Income tax (charge)

Stephen Kinnock Excerpts

Tuesday 17th March 2020 Commons Chamber

[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to follow the hon. Member for Bolton North East (Mark Logan), and I particularly congratulate him on that bit in Mandarin, which was blatant showing off. Nevertheless, it was quite impressive.

As the country struggles to deal with a global health pandemic, the very structure and foundations of our economy are coming into focus. Today’s debate is an important opportunity not just to talk about how we deal with the immediate impact of the virus, but to consider the foundations and structure of our economy. We must build resilience. We know that this shock will not be the last that our economy faces, and we need to build an economy that is able to absorb and bounce back from future shocks.

The introduction of the Government’s so-called levelling up agenda reflects what many economists, politicians and commentators have recognised for many years: the gross inequalities that exist in the UK economy are, in no small part, down to where someone is born. Tackling regional inequality must be central to any strategy to create a fairer Britain.

In London, Britain plays home to the richest area in the whole of northern Europe, but the UK is also home to the five poorest regions in northern Europe, with west Wales and the valleys the poorest of all. In 2016, average incomes in London were 77% higher than the UK average, which is as staggering as it is unsustainable. We need a commitment from Government that they will bridge the widening gap between our cities and our towns.

The economic story of the past 40 years has been one of a job market that has shifted from manufacturing to services, boosting metropolitan cities, but leaving industrial towns bereft of opportunity, wealth, power, investment, and a sense of security. Workplaces have changed beyond recognition, with productive and meaningful industrial work evaporating, and high streets being ripped up due to rapid technological change. A winner-takes-all post-18 education system has whisked certain young people off to university, but delivered nothing for the individuals and communities left behind. All that has been compounded by a decade of self-defeating Tory austerity—a party that responded to seismic shifts in the global economy by treating industrial areas with a toxic mix of indifference and incompetence.

Now, for electoral reasons, the Conservatives have put levelling up front and centre of their agenda. They know that their success in keeping hold of leave voters in the north, the midlands and parts of Wales will be largely dependent on how they manage to transfer wealth and opportunity in those directions. That aim is worthy in itself, but will the strategy succeed when the motives are skin deep?

Let us look at the baby steps that the Conservatives made with this Budget. Commitments on improving infrastructure and devolving power to city Mayors are central to the Chancellor’s promises, but we get the sense that this Budget is really a continuation of the city-centric model on which the British economy is based, and which has failed our economy and country for far too long. There is plenty to say about Leeds; not that much about Leigh. Policies for Birmingham; pittance for Bassetlaw. As a country we must be far more ambitious in tackling regional equality, as well as the gaping chasm that exists between our towns and our cities.

The likes of economist Paul Collier, the Institute for Public Policy Research and the Industrial Communities Alliance have each identified important levers for the levelling up agenda. Across the board there is recognition of the need to focus on local political autonomy. Whitehall simply cannot plan the economy of a distant area; it must devolve more power everywhere, not just via piecemeal city devolution deals. We also need a locally based finance industry. It was a huge mistake for the Bank of England to force the merger of regional banks, because local knowledge is essential in knowing where to lend. We need locally organised business communities that work closely in lockstep with locally based college education. Local youth should be trained in pertinent skills, which in turn will help the surrounding firms. For example, German tertiary education has much stronger links with local business.

For a decade, the Conservatives have failed those who do not go to university. Far from reviving vocational education, the Government have poured money into universities which, as well as failing to defend free speech, have loaded students with debt, and too often failed to provide them with any significant return on their investment. That cycle must be broken and must change.

The Government must also support the clusters of industries emerging around the UK—steel and clean energy in south Wales, tech in Cambridge, chemicals in Hull and metals in Yorkshire, for instance. We need a comprehensive and integrated policy agenda. Investing in transport is important, but it will not suffice. A continuation of the city-centric model will lead to more social damage and increasing travel congestion, and will do nothing to green our economy.

The most critical part of rebalancing our economy has to be a commitment to a modern manufacturing renaissance. UK manufacturing has been in decline for decades, dropping from 30% of GDP in the 1970s to a meagre 9% today. That is very much a political choice; it is not an act of God. Germany’s manufacturing base has remained strong, at more than 20% of GDP, thanks to proactive Government support and a proactive industrial strategy. Its economy is more resilient as a result.

Of course, any UK manufacturing renaissance must be underpinned by a thriving UK steel industry. Steel is the backbone of the British economy. It is not a sunset industry but a 21st century industry that continues to underpin our entire manufacturing base, from defence to aerospace, and our everyday lives, from the houses we live in to the offices we work in and the trains, buses and cars we travel in—including the electric vehicles of the future. Steel jobs are well-paid manufacturing jobs, offering people in so-called left-behind communities real opportunities in life, yet the Chancellor’s Budget did nothing to address the sky-high energy costs that are crippling the steel industry—UK steelmakers pay 80% more for their energy than their French counterparts —or to tackle the extortionate business rates that are crippling our industry.

If the UK Government are serious about levelling up, steel simply must be front and centre of that strategy. Without its steel backbone, the British economy will not be able to stand up, let alone level up. There is still no word on the UK shared prosperity fund, which will replace EU development funding from 2021. The clock is ticking, but there is still no sign of the consultation on that fund, which the Government promised at the end of 2018.

Levelling up cannot just be a buzzword. Getting Brexit done is already starting to come unstuck, with the Prime Minister’s “oven-ready deal” seemingly stuck at the back of the frozen food section. The levelling up agenda must not be left to thaw, and neither must it come out of the oven half-baked. We need a whole-nation industrial strategy that actually reaches places such as Aberavon—one that goes beyond the city-centric model laid out in the Budget and begins to reunite our deeply divided country.

[Several hon. Members rose—]

Oral Answers to Questions

Stephen Kinnock Excerpts

Thursday 15th September 2016 Commons Chamber

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

5. What assessment he has made of the effect of the result of the EU referendum on the timetable for a decision on Heathrow expansion.

[Stephen Kinnock (Aberavon) (Lab)]

8. What assessment he has made of the effect of the result of the EU referendum on the timetable for a decision on Heathrow expansion.

[The Secretary of State for Transport (Chris Grayling)]

The Prime Minister will begin the negotiation for Britain’s future relationship with the EU and will also take the decision about when to trigger article 50 and start the formal process of leaving the EU. As I said a moment ago, as we move into the new world beyond our membership of the European Union, it is important that we are an outward-facing nation with strong business ties around the world. The decision on runway capacity is an important part of that, and it is important that we get it right. We will take that decision and move ahead with our plans, ensuring that we have the right links for the future.

[Chris Grayling]

I will not give an exact date today, but I assure the House that we intend to take the decision soon. It is important that we move ahead with these plans. I hear what my right hon. Friend says about Heathrow. I have seen three effective, well-crafted proposals for the Government and this House to consider. We will reach a view shortly about what recommendation we will seek to make.

[Stephen Kinnock]

The Prime Minister has claimed that she wishes to govern in the interests of the whole country. The expansion of Heathrow would deliver more than 8,000 jobs for Wales and contribute more than £6 billion to the growth of our economy. Does the Secretary of State agree that the expansion of Heathrow is the only right answer for the economy of Wales?

[Chris Grayling]

I hear what the hon. Gentleman says, and he clearly has a strong view on this matter. As he will have seen, strong views are held on both sides of the House and on all three sides of this argument. I note what he says about the importance of proper air links for Wales. This Government will always focus on the best way we have at our disposal to help Wales, but we have to take a decision about the interests of our collective United Kingdom and which option is better, and that is the decision we will take.

Severn Bridges (Tolls)

Stephen Kinnock Excerpts

Tuesday 21st July 2015 Westminster Hall

[Jessica Morden]

I agree wholeheartedly. There is probably now a case for a broader campaign to make such points, encompassing local government, business, chambers of commerce and so on.

Owens logistics, which is based in the constituency of my hon. Friend the Member for Llanelli (Nia Griffith) but has a main depot in Newport, is a haulage company that has long campaigned for a reduction in the tolls, on which it spends half a million pounds a year. That money just comes off the bottom line. It is an extra cost that the business has to pay that it cannot pass on to its customers. Owens has been quite open with me that it is thinking long and hard about its business decisions, because if it transferred parts of its operation across the bridge, it would avoid the tolls. That is the sort of decision that businesses in our area are making, which is precisely why we need clarity from the Government about further toll reductions.

The South Wales chamber of commerce told me about the impact that the tolls have on the tourism sector and the logistics industry. As I said, if logistics companies choose to pass the cost on to the customer, it adds to the cost of goods produced in Wales, making them less competitive, or increases the costs for businesses buying goods from England. The chamber of commerce also said that its colleagues in Business West say that it is picking up the fact that businesses are choosing to locate on the English side of the bridge due to the tolls.

Small businesses are also affected. I received an email this morning from a business that rents out marquees and employs 38 people. The cost of the tolls to the business over the summer is an extra £1,000, making it difficult for it to compete with companies on the English side of the bridges.

[Stephen Kinnock (Aberavon) (Lab)]

I congratulate my hon. Friend on securing the debate. Does she agree that the policy for the bridges and their tolls is a classic example of a false economy? The tolls may well create revenue, but a huge amount of additional economic activity is being lost. This disincentive to cross-border trade and activity deprives the Exchequer of much-needed tax revenues through corporation tax, business rates and additional economic activity. If the tolls were presented as a classic example of a false economy, we may get some more traction with the Government.

[Jessica Morden]

I thank my hon. Friend for his well-made point. The Welsh Government certainly agree that lowering the tolls would help to stimulate the Welsh economy.

Other hon. Members mentioned commuters earlier. In my constituency, many people in Magor, Rogiet, Caldicot, Undy and so on commute over to Bristol for work every day. It is a strong commuter area and the tolls’ effect is keenly felt, particularly by those who are looking for work in Bristol but cannot absorb the toll cost. Over the years, I have met people facing a bill as part of the Child Support Agency process, for example, who have said to me, “I work for this distribution company in Bristol, but once I have absorbed the bridge costs, I am on fairly low pay. How am I going to survive?” People’s employment opportunities are being limited. The only concession available on the Severn bridges is the TAG system, which allows four free journeys out of 22 in a month. Taking bank holidays and annual leave into account, that is not much of a bargain. We could do a lot more on that.

Some 12,500 people commute to England from Newport and Monmouthshire. Many of them use the bridges, which restricts their access to jobs and acts as an extra tax. My plea to the Minister today is for a consultation. We are just two years away from decisions being made, so I ask the Department for Transport to give bridge users, businesses and hon. Members a say in how we move forward and help our constituents by getting the tolls down. There is not long to go, so it is high time that we had that conversation. Successive UK Governments have failed—the Welsh Government have done the same—to undertake studies into the bridges’ economic impacts. It is time that we asked the Department for Transport to collect further evidence so that everyone can have an input.

Moving on to the thorny issue of bridge finances, having lived with the Severn bridges in the capacity of an MP for many years I can say that the finances are as clear as mud. Getting clarity is terribly difficult, so I ask the Minister for some figures today so that we can have an informed debate going forward. The concession was established by the Severn Bridges Act 1992, which, in retrospect, was clearly far too restrictive. It allowed the company to whack up the tolls every year, with no one being able to have a say and the Government arguing that they have little flexibility to step in and reduce tolls without incurring taxpayer liability. However, as I said earlier, they did step in in the case of the Humber tolls.

As we know from previous Welsh Affairs Committee inquiries, the company has done very well over the years. In oral evidence given to the Committee in 2013, we heard that the costs of the bridges for Severn River Crossing plc were some £50 million, including depreciation at £38 million and operational costs of £13 million. That £50 million compares with an annual turnover of £81 million. Will the Minister confirm the latest position and update those figures? Having a clear idea of the company’s operational costs and profits would be helpful.

The Government also do pretty well out of the bridges. They receive significant tax receipts from VAT and from the removal of the industrial buildings allowance, which was a tax relief that Severn River Crossing plc used to benefit from. From the answer to a recent parliamentary question, we found out that Severn River Crossing plc paid £154.2 million in VAT to Her Majesty’s Revenue and Customs between 2003 and 2014. However, we have been unable to get a specific figure from the Government on how much they have benefited from the removal of the IBA. Will the Minister commit today to providing that figure? Will the Government be straight about how much they have benefited?

I also hope that the Government will remedy as early as possible the situation whereby they and the company are protected from financial pain but my constituents and other users of the crossings are not. Users always end up paying, while the company is always protected. When the industrial building allowance was withdrawn, the company was allowed to extend its tolling mandate to compensate for that. The same was true of the VAT increase implemented by the coalition Government. In the spirit of fairness, I wonder whether the Government could reduce the tolling mandate given that the Chancellor has announced further reductions in corporation tax, which will further benefit Severn River Crossing plc. The first corporation tax cut will be in 2017-18, before public ownership. How will we ensure that taxpayers do not lose out when the company gets yet another tax reduction?

The main point on which my constituents would like an answer is about VAT. Given that the Government have benefited from the tax income—VAT of £154 million—why are they still arguing for tolling to continue after 2018 at a level high enough to recoup an £88 million debt? Clearly, the Government have done extremely well out of the bridges, so is it not time to pay people back a little by reducing the toll?

I want to allow others to speak, although hon. Members have already raised a lot of issues to do with the bridges. It would be incredibly helpful to know when the concession will end, because that has been a moveable feast—it was 2016, then 2017 and is now 2018. Will the Minister update us on when the Government expect the concession to end and the bridges to come back into public ownership, and on the maintenance of the bridges? A previous Minister said in reply to a similar debate to this that he would keep an eye on what he was inheriting. Will the Minister tell us a little more about what the Government expect to inherit when the bridges come back into public ownership?

May we have a discussion about free-flow technology? In various oral evidence sessions of the Welsh Affairs Committee, the company used to argue that the technology to differentiate between cars and vans was not available. Given that the Government are moving to reduce the cost for vans, surely implementing such technology will be easier. I want a maintenance-only toll, but I also want the Government to add into the mix a re-examination of what concessions might be given locally.

--- Later in debate ---

[Andrew Jones]

Removing VAT will result in a significant cost reduction. Of course, like all Members, I would like cost reductions in all sorts of areas of our economy, but to say that VAT reductions are matters of great insignificance is simply wrong. It should be remembered that further reductions in tolls for some vehicle classes once the crossings return to public ownership were also announced in the March Budget. The Chancellor announced that, when the concession to toll the crossings ends, the higher toll rate for vans will be reduced to the same rate as for cars, which will be a significant benefit to smaller businesses on both sides of the crossings. So we are considering some toll reductions, which is significant.

Our intention is to continue tolling after the projected end of the concession in 2018 simply to recover the costs that have been incurred in relation to the crossings that fall outside the agreement. The current projection of those costs stands at £88 million. We have not made any decisions about the operation and tolling arrangements for the crossings once the current regime ends. The road investment strategy contains the Government’s commitment to working with the Welsh Government and others to determine the long-term future of the Severn crossings. The Under-Secretary of State for Wales, my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), who is sitting next to me, has done excellent work in highlighting the economic impact that the toll reduction for vans and the VAT reduction will have on the area and in explaining the importance of the crossings overall. We have already met to discuss that subject, and I anticipate that we will meet again shortly.

[Stephen Kinnock]

The Minister says that the Government have not yet made a decision, and 2018 is not that far away. As hon. Members said earlier, business abhors a vacuum. Business needs certainty, and it needs to know where its costs will be. Can we please have clarity on when the decision will be made and why it cannot be made within a defined period of time?

[Andrew Jones]

Although 2018 is not that far, it is still three years away. Work on what happens next is under way. We are looking at a potential end date for the concession of around 2018. It is a financial target, rather than a fixed date, which means that we have a requirement to plan appropriately, and I will address that next.

Oral Answers to Questions

Stephen Kinnock Excerpts

Thursday 16th July 2015 Commons Chamber

[Mr McLoughlin]

I told the hon. Lady when I was asked about giving a pause, and that is when I came to the House. Mark Carne has been doing a fantastic job trying to upgrade the railway while at the same time delivering a railway service for the passenger, which is very important. He described it as “open-heart surgery”. I pointed out when I went before the Select Committee back in March that there were problems with trans-Pennine electrification. That is why the ITT for Northern Rail was deliberately worded so that diesel trains would be in service on that particular line, because it was thought that electrification might have to slip.

[Stephen Kinnock (Aberavon) (Lab)]

7. What recent discussions he has had on the proposed EU port services regulation.

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I represented the UK at Transport Council when this was discussed last October. I have also met the European Parliament rapporteur, the hon. Gentleman’s socialist colleague, Knut Fleckenstein. My most recent discussions were on Wednesday this week at the all-party maritime and ports group chaired by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick).

[Stephen Kinnock]

The previous shipping Minister indicated that the Government would be able to use domestic regulation to counter these regulations if they were passed in Europe, but the details of how it would be done remain unclear. Will the Minister reassure us that he has a clear plan of action to protect the UK’s interests and block any regulations that damage port business and threaten workers’ interests in my constituency?

[Mr Goodwill]

Our position is quite clear: competition between ports is the best way to ensure efficient operation within them. I am pleased that the general approach is better than the Commission’s original proposal. We have the competitive market exemption and more discretion on issues such as pilotage. I would certainly be happy to meet the hon. Gentleman to discuss particular issues affecting Port Talbot, which is one of our most important ports.