House of Commons
Wednesday 25 March 2015
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Minister for the Cabinet Office was asked—
Public Procurement: Small Businesses
Over the past five years, we have implemented a wide range of measures to open up the way we do business to make sure that small companies are in the best possible position to compete for contracts. These measures include increasing transparency, making opportunities more accessible, removing unnecessary bureaucracy, improving payment terms and clamping down on poor practice.
I thank the Minister for that answer. He will be aware of the report of the Public Administration Committee that showed that at the time not enough was being done. Does he accept that there still needs to be a real culture change in the civil service to open up Government procurement to small and medium-sized enterprises?
We have obviously made a lot of progress and there is more to do, but we intend to extend and embed the reforms that we have made over the past five years. I would just remind my hon. Friend that at the last general election, only 6.5% of direct central Government procurement spend was with smaller businesses, and we had no idea how much was spent in the supply chain, so we have made huge progress.
The Minister omitted to say in his answer that nine out of 17 Departments spent less with SMEs in 2013-14 than they did in 2012-13. With just 10% of Government contracts going to small businesses, why have this Government been so poor when it comes to procurement from our SME sector?
In 2010, the Government set an aspiration that by 2015 25% of Government procurement spend by value should go to SMEs directly and into the supply chain. In fact, we have exceeded our target, and a record 26.1% is now being spent with SMEs. That is a record to be proud of, and a tribute to my right hon. Friend the Minister for the Cabinet Office and Paymaster General.
I know my hon. Friend is a great champion of small businesses in his constituency. One of the wider benefits of this programme of commercial reform is that it enabled the Government to make the huge saving of £15 billion in the years 2010 to 2014. As I say, that is a lasting tribute to my right hon. Friend.
The Minister might confess that it would help if he bought enough desks for civil servants. In answer to 11 parliamentary questions, Whitehall Departments have told me that they have more civil servants than desks. In the Department for Transport, there are 6,600 officials and 1,500 desks. This sounds more like musical chairs than hot desking. Is it the cause of all the chaos and confusion in this Government?
Building Workers: Shrewsbury
2. If he will expedite the review of papers held on people convicted in 1973 in relation to alleged incidents during the national building workers’ strike at building sites in the Shrewsbury area so that the review is completed as soon as possible. (908308)
I am very grateful for that answer, and I wish I believed it. Sadly, it was confirmed in a debate yesterday afternoon that despite this House overwhelmingly agreeing on 23 January last year that the papers would be released—and that Ministers would assist in getting the papers released—they have not been. The campaign has consistently met blockages. I am calling on the Minister to bring forward the release of these papers as quickly as possible and to stop the 43-year cover-up, which will see innocent men going to their graves as convicted criminals to protect the Tory Ministers of 40 years ago. It is a disgrace.
I am afraid that the hon. Gentleman is unaware of the actual situation. The review of which he speaks is under way at present, but the papers—and the particular parts of those papers that were kept back on security grounds—have all been given to the Criminal Cases Review Commission, which has looked at them and is using them in the course of its review. There is no question of any injustice of the kind he describes occurring as a result of the lack of those papers being present. I, however, assure the hon. Gentleman that if I find myself in my current post after the election, I shall seek to expedite the review.
The hon. Member for Blaydon (Mr Anderson) asked a serious question. This was an establishment stitch-up 42 years ago, and for 42 years it has been an establishment cover-up. Does the Minister not realise that there cannot possibly be any state security reasons why the records of an industrial dispute should not be made public?
My hon. Friend is also suffering from a misconception. The bulk of the papers involved were released. The bits that were not released relate to security and make specific references to the security services and their activities. Those are being reviewed, and a decision will be made. He is absolutely right that the crucial point is that the people involved deserve justice, so the CCRC needs to see the unexpurgated version, and it has. It has been given full sight of all the papers.
It is increasingly clear that there is simply no justification for the delay in the review or for the refusal to release the full papers about the case. The Minister may refuse to act, but a Labour Government will act. We will release those papers with the urgency that the situation demands. Justice delayed is justice denied. Why is he so determined to ignore the will of Parliament, ignore the public and ignore the urgency of the situation, and why will he not release the papers now?
I am sorry that the shadow Minister wrote that question before she heard my previous answers. If, as I hope she will not, she finds herself a Minister after the election and has to make this decision—[Hon. Members: “Hear, hear.”] If she finds herself in that position, I hope that she will discover the truth, which I have already told the House—that the CCRC has already seen the papers, so there is no question of justice being either delayed or denied.
Government Digital Service
The Government Digital Service has created the award-winning, world-leading gov.uk, the single web domain for Government information and services, and 25 major services have been redesigned to make them simpler, clearer and faster to use. That will not only provide savings to the taxpayer but improve delivery for the public, so that it is focused on user need, not Government convenience. In the next Parliament, we will deliver government as a platform, building common services such as a once-for-all payments platform.
The Government Digital Service has been one of the current Government’s unsung success stories, improving the efficiency and effectiveness of public services and saving the taxpayer money. Will my right hon. Friend, on the occasion of his final Cabinet Office questions, accept my congratulations on the fantastic revolution in public services that he has led over the past five years?
I am grateful to my hon. Friend for those kind words. There has been a great success with the Government Digital Service, which the Washington Post has hailed, stating that the UK has set
“the gold standard of digital government”.
The Obama Administration and the Australian Government have created their own analogous organisations, explicitly modelled on what we have done.
I do not know what the Minister is eating for breakfast this week, but you do not seem to be able to keep him down, Mr Speaker —I half expect him to announce a U-turn on his intended retirement before the week is out.
Is not the secret success of the Government Digital Service the confidence that it has given Departments to develop solutions in-house with an agility that was simply impossible in the days of lengthy contractual negotiations with large IT companies?
My hon. Friend is completely right. From a time when British government was synonymous with failed IT projects, we have moved to being the world leader in digital government. There is still a huge amount more to do, but I am grateful to him for his support for our work.
4. What savings have accrued to the public purse from the Government's reforms to trade union facility time. (908310)
At the time of the last general election, there was no proper monitoring of trade union facility time in government. We now have controls in place that have saved the taxpayer some £26 million in the past year, and we have reduced the number of taxpayer-funded full-time union officials from 200 in May 2010 to just eight today.
While I generally support the principle of the union movement—[Interruption.] Why is that surprising? I generally support the principle, but it is not for the taxpayer to fund. What was the cost of giving trade union representatives in the civil service taxpayer-funded time off when this Government came to power?
Part of the problem was that it was not monitored, but the information we put together showed that the cost was £36 million, which we have cut to less than £10 million. There is a perfectly proper role for union officials to be embedded in the workplace, as they can resolve disputes and grievances quickly, but the situation was completely out of control and we have brought it under control.
Will the right hon. Gentleman take this opportunity to thank those civil servants—mainly trade unionists—who have had to implement Government policies, particularly in the Department for Work and Pensions, such as referring people to food banks? Perhaps against their own judgment, they have had to implement austerity, which has done great damage to the people of this country.
I point out to the right hon. Gentleman, for whom I have great respect, that the need for austerity was caused by the huge budget deficit that we inherited from the Government of which he was a part. We would rather have not had to do that, but I give credit to civil servants across the country who have done a huge amount. The civil service is smaller than at any time since the second world war, but it is doing more than it was before and productivity has improved dramatically.
The Paymaster General has spent the last five years attacking civil servants’ facility time and check-off. We now learn, a week before Dissolution, that he is inserting a gagging clause into the civil service code. Why is it so necessary and urgent to change the civil service code now?
The change to which the hon. Gentleman refers simply makes clear what was already the case. There will be considerable concern about whistleblowing, and we will do whatever is needed to ensure that we continue to be much more open about things that have gone wrong. Things are much less suppressed than they were when the Labour party was in power.
This is a devolved matter but in England and Wales more than 70 public, private and voluntary sector organisations now support activity under the digital inclusion charter, working together to help individuals, small businesses and charities to realise the benefits of being online. Later today the Government will launch the Digital Friends initiative that will call on civil servants to go out into their communities and teach digital skills to friends, family, neighbours, or colleagues who are offline.
The Minister will be aware that, unfortunately, Glasgow has one of the highest levels of population who are offline. The Government have recently run a series of adverts on Glasgow radio stations about encouraging people to switch their electricity and gas suppliers, but they are asking people only to use the online route. What assessment has he made about how we can encourage digital inclusion and the appropriate way to target Government adverts?
As I said, this is a devolved matter. The Scottish Government published their digital participation strategy in April 2014, led by the Cabinet Secretary for Culture, Europe and External Affairs, Fiona Hyslop MSP, and supported by a ministerial advisory group.
Civil Service: Job Reductions
Although the civil service is now at its smallest size since the second world war, officials have helped to deliver efficiency and reform savings of £11 billion in this financial year to January against a 2009-10 baseline. I pay tribute to the hard work and dedication of hundreds of thousands of civil servants up and down the country.
Can the right hon. Gentleman explain why he shut an office in my constituency that I fought long and hard to maintain, given that people have more than met the targets they have been given on every occasion in every year? Will he personally—he has not got long to go—have a wee look at that and perhaps write to tell me why he shut that office?
With the news this morning that HSBC is choosing Birmingham over Singapore or Hong Kong, and that Jaguar Land Rover is opening a new plant in the Birmingham area, will my right hon. Friend pay tribute to the civil servants who enabled that to happen in a new, clean, civil service that is lean and effective?
I pay warm tribute to what my hon. Friend has done to support the bringing of employment to the west midlands. He is a hugely energetic local Member of Parliament. Yes, the civil service does these things extremely well. It is a smaller civil service, but it is more effective than it was. I think its leadership would agree that there is still much more to do.
My hon. Friend the Member for Central Ayrshire (Mr Donohoe) raised the issue of the Government closing down the Her Majesty’s Revenue and Customs office in his constituency. Why is the Minister closing down the HMRC office in my constituency, the Army recruitment centre in my constituency and the Crown courts in my constituency?
As I said to the hon. Member for Central Ayrshire, every Department in Government has to look to its efficiency, make sure it can live within its means and do the job on behalf of the public. The civil service does not exist to provide employment; it exists to serve the public. We found that that can be done more efficiently and effectively, doing more and better for less. At the same time as employment in the public sector has fallen, it has risen in the private sector by 2.3 million.
Does the Minister agree that in the parts of the United Kingdom where there has been an over-dependence on the public sector and large numbers of jobs in the civil service, such as in Northern Ireland where the Executive are trying to reduce the dependence on the public sector, central Government should support inward investment through the private sector?
I completely agree with the hon. Gentleman. He is quite right to identify both the problem and the solution. The Northern Ireland economy will undoubtedly benefit from more private sector investment, from overseas or from within, with a smaller public sector.
Senior Civil Servants: Accountability
The Prime Minister can now exercise choice in making permanent secretary appointments. We have introduced fixed tenure for permanent secretaries. We publish their performance objectives, as well as improved management information, to allow them to be held to account. We have revised the Osmotherly rules to ensure that senior responsible owners are directly accountable to Parliament for project implementation and to allow former accounting officers to be called to Select Committees.
We have now instituted a formal process where formal input must be provided by Ministers to the Cabinet Secretary and head of the civil service on the performance of their permanent secretaries. That input has to be taken into account as part of the end of year appraisal undertaken by the head of the civil service.
At what may well be my right hon. Friend’s last appearance in the House of Commons at the Dispatch Box, may I remark that his five-year term as Minister for the Cabinet Office in charge of civil service policy for the Government will have truly left its mark not just on the civil service but on this House? His tenacity, commitment and sincerity are of great credit to him.
I am extremely grateful to my hon. Friend for his kind remarks. I pay tribute to him for the way in which he and his Committee have held us to account for what we do. He has done that consistently and persistently. It has not always been comfortable, but that is what the House of Commons is for.
My responsibilities are for efficiency and reform, civil service issues, public sector industrial relations strategy, government transparency, civil contingencies, civil society and cyber-security.
I would like sincerely to thank my right hon. Friend and neighbouring Member of Parliament for all his assistance and advice over many years., Can he estimate the amount of taxpayers’ money that has been saved through efficiencies in his five years in the Cabinet Office?
In the course of this Parliament we have saved more than £50 billion through efficiency and reform savings. I am extremely grateful to my hon. Friend for the support he has given throughout the process. He is a completely brilliant local MP, and I am confident he will be back here after the election.
With your permission, Mr Speaker, I would like to pay tribute to the right hon. Gentleman, given that this is likely to be his last appearance in this place. He has a long record of public service, which he has always pursued with principle, dignity and drive. Even when it has not served his own career, he has never been afraid to speak out, and I have always respected him for having a clear agenda. He is a moderniser and impatient for reform, and despite our disagreements, I am sure that Members on both sides of the House will want to pay tribute to his distinguished career.
Looking to his future, I wonder whether he wants to follow in the footsteps of his friend Michael Portillo. If so, I am happy to arrange some practice sessions for him cosying up on the sofa with my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott). I wish him well with his future plans, albeit with me taking his place in the Cabinet Office, and I wondered whether he wanted to take this opportunity to tell us some of his fondest memories of this place.
I am extremely grateful to the hon. Lady for her kind and warm words; they are hugely appreciated. We have pursued a difficult and often controversial agenda of reform, but one of things that has given it strength has been the robust support from her and her predecessors. Whatever the result of the election—I hope it will not be the one she foresees—this programme of reform must continue and be followed through.
That is a tempting question, but actually we have achieved a huge amount. I pay tribute to my right hon. Friend the Chief Secretary to the Treasury, who has worked closely with me and my officials on driving through this programme. It is hard to see how we could have done much more in that context.
T4. Does the Minister agree that one of the great failures of this Government has been their inability to check the quality of private companies engaged to deliver our people’s public services? Has that not been one of the fatal policy weaknesses of this Government? (908325)
We have improved the quality of the commercial directors and teams across Government so that we can monitor much better what is done than was the case under the hon. Gentleman’s Government, and I announced yesterday some principles for transparency that will take this process yet further. It is much better than it was, but there is still a lot to do.
T3. My right hon. Friend has been an outstanding Minister on cyber-security. He recently visited Pakistan and met the chief of general staff in the Pakistan army. Did they discuss greater co-operation between our two countries on cyber-security and sharing the good practice he has developed in this area? (908324)
T5. What assistance is the Minister for Civil Society giving to the National Citizen Service to maximise the number of students from disadvantaged backgrounds who participate in it so that they can play their full part in a programme that would benefit them more than those from more affluent areas? (908326)
The hon. Gentleman’s interest in the NCS is welcome and I know is reflected in his constituency, where demand for the programme is high among pupils at Bulwell academy and Bluecoat Beechdale academy. I am delighted that the latest independent evaluation found that in 2013 16% of NCS participants were in receipt of free school meals, compared with about 7% of 16 and 17-year-olds in the general population.
T6. The Cabinet Office has been relentless in reducing waste from public services. However, does my right hon. Friend share my concern that the hidden cost to the taxpayer, as well as the lack of local accountability, from doing away with the shire fire and rescue services and trying to create a national fire service as Labour proposes would be considerable? (908327)
The Prime Minister was asked—
I know the whole House will wish to join me in offering our deepest condolences to the families and friends of all those killed in yesterday’s Airbus crash in France. It is heartbreaking to hear about the schoolchildren, the babies and the families whose lives have been brought to an end. As the Foreign Secretary has said, it is very likely that some British nationals were involved. At this stage, three British nationals have been identified as having been on the flight. The Foreign Office is working urgently to establish whether any further British nationals were among those on board. We are providing consular assistance and will give further information as it becomes available. Our ambassador to France is at the crash site today. I spoke to Chancellor Merkel and Prime Minister Rajoy last night and made it clear that the UK is ready to offer any assistance we can. I expect to speak to President Hollande later today.
This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House, I shall have further such meetings later today.
May I join the Prime Minister in expressing sympathies to all the families affected by yesterday’s tragedy?
In 2014, the number of people working on zero-hours contracts increased by 19%, unsecured borrowing rose by 9%, and the percentage living in relative poverty was at the highest level since 2001. Does the Prime Minister agree that on his watch the future of our young people is only getting darker?
What has happened on my watch is that 174,000 more people are employed in Scotland. Zero-hours contracts account for one in 50 jobs, and it is this Government who have outlawed exclusivity in zero-hours contracts—after the 13 years of inaction from the Labour party. In the hon. Lady’s own constituency, the claimant count has fallen by 32% since the election. That is evidence that our economic plan is working in Scotland, as it is throughout the rest of the United Kingdom.
One of the most disturbing scandals has been the infection of thousands of people across the nation with HIV and hepatitis C through contaminated blood. Today Lord Penrose publishes a report that follows nearly 25 years of campaigning by Members on both sides of this House to address the scandal. Will the Prime Minister, as the last act of his Government, ensure that there is a full apology, transparent publication and, above all, proper compensation for the families terribly affected by this scandal?
My hon. Friend is absolutely right to raise this, with the Penrose report being published today. I can do all of the three things he asks for. I know that many Members on all sides of this House have raised the question of infected blood, and I have spoken about how constituents have been to my surgeries. While it will be for the next Government to take account of these findings, it is right that we use this moment to recognise the pain and the suffering experienced by people as a result of this tragedy. It is difficult to imagine the feelings of unfairness that people must feel at being infected with something like hepatitis C or HIV as a result of a totally unrelated treatment within the NHS. To each and every one of those people, I would like to say sorry on behalf of the Government for something that should not have happened.
No amount of money can ever fully make up for what did happen, but it is vital that we move as soon as possible to improve the way that payments are made to those infected by this blood. I can confirm today that the Government will provide up to £25 million in 2015-16 to support any transitional arrangements to a better payments system. I commit that, if I am Prime Minister in May, we will respond to the findings of this report as a matter of priority.
Finally, I know that Lord Penrose was unable to present the findings of his report today because of illness. I am sure the whole House would want to send him our very best wishes.
Let me first say that I fully associate myself with the remarks that the Prime Minister has just made about the victims of infected blood. We undertake today to act on those recommendations as well. I also join the Prime Minister in offering my condolences to the families who lost loved ones in the devastating plane crash yesterday, especially remembering the three British victims. Our thoughts are with all the victims, their families and their friends.
On Monday, the Prime Minister announced his retirement plans. He said that it was because he believed in giving straight answers to straight questions. After five years of Prime Minister’s questions, that was music to my ears. So here is a straight question: will he now rule out a rise in VAT?
No one is going to believe it. No one is going to believe it because of the Prime Minister’s extreme spending plans, because his numbers do not add up, and because he promised it last time and he broke his promise. Now, if the Prime Minister is in the mood for straight answers, let us try him with another one. Can he confirm that a spending cut—[Interruption.]
The Prime Minister will have plenty of time to ask questions after 7 May—and I am afraid to say that his own Office for Budget Responsibility has referred to
“a much sharper squeeze on real spending…than anything seen over the past five years”.
Next question, and this should be an easier one. Five years ago, the Prime Minister promised to cut net migration to tens of thousands. Straight answer to a straight question: is that a broken promise? Yes or no?
Let me give the right hon. Gentleman a second chance. I answered a very simple question about VAT. I ruled out an increase. Let me ask the right hon. Gentleman again: will he rule out an increase in national insurance contributions?
We all know that this is Labour’s jobs tax. This is Labour’s tax of choice. This is what Labour clobbers working people, families and enterprises with. So let me ask the right hon. Gentleman again—straight question, straight answer—will he rule it out?
There is only one person who is going to raise taxes on ordinary families, and that is the Prime Minister—and he is going to cut the national health service. Moreover, he did not answer the question. Let me now ask him a question about the NHS. Five years ago, he promised no top-down reorganisation of the NHS. Now, this is an easy one: can he confirm that that is a broken promise? Yes or no?
I will tell the right hon. Gentleman what is happening in the NHS. There are 9,000 more doctors, 7,000 more nurses, and 20,000 more bureaucrats. But we have heard it now: a clear promise on VAT from this side of the House, and no answer on national insurance from that side of the House. And it goes to a bigger point. The right hon. Gentleman has had five years to come up with an economic plan, he has had five years to work out some policies for the future of this country, he has had five years to demonstrate some leadership, and he has failed on every count.
Nobody believes the right hon. Gentleman’s promises on VAT and nobody believes his promises on the national health service because he has broken his promises in this Parliament. Now, let us try him on one more: three years ago he cut the top rate of income tax. Can he rule out, under a Tory Government, a further cut in the top rate of income tax?
The richest in this country are paying more tax under this Government than they paid under the last Government. We have set out our plans for tax cuts: if you are young and you work hard, you will get an apprenticeship; if you are a family, we will take you out of tax until you earn £12,500. I do not want to see middle-income families drawn into the top rate of tax. We have made our promises. Now, let the right hon. Gentleman make a promise: will he increase national insurance? Yes or no?
Nobody believes the right hon. Gentleman’s promises. He has had five years of failing working families, with worse to come—more spending cuts, more tax cuts for the richest, more betrayal. This has been a Government of the few for the few. It is time for a better plan. It is time for a Labour Government.
Well, we have seen it all: absolutely no ability to answer a question. This is a country where unemployment is falling; the economy is growing; the deficit is coming down; in our NHS, the operations are going up; there are more good school places for our children; living standards are rising; inflation is at zero; and there are record numbers in work—all of this could be put at risk by Labour. That is the choice in 43 days’ time: competence and a long-term plan that is delivering, instead of the chaos of economic crisis from Labour.
Q3. Thirteen months ago, my constituent Leigh Smith tragically lost her three-month-old baby Beatrice due to a rare heart condition. In an effort to help other families avoid the grief and despair of losing a child, Mrs Smith wants all schools to install defibrillators and to teach life-saving skills. Will the Prime Minister offer his support to this vital cause? (908294)
First, let me say to my hon. Friend and his constituent that there is nothing more heartbreaking than losing a child and we should do everything we can to help with this. The Chancellor announced in his Budget £1 million for defibrillators, including putting defibrillators into schools. I want to see a situation where community buildings, schools, pubs, village halls—all of them—have defibrillators, because we can save lives in this way, and particularly when we are saving such young lives, as in my hon. Friend’s constituent’s case, we must do better.
Q4. May I start by expressing my condolences to the families of those who lost their lives in the tragic Germanwings air crash?There are not any in the Prime Minister’s constituency, there is just one in the Home Secretary’s seat, and yet there are 680 people seeking asylum in Rochdale, more than in the entire south-east of England. We are all proud of the assistance that this country offers to those in need, but public services in Rochdale are already stretched and this uneven dispersal of asylum seekers is not helping the situation. Does the Prime Minister accept that this is not fair on Rochdale, and what does he plan to do about it? (908295)
I think the hon. Gentleman is absolutely right to raise this issue, that what we inherited was completely unacceptable. The numbers of asylum seekers are down by a third from the peak they reached under Labour. We are fast-tracking more cases and we are resolving more cases more quickly, but I have to say to him that the legislation governing the distribution of asylum seekers was put in place under the last Labour Government.
I have been following what the hon. Gentleman has been saying. He has sent some very good dispatches from the front in terms of knocking on doors in Rochdale, and this is what he says:
“Any Labour politician that says to you they knock on a door and Ed Miliband is popular are telling lies.”
He says that about his own side. He says:
“You know, this north London elite view of the world just doesn’t play in Rochdale, Rotherham, Runcorn or anywhere else beginning with an ‘R’ outside the M25.”
I would like to encourage him to do more interviews, because he could add Reading, Redditch, Redruth, Reigate, Rochford, Romford, Romsey, Rossendale, Rushcliffe, Rutland, Rye—and probably Rosyth too the way they are going.
Q5. I don’t think so love. In May 2010, unemployment in South Derbyshire, an ex-mining area, stood at 1,540. Today it is almost a third of that, at 580. Does my right hon. Friend agree that the strong Conservative Government and a Conservative district council with a long-term economic plan are able to succeed in bringing jobs and growth where the Labour equivalent failed to do so? (908296)
My hon. Friend is absolutely right; in South Derbyshire, since the election, the claimant count—the number of people claiming unemployment benefit—is down by 68%. Those are the statistics, but every one of those people is someone with a job, with a livelihood and with a chance to provide for their family. That is what this election is going to be about: for young people who want jobs, we are offering apprenticeships; for young families who want homes, we have got homes with Help to Buy; and for pensioners who want security, we have got the pension and the pension benefits guarantee. That is what is on the ballot paper and that is what I think people will choose at the next election.
Following the publication of the Select Committee on Northern Ireland Affairs report on the disgraceful on-the-runs debacle yesterday, it has now been revealed that the man who went about distributing these letters to IRA fugitives, Gerry Kelly of Sinn Fein, has actually received the royal prerogative of mercy for certain crimes. Will the Prime Minister now list in the Library of the House all those other Sinn Fein members and leading republicans who have likewise received a royal pardon, so that republicans in Northern Ireland can know which of their great stalwart leaders have begged or asked for, or received, probably on bended knee, such a royal pardon and secondly, so that everybody in the country can know which Governments have been involved in such nefarious activities?
I will look very carefully at the question the right hon. Gentleman asks and what more we can do to be transparent, because this Government, not least by holding the on-the-runs review, have been transparent. What I would say to him is that Governments in the past have had to make difficult decisions with respect to Northern Ireland to try to bring parties together and produce the peaceful outcome that we have today. That has involved difficult compromises and things that he and probably I have found, at times, deeply distasteful. None the less, sometimes, in the pursuit of peace, some of these things have to be done.
Q6. May I congratulate my right hon. Friend and the Department for Transport on their securing a £50 million rail infrastructure improvement scheme in South West Trains, which feeds my constituency? However, we still need better infrastructure—additional track; flyovers and power supply—if we are to get longer trains and faster journey times to Weymouth and Portland. Will he meet me to discuss this further to see whether we can further boost the economy in South Dorset? (908297)
I am always happy to meet my hon. Friend and discuss these issues. I believe this Government have done right by the south-west, not least with the announcement the Transport Secretary has made of an additional 57,000 seats on South West Trains every week from December and 1,400 extra car parking spaces at train stations across the region. We can have this strong transport investment, not just in the south-west, but right across our country, only because we have a long-term economic plan that is delivering the growth this country needs.
Q7. Is my right hon. Friend as alarmed as I am— Order. The hon. Lady must be heard. Is my right hon. Friend as alarmed as I am that Alex Salmond is planning to impose a series of demands on the UK Government? Will my right hon. Friend confirm that he will have nothing to do with such demands? (908298)
My hon. Friend makes a very important point. As far as I can see, Alex Salmond has taken the entire Labour party hostage, and today we have got the ransom note. The ransom note is very clear. It says, “Higher borrowing, uncontrolled immigration, unfettered welfare, higher taxes and weaker defence.” That is what is being demanded, and the British people have only one way of saying no to this appalling hostage situation, which is to vote Conservative on 7 May.
May I ask the Prime Minister about the continually dire position at London Bridge station, which is a cause of major concern? Is he aware of the abysmal service and the chaotic scenes that have accompanied Network Rail’s latest stage of development? Will he instruct the Secretary of State for Transport personally to take responsibility for resolving the debacle and for bringing forward an early straightforward compensation scheme for the many tens of thousands of commuters who have had their lives so seriously disrupted?
The hon. Gentleman is right to raise that matter. Anyone who has seen the pictures of what has happened some mornings at London Bridge station knows that the pressures are immense. What we need to do is ensure that Transport for London and the Department for Transport are working together—as they are—to bring about the best possible solution. People cannot criticise this Government for failing to invest in London’s transport infrastructure. The Crossrail scheme, which I visited again a couple of weeks ago—[Interruption.] Labour Members say, “We did that”. They did not. They left an enormous bill, but it was this Government who put in the money and got it built. It is one thing to promise something, but another to put the diggers in the ground and to get it done, which is what we have done.
It is very easy to say the words, “long-term economic plan”, but in Brighton, Kemptown, the past five years have seen sharply falling unemployment, huge increases in business start-ups, and a massive £480 million investment in the new hospital. Does the Prime Minister think that the sun will continue to shine on Brighton?
First, let me pay tribute to my hon. Friend who has been a real champion for Brighton. He has campaigned so hard for the extra investment and the rebuilding of the hospital, and I am glad that the redevelopment of the Royal Sussex county hospital will take place. I also note that, in his constituency, the claimant count has gone down by 52% and the long-term youth claimant count by 50% since the last election. On that basis, I think that we can say that the sun will continue to shine on Brighton.
Q9. I agree with the Prime Minister that the sun shines on Brighton; it shines bright green on Brighton Pavilion. The Brighton Argus recently revealed that, in the space of a single month, nearly 1,700 trains between Brighton and London Victoria ran late, but, to add insult to injury, unfair train company rules meant that passengers could claim compensation on just 59 of those 1,700 journeys. Will he join me in backing The Argus newspaper campaign for a fairer compensation system that puts money back into passengers’ pockets? (908300)
I should have said in my previous answer that the only place in Brighton where the sun does not shine very brightly is where the local Green council is incapable of emptying people’s dustbins. We need a Tory gain there as well. But the hon. Lady is right to raise the case of rail compensation. We are looking closely at The Argus campaign and at what can be done to make the compensation scheme simpler and easier to deliver for people.
Q10. Thanks to funding from this Government, thousands of constituents in the East Riding of Yorkshire and North Lincolnshire now enjoy access to superfast broadband. That is helping to bridge the digital divide between rural and urban areas. It is also helping small businesses in rural areas to benefit from our “long-term economic plan”—I had to say it once. However, getting broadband rolled out for the remaining properties in East Riding will be particularly difficult. Will my right hon. Friend meet me and other East Riding MPs to ensure that we can get the delivery out as quickly as possible? (908301)
I am always happy to meet my hon. Friend who is a real champion for his constituents. He is right to put this issue of rural broadband front and centre in his campaign. As he knows, we are investing around £780 million to get superfast broadband to 95% of UK premises by 2017. That programme is going well. Every day, our roll-out reaches another 5,000 homes and businesses. [Interruption.] The Labour party complains, but broadband roll-out has doubled under this Government. That is what has happened because of the work that we have put in. We are investing extra money to ensure that we can get to the most hard-to-reach premises, and that will include subsidising the cost of installing superfast satellite services, which will give access to those in the hardest-to-reach areas who currently have the slowest speeds.
Q11. A young couple in my constituency—[Interruption.] (908302)
A young couple in my constituency were persuaded by Mr Steven Macsporran of the Advice Centre for Mortgages to put a legacy they had into a flat to rent in Turkey. He was an agent for ROPUK. They got no flat and lost £47,000. The Financial Ombudsman Service said that it could not give any advice because it was unregulated advice. Does the Prime Minister agree that that company, and companies like it, should not be allowed to advertise themselves as being regulated by the Financial Conduct Authority if they give such advice, and is it not time we dealt with this rip-off Britain problem?
I am sorry. Let me rephrase that. [Interruption.] I want to defend my team, because this is my 146th appearance at the Dispatch Box for Prime Minister’s questions, and they normally get these things right. Let me pay tribute to the hon. Gentleman anyway and wish him luck in the current battle he has in his constituency.
We have all heard such cases in our constituency surgeries, from people who put their money into timeshare schemes with companies that subsequently turned out to be disreputable. We have all then had the challenge of getting those companies properly uncovered and regulated. I will look into the specific case and write to him, either in his capacity as an MP or whatever it is after the election.
Q12. The Prime Minister knows that I have often been unhelpful to the Government in the Health Committee, but as a member of that Committee it is my duty to be impartial. Does he share my concern that the objective scrutiny role of the Select Committee system has been fundamentally undermined by Labour’s refusal even to discuss a draft report, having heard evidence of decreased administrative costs since the health reforms, privatisation slowing since 2005, the Transatlantic Trade and Investment Partnership not posing a threat to the NHS, no charges or top-ups introduced, and no plans to do so, and does he agree—[Interruption.] (908303)
My hon. Friend makes a very important point. That Select Committee report has been held back because Labour Members of Parliament do not want to tell the truth about our national health service; they are only interested in trying to weaponise it. The fact is that there are more doctors and more nurses and more operations are being carried out. That is the truth, and it is disgraceful that Labour is trying to cover it up, just as it did in office.
No SNP gain here. This is, in fact, my last Prime Minister’s questions after 23 years in this place, but I hope that my very good friend the former Member for Banff and Buchan will be rejoining this place in May. Can the Prime Minister please tell us which causes him more anguish: his imminent return or my imminent departure?
I was quite looking forward to missing you both, but obviously that is not going to be—[Interruption.] I have sat in this House for 14 years, and all the time that the right hon. Gentleman has been a Member of Parliament, I remember some very passionate speeches, not least on the Iraq war. I remember some very passionate speeches about civil liberties in our country and making sure that we respond in the right way to terror. He has always stood up for his constituents, he cares passionately about Wales, he cares passionately about rugby, and he will be missed by everyone.
Q13. On the very last day before the 2010 general election, the Prime Minister, then Leader of the Opposition, visited Montgomeryshire. It was a joyous occasion which led to my presence in the House today. Will the Prime Minister make another visit to see for himself the dramatic improvement in business confidence and the dramatic falls in unemployment that have taken place in Montgomeryshire as a result of the Government’s long-term economic plan? (908304)
It was a huge pleasure to go and visit my hon. Friend just before the last election. I thought it was a bit of a long shot, but none the less he made it here and he has been a fantastic Member of Parliament, standing up for his constituents. In Wales since the election we have 22,000 more small businesses, employment in Wales going up by 52,000, unemployment coming down and private sector growth. We see a real recovery in Wales and it needs my hon. Friend back here, standing up for his constituents and for Wales in the House of Commons.
I have here a cutting from The Press in York on 24 April 2010, which says:
“David Cameron last night dismissed claims the Tories would put up VAT if they win the election”.
That was at the last election. Why should the public believe promises that he makes at the coming election?
I have given the straightest possible answer, and this time in government we know what needs to be done—we know the changes, and both sides of this House have voted for a £30 billion adjustment. Those on the Labour Front Bench voted for it too. We have set out what needs to happen with departmental spending, welfare and tax avoidance. The Labour party has said that half of the £30 billion must be raised in taxes, so we know it: there is a tax bombshell coming from Labour, and it is going to be, we learned today, a jobs tax bombshell. They wanted to do it before the last election, and they want to do it after the next election. It would wreck our economy and put up taxes for working people, and there is only one group of people who can stop it.
Q14. Many hundreds of households in Amber Valley still suffer from noise from the A38 through my constituency. Does my right hon. Friend agree that measures to reduce the noise should be brought forward, and that where development takes place which uses the advantages of being near the A38, the developers should use their profits from those sites to fund noise reduction measures? (908305)
Today is a good day to discuss noise pollution. It is probably appropriate that we quieten down and think about the subject for a minute. My hon. Friend has consistently campaigned on this issue. He is quite right to do so—it is a big concern to his constituents. We are providing £75 million for noise mitigation on our national road network. We are resurfacing 80% of that network with low noise surfacing. That can make a real difference, and I will look carefully at what we can do for my hon. Friend’s constituency.
I will tell the hon. Gentleman what is a lame duck—trying to get into Downing street on the back of Alex Salmond’s coat tails. The Opposition now know that they cannot win the election on their own, so they are preparing to answer the ransom note. Higher taxes, more borrowing, weaker defence, breaking up our Union—that is what we have to stop. Never mind talk of ducks; I am looking at Alex Salmond’s poodle.
Q15. On Friday, together with local businesses and the local enterprise partnership, I will be launching a new campaign, Gateway to Growth, calling for a link road from the M4 to the Avon ring road that will help to deliver millions of pounds of extra investment and new jobs to the Bristol region, and provide the Kingswood area with the access to the motorway it needs. As part of his long-term economic plan, will the Prime Minister look closely at the campaign and the case for an M4 link? First of all, let me pay tribute to my hon. Friend for his very hard work for people in Kingswood and in Bristol more generally. He is absolutely right that we do need to see better transit schemes in Bristol, and I know that the Transport Secretary will be happy to look at the campaign and the case he makes. It is also of note—and I am sure that, as a great historian and, indeed, someone who has written about Richard III, my hon. Friend would want me to say it—that we should not let this day pass without noting that of course Richard III will be buried tomorrow. That is worth remembering. It is the last time that someone did in one of their relatives to get the top job and the country ended up in chaos.
Protection of Children (Removal of Police Discretion)
Presentation and First Reading (Standing Order No. 57)
Mr Barry Sheerman, supported by Sarah Champion, Mr Elfyn Llwyd, Meg Munn and Liz McInnes, presented a Bill to require the Secretary of State to remove the discretionary decision-making power afforded to police officers in charging individuals with rape in cases relating to acts of sexual intercourse involving persons aged under 16; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 27 March 2015, and to be printed (Bill 195). (908306)
Tax Transparency and International Development
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to require country by country public reporting for all multinational companies; to strengthen controlled foreign company rules and overseas bond rules; to establish a public register of beneficial ownership, including in the Crown Dependencies and Overseas Territories; to introduce a penalty regime for the General Anti-Abuse Rule; to measure the impact of tax regimes on developing countries; to establish a commitment to use the international aid budget to strengthen tax systems in developing countries; and for connected purposes.
It has been a great privilege over the past three years to serve as a member of the International Development Committee and to see with my own eyes the difference that UK aid is making in the poorest countries around the world. That is something that we should be all be proud to champion during the general election campaign. Not only is eradicating poverty a worthwhile ambition in itself, it is also the best route to reducing conflict in an unstable world.
When I joined the Committee, it was considering its report on tax in developing countries. The introduction to the report begins with the following words:
“Tax is an issue of fundamental importance for development. If developing countries are to escape from aid dependency, and from poverty more broadly, it is imperative that their revenue authorities are able to collect taxes effectively. Tax revenues represent a more predictable and sustainable source of revenue than aid flows ever can.”
This Bill seeks to empower developing countries at a time when they are vulnerable to companies seeking to exploit their natural resources and economic development potential. The citizens of these countries should benefit from those resources and that economic growth so that they can shape the future of their own nation and of generations to come who can grow up free from poverty if we act to ensure fairness and transparency and to prevent this wealth from flowing to nameless beneficiaries.
This is not just an issue that exercises people in this place. Tax avoidance has become a hot topic. A ComRes survey last year found that 85% of the public believe that corporate tax avoidance is morally wrong even when legal. Outside Parliament, a collective of international development charities and many of my constituents have called on the UK Government to introduce an anti-tax dodging Bill early in the next Parliament. The charities say that such a Bill could raise an additional £3.6 billion for the Treasury, as well as help developing countries to improve their revenue collection and national income. They say that developing countries currently lose $160 billion a year in potential revenue owing to corporate tax dodging, which is more than the amount given annually in overseas aid by all rich countries. I should like to put on record my thanks to those charities for their work, especially Christian Aid and ActionAid.
Not only does tax dodging remove revenue from developing countries that could help them to create infrastructure and growth, but it takes money from public services and undermines the social contract between citizens and the state. The current Government have not done enough to tackle tax avoidance. The amount of uncollected tax has risen year on year, increasing to £34 billion in 2012-13. I am proud that my party—the Labour party—has committed to tackling tax avoidance in its first Finance Bill if it wins, or rather when it wins, the general election.
The Tax Transparency and International Development Bill seeks, by closing loopholes and imposing penalties, to ensure that multinational companies do not receive unjustified tax breaks, and that our tax rules do not incentivise companies to avoid tax in developing countries. It also seeks to make our tax system more transparent.
While leading the G8 at Lough Erne in 2013, the Prime Minister said that the agenda for the world’s most powerful nations should focus on trade, tax and transparency, and made it clear that that should be to the benefit of developing countries, and yet, reporting to the House in autumn last year following the G20 meeting in Brisbane, he did not mention developing countries once. He mentioned tax avoidance in his statement—he reported that an additional $37 billion had been taken from big companies as a result of steps taken by the G20—but when I asked him how much of that revenue had benefited developing countries, he did not know the answer.
Tackling avoidance is key to tackling global poverty and inequality and it cannot therefore be an afterthought. That is why the Bill is crucial. With that in mind, let me describe the specifics of the Bill. The Government introduced the general anti-abuse rule, which aims to catch those who set up abusive schemes, but there is currently no penalty scheme, so the rule lacks teeth.
The Bill calls for tough penalties to ensure that companies cannot avoid paying their fair share. I welcome the fact that the Government have committed to introducing a diverted profits tax, commonly known as a Google tax, from April 2015, which aims to impose a 25% tax rate on profits that companies have diverted out of the UK. That policy is flawed because it does not apply to loan arrangements, which allow multinationals to give loans to their subsidiaries in higher tax countries, the interest on which is deductible against tax, giving the subsidiaries a tax break while the interest payments end up overseas in a tax haven. Closing that loan loophole for exemptions could mean that by 2017-18 we will raise even more than the £350 million that is estimated in the Budget Red Book.
Similarly, in the 1980s, the controlled foreign companies rules were introduced to deter British companies from shifting profits to tax havens by stipulating that profits could still be taxed at their full UK rate. CFCs not only helped us to maintain our tax base, but they helped other countries, including developing countries, to raise decent taxes. In 2013, the Government altered the rules so that they applied only to profits shifted out of the UK, and not to profits shifted out of other countries. In effect, the coalition gave a green light to avoidance by multinationals based in the UK. In contrast, the Bill would reverse the revisions and strengthen the rules, which the Treasury has said cost UK taxpayers £900 million a year.
The altered controlled foreign companies rules highlight the need for the UK Government to carry out spillover analysis. However, we need to go further by assessing whether there are any adverse consequences on the ability of developing countries to collect tax. The Netherlands and Ireland have already done so. Given that the UK has led on so many aspects of development policy, we should not allow ourselves to lag behind on that.
While the UK Government are beginning to work on strengthening tax systems, we need to ensure that more is done, and that aid is targeted on it. Prosecution is only one deterrent against avoidance; public pressure is another. That is why we need to ensure that we know how money is being raised and spent, and we must push for country-by-country reporting for all multinationals.
Although the G20, OECD and the UK Government support country-by-country reporting—with the Government stating in their Budget Red Book that reporting will bring in £10 million of additional tax by 2018-19—they have not agreed to make the information public. That means that people in developing countries will not be able to access the information. The work of the Public Accounts Committee on corporate tax avoidance illustrates the importance of public engagement with these issues.
In line with the 2013 G8 declaration, which stated:
“Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily”,
the UK has introduced the first register of beneficial ownership in not only the UK, but the world. We should be proud of that, but we need to do more to make sure that the overseas territories and Crown dependencies have public registers, too. To date, none of those countries has committed to a public register.
Following the Prime Minister’s statement to the House on the G7 meeting in Brussels last June, I asked him what progress had been made. He replied that
“we should commend them for the work that they have done to bring their arrangements up to date. I had this conversation with them almost exactly this time...They have made huge steps forward, and we should commend them for that and encourage them to go further.”—[Official Report, 11 June 2014; Vol. 582, c. 555.]
However, that is simply not the case. When I raised the issue with the Business Secretary, he confirmed that we have not used our influence effectively.
We must continue to push this issue, and that is why it is central to this Bill. Despite the Government’s warm words, four of the overseas territories and Crown dependencies have so far ruled out a public register and none has committed to one. We must do more to deliver on the Lough Erne leaders’ communiqué signed off by our Prime Minister.
This Bill will ensure that multinational companies do not receive unjustified tax breaks, by closing loopholes and imposing penalties. It will give a fairer deal, do more to tackle poverty and give transparency to our tax system. The developing countries of this world deserve no less. I commend this Bill to the House.
Question put and agreed to.
That Fiona O’Donnell, Dame Anne McGuire, Anas Sarwar, Steve Rotheram, Ann McKechin, Jeremy Lefroy, Sheila Gilmore, Valerie Vaz and Fabian Hamilton present the Bill.
Fiona O’Donnell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 March, and to be printed (Bill 196).
Finance (No. 2) Bill
I beg to move, That the Bill be now read a Second time.
Finance Bill 2015 takes another step forward in this Government’s long-term economic plan. As my right hon. Friend the Chancellor set out in last Wednesday’s Budget statement, we have grown faster than any other major advanced economy in the world; more people have jobs in Britain than ever before; and the standard of living is rising and set to rise further. We are cleaning up the economic mess we inherited in 2010 and delivering a fairer economy for all.
This Bill will build on that success. It will help British businesses to invest and create jobs, help British households to work and save, and help ensure everyone in Britain pays their fair share of tax.
We have established the Office of Tax Simplification and put in place a large number of its recommendations. I could spend some time talking Members through some of them. It is also worth pointing out that just last week the Chancellor of the Exchequer announced plans to take very large numbers of people out of having to pay income tax on their savings, reducing the need for them to be in the self-assessment system. Indeed, we have set out longer-term plans to simplify the operation of the tax system through a more digitised system with online tax accounts, which will make a substantial difference to many people. I should also point out that from April of this year we will have one rate of corporation tax, which means that we no longer need a marginal rate with some 50,000 businesses having to calculate what to pay in a more complicated way. The Government have taken a number of steps on tax simplification.
We are committed to all the tax measures that the Chancellor set out last Wednesday, but appreciating the constraints on the timetable we have deliberately held a number of measures back and published a shorter Bill than would otherwise have been the case. Unlike under previous Governments, legislation for Finance Bills since 2011 has been published in draft three months ahead of the final publication of the Bill. Under this new approach, we published more than 250 pages of draft legislation in December for technical consultation, again meeting our commitment to expose legislation in draft.
We are proceeding today on the basis of consent. The Opposition required us to remove five clauses from the Bill following discussions last week. The clauses concern a new tax exemption for the travel expenses of members of local authorities; a new statutory exemption from income tax for trivial benefits in kind, implementing a recommendation of the Office of Tax Simplification’s review of employee benefits and expenses; simplifying link company requirements for consortium claims under corporation tax; a separate rate of excise duty for aqua methanol; and changes to scheme rules for the enterprise investment scheme and venture capital trusts. The Government would look to legislate on all five of those clauses at the earliest opportunity at the start of the new Parliament.
I will happily take further interventions this afternoon, but let me first set out the order in which I intend to discuss the measures in the Bill. I will begin by talking about those that will boost growth and enterprise. Next, I will cover those that tackle avoidance and aggressive tax planning and then I will cover those that help families and savers do more with the money they earn. Finally, I will talk about how the Bill, like previous Finance Acts in this Parliament, will help to deliver a simpler tax system.
Let me begin with the measures designed to boost growth and encourage enterprise. Hon. Members will be aware that our long-term economic plan is working and confidence is returning to businesses and our markets, but that growth would not have been possible without the hard work of businesses up and down the country. During our five years in office, we have created the right environment to help businesses start, grow and succeed. When we came to office, Britain had one of the least competitive business tax regimes in Europe. Now it is the most competitive. Next week, corporation tax will be cut to 20%, one of the lowest rates of any major economy in the world. By 2016, that will mean £9.5 billion savings for businesses across the UK every year. That is why more and more businesses are moving operations here, starting up here or growing here.
The Bill will also bolster support for research and development and the creative sector. We are increasing the research and development tax credit for small and medium-sized enterprises from 225% to 230%, increasing the rate of film tax relief to 25% for all expenditure and introducing a new children’s television tax relief. I am sure those are industries that Members on both sides of the House will support.
The Government will not sit back and let hundreds of thousands of jobs be put at risk thanks to falling oil prices. The Bill recognises the importance of the future of the North sea oil and gas industry, our largest industrial sector. With effect from the start of next month, the Bill introduces a single, simple and generous tax allowance to stimulate investment at all stages of the industry, giving investors early certainty for their long-term investment decisions. We are also cutting petroleum revenue tax from 50% to 35% to encourage continued production in older fields. Backdated to the beginning of January this year, as announced by my right hon. Friend the Chancellor last week, the Bill also cuts the supplementary charge from 32% to 20%.
My hon. Friend talks about the policies that are being put in place by the Government to help businesses. Does he share my view that the freezing of fuel duty has helped not just businesses but individuals, and will he tell us how much of a saving businesses and individuals make every time they fill up their vehicle?
My hon. Friend is absolutely right. Very often, the debate in this House is about the impact on individuals of the freeze on fuel duty, which has considerably reduced how much fuel costs. As a consequence of our measures, £10 is saved per tank full of petrol. He is also right to mention the impact on businesses, because many of them, particularly smaller ones, pay this tax. We can sometimes forget that in that debate. Fuel duty is now 16p per litre lower than it would have been under the previous Government’s plans.
Let me return to the provisions on oil and gas. The new cluster area allowance will support the development of one of the biggest fields in the UK continental shelf, which is expected to generate about 3,500 jobs and more than £3 billion in capital investment. As hon. Members can see, the Bill tackles some of the challenges facing our business community and our economy.
Now that I have set out such competitive tax rates, designed specifically to support our businesses, let me say that we expect those taxes to be paid. The Bill continues the Government’s firm action against the small minority who seek out unacceptable ways to reduce or delay paying the taxes they owe. Under the Bill, we will legislate to create a fairer tax system by clamping down on tax avoidance and ensuring that banks contribute their fair share. Taking effect from the start of next month, the Bill will introduce a new diverted profits tax of 25%, aimed at large multinationals that artificially shift their profits offshore to avoid paying UK tax. As part of the project, I can confirm that we are working with five other tax authorities to investigate and challenge how digital multinationals shift their profits to tax havens. For the first time, we are gathering a full global picture of the tax risks those companies pose that is invaluable in helping us take decisive action.
The Bill will also increase the bank levy to 0.21% and introduce new rules for banks on carried forward losses, to ensure that banking companies can use them only to relieve up to 50% of company profits. Combined, those measures will raise nearly £8 billion over the next five years. We have always been clear that banks should make an additional contribution that reflects the risks they pose to the UK economy, and now that banks are strengthening their balance sheets and returning to profitability, they should make a greater contribution to the economic recovery.
My hon. Friend makes a very good point. Indeed, that is why the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made it clear that the bank bonus levy could only really be effective for one year. It is important that we have something sustainable that can exist for much longer.
My hon. Friend is being generous in giving way. I welcome the diverted profits tax and I think that my constituents will very much welcome that measure. Will he confirm that it comes on top of all the work the Government are leading at the OECD and that, in September or later this year, we will therefore see further rules coming in to clamp down on base erosion?
My hon. Friend again makes a very good point. This Government have led the way in the establishment of the OECD’s base erosion and profit shifting project. We are already implementing some of its conclusions, including in this Bill, but there is more work to be done. The diverted profits tax is consistent with the direction that we want the BEPS project to go in, which is to align economic activity more closely with taxing rights. That is the direction in which the international tax system needs to move, and the diverted profits tax is consistent with that approach.
The Bill legislates for corporation tax loss refresh prevention, which will stop companies obtaining a tax advantage by entering highly contrived arrangements to turn old tax losses into new, more versatile losses. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses. We are strengthening civil sanctions targeting individuals with hidden income, gains or assets overseas to ensure that taxpayers who do not pay their fair share are penalised. We are tackling avoidance by large businesses and wealthy individuals, and we are tackling tax evaders.
My hon. Friend makes another excellent point. This year, the proportion of income tax paid by the highest earning 1% will be above 27%, higher than for any year under the previous Government. I dare say that we will debate that in a little more detail later this afternoon. On this Government’s record in ensuring that those with the broadest shoulders make the biggest contribution, the facts are very clear: they are doing so under us. A whole host of measures that we have taken, not least in areas of tax avoidance, have ensured that we are getting in that money.
My hon. Friend is making a powerful case on the work that the Government have done to tackle tax avoidance. What is being done to throw the book at the promoters of tax avoidance schemes and people who continually try their luck by entering such schemes?
My hon. Friend—given his background, he is an expert in tax matters—has been a consistently strong advocate of taking tough action in this area. I can certainly reassure him that one of our very important strands of work has been to take on the promoters of tax avoidance schemes. Indeed, we are bringing in measures to place greater burdens on them to disclose the position they are in, as well as greater surveillance and supervision of them. During this Parliament, we have seen a dramatic fall in the number of tax avoidance schemes being promoted, which is very good news. There has been a real change in the climate, driven not least by the action that the Government have taken. I believe that we have a very proud record in dealing with tax avoidance and the causes of tax avoidance.
I thank the hon. Gentleman for being so generous with his time. The Chancellor has indicated that, if he is returned to government, he will look for £5 billion of savings from evasion and avoidance; yet in its Budget report, the Office for Budget Responsibility could find only just over £3 billion of savings among the Chancellor’s provisions, which leaves a gap. Will the Financial Secretary explain to the House how he intends to fill that gap during the next Parliament?
Given this Government’s record on the measures introduced in Finance Act after Finance Act, the support provided to Her Majesty’s Revenue and Customs in additional powers and resources for this area and the fact that yield has increased very substantially during this Parliament—from £17 billion in 2010 to £26 billion now—we are confident that further savings can be found. Through a combination of measures dealing with tax evasion, tax avoidance and aggressive tax planning, we believe that £5 billion can be found.
I now turn to how the Bill will help hard-working families. This Government have a proud record of reducing tax for the lowest-paid. Not only will the Bill deliver our commitment to raise the income tax personal allowance to £10,600 from the start of the new tax year, but it will legislate to raise it to £10,800 in 2016-17 and to £11,000 in 2017-18. By 2017, a standard rate taxpayer will be £900 better off than under the previous Government’s plans and an individual on the national minimum wage working up to 30 hours a week will not pay any income tax whatsoever. That is a tax cut for 27 million people, and it means that this Government have taken almost 4 million of the lowest-paid out of income tax altogether.
We are passing on the full gains of that policy, so for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just in line with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. Under the Bill, the rate of the new transferable tax allowance for married couples will rise to £1,100, providing help for more than 4 million couples. We are legislating to exempt children from air passenger duty so that, together with measures introduced in the Finance Act 2014, a family of four flying to Australia will now save £194. The Government have made clear their commitment to support households in the UK and to put more of their hard-earned money back in their pockets, where it belongs.
Finally and briefly, I turn to tax simplification, which was touched on earlier. Under this Government’s new approach to tax policy making, we published more than 250 pages of draft legislation in December for technical consultation. As such, the majority of measures contained in the Bill have been drawn up following lengthy consultation with interest groups and businesses. The Bill continues to build on the excellent work of Michael Jack and John Whiting at the Office of Tax Simplification, and it includes a package of measures that will help to simplify tax administration for businesses in several ways.
According to the Financial Times this morning, the Bill will add significantly to the complexity to the tax code. The number of pages in Tolley’s is going up and up. We are told that we now have the longest tax code in the world, having overtaken India some years ago, but the Financial Secretary is presenting this as if it were a simplification. This is contrary to the entire thrust of public debate on these issues. When will we get some tax simplification?
The hon. Gentleman may be interested to hear, or he may already be aware, that the Office of Tax Simplification has looked at what constitutes complexity within the tax system. One conclusion that it reached was that the number of pages in the tax code is not a particularly good barometer of complexity. For example, the rewriting of the tax code that occurred over many years lengthened it, but the intention was to make it simpler to understand.
I would make this challenge to the hon. Gentleman: which elements of the Bill would he not want? For example, there are 40 or so pages on oil and gas tax reform, which I believe all parties recognise is a necessary response to the current circumstances, but that will lengthen the tax code. A number of pages are being added to the tax code because of the diverted profits tax, but all parties recognise the need for such a tax to deal with artificially contrived arrangements. I appreciate his point and the spirit in which he makes it and I share the desire for greater tax simplification, but there are some challenges in that for a Government who also want to deal with avoidance and ensure that we have a competitive tax system for the oil and gas sector.
I do not wish to revisit old debates about simplification, but does my hon. Friend have a view about the future strategy on anti-abuse rules? I believe that when Graham Aaronson examined the general anti-abuse rule, he thought that after about five years we would be able to start to do away with individual anti-avoidance rules and rely on the GAAR. We could therefore remove some of the more complicated provisions and the loopholes that go with them. Does my hon. Friend think that could work, or does he think it should be ruled out and that we must have both the general and specific rules?
My hon. Friend does not want to revisit old debates, but I tempted to give a response that I suspect I have given him before. The general anti-abuse rule is a big step forward, and it was absolutely right that this Government introduced it. Other Governments had considered it but felt that it was not the right thing to do. However, it is there to complement the existing measures, and we will want to see how the GAAR works over time rather than rush to judgment. I do not believe that a future Conservative Government would want to risk opening up new loopholes because of uncertainty about exactly how the GAAR applies. It is of course an anti-abuse rule and sets a reasonably high bar for behaviour covered by it, and I suspect my hon. Friend agrees that that is right because of its broad nature. We will have to wait and see before I make any commitment to repealing various targeted anti-avoidance rules.
My hon. Friend is being extremely generous in giving way. May I turn to the provisions on oil taxation and the revenues from oil, given what has happened to the oil price? Does he have any idea of how big a black hole would be driven into the finances of an independent Scotland were there to be another referendum campaign fought by the losers from last time?
My hon. Friend is absolutely right. I believe that oil revenues are something like a 10th of what the Scottish National party predicted, but I will happily stand corrected if I am wrong. The fact is that a united kingdom is better able to absorb volatility in the oil price than an independent Scotland would ever be. Given what has happened to the oil price, it is clearly to the benefit of Scotland that those calling for independence were roundly defeated last year.
I thank the Financial Secretary. I am sure that he would accept, having looked at the business case for the changes in oil taxation, that the economic effects of the oil industry are much wider than simply the winning of oil. In particular, the engineering and manufacturing industries in the north-east of England are pleased by the moves that have been made.
My hon. Friend makes a good point. Particularly in the north-east of England, a number of businesses are ancillary to the oil industry, so I am grateful for his remarks.
The Bill takes further steps to deliver long-term, sustainable economic growth. It puts in place a more competitive environment for business, takes more people out of income tax, continues our reforms of the tax system and supports the continued success of our industries. I commend it to the House.
It is a strange moment in the life of this five-year Parliament to be here debating the coalition’s last Finance Bill. Obviously I have great disagreements with the Financial Secretary and his colleagues in the Treasury team, but I want to extend a little hand of friendship across the Chamber. I know that this can be a difficult, even frenzied time, trying to draft legislation straight after a Budget and get things together at the last minute. However, we all aspire to be good parliamentarians, and it is incumbent on us to do our duty to scrutinise the Bill’s provisions properly and ensure that they are considered fully.
We are in the dying hours of this Parliament, but the Bill’s provisions—as my hon. Friend the Member for Edmonton (Mr Love) said, they will add to the tax code—are significant and will have a real impact on the economy and on many people’s tax and financial affairs. Ensuring that the Bill has proper scrutiny is therefore incredibly important. If we are honest, we have limped along in what has felt like a zombie Parliament in the past year in particular, with little going on. I am therefore a little surprised that there is a burst of energy all of a sudden, given that many of the Bill’s provisions could have been discussed, published and thought through at a more civilised pace. It is almost as though the Financial Secretary were doing one of those cycle races in a velodrome where it is all very slow until the last minute. There seems to be a bit of a panic in the Treasury.
The Bill contains 131 clauses of complex tax changes, affecting the energy generating sector, tax avoidance, pensioners and businesses, but we have been given only six hours to cover all of it. I accept that we have little choice about that because of how the Fixed-term Parliaments Act 2011 works—in the fifth and final year of the Parliament we can see that Parliament will prorogue at a given point. Nevertheless, I want to put on record our disappointment that we have not found a better way of improving the scrutiny of this year’s Finance Bill. Normally we would have a Public Bill Committee, in which we could spend fun-packed hours going through every provision. Sometimes I feel that such Committees go all too quickly.
I share the hon. Gentleman’s sense of loss that there is not the usual Committee stage upstairs this year. To be clear, it is necessary to pass a Finance Bill after Budget resolutions have been passed, and there is clearly a short period between those resolutions being passed and Prorogation. I am sure he recognises that there were discussions last week in the usual manner, and that clauses that the Opposition believed should be debated and dealt with in the next Parliament have been withdrawn. The clauses that remain are those that the Labour party accepted should be dealt with in the Bill.
I do accept that, and it is good that we have had discussions through the usual channels, treating the Finance Bill this year more in what is known as the “wash-up” procedure rather than our normal less-constrained procedures. Nevertheless, I think we should pause and dwell on the fact that in a fixed-term Parliament the date of the final Budget may have consequences downstream for the legislation that is spat out at the other end. Perhaps we should consider allowing a little more time between the final Budget and the end of the Parliament—obviously a Labour Government will be in power for the next five years, so this may be quoted back at me in five years’ time—so that we have a more considered approach.
Is my hon. Friend as concerned as I am that there is so little distributional analysis in the Finance Bill, given the past five years in which the poorest in society fared the worst and our concerns about an increase in VAT looming in the not-too-distant future if the Government get back in?
My hon. Friend’s point about distributional analysis is a good one. We know that those on lower and middle incomes have been hit particularly hard: people on the lowest incomes do not benefit from many of the changes that the Government have made, and we must consider what data we need.
My point about parliamentary procedure is not just about the political dates of Budgets and so forth; it is also about the time that officials and civil servants have to draft some of the provisions and proposals. I do not understand why it has to be so last minute and by the seat of their pants. It is one thing to exclude one’s political opponents from the reveal moment of the Budget, but surely it would be good to ensure that proper internal arrangement are in place in the Treasury for drafting these arrangements.
The Institute of Chartered Accountants in England and Wales has its concerns:
“we do not think that Parliamentary consideration amounting to only one day is in any way sufficient to consider and pass another significant Finance Bill that runs to 349 pages and contains a considerable amount of controversial legislation.”
An article in today’s Financial Times quoted Heather Self of the law firm Pinsent Masons. She said that the decision to rush through the Finance Bill was
“an abrogation of the parliamentary process…Legislation this complicated should not be going through without parliamentary scrutiny”.
My hon. Friend the Member for Edmonton was right when he talked about Tolley tax handbooks—I know his walls are adorned with the tax code in fine, leather-bound tomes. He will know that when the coalition came to office, there were 17,795 pages in that tax handbook, but by the end of this Parliament that has risen to 21,414 pages. The Minister says that is not a good barometer. I suppose it is good for publishers and perhaps makes my hon. Friend’s library a little more expansive and extensive, but I suspect it makes things more difficult for people to understand and follow. I think that our constituents deserve better and want proper scrutiny of the Finance Bill, and we will try our best to do that. The House should bear in mind the fact that the Bill appeared in the Vote Office yesterday, so it is difficult even for my diligent hon. Friends properly to absorb and assimilate all the provisions and to do justice to the Bill. Nevertheless we will give it a go and try our level best.
Ultimately, the Finance Bill could not disguise the coalition’s failures of the past five years. There is a slow recovery, but it is not being felt far and wide. By the standards and tests that the Government set when they came to office and made their promises in 2010, the Conservatives and Liberal Democrats have failed, particularly on the public finances. They have failed to eliminate the deficit, which should have gone by now. In fact, in the autumn statement 2010 the Chancellor trumpeted that he would bring forward to 2014-15 the year by which the current structural deficit would be eradicated, yet we find ourselves with a £90 billion current budget deficit, which fell by only 5% on the previous year—not exactly the rate we were promised.
There are many other structural issues in the economy. I do not know whether my hon. Friends remember the Chancellor’s promise about the march of the makers, but I am afraid that this country’s exports have not lived up to the £1 trillion target set for 2020; we are already a mere £300 billion off course in achieving that. Before the last election the Chancellor set the litmus test of cherishing our triple A rating, but of course that was downgraded.
One thing in the Finance Bill that supports the Government’s fiscal strategy was the revelation of how extreme the cuts will be to public services over the next three years—twice as deep over the next three years as we have seen for the past five years. In the words of the Office for Budget Responsibility, the “rollercoaster” is about to go over the precipice, and public finances, social care, the police, defence and many other public services will be pushed over the edge of that cliff should the coalition parties Government have a further five years in office.
It is no wonder that when people look at the impact of deep and extreme cuts to what Government Ministers term “non-protected Departments”, and see how deep they will be, they say, “Well that isn’t going to happen; it’s impossible to countenance that they would end up taking 30%, 40% or 50% from some of those Departments.” It is no wonder that people then believe there must be another plan, either for raising taxes or for cutting other services that some assume ought to be protected, in particular the national health service.
We had the debate on VAT, but I find it difficult to take the Prime Minister’s words seriously. These days, he has a habit of shooting from the hip—about whether he is retiring or what his views are for the day—so I am not sure that people will necessarily say, “Oh well, the Prime Minister said he’s not going to do it. That’s that then.” That is sort of what he said before the last general election about having absolutely no plans to raise VAT, but it was only a matter of weeks before he got round to doing it.
My hon. Friend will know that the number of people earning more than £20,000 has fallen by 800,000 since 2010, and the slack has been taken up by more and more people on low pay and zero-hours contracts. Does he accept that we are facing these draconian cuts because the Government are overseeing a completely unsustainable business model and creating more and more low-paid people who cannot pay any tax? The revenues are not coming in, which is why they have borrowed more in five years than Labour did in 13.
As ever, my hon. Friend manages to sum up the Government’s record in a pithy and simple intervention. I had not heard those statistics about the number of people earning more than £20,000, but I shall certainly take a look at the points he makes. We shall perhaps look at those statistics in more detail.
My hon. Friend’s point about living standards is a good one that all Members should intuitively and properly understand. If we do not include everybody in the growth of the economy, if everybody does not have a stake or a share in it, if their consumer capabilities are not stronger, and if we do not tackle the sustainability challenge for growth in the future, we should not be surprised to find that we have an unequal recovery. Britain will only succeed if working people succeed. That is a catchy way of summing that up, and Government Members may well hear it a few more times in the coming weeks, but it is true.
Ultimately, our public finances are not determined in isolation, as though they are frozen in aspic. They cannot simply be dealt with in terms of cuts or changes in revenue: there is a dynamic, strategic set of issues that relate to what is happening in the real economy and the real world. The health of our economy will ultimately determine the health of our public finances. The Prime Minister and others say, “Why are you talking about living standards? Why are you talking about these things? That is not really the economy; it’s not about growth.” Of course it is. Ultimately, these things are related.
The low-wage economy the Chancellor has been heading us towards is a danger to our public finances. We are enduring an epidemic of job insecurity. The number of zero-hours contracts has ballooned by more than 20% in the past year alone. That is a problem for those who cannot plan even for the child care they need for the week ahead, let alone for getting a mortgage. It is also bad because it undermines the tax receipts the Treasury needs to sustain and pay for public services. It means that tax credits need to be higher to subsidise low pay and it is why the social security bill is £25 billion higher than the Chancellor expected.
Those living standards issues come up time and again in surgeries, meetings and encounters that my hon. Friends have with our constituents. Some 900,000 people are using food banks, and some 600,000 people have been hit by the cruelty of the bedroom tax. These issues will come back to haunt Ministers. They have attempted to deal with the deficit by hurting those on the lowest incomes. It has not worked; it has not succeeded; and it is a strategy that will just get worse in the coming years.
I was at a Budget briefing in Dunfermline given by a local accountancy firm, Thomson Cooper, on Friday. It was pointed out that those earning more than £150,000 a year under this Government actually have a lower marginal tax rate than those earning £100,000 a year. Does my hon. Friend think that that is a really good example of how the Government have got their numbers completely wrong? Those who can afford to pay the most are in fact paying far less.
It is in the very first clause of the Bill: it seems that the Government’s proudest achievement is to cut the highest rate of income tax for those earning £150,000. They want the rate to be 45p instead of 50p. That has been their priority. They regard that as something that the country has been crying out for and that will make a big difference to the economy. I suppose if one views the economy through a trickle-down prism and believes that tax cuts lavished on the very wealthiest in society will percolate down and everybody else will benefit as a result—
Well, maybe that is the logic of the Liberal Democrats in supporting these particular measures. I will give way to the hon. Gentleman, but he has to admit that it was an error to ensure that those earning more than £150,000 received a tax cut. Anyone earning £1 million this year will have benefited to the tune of £42,000 in tax cuts. He does have regrets about that, doesn’t he?
Will the hon. Gentleman explain why the Government he was a part of put up 100 taxes in 13 years, but rejected putting up the higher rate of income tax for the entire period until the day they left office? It was 40% then—those same millionaires were that much better off under his Government.
That sounds as though the hon. Gentleman was in favour of the 50p rate and regrets that it was not implemented earlier. That is the usual argument: why did the previous Government only put it up towards the end of the Parliament? The global banking crisis hit in 2008, when we were already a long way through that Parliament. [Interruption.] The hon. Gentleman seems to be a banking crisis denier. He seems to think that it had nothing to do with the fiscal situation. He must admit in his heart of hearts that the banking crisis created great pressures on our public finances. It reduced a number of revenues and caused the deficit we have had to tackle. As a consequence, the tax changes that followed the banking crisis were bound to come in 2009, and that was the period in which we chose to introduce the 50p top rate. He should not be surprised that it came in towards the end of that Parliament, because the banking crisis and all the ripples that flowed from it also happened at the end of the Parliament. Let us nail that one for a start.
The cut in the rate of income tax was the wrong thing for the hon. Gentleman and the Conservative party to have prioritised. I think many people in our country regard it as a real obscenity. It is a perverse set of priorities and we would reverse them because the public finances need the extra support. The public finances need those with the broadest shoulders to contribute a fairer share.
My hon. Friend will know the excellent work of the Union of Shop, Distributive and Allied Workers in raising the profile of issues affecting workers in the retail sector, who are sometimes at the sharp end when it comes to serving the public. They do a very important job. I recently met members from across the north-east who raised exactly the points he is making about insecurity at work and the need to tackle zero-hours contracts. This is a major area of concern, and retail workers in particular feel that the Government are failing to act.
The retail sector is edging towards greater and greater insecurity, as companies feel that the only way to make that extra margin is by eroding standards of contract security for many of their work force. In that context, I have to reiterate the position of those of us on the Opposition Benches: someone who works regular hours deserves a regular contract. That is why we intend to abolish exploitative zero-hours contracts.
Following on from the previous intervention, in Scotland we are seeing an abuse of apprenticeship payments to young people in the retail sector. There are a lot skills involved in working in retail, but to call three months working in a shop an apprenticeship undervalues them. That does, however, help the Scottish National party to massage the figures.
My hon. Friend should bear that in mind when we hear Ministers trumpeting their apprenticeship numbers in aggregate, because there is always a story behind them. We need genuine apprenticeships to help the next generation obtain skills and career assistance, rather than what has been happening: the re-badging of many apprenticeship programmes, existing training courses and other arrangements that have been rebranded to allow tax support for applications for apprenticeships.
The Bill is not just divisive and unfair but a missed opportunity. There are several omissions. It is not just that the Chancellor could barely drag from his lips those three little letters, NHS, which I think got one mention in the Budget—Agincourt got twice as many. We should have had action to help the next generation, for example by reducing tuition fees to tackle the burden of debt facing students. Students graduate typically with £44,000 of debt, which is a burden not just on those individuals but on the national finances. Government Members should be very scared by some of the projections. Owing to their inability to collect tuition fees from some students, barely half of all tuition fees will be collected, which is adding to the national debt in the hundreds of billions of pounds. That needs to be tackled.
We are delighted that the Government took a shine to our proposals for pension tax relief changes—I suppose that imitation is the best form of flattery. We will stick with our policy to reduce tuition fees to £6,000, and we will set out in our manifesto, in a matter of days and weeks, how it will be funded. Still at this late hour, the full costings in our manifesto are available for the Office for Budget Responsibility to audit and verify—if only the Minister had shaken my hand on that. I offered him the hand of friendship—was it on the “Daily Politics” the other day?—but sadly he could not do it. It is important that we have fully costed and funded manifestos and that all parties engage in the process. We will look closely at the Conservative party manifesto. The Conservatives have made some grand promises about tax which will cost at least £10 billion to implement, even in the final year of the next Parliament, yet we have not seen a dicky-bird—even in the Budget figures—on how they will be paid for. I am looking forward to reading that chapter in its manifesto.
I mentioned that low productivity was driving down wages. Is not the point of tuition fees policy to increase the number of qualified people, productivity and national wealth, to end the deterrence on going to university, to stop people having credit ratings that prevent them from buying houses and to stop them not wanting a pay increase in case they have to pay back more of their fees? Surely this makes economic sense, while the Conservative party’s unsustainable economics of low pay and austerity is sending us into bankruptcy.
My hon. Friend knows that the change from £9,000 to £6,000 would make an appreciable difference. Of course, it is still a significant fee, but we will only ever make promises we know can be kept and that are fully funded. I would love to do more on many other tax issues, but given the state in which the Chancellor will be leaving the public finances in only a matter of weeks, we must show students that we understand the burden of debt on them and the nation. The Government never appreciated that so many students would never be able to pay back their debts and that the bill would have to be picked up by the taxpayer sooner or later.
As well as measures on tuition fees, the Bill should have contained a proper bank bonus tax for the starter jobs that many young people who are having trouble finding employment need.
Will the hon. Gentleman clarify his statement about the Government not realising how many people could not pay back their tuition fees loan? If tuition fees were reduced to £6,000, under his party’s policy, at what salary would people start to pay that back?
The arrangements for the rate of payback were set out in the policy documents we published, but the hon. Gentleman should know that on current projections, by 2030, which is only 15 years away, £281 billion is expected to be added to the national debt now that we have reached the proportion of 49% of people who are incapable of paying back their tuition fees. It might have been a miscalculation by the Department for Business, Innovation and Skills, so perhaps he could blame the Liberal Democrat Business Secretary—that might be the function the Liberal Democrats fulfil—but whether it was the Business Secretary’s miscalculation or the Treasury’s miscalculation, I would urge hon. Members just to take a look at the projections.
I want to make some progress—I have several pages still to get through and I want other Members to contribute.
The Bill should have contained a bank bonus tax for starter jobs and measures to scrap the bedroom tax. Given today’s timetable, however, I must move rapidly to some specific issues in the Bill and ask the Minister some questions. It is not just that we have general objections to the 45p higher rate of tax for earnings over £150,000; we have anxieties about the plans for a married couples allowance that will benefit only one third of married couples and only one sixth of families with children, and although the increases in the personal allowance are a concession, rather than leap straight to a 20p basic rate, it would be better to start with a 10p rate, as a fairer and more effective way to ease people on lower incomes into income tax.
My hon. Friend makes an important case about the bedroom tax. The average cost of the bedroom tax is £700 per annum, and across Greater Manchester, 28,000 people have been affected. In my constituency alone, 3,038 families—the highest figure in the land—suffer from it, whereas in Witney in Oxfordshire, 300 families suffer from it. This has been of huge detriment to northern regions—across the country but mainly northern regions. Government Members have no understanding of its impact on our constituents.
This is always the dilemma. Do Government Members not understand—is it just a question of ignorance?—or have they just turned a blind eye? My hon. Friend has been a diligent campaigner against the bedroom tax and has managed to articulate very successfully the harm and difficulties that people have encountered, particularly those with disabilities who need the extra space in the house. Again, that should have been covered in the Bill.
Many studies suggest that it costs more than has been raised. Of course, the Government knew how unpopular the bedroom tax would be and came up with their “discretionary fund” to allow local authorities to ameliorate the impact, but it has not been enough and has certainly not been extended to many people who need it. My hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) will also note that there has been no guarantee that the fund will continue into future years. The Government are hoping that this will go away and that nobody will notice, but our constituents will notice.
I do feel strongly about it. I can cite, with his approval, the case of Mr Gunning from my constituency, which has five wards in Labour Manchester and three in Tory Trafford. He lives in Tory Trafford and was not given the discretionary payment. If he had lived in Labour Manchester, he would have got the discretionary payment, although by now it would have come to an end.
That is interesting. This sort of postcode lottery has afflicted many people, so my hon. Friend makes an important point. I now want to move on.
This Finance Bill contains a series of measures relating to vehicles and emissions. On clauses 7 to 9, will the Minister take some time in his response to explain the direction of travel—if he will pardon the pun—in the differential for different types of vehicle and different years of what is charged for ultra-low emission vehicles? Our reading is that there is a differential of 4% for the financial year 2017-18 and then 3% for 2018-19. If there is an explanation for that, I am not clear what it would be. We would be grateful if the Minister could seek some inspiration over the next hour or so and help us out with that. Similarly, why are the Government using the Bill to remove the incentive for companies to provide zero-emission vans over the next Parliament? Again, I cannot understand the logic behind the provisions as it appears in the explanatory notes, so it would aid the process of debate if the Minister could clarify it for us.
In clauses 13 and 14, the Government are legislating to protect two particular groups, carers and ministers of religion, who may suffer as a result of the Bill’s abolition of the £8,500 exemption on what are known as “benefits in kind”. That is obviously welcome for those who benefit from it, but will the Minister reassure us and confirm that adequate due diligence has been applied to ensure that no other categories of low-paid worker could be adversely affected by this change? The provisions are very specific in naming the particular types of occupation, but I always slightly worry when particular types of job have to be named that other forms of occupation or employment might be affected. I would like to know more about the process the Treasury pursued in framing the clauses in that particular way.
The Bill brings forward several clauses relating to tax avoidance. Everybody knows that the Government’s record on this is atrocious, given that the tax gap increased by £1 billion to £34 billion last year. We also know that Lord Green, the champion of the Tories on many of these issues, has his own track record at HSBC. In this context, any moves to tackle extreme tax avoidance and evasion are welcome—clause 33, for example, provides for anti-avoidance measures on carried-forward losses and there are provisions on entrepreneurs’ relief—but we have some questions that it would be helpful for the Minister to answer.
Clause 12 deals with the abolition of the dispensation regime. Is there a danger that, during the course of the simplification of expense reimbursement—a principle we support—some opportunities for abuse might arise? For example, a flat-rate expenses allowance could lead to some avoidance issues. Do the Government have some figures to show the amount of taxes collected through PAYE and the benefit audit from current companies?
We support the principle of clause 20 on intermediaries and gift aid, encouraging charitable giving and making gift aid a more attractive prospect by removing the need to send off the gift aid forms through the post. Donating online is obviously welcome, but can the Government confirm how they will prevent rogue intermediaries from seeking to profit from the gift aid market? How will the Government ensure sufficient understanding of this so-called “tax to cover” principle?
Do the changes outlined in clauses 26 and 27 undermine the original anti-avoidance intentions of the late interest rule? Could these provisions be rendered in any way redundant by the ongoing BEPS—base erosion and profit shifting—process? Will the capping of group interest deductions be covered? Labour Members want to hear that proper attention has been paid to this international process and that we are not unduly jumping the gun.
We have questions about the clause 28 restrictions on research and development relief, whereby the costs of materials incorporated in products that are then sold commercially will not be eligible for that relief. Have the Government considered any exemptions for companies selling items that they had not intended to sell—for cash-flow reasons, for example? What will be the impact on liquidation of a company? Would its R and D credit-containing assets be devalued?
Before leaving my assessment of the anti-avoidance measures, I want to draw the House’s attention particularly to part 3 on diverted profits tax, which tries to deal with artificially contrived arrangements. Opposition Members want arrangements to work effectively, but we worry about the haste and laxity of the drafting. In his opening remarks, the Minister introduced this new tax on diverted profits through counteracting arrangements by which foreign companies exploit the permanent establishment rules and prevent companies from creating tax advantages by using transactions or entities that lack economic substance. We were told that the draft clauses published in December would be replaced, but the first we saw of the new iteration of the provisions was when the Bill was printed yesterday. That provides insufficient time to scrutinise and assess such a large number of highly complex and potentially important measures. This, I fear, is a direct result of the rushed timetable with which we have been presented today.
These are my questions to the Minister. What is the expected impact on the base erosion and profit shifting process? What challenges is he expecting on the basis of EU law and how will he address them? Why is it still showing such a low yield in the Red Book, given that the UK turnover of the multinational tech giants is so significant? What research has the Department undertaken into the effectiveness of the proposed enhanced civil penalties for offshore tax evasion and will the increase improve compliance?
We welcome the measure on country-by-country reporting and common reporting standard issues, but the Office for Budget Responsibility has labelled the costings and related aspects as “highly uncertain”. I understand that the wording in the draft clause that we have seen would enable public disclosure of the country-by-country reporting rules, if the OECD updated its guidance to allow for it. Is that still the case for the clause before us today? Will the Government push for public disclosure or is the Minister trying to allow the disclosure only secretly for the Revenue authorities? Public disclosure is where we should be; if not, why not?
The clauses that extend capital gains tax arrangements to foreign individuals when they dispose of UK residential properties are welcome, but again the way in which the Government have brought them forward at the last minute means that we have little opportunity for proper scrutiny. It is worrying to those outside this place to see attempts to pass such provisions in this way. We understand that the Treasury might have further legislative proposals, but can the Government address the concerns raised by the Chartered Institute of Taxation about the complexity of the new rules and the perceived unfairness in how they apply to people temporarily on assignments overseas who would not normally be required to pay a CGT charge on their main residence?
On the simplification measures, there are questions about the correct penalty regime for the new reporting requirements in the Finance Act 2014. Removing the need for a tribunal process is one such arrangement, but there might be consequences from rushing through this legislation.
My shadow DEFRA colleagues would certainly want to ask the Government why they have not done more on flooding and flood prevention. The tax change to encourage private investment in flood prevention is certainly welcome, but is it not more of a fig leaf to cover the Government’s failures properly to support flood defences? The de-prioritising of flood defence investment that we saw at the start of this Parliament will be a legacy that many communities will not forget.
On the new tax reliefs for film, TV programmes and video games, the Minister will know of the history of scams, tax shelters and bogus arrangements that have been exploited in the past. Some have been convicted of abusing those arrangements. Will he assure us that proper due diligence has been done to prevent some of those abuses from happening again?
Finally, let me deal with the measures relating to the oil and gas industry. My hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) wrote to the Minister about the impact of the Bill on the safeguarding of the future of the North sea oil industry. The recent fall in global oil prices has put a number of jobs at risk in the sector, which is one of Scotland’s greatest success stories, and its current predicament requires a long-term solution.
We welcome the measures that will cut the supplementary charge and petroleum revenue tax, which were outlined in Labour’s “oil industry roadmap” in January. However, we have also consistently called for greater certainty for the sector, particularly because of the long-term nature of much of its investment. A simpler investment allowance should be delivered, as long as the industry can be assured that the transition from the current regime will not cause any interruption in investment.
The Finance Bill should be establishing a mechanism for joint reporting by the Treasury and the finance directorate to the United Kingdom and Scottish Parliaments on the fiscal risks of volatility, and how they will be managed in the future to maximise recovery from the UK continental shelf. I also urge the Minister to consider the need for a full assessment, in the round, of the impacts of tax reliefs and rates
My hon. Friend the Member for Birmingham, Ladywood will shortly have an opportunity to talk about other changes that we feel are necessary. Let me say now, however, that we should like to see a review of the impact of the rise in VAT in recent years, and of the changing of the top rate of tax from 50p to 45p. I hope that we can extract some more data and information from the Treasury. We should be finding ways of helping small firms with a cut in business rates, rather than always prioritising a small number of larger companies, as the Government are doing. Their priority is reducing corporation tax rather than cutting business rates in 2015-16 and freezing them in 2016-17, which we think would be preferable.
We should have had a Finance Bill that deals in the round with many of the problems that our country faces: the living standards that have been squeezed, and the fact that wages have been surpassed by prices for such a long time during the present Parliament. Our public services require revenues to help them to serve our constituents—particularly the national health service, which we have to conclude is at risk because of the Government’s extreme plans for cuts. Those plans go way beyond simply focusing on the deficit, as the Government have also done. The Office for Budget Responsibility have talked of
“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.
At the general election in, I believe, 43 days’ time, the country will have a clear choice between the failing plans, the failing Budget and the failing Finance Bill that we are debating today, and a better plan to put working people first and to save our national health service. We will raise living standards by increasing the minimum wage to £8 an hour, and we will try our best to fund 25 hours of free child care for working parents with three and four-year-olds by means of changes in the bank levy. Our plan will help to transform our NHS with a “time to care” fund, which we will support by asking those who are fortunate enough to live in properties that are worth at least £2 million to chip in a little more, and it will ensure that we balance the books fairly by reversing the approach of the Government parties. That would be a better Finance Bill and a better Budget, and I look forward to seeing it under a future Labour Government.
For someone who did not feel that we had been given enough time today, the hon. Member for Nottingham East (Chris Leslie) made an incredibly long speech.
I welcome the measures in the Budget, especially those benefiting business, and I am not the only one. At a lunch event on Friday, I spoke to members of the North East Chamber of commerce, and they also welcomed the Budget—particularly the measures involving oil and gas, which are very important for manufacturing industry and contractors in the north-east. The moves on corporation tax and support for business are clearly welcome. I do, however, agree with the hon. Gentleman that there is concern about the speed with which the diverted profits tax is being introduced. I congratulate the hon. Member for Amber Valley (Nigel Mills)—who has just left the Chamber—on triggering a Westminster Hall debate on the subject, during which we scrutinised it a little further.
As I said a moment ago, I do share some of that concern. The new diverted profits tax is quite complicated, and I agree that introducing it after so little time is risky. However, I also think that it is a very necessary tax. Far too much of our economic activity in the United Kingdom has been booked elsewhere, and too many of our profits are being shoved elsewhere. I therefore welcome the overall measures, and hope that they can be made to work.
I welcome the increase in the bank levy. It is clearly more sensible than taxing bank bonuses at a total rate of 115%, which is what I understand the Opposition to be proposing. That clearly would not work, and I think that their proposal shows a lack of competence. I welcome the fact that the rich are paying more. The hon. Member for Nottingham East used the emotive word “obscenity”. I think that there was something of an obscenity in the fact that people on the minimum wage were having to pay about £1,000 a year in tax under the last Government. The Liberal Democrats’ priority is to change that, and to raise the tax threshold. Our original target was £10,000, but I am delighted to say that it is now on the way to £11,000 as a result of our work in this Government.
The rich are paying much more in tax. Their income tax rate was held at 40% for 13 years by the last Government. When we came to office, the rate of capital gains tax was 18%, lower than even the basic rate of income tax; it is now 28%. People are allowed to put a quarter of a million pounds a year into pension schemes and receive full tax relief on them: the allowance is now £40,000. The lifetime allowance has been reduced again, to £1 million. I welcome all those measures. I am not going to become involved in a long debate about VAT, but it is worth noting that the VAT on a new Ferrari is £50,000. The idea that it is all paid by pensioners is clearly not right when we take account of the goods that are not subject to the standard rate of VAT.
The Budget raised stamp duty on property, and introduced yet more measures to deal with avoidance. Of course, there was industrial-scale avoidance under the last Government, and many cases are still coming to light, having arisen before 2010. I welcome the moves on the cost of living and on alcohol taxes, which support many of our important industries. I must declare an interest, as a cider drinker who greatly welcomes the reduction in cider duty. Overall, there is an inconvenient truth for the Opposition. Inequality has narrowed under this Government, whereas it widened under the last Government. People are better off than they were in 2010, and the Institute for Fiscal Studies has been saying so since January. The £1,600 figure was never about the total; it was about average incomes, which have, of course, been affected by the huge fall in youth unemployment, the huge rise in the number of apprenticeships, and the huge fall in bank bonuses. The Opposition’s stance does not bear scrutiny.
I have been asked to be brief. Let me end by saying that my part of the world has gained huge benefits under the present Government. We have benefited from the regional growth fund, from the local enterprise partnership—which is highly successful—and from the fact that this Government have spent five times more on capital investment in the Tees Valley than the last Government did in five years. In the last year, unemployment in my constituency has fallen by 781. It is still too high, but we are heading in the right direction.
My party will support the Bill today.
Let me begin by expressing my disappointment that there is to be no Public Bill Committee. I have served on every single one in the present Parliament. I do not know what I did wrong in the Whips Office, but I feel that I am missing out on something.
I congratulate the hon. Member for Redcar (Ian Swales), who is, of course, a Liberal Democrat. Following the embarrassment of the Chief Secretary standing on the steps of the Treasury with his Fisher-Price lunch box, announcing a Liberal Democrat Budget the day after the real one that he said he had signed off, I admire any Liberal Democrat who can stand up now and defend the Government’s policies.
I want to say something about the Finance Bill and the Budget. This is the truth as I see it: for one hour, the Chancellor, simply because a general election is on the way, changed his tune from that of the Conservative party conference in October, when he told us swingeing cuts were on the way and we should prepare for an age of austerity. Now, 44 days before a general election, he tells us, like a latter-day Harold Macmillan, that we’ve “never had it so good.”
Those of us who are historians remember what happened after the complacency of that Conservative Government of the 1950s and the eventual devaluation of the pound in the 1960s. The problem is that for vast swathes of constituencies like mine across the country which are trying to deal with the post-industrial age the Government did not offer any hope or optimism for the future. Families in my constituency are £1,600 worse off than they were five years ago; that is the truth, and I challenge any Government Member to come to Islwyn, walk down the streets with me and go to the food bank in Risca where I was taken the other day. I could not get through the front door because so many people there were in need. Some might say they were there for kicks, but so many of them just needed help with benefits or the health service—they were there because there was nowhere else to go. That is a sad indictment of this Government’s policies.
Islwyn is a constituency dealing with the post-industrial age. Under the last Labour Government we attracted investment, but the problem is that this Conservative- led Government have created two Britains. There is the Britain of the affluent, who are enjoying a tax cut because we are in the grip of an economic theory that failed and only brought about deficits in the ’80s. That continues with the tax cut from 50p to 45p. We also see a different kind of Britain, however: a Britain of people gathered around the kitchen tables worried about paying the bills—about how they are going to pay the mortgage, how they are going to pay the rent. These are the people who deserve the tax cut.
It is all very well the Prime Minister committing today at Prime Minister’s questions not to put VAT up. He made that commitment before the last general election, yet VAT went up. It is only ever the Tory party that puts VAT up. VAT is regressive because everybody has to pay it, whatever goods they buy; whether they are a pensioner, a student, in work, a lord or a duke, they have to pay VAT. It does not matter what they earn. That is why VAT is a regressive tax.
The Government have forgotten who pays the bills around here. It is not the millionaires. It is not the business people. It is the people on the ground. I have nothing against anybody earning big money; I have no problem with success or aspiration, or ambition or achieving anything. However, if we give a tax cut to the very rich in society, they will employ accountants who will hide the money, but if we give a tax cut to people in the middle, they will spend it in the shops and businesses and get the high streets moving. That is not what is happening. That is not the reality on the ground.
We can talk all we want, but the simple fact is there is a problem with the word “conservative”. It means preserve or conserve—to conserve a way of life that never existed. If we want examples of how the Conservatives constantly look back to a golden age that never existed, we need only listen to the references to Agincourt. This is what I say: if we are looking back constantly, we are not moving forward.
The NHS is in crisis but the Budget says nothing about that most important public service in Britain. The Tories last week confirmed plans for extreme spending cuts in the three years after the election, which will put our NHS at risk.
I welcome any money that goes towards mental health, and I think anybody suffering from a mental health issue would welcome that as well, but I have to say this to the hon. Gentleman: I am fed up, especially as a Welsh MP and a Welshman, at the way the Welsh NHS has been attacked by this Government. It is a shame because when the Government attack the NHS in Wales, they are attacking the nurses, the doctors, the cleaners, the porters—everybody who works so hard to provide the best possible health care to our patients.
The hon. Gentleman is making a passionate and powerful speech highlighting why it is such a travesty that he is not at the forefront of the Leader of the Opposition’s team, as he should have been. Does he join me in regretting the fact that the Leader of the Opposition seems to be planning a jobs tax were Labour to get elected at the general election?