Summer Adjournment

Stewart Hosie Excerpts

Thursday 20th July 2017 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

It is a pleasure to serve under your chairmanship in this summer Adjournment debate, Madam Deputy Speaker. As everyone else has, I wish colleagues and staff all the best for the recess. Of course, many of our colleagues—and their staff—who lost their seats might not have quite such a happy summer, as they face in some cases quite uncertain circumstances. I wish to say a little about the arrangements for non-returning MPs and their staff, and I hope it will command support from both sides of the House.

Before I do, though, I have always taken the view that an MP’s salary should be broadly in line with comparable professions and sufficient to meet the needs of living in two places—including in London, which is one of the most expensive cities in the world—but it should not be so high as to be the prime motivator for anyone seeking to become an MP. By and large, I believe, the current salary does that. The office allowance and travel arrangements are absolutely appropriate, and the allowance for staff should be sufficient to employ the correct number of caseworkers and other staff in our constituency offices. Again, since IPSA has given a rather generous increase to the staff allowance, that has most certainly been achieved.

Of course, the advent of the Fixed-term Parliaments Act 2011 has, or rather should have, provided more certainty for people seeking election or to work for an MP when they give up careers, professions and trades to do that. It is also worth noting that the recent salary increase for MPs was combined with changes to the MP pension scheme and the removal of the old resettlement allowance. At face value that is all fair and reasonable and, for the most part, it is. The reality of how easily the terms of the Act were overturned casts a bit of a shadow over what happens in practice, particularly for those who lose their seats, in the event of a short Parliament.

Irrespective of the expectation of a five-year term for Members and staff, the reality in the last Parliament was that many MPs’ staff members were entitled to precisely nothing—zero—by way of redundancy because they were employed for less than two years. That was inevitable, given that the Parliament itself was barely two years old. That simply cannot be right. As one non-returning MP put it:

"My own staff position seems to be typical; I have five in my team of whom four are to be paid no redundancy at all. This is because they worked less than two years (in some cases missing the cut by only a few weeks.)…Many staff members gave up jobs, others gave up homes and moved to London, and some took out mortgages”

on the basis of a five-year contract made in good faith. They are now made redundant on terms that he says

“would disgrace the most unscrupulous private corporation.”

Indeed, were there to be another election before 2019, which is certainly not inconceivable, any staff employed by a new MP of any party elected for the first time this June would likewise be entitled to absolutely nothing if the MP lost his or her seat. I would suggest, and I hope that this would command support, that at the very least in future redundancy should be paid to staff as per the contract, in the circumstances of a short Parliament, as if the members of staff had been employed for five years, particularly as the circumstances of a short Parliament are outwith the control of the staff, outwith the control of Members—and, given what we now know, were outwith even the knowledge of half the Cabinet when the Prime Minister called the election.

Likewise, the decision to call an election within the five-year timescale has left a number of non-returning MPs in a very difficult position, with many new ones being entitled to less than £3,000. Although IPSA is right to try to put things on a par with other workplaces, where we have ended up with the terms of redundancy for MPs appears to bear absolutely no relation to any professional contract I have ever seen.

To put into some kind of context the combination of circumstances in which ex-MPs and their staff find themselves, I can tell the House what two have told me. One said:

“we are now trying to support staff who are receiving no help from IPSA—while not being paid ourselves to do so”.

He hopes that consideration can be given to finding the means to provide additional support to staff. Another said that he would not

“abandon my staff and former constituents, nor walk away from my responsibilities. But, it seems, that I am expected to manage my staff as their boss full time until the 8th August entirely unpaid. That cannot be right or fair.”

I am not arguing for a return to the old resettlement allowance regime, but the current situation must be changed. I believe it needs to be changed not just to help those who lost their seats in practical terms but to address a more difficult issue. If this situation continues and there is a series of short Parliaments leaving people in this position, massive limits will be placed on those choosing to stand for election or to work here. The huge strides all the parties have made to ensure that Parliament more accurately reflects society could be reversed, and that goes for staff as well as Members. If it is clear to those who might wish to come here that MPs who lose their seats after a short Parliament will come away with less than one month’s salary and their staff, in some cases, will come away with literally nothing at all, the only people who might seek election will be the independently wealthy or the kind of zealots who would do it for nothing. Nothing, but nothing, could be more different to society than a Parliament of MPs and staff drawn from such narrow groups.

Urgent action needs to be taken to ensure that staff redundancy is paid on the basis of a five-year contract, irrespective of how long a Parliament lasts, and MPs need to have a comparable professional termination package based on length of service but with a minimum safety net, not merely a few weeks’ salary. Let me repeat that I am not calling for the re-introduction of the old resettlement allowance, but the prospect of surrendering one’s career or trade to enter Parliament, losing one’s seat when it is not one’s fault and then being presented with less than one month’s salary will be a massive disincentive to others who would seek to do this public service. IPSA needs to be flexible.

Finally, a winding-up allowance of around £50,000 or so is available to each MP, but it appears from non-returned colleagues that there are huge restrictions on how that can be used. My judgment is that, with little imagination, IPSA could easily pay staff redundancy for those who serve less than two years in the event of a short Parliament. I am talking about a modest termination package to allow ex-MPs to fulfil their obligations to those staff and to adjust to life outside Parliament without any significant increase to the funds that IPSA already sets aside. This is not special pleading; it is a matter that can and will affect all parties. It is something that we must review and repair quickly, given that the fixed nature of our parliamentary terms is rather less robust than many of us had expected.

Oral Answers to Questions

Stewart Hosie Excerpts

Tuesday 18th April 2017 Commons Chamber

[Mr Hammond]

I cannot speculate on how fast the pigeons are in the hon. Gentleman’s constituency, but I can tell him that all consumers now have a right to 10 megabits broadband. By the end of this year, 95% of properties will have access to 24 megabits broadband. The Government are investing more money to reach the last 5%, the hard-to-reach that are often in rural areas.

[Stewart Hosie (Dundee East) (SNP)]

In Scotland, the original plan was as for the UK: 95% coverage by this year, additional funding for rural areas, money for wi-fi in public buildings and a superfast broadband target of 100% property coverage by 2021. Given that this should be a common endeavour, will the Chancellor welcome the steps taken in Scotland to deliver on those performance targets?

[Mr Hammond]

We have a UK-wide target. We of course welcome any other actions taken on top of that to achieve yet higher levels of broadband penetration. That is a very positive move for the economies of the regions and nations they affect.

[Stewart Hosie]

I thank the Chancellor for that. However, the issue is not simply about the provision of infrastructure, but paying for digital usage. Will he give a guarantee to the House that when the UK Government enter the Brexit negotiations there will be no return to the super-expensive roaming digital phone charges for UK citizens working and living in the EU, and for EU citizens living and working in the UK?

[Mr Hammond]

I hear the hon. Gentleman’s concern and I am absolutely sure that the vast majority of our constituents would agree with his suggestion that we seek to maintain cost-effective access for UK phone users whenever they are roaming within the EU. I think that will be an issue for this Parliament post-Brexit unless we choose, in the course of the exit negotiations, to reach a reciprocal agreement with the European Union.

Finance (No. 2) Bill

Stewart Hosie Excerpts

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

[Stewart Hosie (Dundee East) (SNP)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give the Finance (No. 2) Bill a Second Reading because it derives from the 2017 Budget which confirmed the continuation of austerity, it fails to provide the necessary stimulus to compensate for the economic impact of Brexit, it fails to address the inequity of VAT being charged on the Scottish Police Authority and the Scottish Fire and Rescue Service, it fails to provide concrete measures to support the oil and gas industry, it increases Insurance Premium Tax above the level of inflation, it increases duty on Scotch whisky, and it is a wholly inadequate response to the economic challenges being faced by Scotland and the UK.”

We oppose this Finance Bill—well, someone has to—not so much because of what it does but because of what it does not do. Let me take as an example the inequity of Scotland’s police and fire and rescue authorities paying VAT. It is a long-standing problem, and this Government could and should have taken the opportunity of this Finance Bill to rectify it, but they did not. In the Budget, there was at least a recognition of the problems faced by Scotland’s oil and gas sector, but no specific measures were announced—just another options paper, which was effectively announced last year. This Finance Bill should have been the opportunity to make concrete proposals for UK content and for oil exploration and decommissioning allowances to ensure that the sector continues to thrive, to flourish and to provide substantial tax yields for decades, but of course it does not. It does, however, put up the duty on Scotch whisky, and increase insurance premium tax again by 20%, which is way above the rate of inflation. Effectively, the Bill treats the Scotch whisky industry and the insurance sector as cash cows for the Treasury.

Having said that, we do welcome some of the measures in the Bill, particularly those that are intended to clamp down on tax avoidance and evasion. I welcome what the Minister said about restricting the use of past losses, disguised remuneration, the initial penalties for tax avoidance enablers, and the removal of the permanent non-dom status. However, it is hard to see how this Bill will assist in any substantial way to address the long-term UK challenge of improving productivity or even helping to make society a little less unequal, which is vital to unlocking our growth potential. That is particularly the case when one considers that alongside this Finance Bill are a set of welfare proposals that do not support inclusive growth but, rather, drive a coach and horses through it. They include the cut of £30 a week to employment and support allowance for claimants placed in the work-related activity group; a 55% cut in the rate of ESA for disabled people under the age of 25; the freezing of the lower disabled child element of universal credit; and the changes for full-time students who receive disability living allowance or personal independence payments who are now not treated as having limited capability for work and are therefore not entitled to universal credit until they have been assessed, which means that they face long delays without support.

I do not want to digress too far from the Bill, but delivering those cuts when disabled people and those on low to middle incomes are already facing a barrage of cuts from this Government is a disgrace. Moreover, those cuts not only fly in the face of the Tory party’s last manifesto commitment to help more disabled people into the workplace—something that is vital—but undermine the essential drive for real inclusive growth, which is vital if we are to grow the economy and maximise our potential.

[Rebecca Pow (Taunton Deane) (Con)]

I just want to point out that, under the Scotland Act 2016, we are devolving benefits worth £2.8 billion to the Scottish Parliament. That is almost a fifth of Scottish spending. It would be really interesting to hear what the hon. Gentleman thinks about that. Indeed, he could even welcome the fact that this Government have created such a strong economy that Scotland is able to have that much money gifted to it.

[Stewart Hosie]

I am sure that the Scottish people will be delighted to hear that the hon. Lady thinks that somehow they do not pay taxes and that they are dependent on the largesse of ladies like her to fund our welfare system. We have had a very small amount of welfare devolved. If she wants to make such a contribution, she can read out the rest of the Whips’ briefing note when she catches your eye later, Mr Deputy Speaker. [Interruption.] The Tories can groan all they like, but they have called a snap election, and on the same day we are debating the Finance Bill.

In this Bill, the Minister wishes to reduce the dividend nil rate from 2018-19 from £5,000 to £2,000. I will listen carefully in the next 10 days or so to what the Government say about that. Perhaps they can prove that only very wealthy people benefit from that allowance and that it may be a reasonable change. Equally, it may be the case that many small and start-up business owners depend on that money to tide them over and that the measure will be nothing more than a tax on enterprise—a disincentive to start a business, to create jobs and to power local economies.

I did find it slightly jarring when the Minister explained that wealthy people could put lots more money in individual savings accounts. That is fantastic news for people who are already wealthy: they can save tax free. Let us juxtapose that with a change to the dividend nil rate from a modest £5,000 down to £2,000, which might act as a disincentive to people who genuinely want to start a business, while allowing already wealthy people to save tax free. That might be the kind of error we would have seen under the old fiscal charter and its requirement to run a permanent surplus quickly, almost irrespective of the economic conditions. However, the new fiscal charter is more flexible than the last one, which should make such a measure unnecessary. The Government are still targeting a surplus early in the next Parliament. Let us see how early it is in the next, next Parliament.

Again, without digressing too far, the numbers and the timescale for even a modest surplus within four or five years look precarious. The forecasts for a current account surplus are tiny, not even reaching 1.5% of GDP. If there is any external shock or capital flight if sterling suffers further devaluation, which is quite likely if the Brexit negotiations go wrong—again, highly possible—the figures could fall apart very quickly indeed.

At its heart, this is a Finance Bill delivered with the pretence that the hard Tory Brexit is not happening. It sits in splendid isolation from reality. We cannot assess whether it will assist with the challenges that lie ahead. We cannot even assess properly what the consequences of the limited measures in it will be, because the Office for Budget Responsibility told us about Brexit at the Budget:

“There is no meaningful basis for predicting the precise end-point of the negotiations as the basis for our forecast.”

In short, this Finance Bill, like the 2017 Budget, is effectively based on a central assumption that pretends that Brexit does not exist. That is a ridiculous thing to do, given that article 50 has already been triggered.

[Mr Rees-Mogg]

The hon. Gentleman quotes the OBR, which was one of the few forecasters that was responsible enough a year ago not to make wild assumptions about what Brexit would mean. Most of the other forecasters thought they knew what would happen and got it comprehensively wrong. It shows prudence, caution and common sense not to try to forecast that which is essentially unknowable.

--- Later in debate ---

[Stewart Hosie]

I think the hon. Gentleman has been on record attacking the OBR for its forecasts. If he has not, I apologise, but I am sure that many of his colleagues have. No one seriously suggested that on day one or in week one, month one or even year one, even before the negotiations were complete, Brexit would result in any kind of catastrophe, reduction in GDP or other such thing. The real danger is for the medium and long term. As the hon. Gentleman brings it up, let us remember what some of the forecasts said. The Treasury itself said that we could lose up to £66 billion from a hard Brexit, and that GDP could fall by about 10% if the UK reverted to World Trade Organisation rules, which echoed the Chair of the Treasury Committee and other assessments. The London School of Economics said:

“In the long run, reduced trade lowers productivity”—

a huge problem for the UK—which

“increases the cost of Brexit to a loss of between 6.5% and 9.5% of GDP.”

It put a range of figures on those costs of between £4,500 and £6,500 per household.

There are other assessments from the Fraser of Allander Institute, from the FTSE 500 senior executives and from the British Chambers of Commerce. The hon. Member for North East Somerset (Mr Rees-Mogg) may not believe those assessments. Some of them may not come to pass, but given that the warnings are very real and credible, one would have imagined that they would instruct a far bolder Finance Bill. That is the point that I was trying to make.

[Mr Rees-Mogg]

The point I was trying to make was that we have had incredibly wrong forecasts from all these illustrious bodies. The hon. Gentleman was only wrong on the OBR. I criticised lots and lots of bodies; the OBR was the one I singled out for not being so foolish as to make erroneous forecasts. The Treasury, the International Monetary Fund and the Bank of England all said that the day we left there would be Armageddon and we would have a punishment Budget. This turned out to be nonsense, and it is much wiser of the current Chancellor to avoid foolish speculation.

[Stewart Hosie]

I do not want foolish speculation; nor do I want rose-tinted spectacles or ostrich heads in sand. There are very credible warnings of what Brexit might deliver. If the Government fail to mitigate the risks, they fail the people, and that is incredibly important.

To be fair to the Chancellor, in terms of what mitigation measures he could take and has taken, last autumn he announced additional support for capital investment and research and development; and he has since reiterated some of his R and D statements and put some more flesh on the bones of investment. However, the figures from the last autumn statement show that public sector net investment falls in 2017-18, and presumably 2018-19, depending on what happens after the 8 June election. The figures announced only a few months ago for public sector gross investment show them falling again this year, compared with the forecast made last winter, and not increasing again until 2020 or beyond. We would argue that money should have been allocated, and the Finance Bill should have reflected this, to mitigate the damage that we and many others believe is likely as a result of a hard Tory Brexit.

Of course it is not all about Brexit. Nor is it about reminding the House—I will not do it today—of the failures and broken promises on debt, deficit and borrowing. It is not even about repeating the mistakes of the past on investment. We are now in such uncertain times that in order to protect jobs, to protect yield and to protect the current account, trade should be front and centre, but little was said about that today and there was nothing in the Finance Bill that would assist in that regard.

The Budget Red Book tells us already that the current account is in negative territory for the entire forecast period. The impact of net trade will be zero or a drag on GDP growth, without the impact of Brexit, for almost every year of the forecast period in the Budget. That is after a near 15% devaluation in sterling since the referendum. More should have been done, and it should have been done in this Finance Bill.

My hon. Friend the Member for East Lothian (George Kerevan) intervened earlier on how growth will be generated. It is forecast to be based on heroic levels of business investment after the uncertainty of Brexit ends, which we do not believe will be any time soon. It will be propped up by household consumption with a commensurate rise in household indebtedness; by central Government investment, which I welcome; and by fixed investment in private dwellings, but house price rises are forecast to be two or three times the rate of already rising inflation. That is not a balanced recovery, and there is nothing in the Finance Bill that would assist in balancing it.

However, the issue of trade is most worrying. The figures are clear, notwithstanding one quarter’s blip in either direction. The last full years for which we have figures saw the current account £80 billion in the red, and a deficit in the trade in goods of over £120 billion. Nothing in the Finance Bill today would assist businesses to trade in a way that would even begin to shrink or erode those deficits.

This is a thin debate today because of other announcements, so I will conclude by saying what I said at the start. We will oppose this Bill—not so much for what it contains as for what is missing. We will do so because, like the Budget that drives this Bill, it is wilfully blind to the damage that Brexit will do, and in our view it is a completely inadequate response to the challenges that the economy will face.

Class 4 National Insurance Contributions

Stewart Hosie Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

In the Budget speech last week, I made it very clear that we were seeking to close the gap a little. We were not seeking to equalise the contributions treatment of the employed and self-employed, as there are very good reasons why there may well need to be a gap. That is why we will look at this in the round—contributions, entitlements and the way the whole package works for the self-employed. Let us come back to this once we have completed the review, have the Matthew Taylor work and can look at the problem in the round.

[Stewart Hosie (Dundee East) (SNP)]

I said last week that this decision would come back to haunt the Chancellor, and it has, but little did I expect that when it did, No. 10 and No. 11 would be briefing against each other. It is almost as if the halcyon days of Gordon Brown and Tony Blair never really went away. However, I welcome the U-turn today, not least because about 140,000 Scottish self-employed people would have been affected by the proposal, and many of them would have earned slightly below, on or only slightly more than the average wage. I am delighted that the Scottish National party went in to bat for the squeezed middle against this Chancellor.

Today’s U-turn has all the characteristics of the pasty tax, the caravan tax and the omnishambles Budget. The Chancellor said that he would fill the gap in the autumn, and I will listen carefully to what he says then, but will he give us an assurance today that he will not simply find another clever way of dipping into the pockets of modestly paid self-employed people? More importantly, if he changes the tax or national insurance regime for self-employed people in the future, will he have proper consultation in advance with their representatives, so that they are not hit with the uncertainty that they have faced over the past week?

[Mr Hammond]

On the last point, we will, of course, consult people widely over the course of the summer as we carry out the review. The hon. Gentleman will know that it is intrinsic in the Budget process that it is difficult to have any kind of proper consultation when preparing a Budget. He asked about measures in the autumn Budget. I said that all spending measures in the spring Budget would be fully funded by revenue raises or reductions in spending elsewhere in that Budget, so that it was broadly fiscally neutral. As a result of the decision I have announced today, the spring Budget is no longer broadly fiscally neutral, but I am committed to addressing that issue in the autumn. The intention remains to balance the measures that we are delivering between spending and taxation.

Oral Answers to Questions

Stewart Hosie Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Hammond]

I do not think that that is the right way to proceed. The business rates revaluation reflects the underlying value of premises, and I am afraid it is an inconvenient fact that some large organisations have premises in low-value areas and some small organisations have premises in very high-value areas.

[Stewart Hosie (Dundee East) (SNP)]

The Chancellor was right to talk about access to finance, but most small businesses depend on lending from safe high street banks. What discussions has he had with the banks to ensure that they remain safe and continue to fund small businesses so that they can benefit from the other fiscal measures?

[Mr Hammond]

Different high street banks have different models, but it is certain that some high street banks are aggressively pursuing small and medium-sized enterprises. When I say “aggressively pursuing”, I mean actively seeking their business. However, it is also important for us to diversify the range of financing options that are available to small and medium-sized enterprises, which is one of the reasons why we have pushed money, through the British Business Bank, towards other intermediaries that can provide equity and debt finance for SMEs.

[Stewart Hosie]

The other part of my question was about the banks staying safe, which is vital to small businesses and the whole economy. The Chancellor will have observed the worrying signals from the United States that the new President intends to roll back some of the regulation that was introduced to make banks safer. Will the Chancellor assure us that he does not intend to play follow my leader and deregulate the banks unnecessarily in this country?

[Mr Hammond]

Our banking system in the United Kingdom ensures that our banks are safe, and is tackling the “too big to fail” culture. We have a high level of confidence in our banking system. The reserve ratios of our banks are improving consistently, and we do not want to do anything that would undermine them.

Oral Answers to Questions

Stewart Hosie Excerpts

Tuesday 17th January 2017 Commons Chamber

[Mr Hammond]

The remedy to the problem my hon. Friend sets out will lie in the hands of this Parliament once we repatriate the acquis in the great repeal Bill.

[Stewart Hosie (Dundee East) (SNP)]

In the seven years to 2014, Scotland’s trade with the EU rose by 20%, twice the rate of growth in trade to the rest of the UK and vital for a resilient economy. Today’s hard Tory Brexit puts that at risk, but is this not also a kick in the teeth to many of those who voted leave believing that a European economic area/European Free Trade Association-type arrangement would be put in place to mitigate the damage done?

[Mr Hammond]

I reject the hon. Gentleman’s analysis. We are engaging constructively with the real world and recognising the political red lines of our European Union partners. If we do not recognise them, frankly, we are banging our heads against a brick wall. They have to recognise our political red lines, we have to recognise theirs, and then we need to work together to find a pragmatic solution that works for all the people of the UK within those red lines, and that is what we are doing.

[Stewart Hosie]

As we are looking for a pragmatic solution, Scotland’s trade with the rest of the world over the same timeframe grew by 50%, driven by EU trade agreements. Given that it takes an average of 28 months to conclude a single agreement, how many pragmatic decades does the Chancellor believe it will take to put in place the trade agreements that we need to mitigate the damage of a hard Tory Brexit?

[Mr Hammond]

I am disappointed to hear the hon. Gentleman resorting to the soundbite; he is normally better than that. The discussions I have had with third countries that have free trade agreements with the European Union suggest that there is a strong appetite for a quick and simple agreement with the UK so that, as we leave the European Union, we can immediately enter into a successor agreement with those countries—Korea, for example—that will allow us to continue trading with them on the same terms.

HMRC Estate

Stewart Hosie Excerpts

Tuesday 10th January 2017 Commons Chamber

[Jane Ellison]

I thank my right hon. Friend for his comments, and I am glad that he has put on the record his appreciation for staff. He is absolutely right. In the past six months, call waiting times have averaged less than five minutes and customer service has improved to the best levels in years. This is something that HMRC management keep under constant review. It is absolutely right that we seek to provide the best service possible, but we cannot do that in un-modernised offices. For example, we must recognise that investing in the most up-to-date digital infrastructure is unrealistic across an estate of more than 150 offices. We need to bring people together in an environment that is fit for the future both for staff and customers.

[Stewart Hosie (Dundee East) (SNP)]

The NAO has actually said that

“HMRC’s original plan has proved unrealistic”,

that

“suitable property will not be available…within the time frame set out”,

that

“HMRC now estimates it may lose up to 5,000 staff”,

which will require recruitment while it simultaneously carries out redundancies, and that the plans were

“over-optimistic…and carried too high a risk of disruption”.

These are very similar warnings to those expressed in respect of the outturn failings in 2009 of the strategic transfer of the estate to the private sector—STEPS—programme. Given how clear and stark the warnings are, would it not make more sense to pause this, rip it up and start again?

[Jane Ellison]

No, that is not right; I cannot agree with the hon. Gentleman. The factors driving the programme—the reasons we want to transform HMRC into the most modern and digital tax authority in the world—all still stand. We have always been open about the fact that this is an ambitious transformation, and as with any major programme, a number of which are running at the same time, it is right that it be looked at regularly. Of course HMRC will respond in detail to the NAO report, but the principle driving the plan stands good, for all the reasons I have talked about—it is better for customers, better for staff and better for the taxpayer.

The hon. Gentleman mentioned the STEPS programme, but the NAO report noted how much better HMRC had been managing it. There were problems with the programme, which was initiated under the last Labour Government, but the report compliments HMRC on the way it is managing it and got some of the private finance initiative costs under control, and so on. It is right that we constantly re-evaluate programmes of this importance, but I do not agree with the thrust of his question. It is also worth noting that while Scotland accounts for 8% of the UK’s population, 12% of the HMRC workforce will remain there, so Scotland remains a very important part of the HMRC estate.

Autumn Statement

Stewart Hosie Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Mr Hammond]

I am grateful to my right hon. and learned Friend. I am delighted that we have been able to lower the taper rate of universal credit, because of course it is absolutely in line with our principle that we should be supporting and encouraging people into work. He says the taper rate discourages people, but it is of course a much lower rate of withdrawal than under the old tax credit system it replaces.

Let me reassure my right hon. and learned Friend that I and my right hon. Friend the Prime Minister remain absolutely committed to the sound Tory principle that a country has to live within its means. Of course we have to deal with the realities the world throws at us, and that is why today I have adopted, as an interim measure for the remainder of this Parliament, a cyclically adjusted target which will always allow us to respond to any downturn that occurs. However, I certainly understand the importance of economic reality, and I also understand, as does my right hon. Friend the Prime Minister, the extreme desirability of achieving the very best access to markets in Europe for those who produce our goods and services.

[Stewart Hosie (Dundee East) (SNP)]

First, may I associate myself with the words of the shadow Chancellor and the Chancellor on the late Jo Cox? May I also thank the Chancellor for what he said about the Tay cities deal? I note that what he said was slightly different from the words in the Red Book, so we will take him at face value from the Dispatch Box. In his attempt to clamp down on evasion, it was disappointing that no reference was made to Scottish limited partnerships. One would have thought that there would be more, too, in terms of fairness overall, and a reference to the Women Against State Pension Inequality campaign and the unfairness for those women.

The Chancellor gave us plenty of information today, but with no more than a glib reference to being match fit at the beginning and a bit of deflection there was very little on the elephant in the room, which is Brexit. It is not as if the Treasury does not know what the consequences of it will be; its own assessment tells us that tax yields could be down by £66 billion a year after 15 years and GDP down perhaps by 9.5% —a figure confirmed by the London School of Economics—as a result of reduced trade lowering productivity. That amounts to some £6,500 per year per household. So where was the plan to ensure that there is no hard Brexit and to maintain access to the single market? Where was the plan to mitigate the losses in tax yield and GDP? Although the Chancellor said a considerable amount about capital investment and research and development—and I welcome some of it up to a point—where was the fully developed scheme actually to boost productivity?

We do not go into this next period from a position of strength. As the Chancellor knows, UK GDP is already nearly 20% lower than it would have been had we achieved even a 2% trend growth rate since 2008. Our argument is that the austerity of this Government and the previous Government sucked consumption out of the economy, weakening recovery. This Government are set to repeat the error. Growth barely reaches 2% for the forecast period, and although the Chancellor sensibly did not put a date on it, he is still targeting a surplus in the economy, perhaps again before recovery has been secured.

I am glad the Chancellor has changed the fiscal charter, because the previous permanent surplus rule, taking £10 billion a year more out than required to run a balanced economy and cutting £50 billion a year more than required to run a balanced current budget, left us with some terrible consequences. As discretionary consolidation, cuts and tax rises took place, the ratio of cuts to tax rises also increased, placing the burden of austerity and an arbitrary fiscal target on the back of the poor. That has made the poorest decile 5% worse off and the richest 10% almost entirely better off. The Government have clearly worked out something, and I welcome the move on the taper, but let us be clear: at 2p in the pound, on the minimum wage that is 14p an hour.

It is not a king’s ransom and it will not cure poverty. The squeeze has not been lifted from the poor, and the screw of the welfare cap has not been turned off; this has simply made a brutal regime slightly less brutal.

I am glad that the Chancellor mentioned the actions of the Bank of England. Our party very much welcomes what the Governor has done. He has introduced an increase in quantitative easing and £60 billion of extra Government bond purchases, made £10 billion available for corporate bond purchases, set a 0.25% base rate and enabled additional term funding to encourage more and cheaper long-term lending from the banks. However, there has been a more or less complete absence of a fiscal policy stimulus to match the incredible monetary policy activism of the central bank.

The key part of today’s autumn statement—I am pleased to hear that this is the last one; it is my 25th Budget, autumn statement or pre-Budget statement—was the increase in total managed expenditure, but like, for like, it amounts to 1.5% of total managed expenditure over the forecast period from 2015-16 to 2020-21. It is to be welcomed, and it certainly represents a break from the recent past, but it can in no way be described as the sort of fiscal stimulus required to match the monetary policy discipline of the central bank.

The Chancellor talked about an increase in capital investment, which I very much welcome. He also talked about an increase in funding for research and development. However, given the fact that the description of research and development has changed in the Green Book, as has the description of the UK Trade & Investment funding—he said that there would be a doubling of some aspects of export support—it is hard to tell precisely what the impact of some of those measures will be. Will he tell us what the total increase in cash and percentage terms of this vital export support will be? Will he also tell us what the overall increase in research and development funding will be across the piece? How does he intend to deploy the £23 billion of what he described as capital investment?

[Mr Hammond]

I am not sure whether that was a “thank you” or not. I might have to consult my hon. Friends about that. I think it might have been—

Oral Answers to Questions

Stewart Hosie Excerpts

Tuesday 25th October 2016 Commons Chamber

[Mr Hammond]

Indeed I will. It is an important part of the role of a Chancellor to act as a champion for businesses in the north and the midlands, and to draw the attention of inward investors such as the Chinese and the Indians, who are already heavily invested in the west midlands, to the opportunities that exist in the UK beyond London and the south-east. Such opportunities are not always as obvious to foreign investors as those that exist in London.

[Stewart Hosie (Dundee East) (SNP)]

In order to boost growth outside London and the south-east, there should be a laser-like focus on manufacturing and its associated innovation research and development, but the UK’s record on R and D spending is lamentable compared with that of our international competitors. May I ask the Chancellor how he intends to remedy that? Will he take the opportunity of the autumn statement to reverse the decision to convert innovation funding from grants to loans?

[Mr Hammond]

We have supported £22 billion of R and D spending across the UK through the tax credit system. The hon. Gentleman is right; the UK’s productivity performance is weak compared with that of its principal competitors, and our investment in R and D is significantly less than that of many of our principal competitors. I promise him that we are acutely aware of that challenge, and I will address that challenge in the autumn statement on 23 November.

[Stewart Hosie]

I will take that as a veiled good news story at some point to come. In order to boost growth we need to take exports more seriously, including to the EU, given that our trade balance has gone into reverse over the past two years. To effect that, what efforts is the Chancellor making to rule out a hard Brexit, with visas, tariff barriers and an end to the customs union, all of which the Treasury says could lead to the loss of £66 billion of revenue, a reduction in GDP of around 7.5% and a threat, estimated conservatively, to half a million jobs?

[Mr Hammond]

I know that the SNP does not like a good news story, and I am sure that the hon. Gentleman will have been able, by 23 November, to think up a suitable response just in case there is such a story on that day.

On the wider issue of managing Britain’s exit from the European Union, the Prime Minister has been very clear. We understand the instructions that we have received from the British people, and within our obligation to deliver those we will seek to get the very best deal we can with the European Union that maximises the amount of trade in goods and services between our companies and the markets of the European Union, and between European companies and the UK market.

Tax Credits: Concentrix

Stewart Hosie Excerpts

Wednesday 14th September 2016 Commons Chamber

[Jane Ellison]

I quite understand my right hon. Friend’s point. The drop-in is there as a facility should Members wish to use it, but it is not an alternative to the HMRC lines already in place. We encourage anyone affected to call the HMRC number on the letters they have received. We are putting significant additional resources into those helplines, with immediate effect, to make sure we can resolve the situation. I am reassured—although obviously I will be talking to HMRC consistently about this—that as soon as the facts of a case are resolved we can get money into people’s accounts in a short number of days.

[Stewart Hosie (Dundee East) (SNP)]

I am delighted that the Concentrix contract is not to be renewed. It will come as some comfort, at least, to those who have been affected by its activity. That contract was designed to save £1 billion in fraud and overpayment. The Minister tells us some £300 million has been saved. How much of those so-called savings was as a result of false accusations by Concentrix against tax credit recipients? If somewhere between 120 and perhaps many thousands of people were affected, why was the contract not cancelled sooner? The cost of the contract was reputed to be some £75 million. How much do the Government intend to claw back to directly compensate those affected? The Minister tells us, and I am pleased to hear, that HMRC civil servants have been drafted in to clean up the mess, but how much will that cost the taxpayer in additional pay, and will the Government be seeking payment from Concentrix to fund that remedial action?

[Jane Ellison]

I am not able to respond immediately from the Dispatch Box to one or two of the points raised by the hon. Gentleman. My clear priority and that of HMRC at the moment is to make sure that we resolve the outstanding cases, and in particular the difficult cases for vulnerable constituents. We will then turn our mind to some of the other points that he made. We are not renewing the contract, but we intend to continue to bear down on error and fraud. That is important, as there is a lot in the system, but we have had a great deal of success in recent years in reducing it—the amount of fraud in the system has halved from £800 million to £400 million. We need to continue to bear down on that, because money that is fraudulently obtained is money that is not available to taxpayers. It remains vital that we address that matter. But for the moment, my primary consideration is resolving the difficult cases to make sure that we look after our most vulnerable citizens.