Ways and Means

Steve McCabe Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Will the Minister explain how long the Government have been working on this major concession and when he anticipates that there will actually be some change that means non-doms experience the same arrangements as ordinary taxpayers in this country?

[Mel Stride]

The answer to the hon. Gentleman’s question is that that is precisely what this Bill will be achieving. We will be putting an end to permanent non-dom status, so that those who are “deemed domicile” are treated on the same basis for taxation purposes as other residents in our country. Let me gently remind him that his party was in government for 13 years and very little happened then on the issues to which he now professes objection. So we should not be taking too many lessons from Labour on the issue of non-doms.

--- Later in debate ---

[Peter Dowd]

I hope the hon. Lady will be busier in her job.

I find it baffling that, at a time when the Government are introducing some of the most complex plans to make tax digital, and while there is so much uncertainty about how taxation and customs will work post-Brexit, they are choosing to fire HMRC staff rather than hire them. To put it simply, were the Government truly serious about wanting to close the tax gap, which costs the UK taxpayer a minimum of £36 billion every year, they would give it the resources it so desperately needs. Given the thousands of accountants and lawyers across the world whose sole occupation is to advise and enable tax avoidance, it will never be a fair fight.

The sieve-like measures on non-doms which I have mentioned are perforated even further by the plan to loosen the rules on business investment relief. That measure will allow non-doms to remit funds into the UK without paying the usual taxes. There is little evidence that such relief has been effective in encouraging greater investment in business, so expanding it is only a giveaway to non-doms. If any of us wish to invest, we have to pay the appropriate taxes. There should not be different rules for a privileged few, which maintains the Government’s view that the UK can only ever be attractive as a tax haven. The Government’s race to the bottom begins in earnest and enthusiastically.

[Steve McCabe]

On business investment relief, it was suggested a moment ago that we should work with the Government. Does my hon. Friend agree that they should publish details of which companies and businesses benefit from such investment, and what part of the country they are located in? That way, we will be able to see whether there is anything to work with.

[Peter Dowd]

My hon. Friend makes a good point; I hope the Government will listen carefully to what he says and, more importantly, act on it.

The devolution of corporation tax rates to Northern Ireland has been debated in the Chamber many times, and we do not seek to reopen the debate. Nevertheless, we have not debated and will not welcome the clear attempts by the Government to loosen the definition of a Northern Irish employer and water down the requirements for claiming the lower corporation tax rate in Northern Ireland. Under the measure before us, corporations would effectively use Northern Ireland as an onshore tax haven. They would set up small offices with a brass plate on the door, but bring in little of the real investment and jobs that Northern Ireland needs.

We see special treatment for corporations and non-doms, but the news is less good for workers at risk of losing their jobs. The proposed measures on termination payments, if they reflect what was before the House before the election, will target sacked workers as a source of revenue. If there is genuine evidence of the abuse of payments in lieu of notice, that needs to be acted on, but the Government have tacked on a power for the Treasury to reduce the tax exemption on termination payments without primary legislation. That would be a U-turn on their previous statements about dropping such plans. If there is no intention to use the power to reduce the exemption, then the measures should be amended so that it can only be uprated, not reduced. The Government also heartlessly want to enshrine the taxable status of “injury to feelings” compensation. Even when that reflects HMRC’s practice, why is it seen as a priority for legislation?

So there we have it: these motions will introduce a summer Finance Bill that stretches the meaning of summer and will leave taxpayers and businesses with months of uncertainty. It is a Bill that will do nothing seriously to tackle tax avoidance, with the Government claiming to take on non-doms while in the same breath legislating to protect the offshore trusts; a Bill that fails to address the growing black hole and the Conservatives’ mismanagement of our public finances; and a Bill that will protect the privileged few while doing nothing for the many.

This is a dark, miserable, barren winter Finance Bill with a wrathful nipping cold. We have waited a whole season for these resolutions, and they only reaffirm what we already knew: that the country can wait no longer for this disastrous and divided Conservative Government to step aside and make way for a Labour Government who will invest to grow our economy, balance our public finances and take on the tax dodgers—which the Conservatives won’t do.

--- Later in debate ---

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am grateful for the opportunity to make a brief contribution to this debate.

I cannot help but feel that the Government seem a little embarrassed by this whole Budget, this whole set of measures and the state of the economy. Presumably, that is why there were so few people on the Government side to make a contribution today. We did have a fleeting, cameo appearance from the Chancellor earlier, but he is still taking his vow of silence. I understand that, because I used to work with unemployed people and people who feared losing their jobs, and I know about that sense of needing to keep your head down sometimes.

In the time available, I want to pick up a couple of the issues that have come up in the debate and to try to understand where the Government are at the moment. To be honest, the Minister gave very little detail in his opening remarks—it was not so much broad brush as “Don’t blink or you’ll miss it.”

I particularly want to ask about the proposal that has come up again to tax people’s redundancy pay and termination payments. My understanding was that there had been a discussion on this and that the Government had conceded, so I am not quite clear why we are back looking at what looks like virtually the same proposal. I want to ask a straightforward question: if this proposal is the right thing to do—I have grave doubts about the way we are proceeding—should Parliament not decide that? Is it really right that HMRC should be given the power to make the decision? I think that that is Parliament abdicating its responsibility, but more importantly it is another grab by Government to transfer power elsewhere so that they do not have to be accountable or scrutinised. We really should look again at whether that is appropriate.

I have a very simple request on business investment relief. It behoves the Government to place in the House of Commons Library details of where that business investment is going. We need to know which businesses and companies are benefiting; how evenly it is being spread around the country; and which regions and nations are seeing benefits. Otherwise it looks like another attempt to give someone a tax cut on the side. As long as people have that suspicion and do not have the evidence or an explanation, is it any wonder that they will adopt that view?

I intervened on the Minister earlier on the issue of non-domiciles. He was quick to tell me that I had nothing to say on the subject because Labour was in power before the present Government and the coalition. It is true that past Governments have struggled on the question of non-domiciles, but my memory is that the Conservative party could not have been clearer about its position in 2010. In fact, the former Chancellor was absolutely crystal clear about what it was going to do when it came to power. The question we have to ask is, having had all this time to work it out, how come there are so many exemptions, exclusions and difficulties in tackling a problem which, according to the Conservative party, has been at the centre of its own thinking for seven years? How is it so difficult? If the object of the exercise is not to try to avoid doing it—it was quick to say that that was not the case and that it was the party that would deliver—how come there are so many exclusions, exemptions and get-out routes for the people involved?

On the wider question of tax avoidance, the Conservative party seems to wonder why people do not believe, trust or have faith in it. Is it normal that those lobby groups and people who have spent time arguing against tax provisions to limit the amount of tax paid by individuals and organisations should then be given the power to scrutinise whether what individuals are doing is right and appropriate? That does not sound right to me, and when I try to explain it to my constituents it does not sound right to them either. They have a straightforward understanding of the rules: the Government set the rules, they are laid out in black and white, and we are expected to pay. However, when it comes to other people being expected to pay, the very same lobby groups and organisations that advise and assist them and lobby against paying are given the power to scrutinise what they are doing. That is why people do not have faith in what is going on.

I want to turn to the air passenger duty measure. The Minister was quick to use his crystal ball when tackled on corporation tax earlier. He quickly moved the issue away from what the Government are doing to what he foresaw a future Labour Government doing. I wonder whether he will go back to his crystal ball and reflect on two things. First, on the air passenger duty arrangements we are being asked to approve, what are the Government doing about the changes happening elsewhere in the country? When the Scottish Government set their rate for air departure tax, that could have a phenomenal impact on the airline industry and every regional airport and regional economy in this country. What is the point of the Government setting a rate in complete isolation from what is happening about 600 miles up the road? What is the value in that? Why do they not look at that and give us a coherent response?

Secondly, I am interested to know from the Minister’s crystal ball what is going to happen with corporation tax. Once Northern Ireland has to make a decision about corporation tax—presumably in relation to the Irish Republic—it cannot but have a knock-on effect on corporation tax rates in the rest of the country. How come there has not been a single comment about that from the Government? Will it be a case of them waking up after the event, as they have done at every stage in the economic management of the country so far, and telling us that they are going to think about it?

Finance (No. 2) Bill

Steve McCabe Excerpts

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Peter Dowd]

I draw the hon. Gentleman’s attention to waiting lists in England, where an estimated 3.8 million people are waiting for treatment. I suggest that he should be more concerned about those 3.8 million people in England than he is about Wales.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Does my hon. Friend think it is remotely credible for a Tory MP on the eve of a general election to boast about the NHS? If one thing is certain as we go into this election, it is that people know who they can trust on the NHS.

[Peter Dowd]

My hon. Friend is completely right about that. If Conservative Members want to send me their manifestos on the NHS, I will be happy to look them through. As a matter fact, I might get even more votes if I put those manifestos through the doors in my constituency.

The Finance Bill does nothing to help to fund the NHS. It is as simple as that. By underfunding and overstretching the NHS, the Tories have pushed health services to the brink. The number of NHS beds has been cut by 10% since the Tories came into government; that issue has been raised. GP recruitment is at an all-time low, and more GPs are moving out of practice. Community pharmacy funding has been savagely cut back, in some instances by as much as 20%. As a result, as many as 3,000 pharmacies, in rural and urban communities alike, face closure. That is not the best record on the NHS; it is as simple as that.

--- Later in debate ---

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I want to follow the hon. Member for Vale of Clwyd (Dr Davies) in addressing my remarks to part 3 of the Bill and the chargeable soft drinks levy.

I was struck by the Minister’s comments about the Government’s remarkable record on borrowing. I wonder whether she has had an opportunity to look at the work of Professor Richard Murphy of the University of London, who has done a rather extensive comparative study of Labour and Conservative Governments over a 70-year period, which shows quite clearly that Labour in office always, on average, borrows less than the Conservatives, and always pays back more while in office. That is not quite the impression that the Minister may have tried to convey.

[Mr Rees-Mogg]

That is because Labour always inherits a wonderful financial situation from the Conservatives and we always inherit a mess from it.

[Steve McCabe]

Yes, of course that is the hon. Gentleman’s belief. However, if we go back in history, I seem to recall Tory Chancellors singing in the bath as the pound collapsed and we were jettisoned from the ERM. I seem to recall crisis after crisis, including one Tory Chancellor who left a note saying, “I’m sorry I’ve made such a mess of it, old chap.” I do not think it is quite as the hon. Gentleman remembers. I would say that the Minister’s claims on borrowing are about as reliable as the Chancellor’s reputation for competence proved after the shambles of his Budget.

Like many others, I would like to know what bad news is coming down the line. Why is it, after five public refusals to call a general election—after assurance after assurance that there would be no election before 2020—that the Prime Minister now needs one? What does she know that the rest of us do not know? I suspect that what she knows is that the NHS is in chaos, our schools are in chaos, the Brexit talks are in chaos, and the economy is heading for the doldrums. That is what I suspect is happening. [Interruption.] I think the hon. Member for Peterborough (Mr Jackson) would like to rise and say that for the benefit of Hansard.

[Mr Stewart Jackson (Peterborough) (Con)]

I am inordinately fond of the hon. Gentleman, but we have heard this—“24 hours to save the NHS”—so many times for the past 20 years. It is a fact that the Conservative party spends more on the NHS, is more committed to the NHS, and delivers better patient care than Labour has ever done.

--- Later in debate ---

[Steve McCabe]

The hon. Gentleman may be reading from one of those notes that the Whips have been passing around, but I have not got around to mentioning the NHS yet. I will come to it.

I want to comment on the points made by the hon. Member for Vale of Clwyd. I agree that high-sugar diets are associated with a large number of serious conditions, including tooth decay, cardiovascular disease and type 2 diabetes. I will not repeat the figures, but I am grateful to him for giving the stats for five to nine-year-olds and for saying that such diets are the leading cause of hospital admissions for that age group. Of course, that imposes a considerable cost on our already overstretched NHS. He also rightly said that sugar is a leading cause of tooth decay for 15-year-olds, whose permanent teeth are being damaged. That is all preventable, as he said.

I think we are agreed that excessive sugar consumption is the main cause of tooth decay, so in principle I am in favour of a soft drinks levy. However, I am worried that it is an isolated policy and that it will fail to bring about the lasting change we hope for in the consumption habits of the public.

The hon. Gentleman gave the example of Mexico. If he looks carefully at what actually happened, however, he will see that, after an initial dip in sales of soft drinks, they subsequently rose and are now slightly higher than their pre-tax levels. The risk of such an isolated policy is that it may not have the long-lasting effect we seek. Indeed, it is debatable whether there is any robust evidence that an isolated levy on soft drinks will actually reduce the prevalence of any of the health conditions associated with high-sugar diets.

[Jane Ellison]

I am happy to comment on a couple of things. First, the provision is designed slightly differently from the Mexican initiative and others around the world. It is deliberately a producer levy, to drive reformulation of product. Secondly, to recap what I said in my opening speech, it is not happening in isolation. I entirely agree that it would not be enough in isolation, but it sits alongside a very ambitious body of work, not least in relation to reformulation across a range of different food groups, particularly those focused on children’s diets, on which Public Health England will lead over the next few years, working closely with manufacturers.

[Steve McCabe]

I am grateful to the Minister. Obviously, we cannot cite Mexico as evidence in favour of the policy and then dismiss it when there is contrary evidence. That was the point I was making. I do not disagree with some of the stuff for which she is arguing, but I and a lot of other people want a broader public health approach. We need to do a bit more to promote healthy eating and improve awareness of the risks associated with unhealthy diets.

I ask the Minister to think again about an industry comprehensive code, because that might be much better and enforceable. If that was to work in conjunction with a soft drinks levy, it might make a much more significant difference. The obesity strategy has been mentioned, but the truth is that most people were pretty disappointed with it when it came out. I remember her in her previous incarnation being much more optimistic about it than appears to be the case now.

With the NHS—this is for the benefit of the hon. Member for Peterborough—significantly extending waiting times for those needing operations for hip and knee replacements, and in the absence of any announcement of additional funding for the NHS, and with the Government continuing, as we have just heard, not to recognise that a funding crisis is engulfing the NHS, the need for a comprehensive set of preventive health measures to complement any soft drinks levy has become all the more pressing. I simply make the point that a tax to plug a hole in yet another failed Tory Budget simply will not be enough. We all know how we arrived at this tax, but it will not be enough by itself.

I do not know how much of this Bill will ever see the light of day, but I do know that it does not address the funding crisis in our schools and our NHS; the impact of cuts in policing, which are now resulting in predicted rises in crime; or the sense in my constituency of Selly Oak that, when it comes to fairness and those who are just about managing, this Government’s economic plans and other policies do not help them. With unemployment in Selly Oak at 4.5%, against 2.4% nationally, this Government simply are not working for Selly Oak.

Oral Answers to Questions

Steve McCabe Excerpts

Tuesday 29th November 2016 Commons Chamber

[Mr Gauke]

My hon. Friend is right—it is a road that I know well. We certainly agree that the A14 is a critically important part of the network. We are investing £1.5 billion for a major upgrade to cut congestion on the A14, including a new 21-mile road between Huntingdon and Cambridge, and only yesterday my right hon. Friend the Transport Secretary was able to go there to witness the start of the work.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

24. Is not the simple truth that more than half the money announced for England will go to projects in London and the south-east and that, despite a £50 million shortfall in NHS funding by 2017 and a £130 million shortfall in social care funding by 2020, the Chancellor, like his predecessor, has short-changed Birmingham and the west midlands?

[Mr Gauke]

No, that is not true. There is a balanced package and all parts of England will benefit from the transport measures. The Barnett consequentials should mean that Scotland, Wales and Northern Ireland can also benefit in this area. A specific announcement about the midlands hub was made in the autumn statement and there is more to be said about the midlands engine. This is a Government who are determined to ensure that the whole country benefits from economic growth.

Finance Bill

Steve McCabe Excerpts

Tuesday 6th September 2016 Commons Chamber

[Philip Boswell]

There are several new clauses on which I intend to speak—most of them briefly—and the first is new clause 18.

New clause 18 calls for a review of the impact of section 24 of the Finance Act 2015. I and my SNP colleagues have concerns that the changes made in section 24 may have adverse consequences on the availability of affordable housing in Scotland and beyond. That legislation seems to be yet another London-centric policy that fails to take account of the diversity of the housing market throughout the UK.

Unlike other parts of the UK, where large rental agencies dominate, Scotland has a disproportionate number of landlords who own a small number of properties. That is hugely beneficial to tenants—particularly those on low incomes—as those small-scale landlords are often more willing to rent properties at an affordable price and to those relying on social security as a safety net. Owing to the changes introduced in section 24, we are concerned that those small-scale landlords may be forced drastically to increase rental costs, causing houses to be less affordable, or to sell their properties, potentially resulting in their being purchased by less sympathetic landlords or agencies. Given the UK-wide housing crisis that we are suffering and the rising cost of rented accommodation, it is incredibly important to ensure that landlords who rent at affordable prices and to those who depend on social security as a safety net are not pushed out of the market. New clause 18 therefore calls for a review of the impact of these changes on the availability of affordable housing so that those on lower incomes are not adversely affected.

New clause 6 calls for a review of the VAT treatment of the Scottish Police Authority and the Scottish fire and rescue service. I thank the Minister for her comments and consideration in her introductory remarks. Many in this Chamber may be familiar with the matter of VAT in relation to the Scottish police and fire rescue services, which my colleagues have raised in this House on a number of occasions. This remains an incredibly important matter that this Government have failed properly to address. Since the incorporation of police and fire authorities in 2013, the Scottish Police Authority and the Scottish fire and rescue services have been charged VAT by the UK Treasury. This UK Government have refused to grant an exemption to these vital services in Scotland, despite the fact that since the time of incorporation the HMRC has handed out exemptions to the new transport agency Highways England, and Olympic legacy organisation the London Legacy Development Corporation.

This Tory-backed charge on essential Scottish public services is costing emergency services tens of millions every year that could and should be spent on frontline services. Only in June, it was reported that Scotland’s police force has paid £76.5 million in VAT since it was formed three years ago and remains unable to claim this money. It is worth noting that only the Scottish police and fire services have been expected to pay VAT to Her Majesty’s Revenue and Customs and not English, Welsh or Northern Irish services. This is a disgrace. It seems absurd and unfair for this Tory UK Government to continually expect the Scottish Government to rectify the matter and cover the difference, especially given the consistent cuts to the pocket money they grant Scotland to run devolved matters. New clause 6 therefore seeks a review of the impacts of the VAT treatment on the Scottish police and Scottish fire and rescue services, including analysis of the impact of the financial position of these services arising from their VAT treatment.

I turn briefly to new clause 15, which seeks to prevent VAT from being increased on the installation of energy-saving materials. I agree with the intent of the right hon. Member for Wokingham (John Redwood) to prevent these VAT increases, if not his methods. This Tory Government have consistently instituted regressive policies in relation to clean energy and energy-efficiency measures, from cuts to the solar subsidies—

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Does the hon. Gentleman agree that this would be a relatively cheap way of incentivising householders and energy-saving products in addressing some of the damage that the Government and the previous coalition Government did by, in effect, dismantling the green energy policy they claimed to support at the outset?

[Philip Boswell]

I thank the hon. Gentleman and agree wholeheartedly with his comments.

From cuts to solar subsidies, to the scrapping of onshore wind, to the scrapping of the green deal for energy for energy-efficient homes that the hon. Gentleman mentioned, to the selling of the UK Green Investment Bank—there are numerous other examples—this austerity-obsessed Government are taking the UK backwards with regard to renewable energy. I fear that with Brexit looming on the horizon this trajectory is set to continue. Given this environment of cuts, it seems logical for the installation of energy-saving materials to be exempt from a hike in VAT, as a bare minimum.

I will now speak to new clause 8 on dividend income. In Committee, my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) tabled an amendment regarding the proposed changes to the treatment of dividend income by HMRC. My colleagues and I feel that this issue has not yet been sufficiently addressed by the Government. We did not press the new clause to a vote at that time so that we could address the matter at a later date, and we do so now. I do not wish to rehash previous points made, but this is a matter of great importance and, as such, we have tabled the new clause. Numerous stakeholder groups raised concerns with the Committee regarding the regressive impact of the changes to dividend income proposed in this Bill, particularly the effect on small and microbusinesses, which employ between one and nine people. Those raising concerns have highlighted that the changes will have a disproportionate effect on microbusinesses run by owner-operators on modest incomes, given that there are already numerous disincentives to running microbusinesses—as opposed to traditional salaried employment—including, but not limited to, a lower level of job security and a lack of employer pension contributions.

Bank of England and Financial Services Bill [Lords]

Steve McCabe Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Mr Walker]

New clause 9 is designed to prevent the restriction or withdrawal of banking services from perhaps tens of thousands of people. Those people include soldiers and others serving in the armed forces, judges, civil servants, trade unionists, and local councillors and their officials. Those people, along with their families and associates, are deemed to be “politically exposed persons” for the purposes of the fourth money laundering directive, which is due to be transposed into UK law by no later than June 2017.

The scope of new clause 9 is straightforward. It is designed to ensure that when that money laundering directive is transposed into UK law, reasonable regard is given to the parts of the directive that deal with proportionality. The new clause makes it clear that prior to the enactment of the directive, the Financial Services and Markets Act 2000 will be amended so that the Financial Conduct Authority will be required to publish clear guidance to the banks defining what it deems to be proportionate. New clause 9 also makes regulatory provision for PEPs who believe that they have been treated unreasonably by their banks to ask that their case be adjudicated by the FCA.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I congratulate the hon. Gentleman on introducing the new clause. I understand from what we heard during today’s topical questions that it is likely that the Government will accept it, so he is obviously in the right area. Is he worried that banks are acting in advance of the measure and that there is quite a lot of evidence that they are already gathering information about ordinary, law-abiding members of the public and using it as an excuse to restrict their banking activities?

[Mr Walker]

The hon. Gentleman makes a valid point. Banks are de-risking very aggressively at the moment and we need to inject some proportionality into their actions. I believe that the new clause will go some way towards achieving that.

New clause 9 inserts into the Bill a process of adjudication. If a politically exposed person believes that they are being treated unfairly—being denied access to banking services—they can take their concern or complaint to the FCA, which can then adjudicate. The FCA can decide whether banks are interpreting the directive over-aggressively and, if they are, levy a fine on them for doing so. The new clause has nothing to do with reducing accountability; it is about increasing proportionality, which is the right thing to do.

Why is new clause 9 needed? It is needed because it is clear that in interpreting the fourth money laundering directive, banks are making no distinction, when determining who is a politically exposed person, between PEPs drawn from the corruption hotbeds of Nigeria, Russia and parts of the subcontinent, and those drawn from developed democracies such as ours that have high levels of scrutiny and accountability.

Budget Resolutions and Economic Situation

Steve McCabe Excerpts

Tuesday 22nd March 2016 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Most Budgets lose a bit of their lustre as the days wear on, but this one started to disintegrate before it was delivered, during its delivery and, spectacularly, afterwards. First there was the great pension reform that never materialised. Then the pound suffered a rocky period as Mr Memory—not!—tried to forget the deficit and the borrowing, and the fact that growth and exports should by now be seeing the sunny uplands as he had predicted. He then managed to knock down the share value of A.G. Barr, Britvic and Tate & Lyle with his clumsily scrabbled together announcement of the sugar tax. What we have learned over eight Budgets is that this guy has run out of excuses and is rapidly running out of friends. He is now correcting previous Budget errors—his errors. We see a cut in capital gains tax, which he increased in 2010, an increase in insurance premiums to pay for his cuts to flood defences, cuts in North sea taxes from the man who ignored advice and increased them in 2011, and a promised cut in business rates for small business, except that local authorities were promised such rates only four months ago, which is another £1.7 billion unaccounted for. The Government say that local authorities will be compensated, but will they be only blue authorities as usual?

What are we left with? We have the abolition of class 2 national insurance contributions, which on the surface will help the self-employed, although we need an assurance that it is not a cunning ploy to make them ineligible for employment and support allowance and another hidden welfare cut. Personal allowances will be raised, which is good for the top half of earners. There are also some new capital projects. The Chancellor is cutting corporation tax, which helps the service sector, but there is no sign of the rebalancing of the economy that he promised. There is nothing for manufacturing on capital allowances, and, of course, 9% of the catapult innovation resources is going to the Midlands and 46% to London. There is not a hint of support for the WASPI campaign. We have seen a legacy of 14% council tax increases, meaning an average of £162 for Birmingham households, to pay for his cuts to the police and social care. That is his plan for Birmingham.

In the fall-out of the Budget, we have been told that there are no new plans to attack the disabled. However, in a little-noted item, the Department for Work and Pensions is to receive £22 million to hire more staff to defeat disabled people’s claims at PIP tribunals. Maybe there will be more cuts for the disabled after all. The Chancellor has failed. He has broken every promise. He is finished.

The Economy

Steve McCabe Excerpts

Wednesday 18th November 2015 Commons Chamber

[John McDonnell]

The whole point of this debate is about political choices. To be frank, we have said to the Chancellor on a cross-party basis in debate after debate that this was the wrong political choice and that he should therefore look elsewhere. I am not asking for the detail of how he is resolving it—we will wait to hear that next week—but I am urging Ministers at least to give us the assurance that nobody will lose out. Families want that assurance now, because of the insecurity that they face.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

With my constituency of Selly Oak now in the top 13% in the country for unemployment, with more than 20% of those in work not earning the living wage and more than 60% of families dependent on tax credits, is it not clear that five years of the long-term economic plan has not worked for Selly Oak? What we need next week is not a rethink, but a step change in the approach to working families.

[John McDonnell]

I hope that that is what the Chancellor is working on at the moment and that that is why he cannot be with us.

--- Later in debate ---

[Harriett Baldwin]

My hon. and learned Friend is right to highlight the effectiveness of our science spending. Earlier, she mentioned agri-tech, and my constituency has fantastic skills in cyber-security. Those are all important and we will continue to make sure that they are a Government priority.

[Steve McCabe]

Does the Economic Secretary accept that one of the problems is the contradictory nature of Government policy? It may well be true that they are investing in the science budget, but simultaneously—as the Coalition for a Digital Economy, or Coadec, revealed in its recent letter to the Prime Minister—they are strangling the digital industries through their immigration policy, which denies entry to tier 2 skilled workers and entrepreneurial visas to people who could boost our industries.

[Harriett Baldwin]

I welcome the opportunity to clarify that there is no cap on inter-company transfers at tier 2 or on people who will earn a substantial amount. I am aware that Tech City keeps very close tabs on this and informs me about its importance. The hon. Gentleman will welcome its continued success in attracting investment from around the world.

The motion also mentions the Department for Business, Innovation and Skills budget. I obviously cannot pre-empt what the Chancellor will say next week, but every single decision on spending has been based on our productivity plan to focus on world-beating productivity, to drive the next phase of our growth and to raise living standards.

People should never underestimate this Government’s commitment to helping British businesses and workers succeed in the global economy. We know that businesses drive growth and create jobs, and we work with them so that they continue to do so. In marked contrast, the Labour party could not get a single business even to host an event with its leader last week.

Is the economy perfect? No economy is ever perfect. We need to export more, work more productively and eliminate the gender pay gap altogether. It takes time for a country to recover from a significant economic crash, such as the one inflicted on us by the last Labour Government. But thanks to the hard work of the British people, the economy has recovered. We have more growth, more jobs and higher wages. We know that there is still much more to do, but there is no economic security, no national security and no opportunity when control of the public finances is lost. I urge hon. Members to reject the economic views of the Labour party, to reject the advice of the shadow Chancellor and to reject the motion.

Tax Credits

Steve McCabe Excerpts

Thursday 29th October 2015 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Like most people, I would prefer the Chancellor to scrap his tax credit proposals and go back to the drawing board. This is not because I am against the phasing out of tax credits. I am prepared to accept that there might be an argument for new measures of support, and if we can raise living standards for working families without tax credits, that would be a desirable aim. I also note in passing that freezing the value of tax credits is a clear indication that they are on their way out anyway. The truth is, however, that the Chancellor has made a pig’s ear out of this. He has blundered, and low-paid hard-working parents are going to pay the price for his mistakes.

If we can take the Prime Minister at his word, I think he suggested during his six non-answers yesterday that there would be some attempt to address this mess in the autumn statement. Normally, his word would be good enough for me, but of course this is the same Prime Minister who gave his word on national television that tax credits would be safe. Is it any surprise, therefore, that within five months of the election, people are beginning to wonder about the long-term future of this Government? Conservative Members have taken to telling us that they have a mandate. Let us just remind ourselves that this is a Government that did not expect to win, and that secured less than 40% of the popular vote—trade unionists, please note! This Government have a limited mandate, and if there are many more shenanigans like this tax credit debacle, they will have no moral authority.

As I said, there might be an argument for phasing out tax credits, and if the Government could give us a clear indication of their determination that wages and living standards will rise to compensate for that, I think most people would accept the change. In a still-fragile economy, however, there is no sense in taking money off the working poor before their wages have risen. It is also a mistake for some Conservative Members to attempt to demonise Gordon Brown, and to demonise tax credits as a policy instrument. The Adam Smith Institute recently pointed out that working tax credits were the best form of welfare we have, and that simply cutting them would serve as a disincentive to work and hurt those at the lowest levels of society. It also pointed out that the new minimum wage structure, which the Chancellor deliberately misleadingly calls a “living wage”, will do little to help those affected by these cuts. The institute states:

“Enticing more people into work was one of the stated aims behind the Working Tax Credit…and attacking it for achieving this end is somewhat perverse.”

I want to consider what changes the Chancellor might make. I have read that he might speed up the increase in the personal tax allowance, but that could cost about £12 billion, and 70% of that benefit would go to those in the top half of the income distribution curve. It would actually be worth less than £1.25 a week for working families. I am not at all convinced that, in these economically difficult times, such a costly measure would be the best way to help the low-paid.

The House of Commons Library has produced a simple way to calculate the impact of the combined effect of the reduced threshold and the increased taper, which form the centrepiece of the Chancellor’s plans. A family on £20,420 with two children will, in combination, be £2,200 worse off. The consequence is that 3.3 million working households will be losers, more than 8,000 of whom are in my constituency.

The Chancellor could decide to change the disregard level. That would not undo the damage he plans to inflict, but it would mitigate the effects. As Barnardo’s points out, such a change could mean that a single parent working 18 hours, with two children below school age, could lose only £376 rather the £805 the Chancellor currently plans to take from them. He could also scale back plans to increase the taper from 41p to 48p, which would mitigate the impact on those struggling to make a living. He might decide to turn the clock back and recognise family responsibilities in the tax system by reintroducing some kind of tax allowance for children as a feature of our tax system. He could also use the autumn statement to revisit his plans for inheritance tax cuts and the tax cuts he has already given to millionaires. If we are all in this together, as somebody over there once suggested, it is time we had some evidence to back up the empty statements.

As the former higher education Minister, now Lord Willetts, points out in his book “The Pinch”, the balance is wrong. Young people and young families are taking far too big a hit, and we need to restructure our welfare system. My hon. Friend the Member for Nottingham North (Mr Allen) has suggested that the Chancellor and the Government should involve Parliament in such plans. I would like to suggest that they also involve my right hon. Friend the Member for Birkenhead (Frank Field) and his Work and Pensions Select Committee. We desperately need a system that promises fairness and support for young people and families, and that encourages and incentivises people. Above all, however, the Government must make it clear that it is their sincere intention to row back from this mad cliff edge that they are now on.

--- Later in debate ---

[Scott Mann]

I thank the hon. Gentleman for his contribution. I will deal with that as I continue my remarks.

The proposals presented by the Opposition over the past few days would maintain the status quo. They believe that we should not change the £30 billion tax credit bill at all. [Interruption.] I do not accept that. They have offered no credible plan to take this burden off our children. [Interruption.] I was elected on a manifesto to reduce the welfare bill and I hope we will do that. We on the Government Benches know that we have to take the difficult decisions that lie ahead in order to bring about spending reductions. It is all very well for the Leader of the Opposition to ask six questions on tax credits yesterday, but a policy that affects 3 million families cannot be changed on a whim. I welcome the Chancellor’s announcement that he will deal with the matter in the autumn statement.

[Steve McCabe]

Is the hon. Gentleman saying, therefore, that the Prime Minister could not answer because the Government are not committed to protecting families from this problem?

[Scott Mann]

Absolutely not. We are looking seriously at the proposal and we will make some announcements in the autumn statement.

North Cornwall, which I represent, is a modest-waged economy. We benefited from the economic improvements that the country has seen. We have seen rising school provision and many people in my constituency have benefited from the Help to Buy scheme. They are trying to improve their lot in life and trying to do the right thing. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said so eloquently, the Government must ensure that we make it better for people to be in work than out of work, but we must support those who work.

Oral Answers to Questions

Steve McCabe Excerpts

Tuesday 21st July 2015 Commons Chamber

[Greg Hands]

What I can confirm is that the surplus will be higher at the end of the Parliament and debt will be lower. But the hon. Lady was a Member in the last Parliament and she voted against every single one of the spending reductions and other measures that we took to deal with the deficit, and all the time she wanted higher deficits, higher debt and higher spending.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

11. What estimate he has made of the net change in revenue to the public purse that will arise from tax changes announced in the summer Budget 2015.

[The Financial Secretary to the Treasury (Mr David Gauke)]

The change in revenue from tax changes announced in the summer Budget is shown in the Budget document. It shows that net receipts increase by between £4 billion and £6.5 billion in each full year of the forecast period. The Government pledged to raise £5 billion per year from tax. The measures announced in the Budget mean that by 2019-20, the Government will have delivered on their targets, raising £5 billion from avoidance and tax planning, evasion and compliance, and imbalances in the tax system.

[Steve McCabe]

Ernst and Young points out that the rise in household taxes is reducing disposable income, with £47.2 billion of tax rises, including the insurance premium tax and vehicle excise duty. Does the Minister accept that over the course of this Parliament, these tax rises are twice as big as any tax cuts?

[Mr Gauke]

We said at the election that we would raise a further £5 billion in tax, but we have one question from a Labour MP complaining about the deficit being too high, we have Labour voting against any measures to control spending, and now we have Labour complaining about any tax increases. So where do they stand? We failed to find coherence from the Labour party in the last Parliament and there is no sign of it in this Parliament.

Budget Resolutions and Economic Situation

Steve McCabe Excerpts

Monday 13th July 2015 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I congratulate the hon. Member for Erewash (Maggie Throup) on a witty, thoughtful and informed maiden speech.

There is a view that the Chancellor is riding high at present, and it is true that he has probably, for the time being, dished the ambitions of the Home Secretary and the hon. Member for Uxbridge and South Ruislip (Boris Johnson), but my advice to them is “Be patient.” Gordon Brown used to say there are only two kinds of Chancellor—those who fail and those who get out in time. This Chancellor has already failed. He has failed to eliminate the deficit on time, failed to maintain our triple A credit rating, despite his dire warnings of the consequences, and succeeded in reducing debt by virtually doubling it.

As the Institute for Fiscal Studies points out, the key feature of the Chancellor’s true blue Budget is that it will leave 3 million families £1,000 per year worse off, on average. The cuts to sickness benefit will mean that a party that has routinely seemed comfortable seeing cancer sufferers and others declared fit for work will now institutionalise that problem by having all those unfit for work reclassified as potentially fit and therefore eligible only for the lowest level of benefit. That is a blatant attack on the sick, not the workshy.

As with the bedroom tax, and the poll tax before it, no amount of double-speak will change the minimum wage into the living wage. Traducing the concept of a living wage by confusing it with a 50p rise and excluding the under-25s does not wash. It is merely a crude attempt to distract attention from the impact of the cuts to working tax credits. It is putting politics before people and before the country.

This Budget does not address the problems of skills and productivity, and it may in fact exacerbate existing problems in some sectors. In high-tech, science-based businesses, the issue is not wages but skills, access to capital and the capacity to grow. These are the knowledge businesses of which we have too few. We needed a Budget to help and encourage them.

Turning maintenance grants into loans will do nothing to encourage young people to develop the skills we really need, but may frighten off a generation from poorer backgrounds and simply turn Government debt into personal indebtedness. This is the Osborne legacy.

At the other end of the scale, what impact do hon. Members think the combination of tax credits cuts and minimum wage rises will have on the care sector? It is a sector of low wages and immigrant labour, with mostly small businesses or groups such as Southern Cross. We will see further cost cutting, scandals, inquiries and receiverships. Of course, higher wages mean higher fees, and therefore extra demands on already decimated local authority budgets.

My contention is that the short-term political cunning of this Budget will fail because the key decisions are wrong. Inheritance tax is not the priority in an economy that needs better productivity. We should be rewarding effort, not inheritance. The stark picture in the OBR report is the forecast decline in our share of exports at a time when we have the largest current account deficit since modern records began, and research and development spend is now below the European average. Where are the measures to address those problems? How will this Budget help to achieve the Chancellor’s target of doubling exports by 2020? Perhaps that is another target that will be kicked into the long grass as the long-term plan sounds more and more like the never-ending story.

The problem with the Chancellor’s putting all his eggs in a basket designed to win the Tory leadership is that his interests do not coincide with the real needs of our economy. Our problems are not solely to do with welfare, inheritance tax or the public sector. The Chancellor should be addressing private sector under-investment, the failure of companies to grow and the failure to protect small companies. Too many of our small businesses are starved of capital.

Instead of our ideas growing as good, sound British businesses, technological advancements are being snaffled up by foreign conglomerates. Let us look at the Smith and Wright report “Losing Control”, and what has happened to the British aerospace industry in the past few years—the majority of the companies have been taken over by foreign companies or private equity firms focused on short-term profit rather than medium-term growth. The lowering of corporation tax only makes the buying of ready-made UK technology even more attractive.

The Chancellor could have done a lot more, but he is too busy shoring up his friends and shoring up his leadership prospects. My advice is to beware the cheers now, because it could be a case of cheers today and gone tomorrow.