Finance Bill

Tommy Sheppard Excerpts

Tuesday 21st July 2015 Commons Chamber

[Tommy Sheppard (Edinburgh East) (SNP)]

I rise to speak in support of the SNP amendment and, hopefully, to persuade the House to deny the Bill a Second Reading.

Before I go into the details of the Bill, I want to deal with a question of overview. Over the years, we have grown used to hearing glib statements from the Government, and soundbites rather than substance. Many of us marvel at the fact that the Conservatives manage, without smile or grimace, to get the words “working people” out of their mouths quite so often, given that, we suspect, some of them rarely meet the working people of this country, let alone have their best interests at heart. We have also grown used to the phrase ”long-term economic plan”, although the plan has been going for five years and has so far failed to meet every single objective that was set for it by the Chancellor. The latest mantra we hear consists of six words: the Conservatives believe in “high wages, low taxes, low welfare”. That is the type of society that they want to see.

I think it was the hon. Member for Gloucester (Richard Graham) who, at an early stage in the debate, asked the Opposition spokesman, the hon. Member for Birmingham, Ladywood (Shabana Mahmood), whether she agreed with the general direction indicated by those six words. I do not want to misrepresent the hon. Lady, but I did not hear her response, and I think that she tried to dodge the question. Well, I do not want to dodge the question. I want to say that I consider that statement to be facetious, glib and shallow, and that it is not a statement with which my colleagues and I agree.

I want to see a society in which there are high wages, fair taxes and decent welfare provision for everyone, and that is what I think we should be aiming for. I believe that prosperity is not just about what we have as individuals, and the wealth that one family gets through a wage packet, but about the things that we have together, in our society and in our communities. I believe in the whole concept of the social wage. If we know that we have well-funded, adequate, strong public services in respect of, for instance, health and education, and if we know that we have a strong system of social insurance that gives us a safety net should we fall ill, suffer disability, or find ourselves between periods of employment, we are much richer as a result. That is our attitude, and that is the philosophy in which we believe.

Let me now deal with some of the provisions in the Bill. So far, no one has discussed the tax lock provisions in clauses 1 and 2. The Government are saying that, for the remainder of the current Parliament, they will take upon themselves a legal obligation not to increase VAT or income tax. I made some inquiries about that, because I thought it a strange thing for the Government to want to do. After all, they are the Government now, and they will be the Government next year and for the following five years. If these provisions are included in what will become the Finance Act 2015, it will only take a clause in the 2016 Finance Bill to overturn them. They are therefore literally not worth the paper on which they are written. That is another example of a Government who prefer public relations to concern about the public finances.

The second detailed issue that I want to raise is that of the personal allowance. Members on both sides of the House will probably welcome the increase in the allowance and, as we are told, the ability of people to keep a little more of what they earn; but let us not kid ourselves.

[Angela Crawley]

IFS figures state that a £1,000 increase in work allowance available to a single parent earning £12,000 would boost their income by £650 a year, whereas in contrast a £1,000 increase in personal allowance would mean a family would benefit by only £70, resulting in further child poverty. Does my hon. Friend agree that this will not help families?

[Tommy Sheppard]

I agree with my hon. Friend and was just about to make that point, which has been endorsed by the IFS and others. The personal allowance is one lever we can use to enable people to keep more of what they earn, but we should not fool ourselves that it is going to do something about the lowest paid in our society and that it is the only thing we should do. Let us compare and contrast it with action on the work allowance, for example, which is the amount of money people are allowed to earn before they begin to lose benefit. As my hon. Friend said, increasing that by £1,000 would have a much better effect than increasing the personal allowance by £1,000.

Our manifesto had a proposal to increase the work allowance to 20% to allow people to keep more of the money they earn. That would also provide a powerful incentive for people either to go out and get higher paid work or to get more work, knowing they would be able to benefit from that and would not lose benefits as a consequence. Under these current proposals, however, someone who today has a part-time job earning, say, £5,000 a year will either lose benefits or have to work less and earn less than £5,000 to keep their benefits. Either way, their household income will go down. That will make the poorest in our society poorer still, and it is a serious indictment of this Government that that is the direction they are going in.

On inheritance tax, I do not think any Member of this House would suggest for one minute that people should not be allowed to pass on their good fortune to their children. All of us believe in that, but this is the question: when doing that, should the luckiest in our society who have benefited the most, as well as passing most of what they have on to their children, also make some contribution to other people’s children and society as a whole? That is why we have taxation, after all. Governments and their policies are about priorities and this Government have shown their priority is to look after people who live in £1 million houses and make the tax burden easier for them while clobbering the poorest in our society.

I also want to echo the comments of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin), who proposed our amendment, and ask the Minister to examine in the context of this Bill the serious value added tax anomaly that has built up in Scotland with our police and fire and rescue services. There is an opportunity to remove this anomaly whereby the forces in Scotland are the only ones in all of these islands that have to pay VAT. Police Scotland has to pay £23 million a year to the Exchequer. That is extremely unfair and it places a great burden on that service. The money would be better spent on police officers on the streets defending us against crime. Given the Government’s apparent commitment to doing something about crime in our society, I hope they will take that on board. If Ministers cannot deal with this point in today’s debate, perhaps they will at least give an undertaking to look into it as the Bill goes to Committee.

The insurance premium tax measure is a clear example of this Bill’s policies not being about those who can afford to pay the most and who have the broadest shoulders and are able to cope with this burden. Those who live in high-crime areas are usually in poorer households and poorer communities, and they will face heavier insurance bills—if, indeed, they can afford to buy insurance. As a result of this policy, we are taxing people who have to pay those premiums in those areas more than people in the leafy suburbs who are much better able to pay. This is an iniquitous, devious little measure, and it should be rejected.

I have two further points to make. First, there is the most interesting question of this entire debate—and we have sat here for hours now. It is, where are Her Majesty’s loyal Opposition? I was taken aback when I heard the Labour party’s representative say that it would abstain on this Bill, so I spent an hour out of the Chamber doing a little research. On 6 July 2010, the Labour party voted against the Second Reading of the Finance Bill. On 26 April 2011, the Labour party voted against the Finance Bill on Second Reading. Members may see where I am going with this. On 16 April 2012, there was a Division on Second Reading and Labour voted against the Finance Bill. On 15 April 2013, there was a Division on Second Reading of the Finance Bill and Labour voted against it. On 1 April 2014, Labour voted for its own reasoned amendment and then against Second Reading of the Finance Bill.

For five years the Opposition have voted against the Government’s Finance Bill on its Second Reading. Can it possibly be that the difference then was that it was a coalition Finance Bill put forward with the Liberal Democrats, and that, now, the Opposition find this Finance Bill, put forward just by the Conservative party, to be more acceptable? Even I would find that incredibly implausible, so I urge and plead with Labour Members, because the country needs better than this. The people who did not vote for the Conservative party—63% of them—expect it to be opposed in this Chamber, and, even if Labour Members agree with one or two things in the Bill, surely they can see that its overall rubric and intent is to penalise those people in society whom they should stand up for. I appeal to Labour Members to reconsider their position on this issue and to join us in the Lobby tonight as we vote against the Bill on its Second Reading.

My final point is this: in my country this Government have no mandate to bring forward these proposals. They got 14% of the votes in Scotland; they have one out of 59 Scottish MPs. Our country is completely opposed to the Bill, and the people have sent us here with a mandate to oppose it. That more than anything else shows the need for these measures to be transferred to the Scottish Parliament—in order that the Scottish Government can deliver to the Scottish people their own democratic wishes and the type of society that they want to see.

[Barbara Keeley]

rose—