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Tax Receipts (Deficit)

Volume 587: debated on Tuesday 4 November 2014

Progress has been made on reducing the deficit; it is down by more than a third from its peak and borrowing in 2013-14 was under £100 billion for the first time in six years. The latest public finance release shows that the impact of the great recession is still being felt in our economy and the public finances. The Office for Budget Responsibility expects real earnings to rise faster than inflation, and receipts are expected to perform more strongly in the second half of the year. It is therefore important to stick to the plan, which is building a more resilient UK economy.

The Chief Secretary to the Treasury will be aware that although unemployment has been falling, income tax receipts to the Treasury have stayed flat, despite the Government predicting a significant increase. Does that not show that this Government are presiding over an explosion of underemployment, zero-hours contracts and low pay, and until they deal with that, they will never bring the deficit down?

First, I would think that the hon. Gentleman would welcome the substantial increase in employment we have seen in the past two or three years—after all, it was his Front-Bench team who predicted that that would not happen under this Government. In fact, 80% of the jobs created in the past 12 months have been in full-time employment, not the part-time employment he is talking about, which is greater than the level in the economy as a whole.

Tax receipts and deficit closure are contingent on a strong economy, so does the Minister welcome the fact that the Legatum Institute’s prosperity index shows that the UK is now the most prosperous economy in all the major EU countries?

I agree with my hon. Friend that strong tax receipts require a strong economy, and the focus of this Government’s economic policy since the coalition was formed has been to rebuild the UK economy and clear up the mess left to us by the Labour party. We now have the strongest growth in the major world economies, and Government Members should be very proud of that.

Revenue officials have always been slow to catch up with the latest tax-avoidance scams in the construction industry, the latest of which is the umbrella company. Such companies are costing the Revenue huge sums and are exploiting workers. This is spreading rapidly to other sectors, including supply teaching. What is the Minister going to do about the scandal of umbrella companies?

We introduced measures precisely to deal with intermediary companies, which are often vehicles for tax avoidance or for minimising tax. We take that very seriously. If the right hon. Gentleman has evidence that he wishes to bring to my attention of specific issues that have come to his attention, I would gladly look at it.

Does the Chief Secretary agree that the best way to increase tax receipts is to create the conditions for business confidence and growth? That is happening in my constituency, with the recruitment firm eResponse choosing to set up in Rugby because it has assessed that between 1,500 and 2,000 new jobs will become available.

I welcome that sort of investment, and I very much agree with what my hon. Friend says. Businesses like that one, in every constituency up and down the country, are creating jobs because they have confidence in the economic policies of this Government.