Section 5 of the European Communities (Amendment) Act 1993
Debate between William Cash and Rob Marris(8 years, 8 months ago)
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Rob Marris (Wolverhampton South West) (Lab)
I have to say that I have some sympathy with the hon. Member for Stone (Sir William Cash) and the right hon. Member for Wokingham (John Redwood). I draw the House’s attention to the wording of the motion, which states:
“That this House approves…the Government’s assessment as set out in the Budget Report and Autumn Statement”.
Even the Chancellor of the Exchequer does not accept the assessments made in the autumn statement, yet we are now going off to Brussels and—if the motion is passed; I hope it is not—saying that we accept them.
I hope you will give me a little latitude, Mr Speaker, because I would like to start by setting the scene of where we are with our economy and looking at some of the history behind it. We must look at credibility. In the 2015 general election, Labour lacked economic credibility and people voted accordingly. It is true that most of the economic meltdown in the UK in 2008 was due to world factors such as the Lehman Brothers collapse and so forth. Let me try, however, to dispose of the myth to which some in Labour still cling—namely, that there were no real problems with the UK economy when the world economic meltdown occurred in 2008 and that all Labour’s economic problems thereafter were due solely to world factors.
That analysis is just plain wrong, and most people know it. Most voters know that the Labour Government did great things to improve our society and our economy, but voters also know that Mr Gordon Brown made some fundamental economic mistakes—for example, the nonsense of his slogan “an end to boom and bust”, his light-touch regulation of the financial services sector, the disaster of the private finance initiative, and large deficits in the good times. Just before the world meltdown, the UK annual deficit was 3.1% of GDP.
As I have said in the House before, Mr Brown arrogantly ignored the warnings that some of us gave him well before the crash. I am angry and sorry that he made those mistakes, because they meant that the UK economy was not as well placed as it should have been before the world crash. Even without them, the UK’s defences would have been overtopped when the financial tsunami came across the Atlantic, but not by so much. Today, our economy faces what the current Chancellor has described as world headwinds, and because of the current Chancellor’s own mistakes the UK is far worse placed to withstand those headwinds than it was in 2008, when the world tsunami hit. The national debt expressed as a percentage of GDP, for example, is far higher than it was in 2008, and it is now rising.
Sir William Cash
In the light of the strictures that the hon. Gentleman has imposed on his former Prime Minister, may I just mention that the national debt, which is currently regarded as being about £1.5 trillion, rises to between £3 trillion and £4 trillion if, for instance, Network Rail and the pension liabilities are taken into account? Does the hon. Gentleman accept that that is the real position?
Rob Marris
Network Rail should be included; future pension liabilities should not.
The Chancellor is fond of saying that the current Government and the last coalition Government have fixed the roof while the sun was shining, and that Labour failed to do so. Well, only 20% of infrastructure projects have been started over the last six years. Under Labour Governments we had many more hospitals and schools, and we also had the £12 billion decent home programmes for doing up social housing. As a result, there was a great deal more social housing, including housing association and council properties, than there has been under the current Conservative Government and the coalition.
I welcome the creation of 2 million more jobs since 2010—that is the jewel in the Chancellor’s crown—but it has been bought with a sea of debt, a point to which I shall return. The proportion of part-time workers in the work force has remained broadly the same for the last 10 years, but there is concern about the growth of zero-hours contracts, although I must say that that concern is sometimes overblown. There is also concern about regional imbalances between London and the rest of the country, although I am pleased to say, as a west midlands Member, that they have lessened somewhat in the last two years. However, according to the Office for National Statistics, median gross weekly earnings in the United Kingdom fell by about 4.5% in real terms under the coalition Government.
A theme of the Chancellor’s Budget statement was
“We choose to put the next generation first.”—[Official Report, 16 March 2016; Vol. 607, c. 951.]
What happened about student fees and loans in England? What happened about the abolition of the education maintenance allowance in England? What happened about the spiralling cost of housing in the last six years because the Government singularly failed to address that issue, thereby increasing intergenerational imbalance? What happened about this Government’s selling of a record amount of state assets this year? Those assets could have gone to the next generation. What happened about this Government’s carrying on with the disastrous policy of PFI? And what happened about the deficit and the national debt?
We were told that the deficit was not going to be eliminated by 2015. Well, these things happen. Is it going to be eliminated by 2020? Barely any commentators besides the Chancellor of the Exchequer himself believe that. The Financial Secretary to the Treasury says this evening that we are doing better than other member states. I have to tell him that that is not true. In the G7, for example, our deficit compared with those of the other seven states is the sixth worst; only that of Japan is worse. In 2014, the deficit in Greece—poor old meltdown Greece—was less as a proportion of GDP than the deficit in the United Kingdom. In 2015, according to the International Monetary Fund, they will be the same. That is not a great example to set.
The changes, positive as they may be, with some anaemic growth and considerable growth in employment, have been bought on a sea of debt. Government spending is out of control. Let us look at the national debt. I am grateful to the economist Richard Murphy for providing me with these historical figures. In 2014 prices, the average borrowing by Labour Governments for each year in office since the war was £26.8 billion. The figure for Conservative Governments was £33.5 billion. The average borrowing, in 2014 prices, for each year in office excluding the period since the world crash in 2008—it could be argued to be unfair to the last Labour Government and the Conservative-led Governments to include that period—was £17.8 billion for Labour Governments and £20.6 billion for Conservative Governments.
Let us look at the percentage of years in which debt was repaid by Governments since the war. Part of the national debt was repaid in a quarter of post-war Labour Government years; the same happened in 10% of Tory Government years since the war. Let us now look at the total repayments of the national debt made by respective Governments, in 2014 prices. Conservative Governments have managed to pay off £19.9 billion of the national debt. Labour Governments, who have far more economic credibility, have paid off £108.8 billion. This Government’s spending is out of control. The national debt is up two thirds in six years, and this year it is forecast to increase slightly as a percentage of GDP.
It is a good thing that Mr Brown kept the United Kingdom out of the euro. Had he not done so, we would be in special measures big time under the terms of the growth and stability pact. The treaty defines excessive budget deficits as those that are greater than 3% of GDP. The current Chancellor has failed that test six years running, and on current forecasts—they could of course change next week—he is set to scrape in under the wire at 2.9% this year. The other element of the definition of excessive budget deficits under the growth and stability pact is that public debt is considered excessive if it is greater than 60% of GDP. It should also be falling by 5% per year on average over a three-year rolling period. The current Chancellor is on track to fail that test 10 years running.
The Chancellor is borrowing on the credit card to pay the day-to-day bills. He is also borrowing on a mortgage to buy bricks and mortar. That is fine for infrastructure— that is what Labour would do and it is what many families do. We borrow on a mortgage to pay for the bricks and mortar, but we should not borrow on the credit card to pay the day-to-day bills.
This Chancellor has been in office for six years and it is time that he took some responsibility. Frankly, it is wearisome, juvenile and harmful to our economy to keep blaming the previous Labour Government. I urge all Members of the House to vote against the motion tonight.
Finance Bill
Debate between William Cash and Rob Marris(9 years ago)
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Rob Marris
I thank the hon. Gentleman for that. We shall shortly be having a discussion about the mechanics of setting VAT in the United Kingdom.
New clause 7 has been tabled by my hon. Friend the Member for Dewsbury (Paula Sherriff). New clause 2, tabled by the Scottish National party, is similar but not as good. It was also tabled in Committee. The greater virtue of my hon. Friend’s new clause—in contradistinction to new clause 2—is that she has carefully listened to what the Government said in Committee about the road map, as we say these days, to achieving this worthy goal. She has worded her new clause in the light of the remarks made by the Minister in Committee, and I commend her for that. Her proposal has gained considerable momentum on both sides of the House, for obvious reasons. Of course, those of us on the Labour Front Bench will support it and I urge hon. Members on both sides of the House to do the same. I will not say a great deal more about the new clause—
Sir William Cash (Stone) (Con)
Some of us do have a certain amount to say about it. These are weasel words. The Opposition know perfectly well that they are not going for a full relief, or any relief, and are instead going for a pathetic little report, because of sections 2 and 3 of the European Communities Act 1972. The hon. Gentleman knows it, and we know it. These are weasel words, and the proposal would make no real change.
Rob Marris
I wish no disrespect to the hon. Gentleman, but I am not going to get into a big debate about this subject. It is not a great idea for a man to stand at the Dispatch Box and get into such a debate. On the broader issue of the European Union, it might surprise him to learn that more than half the population of the EU is female. It might also surprise him to contemplate the fact that this measure could be on the shopping list that our Prime Minister takes to Brussels, and that it could gain considerable support—from the Chancellor of Germany, Mrs Merkel, for example.
Rob Marris
I will not give way for two reasons. First, the hon. Gentleman can seek to catch the Deputy Speaker’s eye later. Secondly, as I have said, I do not propose to get drawn into a debate on this issue. I support my sisters in the Labour party and around the House, and they are more capable than I am of putting forward the reasons behind the measure being proposed by my hon. Friend the Member for Dewsbury. They are more than capable. They do not need me to do it, and I shall say no more than I have already done.
New clause 10 seeks to place a statutory requirement on the Government to produce a report, within two years of the passing of the legislation, on the effects of clause 47 and schedule 8. In lay terms, clause 47 and schedule 8 will—with safeguards—allow HMRC to nick money out of our bank accounts without a court order.
Of course, under these provisions HMRC would not, in any legal sense, be stealing money from a bank account. Were it to do so, that would be covered by section 1 of the Theft Act 1968—I am not a criminal lawyer, but that is my recollection of it. What HMRC would be doing is something that other people cannot do: it would, with safeguards, be removing money from a debtor’s bank account without a court order and without the agreement of that debtor. That is a very big step forward for our society to agree to, refracted through clause 47. In Committee, the Labour Members tried to persuade the Government not to press ahead with the clause, as did other organisations, but we failed on that. We are not trying that again tonight directly, but we are saying that we take cognisance of the safeguards the Government have introduced and beefed up as a result of representations, and that a report should be produced within two years to see how they are working.
Before I deal with the safeguards, I wish to remind the House of why clause 47, allowing HMRC to go into people’s bank accounts without a court order, has been introduced. One major driver is HMRC’s fears about revenue loss through non-compliance. In an earlier Budget speech, the Chancellor said:
“I am increasing the budget of Her Majesty’s Revenue and Customs to tackle non-compliance.”—[Official Report, 19 March 2014; Vol. 577, c. 785.]
That was welcome: there is too much non-compliance going on, some of it blatant, some of it immoral avoidance but not illegal evasion, such as large corporations squirreling away money in tax havens and in places such as Luxembourg; and there are people who owe money to HMRC but fail to pay, and so HMRC has to take steps to recover that money.
Another major reason given by HMRC, which might trouble the hon. Member for Stone (Sir William Cash), was as follows:
“The current processes for recovering debts…can be costly”.
That was said on page 2 of the consultation document, which contains an introduction by the Financial Secretary to the Treasury—the words I read out were not his but they were contained in a document whose preface he wrote. Paragraph 2.31 on page 9 goes on to say that
“a county court judgment…can be a slow and expensive process.”
In clause 47, the Government are therefore saying, “We find the court system a bit slow and a bit costly, so we are going to have our own system to take money out of people’s bank accounts, with safeguards.” That is echoed in clause 48.
Where someone wins at court, there is a calculation to be made as to how much they are owed on a debt. I believe the basis for calculating what is known as the judgment debt rate goes back to about 1837, but the Government are not having that either in clause 48. Under the interest rate provision in clause 48, and in clause 47 on HMRC taking money out of bank accounts without a court order, we have one rule for them and one rule for the rest of us. We have to ask ourselves: are they right about the court system? Is it a slow and expensive process? I have not practised law for almost 15 years, but I try to keep up with it and I think the process is getting slower and more “costly”. That is because it has been starved of money by this Government and their predecessor Conservative-led Government.
Rob Marris
I disagree with the hon. Gentleman. The difficulty is that we have high energy prices because we have not invested in new technology to bring them down. For example, if we had cracked the holy grail of carbon capture and storage on a commercial basis—it is already cracked on a scientific basis—this country would be quids in, because of all the coal we have.
Sir William Cash
The short response to what the hon. Gentleman is saying is that massive subsidies deployed in other countries are being authorised by the European Commission, but we do not get them. As the hon. Member for East Antrim (Sammy Wilson) said just now, there is an increasing failure in renewable energy because it is too expensive and the subsidies are a complete disaster zone.
Rob Marris
The hon. Gentleman is right that the European energy market and the production of energy within the European Union are a bit of a mess. The United Kingdom is part of that mess because we are in the European Union, but it is a mess here anyway because we have not tackled energy security. Again, the problem started under the previous Labour Government and I berated them for it at the time. I was berating a Labour Government on energy security before I lost my seat in 2010, and on returning to this House five years later, so far as I can tell almost nothing has been done on that front apart from the poisonous deal—in many senses of the word—backed by China and EDF for new nuclear power stations in this country.
One can see a bit of a pattern with what is happening with the removal at 28 days’ notice of the climate change levy exemption for electricity from renewable sources used by non-domestics—non-doms, as it were. The Liberal Democrat policy was for the percentage of taxation to come from environmental taxes to keep rising year on year, and when the Liberal Democrats first came up with that crazy idea in about 2007 I pointed out that it was a bit self-defeating. That has been formally abandoned by this Government, which is not necessarily a mistake, but in the context the issue is what has or has not replaced that policy. Support for large onshore wind is being cut, and support for photovoltaics is being ended one year early. The Government’s policy is to lessen air passenger duty, and they aim to abolish it and to expand airports. That is not good news for the environment. The policy on zero-carbon homes for 2016 is being scrapped, not just diluted. There is a massive nuclear subsidy, which we heard about last week with the visit from China. What will our nuclear industry be built on? State support from China and from France.
Rob Marris
I quite agree with my hon. Friend. We want those highly skilled jobs and we want the cheaper energy that one hopes we can get from that technology. We need the Government to kick-start research and development investment to develop that technology. However, I must caution my hon. Friend. There is only so far I can go in agreeing with him. Yes, we want those jobs, and quite a lot of them will be highly skilled, but it is a dead end for us as a country always to have subsidised jobs. That is the obvious thing to say, but it is a dead end. We need a plan to get from where we are, without energy security and without technological development, to the sunlit uplands where we have that technology and development, and where they are self-sufficient and commercially viable. That will need some support from Government, and the removal under clause 45 of the CCL exemption for electricity from renewable resources used by non-doms is a step in the wrong direction.
The Department of Energy and Climate Change Minister Lord Bourne of Aberystwyth wrote to me on 26 August saying that the Government had committed to delivering on the national infrastructure plan published in December 2014, which contained a number of priority investments. He went on to list some of them. One is rail electrification, and we know what has happened to that—it is on pause. Another is low-carbon energy such as nuclear; we know the cost of that, which is enormous. A third is low-carbon energy such as renewables, but clause 45 is going in the wrong direction on that. Lord Bourne also cites energy efficiency measures such as smart meters, but the evidence on them is mixed, to say the least. Before Conservative Members jump up, I know that it was a Labour Government who started down that route and it struck me as a very odd thing to do at the time.
The final point that Lord Bourne mentions, which will please my hon. Friend the Member for Stockton North, is carbon capture and storage. We need to go down that route, but as I say, we need a bit more help from Government, and the measure in clause 45 goes in the wrong direction—at least, we are uncertain what direction it is going in as there has not been a whole bunch of consultation on it as far as I can tell and I am not aware of an impact assessment.
On 8 July—Budget day, I believe—HMRC put out a consultation document on the subject, which said that one of the factors being examined was the “operational impact” in pounds. It stated:
“Changes in HMRC costs are estimated to be negligible and would fall as part of the existing operational cost of administering CCL. The government will consult Ofgem and NIAUR”—
that is, the utility regulator—
“over summer/autumn 2015 to establish the costs and other impacts on the regulators of removing the exemption.”
That is a consultation, as I understand it, only on the impacts on the regulators, but that might shed some light on the impact on the industry and on employment. I hope that when he responds to the debate, the Minister can address that point.
Sir William Cash
I do not think new clause 7 is strong enough. It just asks for progress. We are not doing enough. Let me explain why.
The hon. Member for Wolverhampton South West (Rob Marris), who presumably helped to draft this proposal, knows perfectly well that he is trying to find a way of satisfying those who would like to see a serious attempt made to reduce the VAT on these products. They are clearly necessary and the tax on them should be reduced in the way that has been proposed. Unfortunately, however, he also knows that because of sections 2 and 3 of the European Communities Act, it is impossible to do that without getting the agreement of all the other member states. There is a variation as between other member states and ourselves to the advantage of those states, the net result of which is that supporters of new clause 7 are not going to get that agreement and they know it.
I am completely on the side of those who want to see a total elimination of VAT on these products.