervened on the Chief Secretary, and I also asked whether he thought it was a mistake that when taking office the Government reduced capital allowances—investment allowances—for businesses from £100,000 to £25,000. Yes, they are going back up again, but yet again we see more chopping and changing, more inconsistency; temporary measures, not giving the stability to business that it needs to plan for the long term. The Chief Secretary says that it was not a mistake that they should go down and now they are going up, but that, I am afraid, is typical of Liberal Democrats who like to face both ways on these matters.

In chapter 2 we have the married couple’s tax allowance. The Chief Secretary is deep in conversation, but I want to give way to him in a moment specifically on the issue of the married couple’s tax allowance. [Interruption.] From a sedentary position, he says that he will not intervene, but this is a critical point because I am not quite clear on his view of the married couple’s tax allowance. The Chancellor was apparently in a little bit of doubt about it, but the pressures from Conservative Back Benchers were such that they needed this transferrable allowance, which will help only about a third of married couples because it is available only to couples where one person is in work but the other does not use all their tax-free allowance. There are a number of other ways in which that amount of money could have been allocated. He could have decided to do it through the personal allowance—I know he is keen on that policy—perhaps a 10p starting rate of tax. Does the Chief Secretary agree with the implementation of the married couple’s tax allowance? This is his opportunity to set out the Liberal Democrat attitude to these things. I will give way to him. The record will have to show that, for whatever reason, the Chief Secretary does not want to stand up and sing the praises of the married couple’s tax allowance in this particular agenda. Yet again, he is stifled by his capture by the Conservative party, unwilling to speak his true mind on these issues.

On the employment measures in the Bill, such as they are, yesterday the Chancellor was full of rhetoric about full employment, yet the Government have come forward with no new policies to deliver this. The number of young people out of work for 12 months or more has nearly doubled since the Chancellor and Chief Secretary came to office, and we have a record number of people who want to work full time but are being forced to work part time, a Work programme that is so spectacularly unsuccessful that people are more likely to go back to the jobcentre than find work, and only 5% of disabled people on the Work programme have found work through that programme. We clearly need compulsory starter jobs for the long-term unemployed to help them to repair their CVs and to get back into work and on to the ladder to a long, sustainable career.

[Stephen Doughty]

I agree with my hon. Friend on the compulsory jobs guarantee, and it is a great shame that we do not see such a measure in the Bill. Does he agree that there is a massive contrast between this Government when they took office and cancelled the future jobs fund, and the Welsh Labour Government in Cardiff who introduced the Jobs Growth Wales scheme, which has now seen nearly 12,000 people across Wales benefiting, and one of the lower rates of unemployment in the UK because of that measure?

[Chris Leslie]

Conservative Members love to bash what is going on in Wales. They have an anti-Welsh attitude to these things, but it is one of the great success stories of devolution, making sure that they focus on a meaningful back-to-work scheme, particularly for those who have been out of work for a prolonged period. That is what we need to have, and I wish Ministers would learn from that.

Chapter 4 deals with annuities and pensions. Obviously, as we have said, in general those annuity changes are to be welcomed. Annuities are an outdated product and they failed too many pensioners, but it is important to reiterate the tests that we have. What sort of advice or comprehensive guidance will be put in place for those reaching retirement and potentially having to make calculations of income perhaps over a third of their lifetime to come, and what will happen to the annuities market for those who do wish to purchase such a product to have a steady stream of income in perpetuity?

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[Richard Harrington]

My right hon. Friend makes a valid point. That is another benefit. That is another way in which setting up a business is a public service.

Many of the things that the Government are doing involve not only the Treasury, but other Departments. I mentioned the pension changes, which relate to the Department for Work and Pensions. There are also changes in skills and education. The new university technical college in Watford completed on its property in Colonial way today. That has been put together by David Meller of the Meller Education Trust, who has several projects in the area, and myself. It will provide pre-apprenticeship education for businesses in the area that have jobs and that want trained people.

The UTC is sponsored by the Hilton hotel group, which is based in Watford. In fact, it runs the world from Watford. Everyone in Watford thinks that they run the world from there, but Hilton actually does. For the sake of clarity, people should understand that that excludes the United States, the rest of the world being a region of the United States in many people’s perception. The important point is that such firms are thinking, “If we want skilled employees to build up our business, we need them to be trained from quite an early age.” Hilton and Twin Technology, which is an IT company, are the two main sponsors of the UTC. They helping to design the courses because they are prepared to guarantee that there will be work experience and apprenticeships for people who come through the college. The Government have helped to facilitate that through the Budget and the Finance Bill.

In the dream world of the Opposition, they say, “Hey, everybody should get a job and it is guaranteed for a year.” No one has explained to me where those jobs will come from. I saw people working in the park as a result of the last Government’s attempt at that. People were taken on for a year to help the park keeper, but the job disappeared because it was not really a job. I am pleased that this Government have done their best to avoid that trap.

[Stephen Doughty]

The hon. Gentleman is giving a slightly confusing impression of such schemes. I have met small businesses in my constituency that have benefited from taking on workers through the Jobs Growth Wales scheme, which they would not otherwise have done. The scheme therefore benefits the business and the person who is in a job, getting experience and developing themselves. There would otherwise have been a lost opportunity.

[Richard Harrington]

I respect the hon. Gentleman’s view. I described my experience of the last scheme and he has spoken of his personal experience. I am in favour of that kind of scheme. When I was very young and starting out in business, I was able to take on one person under the old youth training scheme, which was much maligned by the Labour Government afterwards. I paid her £30 a week and the Government made up the balance. It was a very simple scheme and not as sophisticated as the schemes that we have today. That person is still in employment, although I am no longer anything to do with the company. She was 17 at the time and is now 40. That shows how old I am, but it also shows that such schemes can work for people. In my experience, the jobs that were provided under the last scheme would not otherwise have existed. It did not subsidise a job that would have been there anyway. However, I am perfectly happy to accept his point and his experience.

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[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I listened with care and interest to the hon. Member for Watford (Richard Harrington), and I challenge the idea sometimes portrayed by Conservative Members that the Labour party is somehow against business and does not understand it or the value it creates for the economy. We all do. I meet many small and large businesses in my community every week. Of course I want to see them grow and employ more people. I want them to employ people on better wages with better conditions and add that value. The hon. Gentleman’s comments about people being able to buy Ferraris are revealing and go to the heart of the Government’s problem, which is that they have done so much to help big businesses and bigger earners but done so little—or indeed have targeted—those who have less, be they small businesses or individuals on low incomes. That is the fundamental difference between those on the Government Benches and those on the Opposition Benches.

I am delighted to have the opportunity to speak on the Finance Bill and to support the reasoned amendment. As my hon. Friend the Member for Nottingham East (Chris Leslie) made clear, the Bill is long and weighty but will do remarkably little, if anything, to tackle the cost of living crisis facing many of my constituents. It will do much to support bigger earners and bigger businesses at the expense of small and medium-sized enterprises and businesses, and small and medium income earners in constituencies such as mine. It will do very little for the bank clerk or the call centre operator working for the banks and the financial industry in my constituency. It will do very little for the cleaner taking on a second or third job to make ends meet to be able to pay basic bills. The basic costs of living, whether energy, food or heating, are rising for them. It will do very little for the shift workers working in supermarkets in my constituency.

[Jacob Rees-Mogg]

This is a completely different Finance Bill from the one we have before us. The only decile of income that will actually be worse off in the next year is the top decile. In this Budget, there is £15 off fuel bills, a rise to £10,500 in the personal allowance, which helps the lowest paid most of all, and the freeze in fuel duty. All that helps the worst-off in society.

[Stephen Doughty]

The hon. Gentleman fails to note that the average worker has become £1,600 worse off since his Government came to power. I am sure that he is doing relatively well, but many people in his constituency, and certainly in mine, are not. Small businesses in my constituency are struggling with energy bills and business rates.

Hard-working people across my constituency are £1,600 worse off since the Government came to power. The increase in the personal allowance is often paraded by Government Members, but that is dwarfed by the 24 tax rises that have hit hard-working people. At the same time, the Chancellor has given a tax cut to millionaires. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) is not in his place, but he spoke on that earlier. The economic adviser to the leader of Plaid Cymru has apparently also supported that recently.

[Mr Kevan Jones]

Does my hon. Friend agree that there is the problem of insecurity, even for those who are in employment? Zero-hours contracts and a lot more part-time work make it difficult for many people to get credit, or even to dream of getting on the housing ladder.

[Stephen Doughty]

My hon. Friend makes an excellent point. Indeed, I will come on to the value of high-paid and well-paid work later in my remarks. That is one of the reasons I am such a strong supporter of the living wage. I am not surprised that Government Members will not give us an answer, when asked about the job figures, on how many of them are part-time, zero-hours contracts and minimum wage jobs. That is deeply revealing.

Businesses across my constituency are still struggling to get competitive financing to grow, yet bank bonuses are rising again. The Chancellor is using his time in Europe to fight on the bankers’ behalf, rather than looking at how we regulate our banks and financial sector in a sustainable and fair way that will drive real investment and real jobs in our economy.

What affect businesses in my constituency just as strongly, and 2.4 million businesses across the country, are energy price rises. They have hit the cafes I visit in Grangetown as much as they have hit the hard-working nurse or police officer who is struggling to pay their energy bills in places such as St Mellons and Penarth in my constituency. Energy bills have risen by £300 a year since the election. The Government constantly try to con us into believing that they are cutting bills, but the bills continue to rise. The Government remain unwilling to agree to an energy price freeze, although this week one of the major energy companies agreed to freeze its prices.

Earlier, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) spoke passionately about visiting food banks in her constituency. I meet people who are struggling to get by: people who have been in work and have been looking for work, but who are now experiencing the indignity of having to go to food banks for emergency help.

[Mark Tami (Alyn and Deeside) (Lab)]

Many people who are in work have to go to food banks as well, because they are receiving very poor wages or are on very poor zero-hours contracts.

[Stephen Doughty]

My hon. Friend is exactly right. I have met many such individuals in my constituency. Two of the main food banks in my constituency are Cardiff Foodbank and the Tabernacle food bank, which is run independently by a church in Penarth. During the festive period in the run-up to last Christmas, demand for the Tabernacle’s services was eight times higher than it had been over the previous festive period, and demand in Cardiff overall doubled. I found that information very revealing. If it does not give an impression of what is really going on—of the hardship that people are facing, and the number of people who are on the edge as a result of the cost of living crisis—I do not know what else does.

[Mr Redwood]

Since devolution and the advent of a Labour Government in Wales, there has been more public spending per head in Wales than in London and the south-east, yet the economy of London and the south-east has greatly outgrown that of Wales. Why should that be?

[Stephen Doughty]

I am interested that the former Secretary of State for Wales should want to make comparisons between the economic performance of Wales and that of the rest of the United Kingdom. As I said earlier, the Jobs Growth Wales scheme has secured work for 12,000 people who would not otherwise have obtained it. In fact, Welsh unemployment is now lower than unemployment elsewhere in the UK. I think that the Welsh Labour Government are doing a very good job, notwithstanding the constant war on Wales being waged by the Conservatives, which the right hon. Gentleman appears to want to continue.

What I have described is the reality of life in Britain today for the constituents I have met at food banks, because of the cost of living crisis. We want the Government to take the steps we have recommended. We would like to see a Finance Bill that froze energy bills, reformed the broken market, returned people to work—not just in Wales, but throughout the UK—with a compulsory jobs guarantee, cut taxes for 24 million people on middle and low incomes by introducing a 10p rate, and cut business rates for small firms rather than cutting corporation tax for the biggest. A moment ago, we were talking about the Welsh Labour Government. It was only yesterday that their Economy Minister announced a new business rates relief scheme for retail companies. That is another example of the way in which they are prioritising small businesses, whereas this Government are prioritising those at the top. Of course, we would also reverse the £3 billion tax cut for people earning more than £150,000 a year.

[Mr Kevan Jones]

Such as the right hon. Member for Wokingham (Mr Redwood)?

[Stephen Doughty]

Indeed, indeed.

As my right hon. Friend the shadow Chancellor pointed out today, it was Labour that supported, and indeed beat down, successive cuts in the main rate of corporation tax, which fell from 33% in 1997 to 28% in 2010. Given that the rate today is 21%, however, we cannot justify another cut for bigger businesses when so many small and medium-sized businesses are under pressure. We want to see a cut that would benefit 1.5 million businesses throughout the UK, and in Wales we are already leading the way in that regard.

A moment ago, I mentioned the success of the Jobs Growth Wales scheme. I want to highlight that success, because there is a big contrast between it and, say, the failures of the Work programme introduced by this Government. As I said earlier, the Government cut the future jobs fund when they came to office. We in Wales, under a Labour Government, chose a different way, without which far too many young people would otherwise be missing out on opportunities for growth, development and experience. They would be sitting idly at home, rather than being out there developing skills and contributing to the economy.

My hon. Friend the Member for Airdrie and Shotts (Pamela Nash) has recently done some excellent work on youth unemployment and highlighted that 900,000 young people throughout the country receive unemployment benefits for more than a year—a figure that has doubled under the Government. Again, it is a tale of two approaches. Obviously, we want the jobs guarantee to be funded by a bankers bonus tax, learning from the example of schemes in Wales.

I have strongly supported a living wage for some time. I congratulate Cardiff council, which has introduced a living wage and Cardiff university, which took the bold step of introducing the living wage following campaigning by many organisations such as Citizens UK to bring people’s wages up so that they can earn more and cope with the cost of living, and ultimately contribute more to the taxation system and the economy. I am disappointed that the Bill does not make any plans to boost wages such as the Opposition’s proposals to incentivise firms to pay the living wage by giving a 12-month tax rebate of up to £1,000 for every low-paid worker who gets a rise. Increased tax and national insurance contributions raised from employees receiving higher wages would fund that scheme. That is about a race to the top. It is about building people up and getting them off social security and into better paid jobs, rather than the Government’s race to the bottom.

Tax avoidance generated some strong remarks from the Chief Secretary when I mentioned it. This morning, we heard that the Business Secretary has lost taxpayers billions in the Royal Mail fiasco. We need to look increasingly carefully at the Government’s great claims about tax avoidance and how much they will get back in various deals and schemes. I only wish that they had spent as much time in the past three years on measures to stop people avoiding tax as they have on cutting taxes for the richest.

I want to respond to the Chief Secretary’s comments. Despite the Bill’s numerous clauses and instruments on tax avoidance, which, I am sure, will be interesting to debate, the amount of uncollected tax rose last year. The Swiss tax deal will raise only a quarter of what the Chancellor claimed when he added it to his autumn statement. Many Opposition Members will treat with scepticism any future big claims about billions that will come from such deals when they are not delivered.

Tax avoidance is significant for the country’s finances and is also regularly raised with me locally. Ordinary taxpayers and businesses throughout the country are concerned about companies and individuals engaging in aggressive tax avoidance and tax avoidance schemes, and about individuals who fritter away this economy’s wealth in tax havens and through other loopholes, rather than contributing.

I will examine the provisions closely and follow the debates with interest. I am unlikely to serve on the Finance Bill Committee this year, although I enjoyed it greatly last year. [Hon. Members: “Shame!”] Indeed, it is a shame. We need to continue to hold the Government’s feet to the fire on tax avoidance. Many of our constituents would want us to do that.

The general anti-avoidance rule has been introduced and there are new schemes about accelerating receipts, but will they generate more money for the Exchequer? It is all well and good to introduce them faster—we all want that—but will more money be raised? A recent report in the Financial Times stated that the Office for Budget Responsibility originally hoped that the tax system would collect revenues worth 38.8% of national income in 2014-15, but that figure has been progressively revised down to 37%. We have to treat some of the Government’s claims about tax revenues and receipts with great caution.

This Finance Bill does nothing to tackle the cost of living crisis that many of my constituents are facing. It does very little to support the small and medium-sized businesses that are crying out for help, and it is continuing with out-of-touch policies such as millionaires tax cuts. Instead of learning from the economic and employment successes of the Labour Government in Wales, this Government are continuing to attack and to smear that Government. They would do far better to learn from them.

--- Later in debate ---

[Shabana Mahmood]

Yet after all that action, this Chancellor and this Government have given with one hand and taken away a hell of a lot more with the other. The hon. Gentleman knows that is true. He also knows that people will be worse off in 2015 than they were in 2010, which says everything we need to know about this Government’s priorities.

What is there for young people? Long-term youth unemployment has doubled under this Government, and 900,000 young people are out of work. What is there in the here and now, in this Bill, to help them? Not much. The Chancellor spoke yesterday of full employment, but where are the policies that would make that happen? The number of young people out of work for one year or more has almost doubled under this Chancellor, and what this Government have delivered—the Work programme—has returned more people to the jobcentre than have been found new work, while only 5% of disabled people have been helped to find a job.

The hon. Member for Dover (Charlie Elphicke), who is not in his place, cited the welcome decrease in long-term youth unemployment in Birmingham, Ladywood. He is not aware, though, that Birmingham’s Labour-run council administration has introduced a scheme called the Birmingham jobs fund, based on the Labour Government’s future jobs fund, specifically to tackle youth unemployment. That is why we have seen a decrease in long-term youth unemployment in my constituency and in other Birmingham constituencies. Although he might not have meant to congratulate my colleagues at Birmingham city council, I shall certainly pass his congratulations on to them.

Where was the help for small businesses—the backbone of economic growth in this country—who are crying out for extra support? We have said that instead of going ahead with the additional 1% cut in corporation tax, the Government should use that money to cut and then freeze business rates so that small and medium-sized enterprises can get some real help now. During last week’s debate on the Charter for Budget Responsibility, the Government tried to portray Labour’s policy as an anti-business proposal that would increase business taxes, but when it was pointed out to them that that argument flies only if one considers small businesses not to be real businesses, they seemed to change tack. Today, the Secretary of State for Education tried to posit it as setting one set of businesses against the other, but that totally and utterly misses the point.

Our proposal would use all the money saved by not going ahead with the corporation tax cut for the largest companies to support small businesses. At 21%, the corporation tax rate would remain competitive, but that switch in spending would strike a better and fairer balance. Business rates have already gone up by an average of £1,500 under this Government, and many businesses, including more than one in 10 small businesses, are now paying more in business rates than in rent. Unless things change, business rates will have risen by an average of nearly £2,000 by the end of this Parliament.

This Government have failed to help small businesses, and so the next Labour Government would cut business rates in 2015 and freeze them in 2016.

[Stephen Doughty]

I wonder whether my hon. Friend has had the same experience when talking to small businesses in her constituency as I have had in mine. The top two concerns that they have raised with me up and down the streets of Cardiff and Penarth are business rates and energy prices—two things that this Bill does nothing about.

[Shabana Mahmood]

My hon. Friend makes a powerful point. His experience as a constituency MP is exactly the same as mine. Almost every business that comes to see me at my surgery is struggling with its business rates and energy costs.

What does the Bill say about the top rate of income tax? Well, it remains at 45p. This Government have given an average tax cut of more than £107,000 to the 8,000 millionaires in our country. They seem to think that if they keep talking about the increase in the personal allowance, they will make people forget that the combined impact of the tax and benefit changes is that a typical household is £900 a year worse off, and that the richest in our country are getting an absolutely huge tax cut. The Government are desperate to be able to claim that the 50p rate raised as little money as possible because they want to make it easier for themselves to justify their decision to give a tax cut to the wealthiest at a time when ordinary families are really struggling.

The Government’s own assessment claims that the cost of cutting the rate to 45p, excluding all behavioural changes, was over £3 billion. To justify the tax cut, they argued that most of the potential revenue would be lost as a result of tax avoidance. Government Members were very excitable about the Government’s record on tax avoidance, which I will come to in a moment. But surely a Government as proud as they are of that record would have taken some targeted anti-avoidance measures to stop people avoiding the 50p rate. Instead, they ducked the opportunity.

The Government also claim that tax revenues rose after they cut the top rate of tax, but both the Office for National Statistics and the OBR have said that many of the highest earners moved their income and delayed their bonuses by a year after the 2012 Budget to benefit from the lower top rate of tax. That shifting of income will have cost the Treasury millions of pounds in lost revenue. When the deficit is high it cannot be right to cut the top rate of tax. The next Labour Government will put that rate back to 50p while we get the deficit down.

There was some excitement on the Government Benches about the Government’s record on tax avoidance. Although they like to pretend that that record is strong, it is nothing to write home about. The DOTAS—disclosure of tax avoidance schemes—measures were introduced by a Labour Government in 2004. Every time Government Members stand up and take credit for those measures, I shall pass on their thanks to the previous Labour Administration, who introduced them.

The Government have made a number of assumptions in their calculations of the value to the Exchequer of extending the accelerated payment scheme to both DOTAS and the general anti-abuse rule. Although HMRC is successful in about 80% of the cases it litigates, I find it hard to see why the same 80% success rate has been applied to potential cases under the GAAR when a case on the GAAR has yet to go to court. We will scrutinise the Government’s numbers in Committee: they have a history of overestimating the impact of their avoidance measures. We have spoken a lot today about the Swiss deal, which raised £2.3 billion less than expected. I am sure that the Exchequer Secretary will not—[Interruption.]

Charter for Budget Responsibility

Stephen Doughty Excerpts

Wednesday 26th March 2014 Commons Chamber

[Ed Balls]

It started in 1986 under a Conservative Prime Minister and social security Secretary, it was called “restart” and it actively moved people from JSA— unemployment benefit—on to long-term sickness and invalidity benefits. It meant that very many people then spent many years out of work. It was a shameful policy.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

rose—

[Ed Balls]

The hon. Member for Dover (Charlie Elphicke) has given up, so I will give way to my hon. Friend.

[Stephen Doughty]

I am glad that my right hon. Friend has mentioned the compulsory jobs guarantee, because is it not an absolute contrast with the manifest failures of the Work programme? Does he agree that the Government ought to be learning from, rather than smearing, the Welsh Labour Government and the success of the jobs growth Wales programme?

[Ed Balls]

All the evidence shows that action to get young people back to work, especially the long-term unemployed, pays real dividends. It is what we mean by tackling the root causes, and it is the right way to implement a tough welfare cap. That is the approach we will take.