VAT on e-books

Tom Harris Excerpts

Wednesday 2nd July 2014 Westminster Hall

[Mr Tom Harris (Glasgow South) (Lab)]

Through you, Mr Hood, I thank Mr Speaker for giving me the opportunity to raise this matter. I raised the subject under a Labour Government in the last Parliament, before the 2010 election. Sadly, many of my concerns have not receded. I welcome the Minister to her place.

It is not necessary to go into a long exposition about the importance of books or reading. We can take for granted the Minister’s agreement that encouragement to read books is a good thing, and that any Government, whatever their political colour, want to promote the reading and enjoyment of books.

I declare an interest at the outset in that I am an avid reader and, in the past four years, have become an avid reader of e-books downloaded to my Kindle or my iPad—my personal iPad mini, which I bought myself, not my publicly-funded iPad. I say that for the record lest the tiresome usual suspects see an opportunity to berate me for misuse of public funds.

My experience seems to be fairly familiar to other e-book readers. Purchasing an e-reader prompts the reader to buy more books than he or she did before. An additional benefit of e-readers is that I can now purchase books and store them unread on my Kindle instead of buying physical books and leaving them unread and gathering dust on my shelf.

Amazon states that UK users of the Kindle buy up to four times as many books as they did before they bought their Kindle. For those of us feeling the dreadful physical onslaught of the years, e-readers make print more accessible with adjustable font size and colour, and so encourage reading.

E-books offer greater consumer choice. I was delighted to discover that books by my favourite science fiction writer—the late, great Bob Shaw—which were out of print, are available again online to download. The renewed availability of previously out-of-print books from a huge range of authors has provided a much-needed revenue stream for publishers and authors, as well as offering readers greater choice.

E-books are a British success story and have helped to drive the recovery of the UK publishing industry since the financial crisis of 2008. Consumers in the UK are already the biggest e-commerce spenders in the world, and have been fastest in the EU to embrace e-books, partly because of the huge choice of English language books, partly because of competition and choice in e-book readers, and in large part because of the price competitiveness of e-books. That has brought big new opportunities to readers, writers and publishers.

Rapid year-on-year growth saw e-book sales in 2013 account for 21% of the value of the UK’s total book market, up from 8% in 2011. The Publishers Association reported that 29%, or about £1.5 billion, of UK publishing revenues in 2013 was derived from digital products. Amazon.co.uk’s Kindle e-books already outsell print books.

That is all good news, but the Minister will be aware that a change is coming that will have damaging consequences for all concerned, except the Treasury. For everyone else—authors, readers, publishers and online retailers—the consequences of the changes to be introduced in January, just six months from now, will reverse much of the good that the introduction of e-books has achieved in recent years.

Unlike printed books, which rightly attract a zero rate of VAT, e-books have the full rate of VAT added to their price. That is simply wrong, and I have thought so for several years. It is clearly unfair to recategorise a book as an electronic service, which is the justification for adding VAT, simply because it is downloaded rather than picked off a shelf. A book is a book is a book. The full UK rate of VAT is charged on any e-book sold in the UK, but that does not affect readers who buy a book from the Kindle store, because the VAT rate is that applying in Luxembourg, where Amazon is based.

From 1 January 2015, however, VAT will apply wherever the purchaser lives. For example, Donna Tartt’s “The Goldfinch”—which I would highly recommend to the Minister, although a drawback of e-books is that it is much harder for people to lend others their copy—which I purchased from Amazon a couple of weeks ago for £3.49, included a nominal VAT rate of about 3%. If we add an additional 20% to that cost, which is what I would have had to pay had I waited until next year to buy it, that will undoubtedly have the effect of discouraging many readers—not all, but many—from buying it.

The decision to buy a book is price-sensitive. Ofcom research shows that the willingness to pay for a single book download declines steadily as the proposed price of a book download increases. The average price that respondents were willing to pay was £3.74. About 42% of people were willing to buy an e-book at £5. Once VAT at 20% was added, bringing the cost up to £6, the proportion of consumers willing to buy it fell dramatically to 28%.

According to the Publishers Association, digital sales across all publishing increased in 2013 by 305% and digital revenues are now £509 million—or 15%—out of an overall book market of £3.4 billion. In fiction, e-books account for a third of all sales—that is £200 million —and for 7% of non-fiction sales.

But the association adds:

“These figures are likely to continue to increase, but at a slower rate of growth than in the earlier years of e-reading take-up, as the market matures... A further check on the growth of ebooks will come from the fact that they currently attract VAT (in the UK at the full rate of 20%). This is compared with the application of the zero rate of VAT on physical books—a long-standing feature of the UK’s tax regime—and is a reflection of the belief that the tax should not act as a disincentive to reading and learning. However, this important feature of the fiscal regime is absent for digital publications on which the full rate of VAT of 20% is applied. Research suggests that consumers are discouraged from buying ebooks by the VAT rate.”

The association continues:

“The European Commission Directorate-General for Taxation is conducting a full study of the whole of the VAT regime, and has identified ebooks as a particular focus of attention.

“We currently await a Communication from the Commission outlining its findings and recommendations—however, publication of this seems to be suffering from repeated delays. We believe that the UK Government should urge the European Commission to publish its findings following its study; and that the Commission should resolve to allow Member States to investigate applying lower rates of VAT on e-publications (books and academic journals). The UK should itself then undertake a similarly detailed study to analyse the impact of reducing the VAT rate on e-publications, with a view to reducing to the zero rate.”

E-books are a hugely important part of the UK publishing industry, which is itself a hugely important part of our creative industries, and in a week when the Government are pledging to help and support our creative industries, this debate has come at an appropriate time.

The UK is the largest e-book market in Europe, but the Society of Authors is concerned that publishers’ practices and the Government’s policies are creating barriers to growth and hindering development of the publishing industry. It told me this week:

“The largest barrier to growth for most authors is the difficulty of obtaining a proper return for their professional work. Authors’ incomes continue to be squeezed: fewer books are published and sold; advances and royalties have fallen while more unpaid work is expected of authors in marketing and publicising their work, including appearances and use of social media.

“Print books attract a zero rate of VAT, but their electronic equivalents attract a rate of 20 per cent in the UK. Other EU countries, such as France and Luxembourg, have unilaterally reduced the rate of VAT on ebooks. This means the UK will now be at a competitive disadvantage, as ebooks sold in the UK will be more expensive than those sold elsewhere. The result is often to drive down prices leading to a smaller net sum going to authors. Most of the major players in the ebook market are based abroad.

“Given the rapid pace of development in the ebook market, there is an urgent need for removing VAT on ebooks to avoid the UK slipping behind European competitors.”

There are those in the industry who welcome the change from charging VAT in the country where the e-book is sold to charging the consumer where he lives. As someone who has spoken in the Commons against Amazon and others for not living up to their moral obligations to pay tax, it is a change that I understand. However, this is not about Amazon or Kobo or any of the other e-book sellers avoiding tax. VAT on e-books is not paid by the seller; it is paid by us, the consumers. If the change goes ahead in January, while the Treasury sticks to its position of insisting that an e-book is not a book at all but the equivalent of a video game and is therefore subject to 20% VAT, the industry—the whole industry, not just those specifically involved in producing and selling e-books—will suffer, and suffer significantly.

The Government argues that their legal advice

“indicates there is no scope to change the VAT treatment of the sale of digital book… products under EU law.”—[Official Report, 14 May 2014; Vol. 580, c. 682W.]

I simply cannot accept that, because Luxembourg and France have already challenged it. They cut their rates for e-books to 3% and 5.5% respectively in 2012. There is no reason why the UK cannot follow suit. I certainly do not believe that Ministers in this Government, of all Governments, are reluctant to pick a fight with the European Commission.

Other European Governments have taken on the EU on this issue. Germany, Poland and Italy are all calling for reductions in the rate of VAT on e-books. Will the UK add its voice to that call? Even assuming that the Government stand by their legal advice, which has been published and publicised, will they add at least their voice to the calls on the European Commission for change?

Incidentally, the German coalition Government’s executive board decided in April to cut VAT on audio books to 7% from 19%. The German Ministry of Culture is also pushing at the EU level for the same 7% VAT rate to apply to e-books, in line with the rate for print books in Germany, so the decision, if made, would make e-books and print books equal as far as VAT is concerned.

A German Government spokesman said:

“Due to rapidly advancing digitisation”—

I do not know what the German for “digitisation” is, by the way, but I would be quite interested to find out—

“we insist on a rapid implementation of the agreed points. We want to make sure that print and electronic media and audio media are treated equally for tax.”

Well, hooray for the Germans.

In the House, we are only too aware of the need to nurture the next generation. As parents, we understand the importance of encouraging our children to read. My own children often borrow my Kindle to take to bed, although they have not yet mastered the art of charging the damn thing after they have used it—that may be further down the line. So, for a new generation who view CDs as a quaint old-fashioned way to buy music; who watch TV shows when it suits them, not when it suits the broadcasters; who download their video games, rather than queuing outside the shop; and who have a far greater number of distractions than any previous generation to prevent them from sitting down with a book, but who will, when choosing to read a book anyway, be more likely to buy it electronically, are we really saying that increasing the cost of that product by up to 20% can really be reconciled with an ambition to encourage the young to read literature?

Do the Government still accept that we should promote reading and literacy and do all in our power to widen reading and literacy? I know, of course, that the genuine answer from the Minister will be yes, but should we not therefore widen our support for print books to their digital equivalent? Are the Government willing to engage with the European Commission to hasten the completion of its impact study assessment of options to reform EU VAT rules, including those affecting VAT on e-books? Should the Government not be standing up to Europe and following the examples of France, Germany and Luxembourg by insisting on a substantially lower rate of VAT on e-books? This is one area where I would like to see a race to the bottom. I want the Government parties and my own party competing in the next few months leading up to the general election to see who can offer the lowest rate of VAT on e-books, because consumers, readers and authors, not politicians, would emerge the winners.

Lastly, and importantly, one activity I use my taxpayer-funded iPad for is reading newspapers, and I am a subscriber to the digital edition of The Times. I am delighted that, as revenue from journalism is increasingly scarce, newspapers have found a route to survive in the 21st century through digital subscriptions, but their route to survival is similarly under threat. This country removed taxation from newsprint more than 300 years ago—removing what was seen, rightly, as a tax on free speech. Now, however, the Treasury is stealthily reimposing it by requiring the 20% VAT levy for the proportion of every newspaper subscription that is digital. It was not this Government who introduced that, but the previous Government. This Government have merely continued it, and it is wrong.

As a former local newspaper journalist, I want a successful future for our local, as well as our national, press. When quality journalism by properly trained and professional staff is competing with numerous free sources, as well as so-called citizen journalists—well meaning amateurs with dubious qualification to write about their chosen field of interest—imposing an unnecessary 20% charge on newspapers is a serious blow to freedom of expression. That argument was first deployed, successfully, 300 years ago. It is no less relevant today. The Minister and her colleagues have an opportunity to be on the side of fairness, literacy, opportunity and culture. The question is whether her Treasury colleagues will allow her to grasp that opportunity.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

It is a pleasure to speak under your chairmanship, Mr Hood. I congratulate the hon. Member for Glasgow South (Mr Harris) on securing a debate on this very important subject. I am aware that he has asked a number of questions on the issue recently. As he will be aware from the answers that he has received, I am filling in for my hon. Friend the Exchequer Secretary to the Treasury in Westminster Hall, as he is in the main Chamber leading on the Finance Bill. In his absence, I will do my best to answer some of the hon. Gentleman’s questions.

Of course, no one needs to be an expert on tax to recognise the importance of books. The hon. Gentleman is absolutely right—publishing is an industry in which the United Kingdom can boast to have always been, and to remain, one of the world’s leaders, be it because of Charles Dickens, Jane Austen or Agatha Christie. I understand that Barbara Cartland is one of our most lucrative book exports, but I am not personally so familiar with her novels.

[Mr Harris]

I suppose that at this point we should acknowledge that one of the Minister’s colleagues, the hon. Member for Mid Bedfordshire (Nadine Dorries), is consistently in the top six on the Amazon bestsellers list for e-books.

[Andrea Leadsom]

I am sure that my hon. Friend will be delighted to have been name-checked. Her sales will no doubt rise dramatically as a result of that helpful intervention.

The Government also recognise the crucial role that reading can play in increasing literacy among our younger generations, which is important to their future success. I remember that my two sons were five and three when the first Harry Potter books by J. K. Rowling came out. We used to snuggle up together, and none of us wanted them to go to bed, because we just wanted to get on to the next bit. There is no doubt about the contribution of some of the great British children’s and adults’ literature. I include C. S. Lewis and some of the other great children’s authors among those who have helped to support and sustain literature and pleasure in reading among young people and adults. Our new national curriculum, which comes into force this September, is clear that all pupils must be encouraged to read widely, both for pleasure and for information. We absolutely recognise the important role that books have always played in this country and will continue to play.

On the issue of tax, I begin by reassuring the hon. Gentleman that the Government recognise the importance of the e-services market in the UK and that Ministers are taking a number of actions to support the digital economy. E-services are a growing part of our economy, and we expect them to generate significant tax revenues going forward.

On the specific issue of VAT, I should briefly explain that, as the hon. Gentleman pointed out himself, it is governed by EU law, and that reliefs from VAT are strictly limited under EU law. As hon. Members may know, when the UK joined the European Community in 1973, we successfully negotiated to keep our existing zero rate on items such as children’s clothing, most foods and physical books, newspapers and journals. Most other member states do not benefit from that derogation.

[Mr Harris]

I apologise for interrupting, but when the derogation was granted on our accession to the EU in 1973, there was no reference to physical books, because e-books did not exist at the time. There was a concession on books, and as that derogation stands, it could be extended to e-books, as e-books come under the definition of being a book.

[Andrea Leadsom]

Yes, I accept the hon. Gentleman’s point, and I will come on to it if he will bear with me.

EU VAT law allows member states to implement reduced rates of VAT of no less than 5% for certain goods and services, listed in annexe III of the VAT directive, at the discretion of member states. One of those reliefs relates to the supply of books on all physical means of support, newspapers and periodicals, other than material wholly or predominantly devoted to advertising. Although that may sound like it includes e-books, article 98(2) of the VAT directive specifically excludes electronically supplied services from the reduced rates in annexe III. That means that the UK charges the standard rate of VAT, 20%, on e-books and the zero rate of VAT on physical books.

As hon. Members will be aware, the UK’s e-books market is a growing one. Therefore, it is not clear that it is in need of a stimulus in the form of a reduced VAT rate. Between 2011 and 2012, e-book sales in the UK increased from £138 million to £261 million, so at a time when the Government are working to tackle the economy’s problems head-on and deliver a recovery that works for all, it is not clear that we should offer fiscal support for such a rapidly expanding industry.

[Andrea Leadsom]

The hon. Lady will forgive me—I do not have those specific breakdowns to hand, but I will happily write to her on that point. I apologise for that.

[Mr Harris]

I am grateful to the Minister for giving way again. She has shown great patience, and I appreciate it. What she has just said, though, rather misses the point of my debate. No one is asking the Government to offer subsidies or favours to the e-book industry. What I am asking is that an impending charge that consumers in this country are not currently paying not be levied. She is right to say that the industry is doing well and growing. The problem is that people who buy books currently and pay 3% or 5% VAT will from 1 January pay 20%. We are not asking for any kind of subsidy from the Government; we are asking for the current situation to continue.

[Andrea Leadsom]

Again, I understand entirely the point of the hon. Gentleman’s debate. The issue is specifically that e-books are not counted as zero-rateable books from the point of view of the EU directive, so this is not an optional VAT charge. The EU directive requires us to treat e-books in that way, because they are treated as an electronic service. As the hon. Gentleman said at the start of his remarks, people can change the font; they can download e-books; they can switch from page to page without having to move pieces of paper, and so on. Therefore, they are deemed to be an electronic service and not the same as a physical book. The point that I am making is that our charging VAT on them is not optional.

Let me come on to the case of France and Luxembourg, about which the hon. Gentleman spoke, and in particular the difficult issue of books on Amazon. I am sure that, although he would support not paying VAT on e-books, he recognises that there has been an issue with big companies locating themselves in other places to take advantage of beneficial tax regimes that no doubt help their sales. As he pointed out, since 2011, France and Luxembourg have levied reduced rates of VAT—7% and 3% respectively—to bring them in line with their VAT rates on physical books. That is creating competitive distortions in relation to economic operators in other member states, and there has been pressure from the industry for the UK to reduce its VAT rate on e-books. The European Commission has begun European Court of Justice infraction proceedings against France and Luxembourg, and it has formally instructed them to apply their standard VAT rates to supplies of e-books. If the UK were to reduce the rate of VAT on e-books, it is extremely likely that we, too, would be infracted. I would be interested to know whether the hon. Gentleman thinks that we should seek to avoid infraction proceedings from the European Court of Justice or embrace them. We could be, unusually, on opposite sides of the argument on that point.

[Mr Harris]

I seem to remember being complimentary to the Minister when she spoke powerfully in favour of votes for prisoners in a debate on which we took the opposite points of view, and I believe that we are going to do the same again. I am more than relaxed about the UK being the target of court action by whichever European institution is relevant. I was relaxed about the idea when it came to votes for prisoners—we have to keep our position on that—and I see no difference, frankly, in this case. If the move would be good for the UK industry, we should stand up for that industry against interference by the EU.

[Andrea Leadsom]

I absolutely respect the hon. Gentleman’s position. Were we unilaterally to decide to change the VAT rate, we would, no doubt, be subject to ECJ infraction proceedings.

The other real issue is that a reduction in the rate of VAT on e-books would be likely to create border-line issues in the wider electronic services market, because problems of definition could lead to a widening of the relief through legal challenge and industry changes. That would put at risk serious amounts of revenue in the UK market, which is worth more than £2.5 billion.

I turn to the VAT changes that will be introduced in 2015. Currently, supplies of services, including electronically delivered services such as e-books, are taxed in the member states where the supplier is based at the VAT rate of that member state. Member states with lower VAT rates therefore have a competitive advantage, which encourages suppliers to locate there and sell to EU consumers, including the UK, at lower VAT rates. From 1 January, therefore, there will be a place of supply change, which will mean that e-books and other e-services will be taxed in the member state where the customer belongs at the VAT rate of that member state. That is designed to make competition fairer and to remove distortions.

Legal advice obtained by the Government indicates that there is no scope to change the VAT treatment of the sale of digital books and similar products under EU law. The Commission’s position is clear on the VAT rate of e-books: e-services attract a standard rate of VAT, because they are electronically supplied services. The UK’s rate is in line with EU law, and there is currently no intention to reduce the rate of VAT for e-books.

I am sorry to disappoint the hon. Gentleman by my reply, but I hope that he will be pleased to know that Ministers are focused on actions outside the VAT system to support the digital economy. In that area, we are making great efforts to encourage the digital economy. For example, in June 2013 the Government launched an information economy strategy, which includes positioning the UK strongly in the field of e-commerce by, among other things, improving digital skills across the population and creating the infrastructure to support innovation and growth.

Although I am sure that the hon. Gentleman is disappointed by my answer on VAT and e-books, I hope that he and other hon. Members are reassured that the Government support the sector and will continue to do so and that we are confident that the electronic services market will continue to grow and generate significant tax revenues.

[Mr Harris]

As there are a couple of minutes left, I wonder whether I could be cheeky and get in with another couple of points.

[Mr Jim Hood (in the Chair)]

Order. The hon. Gentleman was able to intervene, but the Minister has sat down and the hon. Gentleman cannot make another speech.

Question put and agreed to.

Budget Resolutions and Economic Situation

Tom Harris Excerpts

Wednesday 19th March 2014 Commons Chamber

[Mr Tom Harris (Glasgow South) (Lab)]

May I say how glad I am that the hon. Member for Fareham (Mr Hoban) is still in his seat? I enjoyed his contribution and it had passed me by that he had left the Government and returned to the Back Benches—the curse of Harris strikes again; just about every Conservative Minister that I have any time for, like, or respect has somehow found their way back on to the Back Benches—[Interruption.] You’re welcome.

I begin by welcoming the good news not only in today’s Budget, but the wider economic news against which speeches are being made. Unemployment in my constituency has fallen to 4.8%—a total of 2,187 jobseeker’s allowance claimants—and it is important that Labour Members welcome good news when it arrives. It is good news for my constituents, and good news for the whole of Scotland and the UK that unemployment has taken such a large dip in the latest published figures, and we welcome that without a “but” at the end.

The Lib Dems are like a broken clock—they are right at least twice a day. [Interruption.] Yes, they are clearly keen to attend the debate; perhaps they scarpered when they saw me standing up. I know that raising the tax threshold to £10,500 is not a policy supported by those on the Labour Front Bench. That is a matter of some regret for me as it is a policy I have supported for some time, and fundamentally I think that the lowest paid should be taken out of tax altogether. One argument against raising the threshold is that it also benefits people higher up the income scale, but I support the policy not despite its tax-cutting effect on the better-off, but because of it. I do not think there is anything wrong with reducing the tax take of people further up the income scale, and I do not regard tax as an unalloyed good thing. I see tax as a necessary evil, and where we can reduce the tax burden, we should do so.

The Labour party introduced the national minimum wage—that is often forgotten in these enlightened days when we see the right hon. Member for Sutton Coldfield (Mr Mitchell), and even the Liberal Democrats, welcoming a big increase in the minimum wage. It is often forgotten that when it was introduced, only the Labour party supported it, and it was opposed by the Conservative party and the Liberal Democrats—[Interruption.] I wondered whether Scottish National party Members were going to say something, because there would be a riposte to any claims that the SNP supported the national minimum wage.

I believe that the national minimum wage must be entrenched in some way, and what better way of doing that than by instituting a change that means that someone who earns the minimum wage will not pay a penny in tax? That is the situation the Labour party should be pursuing, and such a policy would be welcomed throughout the country.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I was one of those who opposed the national minimum wage, and I was wrong. It was introduced sensibly and modestly by the last Labour Government, to my surprise. The challenge for us all, however, is that those on the edge of the labour market can be priced out if future Governments are too ambitious about where it stands. That is the fear about entrenching it. Does the hon. Gentleman respect that point?

[Mr Harris]

Yes. I absolutely believe that when the minimum wage was introduced, it was set at the right level. It disappointed a lot of people who wanted it to be higher. There will always be those who want the minimum wage increased beyond what the market can sustain. The hon. Gentleman is absolutely right: it has to be generous, but it has to be moderate so that we do not have the negative effect of losing workers.

But what about help for ordinary working families? I am loth to use some of the more overused phrases that we are encouraged to use like “cost of living crisis”—trademark patent pending—but the fact is there is such a crisis. If average wages in real terms have dropped by £1,600—and I have yet to hear any Minister saying that is not the case—that is something of a crisis if not for people in this House then certainly for families and workers in my constituency. Yet despite the high number of headline-grabbing announcements, many of which I would support, there is absolutely nothing in what the Chancellor said that will address this urgent issue that faces the whole nation.

[Mr Redwood]

The hon. Gentleman is right that there has been quite a big fall in real wages, but will he accept that the biggest part of the fall occurred in 2008-10?

[Mr Harris]

I am, as always, very grateful to the right hon. Gentleman for intervening as I was just about to get on to the events of 2008-09. I want to address the deficit, because so many Government Members have raised it in the House whenever they have got the chance in a way that I find completely disingenuous, not worthy of an adult debate and not related to what actually happened in 2008-09.

An observer from Mars who tuned into what the Chancellor said today might have come to the wrong conclusion that when the right hon. Gentleman was in opposition he somehow opposed the last Labour Government’s spending plans. That is not the case: right up to November 2008 the official Conservative party policy was to support our spending plans. That either means that the Conservatives believe the deficit was created in the 18 months from that point until the general election, which frankly none of us believes, or that they are now saying something that is completely the opposite of what they were saying in opposition. I remember sitting on those Government Benches—in a couple of years’ time I hope to be back there—and I do not recall any Conservative Member, or indeed Liberal Democrat Member, calling for an end to spending on their local schools, their local hospitals, their local roads. The fact is that the deficit was almost entirely caused not by profligate spending by the Labour Government, but by a disastrous fall in tax revenue caused by an international recession—the deepest any of us have seen in our lives. That is the truth of the matter.

Conservatives and Liberal Democrats—and I have to say especially Liberal Democrats, who seem to get more incensed about this than anyone, even though they said not a word about it in opposition—stand up and demand all this nonsense about apologies for the deficit and for mistakes that were made. Of course all Governments make mistakes, but let us be honest with the British public about how the deficit was created. It was not created because new schools were built. It was created because of a recession that put a lot of people out of work and that cut off revenue to the Treasury. That is why we are where we are. It is not because of Labour’s spending plans.

There are some items in this Budget that I welcome, but I fear it will be most notable not for the issues it addresses, but for those issues it needs to address and, sadly, ignores.

Economic Policy

Tom Harris Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

I think that it was Lord Chesterfield who provided advice to his son in that famous book, and I am sure that the advice included, “Don’t spend more than you’ve got.”

[Mr Tom Harris (Glasgow South) (Lab)]

The Chancellor seems determined to follow in the footsteps of his illustrious predecessor, Lord Lamont, who, following our ignominious expulsion from the exchange rate mechanism in 1992, famously had a bath and sang, “Je ne regrette rien”. Does the Chancellor have any plans to have a bath tonight and what song does he plan to sing? May I suggest, “Help!”?

[Mr Osborne]

We are dealing with the problems that we inherited. Given the situation that we inherited, I think we can say, “Things can only get better”.

Oral Answers to Questions

Tom Harris Excerpts

Tuesday 29th January 2013 Commons Chamber

[The Economic Secretary to the Treasury (Sajid Javid)]

I know that my hon. Friend is passionate about this issue, and he is right to raise it today. The Government are committed to ensuring that people who borrow from payday lenders are protected against bad practices. Last January, we announced our intention to transfer the regulation of consumer credit from the Office of Fair Trading to the new Financial Conduct Authority. The FCA will have powers and sanctions to address consumer detriment in the consumer credit market, and we will shortly be publishing consultation on this very issue.

[Mr Tom Harris (Glasgow South) (Lab)]

T2. May I take this opportunity to pay tribute to the Chancellor’s excellent judgment in supporting Labour’s spending plans up until November 2008? Will he therefore accept that the deficit he inherited was caused not by the spending plans supported by those on both sides of the House but by the worldwide recession?

[Mr Osborne]

The idea that Labour irresponsibility had nothing to do with the fact that Britain had a higher budget deficit than almost any country in the world is fanciful. The truth is that my predecessor as Chancellor has accepted that Labour was spending too much, as has Tony Blair, who was Prime Minister during that period. The only person who will not accept that is the person who was chief economic adviser at the Treasury at that time—the man who Labour have now been landed with as shadow Chancellor.

Public Service Pensions Bill

Tom Harris Excerpts

Monday 29th October 2012 Commons Chamber

[John McDonnell]

Let me press on with the points that I am making.

What the Government are now doing is exactly the same as they did to private pensions, but we were told by the Chief Secretary that this is a settlement for a generation—that it will restore stability and predictability to public sector pensions for the next 25 years. No, it does not. As has been said before, the Henry VIII clauses in the Bill not only have the potential to undermine future benefits but are retrospective. I urge Members to look at the BMA’s legal advice on clause 3 and the vast remit that that gives future Governments to undermine future protections. Under clauses 3 and 21 and other clauses, public sector pensions do not even get the protection afforded in the private sector. In the private sector, if an alternative benefit is proposed, it must be actuarially evaluated as a viable alternative and one that does not undermine an equivalent benefit.

I agree with my right hon. Friend the Member for Wentworth and Dearne (John Healey)—we all agree on this—that pensions are deferred earnings, something people invest in and, therefore, something they should have some say in, but the Bill will take away all participatory control by the members who contribute. As he said, the Treasury will now control the design of the schemes, the revaluations and how they are undertaken, and the cost cap and what is included within it. There is a lack of commitment in the Bill, contrary to all that Hutton said, to ensuring that any future changes or reforms are made on the basis of agreement or at least joint engagement.

I am now secretary of the Fire Brigades Union parliamentary group and wish to circulate the evidence the FBU provided to Ministers on the physical work firefighters now do. Under the new pension scheme the retirement age in the fire services has been lifted to 60. The previous Government argued that there would be preventive measures to enable firefighters who could no longer undertake the physical rigour of the job to undertake lighter duties, as the hon. Member for Bromley and Chislehurst (Robert Neill) said. This year, 16 posts in the whole the country have been offered for redeployment alone, so that is unreal. Frankly, I do not believe that a 60-year-old firefighter can cope with the rigours of the job, no matter what improvements there have been in technology.

The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the briefing from the Prison Officers Association. There are five physical tests that every prison officer has to undertake in order to be able to continue doing the job. If they fail in any one, they cannot do the job. The POA therefore predicts, quite rightly, that the cost of medical retirements will outweigh any savings gained as a result of the increased pension age. The same information came from the Royal College of Nursing with regard to nurses and paramedics and from the National Union of Teachers with regard to teachers teaching at 68.

The Government said that they would set up the longer life review. Its first meeting was held in September and the results will not be out for at least another six months, yet this Bill allows no flexibility. My right hon. Friend the Member for Wentworth and Dearne was right: even if the money is there and the employer agrees with it, the Bill provides no flexibility in any of the proposed schemes. It is lunacy to bind the hands of negotiators in that way.

There is no legal requirement on the pension boards to consult or negotiate, contrary to what Hutton recommended, and we can see no representation from the work force. There should at least be some assurance in the Bill that there will be an element of representation on the boards. With regard to the closure of the existing schemes, some protections are being put forward, but there is none on ill health or redundancy. I find clause 23 almost sinister. It will enable employers to offer benefits as an alternative outside the schemes, which is another way of using private sector schemes to undermine the public sector overall.

I am worried about this Bill, which is why I want to vote against it. I think we will look back on today as the day when public sector pensions started on a downward slope, with the erosion of benefits and increasing contributions leading eventually to the undermining of the schemes and their closure. I think it will result in many people being impoverished and greater inequality being created in our society. That is why I will oppose the Bill tonight.

[Mr Tom Harris (Glasgow South) (Lab)]

On a point of order, Mr. Deputy Speaker. I apologise for interrupting the flow of the debate, but I need to raise an important matter. It will be recorded in tomorrow’s Hansard that the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath), told Members that the Government’s commitment to introducing a ban on the use of wild animals in circuses was confirmed by the fact that such a commitment was made by Her Majesty in the Queen’s Speech to Parliament. You will, I know, agree that that is a powerful riposte to those of us who had dared to doubt the Government’s good faith on this issue. However, a subsequent inspection of the two most recent Queen’s Speeches of this Parliament finds no mention whatever of such a commitment. Is it in order for any Minister to pray in aid of his argument a part of Her Majesty’s Gracious Speech that turns out to be wholly fictitious? Has the Minister in question contacted you or Mr Speaker to schedule an apology to the House?

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Gentleman for his point of order. I have not been notified that any Minister wishes to make a statement on this matter or any other matter from the Dispatch Box this evening. As for whether the Minister was in order to give the response that he did, Ministers and, indeed, all right hon. and hon. Members are responsible for their own speeches.

Amendment of the Law

Tom Harris Excerpts

Monday 26th March 2012 Commons Chamber

[Danny Alexander]

The full depths of the economic incompetence of the Labour party have been revealed in the course of the debate. [Interruption.] They are opposed to most of our spending reductions. They are opposed to many of the revenue-raising measures in the Budget. They have opposed tax cuts for business. I heard from the deputy Leader of the Opposition that they are opposed to our cap on unlimited tax reliefs for the wealthy. We know what Labour’s economic plan for this country would be—income taxes up, business taxes up, borrowing up, debt up, and interest rates and mortgage rates up. The only thing that would go down under the Labour party would be the British economy. It may seem astonishing that the party that got Britain into the worst economic crisis for a generation now wants to put us right back into the mess that this coalition Government are trying to get the country out of. The Labour party of the 1970s and 1980s is back and I hope the British public have been watching.

[Mr Tom Harris (Glasgow South) (Lab)]

When the Chief Secretary meets the Chancellor every morning at the Treasury to receive his instructions for the day, has the Chancellor ever once explained to him how his party can possibly blame the spending of the Labour Government for the deficit while having supported every single penny of spending right up to November 2008— 18 months before the general election?

[Danny Alexander]

There we see it again—a party in denial about the mess it got this country into. [Interruption.] I know the hon. Gentleman is a rational man and has played a great role in Scottish politics, but he ought to have a bit more sense than to pretend that his party has no responsibility whatsoever.

Banking (Responsibility and Reform)

Tom Harris Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Hoban]

Let me make some more progress.

Through the disclosure regime, we have provided more transparency than ever before, revealing the executive pay of the five highest-earning non-board executives for the Project Merlin banks last year. We are consulting this year on extending the requirement to cover eight executives at all banks operating in the UK, and UK banks now also have to disclose the aggregate pay of all their key risk-takers. These are some of the toughest rules in the world. It is because of our pressure and our leadership that the Commission’s capital requirements directive—CRD IV—contains proposals for additional regulations on remuneration disclosure which closely follow the recommendations of the Walker report.

[Mr Tom Harris (Glasgow South) (Lab)]

The Minister points out that the so-called “cash bonus system” emerged under the previous Government. Perhaps he can remind me, but I do not recall many Opposition day debates promoted by his party against the bonus culture. Did he personally, as a member of the shadow Treasury team at the time, mount any kind of opposition to or campaign against that bonus culture?

[Mr Hoban]

Clearly we had more power in opposition than we thought; we seem to be being blamed for the bonus culture and what was happening in the banks. As the hon. Gentleman will recognise, we have seen a bonus culture develop in this country and action needs to be taken. It is a bit rich for Labour Members to be criticising us, given that they were in government for the past 13 years and had the power to do something about the situation.

Budget Resolutions and Economic Situation

Tom Harris Excerpts

Thursday 24th June 2010 Commons Chamber

[Luciana Berger]

My hon. Friend makes a very good point. [Interruption.]

[Mr Tom Harris (Glasgow South) (Lab)]

My hon. Friend is making a powerful and significant contribution in talking about the difficulties that younger parents in particular have in bringing up their first and second children. What conclusions does she draw about the Conservatives’ approach to those difficulties from the fact that Conservative Members are mocking her and laughing when she is trying to make a serious point about the difficulty and cost of bringing up children?

[Luciana Berger]

I thank my hon. Friend for making his point and I am disappointed by the response from Conservative Members.

On Tuesday, the Chancellor said that his Budget would protect the most vulnerable. I urge the Government to address the question of what limiting support to the firstborn will mean in practice. No family that needs help should miss out and, contrary to the Chancellor’s declaration, this cut will affect rather than protect the most vulnerable.

The second very different element of the Budget I wish to raise is the remarkably short-sighted decision not to introduce tax relief for the UK video games industry, which makes a valuable contribution to the UK economy: in 2009, it generated £2 billion of sales, added approximately £1 billion to the UK’s GDP, raised over £400 million for HM Treasury in tax revenues, and employed more than 28,000 people. It is an export-oriented, high-tech, highly skilled, low-carbon industry.

As we speak, the best developers are leaving the UK and going to Canada and the USA. The UK lost 700 jobs in the sector from 2008-09; a full 7% of its work force. That not only is harmful to the UK industry and to games already in production but means that some games that would otherwise have been made in the UK are made elsewhere.

Why are so many of the video games industry work force leaving the UK at a time when global video game sales grew by 24%. between 2007-09? Why has the UK games development industry fallen from the third largest in the world based on revenue in 2006 to fifth place in 2009? It is because the UK’s principal competitors in Australia, Canada, China, France, South Korea, Singapore and the USA all received national or regional state tax breaks for games production. For example, in Montreal, Quebec, there is a five-year income tax holiday for foreign specialists and research and development tax credits cover 20% to 35% of qualifying expenditure.

Other competitive nations have taken a strategic decision that the video games sector is a key element of their economy. Research carried out by TIGA, the trade association representing the UK games industry, indicates that over five years games tax relief would create or save 3,550 graduate-level jobs, increase and safeguard £457 million in new development expenditure and save development expenditure that would be lost without tax relief. Most significantly, introducing games tax relief would increase and protect £415 million in new and saved tax receipts for HM Treasury—far outweighing the £192 million that games tax relief would cost.

Can the Minister explain why it is stated in table 2.1 of the Red Book that the non-introduction of video games tax relief would raise an additional £190 million over the next five years? How was that figure arrived at?

In my constituency and across Liverpool there are a number of video games developers: Genemation, Bizarre Creations, Magenta Software and Playbox. Sony Computer Entertainment, based at Wavertree technology park, employs more than 600 people. Games developed over the past 15 years in north-west England alone have produced and sold over 100 million units, equating to over £3 billion in revenue.

We have an outstanding record for vision and originality of games, but it is clear to me from having spoken to a number of people in the industry that there is a deep sense of frustration. All they want is a level playing field so that we can at least maintain the UK’s position, if not grow the sector, so that jobs are retained and we can compete on a fair basis.

The video games sector is an important and growing knowledge-based industry. More than a third of the work force are carrying out graduate-level jobs in games development. Average salaries exceed £30,000, which is above the national average of £22,000. There is absolutely no doubt that a cultural revolution is taking place in the games sector, whether in serious games such as educational programmes and defence training simulators or recreational games.

Interactive media industries are with us for the next century and we should be doing all we can to support the sector to be a world leader in the field. Just as we have film tax relief in the UK, the Government should uphold the commitment both coalition parties made before the election to have a games tax relief. Britain has traditionally been a leader in the field of video games development, and in many ways it still is. However, we cannot compete without the same tax incentive system that is in place in other countries.

Throughout the Chancellor’s speech on Tuesday, he kept on repeating that his Budget was an accelerated decrease in the structural deficit, but as I have shown through reference to just two of the cuts announced, it is actually an accelerated attack on families. It is an accelerated attack on those who are most vulnerable, on business and on growth and jobs. I will be voting against it next week.

--- Later in debate ---

[Mr Umunna]

No, I am not, but I am seeking to point out what happens when people take a cold, dispassionate and inhuman approach to economics and neglect to consider the consequences of their actions.

[Mr Tom Harris]

I rise in part to respond to the hon. Member for Spelthorne (Kwasi Kwarteng), because it was not my hon. Friend the Member for Streatham (Mr Umunna) who suggested that riots would return to the streets of Britain; it was the Deputy Prime Minister, who said just a few weeks before the general election that the scale of cuts foreseen at the time would result in civic society breaking down in this country. Is the hon. Gentleman suggesting that the Deputy Prime Minister is mistaken?

[Mr Umunna]

Silence.

There has been a lot of talk about IFS and Institute of Directors reports, various statistics, the extent to which we need to reduce the structural deficit and the extent to which it is cyclical—but we are talking about people’s lives, and I am deeply worried about what the approach adopted by the Government means for my constituents and those who live in similar areas. There was talk of contrived anger. My worry is not contrived; it is very real. As has been said, the Office for Budget Responsibility has revised up the unemployment forecast by 100,000 people. The Chartered Institute of Personnel and Development is saying that it is absolutely certain that unemployment will go beyond the 3 million barrier again.

I took the trouble to look into some of the cuts that Geoffrey Howe imposed on the country, and what worries me most is that they pale into insignificance compared with the cuts envisaged by the Government now. Howe cut spending by 4% between 1981 and 1984. The Chancellor is planning 25% cuts over four years.

--- Later in debate ---

[Sajid Javid]

The hon. Gentleman’s own party said before the election that it expected to make very large, severe cuts, in the order of about 20% in real terms. Our Budget proposes cuts of about 25% in real terms in unprotected Departments. Is he really saying that the only thing bothering him is a difference of 5%? I have not heard anything from Labour Members in the past two or three days that remotely suggests how they would achieve the 20% cut that they have talked about.

James Carville, who was President Clinton’s political adviser, once famously said:

“I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone.”

Soon after that, President Clinton abandoned his plans to increase borrowing, recognising instead that, even at that time, he had no choice but to balance the budget. I have traded in the international bond markets for many years, and working on a trading floor I saw for myself just how severe the financial crisis was. There is no question but that we would have faced economic problems regardless of the actions that were taken by the previous Government, but their actions made things worse, and that is the key. The situation has been made worse by the huge amount of borrowing that we have taken on since that time.

[Mr Tom Harris]

Does the hon. Gentleman believe that it was right for the Government to bail out Northern Rock?

[Sajid Javid]

Personally speaking, on my own behalf, I would not have carried out the bail-out in such a way. I think that the true consequences and costs of that bail-out are yet to be borne out.

I know from my own experience of the bond markets that they take no hostages. We now depend on them utterly for the nation’s finances. My right hon. Friend the Secretary of State was absolutely right to point out that we face a major sovereign crisis unless we take serious action. Some Labour Members have said that it does not look as though we have had problems with financing our budget deficit to date. We borrowed about £225 billion in gilts in the last financial year, but at the same time, the previous Government, through the process of quantitative easing, printed about £225 billion of new money. It is therefore not difficult to work out how, in effect, much of that borrowing was paid for.

The United States was the only other major economy that went through a process of quantitative easing, and we cannot use it as an example to compare with ourselves because, as we know, it has a reserve currency and we do not. That makes its situation entirely different when it comes to such an economic policy. The only other country in the world that I can think of without a reserve currency that went ahead and printed money at about the same time as us—indeed, before—was Zimbabwe. It is rumoured that the Finance Minister of Zimbabwe sent a note in 2008 to the then Chancellor of the Exchequer offering him his economic advice in exchange for lifting visa restrictions on him and his family. I think the then Chancellor took the advice but did not give anything in return.

The bond markets are picking off grossly indebted nations one by one with rising bond yields and falling prices. We have heard today about Greece, and we have seen what has happened in Ireland, Portugal, Spain and Italy. Those who observe the markets carefully need only look at what has happened, to a lesser extent, in France in recent weeks, where problems have started. That is why France, too, recently announced an austerity package. We have no choice but to reduce the record budget deficit, or else we will face an economic crisis of cataclysmic proportions.

[Sajid Javid]

Yes; Professor Blanchflower has been consistently wrong for the past three years since the crisis started, and he was wrong in what he said yesterday.

We have no choice but to cut the deficit, and that requires both cuts in spending and the raising of taxes. As we have heard today, we have to a strike a balance between the two, and the burden must fall on public spending. We have no choice about that, because if we raise taxes too much we will destroy the very incentives that we need to create the growth that will get us out of this economic mess.

As we go through that process, we must naturally try to protect the most vulnerable as much as we possibly can. Opposition Members have accused us of being ideological about the matter, but how can we be anything else? They are absolutely right, and there is no shame in it, because there is an ideological difference between what they believe and what we believe about how to get our country back on track and our economy going.

The Opposition believe in some kind of Alice in Wonderland economics in which we can go on living beyond our means year after year. We believe in the real world, where we have to pay our way. They believe that the state has the answer to all society’s problems, but we believe that individuals, helped by the state, have the answers. They believe in an ever increasing welfare state, in which people are tied down and not allowed to profit from their own industry, and we believe in helping the most vulnerable in society—those who cannot help themselves—but freeing those who can work for themselves and earn an income, and giving them the incentives to do just that. Because of that, we believe that we can get more out of our constrained budget, repair our economy and create a fairer and more responsible society.

[Mr Tom Harris]

Will the hon. Gentleman give way?

[Sajid Javid]

I should like to plough on for a bit, but I will give way in a moment.

The size of our national debt cannot be ignored, either. It has not been mentioned much—we have all talked about the deficit, but let us not forget the enormity of the problem caused by the national debt. Any Government will have to address it at some point. Benjamin Disraeli once said:

“Debt is the prolific mother of folly and of crime.”

He should have known, because there was not just public debt at the time; I believe he had some personal debt, and he was probably referring to that as well.

After 13 years in office, Labour took our visible national debt from £350 billion to more than £900 billion—an almost threefold increase. That does not include the invisible national debt, public sector pension liabilities, which reputable organisations estimate to be more than £2 trillion, and all the private finance initiative liabilities, which grew from approximately £20 billion to £150 billion. We have a huge debt problem, which must be addressed, otherwise not only will this generation and our children pay for it, but our children’s children will inherit it. Let us not forget the changing demographics in our country, where we have a growing elderly population and fewer people of working age. That means that there are fewer people to tax and fewer who are able to fund the state’s activities, including repayment of debt.

The Budget addressed how to start promoting growth, which will help us get out of the mess. The Government are reducing corporation tax, the tax on small companies and on entrepreneurs’ relief, and addressing some of the problems of bank lending Many banks have been held back from increasing lending since the onset of the crisis because of the uncertainty of the future economy. The Budget gives banks much more certainty about the future of our economy, and that gives them more confidence to lend.

The securitisation market has not been mentioned often in the debate. More than the equivalent of £5 trillion has been issued in the past 10 years. Many banks used that to provide funding to small and medium-sized companies and to fund mortgages throughout the world. Securitisation unquestionably caused some of the problems of the credit crisis, but we must consider that market if we are serious about getting banks to lend again. So far this year, European banks have issued €30 billion of securitised bonds, against €500 billion in the same period last year. Last year, 95% was purchased by the private sector; so far this year, 95% has been purchased by the public sector central banks throughout Europe, including ours.

We are considering a bold Budget to redress a dire situation. Its measures are thoughtful and disciplined and it aims to spread the economising process throughout the nation. No group is spared and none is favoured.

[Toby Perkins (Chesterfield) (Lab)]

It is interesting to follow the hon. Member for Bromsgrove (Sajid Javid). There was one thing in the past 14 minutes that I am glad that he acknowledged; otherwise there was little with which I could agree. However, I agreed with the admission that the Budget is ideological and that the Conservative party has delivered the sort of change that it always wanted to make and scrapped the massive improvements that the Labour party made in the public sector. It is not an economic but an ideological Budget. The hon. Gentleman’s honesty, at least about that, does him great credit.

I want to consider the huge and unnecessary gamble that the Chancellor has taken with our economic recovery, and why a genuine growth strategy would enable us to grow our way out of the economic crisis without threatening thousands of people with the dole, and without threatening those who rely on housing benefit or the economic recovery. I shall also talk about the Budget’s impact on my constituents in Chesterfield and Staveley.

First, I shall deal with the myth that the Chancellor had no choice and that the measures were taken out of economic necessity rather than, as the hon. Member for Bromsgrove admitted, political ideology. That is nonsense. The Chancellor’s Office for Budget Responsibility’s report confirms that the borrowing requirement this year was £8 billion less than that forecast by my right hon. Friend the shadow Chancellor in March. Before the Chancellor’s intervention in the Budget, we were on target for the growth forecast for 2011 of 1.25% that the shadow Chancellor had made. The OBR admitted that the shadow Chancellor’s plans for spending restraint over the next four years would have halved the budget deficit by 2014-15, just as he said they would when he delivered his Budget in March.

Uniquely among the main parties, the Labour party is putting forward policies that we campaigned on in the general election a month ago. This could catch on: we could go into elections telling the public what we wanted them to vote for, and then we could come to this place and deliver those policies.

[Mr Tom Harris]

That’s not the new politics.

[Toby Perkins]

My hon. Friend makes a valid point: it probably is not the new politics, but it is something that political parties should perhaps consider.

Hon. Members should remember that the previous Labour Government were the first Government for many years to start paying off the national debt. The stringent financial rules that the former Prime Minister put in place during his long stint at the Treasury put this country into the position whereby we entered the recession with the second lowest debt to GDP ratio in the G7.

[Toby Perkins]

It certainly is not the case. The hon. Gentleman should remember that in 1997 we inherited hospitals that were in a disgraceful state and where people died of things that they could have been treated for, if only they had got to the top of the waiting list. We should also remember that we inherited schools where the roofs leaked every time it rained. Our children were educated in quite disgraceful conditions. That was the legacy of 18 years of the Conservatives, which is why when they lost, they lost so massively that they were not even credible as a party for another 13 years.

[Mr Tom Harris]

May I congratulate my hon. Friend on a terrific election result in Chesterfield? Does he share my bewilderment—and, I have to say, amusement—at the efforts by the Chief Secretary to the Treasury and the Business Secretary to claim not only that they were wrong to oppose an increase in VAT, but that they have miraculously transformed VAT from a regressive tax before 6 May into a progressive tax now?

[Toby Perkins]

I was certainly bewildered by the Secretary of State for Energy and Climate Change’s contribution in opening this debate, and by the idea that when the Liberal Democrats talked about the tax bombshell, what they meant was that VAT was regressive only if it was levied on food, a suggestion that nobody had made and which was never part of the debate. His speech was one of the most bizarre contributions that we have heard over the past three days. I look forward to watching it on iPlayer tonight and reliving the moment, because it is something that will live long in the memory.

I want to talk about the choice that the Labour party made. What we enjoyed under the previous Labour Government was 11 years of stable economic growth. That was the longest period of stable economic growth in this country’s history, yet unlike the Conservatives, we went into recession only when the entire world went into recession. The Conservatives did it differently: they could go into recession when the rest of Europe was in a strong position. It was only the global economic crisis that threw the economy off course under a Labour Government.

Capital Gains Tax (Rates)

Tom Harris Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Mr Tom Harris (Glasgow South) (Lab)]

I hope that the hon. Lady will steer away from misleading the House into believing that the Labour Government did not wish to reduce the national deficit, because she must know that they proposed to halve it over a period of four years. Can she tell us with what part of that package she has so much difficulty?

[Mary Macleod]

The hon. Gentleman clearly has a very short memory of what the present Opposition did to the country. What we, as the Government, need to do now is address the present situation and, as we have done in the emergency Budget, come up with measures to turn it around.

Far from being reckless, as was suggested yesterday by the right hon. and learned Member for Camberwell and Peckham (Ms Harman), this Budget has shown that the Government are prepared to take on their responsibilities and make the tough decisions required. That is something that the previous Government neglected to do. We are putting the country first, and doing the right thing. What would be reckless would be to continue to allow debt interest payments to increase as they have been doing. The cuts that are coming are actually Labour cuts. We have inherited a mess far worse than we were told we would inherit before the election, and we are paying the bills for the last Government’s irresponsible actions. That is their legacy to Britain. If we carry on as we are, we may be paying about £70 billion in interest on our debt in five years’ time.