House of Commons
Tuesday 25 February 2020
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
MINISTRY OF JUSTICE
The Secretary of State was asked—
May I welcome my new ministerial colleagues, my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) and my hon. Friend the Member for Cheltenham (Alex Chalk), to their places?
I recently consulted on proposals for introducing coronial investigations of stillbirths, along with a colleague in the Department of Health and Social Care, and we will publish our consultation response in the early summer. I will of course be pleased to meet my hon. Friend about this issue.
It is good to see my right hon. and learned Friend in his place and I know he is sympathetic to this, but the Civil Partnerships, Marriages and Deaths (Registration etc) Act became law in May last year and the consultation on the terms of how the Coroners and Justice Act 2009 could be changed finished last summer, as he said. The former Justice Minister, my hon. Friend the Member for Charnwood (Edward Argar), did a lot of preparatory work on this, and since then there have been further cases of clusters of stillbirths. What is the hold-up?
I am very grateful to my hon. Friend and share his strong commitment to this issue. Many Members in this House have been touched directly or indirectly by the tragedy of stillbirth. It is important to note that we are ahead of target in halving stillbirths by 2025. I fully accept, however, that bereaved parents need answers now. We will be publishing the consultation response as soon as possible. I want to move this on as quickly as possible. I give him that assurance.
The United Kingdom signed the convention in 2012 to reaffirm our strong commitment to tackling violence against women and girls, and, as required by the Preventing and Combating Violence Against Women and Domestic Violence (Ratification of Convention) Act 2017, we published the latest annual report on our progress towards ratification on 31 October. I can assure the hon. Lady that in forthcoming legislation we will include the necessary measures to cover all parts of the United Kingdom to ensure compliance.
The Istanbul convention enshrines the rights of survivors of sexual violence; it includes the right to access crisis counselling and mental health support. Over 6,000 people are currently waiting to be seen by mental health specialists after experiencing sexual violence. Most of them have been told they will have to wait over a year to get help. What will the right hon. and learned Gentleman do to urgently address this?
As well as introducing our important domestic abuse Bill, we are already committing more resources to rape crisis centres. For example, rape and sexual abuse support services have had their funding increased to £32 million over the next three years—an increase of over 50%—which will provide free advice, support and counselling at 94 rape support centres, which is more than ever before. That is encouraging progress.
On International Women’s Day last year, Ireland became the 34th country to ratify the Istanbul convention, but unfortunately the United Kingdom is one of only six countries yet to do so. Can we take this as an indication of where the UK intends to position itself on the world stage in terms of rights and protections of citizens post-Brexit?
I can reassure the hon. and learned Lady that not only is the United Kingdom committed both internationally and domestically through legislation—I know that she actively supported that back in 2017—to implement the convention, but in many respects we are ahead of the obligations that the convention places upon us, and we are among the leaders of the world in our support and in our approach to violence against women and girls and the victims of sexual abuse. We should not be complacent about that, but it is worth reminding ourselves of how far we have come.
That is all very well, but the right hon. and learned Gentleman’s own Government’s report identified two major respects in which UK law has yet to comply sufficiently to make us able to ratify the convention. The legislation to which he refers, introduced by my former colleague Dr Eilidh Whiteford, was introduced three years ago, so what we need to know today is what is stopping the UK Government following the lead of the Scots and the Irish. Is it by any chance the requirement to support migrant women experiencing domestic abuse, who often find it impossible to access emergency protection because of the no recourse to public funds condition? His own Government identified that as one of the two major problems. What will be done about that, and when?
The hon. and learned Lady knows that in response to the Joint Committee on the Draft Domestic Abuse Bill the Government are taking careful account of the evidence that has been provided on that specific issue. In previous annual reports we have indicated compliance with the articles, but we have to make sure that the concerns raised in the Joint Committee are properly addressed. We will no doubt have an opportunity with the forthcoming Bill to debate these issues, and I look forward to engaging with the hon. and learned Lady on the subject.
Deradicalisation of Prisoners: Longer Sentences
In order to protect the public, it is vital that those who are convicted of terrorism offences serve a longer proportion of their prison sentence in prison and are subject to release after an assessment by the Parole Board. Experience shows that the path towards deradicalisation is very complex, and interventions need to be provided over a significant period to have an impact on rehabilitation.
I am grateful for that answer, but surely the purpose of putting someone who needs to be deradicalised in prison and lengthening their sentence has to be to give a greater opportunity for deradicalisation. What resources will be made available to people serving longer sentences to make that deradicalisation effective?
The hon. Member will know that in January we announced a £90 million package of measures to counter extremism. Within that, there is a £3 million package for specialist intervention—counter-terrorism programmes and intervention centres—to build an evidence base for what works. We are also training our prison officers to assess when there are incidents, report them and challenge terrorist behaviour.
When the Lord Chancellor introduced the Bill to curtail the early release of prisoners with his usual mix of alacrity and wisdom, I suggested on Second Reading, based on information from the House of Commons Library, that about 160 people might have been released early. Since then, having received further advice from our excellent Library experts, it has become clear that the Home Office quarterly report does not distinguish between early release and all release. Will the Minister take the opportunity to set the record straight by telling the House exactly how many prisoners have been released before serving their full custodial term of sentence in each year since 2013?
My right hon. Friend has a lot of experience in this area, having been the Minister for Security, and I was very pleased to work with him on the Investigatory Powers Bill. He is right to highlight that very important point. We are looking into this matter and I am very happy to write to him with the precise details in due course.
The Minister will know that the Prime Minister David Cameron asked me to carry out a review of disproportionality in the justice system. It showed a very worrying rise not just in disproportionality for all ethnic minorities but in the Muslim population in our prisons. Will the Minister ask the Secretary of State to meet me to discuss the Department’s progress on the review, a review that successive Secretaries of State have taken very seriously?
We were very happy to receive the right hon. Member’s review in 2017 on ethnic minority individuals in the criminal justice system and have acted on many of its recommendations. We recently published an update on progress across the Lammy recommendations, which demonstrates a range of work. I am very happy to meet him. I do not make that offer on behalf of the Secretary of State—[Interruption.] I hear that the Secretary of State is also happy to meet him to discuss the very important work on this area.
There will be a renewed and ambitious cross-Government effort to reduce reoffending. It will build on the existing established partnerships with a range of other Government Departments. We will focus on addressing the health of offenders, educational attainment, rebuilding or reinforcing family relationships, and housing and employment issues.
Many of those in prison have low educational attainment and lack skills, which makes it difficult for them to integrate on release. What steps are the Government taking to ensure that education and training in prisons give offenders the skills they need to have successful crime-free lives when they are released?
I thank my hon. Friend for that question. She can be reassured that in April 2019 we implemented new prison education contracts which deliver services designed by prison governors and staff to best meet the specific needs of their prisoners and local labour markets. Indeed, we will be developing a new prison education service that will build on further commissioning, improving the range of training available to prisoners that is directly linked to real jobs on their release.
As someone who used to mentor young offenders, I saw at first hand the impact that not having somewhere to go after release had on them and their chances of getting into meaningful employment. What steps is my right hon. and learned Friend taking to ensure that those who leave prison have somewhere safe to live?
My hon. Friend speaks with authority on this matter. It is simple: a home, a job and a friend are the path away from reoffending. Through the Government’s rough sleeping strategy, we are investing up to £6.4 million in a pilot scheme to support individuals released from three named prisons: Bristol, Leeds and Pentonville. I am sure that that work can be scaled up to offer released prisoners a real opportunity to have stable accommodation.
Does the Secretary of State agree that a key pathway to reducing reoffending is through meaningful and rewarding paid work that prisoners can do, such as that provided by my constituent in Clwyd South, Kerry Mackay, whose rapidly expanding business based in Llangollen sells environmentally friendly, biodegradable cleaning pads called Scrubbies, some of which are made by prisoners in Warrington and Wrexham?
I am grateful to my hon. Friend for citing an example from Llangollen, a wonderful part of my homeland. I agree that meaningful and rewarding paid work can contribute to ex-offenders turning their backs on crime, and I commend his constituent for recognising that potential. As a result of the New Futures Network that was set up last year, over 480 businesses have signed up to offer work to prisoners as a pathway out of crime.
With their privatisation of probation, the free market fundamentalists in the Conservative party sent reoffending up and made working-class communities less safe. Despite acknowledging that that privatisation failed, under new plans the Tories are still insisting on handing hundreds of millions of pounds over to private companies. Is that because they are ideologically wedded to the free market, or is it because the Tory party is in the pockets of the billionaires and the private corporations?
The only fundamentalist I see is sitting on the Benches dead ahead. This Government are committed to reforming and improving the probation service by creating a truly national framework. I make no apology for wanting to harness the ability of small organisations and charities who specialise in rehabilitation, working together with our National Probation Service. We are not ideological; the hon. Gentleman is.
I am afraid that even though the Government do not like it, what I said is in fact the truth. They even had a Justice Minister who was a spin doctor for the private sector justice giant, Serco. If they want to show that they actually care about public safety, will they guarantee today that any corporate giant involved in the probation privatisation scandal will be excluded, as they should be, from the new probation contracts? No waffle, please—a simple yes or no will suffice.
The hon. Gentleman tries very hard to pin the ideological cap on me and our Front Benchers. I am afraid that he is playing a very old record that needs to be changed. We take an entirely new approach to probation. We will look at all providers and judge them on their past record, but we want to make sure that we obtain maximum value for money, harnessing the best of our National Probation Service with the work of the third sector, the voluntary sector and, indeed, the private sector, where appropriate.
I have no doubt about the Lord Chancellor’s sincerity in trying to help people not to reoffend. I also know that he cares deeply about Wales. There is a specific problem with female reoffenders and there not being a women’s centre in Wales. Will he update the House on the progress he has made with the Welsh Government on ensuring that a women’s centre will be built in Wales in the coming months and years?
The hon. Gentleman is right to press me on this. It is an ambition of mine to attain that, bearing in mind my deep knowledge of women offenders and the fact that Eastwood Park is the nearest secure accommodation for them. At the moment, I cannot promise specific plans, but I am prepared to work with him and indeed the Welsh Government to make that a reality through our excellent women offenders strategy, which is championed by the Minister of State, Ministry of Justice, my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer).
Is the Lord Chancellor aware of the work of the Community Self Build Agency in helping ex-offenders to create their own dwellings, which they can then rent at an affordable rate and possibly buy in the future, and the startling effect that that has had on recidivism rates? Given that the National Self Build & Renovation Centre is in his constituency, will he consider working with the Right to Build Task Force on a project to scale up models that have already been demonstrated to work in this area?
My hon. Friend is right to mention the National Self Build & Renovation Centre. I am very interested in modern methods of construction and how they could be developed on the secure estate as a real contribution to our housing supply issue, and I would be very interested to work with him and the organisation he mentions to make that more of a reality.
In Scotland, we have seen a fall in reoffending rates, which are now at a 20-year low. This is a remarkable achievement by the Scottish Government, who have reformed the justice system by focusing on community sentences, such as community payback orders, and a presumption against short sentences. Will the Lord Chancellor meet his counterpart in the Scottish Government to discuss what the UK Government can do to learn from the SNP Scottish Government?
I welcome the spirit in which the hon. Gentleman raises his question. When I was Solicitor General, I met the lead official on community sentencing in the Scottish Government, who had a lot of experience here in the capital and elsewhere in England. Yes, there is a lot we can learn, although I am not with him on an absolute abolition of short-term sentences. The evidence does not necessarily point to it making a big contribution to a reduction in reoffending. However, there is a stubborn cohort of prolific offenders who end up in a revolving door situation, and it is that agenda that I will be addressing as part of my smart approach to sentencing later in the year.
For one category of crime—domestic violence—the moment of release of the perpetrator is the start of a period of fear for their erstwhile victim. Has the Lord Chancellor considered the possibility of extending the restrictions and restraints on those criminals beyond the sentence period they are given in court?
I am grateful to my right hon. Friend for raising an issue of deep concern to us all. He will be reassured to know that a range of options is available now to the courts, including restriction orders, serious crime prevention orders and other types of court order, that can prevent the perpetrator from contact or association with his or her victim. I would be happy to discuss the matter further with him. I do not want to add unnecessarily to the statute book, but he will be encouraged, I think, by the provisions in the domestic abuse Bill that will help to knit together the approach we want to take to protect victims of domestic abuse more effectively.
A significant number of prisoners are ex-service personnel, many of them suffering from PTSD. To make sure they do not reoffend, what is being done to help them in prison with their PTSD?
The hon. Gentleman is right to raise the issue of veterans. It is important to remember that many of our veterans serve in our Prison Service as prison officers, probation officers and other dedicated public servants, and the learning they bring is often the best possible support that can be given to veterans who end up in the criminal justice system. I assure him that a lot of work goes into that issue, but yes more can be done—the identification of veterans is very important, although not the easiest thing to solve—and I take on board his comments and welcome his commitment.
We are investing £2.5 billion in an additional 10,000 prison places. This is on top of the 3,500 prison places already being built and in the pipeline.
Which types of offenders will my hon. and learned Friend be prioritising for these new prison places, and what will she do to make sure they are given opportunities for reform and that they are places of rehabilitation, not just incarceration?
The next two prisons being built, at Wellingborough and Glen Parva, will be category C resettlement prisons that will house low-risk offenders coming to the end of their sentences, and will provide them with modern, safe and secure living conditions will enable them to rehabilitate. My hon. Friend is right that rehabilitation is critical, and the prisons will have in them industry spaces to enable them to learn skills and get jobs on the outside.
I rise as co-chair of the justice unions parliamentary group. Figures released last week revealed that prison officers were resigning at record rates, which prompts the question: how can the Government consider increasing prison capacity without first dealing with the staffing crisis? How does the Minister propose to retain staff currently leaving the Prison Service in their droves, given the toxic combination of poor pay, a dangerous workplace and an inhumane pension age?
The hon. Member is right to draw attention to the importance of prison officers, because they are critical to the whole system. I am very pleased that we have beaten our recruitment and retention targets with a net increase of over 4,300 officers, but, as the hon. Member says, we need to keep them safe. We are rolling out a number of measures including the use of PAVA—the pepper spray—and 6,000 body-worn cameras, improving and increasing training, and building on the key workers scheme which enables officers to build a relationship with the prisoners under their control and which we know is helping to reduce violence in our prisons.
Retail Crime: Sentences
My hon. Friend is right to ask that question. Shops are the lifeblood of our local communities, and shopkeepers should be free to go about their business without fear. My hon. Friend is, of course, a tireless campaigner on this issue.
Shoplifting is covered by section 1 of the Theft Act 1968. It is triable either way, in a Crown court or a magistrates court, and carries a maximum sentence of seven years.
Can the Minister assure me that not only his own Department but the Home Office take retail crime, particularly shop crime, seriously? There is a feeling in the trade that what is sometimes referred to as low-level crime is not taken seriously at all, which, of course, just encourages it.
Once again, my hon. Friend has made a very good point. The Policing Minister, my hon. Friend the Member for North West Hampshire (Kit Malthouse), is present, and will have heard it. One of the issues on which the extra 20,000 police officers will focus is exactly the one to which he has referred—the need to ensure that our shopkeepers are kept safe and that, when crimes are committed against them, the crimes are investigated thoroughly and those responsible are prosecuted.
Domestic abuse is an abhorrent crime, and we are determined to better protect and support victims and their children and bring perpetrators to justice. We are fully committed to enacting the landmark domestic abuse Bill during this Session. That Bill, and the wider action plan, will help to ensure that victims have the confidence to come forward and report their experiences, safe in the knowledge that those in the justice system and other agencies will do all in their power to protect and support them and their children and to pursue the abusers.
What steps are being taken in tackling domestic abuse that are directed at perpetrator programmes to deal with the root cause of this serious problem?
My hon. Friend is right to raise the issue of perpetrator engagement. There are a number of programmes aimed both at those who have been convicted of domestic abuse and at those who have not received such criminal convictions but who pose a real risk. The programmes address the factors that lead to domestic abuse, helping to teach people how to solve problems, manage their own emotions, and make the changes in their lives that will render them less rather than more likely to commit acts of domestic abuse. However, the effectiveness of the programmes is subject to ongoing review via monitoring and evaluation.
Will the Minister give a cast-iron guarantee that the domestic abuse Bill will be reintroduced during this Session?
Matthew Ellis, the Staffordshire police and crime commissioner, reports that three out of four victims of domestic abuse in Stoke-on-Trent and Staffordshire have children, and local head teachers have raised concerns with me about the effect on those children. What are the Government doing to support children who have witnessed domestic violence?
My hon. Friend raises a very important issue. Domestic abuse has a devastating impact on children and young people, which is why the Government have provided £8 million over the last two years for services designed to support children who are affected by it. We are also supporting the roll-out of Operation Encompass, which ensures that information is shared between the police and local schools when children have been exposed to domestic abuse. Following last year’s children in need review, we have committed ourselves to further action to improve the way in which that service is delivered.
At the moment, the justice system is failing the most vulnerable victims. Far too often, domestic abusers are using the family and criminal courts to publicly re-traumatise their victims. Will the Minister ensure that no woman is callously and unjustly cross-examined by her abuser, and will he ensure that these provisions are in place by the end of this year at the latest?
The hon. Lady is right to raise the perpetuation of abuse through the court system. That is why the provisions in the domestic abuse Bill relating to the prohibition of cross-examination by perpetrators are so important, and they will remain in the Bill when it is reintroduced. She will remember welcoming it last time. I can assure her that the special measures that we have already taken in the criminal courts, which she knows about, will be replicated in other forums to offer maximum protection and support to victims who get abused in that way.
Given the recent well-publicised judgment in the Court of Appeal on consent and the family courts, does the Secretary of State agree with the President of the Family Court when he said:
“I am confident that every judge and every magistrate undertaking family law proceedings now fully understands…the emotional and psychological harm that may be inflicted by one adult in a close relationship upon the other and upon their children”.
If he does not share the president’s confidence, will he raise that matter with Andrew McFarlane urgently?
The hon. Lady raises an important point. This relates to a case that enlisted an appropriately high degree of public interest and concern. She will be glad to know that I will be seeing the president tomorrow and that we will discuss this issue. I do share his confidence; he is an extremely experienced family practitioner and judge whose judgment I respect, and I will be talking about that issue, among many others, with him tomorrow morning.
It would be wrong of me to comment on an individual case, but there is a general principle about the enforcement of court orders and something has clearly gone seriously wrong here. That is why, as Minister of State and now as Lord Chancellor, I am driving forward, together with my colleague the Minister of State, thoroughgoing reform of the process so that we can ensure that when community orders are made they are properly enforced. If the hon. Gentleman wants to write to me about that particular case, I would be happy to hear his representations.
What assessment has my right hon. and learned Friend made of the rape and sexual abuse fund, and does he have any plans to increase its funding?
My hon. Friend raises an important point that affects people in his constituency and others right across the country. He will be glad to know that I have already referred to an increase to £32 million in regard to rape support services. We are also increasing support for independent sexual violence advisors. We announced a £5 million package relating to support services in September, and I want to drive that work further forward, first with the improved victims code and then with a victims law. Together with that, the evidence clearly shows that independent sexual violence advisors really make a difference when it comes to the maintenance of complaints of a sexual nature.
Public Protection Sentences: BAME Backgrounds
No one should face any discrimination. I am pleased to have been able to answer this question earlier by stating that we welcomed and have acted upon the Lammy review. The proportion of BAME and IPP prisoners is lower than the proportion of BAME prisoners as a whole: 23% of IPP prisoners are from the BAME backgrounds, compared with 27% of the overall population.
Cases that I have been dealing with as a constituency MP concern me because of the potential for the race disparities that we know exist within the justice system, as the Minister has just said, to manifest themselves in cases of IPP prisoners from a BAME background, particularly in relation to access to courses and to the diagnosis and treatment of mental health conditions. What can the Minister do to ensure that the injustices relating to IPP sentences are not further compounded by our systemic problem with race in the criminal justice system?
The hon. Member is absolutely right to say that IPP prisoners need an opportunity for hope. They need the Prison Service to provide opportunities for reform and to help those prisoners to reform, so that at the end of the process, the Parole Board can consider them appropriately for release. She is right to identify the fact that there used to be a waiting list for certain accredited offender behaviour courses, but that is no longer the case apart from in relation to one. We are doing our best to ensure that all prisoners get the rehabilitation that they need while they are with us in the Prison Service.
Custodial Sentences: Non-UK Citizens
I understand my hon. Friend’s concern about foreign nationals in our prisons. As he is aware, we have 110 prisoner transfer agreements with countries and territories around the world, and we continue to work closely with other Governments to try to increase that number.
Foreign national offenders convicted in this country should serve their terms of imprisonment at the expense of their own Governments in their own countries. We may have 110 prisoner transfer agreements, but only about three are compulsory. Now that we have rediscovered our mojo for tough international renegotiation, can we please have more compulsory prisoner transfer agreements with high-volume crime countries with lots of nationals in our prisons, such as Pakistan, Nigeria and Albania?
My hon. Friend is right to highlight the importance of removing foreign offenders to serve sentences in their own countries, and we have removed 51,000 such offenders from our prisons since 2010. He is right to highlight that we have a number of nationalities within our prisons, including a high number of Albanian, Polish and Romanian prisoners. We are considering all these matters in some detail.[Official Report, 17 March 2020, Vol. 673, c. 7MC.]
Violence in Prisons
We have seen a slight decrease in assaults, and this year is the first time that we have seen assaults fall since 2013. However, we of course recognise that there is still more to do in this area.
When the Minister visits HMP Bedford tomorrow, can she look the governor in the eye and say that she is doing all she can to ensure the health, safety and welfare of his staff when the last Independent Monitoring Board report on Bedford prison revealed chronic levels of sickness, with nearly a quarter of officers off sick at times?
I am looking forward to visiting the prison in the hon. Member’s constituency tomorrow and to speaking to the governor this afternoon. I recognise that the prison has some challenges, but I have heard that it is making real progress. I look forward to discussing the measures being taken in Bedford and talking about how we can support the prison to improve morale and the work of prison officers and to rehabilitate the prisoners.
This afternoon, trade unions representing the wide variety of staff working in our prisons to keep us safe will meet to finalise the safe prisons charter, which has been drawn up by those facing violence in prisons first hand on a daily basis. Will the Minister adopt the charter and put the safety of staff first—yes or no?
I very much look forward to seeing the charter. It is difficult to commit to it until I have seen it, but I am pleased to have met regularly with the unions to discuss general issues relating to their members. When I met prison officers at HMP Whitemoor after they experienced a terrible incident in their prison, I was bowled over to see their determination, resilience and stoicism at first hand and to hear about the amazing work they do every day and the support they give each other. I will look closely at the document the hon. Gentleman mentions.
Will my hon. and learned Friend outline her Department’s plans to crack down on crime within prisons?
My hon. Friend makes an important point about crime in our prisons, which takes several forms. A few months ago, we announced expenditure of £100 million on security within our prisons, which will enable us to stop the use of illicit phones, prevent drugs from getting into our prisons, and increase our intelligence and surveillance to stop criminal activity.
Is it not about time the Government changed the law so that anybody who is guilty of assaulting a prison officer loses their automatic right to early release, thereby acting as a huge deterrent for this appalling activity and giving prison officers the support they deserve?
My hon. Friend has made a number of points on the criminal justice system over a number of years that are all worth thinking about. He is absolutely right about protecting our prison officers. We have, as he will be aware, increased the sentence for assaulting prison staff.
No, we did!
Parliament brought it in, at the behest of the hon. Member’s Assaults on Emergency Workers (Offences) Act 2018—cross-party working in this place is very important—and we continue to look at this important area.
The hon. Member raises an important question. We recognise the unique nature of military service, which is why we committed in our manifesto to offering veterans a guaranteed job interview for any public sector role for which they apply. The MOJ continues to work in partnership with military charities to improve the prospects for ex-armed service personnel in the criminal justice system.
I am grateful to the Minister for that response. She will know that a recent Barnardo’s study, funded by the Forces in Mind Trust, shows that veterans in custody and their families often do not receive the support they need. Does she agree that more effective identification of service leavers is needed, along with dedicated veterans support officers?
Yes, I do. There is support available through the tremendous amount of work that charities do in this sector, but people cannot access that support if we do not identify them as veterans in the first place. We have changed our systems during the screening process to actively ask those entering custody about previous service in the armed forces. That is recorded on the basic custody screening tool but, of course, the more we record, the more we can do.
Rape and Sexual Abuse Victims
The Government are committed to ensuring victims of rape and sexual violence have access to high-quality support services to help them cope and, as far as possible, recover from the effects of this devastating crime. From April, we will be increasing funding to rape support services by 50% to £12 million and investing an additional £1 million for independent sexual violence advisers annually until 2022.
My constituent Dominique Martin has suffered the horror of being a rape victim twice in her life. Dominique described her ordeal to me as “like being murdered, except you are left alive.” What is more, Dominique has had to wait 18 months and counting to see the local mental health team. Will the Minister meet me to discuss the issues Dominique has raised to ensure nobody else has to suffer in the same way?
It is obviously very distressing to hear about this particular case, and I am very sorry for the experience of my hon. Friend’s constituent. I am, of course, more than happy to meet her to discuss these matters. As the 2018 victims strategy has an ambition to join up services across Government and, indeed, with the third sector, I will endeavour to make sure a Health Minister is there as well.
Early Legal Advice
In a nation of laws, access to justice is a fundamental right. Legal aid for early legal advice remains available in many areas, such as for asylum cases. In addition, legal aid is available under the exceptional case funding scheme in any matter where failure to provide it would breach or risk breaching someone’s rights under the European convention.
I spoke last night about the deaths since 2014 of social security claimants the Government had deemed to be fit for work. The number of social security claimants wanting to appeal a decision by the Department for Work and Pensions to stop or reduce their support who received legal advice fell from 82,554 in 2012 to 163 in 2013—I repeat, 163—and it has since remained at that level. What role have the cuts in legal advice to claimants had in failing to protect our most vulnerable citizens, including from the state?
Later this year, the Government will conduct a review of the scope of legal aid, but that will sit alongside a lot of work on scoping pilots to ensure that legal aid and support is provided quickly, because early legal support is much better than late legal support, that it is evidence-led on the basis of the pilots and that it truly goes to those who need it most.
Working in an advice agency, I saw for myself that many people have complex, interrelated problems and that access to early advice that covers all aspects is key to the prevention of often devastating and costly consequences, both to the individual and the state. Will the Minister look into extending the pilots to other areas of law, including family, housing and social security law?
I pay tribute to the hon. Lady for the work that she did in an advice agency. I entirely agree that if early support is provided, it can make an enormous difference in solving problems that would otherwise fester and become more difficult. A pilot is taking place on social welfare law that will consider housing and a raft of other aspects of law, and we will consider that evidence extremely carefully. If the hon. Lady would like to speak with me about it, I would be delighted to do that.
It is now more than a year since the Government published the “Legal Support: The Way Ahead” action plan as part of their response to the review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Since then, hardly any of the deadlines for Government action have been met, including the promise to
“pilot and evaluate the expansion of legal aid to cover early advice in…social welfare”,
which was meant to happen “by autumn 2019.” Will the Minister confirm when we are likely to see the proposals on early legal advice and explain why the Government have completely missed the deadlines in their document?
Proposals for the early legal advice pilot will sit alongside pilots for co-located hubs and a legal support innovation fund. Those pilots have to be got right, so they are being considered together with academics to make sure that they will work precisely as required, because what is ultimately provided must be evidence-led and based on an exhaustive scrutiny of what works, so that it is sustainable in the long run. That is precisely what we shall do.
May I welcome my hon. Friend to his new role and suggest as his first piece of homework that he look at Law for Life’s Advicenow website, which provides early legal support for social welfare claimants? Will he make sure that that is rolled out to existing legal aid deserts, such as my constituency? Many of my constituents could benefit from Advicenow’s services but simply do not know that they exist in the first place.
I pay tribute to my hon. Friend’s extremely distinguished service in the Department. On legal aid deserts, it is of course right that those who are entitled to legal aid support can always access it over the telephone—that is an important point—but none the less, I very much take on board his points and would be happy to discuss the matter with him should he wish.
Keeping the public safe from harm is the first duty of any Government. The terror attack in Streatham earlier this month sadly demonstrated that sentencing laws were not working as they should. People’s lives were being put at risk by the automatic early release of terrorist offenders without scrutiny by the Parole Board. Now that the Terrorist Offenders (Restriction of Early Release) Bill has passed all its stages in both Houses, convicted terrorists will serve at least two thirds of their sentence before being considered for release.
The introduction of emergency legislation is not a step that the Government would ever take lightly, but the law was not working and we had a responsibility to act. I am pleased that this House agreed with that assessment and we were able to get the new law on the statute book as a matter of urgency.
Since 2010, the Conservatives have cut more than a third of all funding to local authorities’ domestic and sexual violence services. I have constituents coming to see me who are in shelters for months or even years because the facilities are not there. When are the Government going to bring forward the domestic abuse Bill, which has cross-party support, so that we can give justice to victims?
The hon. Gentleman will be glad to know that we intend to bring that Bill forward very soon indeed—well before Easter—so that we can debate it. He made a point about local government services; no doubt, he will have welcomed the announcement on the local government settlement that was made yesterday. He will know from his own experience of local authorities, as indeed I know from my local authority, that choices can be made to offer direct assistance. For example, with women’s shelters and refuges, decisions on non-domestic rates can help the funding of those services. Important decisions were made about how homelessness and housing support was given to make sure that the interests of those centres were put first and foremost, because they are not just shelters but places of rehabilitation and support.
I am grateful to my hon. Friend for raising that point. It is appalling to hear of the experience of her constituent. On the specific issue of compensation, following conviction for an offence under the Fraud Act 2006 or, indeed under the Theft Act 1968, the court has the power to award compensation to victims or even order confiscation of assets. I would, of course, be delighted to speak to her to see how we can strengthen protections more generally.
The Grenfell public inquiry has been delayed again after firms demanded assurances that their testimony will not be used against them in a criminal case. We need new laws that force officials and private companies to come clean about wrongdoings and failures. The brave Hillsborough and Grenfell families called for a public accountability law that would do this. In the past, there has been cross-party coalitions of support for such a law, often referred to as the Hillsborough law. Does the Justice Secretary agree that it is now time for such a law?
I am grateful to the hon. Gentleman for raising this important point. He knows that it would be invidious for any of us to comment directly on the ongoing inquiry, which he knows is a judicial process. However, he makes an important point for the long term about the status of individuals with regard to various legal proceedings and consequences flowing from them. I would, of course, be happy to talk to him further about that as an important point that we need to consider carefully, and I will do so.
I am grateful to my hon. Friend for that question and for his tribute to the police. What we have done already, as he will be aware, is that, for the most serious violent and sexual offences, offenders will now have to serve two thirds of their sentences, rather than half, sending a clear message that those who commit serious crimes will be expected to pay for them.
Every death in custody is a tragedy. Every death in custody is investigated. What we need to do is to improve people’s mental health, stop women and men self-harming in prison and give them the skills and tools to turn around their lives through employment. I recently visited HMP Send, a fantastic women’s prison, and its therapeutic community, which offers a long programme that helps women to come to terms with their offending and to get their lives back on track. Those are the sorts of programmes that do a great deal of work for women and men in prison.
I am very grateful to the hon. Gentleman for his question. He will know that the work of reform should never cease. There is a lot of work being directed by the president of the family division, and I have referred to the meeting that I am having with him tomorrow. My view about family litigation is that we need to take the confrontation out of it, particularly with regard to children’s proceedings, where the interests of the child have been, by dint of statute, paramount for the past 30 years. All too often, those interests are trampled underfoot by a far too adversarial approach. I think that it is in that direction that we need to be going, and I would be happy to engage with him and, indeed, with all interested parties to improve the experience of people in the family system.
May I say what a joy it is to see such a fantastic team on the Front Bench?
Now that the case of the Post Office workers against the Post Office has concluded with two damning judgments against the Post Office, it is time for those wrongly convicted workers to have their names cleared. Will the Minister work with the Criminal Cases Review Commission to allow these cases to be dealt with as a group, to ensure that justice can be done without further delay?
I am grateful to my hon. Friend for raising the injustice that has been suffered by so many, including—I am bound to say—someone in my own constituency. The CCRC is seized of this matter. It will, of course, have to consider the cases individually, but I know that it will want to proceed at pace, and I understand that it is meeting in March to consider the issue fully; let justice be done.
The hon. Gentleman will have heard the answer of the Under-Secretary of State for Justice, my hon. Friend the Member for Cheltenham (Alex Chalk), some moments ago regarding the investment that we are making in early intervention. It is clear to me from my many years of practice in the law that what often becomes a litigation problem could have been dealt with through early intervention. It is that approach—of direct help—that I want to take and that we need to take. It is no good refighting the battles of nearly 10 years ago. Let us move forward with a more effective system.
Helen’s law will help to ensure that failure to identify victims or their locations will count against those convicted of murder or child pornography who are seeking parole. Will the Government consider extending this to cover victims of rape, such as those at Medomsley Detention Centre? Some of those victims have taken their own lives and their families are now asking questions.
My hon. Friend has consistently raised this important issue since he was elected to this place. I have a huge amount of sympathy for the victims affected by the abuse at Medomsley Detention Centre. He will know that Helen’s law places a statutory duty on the Parole Board to consider the non-disclosure of information in two very discrete circumstances—that is, failure to disclose information about a victim’s remains, or information on the identity of victims in indecent images—which are both within the knowledge of the perpetrator, but no one else. Rape and buggery are outside the scope of the Bill, but my hon. Friend should be comforted that the Parole Board already takes into account non-disclosure of information in any assessment prior to release.
I pay tribute to the work of law centres, including Gloucester Law Centre in my county of Gloucestershire. We will continue with a pilot to ensure that there is that early legal support—whether face-to-face legal advice or other forms of legal support—so that people can get the assistance they need early.
The prisons inspectorate has this morning published its latest report into Her Majesty’s Young Offender Institution Aylesbury. I very much welcome the progress that has been made, and pay tribute to the governor and her staff for that, but there is still a great deal to do. Will my hon. and learned Friend commit to providing the resources that will be necessary to implement all the recommendations of the report?
We are very conscious of the state of Aylesbury. We are bringing two wings back online by the beginning of next year and remain committed to making improvements in that prison.
The hon. Member makes two important points. He may have heard my answer to the hon. Member for Bedford (Mohammad Yasin), when I said that in fact for the first time, September to September last year, we had a reduction in violence—a slight reduction but a good step in the right direction. As I mentioned to the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), we have recruited more prison officers—4,300 net since 2016.
The introduction of a corporate offence of failing to prevent economic crime could well have prevented a succession of banking scandals: PPI, the rigging of LIBOR and forex and the scandalous mistreatment of thousands of small businesses. What plans does the Justice Secretary have to introduce such an offence?
My hon. Friend has raised this issue on many previous occasions, and he knows that I have engaged very closely on it. Now that we have the time and space with regard to the further development of policy, I want to work with him and, indeed, other parts of government to develop these proposals. There is still more work to be done. We have two failing-to-prevent offences in the realms of tax evasion and bribery. We need to understand the learning from those in order to apply those principles to any future further economic crime offence.
Women are more likely to be imprisoned for non-violent offences and to receive ineffective short sentences of six months or less, and children whose mothers are sent to prison are more likely than their peers to have future problems. With 17,000 children separated from their mothers each year in England and Wales, what steps is the Minister taking to ensure that the safeguarding and welfare of children is prioritised in criminal courts?
The hon. Lady makes a really important point about dependants and the effect of a custodial sentence on the mother of those children. That is why we are ensuring that in pre-sentence reports a checklist is filled out to ensure that the appropriate things are taken into account when a woman is sentenced, one of which will be the effect on her dependants.
There is a significant shortage of magistrates in courts in England and Wales. To add to this, more than half of all sitting magistrates are over the age of 60 and due to retire in the next decade, which will only add to the problems. Will my hon. Friend look urgently at increasing the retirement age for magistrates so that courts have experienced presiding justices and the capacity to deal with their current and future workload?
Yes, I can give my hon. Friend that commitment. It is the Government’s intention to consult very shortly—this spring—on increasing judicial retirement ages, including for magistrates, thereby retaining the very high levels of experience that he refers to. In addition, to maintain diversity on the bench, we need to make sure that we are also recruiting new magistrates who reflect the diversity of our great country.
My constituent Kelly Chandler suffered sexual abuse from her brother when she was a child. As an adult, she found the strength to report this to the police. Her brother then admitted that he did perpetrate this abuse. However, a legal loophole states that due to his age at the time of the abuse, he cannot be prosecuted. Kelly, after reliving this trauma, is being denied justice. When will this loophole be closed?
I am very grateful to the hon. Lady for raising this individual case. I would be happy to discuss it further with her. There obviously seems to have been a prosecutorial decision, which is the responsibility of the Attorney General, but we will meet and discuss this troubling case further.
Point of Order
On a point of order, Mr Speaker. Yesterday, the Home Secretary said that so far 2.8 million people have been granted settled status and that there have been more than 3 million applications. In fact, that figure of 2.8 million includes more than 1 million who have temporary pre-settled status. How could we go about getting some clarification from the Home Secretary, rather than this appearing to be misleading?
I thank the hon. Lady for giving notice of her question. It is not a point of order for the Chair. Ministers, along with other Members of the House, are responsible for the accuracy or otherwise of what they say and for correcting the record. My advice would be to go to the Table Office, and I am sure that it will offer some good advice on how you may pursue it.
National Health Service Expenditure Bill
Presentation and First Reading (Standing Order No. 57)
Jamie Stone, supported by Stuart C. McDonald, Nia Griffith, Munira Wilson, Wendy Chamberlain, Mark Garnier and Mr Stephen Morgan, presented a Bill to require expenditure on mental health services and on health services for veterans and members of the armed forces to be identified separately in National Health Service expenditure plans and outturns; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 26 June, and to be printed (Bill 91).
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 place requirements on the Government relating to the Sino-British Joint Declaration 1984 and human rights in Hong Kong; to make provision about immigration for Hong Kong residents including granting rights to live in the United Kingdom; and for connected purposes.
First, I want to thank Members from across the House who have offered their support for this campaign, either as co-sponsors of my Bill or through their support for the rights and freedoms of people in Hong Kong. I pay particular tribute to the work of Hong Kong Watch, of which I should declare I am a patron, and the many other civic organisations that continue to work tirelessly to advance the cause of democracy in Hong Kong. Most importantly, I should state my full admiration for the people of Hong Kong, who have demonstrated fortitude and resilience for their cause in the face of adversity and active suppression.
The status of British nationals (overseas) in Hong Kong and their right to abode in the United Kingdom is an issue on which my party, with others, has campaigned for decades. It speaks to our values of internationalism, support for the rule of law and liberal democracy. During the handover process in the 1980s and 1990s, we demanded that the people of Hong Kong be given the right of abode in the UK if China were ever to renege on the promises made in the joint declaration. Our then leader, the late Paddy Ashdown, led that call, and he knew that the UK could not guarantee the promises we had made without such a supportive measure. Some decades later, it is clear that the value of the joint declaration is being challenged by China, which is why the issue of British national (overseas) passport holders is more important today than it has ever been.
At the formation of the first ever all-party parliamentary group on Hong Kong last month, Members from all sides of the political discourse came together to create a new parliamentary focus on scrutiny of China’s actions and to hold our own Government to account. China has repeatedly undermined the principles of the joint declaration in recent years, weakening Hong Kong’s democratic systems. The one country, two systems arrangement is a shadow of what it was supposed to be. It has been mocked by Beijing officials as being a “historical document”. The former Governor of Hong Kong, Lord Patten, denounced that dismissive behaviour last month in the inaugural Paddy Ashdown memorial lecture. He said:
“A treaty is what all the contracting signatories agree it is; it is not simply whatever one side says it is.”
Far worse than Beijing’s rhetoric is what we have seen on the ground in Hong Kong. Reports of police brutality against protestors have arrived almost daily since the start of protests against proposed extradition laws last summer. That the Chinese state is reneging on the Sino-British joint declaration is no longer a matter of debate, and if ever there were a time to act in support of Hong Kong, this is it.
The Bill that I seek the House’s leave to introduce is supported and promoted by Members on both sides of the House. It is not a particularly radical set of proposals, but sadly, it is a necessary one. It seeks to discourage further infringements on Hong Kong’s historic freedoms by reopening the BN(O) passport scheme and establishing the right to abode in the UK for BN(O) passport holders. For Hongkongers, this is one of the most important signals that we can send. It is a signal that we in the United Kingdom have not forgotten our obligations to them and that, as it begins to look as if some of their worst fears may be realised, we shall do more than stand on the sidelines wringing our hands. Since the joint declaration was signed and implemented, however, international law has moved on significantly and it is only right that account should be taken of changes such as the evolution of Magnitsky sanctions.
The joint declaration already includes a mandate for the UK Government to strengthen the six-monthly reports so that they issue a judgment on whether the joint declaration has been breached. The problem with that, however, is that as things stand there is no meaningful sanction for those responsible for any breach. That is why I am calling today for the Government to commit to employing Magnitsky-style sanctions for those whom it is judged have been responsible for human rights violations whether in Hong Kong or elsewhere in China. This, again, would be a powerful signal that the United Kingdom is serious about our commitments to the people of Hong Kong.
These actions would not set us apart from the international consensus. Quite the opposite. At the end of last year, the United States Congress passed a Bill to take measures against those responsible for human rights abuses in Hong Kong, and to ensure an annual review of their trading relationship with China. The Bill was supported across Congress—a reminder for us that standing up for democracy should not be a single-party issue.
I am realistic about the prospects of success for a Bill that starts its life as part of a ten-minute rule procedure. There are some who would say that even this is more than we should be doing and that it would be better to keep our heads down and avoid making waves when it comes to our dealings with an important trading partner. Members will have noticed this week already that the former Attorney General, Lord Goldsmith, was moved to rebuke the Government publicly for what he saw as misrepresentation of his legal advice on the issue of granting the right to abode. That was a quite extraordinary move and one that I hope will act as a shot across the bows of the Government. If there are good reasons not to act, then the Government should explain them. Good reasons, however, are one thing; excuses are quite another.
Lord Goldsmith has been clear that
“the UK Government can extend full right of abode to BN(O) passport holders without breaching its side of the Sino-British Joint Declaration”.
This is an issue that is not going to go away. We have seen the continued resistance shown by Hongkongers over these past few months. They are not keeping their heads down, they are making waves, and that is why there is growing support and enthusiasm in the House and across the country for meaningful action to be taken now to stand with them.
Rather than sitting on our hands, the UK can stand shoulder to shoulder with the people of Hong Kong. I am calling on the Government to take an active approach by adopting this Bill. It is time to do what we should have done during the handover; it is time to give the people of Hong Kong the guarantees they need, by providing their right to live in the UK.
The idea of global Britain, so often trumpeted in recent weeks, is meaningless if we are timid in the advancement of international human rights. Human rights are nothing if they are not universal. What is good for us here must also be good for those in Hong Kong. This House must make its voice heard on essential values such as the rule of law and liberal democracy. I believe that there will be cross-party support and grassroots backing across the country and beyond to move this legislation forward. If the Government intend to give substance to their global rhetoric, they should put their weight behind the Bill as well.
Question put and agreed to.
That Mr Alistair Carmichael, Wendy Chamberlain, Wera Hobhouse, Jim Shannon, Alyn Smith, Andrew Rosindell, Bob Seely, Caroline Lucas, Liz Saville-Roberts, Mr Virenda Sharma and Stephen Timms present the Bill.
Mr Alistair Carmichael accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 12 June, and to be printed (Bill 92).
[4th Allotted Day]
Tax Avoidance and Evasion
I beg to move,
That this House notes that the tax gap, the difference between the amount of tax that should be paid to HMRC and what is actually paid, has been estimated at between a minimum of £35 billion and £90 billion; believes that successive Conservative governments have failed to address tax avoidance and evasion while making savage cuts to public services and undermining the social security net; further notes that the Tax Justice Network has described the UK as backsliding on financial transparency; is concerned by reports of the Conservative Party’s links with individuals and companies that have engaged in tax avoidance; and calls for the proper funding of public services after a decade of austerity and for robust action to tackle tax avoidance and evasion.
With a Budget in just over a fortnight, over the coming days we will be setting out an agenda of issues that we believe the Government need to address to tackle the social and climate emergencies that our country now faces. And yes, there is a social emergency in many of our communities. Yesterday, my hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary, exposed the appalling levels of health inequality across the regions of our country. Today, the Marmot report shows what he described as the “shocking” results of 10 years of austerity: life expectancy has stalled for the first time in more than 100 years, and has even been reversed for the most deprived within our community, women in particular.
Yesterday, the hon. Member for Denton and Reddish (Andrew Gwynne), the shadow Secretary of State for Communities and Local Government revealed the scandalous impact of cuts to local councils—for example, the impact they have had on the services desperately needed to keep our children safe. This afternoon, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), the shadow Minister for mental health and social care, will describe the immense suffering and distress caused by the cuts in social care imposed by this Government. Members will remember the report only last year, reporting that 87 people died each day before actually receiving the care they needed.
At present, we have a Government who, on this evidence, have proved to be incapable of providing care for our people, of housing our people, of feeding them or of providing the work that will lift them and their families out of poverty. There is a lot of hyped-up talk about the big expenditure numbers that might be associated with the coming Budget. What we are interested in is outcomes, and the impact on the wellbeing of our people. These will be the key tests of the forthcoming Budget. Will it really end austerity? Will it really reverse the decade of austerity cuts that have been imposed on our community by this Government? Will it ensure that our people are properly cared for, properly housed, properly fed and lifted out of poverty? Alongside all of this, in a week when we have seen the Prime Minister’s failure to respond to the flooding that has damaged so many of our people’s lives, the overriding test is: will this Budget tackle the existential threat of climate change?
It is interesting that, contrary to virtually all the advice from mainstream economists 10 years ago, the newly elected Conservative Government took the political decision to impose austerity cuts on our community. As we have repeatedly said, it was a political choice, not an economic necessity. The alternative was to ensure that we had a fair taxation system to fund our social infra- structure, and that we borrowed to invest in our physical infrastructure to grow our way out of recession. The reality is rather that the neo-liberal ideologues simply could not let the economic crisis go to waste. They seized the opportunity to launch their experiment to downsize the role of the state through cuts, outsourcing and privatisation. This was linked to ever more restrictions to reduce the effectiveness of trade unions to represent their members and to shift the balance of power between capital and labour in the workplace.
The result has been that virtually every area of our public services is in crisis, with the slowest growth in wages in 200 years, 8 million of our people in working households in poverty and over 4 million of our children in poverty. The UN rapporteur has described levels of destitution in our country and the treatment of disabled people as an abuse of human rights. The Government’s alibi for austerity was the global financial crisis, even though Government spending was never a cause of that crash. Now, 12 years on, the Government no longer have that fake alibi for the cuts. It is clear the Tories do not just want to shrink public services and cut public sector jobs in the short term; they want to downsize our public services for good—as the Institute for Fiscal Studies has said, baking austerity into Government.
All this suffering, all this hardship, all this holding back the potential of a near-generation of our people would have been rendered completely unnecessary if we had had a fair taxation system and had invested in our economy. A fair taxation system starts with ensuring that people and corporations pay their taxes. That patently is not the case at the moment. There is much talk about levelling up; well, let us start with levelling up the rules of taxation and the amount many of the rich and the corporations pay in taxes.
Surely the right hon. Gentleman will be aware that the top 1% of earners in this country now contribute about 29.6% of all taxation, whereas in 2009-10 the figure was only about 25%. How can he say that is a failure?
They pay that much because they earn so much more than everybody else, but the other issue, and it relates—[Interruption.] Let me finish. We have this debate time and again. The hon. Gentleman is referring to income tax, but when we take into account overall taxation we see that the poorest-paid in our country are paying about 40% of their income while the richest are paying around 34% of their income. It is the poorest who are hit hardest, it is the poorest who have shouldered the burden of austerity, and it is the poorest whose life expectancies are being reduced at the moment. That cannot be right; surely to God no one in this House was elected to ensure that life expectancy for the poorest stagnates and for some goes backwards.
Does my right hon. Friend agree that the other side of this calculation is that those who are best able to pay ought to pay their fair share of tax, and what we have seen over the last few years is the creation and mass-marketing of tax evasion schemes? Those now exist like package holidays—they are package schemes. Does he also agree that the Treasury has been very remiss in not cracking down on this awful emergence of tax schemes that are packaged to make it much easier for people to avoid paying their fair share?
I want to pay tribute to a number of my colleagues in this House who have consistently raised this issue, and my hon. Friend is one of them. When we had the debate very early on—in, I think, 2012 or 2013—a number of hon. Members, including my hon. Friend, started describing what was taking place as tax avoidance on an industrial scale. That is exactly what has happened, and it has not got better; it has got worse consistently.
At the moment, Her Majesty’s Revenue and Customs is saying that the tax gap is about £35 billion, and it defines that as the difference between its estimate of the tax that should be paid and what is paid. But we know, and HMRC accepts this, that that does not include many of the abuses of corporate profit shifting, and HMRC acknowledges
“many sources of uncertainty and potential error”
in its own calculations. So other experts have suggested—this is the point my hon. Friend is making—that the tax gap could be as high as £90 billion overall. So let us look at who we know is not paying their taxes.
Each year I organise an annual community consultation, and each year there has been growing anger among my constituents about the sense that they are paying their fair share from very ordinary incomes while the level of corporate tax avoidance has been growing out of control as successive Conservative Governments have failed to step up to the mark in tackling it. We are apparently losing over £1 billion of tax due on UK earnings from just five of the biggest US tech firms; that is money that could pay for more than 42,000 rooms in care homes for people who desperately need them. So does my right hon. Friend agree that there is enormous public support for tough action on corporate tax avoidance?
Order. I can put the hon. Gentleman’s name down if he wishes to make a speech, but we must have shorter interventions.
May I thank my hon. Friend for that wonderful speech?
Whoever is in government needs to accept that this is an issue that we have to address, because there is now an increasing lack of confidence in the tax system, and I know from meeting companies, including some in the City, that fulfil their obligations that they feel anger towards those that do not; so this anger is felt within the wider community, but also within the business community. It destabilises the whole process of tax collection and undermines confidence in the system, and also undermines confidence in Government overall.
As I have said, some have suggested that the tax gap could be as high as £90 billion. Let us look at who is not paying: it is the rich corporations, and in particular the multinationals. Successive Conservative Governments have been, I have to say, weak on multi- nationals. According to analysis by Tax Watch UK the top five tech companies alone avoided around £5 billion in UK tax over the last five years. We need to recognise that this is money that could be used by whichever Government for useful purposes. That sum is enough to reverse the cuts to homelessness services—we should remember that 700 of our fellow citizens died on the streets last year. It is enough to provide support for families to prevent children from being taken into care, and Members will recall that when we had a debate not long ago we had the report that there are record numbers of children coming into care because of the cuts in early interventions to support families.
We have had discussions in the House about this, therefore. Recent years have seen secret sweetheart deals between HMRC and tech giants, and they have only been made public as a result of the tireless work of tax justice campaigners. The Government have trumpeted their digital services tax. It was trumpeted before the election, but that tax has been widely criticised. It is aimed only at digitalised business models, and many have said—and I agree—that it is hard to administer and becoming impractical. It creates a pitiful 2% tax on the revenues of a very small group of businesses and is predicted to raise £5 million only this coming year —and that is if it is brought into force on 1 April. Now there is talk of the Government dropping even that hollow half-measure. So let us be clear: if the Government drop or delay the digital services tax, as is rumoured, it will effectively be another tax giveaway to powerful multinationals.
Let us look at non-doms again. Non-dom status is another tax giveaway. My right hon. Friend the Member for Barking (Dame Margaret Hodge) has been raising this issue consistently for quite a while. This is just another area where the Tories have said a great deal but have not had an effective clampdown. It is a colonial hangover from 1799 that allowed colonists to shelter their property from tax—a carve-out from the general rule that UK tax residents pay tax on income wherever it is earned. It is a carve-out that applies only to some who might have their domicile outside the UK.
George Osborne, one of the many Chancellors I have dealt with over the years, tinkered with the process and introduced an annual charge of £30,000 to be paid by some non-doms and £60,000 by others. The Government now will claim they are abolishing non-dom status, but actually it is being kept intact for a significant number of years despite the evidence that those who use this status are the wealthiest individuals, able to pay, able to contribute to the funding of our public services, and able to contribute to our society, which they enjoy living in for long periods. Previous estimates have said that fully abolishing now the status of non-doms could raise £1 billion for our public services—think what that could do now to assist families whose homes are flooded.
There are many other ingredients; non-dom status is just part of an array of ingredients that enable abuse of our tax system. Secrecy is at its core; it is financial secrecy, and especially the exploitation of overseas territories and Crown dependencies to avoid tax.
Last week, to this Government’s shame, the Tax Justice Network judged that the UK had increased its secrecy score by more than any other country since it last measured financial secrecy. It said that the UK had been backsliding in recent years by building its “spider web” of satellite tax havens. Some of us were in this House when the Panama papers were exposed. They revealed that the most popular haven in the world is the Virgin Islands, which is a British overseas territory.
A lot of words have been said about enablers, but there has been a history of failure to clamp down on the enablers of avoidance and evasion, including the auditors and, yes, the lawyers. One recent paper said—my hon. Friend the Member for Wallasey (Ms Eagle) made this point—that
“the tax services industry, propagated by the Big Four—”
the big four accountants—
“is essentially the apex of this pyramid of factors that helps build, manage and maintain”
the tax havens, but the Government have said and done little to crack down effectively on the tax services industry.
There has also been a history of failure to recognise how the City of London is complicit in the financial misconduct affecting the global south when it comes to tax collection and the hiding of taxation. According to Oxfam, the global south is losing £170 billion in tax revenue due to the wealth of individuals and corporations hidden in tax havens associated with this country. Surely it is our responsibility to ensure that London is not used as a global laundromat for washing dirty money. It is the Government’s duty to protect our citizens by stopping that dirty money undermining the rule of law internationally and undermining international stability. What goes around comes around, and allowing the City of London to be used in that way will have its consequences in the long term for all of us. To collect taxes we need tax collectors, yet Her Majesty’s Revenue and Customs has seen its staff numbers plummet from 105,000 in 2006 to 65,000 in 2019.
As we have raised before, there is a litany of legal loop- holes that the Tories have not acted on or have actively created. The general anti-abuse rule that many of us argued for has proved to be toothless—far weaker than anti-avoidance rules in other legislations. The use of legal professional privilege in tax avoidance cases is little short of a disgrace. George Osborne promised the “march of the makers”, but Nicholas Shaxson has said that the Tories have only created the “march of the takers”. I concur. A number of us have been working with a range of tax experts, accountants, the Public and Commercial Services Union, the HMRC staff union, tax justice campaigns and corporate reform groups. Labour has developed a plan to tackle each of those issues, and there is a range of expertise in this House on all sides arguing for more action.
On secrecy, we believe, as others have said, that we need a stronger public register of trusts and beneficial ownership of companies. We need to put an end to financial secrecy, because the current register of trusts, so often a vehicle of tax avoidance, is not truly public and the penalties for non-compliance are pathetic. The current register of who controls companies is not being verified properly and has a high threshold for disclosure. We have a plan for working with overseas territories and Crown dependencies to accelerate their move towards tax transparency. It is just not good enough that the deadline for establishing public registers of company controls has slipped to 2023 at the earliest.
We believe there should be a clampdown on enablers through the introduction of stronger laws on facilitating tax evasion and, yes, harsher penalties for those who promote schemes. The current law has a wide defence for those accused of facilitation, and penalties for promoters of tax avoidance and evasion are just too weak. We urge the Government to introduce an overseas loan transparency register. That would tackle injustices of the kind that we have seen in, for example, Mozambique. We met a group of women from Mozambique, who told us what had happened in their country. Some of their politicians had undertaken secret lending using UK law and had ripped billions from the budget of Mozambique. Then, when the effects of climate change were felt through flooding following a major cyclone, Mozambique did not have the resources it needed to protect its own people.
We urge the Government to introduce a plan to increase targeted audits undertaken by HMRC to raise the nearly £3 billion owed by self-assessment taxpayers. The majority of the self-assessment tax gap is owed by a small number of self-assessment taxpayers, who could be effectively targeted by such audits.
Our concern is that far from moving forward on tackling tax avoidance in the coming Budget, the Government are opening up the opportunity for more abuse, specifically with their proposals for freeports. The evidence suggests that freeports simply relocate jobs and investment, rather than creating new jobs and investment. Far too often, they become hubs for the abuse of workers’ rights and tax evasion.
Let me be straight with the Conservative party. There is a concern about why the Tories will not tackle tax evasion and avoidance effectively. It is argued by some that they are in the pockets of the City, and in the pockets of the avoiders, the evaders and the enablers. It is hardly surprising that some will be able to level that charge. For example, they could come to that conclusion when only this month we discovered that Lycamobile, which donated £2.1 million to the Conservative party, is embroiled in three tax disputes with HMRC over £60 million in unpaid tax. Indeed, the French auditors were blocked from accessing that company’s records in this country. The problem, however, may also lie closer to home: not just with donors, but with the Chancellor himself.
I put it on the record that there are questions I believe the Chancellor himself, given his past associations, has to answer about his own attitude to tax avoidance. I have written to the Chancellor with a series of questions on this matter. In recent weeks, it has become clear that the Chancellor of the Exchequer, the right hon. Member for Richmond (Yorks) (Rishi Sunak), has had close associations with tax avoiders and tax havens. If people are expected to have any confidence in this Government’s commitment to tackling tax avoidance, it is critical that the Chancellor is fully open and transparent about his own past activities. A former close business associate in two companies in which the Chancellor held senior positions was ordered to repay £8 million after engaging in an unlawful tax avoidance scheme. Two of the firms in which the Chancellor held senior positions have made use of the notorious tax haven of the Cayman Islands.
On our side, we will continue to press the case for a fair taxation system. To do that we need first of all to close the loopholes that allow tax avoidance and evasion to flourish. However, we also need to deal with the overall regulatory architecture of finance, a challenge raised by a report published this morning by the True & Fair Campaign. Let me quote from that report:
“the last four years have seen a multiple pile-up of mis-selling scandals and incidents of regulatory failure. It has witnessed the repeated and wanton abdication of responsibility by leading market participants...Worst of all, it has demonstrated a breathtaking betrayal of the trust...rightly owed by so-called financial services professionals to their investors and employees.”
That report is called “Asleep at the Wheel”. It singles out for criticism the Financial Conduct Authority, and in particular Andrew Bailey, appointed by the Government to be the next Bank of England Governor. On several occasions I urged the previous Chancellor, in this House and by correspondence, to delay the appointment and installation in office of Mr Bailey until there has been an independent review of his role at the FCA. This report adds urgency to that recommendation. I urge the new Chancellor to act on it now.
In conclusion, the forthcoming Budget will be a test of whether the Tory party has, as it claims, turned a page. From the evidence so far it looks like a bit more Johnsonian bluster. There is nothing on the scale needed to address in any serious way the damage Conservative Governments have inflicted on our community over the past decade, and certainly nothing on the scale needed to tackle the climate crisis. Any realistic policy to end and reverse austerity and invest for the future needs, at its base, a fair taxation system. We will wait, therefore, to see whether in this Budget, the Government will at long last effectively confront the scandal of tax evasion and avoidance. All I can say is that judging on past form, I am not holding my breath, and I do not think many others are either.
There is a shared desire across the House to ensure that the correct amount of tax is paid and that tax is not evaded, not least because the public services on which we all rely in our constituencies depend on that happening. Since 2010, we have introduced over 100 new measures to tackle tax avoidance, evasion and other forms of non- compliance, which, alongside HMRC’s other compliance work, have secured and protected significant revenue that would otherwise have been lost.
In 2018-19, HMRC brought in an additional £34.1 billion that would otherwise have gone unpaid, including £1.8 billion from the wealthiest individuals and £10 billion from the largest businesses. Our tax gap is at 5.6%—lower now than at any point before 2010 and one of the lowest in the world. To put that in context, in 2005, for example, under a Labour Government, the tax gap was as high as 7.2%. Action has been taken, but there is a shared desire across the House to continue to take further measures on this.
We have achieved that progress through a mixture of enforcement action for those seeking to avoid payment of what is due and through reform, because not all the tax gap is due to malicious behaviour. It can also be due to basic errors, whether that means the data that is used to calculate tax or how the calculations have been assessed. HMRC estimates, for example, that £10 billion of the current £35 billion tax gap is due to taxpayer error rather than evasion or avoidance, all of which shows that the Government have an important role in helping more individuals and businesses to get their tax right first time. A further £4 billion stems from firms going bust while owing tax. Likewise, other areas of the £35 billion tax gap are due to long-standing issues on which there will be a shared desire—for example, tackle tobacco smuggling, which is not a new issue under this Government, alcohol smuggling, and the tax lost through the hidden economy. Many of these are long-standing issues, but the crux of the matter is that the tax gap is at a near record low, thanks in large part to the actions taken by my predecessors in the Treasury.
I wonder whether the Minister thinks that there is a strong ethos of enforcement within HMRC, especially on landfill tax fraud, which I will speak about. In a case I was involved in, HMRC was not interested unless there was more than £20 million a year in evasion. Does that not send a signal that some people can get away with evading large amounts of tax, because there is not an ethos in HMRC to properly investigate?
As a point of principle, HMRC always seeks to collect the tax that it is due. One of the areas of innovation—I will come on to such areas as Making Tax Digital—is about making that easier for HMRC, but I appreciate that the right hon. Gentleman is making a point more about fraud than error. The underlying principle is that HMRC always looks to collect the tax that it is due, but if he has a specific point on a constituency basis, I know that my right hon. Friend the Financial Secretary to the Treasury will always be keen to discuss it with him, because he has a zeal for cracking down on any such practice.
The Government have done much to squeeze the tax gap: by ensuring that companies increasingly pay their way; by cracking down on offshore avoidance and evasion; by tackling tax avoidance schemes; by helping people to get their taxes right first time; and by investing in HMRC’s toolbox. If one looks at the actions being taken in terms of large businesses, they will see that there is an exceptional level of scrutiny. At any one time, HMRC is engaged with half the UK’s largest businesses and we have introduced specific measures to shape behaviours. For example, the diverted profits tax was introduced in 2015 to ensure that multinational companies pay UK tax in line with their UK activities. Under our rules, those companies either declare the correct amount of profits in the UK and pay the full amount of corporation tax on them, or they risk being charged a higher amount of diverted profits tax at a rate of 25%. It raises tax directly through encouraging changes in groups’ behaviour that, in turn, leads to increased tax receipts.
The Chief Secretary quoted a figure of 25% as a potential penalty. Will he tell us how much has been raised from those penalties so far? Has anyone been penalised as a result of failing to fall into line with this new incentive?
It is always good, 10 days into the job, to get specific challenging questions on the detail, but to answer that question—and I do not want to tempt hon. Members who usually come with in detailed questions such as that—the tax has raised £5 billion in additional revenue. On this occasion, I can satisfy the House, but I do not want to tempt fate with too many colleagues on this outing.
It is interesting that attitudes in large companies are changing. I am sure that there will be Members who will want them to change further, but since 2013 the proportion of large businesses agreeing that tax avoidance is acceptable has more than halved, moving from 45% to 21%. There is clearly more to do, but that shows a change in attitude within many large companies.
One of the measures that the Government introduced in 2017 was a corporate offence of failing to prevent tax evasion, which certainly has had an effect on advisers. Will my right hon. Friend consider expanding that failure to prevent offence to include economic crime and money laundering, which would further narrow the tax gap?
As my hon. Friend will know, before coming to the House I worked in the field of trying to prevent money laundering in our financial institutions. As a principle, we are always keen to look at that, but he is right to draw attention to the measures that we have taken, including on the professional responsibilities of advisers, whether that relates to the property business—in businesses linked to his previous senior business experience —or accountants, lawyers and others.
Does my right hon. Friend accept that this ambition is not confined to our domestic policy, but that we have led the world in driving forward the agenda internationally on tax evasion, and what is more, that we have provided the Treasury’s services to many poor countries so that they can collect their own taxes?
Not only is my right hon. Friend point absolutely right in the point he makes, but he draws attention to the measures taken in 2014—when he was a key figure in Government—through the UK’s G8 presidency, when we drove the adoption of greater tax transparency through the automatic exchange of information. It is part of the UK’s role at the forefront of a number of international bodies, including the G20 and the OECD, to improve tax transparency at an international level. Across the House, Members recognise that many of the measures that are required to reduce the tax gap, which I think is a common goal across the House, need international action, not just action on a domestic level.
This is the first time that I have spoken to the Minister in his current job and I welcome him to it. I see him a bit as a poacher turned gamekeeper, because he was certainly an extremely determined interrogator of many of the big corporations that we think are still not paying the right amount of tax. I hope he still accepts from our interrogations of Google, for example, that although it pays a bit of tax, it is a very small percentage of the profits it makes in this jurisdiction. To help us, we could enact a measure that has been passed by this House, which is country-by-country reporting, which would enable us to see the economic activity of companies within this jurisdiction, the profits they make here and so the tax for which they are liable. Why does he not enact that measure?
First, I pay tribute to the work the right hon. Lady did, particularly through her chairmanship of the Public Accounts Committee, on a cross-party basis to bring transparency to these issues. A key driver behind measures the Government have taken in recent years has been a desire for more international transparency, which is at the forefront of many of the concerns the House has had in the past.
Thanks to UK leadership, more than 100 jurisdictions, including—[Interruption.] I will come on to that. Within the right hon. Lady’s point, and within many of her questions, which I have sat and listened to many times, was a desire for transparency, so it is germane to her point to draw the House’s attention to the UK’s leadership in securing the commitment of more than 100 jurisdictions, including Switzerland and all the Crown dependencies and overseas territories with financial centres, to automatically exchanging financial account information under the common reporting standard. HMRC now automatically receives the details of offshore financial accounts held by UK taxpayers. As I understand it, when the PAC looked at many of these issues, that information was not available to HMRC.
We have also increased the penalties and consequences for those who devise, enable or use tax avoidance schemes. I draw the House’s attention, for example, to the disclosure of tax avoidance schemes regime, the general anti-abuse rule and the system of follower notices and accelerated payments, the last of which alone has brought in over £8.7 billion[Official Report, 3 March 2020, Vol. 672, c. 6MC.]. Since 2016, HMRC has had a dedicated fraud investigation service to ensure that no taxpayer can get away with tax fraud. I am sure that service will be keen to pick up on points raised by right hon. and hon. Members in this debate.
We are also seeking to ensure that more firms get their tax right first time, because the £35 billion tax gap is not simply one of evasion; as I say, it also includes a significant amount of error. Since last April, businesses have been using the making tax digital service for VAT, which has many benefits: it helps firms to get their tax right first time; it saves businesses time and inconvenience; it cuts the cost of government; and it makes it easier to tackle fraud, error, evasion and avoidance. The impact of Making Tax Digital is forecast to deliver an additional £1.2 billion to 2023-24. Clearly, this plays an important role in reducing that £10 billion element of the £35 billion overall tax gap.
We have also strengthened HMRC with the extra £2 billion invested since 2010 to tackle tax avoidance, evasion and other forms of non-compliance.
On HMRC’s resources, can the Chief Secretary to the Treasury therefore explain why its wealthy unit currently has 961 members of staff, which is a reduction in 80 posts from its 2018 figure? That would suggest that HMRC could have more resources piled into it to tackle this issue.
The hon. Member picks up on a point the shadow Chancellor made in his opening remarks about the total number of staff, but the key issue is how staff are deployed and what technology we are using. I was just referring to Making Tax Digital. If tax is being filed through the Making Tax Digital platform, the number of staff that HMRC uses will change; that profile will change. We now have about 25,000 staff dedicated to tackling tax avoidance, evasion and other forms of non-compliance, and the proof of the staffing levels is reflected in the fact that we have a near record-low tax gap—far lower than for many years under the previous Labour Administration.
Since 2010, our criminal investigations have prevented the loss of more than £15 billion and resulted in more than 5,400 individuals being criminally prosecuted and convicted. In 2018-19, HMRC investigations secured nearly 650 criminal convictions for tax and duty fraud, resulting in numerous custodial sentences. HMRC has used billions of pieces of data, combined with analytics, to identify where tax is most at risk of going unpaid and to make tailored, targeted and proportionate interventions. Technology and capabilities have moved on, therefore, but, as I am sure the Financial Secretary will mention later, what continues is the dedication of staff within HMRC, who share the House’s desire to close the tax gap and ensure that people do not evade their responsibilities.
On the analytics, what is HMRC doing to track individuals who set up companies, fold them after two or three years and then open up new companies? A constituent came to me with a case in the cosmetic surgery industry where the same individuals moved from one company to another while owing huge amounts to the Inland Revenue and to local councils in council tax. What is HMRC doing to track these individuals? The three individuals involved in the company my constituent highlighted to me have evaded huge amounts of tax.
The right hon. Gentleman raises an important point about the moving target of criminality and the ingenuity of approaches to evade tax or abuse the tax system. That is partly why I referred earlier to the fraud service set up within HMRC in 2016. It is also a key part of how technology is used in a dynamic way within HMRC to tackle that moving target of criminality. As I said in answer to his earlier intervention, if in their surgeries Members are told of case involving firms or local authorities in their constituencies, that intelligence is obviously of relevance to colleagues, and I can commit that the Financial Secretary would take those forward.
The right hon. Gentleman will be aware of the situation in my constituency, where the HMRC offices are being closed and moved to Edinburgh, at significant cost to the taxpayer. One of the key issues the unions raised with me time and again was the loss of expertise. The services and expertise of the many long-serving staff who cannot move for various reasons—financial reasons, caring responsibilities, and so on—will be lost, so there is a double cost to the Treasury. Does he not consider it a grossly bad decision by this Government?
The right hon. Member for Barking (Dame Margaret Hodge), when she chaired the PAC, looked at whether the Government were managing their estate efficiently. Through the PAC, the House regularly raised the concern that the Government were not properly managing their cost base by rationalising the estate, and often those concerns related to PFI—I do not know if the case the hon. Member has raised relates to PFI.
The Pyramids, in Livingston in West Lothian, where the HMRC offices were based, was one of the most high-tech and best-connected sites in Scotland, yet the Government are moving them to Edinburgh to one of the most expensive sites in Scotland. It makes no sense financially, and the PAC agreed. There is still an opportunity for the Chief Secretary to the Treasury to rethink this decision or create a hub in West Lothian to save those jobs, which were put there as a result of the closure of Motorola.
I will not comment on that individual decision, which I have not been involved in, but the House has in the past questioned whether the Government have been moving quickly on the wider principle of using our estate in the most value-for-money manner, by pooling expertise to work more efficiently and offering career progression through the greater flexibility that bigger teams in bigger centres often allow. It is right that we look at what the right estate mix is and at how we can pool expertise to achieve our common goal of closing the tax gap, particularly by using technology.
Would my right hon. Friend consider setting a target to be met by the end of the current Parliament, to give HMRC greater encouragement to introduce whatever further measures and actions are needed? Perhaps he would commit himself to a relatively gentle target of, perhaps, 5%.
The target is a gap that is as narrow as possible, and I do not think HMRC’s commitment to that can be questioned. As I have said, the gap is now at a record low, but I entirely share my hon. Friend’s desire for us continue our efforts to reduce it further, because there is a common purpose: to reinvest that money in levelling up all parts of the United Kingdom and in our public services.
Part of this requires domestic action, but part of the action must be international. That is why in the 2018 Budget we announced 21 measures forecast to raise a further £2.1 billion by 2023-24, including measures to bear down on those using offshore structures to hide their profits and avoid tax; it is why the UK is at the forefront of international action to address global tax avoidance and evasion, including the OECD’s base erosion and profit shifting project, which seeks to align the taxation of profits with the underlying economic activities and value creation; and, indeed, it is why in 2016 we led the world with the first public registry of company beneficial ownership in the G20, to provide for analysis of suspicious patterns of behaviour, and to disclose inconsistencies in supposedly factual information and reveal wrongdoing.
This is not just about the money. It is also about a fair and level playing field for everyone in the country. We know that Google turns over about 10 billion quid in the UK, we know that its international profit margin is about 22% and that 19% corporation tax on that should be £418 million, and we know that it pays about £67 million. Will all the additional measures that my right hon. Friend has described, along with those previously implemented, narrow that gap so that everyone pays a fair amount of tax?
My hon. Friend has been in the House long enough to know that Treasury Ministers will not comment on individual companies. However, there is a wider principle, which I think was reflected in the shadow Chancellor’s opening remarks and on which there is agreement across the House. We all want the tax gap to be narrowed, and we celebrate the HMRC’s work in achieving a near record low, but we continue to think about what further measures can be taken, and I have described to the House a wide range of measures taken by the Government in recent years.
It is in everyone’s interests that we continue to crack down on evasion and avoidance and continue to narrow the tax gap. Doing so will allow us to invest in services, and to level up and unleash the potential of every corner of the United Kingdom. That is why we have done everything that we have done so far, it is why we will continue to keep searching for improvements, and it is why we will continue to invest in HMRC’s powers following the forthcoming comprehensive spending review.
The tax system in the UK is hugely complex. Every Finance Bill that comes along adds layers of complexity, leaving a taxation system that is unwieldy and difficult to understand, and even more difficult for the Government and HMRC to control. It leaves loopholes that incentivise tax avoidance and evasion. My SNP colleagues and I have long argued for a root-and-branch review of the entire system, and I am grateful for the opportunity to repeat those calls today.
The Scottish National party will continue to lead the fight against tax avoidance and evasion at Westminster. In the last Parliament, we were proud to secure the House’s support for a Finance Bill amendment seeking a review of the impact of UK tax avoidance measures. We forced the UK Government to accept the need to tackle the abuse of Scottish limited partnerships as money-laundering vehicles, and supported cross-party efforts by the right hon. Member for Barking (Dame Margaret Hodge) and her colleagues to drag the UK Government into the 21st century by adopting Magnitsky powers to sanction overseas officials guilty of human rights violations.
The SNP has just won a landslide of Scottish seats on a manifesto demanding tougher action on tax avoidance, including a review of the closure of HMRC offices in Scotland and across the UK; immediate action, including reform of Companies House, to uncover the beneficial ownership of SLPs and other companies and trusts; measures to improve the transparency of tax paid by international companies to ensure that they make a proportionate contribution to tax revenues; multilateral efforts to address tax challenges resulting from the digitisation of the economy; further action by the UK Government to tackle international tax avoidance; the full implementation of the fifth money laundering directive; a fit-for-purpose online retailer tax; a review of the tax rules governing intermediaries—known as the IR35 tax rules—and problems with implementation of the loan charge; and a comprehensive inquiry into the digitisation of tax, to uncover the reasons for HMRC and UK Government delays which mean that we still do not have the 21st-century tax payments system that could help to tackle avoidance and evasion.
We have heard a great many well-meaning arguments from the official Opposition this afternoon, but, unfortunately, this is a situation to which Labour contributed when it was in power. Instead of simplifying the tax system, it introduced policies such as the IR35 tax rules, which have made staffing extremely difficult for the NHS and other public sector organisations.
While some very welcome action has been taken, no UK Government have yet created a comprehensive anti-avoidance rule. Legislation has come to shut down loopholes as quickly they have appeared, and then, as night follows day, new schemes have emerged to circumvent the law. We saw then, as we do now, plenty of tinkering at the edges of the system but no meaningful action to align taxes for different kinds of workers. Successive Chancellors have passed up opportunities for radical reform, and have simply added layers of bureaucracy and complexities to the existing system. There are now ample places in which those who do not want to contribute can hide within the system.
Last year, Tax Justice UK published a report on the worrying scale of loopholes in, for example, inheritance tax. On the basis of HMRC figures, it states that the vast majority of those tax breaks go to properties worth more than over £1 million; and that is over and above the usual inheritance tax allowance. Instead of benefiting small farms or family businesses, the tax breaks constitute a massive tax giveaway to those who are already very wealthy. The report’s findings only highlight what we know to be true: that this UK Tory Government have ensured that the rich get richer, while at the same time the poorest people in society have experienced real cuts in their incomes, and are less likely to benefit from policies such as the increase in the income tax threshold.
I appreciate that the new Chancellor has not yet had time to outline his plans, and I hope that he will take a different approach. However, the accounts of his professional background by the shadow Chancellor and in this week’s Private Eye lead me to hae ma doots. Extremely worrying noises have been coming from the Government in respect of the post-Brexit regulatory landscape. Already this year we have seen the UK inch closer to the world’s top 10 countries for financial secrecy, rolling back progress made in previous years on increasing transparency. We have all heard talk of a ”Singapore-on-Thames” approach to the City of London. That would be bad news globally, but also for the people who live here.
With a Tory Government full of Thatcherites, who have no interest in creating a level playing field on tax with the EU, there is a real risk that the Prime Minister has set the UK on a race to the bottom on tax avoidance. Just weeks after the UK left the EU, the European Union has added a British overseas territory, the Cayman Islands, to a list of tax havens. Markus Ferber, of the group of the European People’s party (Christian Democrats), has said:
“The UK would be well advised to take note that EU finance ministers put a British overseas territory on the blacklist of tax havens.
This sends a clear signal that the idea of turning the UK into a tax haven will not be acceptable to the EU.”
The Minister who will wind up the debate should explain exactly what he is doing to address that blacklisting as a matter of urgency.
There are already significant holes in the system preventing dirty money from being moved around. My former colleague Roger Mullin and I have spoken on numerous occasions in this place about the problems surrounding Scottish limited partnerships, which still freely allow people to hide and move dirty money between countries.
Scottish limited partnerships have a real human impact. Is my hon. Friend aware that money is being laundered from, for instance, Moldova through SLPs? That is having a hugely detrimental impact. One human rights defender whom I know from Moldova has been driven out of her own country, and is having to live elsewhere.
We must bear in mind that human impact, but we must also bear in mind the reputational impact on Scotland. Scotland wants no part of schemes of this kind, and the UK Government should clean up their act.
I totally agree with my hon. Friend. Anyone who thinks that moving money around in this way is consequence-free should look very carefully at what actually happens to the proceeds of these funds when they are moved around.
SLPs have their own separate legal personality, which means that a firm can contract and own assets without lifting the veil to see who is really buying them. In 2016 the UK Government obliged SLPs to register a person of significant control, but there is virtually no enforcement and virtually no consequences for people who fail to register companies in the proper way. Last time I checked, thousands of partnerships had failed to register a person of significant control. I should be interested to learn from the Government how many fines have been recovered, and the value of those fines.
This scandal is still having an impact, despite legislation being in place. The dogged investigative journalist David Leask revealed in January that SLPs had been implicated in the payment of mercenaries in a private air war in Libya. If the United Nations is taking an interest in the abuse of SLPs, this UK Government should be taking action urgently. A quick Google search reveals umpteen companies advertising their services in setting up SLPs from abroad and extolling the virtues of this tax-free, opaque way of conducting nefarious business. There is no comeback for firms protecting those who will not register a person of significant control, and no comeback for the perpetrators either. It is well known that SLPs are being used for criminal activity and have been linked to international scandals, not least the Azerbaijani laundromat, in which £2.9 billion was laundered through four UK companies, which were able to file paperwork disguising their true ownership without any flags being raised.
At the heart of this is the gaping chasm in our regulatory system that is Companies House. Companies House is obliged only to register companies, not to carry out any verification or due diligence. This must change urgently, because it undermines the credibility of the UK. It is farcical that the only person convicted for filing false information has been a whistleblower, Kevin Brewer, who did it to highlight the nonsense of the registration process. I ask the Minister: what has changed since that prosecution? Why will the Government not reform a system that is open to such flagrant abuses? If I want to do my tax return online or get a passport, I would require to use the UK Government’s Verify scheme. If I want to set up a company, I can do so online for £12 with absolutely no checks. Why do the UK Government insist that people pay so much for driving licences, passports or UKVI applications but so little to set up a company, especially when those companies can go on to facilitate tax avoidance and evasion? It is high time the Tories sat up and took stock of the scale and extent of the tax avoidance and criminal activity linked to the lack of proper checks by Companies House and the abuse of SLPs. Only by doing so can they put forward a practical and effective solution that will adequately tackle the problem.
HMRC highlighted a loss in 2016-17 of between £1 billion and £1.5 billion on digital sales through VAT fraud. I note that the Association of Accounting Technicians has called for online platforms to be made liable for the collection and remittance of VAT. That money is going uncollected. We know where the goods are going—they are going into people’s houses and through retailers—so there is a digital chain there that we can follow. The UK Government should deal with this VAT avoidance.
I also ask for an update on the registration of overseas entities Bill, on whose pre-legislative joint scrutiny Committee I sat. Property is yet another way in which money can be hidden and taxes avoided, and that Bill will be a vital tool to clamp down on the flow of dirty money. The Committee also noted the abuse of trusts—as we close one loophole, another opens—and the Government must look into that as well. Trusts are being used as a means of hiding the true ownership of property and companies.
My hon. Friend mentions the Bill on whose Committee we both sat. She led, admirably, for the SNP on that Committee. Does she recall that it was not until the attack on UK soil, in Salisbury, that the Government really sat up and took notice of the genuine issues that were raised in the Sanctions and Anti-Money Laundering Bill? It should not take an attack on UK soil for the Government to act on these issues.
My hon. Friend is absolutely right. The change of tone during passage of the Sanctions and Anti-Money Laundering Bill was palpable. It really does say something that the Government only really took the issue of dirty money seriously when it arrived on their own doorstep. We cannot wait for that to happen again; we must take action now.
Another area where the UK Government are taking entirely counterintuitive action is in closing local HMRC offices. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) had an Adjournment debate in January on the closure of the Cumbernauld office, and I know that other colleagues share those concerns about the imminent closure of offices in Aberdeen, Bathgate, Livingston and other locations. While I have something of an interest, as the local Member for the proposed Glasgow regional centre, I cannot see the logic in cutting staff numbers and losing not only jobs in communities but the important local knowledge that can be brought to bear. My hon. Friend the Member for Livingston (Hannah Bardell) mentioned that a House of Commons Public Accounts Committee report last year criticised the Government’s lack of robust business planning ahead of the decision to base local HMRC offices in “expensive” cities. It is a colossal waste of public money to move offices into city centre locations where the rents will be significantly higher and the benefits will not be seen.
On the matter of the movement of offices, another important issue is accessibility. A number of members of the union who have spent time in that new, expensive office in Edinburgh have said that the accessibility for people with disabilities is very poor. I wrote to the Government about this before the election last year but I got a very poor response. Does my hon. Friend agree that these new, expensive offices should at the very least be accessible, and that they should not have been moved in the first place?
I agree. There is a strong argument that the value of the local offices in communities such as Livingston and Cumbernauld is significant. It is much easier for people to get to work there rather than commuting, which of course adds to the environmental damage. It is much better to have a shorter commute to work. The PCS union has also criticised the move and called into question HMRC’s rationale, as has my hon. Friend the Member for Glasgow South West (Chris Stephens), who may have more to say on these things later.
All of this comes at a time when the head of HMRC says that the authority may need to hire an extra 5,000 staff to deal with the logjam at the border because of Brexit. This is a time of growing complexity, and investment in staff and expertise is crucial. Without that expertise, the UK Government are leaving themselves open to a further loss of tax revenue and further potential evasion and avoidance as we head into Brexit.
It is only right that people should pay the taxes that they owe, but HMRC’s botched implementation of the loan charge is nothing short of a disgrace, leaving many people facing the prospect of bankruptcy. The UK Government must, of course, pursue vigorously the organisations that have facilitated those loans, and they must work constructively with those who are seeking a responsible and reasonable repayment plan—one that recoups the unpaid tax while avoiding the unacceptable risk of bankruptcy and homelessness. If HMRC cannot deliver that, an independent arbitration mechanism should be used.
This is not some kind of academic argument. This issue has implications for the real world, for the money available to our public services and for the growing gap between rich and poor. The shadow Chancellor set out the limitations of HMRC’s estimate of the tax gap at some £35 billion. There is a real implication here for all our constituencies when we see cuts coming down the line. Paying tax is a duty. It is the price of a fair society, not a burden to be avoided. Those who seek to avoid and evade their responsibilities, and those who facilitate their behaviour, need a strong message from the UK Government. The Government must explain why they are failing to stop the siphoning away of money that could be paying to educate children and care for the elderly. The SNP is committed to clamping down on tax avoidance and evasion, but we do not yet have the full economic levers to do so as they are still held by the Treasury and HMRC. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) has pointed out on many occasions that small countries are much better and more efficient at gathering tax, so I suggest that if the UK Government will not act, they should devolve the powers to Scotland and let us get on with the job of building a fairer society.
This is an important subject for debate this afternoon, first because we need tax receipts to fund our public services and, secondly, because as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) said, people expect to see fairness. They expect to see everyone and every entity shouldering their fair share of the burden. Sadly, there are people who have an interest in trying to get round the system and to cheat the system, and they strive harder and harder every year to do so. We live now in a more complex world and a more complex new economy that is more multinational, more digital, more services-based, and that can create new opportunities for those organisations and people.
However, the gap is much bigger and older than that. According to HMRC’s own estimates, the biggest part of the tax gap is about individuals and organisations failing to take reasonable care, followed by legal interpretation, illegal tax evasion and then the exploitation of loopholes through avoidance. It is important to note that all economies suffer a tax gap. According to a UN World Institute study in 2017, the world loss from tax avoidance was estimated at $500 billion. That is not the whole tax gap; it is the element that results from avoidance. Proportionally, the countries that suffer most are not wealthy countries such as ours but low income and lower middle income countries. According to analysis by Statista of the total loss, the countries that suffer the biggest loss are the United States, with more than $180 billion; Japan, with somewhere around $50 billion; and France and Germany, with between $15 billion and $20 billion. According to the analysis, the UK was at that time down at somewhere below $2 billion. One can quibble about the detail of the methodology, but it would take a massive error and correction to put the UK close to some of those comparable countries.
Overall, the UK tax gap is less than 6%, as my right hon. Friend the Chief Secretary to the Treasury said, and one of the lowest in the world. It is also one of the most accurately measured in the world. Some members of the Opposition Front-Bench team—they have gone now—were muttering earlier, “You’ve been in government for 10 years. What have you been doing?” Well, we have been bringing down the tax gap. If we compare the tax gap in 2005-06 with 2015-16, it has come down from somewhere close to 8% to somewhere under 6%. It is still a big issue to be tackled, and I am pleased and proud that this Government are redoubling their efforts and leading internationally in that regard.
All countries do some degree of tax competition, either explicitly or implicitly, and our tax regime is one reason why we have attracted many international companies to base themselves here, create jobs and grow our economy. However, I am afraid to say that many companies do try to reduce their tax. Sometimes, they say that they have a fiduciary duty to their shareholders to do so, but Governments also have a fiduciary duty to their shareholders: our citizens and our taxpayers. We simply cannot have the sort of aggressive tax avoidance that we have seen from some companies, because our public services rely on tax receipts. There will be battles over what constitutes economic activity and over what is a legitimate location for intellectual property, but our argument is simple: “If you benefit from our economy, you must contribute to our economy.”
Since 2010, more than 100 measures have been taken on evasion, avoidance and non-compliance. On enforcement, HMRC’s litigation and settlement strategy was refreshed in 2011. The office of the Tax Assurance Commissioner was established in 2012. Now, we are committed to new anti-avoidance measures, including increasing the maximum prison term, a single beefed-up unit in HMRC and a new package of anti-evasion measures.
Just as important—in fact, it is probably more important —is the work that this country has been doing internationally under Conservative Governments. That started with the 2012 joint statement with France and Germany calling for reform of international tax rules, given that our current system effectively dates back to the 1920s. We used our G8 presidency in 2013 to drive forward the G20 OECD agenda on base erosion and profit shifting—the so-called BEPS project. We were the first country to commit to the country-by-country reporting template and the first to adopt OECD rules to address hybrid mismatch.
I was proud of the 25% diverted profits tax in 2015, and I am proud now that this Government are pushing ahead with the digital services tax. We have always been clear that we would prefer international agreement, but if that is not possible, we will go it alone. If international progress now makes the digital services tax obsolete, great. That would be the best outcome of all, but if it does not, unless and until that is the case, we are right to proceed.
There is important work on avoidance, evasion and non-compliance, but what we cannot do, as we sometimes hear from Opposition Members, is to pretend and mislead people that overcoming this kind of cheating and making the system work better will solve all our fiscal challenges. The same goes for pretending that it is possible for just about anything to be paid for by “the rich” and “corporations”. In the end, all taxes are taxes on individuals. On company taxes—corporation tax is part of a suite of taxes alongside VAT, national insurance and business rates—it is right to offer companies an attractive rates of corporation tax that reward investment and job creation, but they must invest in their people’s skills, which is why we have the apprenticeship levy. We must also ensure that people are paid properly, and that is why we have the national living wage.
I commend the Government for their world-leading work. There is always more to be done, but I will vote against this misleading motion.
I welcome the debate this afternoon so early in the new Parliament, but the importance of tackling aggressive tax avoidance, tax evasion, economic crime and money laundering cannot be overstated, and this debate will not go away until the Government are seen to have taken far more action, not just uttering warm words of support in principle but demonstrating firm action in practice.
There is a lot of money at stake, and that is not just reflected in the tax gap, as others have suggested. The tax gap does not measure the money that we should be collecting in tax from, for example, the profits from the activities that big digital companies undertake here. Looking simply at the tax gap, as currently defined by HMRC, is not enough if we are serious about tackling tax avoidance, tax evasion and economic crime.
As I said, a lot of money is at stake, which is important when we have a new Government who have pledged to restore some of the cuts that they have implemented over the past decade and to invest in services and who want to level up living standards across the country. Fairness is at the heart of this debate, as has already been said. It is not about castigating the rich or anything like that; it is about ensuring that everybody pays their fair share of tax. Everybody should contribute to the common pot for the common good from the wealth they own or the income they receive. It is about ensuring that everybody is treated equally before the law. Until everybody in the nation, particularly the 85% who pay their tax automatically through the PAYE system, can be sure that there is fairness in who pays tax and how much they pay, we will not be able to raise the necessary revenue to fund the services that this country so desperately demands.
I urge the Government and the Chief Secretary to the Treasury to listen carefully to what is being said in today’s debate. There is a cross-party consensus on many of the issues, and the Government need to heed that. They will be unable to ignore the voice of Parliament, despite their increased majority, because to do so would be morally wrong and totally unprincipled.
Let me give a figure that has not been mentioned so far. The National Crime Agency estimates—the figure has not changed and, if anything, has gone up—that about £100 billion of illicit money flows through Britain each year. We have become the jurisdiction of choice for too many kleptocrats, too many criminals and too many people who want to launder their money. We will never build a global Britain on the back of dirty money. Post-Brexit Britain will not prosper by, at best, ignoring the extent of the problems of avoidance and economic crime or, at worst, facilitating it.
I ask the Government to respond to four current concerns. In 2018, the right hon. Member for Sutton Coldfield (Mr Mitchell), who is in America talking to elected representatives about how to tackle evasion and avoidance, and I led a successful cross-party campaign to place on the statute book an obligation on overseas territories to provide public registers of beneficial ownership. In 2019, the Crown dependencies, recognising that the will of Parliament was to include them in the legislation, voluntarily agreed to come along with that. We accepted a concession that registers should be implemented by 2023—too late, but it was better to have the scheme accepted by all parties. I remind Members of why the change is so important. We have already heard today that half the entities named in the Panama papers were registered in just one of our overseas territories: the British Virgin Islands. Secrecy enables wrongdoing, and we must understand that.
Our Crown dependencies are as complicit as the overseas territories, and I have two examples: Silvio Berlusconi was accused of bribing two judges, and the payments were allegedly made through a secret offshore branch of the Berlusconi empire, with funds sent to the judges’ bank accounts in Switzerland through a Jersey-based company; and Bono used a company in Guernsey to hide the profits he made in Lithuania.
We need public registers of beneficial ownership in both the Crown dependencies and the overseas territories. Transparency is a key tool in tackling evasion and economic crime. Global Witness has shown a thirst for open access to company data. Since 2015, when the paywall came down on UK company data searches, there have been, on average, 2 billion searches a year, compared with just 6 million a year before the pay wall came down. It has been used by individuals, investigative journalists, campaigning organisations and the voluntary sector, and it has been used by businesses to try to ensure other businesses are treated fairly.
What support have the Government now put in place to help the overseas territories and Crown dependencies implement public registers? Will the Minister confirm the 2023 date this afternoon? Has he taken any steps to bring that date forward? That would be perfectly possible.
Research from Tax Watch shows that, between them, the big five global digital companies—Google, Cisco, Facebook, Microsoft and Apple—paid £240 million in corporation tax in 2018. They should have paid £1.3 billion according to Tax Watch’s calculation of the activity they undertook here, the profits they made here and, therefore, the corporation tax bill that was liable here.
The Government’s proposed digital services tax is the beginning of an answer, but, by 2023, it will raise only around £400 million, which is a tiny start to ensuring that these large global corporations pay a proper amount of tax on digital services. It makes me so angry, because these companies are as dependent as anybody else on the services our tax provides. They need a well-educated workforce, which is provided from taxpayers’ money; they need a healthy workforce, which is provided from taxpayers’ money; and they need infrastructure—whether roads, the internet or whatever else—which is often also provided from taxpayers’ money.
I am sorry to interrupt the right hon. Lady because she is making a valid point that those who are the most enthusiastic in giving advice about how to dodge taxes are often people who, in a previous life, benefited from other people’s taxes. Does she believe there is a bit of inconsistency in that some Members of Parliament who get significant support from tax advisers who promote themselves on giving advice about how to legally avoid taxes are themselves paid very handsomely indeed from other people’s taxes?
I am unaware of that specific allegation, but I will come on to facilitators, advisers and enablers who get away with far too much.
The only way we will start ensuring that digital companies pay the right amount of tax is by implementing country-by-country reporting. I asked the Chief Secretary and he did not reply, so I hope the Financial Secretary will reply to the question in his winding-up speech. When will this Government implement the country-by-country reporting that will allow us to see what activity takes place here, what profits are made here and, therefore, what fair tax should be paid here?
I reiterate to the Financial Secretary an issue that I raised with him in an Adjournment debate a couple of weeks ago, and to which he failed to reply at the time. Netflix has so far avoided public scrutiny, but it exports its profits by ensuring that subscribers pay into a server located in Holland. We reckon Netflix earned about £1 billion last year and paid no corporation tax, but in over two years it has benefited to the tune of £1 million from the high-end television tax relief. Not only was Netflix not paying tax, but it was benefiting from what is, in effect, a grant to encourage the production of content here in the UK.
I welcome such reliefs, but it seems utterly unacceptable that companies should benefit from grants offered through tax reliefs here in the UK yet behave in such an appalling way and refuse to pay their tax here. Now that we are Brexiting from Europe, surely it is not beyond the realms of possibility to introduce legislation so that companies will be eligible for such tax reliefs only if they show responsibility in how they behave and in paying their fair share of tax.
The other thing that really gets me with many of these American-headquartered companies is that the Americans, under Donald Trump, extract tax from profits earned through activity undertaken here in the UK. They extract tax at a lower rate but, nevertheless, they are getting more tax than we are, which is unacceptable. Americans are profiting from tax on profits and intellectual property created here in the UK.
I again ask the Minister what I asked him in the Adjournment debate and to which he refused to respond: will he extend the digital services tax to include streaming services? Will he stop those who deliberately avoid tax having access to grants and tax reliefs?
The hon. Member for Glasgow Central (Alison Thewliss) talked about creating a register of beneficial ownership of property, which David Cameron first promised us five years ago. Why is it important? The last figures I could get show that getting on towards 90,000 properties across the UK are owned by companies incorporated in tax havens.
The purchase and ownership of properties has become a key way in which money is laundered into the UK. Transparency International has established that one in 10 properties in just one London borough—Westminster —is owned by a company registered in an offshore secrecy jurisdiction. Private Eye claims that one in six properties sold in Kensington and Chelsea was bought by a company located in an offshore tax haven. This is a key way in which people launder money here.
The electoral register of Kensington and Chelsea is interesting. There has been a 10% decline in the register over the past decade or so, whereas registers have increased everywhere else in London. Why? Because people buy the properties and leave them empty. They simply use the purchase as a way of laundering money, and we know lots of that money comes out of Russia—about £70 billion has flowed out of Russia into the UK in the past 10 years.
When are we going to see that legislation? When will it be put before the House? When will we see the promise made a long time ago by a Conservative Prime Minister fulfilled by this Conservative Government?
Finally, the hon. Member for Glenrothes (Peter Grant) mentioned the role of advisers. It is the advisers who create these schemes. Whether they are banks, accountants, lawyers or just advisers on their own, they found schemes that are later deemed to be unlawful. Film tax credit and, most recently, the loan charge are good examples of schemes that have caused terrible hardship to people. I feel ambivalent about it because, of course, there is never something for nothing, and people should have been much more careful before they entered into such schemes. Nevertheless, they have led to suicides—they have been terrible schemes. Advisers always get away scot-free, whoever they are, and none of them is held properly to account. The law in this policy area is just too weak. In criminal law, we have to prove dishonesty to pursue a criminal prosecution, which is very difficult. In civil law, the penalties are ridiculously low and are limited to the amount of fee that the adviser would have gained. There is also what is known as a double reasonableness test: it cannot be regarded just as an unreasonable course of action; it also has to be demonstrated that it was unreasonable to think it was reasonable—I hope that makes sense to Members.
The calling to account of advisers, enablers and promoters would be a powerful tool. At a stroke we would kill off many of the schemes that are currently exploited, which lead to such tax loss in this country. I urge the Minister to bring forward legislation to toughen up the regime and to make it easier to hold the advisers, enablers and promoters to account.
In conclusion, it is vital to battle against tax evasion—it is vital to demonstrate fairness in our system, to ensure the proper funding of our public services, and to the building of a global Britain that is respected around the world for its values and integrity and that is seen as a good place to do business. The Government will pay a heavy price if they fail to respond properly to the issues that have been raised in this debate. They must not just give us warm words; they have to give us tough action. I hope that in my short contribution I have given the Minister some good ideas that he could easily implement and that would make the world of difference. I urge him to have regard to them.
Order. I am delighted to call to make her maiden speech, Nicola Richards.
Thank you very much, Madam Deputy Speaker.
The subject of this debate is clearly an important one that I know the Government are working hard to address. We are already amending the law so that from July taxpayers and their advisers will be legally required to report details of certain cross-border arrangements that could be used to avoid or evade tax.
I shall now begin my maiden speech, and I do so with great pleasure as the first Conservative to represent West Bromwich East since 1931. Let me say a little about my background. I was the first in my family to go to university, I went to my local comprehensive and my parents very much taught me the value of hard work. My first job was at Halfords—some would say it was a little taster of a career in what some could call a man’s world. When I began applying for universities, my father helpfully told me that I had to do something different from every other person my age. I somehow found my own path.
I started by doing work experience with the former Member for Dudley South, Chris Kelly. That was the start of a whirlwind of political experiences that led me to this point, because his then office manager, now the leader of Dudley Council, made it his mission to turn me from a shy 16-year-old into a fearless political activist. Councillor Patrick Harley has a lot to answer for. At 19, I stood in my first council election for Dudley Council, and aged 20 I was elected. It was a truly unforgettable experience that I know stands me in good stead in my new job.
I have been honoured to work with other MPs, too, including my hon. Friend the Member for Dudley South (Mike Wood), and I am proud to be a vice-chair of the all-party group on beer, of which my hon. Friend is a true champion in every sense of the word. And of course I worked for Margot James, the former Member for Stourbridge—I am pleased that Margot can be here today.
Fast forward to 2019 and I found myself in the most privileged position that I could have only dreamed about: standing for election in West Bromwich East. Throughout the election, it is safe to say that I was kept well fed, whether at Special Spices, Sagar’s on West Bromwich High Street, the Vine, the Red Lion or the Spinney. I had the pleasure of introducing the then Chancellor to small businesses in my constituency and taking him for the Red Lion’s famous mixed grill. I am proud to say that my right hon. Friend the Member for Bromsgrove (Sajid Javid) said that it was the best food that he ate during the whole campaign.
Thanks to my friends Guvinder, Senna, Jeet, Sat and Vicki, there was not a day that a samosa did not pass my lips; in fact, I may have to purchase my predecessor’s new fitness book to rectify this. On a serious note, I would like to wish Mr Watson all the best for his future. In his own maiden speech, he spoke about West Bromwich being known as the “Spring Town” for its manufacturing of springs. Although people may not know about that these days, West Bromwich Albion fans still nod to our history when they shout “Boing, boing!” at our matches.
We are our own distinct slice of the Black Country bordering Birmingham, and we are proud of it. Like many other towns in the area, we have a rich industrial history that people are proud of. The future of our industries and their success will be at the forefront of my mind over the years ahead while we negotiate trade deals. We can also lay claim to a number of interesting figures in history, one of whom was John Wesley Westwood, a West Bromwich cellist who played on the Titanic while it was sinking in an attempt to calm passengers. I am not sure how calm that would have made me feel, but it is a nice story anyway.
My constituency voted to leave by 68% in the European referendum. It was an honour to vote for the Prime Minister’s withdrawal agreement as the first piece of legislation I ever voted on. Brexit has really tested the public’s patience, and trust in politicians in Sandwell as a whole has hit rock bottom. It is the epitome of a place that feels left behind. People in Sandwell have been let down by a council more concerned about party politics than improving things for the better. That is what comes from not having any opposition—a situation we will be putting an end to this May. Although I am a representative of West Bromwich East and every person who lives there, MPs should not have to be the de facto opposition to their local council.
One gentleman who is highly regarded—perhaps because he is not a politician by trade—is our Mayor Andy Street. Andy was on the levelling-up agenda before it became cool to talk about. He is a machine who will not stop until transport in the west midlands is up to the standard we require. He is passionate about solving the issue of homelessness and is working hard to improve our town centres, including West Bromwich. He is helping us to develop housing on brownfield land to ensure that the next generation have access to the housing they need to live and thrive in our region. Every day, everything he does is to champion the very best region in our great country, of which West Bromwich is obviously the best town.
Back to the election. Brexit was not the only issue raised with me on the doorstep. I was amazed, and in some ways reassured, by the number of constituents who mentioned to me the rise in antisemitism in the UK. I have had the immense pleasure of working with organisations such as the Jewish Leadership Council and the Holocaust Educational Trust. The work that Karen Pollock MBE and the team at HET do day in, day out is nothing short of inspirational. Holocaust survivors regularly recite the darkest days of their lives in order to ensure that the next generation become witnesses to the truth. It is astonishing that we still have to defend the fact that the holocaust happened, but we do. It is a dark theory that we have to tackle on the far left and the far right. Although sometimes the scale of the task is overwhelming, we cannot and will not give in. I have met holocaust survivors and I have seen the pain caused by the rise in antisemitism. I am pleased that my constituents share the view that leaders must lead on these issues. On that note, I pay tribute to the first Member of Parliament I ever met: the former member for Dudley North, Ian Austin, who has been a true champion for the Jewish community in some of their most difficult times.
West Bromwich East is one of the most diverse constituencies, and I say that with immense pride. We have gurdwaras, mandirs, mosques and churches. We are a place that prides ourselves on our fantastic Desi pubs, the owners of which started up their businesses when community tensions were high. Through successful entrepreneurship and a love for their community, every single day they bring people together for a pint of beer and a curry. Because of that I am proud and never hungry, and it is the reason you will find me on a Saturday morning at Sandwell Valley Park taking part in the park run.
It is difficult to mention my constituency without talking about our beloved football team, the Baggies. The late Cyrille Regis is a particular hero of our area, and it is difficult to mention his name without talking about the huge impact that he had on football. He joined the club at a crossroads for English football. With fellow black teammates Laurie Cunningham and Brendon Baston, the trio were given the nickname the “Three Degrees” and were targeted with a lot racist abuse. But at a time when football clubs would rarely give opportunities to players of diverse backgrounds, West Bromwich Albion saw great talent in these three men and were keen to showcase them. That is the spirit that I want us to be remembered for.
I know that winning seats like mine will change my party and this Parliament for the better. The average healthy life expectancy in West Bromwich East is poor. It means that my constituents are more likely than most others to spend more of their life in ill health. That can be linked back to people leaving school with no or very few good qualifications. When we talk about levelling up, it means creating the jobs for areas like mine where there have been decades of poor unemployment rates; improving transport infrastructure, which will be boosted by the long-awaited and much-deserved HS2; and doing everything that we can to improve people’s health, including improving air quality.
So much also rides on ensuring that everybody in West Bromwich East has access to a good education. We need an injection of hope for the next generation in West Bromwich. I want people to have access to a good education that shows them the many opportunities that we have available in our great region.
I should like to finish with the words of J. B. Priestley. Although I do not agree with his socialist principles, I do agree with him when he wrote:
“If I were compelled to choose between living in West Bromwich or Florence, I would make straight for West Bromwich.”
First, let me congratulate the hon. Member for West Bromwich East (Nicola Richards) on her maiden speech. I particularly enjoyed her contribution on West Bromwich Albion and the three trailblazers she mentioned. Cyrille Regis and others did blaze a trail for many in our society, but they obviously had to combat some racism too. One organisation that I am involved with in Parliament is the Show Racism the Red Card all-party group, and I hope that she will consider joining it. Again, I congratulate her on her maiden speech.
The importance of this debate is to show how we deal with certain issues as a society. How does a country treat its poorest and how does it treat its richest? How do we treat the vulnerable who are having their benefit payments cut? Public services are under-resourced, infant mortality rates are increasing, and life expectancy is faltering. Then, of course, there is the use of food banks and food aid provision by more than 1 million people. In contrast, there are others in society who benefit from sweetheart deals.
I intervened on the Chief Secretary to the Treasury to ask him about HMRC’s resources. In fact, I will concentrate most of my remarks on that issue and on how we tackle tax evasion and avoidance. There is absolutely no excuse whatever for HMRC’s wealthy unit—the body responsible for dealing with tax avoidance and evasion—to have had 80 posts cut in one year, from 2018 to 2019. Let me put that into perspective. There are 961 full-time equivalents in HMRC’s wealthy unit, as opposed to the 1,400 full- time equivalents who are hired by the Department for Work and Pensions to tackle social security fraud. Let us contrast the figures. Social security fraud is estimated at £1.2 billion, yet the Department has more resources to tackle that matter than HMRC’s wealthy unit has to tackle tax avoidance and evasion. The only difficulty that I have with the Opposition motion is that it underestimates the amount of tax avoidance and evasion that takes place. A report from the Tax Justice Network and the Public and Commercial Services Union estimated that the figure could be as high as £112 billion. When it comes to the actual tax gap and what is missing from the figures, what those on the Treasury Front Bench have not mentioned is the profit-shifting that is going on. Fairly high-profile, large global companies are involved in that activity.
One would think that on an issue such as chasing a large amount of unpaid money, the Government would ensure that the Department was resourced accordingly, and that over the past 10 years, more resources, not fewer, would have been pumped into HMRC. As both the shadow Chancellor and my hon. Friend the Member for Glasgow Central (Alison Thewliss) have said, the number of HMRC staff has reduced over the past 10 years from 105,000 in 2010 to 62,000 today—a loss of 40,000 jobs. A Department whose sole responsibility is to bring in revenue should tackle that issue and get some more answers from the Government.
The Government are engaged in the “Building our Future” programme. Frankly, it is a disastrous programme, which has HMRC reducing its offices from 170 to 13 regional centres with five specialist sites. Some of our towns and cities across the UK will lose their largest employer, so where was the economic impact assessment of that programme, and where was the equality impact assessment for employees with disabilities who are being asked to travel more than 100 miles to their new office?
Legislation and regulation are badly needed, but they can work only if HMRC is properly resourced. We cannot have a situation where 14 million people are in poverty. We need real answers and real solutions now. If there are staff reductions as a result of that programme and new staff cannot be attracted, that would suggest that there is, perhaps, a problem with pay and terms and conditions. If that is the case, the Government really need to address those problems. I hope that the Minister, when he sums up, will say a bit more about how HMRC is being resourced, and that if there are resources problems, he will say how we as a House can help tackle those issues.
Order. I am delighted to call Suzanne Webb to make her maiden speech.
Thank you, Madam Deputy Speaker. I am thrilled to be standing here today in this great place—the mother of Parliaments—as the hon. Member for the Stourbridge constituency, which is the jewel in the crown and the beating heart of the urban west midlands. It is a constituency with a rich history in glass making; the beautiful Mary Stevens Park; a market town of residential streets interspersed with green spaces; and the stunning Old Swinford Hospital, which is now a school. Only my constituency could have a branch line that is a mere 0.8 miles long. Not even a model railway can compete with that—nor, it seems, can a main line, as I am reliably told that it is the most efficiently on-time train service in the country.
My constituency is the true face of conservatism, defined by the warmest, kindest, and friendliest people. They are hard-working and talented individuals who recognise the importance of responsibility and have pride in their own ability to make something of themselves. My predecessor, Margot James, understood that well. She was the MP for Stourbridge for nine years. She rose up the ranks fast and served Stourbridge well. Some may not agree with her view on Britain’s role in the EU, but that should not distract from her overarching sense of responsibility. In her maiden speech, she said:
“The people of the black country and Stourbridge hold on to certain basic truths that are not just old-fashioned notions that can simply be cast aside…that one should never borrow what one cannot pay back, that we should not foster a culture in which people are led to expect something for nothing”.—[Official Report, 7 June 2010; Vol. 511, c. 61.]
Those are principles that I share with Margot.
I chose to speak in this debate as the Government are committed to ensuring that everyone—whether as an individual or as a business—pays their fair share of tax and understands their responsibility to do so. The Government are, after all, the custodians of taxpayers’ hard-earned money. They have an obligation to spend it as wisely as if the taxpayer were spending the money themselves. Of course, many here will recognise the hand of Mrs Thatcher in those principles. Indeed, it was Mrs Thatcher who changed my world order and who shaped my political thinking. On 4 May 1979, as a teenager, I woke to a Conservative Government. The established political order had been demolished overnight as swathes of the UK turned blue. Fast-forward 40 years and not only has history repeated itself, but the Conservative party has doubled down on Mrs Thatcher’s extraordinary reshaping of our political landscape, with a resounding 80-seat majority.
I would like to take this opportunity to say congratulations to all my hon. Friends whose seats are Tory for the first time in history, from Scunthorpe to West Bromwich West and Dudley North. There are too many for me to mention them all. I thought that 1979 was special, but 2019 was something else. I am thrilled to be sharing these Benches with so many friends and colleagues.
Let me go back to 1979 and the start of my political awakening. A few days after that historic election, my two brothers and I were talking to nan, who, it remains the truth, made the best lemon meringue pie on this earth. My nan and grandpa never spoke to us about politics—ever. The money was on them being lifelong Labour voters, and so it had proved, but, on that fabled day, nan confided to us that she and grandpa had chosen to vote Conservative for the first time in their lives. She said they did so because it was about responsibility. Nan loved Mrs Thatcher’s ethos that the Government are the custodians of taxpayers’ hard-earned money, paid in tax by the likes of my school dinner lady nan. She related to Mrs Thatcher’s simple message that espoused the individual values of ownership, having a society of savers, and the responsibility and accountability of Government to respect and reward this. Nan shared the simple value that it is the responsibility of individuals to take pride in their own ability to make something of themselves—a value that she lived by for the rest of her life.
These values were espoused by my parents, affectionately known as Mac and Babs, and passed down to me and my two brothers. My mum was a teacher and my dad was a white-collar worker. Both were hard-working, resilient and committed to ensuring that their kids had a good education. They created the conditions whereby a comprehensive girl could go to university, own her own home, have a career working across global markets for more than 29 years, and, of course, stand here before the House as the MP for Stourbridge; and whereby one brother went on to become a lawyer and the other a headmaster.
Those values taught me the importance of hard work, resilience and a good education—an education defined not just by academic achievement, but by running for the county and by volunteering for Phab leading one-week holidays for more than 10 years, which I loved with a passion. Fast-forward 20 years: I want to continue this passion to ensure that places of employment become disability confident. The voluntary party has played a big role in who I am today, and I want to say a special thank you to all those who helped and supported me; you know who you are. You can take the girl out of the voluntary party, but not the voluntary party out of this girl. I will continue to support it with the passion with which it has supported me. And so it remains true—as it remains the truth that my nan made the best lemon meringue pie ever—that it is the responsibility of individuals to take pride in their own ability to make something of themselves, and it is with that same pride and responsibility that I will serve my constituency.
With the backdrop of our Prime Minister’s instincts towards opportunity, egalitarianism and one nation Conservatism, it is the opportunity of a fourth industrial revolution that I want to seize in the urban west midlands —a revolution of gigabytes. We have the commitment from the Government for HS2. We now need the commitment to bring the gigabyte factory to the heart of the economic renaissance in the urban west midlands led by the magnificent Andy Street.
We should be bolder when it comes to climate change—not the prophets of doom, but the pioneers of change. I refer specifically to the green belt, which is under much pressure in my constituency. I have long championed the protection of the green belt, and I know that we can do things differently when it comes to building houses. After all, these green spaces are the lungs of this great country. If we are serious about climate change, we need to start thinking differently about how we plan for our future homes and cities, and—importantly—about how we can protect those vast green lungs with fair funding for remediation, and focus on the regeneration of brownfield land.
We need to tackle knife crime—a terrible crime that Stourbridge has witnessed at first hand. My thoughts are always with the Passey family, and I will continue to support the Justice for Ryan campaign until justice is indeed done.
I am a proud midlander, and in true midlander speak, these are pretty bostin’ times. For those who do not know, “bostin’” means amazing and brilliant. Throughout this speech, I have talked about responsibility, whether as a Government or as an individual, and about taking pride in everything we do. I am proud to be part of a Government who understand their own responsibilities: towards fiscal conservatism, advocating low taxes while understanding their obligations to schools and further education; to the NHS, security and policing; to facilitating conditions that are beneficial to the business community; to their solid commitment to the transport infrastructure of the future; to their unwavering commitment to one nation Conservatism; and to those who lent us their votes in 2019. It will be my responsibility—one that I will not take lightly, but with great pride—to ensure that the Stourbridge constituency is a key beneficiary of this fantastic one nation Conservatism, which has its heart firmly rooted in this great and united kingdom.
It is a great pleasure to follow the maiden speech of the hon. Member for Stourbridge (Suzanne Webb). My constituents in Richmond Park will have listened with great envy to tales of an efficient, on-time train system, so I thank her for that.
The most recent estimates of the tax gap in the UK—between what is due to HMRC and what is actually collected—are in the region of £35 billion. As a proportion of overall tax owed, this is just over 5.5%. The proportion has actually fallen in recent years, but this needs to be set against a backdrop of increasing austerity, which impacts disproportionately on the poorest in society. If the Government’s goal is to balance the books, they need to collect all the money they are owed with the same rigour as they manage their expenditure. A society that is quick to sanction those who fall foul of the rules on claiming benefits should be just as quick to penalise those who avoid paying their fair share of tax. As parliamentarians, our interest in the tax gap should not be in its size, its proportion as a share of tax collected or its comparison to prior years, but in the efforts taken by the Government to reduce it, as an indicator of their commitment to fairness and the equal treatment of every citizen, regardless of their income.
As we transition from our membership of the European Union to whatever we are headed towards, attention must be focused on anti-money laundering regulations. The proposed sanctions and anti-money laundering legislation would give Ministers powers to scrap existing EU regulations and replace them with UK laws. The Liberal Democrats are concerned that enthusiasm among some on the Conservative Benches for a bonfire of regulations—a “Singapore-on-Thames” style, low-tax, low-regulation UK economy—will result in these new regulations been watered down, to the benefit of those who would prefer less intrusion in their financial affairs. What assurance can the Government give us that the UK outside of the EU will clamp down just as firmly on tax evasion as it did when it was within EU structures?
The Conservatives’ previous attitude to tax havens does not inspire. Sir Vince Cable, while Business Secretary during the coalition, introduced a “people with significant control” register for anyone who owns more than 25% of a UK registered company, or otherwise exercises significant control over it. These PSC registers were due to be extended to cover the British overseas territories, until they were vetoed by the then Prime Minister, David Cameron, after intensive lobbying. Will the same forces be brought to bear on our post-EU anti-money laundering regulations? Will the Conservatives stand up for the ordinary taxpayers of this country and put in place robust measures to tackle financial crime?
The Liberal Democrats called for the extension of the register of beneficial ownership to all British overseas territories so that accurate assessments of tax owing can be made. Companies that do not voluntarily disclose this information should be barred from bidding for Government contracts, on the basis that companies that may be avoiding contributing to the public purse should not be expected to benefit from it. Furthermore, HMRC should be properly resourced so that tax avoidance can be identified and redressed. With tax inspectors stretched to the limit, too many claims go unscrutinised and too few spot checks are carried out. The Social Market Foundation estimates that under-reporting is considerably more prevalent than current analysis suggests, and that the tax gap may in fact be much wider than the stated £35 billion. The 2019 Liberal Democrat manifesto called for a general anti-avoidance rule, under which all the little loopholes and anti-avoidance measures could be prosecuted without specific legislation. HMRC could make far greater progress in closing the tax gap if it had sufficient legislative tools. A Government committed to levelling up and treating all taxpayers fairly would introduce such a measure in their forthcoming Budget.
I confess to a little wry smile when the Minister mentioned the Making Tax Digital programme and its hoped-for success in reducing the tax gap. Before I was elected to this place, I was the financial accountant for Historic Royal Palaces. In that role, I was responsible for introducing Making Tax Digital into the organisation, and I have to say that although it was successfully implemented and the organisation is now reporting under that regime, the implementation was significantly held up by the very poor drafting of the legislation that introduced it.
The tax gap needs to be closed. This is money that belongs to us and to our constituents. Week after week, we all see the consequences of too little money in our public services. The tax gap is money taken out of the pockets of the poorest in society, and the Government must not sit back and allow this to happen.
I am afraid that I have to impose a time limit of six minutes with immediate effect. This way, everyone will get a chance to speak.
Let me start by congratulating my hon. Friends the Members for West Bromwich East (Nicola Richards) and for Stourbridge (Suzanne Webb) on their excellent maiden speeches. They certainly brought a crowd to a tax debate, which we perhaps do not always see.
It is a pity that we have such a divisive, political motion today. There is a lot of cross-party agreement on this issue, but as there is clearly no way any Conservative Member will be voting for the motion, we have lost a chance to show that agreement. A fairer summary of the current situation would have been that for 15 years or so, successive Governments have been trying incredibly hard to tackle this and have made significant progress, yet there is still a hell of a lot more to do. It is fair to say that we have been running as fast as we can and largely stood still. As the Minister said, we have introduced 100 or so measures in the past 10 years, and yet the tax gap is at a similar percentage to what it was at the start of that period.
At some point, we will have to accept that we are papering over the cracks. We will have to reimagine our tax system to work out what we are going to tax and how we are going to collect that money. The longer we try to perpetuate a system that was effectively based on taxing people, property and profits, the longer we will keep finding that all those things are under real pressure. Adding in the fact that, with regard to all the sins that we tax quite extensively, people are stopping sinning in those ways, we are going to find a large budget gap. The solution to this in the long term is to rethink what we tax rather than just keep adding another 500 pages of Finance Bill every year and wondering why the single biggest part of our tax gap is in legal interpretation or error. That is partly because we cannot follow the rules, do not understand them and cannot comply, or because they are so complex that we end up creating conflicting bits and loopholes that people can then exploit. There must be a better way of doing this if we really want to get the tax gap down to the sort of level we want.
It is important to stress that £1.8 billion, or 5%, of the tax gap is now down to avoidance. There is no way we can legislate our way out of avoidance and get the tax gap down. The majority of the tax gap is now on different taxes. VAT is the largest tax where there is a gap. The largest group of taxpayers who are not paying all the tax they owe comprises small businesses. We need a whole different approach to this.
As I said to the Minister at the beginning, we could start by setting a target for what we think we can get the tax gap down to, so that we can then measure how effective we are being. A relatively gentle target would be to get it down to 5% in the next five years. That would raise about £4 billion a year—a significant amount of money going towards the public services. That is not an impossible target. Looking at the history of our performance, we see that we are bumping along at somewhere between 5.5% and 6% each year, depending on the calculation.
What else can we do? Lots of people have talked about the need for more transparency through the various measures on the public registers and country-by-country reporting. There is no reason why we cannot turn on country-by-country reporting now. It is it is generally accepted that large corporations around the world have to disclose so much in their accounts to the public anyway that there is no harm to them in disclosing the extent of their turnover, assets, employees and profit in each of the territories they operate in. That is not sensitive commercial data that will harm their commercial interests. We can do that as soon as we want to.
Seven or eight years ago, I proposed an amendment to a Finance Bill to require company tax returns to be made public—to be added to the company’s accounts and kept at Companies House. I see no reason why we cannot do that. It would dramatically increase confidence that the vast majority of these companies are paying the amount of tax in their tax return that their accounts suggest they should be. It would also expose those that are not, and we could see where the differences are. Again, I do not regard that as sensitive private data. I think there would be cross-party agreement that we could move in that direction.
We have had the general anti-abuse rule since 2013. There was a plan to review how it was working after five years to see whether we needed to keep doing the individual measures each year that are cluttering up our tax system and to see where we could extend it. I do not quite know where that five-year review has gone. Perhaps now would be the time to have a proper look at the general anti-abuse rule to see whether we need to strengthen it and what else we could do.
We have a very big issue—perhaps the Minister will be grateful to me for raising this—with how we define employment for tax purposes and what is the right amount of tax to collect in that situation. As a Parliament, we are strongly saying today that we want to tackle tax avoidance. However, there has been a lot of noise in recent months about the loan charge and IR35, and it has almost felt as though Parliament has moved away from addressing those things and is perhaps thinking that we should allow them to continue because they are the right sort of tax avoidance. We need to have, pretty quickly, a full review of what we mean by employment and how we should tax it, because it is not right that two people sitting at adjacent desks doing the same job are paying dramatically different amounts of tax. That cannot be allowed to continue. Yes, we need to get the measures right and not too blunt, but we should not be backing down in those areas.
My final suggestion is on advisers. When advisers are so incompetent that their clients are filing incorrect tax information, or are engaging in such unacceptable activity around tax planning that they should not be allowed to continue, HMRC should refuse to deal with them. It should refuse to let them file tax returns and refuse to engage in correspondence with them. In that way, we could drive them out of the market and let their clients know that there are responsible tax advisers who will get the calculations right, and they should use them instead.
I congratulate the hon. Members for West Bromwich East (Nicola Richards) and for Stourbridge (Suzanne Webb) on their maiden speeches. They both spoke warmly of two constituencies that I know very well, as a west midlands girl myself.
There are a lot of things that I found very surprising on becoming an MP. I do not think I will ever find it normal being called “ma’am” or having doors opened for me. But some of it is unnerving as well. Before I was elected, I did not know that big businesses sent gifts to MPs—gifts that always seemed to be accompanied by requests. The other week, Heathrow sent me a food hamper, along with an ask. It wanted me to support its third runway—as if some shortbread biscuits would drown out the warnings of the climate emergency. Google recently sent me a gift as well. It was not much, but it got me thinking about corporate lobbying. It reminded me that, according to the Tax Justice Network, in 2018 Google avoided £1.5 billion in tax, and in 2016 it reached a deal with the Government, after dozens of meetings with Ministers, to secure an effective tax rate of just 3% on profits estimated to be more than £7 billion.
Now, I might have missed it, but I do not think that doctors and nurses or factory workers and cleaners in Coventry South were offered private meetings with Ministers to create tailor-made sweetheart packages to reduce their taxes, yet this is a premium service that is given to big business. So it often seems to be a case of one rule for billionaires and big business and another rule for everyone else. I think the whole web of dinners, gifts, receptions and donations has something to do with that, because the super-rich do not spend their money on MPs out of generosity and out of the goodness of their hearts—they want something in return. Let us be honest: this wealth is used to buy influence in this House; to get this place to serve their interests and not the interests of our constituents. Under the Conservatives, it looks to me like their investment is paying off, because by the end of this Parliament the Government are on course to have handed out almost £100 billion in tax breaks and corporate giveaways. Corporate taxation has been slashed to one of the lowest rates in the world. An estimated £90 billion of tax is still being dodged every year.
Perhaps it is me—perhaps I am being cynical and a bit jaded beyond my years—but when the Minister gets up and says that his Government will tackle tax avoidance, I am sorry, but I am going to find that difficult to believe. I find it difficult because I know that time and time again we have heard Conservative Ministers talk the talk on being tough on tax for the cameras but backslide when those cameras are switched off. That is what happened when the Panama and Paradise papers revealed an industrial scale of tax dodging.
When the Minister talks tough, I find it difficult to believe him because I know that the super-rich donors who fund his party are also exploiting tax loopholes, and that they expect a return on their investment too. I find it difficult because I know that the billionaire press barons who often act as the propaganda wing of the Conservative party are in on it too. The owner of the Daily Mail has profited from being a non-dom—an exclusive status that lets the ultra-wealthy reside in the UK but pay no tax on offshore income and investments. The owners of The Daily Telegraph are reportedly based in Monaco and the Channel Islands. As for the owner of The Sun—well, his company was found by a 2008 US report to have 152 subsidiaries, including 62 in the British Virgin Islands, 33 in the Caymans, and 15 in Mauritius. I know that these billionaire press barons do not copy and paste Conservative press releases into their papers for nothing. I would be honest with the Chancellor if he was here but he is not, so all I will say is that after spending a career working with hedge funds and associates who avoid tax, I am sure he will understand that I have trust issues with him as well.
To conclude, the truth is that my constituents cannot trust this Government on tax dodgers. They cannot trust a party that has cut taxes for the super-rich, takes their donations and lets them hoard their wealth and hide it. The British public cannot trust a party that has slashed the services they rely on, only to blame the NHS waiting lists and overcrowded classrooms on migrants. It is not migrants who rob the public purse of billions of pounds. It is not migrants who buy influence and subvert democracy, and it is not migrants who let hospitals crumble and schools fall into ruin. It is the tax dodgers and the billionaire press barons, and it is the Tory Government, who serve the interests of the 1%, not the British people.
It is a pleasure to follow the hon. Member for Coventry South (Zarah Sultana). I share some of her concerns about ensuring that those with the broadest shoulders pay the most, following the lead of the shadow Chancellor, but it is useful to look at the facts. An interesting survey was carried out by PricewaterhouseCoopers and the BBC on the nations that have the highest proportion of tax on high earners, looking at people earning a quarter of a million pounds a year. The UK is the third highest taxing country in the world—only Italy and India are higher. The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) shakes his head, but he can google that. We should clamp down on tax avoidance and tax evasion, but we cannot raise the taxes we want without the negative consequences of people shifting that wealth and income elsewhere.
The shadow Chancellor said at the beginning of the debate that tax is about a lot more than just income tax. Can the hon. Gentleman confirm whether the statistic he just cited relates to all taxes paid by wealthy individuals or only income tax? Does he agree that, if he is only talking about income tax, that statistic is highly misleading?
It related to income tax. [Interruption.] The point I was making was about income tax. The shadow Chancellor talked about raising taxes from the people who earn the most, and I was simply responding to that point. I have said in the Chamber many times that we should clamp down on tax avoidance and tax evasion.
The shadow Chancellor strikes me as the failed football manager turned TV pundit—having lost all his games by a wide margin, he suddenly complains when the incumbent manager is only winning his games 1-0. This Government have done far more to collect avoided and evaded taxes than the previous Administration—that is a fact. We can choose our opinions, but we cannot choose our facts. We need to go further. This is not just about the money; it is about creating a fair and level playing field and building confidence in the system, so that SMEs, which are the lifeblood of our economy and business, feel that they are not playing in a rigged game. It cannot be like that.
It is utterly wrong that we should countenance tax avoidance, because it undermines the level playing field for SMEs, and that has a tangible effect. For example, the Johnston Press, which owns The Yorkshire Post and many other titles around the country, was turning over £177 million in advertising revenue in 2008, and today, that figure is £22 million. There has been a transfer of revenue from areas such as regional press to online advertising, and particularly Google. Johnston Press will have paid its fair share of taxes, as most companies of that size do. Internationally, Google turns over about £100 billion. We know that around 10% of its turnover is in the UK—that is a stated fact—which is £10 billion. Its international profit margin is 22%, which means that it makes £2.2 billion. It should be paying £418 million in corporation tax at 19%, but it pays £67 million. That is simply iniquitous. It cannot be right, and it cannot be sustainable.
I am delighted that the Economic Secretary to the Treasury is on the Front Bench, because I want to give another example of where we are not maintaining a fair and level playing field. It relates to some of our banks and Cerberus. UK lenders who pay UK tax have sold their loan books to inactive lenders who work offshore and do not pay corporation tax or operate on the same regulatory playing field. Cerberus, which has bought loan books off Northern Rock and UK Asset Resolution, plays by a completely different set of rules. Its costs are therefore lower, which means that it can afford to pay more for those loan books. It does not properly look after its customers, nor does it have the responsibility to look after them and treat them fairly. We have to make an extra effort to ensure that everybody operates on a fair and level playing field. Cerberus paid £15,000 in corporation tax on six subsidiaries in 2015, despite working on a 20% profit margin.
In terms of my own business experience, our business grew to a point where we were making a reasonable profit. Our adviser—a normal accountant, not one of the big four—said, “How about trying this scheme to avoid tax?” It was perfectly legal, but we refused to take that option, because we did not think that it was right. We need to work harder with advisers and promoters to ensure that everybody pays their fair share of tax. The Government use the big four in many ways and take their advice, and it seems wrong that those very companies then go to large multinational companies and others and show them how to avoid tax.
One of the solutions is country-by-country reporting. We have a precedent for that, with the bookmakers’ point of consumption tax. The Labour party came up with a ruse that involved charging businesses in terms of where their economic activity, people and premises are, and there is very much a basis for that. We need to ensure that what the Government have done through the digital services tax and diverted profits tax narrows the gap for companies such as Google and Facebook.
We need to implement some other key measures, including on transparency about overseas entities and ownership of property, which is a way to avoid tax and move money around the world illegally and unfairly. We need to see measures on beneficial ownership in overseas territories brought forward to 2023. Finally, a corporate offence of failure to prevent economic crime and money laundering would reduce the amount of money that is illegally shifted out of the UK into foreign jurisdictions and increase the amount of tax that is paid.
Again, I would like to speak rubbish—actually, the evasion of landfill tax. I have spoken about this subject on a number of occasions. The Government are making progress in clamping down on it, but more needs to be done. The landfill tax was introduced in 1996 for perfectly good reasons—to avoid household waste and other waste going into landfill—and it has largely been successful. But over the years, as the tax rate has risen, it has become a target for wholesale fraud on a small scale and a large scale, involving organised crime. Her Majesty’s Revenue and Customs “Measuring tax gaps” in 2016 said that the gap on landfill tax was £125 million a year. I dispute that; I think it is a lot higher, and organisations such as the Environmental Services Association think that it could be upwards of £1 billion a year.
People ask why this matters. It matters for two reasons. Taxpayers are losing revenue, and the cost of cleaning up the sites when things go wrong usually falls on the local authority or taxpayers. In addition, because of a lack of regulation on what goes into these sites, the long-term environmental impact on areas can be immense. This is an organised system. The threshold for getting into the business is low. Individuals involved in organised crime use it as a way of laundering money and, as the Financial Secretary to the Treasury knows, the case that I referred to a couple of years ago is still ongoing. I asked for a meeting with him and I understand that I now have a meeting with someone in HMRC. They have told me that they can come and see me but they will not tell me anything, which I find, frankly, a bit insulting to someone who is a Privy Counsellor and sat on the Intelligence and Security Committee, and who knows how to keep secrets better than anyone.
The important thing is that we drive this hard because it is not just a matter of the lost revenue but what waste crime is fuelling in terms of organised crime. In the north-east, Durham Police and other police forces are working co-operatively with the Environment Agency and others to tackle some of the worst offenders. I invite the Financial Secretary to come and look at the work that they are actually doing. But again, it comes down to a problem with HMRC. I was told that the case that I have just referred to was not really important because it was less than £20 million a year. That worries me because the emphasis has got to be on clamping down on this as hard as possible, not just because of the lost revenue but because of the impact. The clean money that comes out of the system goes into fuelling other criminal activities.
The Government have made some progress, and I welcome the new unit for waste crime. It is a start in trying to get all the agencies together to deal with the problem. I mean no disrespect to the Environment Agency, but it cannot tackle this on its own. It has got to be a joint effort. There are things that we could do now to clamp down on this crime. In her 2018 recommendations Lizzie Noel called for regulation, for example, of waste brokers, which I certainly support, and also the mandatory tracking of waste. I would go one step further. Waste brokers should own responsibility for where large pieces of waste go. As in the case that I referred to earlier, large companies produce waste and put it into a criminal network. If local authorities and even police authorities are doing it, it begs the question whether once the waste goes out of their gates people forget about it. That cannot be acceptable. We must make sure not only that the tax is paid but that the waste is disposed of in as environmentally friendly a way as possible.
We can make progress. Enforcement is good value for money. If we clamp down on the fraud that is going on, according to the Environmental Services Association Educational Trust, every £1 of enforcement yields as much as £5.60 in return, of which £3.60 goes directly back to the Government. I welcome the enforcement that is going on. I just want to ensure that it is financed well enough to achieve the returns. If it is done properly, enforcement will pay for itself. It is something that I feel passionate about, because I cannot stand to see criminals getting away with things as they clearly are, costing the taxpayer money and ruining our environment. So a clampdown in this area would be good for the taxpayer, good for the environment and more broadly, good for society.
Thank you, Madam Deputy Speaker, for calling me in this Opposition day debate, which, judging by the Benches opposite, Opposition Members did not know about at all.
There has been a lot of discussion, Madam Deputy Speaker, about large corporate entities and taxation so I will talk a little bit about taxation from a personal point of view, because it is often the case that lots of smaller transactions from a large number of individuals can also make a significant difference. In my previous life as a financial planner, I very much did things along the lines of capital belonging in the hands of the people to give them the power to shape and determine their own futures. Our taxation system is something of a Frankenstein’s monster. The hon. Member for Glasgow Central (Alison Thewliss) was right earlier when she said that we tinker around the edges. I agree that we tinker around the edges in many ways. The wholesale, scrapping and rewriting of the entire system would be absolutely preferable, but it is a massive undertaking that no Government would ever do, so unfortunately we will always be restricted to tinkering around the edges.
That tinkering inevitably leads to the wonderful law of unintended consequences, loopholes and other things that appear, but despite all that, as a financial planner I always used to say to people that paying tax was a privilege. In many countries around the world there are people who would be delighted to be able to have their own businesses and to thrive, grow and pay tax, as we do. So it is a privilege, but everyone should pay their fair share, and that word “fair” is thrown around very easily these days. It is a very esoteric concept. It is a little bit in the mind of the beholder.
There has to be a point—a sweet spot—where there is no incentive to avoid taxation, and we saw it perfectly when we reduced the highest rate of tax from 50% down to 45%. The amount of revenue generated actually increased and there has to be a point where the incentive is gone. Fairness is not a concept that is available only to the Opposition Benches. What about the concept of fairness to the individual who went to university, stayed on for a master’s degree, started off at the bottom of an organisation, works 80 to 100 hours a week, sacrificing time with their families and lots of other social benefits so as to carve out a successful career, climbed the ladder and got to high levels of income and found that the taxation system was punitive and a punishment on success? It is not hard to see why the highest earners take steps to mitigate their tax levels.
As a financial planner, I always ensured that all the legitimate tax breaks were used—the simple things such as the ISA allowance, pensions allowances or capital gains tax allowances. Then, for people who have particular approaches to risk, there are vehicles such as enterprise investment schemes and venture capital trusts. That word “allowance” crops up all over the place in our tax code. There are legitimate ways to mitigate tax. We encourage it. Governments of all colours and descriptions have encouraged legitimate tax mitigation for decades, and it is important that we realise that the vast majority of the public engage in legitimate tax avoidance every day through pensions and ISA investments. We need to change the language we use a little bit to ensure that avoidance and evasion are treated and understood very, very differently.
Let us be clear that every £1 of evaded tax is £1 less for our vital public services. Everybody across this House and, more important, in the country, recognises that clearly. This Government are tackling the issues, and for Opposition parties to decry those efforts is just disingenuous. During the shadow Chancellor’s opening remarks, Opposition Members yelled, “Ten years, 10 years”, when we talked about our measures to fix the economy. Damn right it took 10 years. How long was it supposed to take? What would be reasonable from where we were in 2010? The tax gap was 7.3% previously, now it is 5.6%. There was an annual deficit of £153 billion; it is now an absolute shadow of that.
The Labour party complaining about 10 years is like people going around setting fires and then complaining that the fire service do not put them out quickly enough. It is nonsense, especially when, in the past two years, Labour Members have voted against various measures that would have helped tackle tax avoidance, evasion and non-compliance. If you will pardon the pun, Madam Deputy Speaker, the hypocrisy is a bit rich.
I am pleased to be able to take part in this debate and it strikes me that there is a fair amount of agreement, but somehow we seem to be managing to create disagreement instead of agreement, which I have to say is one of the hallmarks of this Parliament in comparison to other Parliaments around the world.
It does seem to me that when we have a discussion about tax, too often on the Government Benches there seems to be an underlying assumption that somehow tax, and income tax especially, is bad. Even though they cannot actively and publicly promote irresponsible tax avoidance, it almost seems as if in their heart of hearts they do not quite see what the problem is. For example, the oft-repeated and completely fallacious claim that Scotland is the highest taxed part of the United Kingdom is completely false. Why is it automatically a bad thing, even if it is true? If for somebody on my salary Scotland is the highest taxed part of the United Kingdom, that is good. If, for somebody struggling to get by on a low-paid, part-time job, Scotland is the lowest taxed part of the United Kingdom, surely that is also good. I sometimes wonder how many Government Members, in their deepest instincts, genuinely believe the conciliatory comments that we have heard from some of their colleagues today that tax is a good thing and that we should all be happy to pay our taxes. When we look at the Register of Members’ Financial Interests and at some of the companies that are bankrolling Conservative MPs, we have to wonder whether they are bankrolling them in the expectation of getting absolutely nothing back in return.
The hon. Member for Delyn (Rob Roberts) spoke about legitimate forms of tax avoidance, and I do not have a problem with that; I do not have a problem with the tax system giving incentives to people to encourage them to do things that provide a wider public benefit, such as giving money to genuine charitable organisations; investing in genuine businesses that need an injection of capital to grow and to create employment; and investing to make sure that their own and their family’s future is financially secure when they are no longer able to work. All those things provide a wider public benefit and it is right that the tax system should encourage them. What public benefit is provided when a company electronically transfers billions of pounds of profits into a non-existent letterbox in the Cayman Islands? That generates no public benefit to anybody, so why do we have a tax system that, either deliberately or unintentionally, encourages exactly that kind of behaviour?
Although some progress has been made, with a more aggressive approach to dealing with legalised tax avoidance than there was in the past, it still does not go anything like far enough. My hon. Friend the Member for Glasgow Central (Alison Thewliss) commented on how easy and cheap it is to set up a company structure for no reason other than to avoid taxes. Many of my constituents, and many in all of our constituencies, would find it easier to set up a company to dodge taxes than people are finding it to prove to the Home Office settled status scheme that they have the right to live and work here and pay their taxes. What kind of regime is it that makes it harder for people to live here and pay their taxes than it is for people to dodge their taxes?
A lot has already been said about the concept of the Scottish limited partnership. I recall that as a young student accountant many years ago I memorised the Partnership Act 1890 by heart. It is a short and fairly simple piece of legislation. I recall that at the time there was a reason why section 4(2) was a good idea—why it was a good idea that in Scotland a partnership had a legal entity of its own. I cannot remember what the benefit was, but I am pretty sure that our predecessors in 1890 did not put those 17 words into that Act just to allow the good reputation of Scotland’s financial services sector to be abused by international criminal gangs in order to launder billions of pounds of criminal funds through the wonderfully respected financial services centre that is the city of Edinburgh and indeed through other cities in Scotland.
My hon. Friend commented on the number of companies advertising their ability to set up tax-dodging companies for people and how easily we can find them on the internet. Such a partnership has been described as
“an ideal solution for those who prefer to operate…in the EU”—
this is perhaps a wee bit out of date—
“and to have a totally tax-free facility”.
That quote came from TBA & Associates Tax Business Advisors Ltd, whose registered office is not a million miles away from here.
In finishing, I wish to read out a quote from Shepherd and Wedderburn LLP, one of Scotland’s best known and most respected firms of commercial lawyers. It said:
“Scotland’s global reputation in the funds and financial services sector, as a respected and safe jurisdiction in which to undertake business, can be exploited by the Scottish LP in an effort to add credence to an otherwise fraudulent scheme.”
If even the businesses that are advising their big commercial clients on how to reduce their tax liability are flagging up the fact that the existence of that loophole in Scottish partnership legislation is a bad thing for the Scottish economy, how can the Government not understand that? If they are not prepared to act on it, they should give the Scottish Parliament the right to regulate that aspect of Scottish business. Believe me, the Scottish Parliament will deal with it very, very quickly.
Let me make one final comment. A lot has been said about the loan charge, both in this debate and in previous debates. I have seen worrying reports recently suggesting that HMRC is offering an easy ride to the companies that have made billions out of advising their clients to go into these schemes in return for co-operation—basically, this is about shopping their own clients to HMRC. Again, the little guy gets done and the big guy—the big business—gets off scot-free. I hope that the Minister will give a categorical assurance that no such offers have been made and no such offers ever will be made to the big companies who are the genuine villains of the loan charge scandal.
Clearly, there is a lot of cross-party support on this topic. Benjamin Franklin once said:
“in this world nothing can be said to be certain, except death and taxes.”
In this country, there is no doubt about it; we have one of the best tax collection systems in the world. It has been said a lot already, but the tax gap is now less than 6%. What we have not said enough is that it is falling every time it is measured. Our manifesto promised a strengthened anti-tax-evasion unit in HMRC, and that is welcomed. I guarantee that every time we knock on a constituent’s door and talk to them about paying their fair share of tax, that is what they want to see. We will continue to clamp down on fraud. Through digital measures that have come in over the past few years, we continue to do that. I just wish to mention two schemes that I came across when I was in business. Over the past few years, HMRC has brought in real-time information and Making Tax Digital, both new, electronic ways and means of submitting one’s information to ensure that there is less data manipulation and so the right amount of tax is paid on time by companies and employees. Far from doing nothing about tax avoidance and evasion, this Government are doing quite the opposite.
Before I became an MP, I was in the real world. I was in a business in Norfolk. I recall once opening the post and to my horror seeing that I had a VAT and PAYE inspection all in the space of the same month or so. When my jaw hit the ground, the first thing I thought was, “What have I done wrong to deserve this?” Out came two tax inspectors. They had 50 years of experience in HMRC. They were fantastic people who spent the next week or so giving me a thoroughly good going over; they checked everything from maternity pay calculations to VAT rates on hedgehog food, grass seed and olive trees. I became an expert on zero-rated products—for those who are not aware, I should say that grass seed and hedgehog food are zero-rated. I am still none the wiser about olive trees being standard rated. The real excitement during that process came with the added knowledge that gingerbread men are biscuits and are zero rated. If we dab a bit of chocolate on their eyes, they remain zero-rated, but do not give them any more chocolate buttons, as they then become standard rated. I joke, and people may wonder why I am talking about this, but I do so because it highlights the real facts. This is a real situation going on up and down the country every day, where businesses and individuals are checked to ensure that they are paying their fair rate of tax—and it works. The staff are diligent and hard-working. This was a normal business, with a turnover of roughly £25 million, and over the four years HMRC went back we had to pay around about £800 of additional tax that was required. So if the Chancellor is listening, I can tell him he got his fair share. The point is that people have said today, “Well, it’s only the big businesses. It doesn’t go across the board”, but that is not true. It is black and white: you pay your fair share. The research from the Institute for Fiscal Studies shows that the highest 1% of income tax payers account for 27% of all income tax. We can hardly sit here and say that the wealthiest are not paying their tax, can we? When those in the public eye commit wrongdoing or try to dodge their tax, there can be few news stories that attract more disdain and are more frowned upon. We have massively cracked down on tax avoidance and evasion in the past few years, and the new evasion law will go even further to clamp down on the worst fraud offenders by doubling the maximum prison term to 14 years. We have already secured over £200 billion in additional tax revenues since 2010, and at the 2018 Budget we announced an ambitious package of 21 measures that it is estimated will raise a further £2.1 billion.
I agree with what has been said all around the House about how global companies that do not pay their fair share of tax in this country absolutely should do so. The digital services tax that we will see coming in will start to put some of those things right. As my hon. Friend the Member for Delyn (Rob Roberts) said, there are differences between tax evasion and tax avoidance. Companies are not evading tax; they are avoiding it. That is where the legislation needs to be corrected, which is what this Government are doing.
The last point I want to make—I have stressed it before when I have stood up here—is that we have to have a balance: yes, clamp down on tax evaders, but we should not be persecuting the wealth generators in this country, the entrepreneurs and those who create jobs up and down this country.
May I start by congratulating the two new Members on their maiden speeches—the hon. Members for Stourbridge (Suzanne Webb) and for West Bromwich East (Nicola Richards)?
The business of tax avoidance, as has been discussed this afternoon, is a serious issue. We show extraordinary world leadership in this, but for all the wrong reasons. Since 2010, a permissive attitude to tax avoidance has been allowed to develop. Let us think back to Chancellor George Osborne and how he advised people on TV just to think, “Well, you know, all you need is clever financial products to help reduce your tax costs”. It really sent out the wrong signal—“Why pay tax at all? Pay the least you possibly can”—as opposed to being responsible and recognising the benefits of tax.
That has been facilitated by the growth of professional enablers. We saw that with the Panama papers, which laid bare the industrial-scale activity in tax havens such as the British overseas territories and Crown dependencies. We think of the Cayman Islands, which is the most secretive territory of all, and the British Virgin Islands, Guernsey and Jersey, which are in the top 20. Just last week, the EU blacklisted the Cayman Islands as the first UK territory on the non-co-operative list due to its tax haven status.
Do not get me wrong—I understand that this is a global problem and it needs international action—but we actually have to go to Davos to talk about these things, and of course the Prime Minister was a no-show there as well. It needs international action, and the UK should be looking to lead on this to restore its reputation. We need leadership, not just simply to be tax lackeys. The Government need to exercise control, not cede control. Let us look at the big accountancy firms. I appreciate the points made by the hon. Member for Thirsk and Malton (Kevin Hollinrake), and I agree with him that on the one hand they are advising the Government, but on the other hand they are advising businesses, and I do not see how we can quite square that particular circle.
Does my hon. Friend agree that it is long overdue that some of the big accountancy firms should be broken up? There is not really competition among these firms; there are cartels in some situations.
My right hon. Friend makes a very good point. With just those four businesses, they absolutely dominate the sector. I do fear that there is a cartel operating, and the sector should be broken up. I think that would be in everyone’s interests. Those firms—or certainly their UK arms—account, according to an HMRC report, for half of all known avoidance schemes. That is the scale of the problem.
This is coming at a massive cost—a loss to UK plc —that is estimated at between £35 billion and £90 billion. There is understandable public anger out there, because that money could be buying significant investments in our communities, whatever people may want to invest it in. That could be 40 new hospitals, two new aircraft carriers or 40 Typhoon jets—all for £35 billion, with some cash to spare. If the £90 billion takes their fancy, we could electrify the Chiltern line serving Warwick and Leamington, and then put money into free school meals for all. Instead, we have an attitude where we increasingly see flat regressive taxes, such as the rise in VAT in 2010 from 17.5% to 20% and the growing expansion of council tax, again hurting hard-pressed households.
My hon. Friend is making some excellent points about the inequities in the system. I feel that is particularly relevant given that only recently did average incomes catch up with those before the great crash of 2008. Does he agree that there has been a total and utter lack of leadership from the Government on this matter?
Yes, there has. As I have said, the former Chancellor showed the wrong sort of leadership when he basically said about taxes, “It is almost entirely down to you whether you choose to pay it or not.” Tax really is the responsibility of us all: it is a corporate responsibility and it is a personal responsibility.
Decades ago, when I was working in the corporate world, I remember the introduction of a thing called corporate social responsibility. It was a real buzz term, and we started making donations to charities, volunteering and so on. Of course, that is important and it is wonderful that big business does that, but we are seeing this almost replace tax responsibility. Rather than paying their way and supporting education, infrastructure and healthcare for society, we are seeing organisations perhaps decorate a community centre or go out on litter picks and the like.
Turning to personal tax avoidance, I have mentioned the former Chancellor, and there are schemes such as the film production scheme. Businesses have increasingly paid out dividends, substituting them for actual salary, because of course there is lower tax to be paid on dividends and it is advantageous to employees or directors to get a much larger proportion of their income through dividends. All we need to do is go to some of the ports around Europe, and see that the yachts in the berths there are all flying flags of convenience—and they are all UK flags or those of UK overseas territories and Crown dependencies. There are no German flags, dare I say it, or Dutch flags or French flags. Either we are renowned for our sailing, or a lot of Germans or those of other nationalities like flying the British flag because— I do not know—they sail better or something like that. The same could be said about personal jets and where they are domiciled.
Let me just say that tax is good: it is a contribution to a better society, and we must think about what that society looks like. We should look at the words of Elizabeth Warren. Let me just paraphrase her; I will not do her justice. She basically said, “Why is it that people should simply want to avoid paying tax and then be able to afford to buy a Ferrari? There is no point in owning a Ferrari, if they have not got a good road to drive it on.” People should pay their tax and get a Jaguar Land Rover or Aston Martin—obviously, because they are much better products anyway—and drive on a beautiful smooth road that has been paid for out of their taxes. That is the sort of society we should be looking for, not people avoiding tax, living behind gated communities, owning Lamborghinis, Ferraris or it whatever may be, and having roads full of potholes.
The Government need to turn up on this issue: they need to go Davos and places like that, and make the case for why international intervention and regulation need to be introduced. I agree with what the hon. Member for Amber Valley (Nigel Mills) said earlier about full disclosure. We need to see that across the entire business sector, whether for small businesses or large businesses. When we talk about consumers being given an informed choice, I think the consumer should know whether Caffè Nero is not paying any tax at all, or whether Costa or one of the others is paying tax, and they can then make an informed decision. They can choose, saying, “Well, maybe I want to buy my coffee from that place”, or whatever the product or service may be.
I want to close on the issue of the tech titans. I say this to them: Amazon, you have your warehouses, and your warehouses need security. They need protection from fire; who is going to show up? Warwickshire fire and rescue service has had significant cuts, and it needs the money out of taxation to pay and provide for the fire and rescue services.
It is estimated that five of the big tech companies paid an effective UK tax rate of just 2.9% in 2018. They avoided paying £1.3 billion in taxes. Does my hon. Friend agree that the Government need to get that money back?
Indeed they do, and I was just about to say in respect of companies such as Facebook that services impact on mental health. We need those services; they need to be paid for for our young people. I say to Apple and Google: your product upgrade and replacement cycles lead to huge waste in recycling. You have to pay your taxes; it is a responsibility that we deserve from you, to pay for our society.
There have been some very thoughtful speeches on both sides of the House today, but I must open by particularly commending the excellent maiden speeches from my hon. Friends the Members for West Bromwich East (Nicola Richards) and for Stourbridge (Suzanne Webb).
The central contention of the Opposition motion is that the Conservative Government have failed to address tax avoidance and evasion over the last 10 years, but that is simply not borne out by the facts. The range of the tax gap involved that the Opposition have stated is £35 billion to £90 billion. The £35 billion is the HMRC’s estimate, so we will accept that, but the provenance of the £90 billion is rather less certain, and I spent some time searching for it before I came in here. The only reference I can find to it is a blog post by Professor Richard Murphy. Members will remember that Richard Murphy was previously hailed as the founder of Corbynomics and was held up in lights by the Opposition as the answer to the economic problems we have. That was of course before he made the mistake of criticising the Leader of the Opposition, stating that he had
“no policy direction, no messaging, no direction, no co-ordination, no nothing”,
for which of course, in true Corbynista style, he was purged, and the shadow Chancellor later said, “we doubted his judgment.”
The shadow Chancellor is not the only one to doubt Professor Murphy’s judgment, of course. The Oxford University Centre for Business Taxation has done so, as has the Institute for Fiscal Studies, which previously described his estimate of the corporate tax gap as
“likely overstated (possibly by a wide margin).”
Many Members have highlighted the fact that tax avoidance and tax evasion have continued to drop. The country’s tax gap is now below 6% and is one of the lowest in the world, and the trajectory continues to be downwards.
The same Labour party that moved this motion voted against many of the measures that have led to that reduction. By voting against the Second Readings of both the 2018 and 2019 Finance Bills, Labour voted against 39 measures that will raise in excess of £7 billion by 2023-24. So if they have any intellectual honesty, they would be far better off congratulating the Government on closing the tax gap and on having a better record on these issues than they had themselves when they were last in government.
By and large, the evidence shows that the Government are making progress in tackling tax avoidance, and I strongly commend Ministers on their efforts. However, as part of wider efforts to reform the tax system there are individual policies that would benefit from a little more attention. One of them is the issue of off-payroll working, which many of my constituents have written to me about, and I have in turn written to Ministers to outline their concerns to them. Those concerns include reports that clients are already beginning to refuse to engage as a result of the complexity of the rules, and that projected earnings are being drastically reduced without the receipt of equivalent benefits or protections as salaried employees.
It is true that the services economy has changed drastically since off-payroll rules were originally introduced 20 years ago, so I believe that the Government were right to look at reforms. However, it is extremely important that in seeking to close those loopholes the Government avoid unintended consequences that limit our future competitiveness. At a time when maximum labour flexibility is surely a long-term benefit to the UK, I urge Ministers to take that into account.
I too want to pay tribute to my two colleagues who made their maiden speeches today, my hon. Friends the Members for Stourbridge (Suzanne Webb) and for West Bromwich East (Nicola Richards).
The general principles of tax evasion and avoidance are simple, and I think from listening to the debate that they are agreed across the House: everyone should pay their fair share of taxes. It is an offence to our sense of natural justice if someone manifestly does not pay the tax that most would judge as fair. The fact they are not paying means others have to pay more; otherwise, we do not have money for public services.
But, even more than in most policy areas, the devil is in the detail. I have been reporting on and tackling tax avoidance and evasion for 25 years or so. As a business and economics journalist, I often covered it. As chief executive of the British Bankers Association, I led the banking industry in efforts to tackle tax evasion both here and internationally.
In my five years in the role of chief secretary to the BBA, the banking industry was accused of many different things but very rarely accused itself of tax avoidance and evasion. I think that was largely because we paid over £70 billion in tax, more than any other industry. The general attitude of the industry was, “Well, if we are paying so much tax, we have to got to do our part to make sure everyone else is paying their tax as well”, so banks play a very active role in tackling tax evasion. For example, I led the industry push for a common reporting standard, adopted by the OECD as a global practice, which enabled Governments around the world to more easily find out what money their citizens have in foreign bank accounts, in order to work out how much tax they owe. We worked closely with the Conservative and coalition Governments on a whole range of reforms to tackle tax evasion, both in the UK and internationally. There were countless measures in every Finance Bill to clamp down on tax evasion, and my team worked hard to deliver many of those reforms.
That is why I find it quite frustrating when Opposition spokespeople keep saying that the Government are not doing anything to tackle tax evasion. That is an easy political hit, but it just is not true. We have heard throughout the debate about the many measures that have been put in place. As with so many things, more can always be done, but it is frankly dishonest to say that nothing is being done. I know from my role in international negotiations that the UK is leading the world on tackling tax evasion in so many ways. In the 2018 Budget alone, there were 21 measures to tackle evasion. As anyone with any experience of dealing with these issues in many other countries knows—even some EU countries—there are many places where paying tax is seen as a voluntary activity and avoiding it as a national sport. Bing involved with that makes one realise how much more seriously the UK takes it than almost anywhere else. As we have heard in the debate, the tax gap has been falling over the past 10 years as a result of the measures put in place by the Conservative and coalition Governments and it is now down to 5.6%, one of the lowest in the world. It is a track record we can truly be proud of.
Members may have noticed that I have been talking about tax evasion rather than tax avoidance, and there is a good reason for this, which was reflected on earlier by a couple of my hon. Friends. Our national debate seems to have lost track of the distinction between tax evasion and tax avoidance, but the distinction is critical. Without understanding the difference, we will never develop policies that ensure that everyone pays their fair share of tax. When I was a young BBC business journalist reporting on tax issues, the differences between evasion and avoidance were always rigorously drummed into me by BBC management. There was a very good reason for that: failing to make the distinction could have landed the BBC with a big libel bill.
Evasion is not paying tax that you are legally required to pay. It is a crime and you can end up in jail. Avoidance is changing your affairs so that you pay less tax. It covers a wide range of activities, from the everyday to the egregious. It is playing within existing rules and it is legal. Just as it is important for journalists to know the difference between avoidance and evasion, so it is for policy makers. If tax evasion is causing problems, the solution is stronger enforcement of existing rules. However, if it is tax avoidance that is causing concern, it is not enforcement that is the problem, as no one is actually breaking any rules. It is the rules that are the problem and the solution is to change the rules.
From a policy point of view, evasion is relatively black and white: you clamp down on it. Avoidance is far more complex, however, because it covers such a wide range of activities. An everyday example—some were mentioned earlier—is buying duty free alcohol at the airport. If you take out an ISA, a pension or gift aid, you are avoiding tax. If you buy a low-sugar drink because you do not want to pay the sugar tax on higher sugar drinks, you are avoiding tax. The fact that people change behaviour to reduce the tax they pay has always been at the heart of tax policy. That is why economists always recommend, and Governments try to promote, taxing bads rather than goods—sin taxes and environment taxes.
What any fair-minded person objects to is aggressive tax avoidance which results in companies or people paying less tax than is clearly their fair share, avoids any other public good and deprives the public purse of money. The biggest examples are multinational corporations, who frequently arrange their internal transfer pricing, often of intellectual property, to ensure that most of their profits are booked in low-tax regimes. The Government have introduced many measures, such as the diverted profits tax that we heard about earlier, to tackle that, but the rise of the weightless digital economy, of global technology firms with minimal geographic presence but huge economic clout, has made it a far bigger issue. It is an offence against any sense of fairness, and certainly against the public purse, that incredibly profitable global companies, such as Amazon, Facebook and Google, pay minimal tax in the UK because of the way they arrange their internal finances. It is unfair on their rivals whom they compete with, and it is unfair on taxpayers and those who use public services. That has to change and I am glad the Government are bringing in a digital services tax. We have a track record to be proud of and I will be voting against the motion.
It is a real privilege to be winding up today’s important debate. We have a heard a number of excellent speeches, including two maiden speeches. I found the comments from the new hon. Member for West Bromwich East (Nicola Richards) very interesting, and we all enjoyed her warm and affectionate portrayal of her constituency. She joins many people in Parliament, certainly on the Opposition side of the House, who have been committed to levelling up for many decades, as well as people who have been very committed to beer. I welcome her to the House. I also welcome the new hon. Member for Stourbridge (Suzanne Webb), who also gave an accomplished speech. I am very pleased to welcome a fellow rail enthusiast to the Chamber, but I have to say—I am very sorry—that I am sure that my granny, not her nan, made the best lemon meringue pie. It is very nice to welcome them both.
This debate comes at a very important time, after last week’s news that the UK has shot up the ranks of the Tax Justice Network’s financial secrecy index. The UK rose 11 places and we stand as the 12th worst jurisdiction for financial secrecy, so rather than moving forward in the fight against tax avoidance and financial crime, we are moving backwards. I very much agree with the comments from my hon. Friend the Member for Warwick and Leamington (Matt Western) in that regard.
My right hon. Friend the Member for Hayes and Harlington (John McDonnell) quite rightly talked about the impact of the failure to tackle tax dodging on the availability of funds for public services, as did my hon. Friend the Member for Coventry South (Zarah Sultana). We should focus on the impact of the failure to deal with these measures because they restrict overall the funds available for public services. The hon. Member for Orpington (Mr Bacon) talked about honesty in the debate. Surely he must be aware that the reason why the Opposition have opposed some of his Government’s measures is precisely that they have not gone far enough, as we saw from last week’s news. In the time I have left, I will talk about some areas in which they have not gone far enough.
Many colleagues have focused on the lack of tax compliance and the creative compliance from multi- nationals. Research suggests that the UK is losing £25 billion each year in tax revenue as a result of profit shifting by multinational companies. A number of Members referred to research produced recently that suggested that just five tech giants were costing the Exchequer about £1.3 billion a year. We were told that the digital services tax would deal with these issues, but as Opposition Members repeatedly mentioned, that tax will generate, at most, £440 million each year—less than half of what is being dodged by just those five firms. That does not even take into account the amount lost as a result of avoidance by other tech giants such as Amazon and a plethora of other less well-known firms.
My right hon. Friend the Member for Barking (Dame Margaret Hodge) quite rightly referred to the case of Netflix. Her pressure on that, as on so many other issues, has been incredibly important in advancing this debate. She rightly pointed out that that firm has benefited from tax relief at the same time as it has not been making the contribution that we would expect. I also mention the case of Rockstar Games, which has not paid corporation tax for 10 years while it has benefited from tax breaks.
We also need to seriously consider our relationship with our overseas territories and Crown dependencies. I found the discussion about this in the House today quite peculiar. Some welcomed the fact that there will be a public register of beneficial ownership, but the timetable for that has slipped enormously since what was initially suggested. It must be accelerated. I also found it strange that we heard nothing from the Chief Secretary to the Treasury, in introducing the debate, about the UK’s approach to current OECD-level discussions about the future for formula apportionment for corporate tax. That is an absolutely enormous gap and we need to know what the UK Government are promoting at that level. A big discussion is going on between the US and the EU. What are the UK Government calling for? Sadly, we have no indication of that at the moment and we really need it. Otherwise, we are not going to deal with the fundamental issues that the hon. Member for Amber Valley (Nigel Mills) quite rightly highlighted.
We also need to focus on enablers, which have been mentioned frequently on the Opposition Benches during this debate. An HMRC study in 2005—I think it needs to do another one—concluded that the big four accountancy companies alone were responsible for about half of all known avoidance schemes. I share the concerns of my right hon. Friend the Member for Barking about the lack of action, including on the loan charge process.
We also need to look at corporate criminal liability. I found the exchange on this quite interesting. The hon. Member for Thirsk and Malton (Kevin Hollinrake) asked the Government whether they had thought about putting a failure to prevent economic crime on the statute book, and the Secretary of State seemed to intimate he might think about it, but in 2016 a Conservative Government actually said they would look to introduce this—perhaps he is not aware of that. The Government ran a consultation, and many of us have been asking what has happened to it. Well, it has been kicked into the long grass, never to be seen again, which is not acceptable.
We also need more transparency. We need a genuinely publicly accessible register of trusts, with an appropriate definition of “legitimate interest”. The Government have chosen to adopt the most restrictive definition they could. As has been repeatedly mentioned, we need proper country- by-country reporting, and we need it to be public. It only needs to be switched on. The House passed it back in 2016. What are the Government waiting for? They need to put it into action.
We also need action on shell companies. I was pleased to hear the comments from SNP speakers in this regard. Labour has said that the Government could have raised £8.4 million each day in fines on Scottish limited partnerships if they had done what they said they would do, which was to force the publication of persons with significant control of those companies. They did not levy those fines and have not taken action, and we are seeing the same things happening with other limited partnerships that we saw with SLPs.
We have not had the reform of Companies House that we need, and we have delays with the introduction of the property register. We need proper enforcement in this area. Conservative Members have trumpeted the fact that the maximum prison term will be doubled, which is right, but when the Secretary of State was talking about convictions, he talked about all convictions in the area of duty as well. He mentioned the figure of 650. Let’s have a reality check on how many of those relate to complex tax crime. In 2017-18, only 88 criminal investigations were opened into serious and complex tax crime, and the number of criminal convictions since 2015 is 22, which is rather different from that 600-plus figure trumpeted earlier.
We also need an appropriately funded HMRC. I am rather less blasé about the reductions in headcount in HMRC than Government Members appear to be. That those numbers are falling faster in this country than in any other European country aside from Greece is something we should be worried about, particularly in relation to the size of the wealthy unit, as was appropriately mentioned by the hon. Member for Glasgow South West (Chris Stephens). Even aside from those numbers, the staff turnover at HMRC is one of the highest worldwide and morale has dropped precipitously. I encourage those on the Government Front Bench to get a grip of the contract that is driving the changing nature of the HMRC estate and see whether it is delivering value for money. It is not; all the upheaval is costing money. HMRC has lost 17,000 years of staff experience in the last year alone through redundancies and departures.
We are told continually that the tax gap has been dropping, but as many speakers have said, the definition of “tax gap” is highly contested and does not include many different aspects of profit shifting. Groups such as Tax Watch UK have adopted a much more sensible approach that looks at overall profits, and of course if we had CBCR, we could assess that even better. We also need to interrogate the 100 additional measures mentioned by the Government. I encourage Conservative Members to look at the difference in those measures between what the Government initially proposed and what happened after consultation. The kinds of processes rightly mentioned by my hon. Friend the Member for Coventry South were evident. Measures are being watered down time and again.
Overall, we know from the evidence that people feel that the Government are not doing enough to tackle tax avoidance and evasion. We know that from the figures, and also from people’s experience of the tax system. If we took the money that is owed by some of those tech companies alone, we would have the funds that we need to, for example, almost double school funding in the north-east.
The Government have a decision to make. They can keep cutting services, or they can generate the funds that are needed from a fair tax system. I hope that they will finally step up to the plate.
I am delighted to wind up the debate for the Government. It has been a fascinating debate. There has, of course, been extensive discussion of the issues of tax avoidance and evasion, but we have also heard about lemon meringue pie and West Bromwich Albion, and we have heard two sparkling maiden speeches, for which I thank my new hon. Friends. It has been a cornucopia of joy for everyone interested in these issues.
Before I deal with the debate itself, may I dwell for a second on the Tax Justice Network report, which is central to the motion? We are repeatedly enjoined to trust it as an authoritative assessment of the UK’s position, but I suggest that nothing could be further from the truth. Those who look closely at the report will see that it generates absurd outcomes. In its list of 133 jurisdictions, we supposedly come 12th in terms of offensiveness, yet near the bottom we see Brunei, Vanuatu and Liberia. Is anyone seriously suggesting that this country is a less robust and effectively transparent tax jurisdiction than those?
The reason for that mistake is the fact that the findings are based on an entirely flawed methodology which accepts the proposition that the UK is one of the least secret jurisdictions in the world. I believe it is the eighth least secret, according to the report. Because its authors have some fudge factor, or financial multiplier, they have somehow able to deduce this extraordinary further conclusion. In fact, it is bogus. As was pointed out by a partner at Clifford Chance, the excellent Mr Dan Neidle— [Hon. Members: “That is not an answer.”] He is a tax partner at Clifford Chance who was offering his view, but that was a nice try from the Opposition Front Bench. He is quoted as saying that
“Britain still scored badly despite making significant strides ahead of its global peers on fostering greater”
This, he said, was because the report calculates its final secrecy score based on the volume of financial activity conducted by non-residents.”
That is, of course, further to the issue of the core secrecy of the regime, and, as I have said, ours is one of the most transparent.
The report is bogus. It is based on a flawed methodology, and one that is itself secret to the point of being hard to scrutinise. However, I will say one more thing about it: although bogus in many respects, it does accurately place much of the blame for the current situation on the very soft-touch regulatory regime initiated under the Labour Government of 1997. That much, at least, is accurate.
Let me now deal with the main topic of the debate. Of course it is right to focus on the size of the tax gap —the gap between tax owed and tax paid—and I am delighted that it has fallen to a near record low of 5.6%. In his excellent speech, my hon. Friend the Member for Amber Valley (Nigel Mills) asked whether we could introduce a target. It is, of course a retrospective measure. HMRC’s attempt to get close to this point involves the concept of compliance yield, amounting to £34.5 billion this year, which is itself a stretching target. However, the good news is that the 5.6% target is some 0.7% below the average of the last five years of the Labour Administration. That is about £4 billion of tax which we, I am pleased to say, are collecting, and which, had they stayed in office, they would not have collected. It has also rightly been pointed out that at the last Budget the Government announced 21 new measures to tackle avoidance, but of course they were voted down by the Opposition. Last year, these compliance activities brought in some additional £34 billion, and since 2010 compliance activities have secured and protected more than £200 billion of tax revenue. That is a record of which we can all be proud.
It is an interesting fact that, when he came to consider the loan charge, Sir Amyas Morse focused on the earliest date on which he believed the charge could be properly validated in law. That date was December 2010. In other words, we supposedly had 10 years of loan charge non-compliance under the Labour party, which received no legal justification or support. I do not actually believe that that is true. HMRC was correct in chasing those people as it did, and that will be proved, but the fact is that Sir Amyas himself has pointed to the slapdash manner in which the last Government addressed this whole issue.
Let me pick on some of the important comments that have been made in the debate. My right hon. Friend the Member for East Hampshire (Damian Hinds) was absolutely right to highlight the importance of the quality of data in our system. He was also right to focus on the diverted profits tax and the digital services tax as examples of activities that we are undertaking in order to improve compliance. The right hon. Member for Barking (Dame Margaret Hodge) raised a series of important points, and I want to spend time on those. We have discussed them in an Adjournment debate, and it is interesting that she has come back to them today. She is absolutely right to say that the centrality of the tax system should be one of fairness. It should not be one of penalising any particular section of the public—rich or poor, wherever they live, whatever they might be doing.
The right hon. Lady asked about public registers of beneficial ownership. It is important for me to say that the law enforcement agencies need to have access to the information they need to tackle money laundering. That is what really matters at the core of this. The Government have ensured that the recently established register of trusts is specifically designed to capture overseas trusts for that reason. She is right to focus, as did the hon. Member for Oxford East (Anneliese Dodds), on the progress that has been made on public registers of beneficial information. The right hon. Member for Barking raised the question of beneficial owners of overseas entities. She will know that that register will be the first of its type in the world, and we will go further to increase transparency in the UK property market. The Department for Business, Energy and Industrial Strategy is the lead Department on this, and it has published a draft Bill that has undergone pre-legislative scrutiny.
The right hon. Lady also raised the question of creative sector tax relief. She will understand that in order to qualify for film and high-end tax reliefs, businesses have to incur a proportion of their production costs in the UK and pass a test for cultural content administered by the British Film Institute. I cannot comment on the specific circumstances of individual companies, but she ought to be aware that HMRC carries out a detailed check of each claim for creative sector tax relief, and that large businesses are subjected to an exceptional level of scrutiny. The point is that large businesses, like all other taxpayers, should pay the taxes due under UK law and implement compliance checks where necessary.
The right hon. Lady talked about country-by-country registration. Private country-by-country registration is of course in place. The problem lies in securing the international agreement required to roll out the public registration. It demands a measure of international agreement, and that is something that we continue to focus on. That is a Conservative act of leadership that we are still in the process of taking forward. She is right to pick on some other areas. I would just point out that the disclosure of tax avoidance schemes, the promoters of tax avoidance scheme rules—which can lead to significant penalties—and the enabler penalties that we put in place are all important, and I anticipate that will be strengthening them further over time. Let me pick up a couple of other quick points—
Will the Minister give way?
I am afraid that there is no time at all to do that, but I will pick up a couple of further points. Colleagues quite rightly had concerns about HMRC resourcing, and they are welcome to write to me if they want to discuss specific topics.
I mentioned the important point made by my hon. Friend the Member for Amber Valley, and I am pleased that he offered his qualified support for IR35. He is right that it is an important measure, and it will collect something like £1 billion of tax a year by the end of the period. As he will be aware, the Government are preparing to legislate to clarify the status of employment from a business standpoint, which is proper and correct.
I am surprised that the right hon. Member for North Durham (Mr Jones) was told that he could not be told anything. Of course, HMRC cannot discuss specific issues, but I hope that he will have a more interesting conversation than that.
I thanked my hon. Friend the Member for Delyn (Rob Roberts) for his constructive attitude, and he was right to focus on the privilege of paying tax. There is an element of truth in that, and we should properly defend it. With that in mind, let me sit down.
25 February 2020
The House divided:
Question accordingly negatived.View Details
I advise the House that Mr Speaker has selected the amendment in the name of the Prime Minister.
I beg to move,
That this House notes that almost ten years of Government cuts to council budgets have resulted in a social care funding crisis which means 1.5 million older people have unmet social care needs; further notes the increasing funding gap for adult social care; believes proposals from the Government for access to additional funding for both adult and children’s social care will do nothing to ease the crisis or address the funding gap; and calls on the Government to bring forward as a matter of urgency plans to reform social care including plans for free personal care.
It is right that we have a chance to debate social care today: it is two weeks ahead of the Budget and there is the ever present hope that the Government will announce much-needed social care reform. This reform is long overdue. After nearly a decade of cuts, our social care system is on its knees. For the people who rely on social care and for their families, the reality is that things have got much worse under successive Conservative Governments. Every day last year, 2,000 older people who had approached their local authority for help with social care were turned down. The result is that there are currently 1.5 million older people who are not getting the support they need—each one struggling to cope with basic everyday tasks. This can mean people left trapped in bed all day or going unwashed all week, because family carers can visit them only on the weekends, and those are the people who are fortunate enough to have help from unpaid carers. Around half the 1.5 million get no help at all—not even from family and friends. They cope as best they can until they end up in hospital, and then they cannot get out of hospital because they can only be discharged safely once a social care package is set up, with the local authorities struggling to find the funding for it.
Another failure in our social care system is where people are held in entirely inappropriate institutions because the local authority cannot fund the care they need to keep them safe in the community. There are 2,200 autistic people and people with learning disabilities who continue to be detained on in-patient wards. This is one of the most egregious failures of our social care system. They should be able to live in their own homes with a support package, but the funding is not there. For eight years the Government have been promising to end this scandal, but they have failed to do so.
My hon. Friend is making a great start to a very important speech. Does she agree that it is quite astonishing that the Equality and Human Rights Commission has been forced into a position where it is having to threaten to take action over the Government because of their failure to accommodate people with autism and learning disabilities, and it is people who are suffering as a result?
I absolutely agree with my hon. Friend. The only way that we will see real change is if the Government put in funding to provide the housing and support needed for those people currently trapped in inappropriate institutions. I first raised this issue with the Secretary of State in October 2018, citing the case of a young autistic woman called Bethany. It took 14 months before Bethany was moved out of a seclusion cell and into a more supported environment. Now we have, as my hon. Friend has said, the Equalities and Human Rights Commission launching a legal challenge against the Department for its failure to move those 2,200 autistic people and people with learning disabilities out of those inappropriate units.
We must see action on this issue, because it is a national scandal. We need to see reform so that more people can get the care they need, rather than being left to struggle on alone. Even when people are able to access publicly funded care, there is no guarantee that it will be of acceptable quality. Last year, one in six social care services was rated by the Care Quality Commission as “inadequate” or “requires improvement”. That can mean care homes that are so unclean that residents are at risk of picking up infections. It can mean home care agencies that have not even carried out basic checks on their staff, or home care staff being so rushed that they do not have the time to take off their coats during a visit.
Twenty per cent of councils in England and Wales still commission 15-minute care visits. That is clearly not long enough to provide care. It is not long enough to get to know someone and support them to do the things that they want to do.
A German style system of social insurance would allow somebody who is defined as needing social care to draw down a certain amount of money which they could then use to pay to a relative, a loved one, or a neighbour who understands that person best and who can care for them best. Is that not a sensible basis for a cross-party discussion, between the Opposition and the Government, about whether a German style social insurance system could solve this problem?
I thank the hon. Gentleman for making that point; he does make it on every occasion that we debate this subject, so I congratulate him on doing so again. However, the person he needs to be directing his comments about cross-party talks to is sitting on the Government Front Bench. I am hopeful that the Secretary of State is going to tell us what he is going to do about cross-party talks, because those 15-minute visits are really not good enough.
I agree entirely about the need for cross-party consensus on this issue, but there can be no consensus until there is an acknowledgement of what has caused the care crisis—the underfunding of the health service and cuts to local government budgets, which have had an impact on A&Es, GPs and other services. Until there is an acknowledgement of what caused the situation, there can be no consensus towards a solution.
My hon. Friend is right. I will come to the causes, because it is important to mention them.
The 15-minute care visit reduces the giving of care by care staff to a series of physical tasks, rather than the staff being able to see a person with their own interests, desires and opinions. It really strips them of the time to do the job they want to do. I pay tribute to all care staff, who go above and beyond in their jobs to improve the lives of the people they support. Without them, our social care system would not work, but they do not get the pay and recognition that they deserve.
Care staff, who provide essential practical and emotional support to some of the most vulnerable people in society, are among the most poorly paid workers. The average hourly pay for care staff is below the rate paid in most UK supermarkets. On average, care staff are paid less than cleaners and healthcare assistants in the NHS, and this has led to a vacancy rate of 122,000 care jobs and a turnover rate of 33%. Now the Government are planning to make the situation worse by turning away people who want to come to this country to work in social care. One in seven care workers is from outside the UK, but the average care worker earns £10,000 a year less than the Government’s immigration salary threshold, so will the Secretary of State tell us just how he thinks he is going to be able to fill the large number of vacancies in the social care workforce?
My hon. Friend is making a powerful speech. Does she share my concern that poor pay and conditions mean not only that these workers are exploited, but that there is a high degree of turnover and a lack of investment in training and development, which in themselves have a significant impact on the quality of care that is delivered to some of our most vulnerable residents?
Once again, I absolutely agree. My hon. Friend is right to emphasise that point.
Last week I met home care support workers in my constituency who are campaigning to be paid a real living wage, and they told me about their struggles to manage financially. One staff member talked of working 90 hours for four consecutive weeks at an effective rate of £6.10 an hour. Others talked about being bitten or punched, yet still they continue to do the support job that they love. I pay tribute to their commitment; in the case of social care, doing a rewarding job does not pay the bills.
Does my hon. Friend agree that far too many essential careworkers are employed on zero-hours contracts, which we really need to see kicked into history?
I very much agree. We need to pay care staff the real living wage, provide them with training and end the use of zero-hours contracts.
I think it is clear enough that the Labour party believes that the current system is not working, and I am sure that the Secretary of State knows it too. Councils just do not have the funding required to deliver the care that people need, and they are faced with a stark choice—either they cut back on the quality of care, or even fewer people receive any help at all. Only a third of directors of adult social services think that their budget will be enough to meet their statutory duties this year, which means that thousands of people who approach their local authority for help with their care are turned down for support. Without investment and a plan, social care services will be pushed deeper and deeper into crisis. Expert report after expert report has pointed to social care being on the verge of collapse, and those reports make it clear that councils cannot deliver adequate adult social care provision without a sustainable, long-term funding strategy. Yet what we have seen from the Government, year after year, is short-term and piecemeal funding.
The Secretary of State may repeat, as his colleagues did yesterday, that the Government are allowing councils to raise council tax this year to fund social care services, but the Opposition know that council tax is a deeply unfair way to fund this vital public service. A 2% rise in council tax rates in Wokingham will raise twice as much money as it would in Knowsley. Even if we raised council tax by 2% every year, the Institute for Fiscal Studies says that by the end of the decade social care will make up over half of all local government spending. This means that other vital services will continue to be cut back. That is certainly the situation I see in my own local authority area.
The shortage of resource and people in the system means that more responsibility falls on families. I know that my hon. Friend recognises the unsung heroes who are young carers—children who miss out on education, a social life and so much more to care for a parent or sibling. Does she agree that the Government need to do more to help to support organisations like the Eastern Ravens Trust in Stockton, which does so much to help these young carers to have a life of their own?
Indeed I do. I am looking forward to the establishment of the new all-party group on young carers, but it is tragic, in a way, that we have to meet in new all-party groups to try to find some way of taking the burden from those young carers.
As local authorities struggle to fund social care, an increasing number of people are forced to take on the financial burden themselves. Some 143,000 people are currently faced with catastrophic costs of over £100,000 for their own care. Over the past three years, 9,000 people have asked their local authority for help after completely depleting their own savings to pay for their care. This means that people are having to sell their homes that they may have lived in for their entire lives to fund the care that they need. The Prime Minister has promised to stop this situation, but with no plan and no proposals for how he achieves that, it is likely that many more people will be put in this position going forward. The Government could drastically reduce the number of people faced with catastrophic costs for their care if they set a lifetime cap on care costs. The Government proposed a cap in 2013. They legislated for it, but dropped it in 2016. That cap would have gone some way towards reducing the number of people now faced with catastrophic social care costs. The Government’s own impact assessment showed that by this year 37,000 people would have benefited from the cap if it had been introduced in 2016.
But reform is not just about protecting housing wealth. It is important to do that, but reform also has to offer a solution to the people who are currently stuck in bed all day unable to get themselves dressed, or needlessly stuck in hospital. The solution that Labour favours is to offer free personal care to ensure that everyone is supported with the basic tasks regardless of their ability to pay. Free personal care was introduced by a Labour-led Government in Scotland in 2002, and it is ensuring that more people there receive publicly funded social care. Free personal care has been backed by the House of Lords Economic Affairs Committee and by charities and think-tanks.
We believe that it is vital that we push forward with this reform because progress to date has been far too slow. In October 2018, the Secretary of State talked about:
“The adult social care Green Paper, which will be published later this year”.—[Official Report, 17 October 2018; Vol. 647, c. 736.]
In 2019, we were told that there would be a Green Paper “that summer” that would set out the future of social care, but it never arrived. It was delayed twice before being dropped completely. Seven months ago, the Prime Minister stood on the steps of Downing Street and said that he had a plan to fix the social care crisis. There is still no sign of it. Perhaps this plan is in the same state as the promised Green Paper. The Government said that they would instigate cross-party talks on social care within the first 100 days of the election. We are now 75 days on and we have yet to hear from the Government on their proposals.
Labour is the only party, as it stands today, with clear plans for the future of social care. Labour’s plan for social care would close the funding gap, cap care costs, and introduce free personal care and improved pay and working conditions for care staff. In contrast, we have no action from the Government on social care. Councils are reliant on piecemeal funding announcements and raising ever higher levels of council tax, yet these measures leave them struggling to meet demand. So Labour’s message to the Prime Minister and the Secretary of State is clear: they need to put in the extra investment needed to stabilise the care system, introduce free personal care, bring back a cap on care costs, and develop a plan to improve the pay and working conditions of the care workforce. I want to make it clear that Labour will be happy to sit down with Ministers and talk them through our proposals, as the Prime Minister does not appear—at this point in time, at least—to have any plans of his own. I urge hon. Members to vote for our motion tonight to ensure that the Government have to finally meet their pledge to fix social care.
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes that the Government is committed to fixing the crisis in social care; and supports the Government’s commitment to find a long term solution for the growing need for care and commitment to an ambitious three point plan, including extra funding every year, seeking a cross party consensus and ensuring the prerequisite of any solution is a guarantee that no one needing care has to sell their home to pay for it.”
This is a welcome opportunity to debate social care—a subject of vital importance—and I want to set out how we must rise to the challenges and celebrate all that is good. We must recognise at the start of the debate that there is much to celebrate, including the millions of people who work in social care, to whom we pay tribute. I want to welcome someone who is new to working in social care: my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who has joined the team as Minister for Care. I pay tribute to her predecessor, my hon. Friend the Member for Gosport (Caroline Dinenage), who led the care system so effectively and delivered a legacy of better training, better recruitment and a real focus on carers; that is a legacy to be proud of.
Let me start with the context for this debate. It is rightly about both adults of working age and older adults. The people of this country are living longer. Over the next decade, the population aged 75 and over is set to increase by 1.5 million, and over the next 20 years, the number of people aged 65 and over is set to increase by almost half. That is emphatically a good thing. More people living for longer is not some problem to be managed; it is an opportunity to be welcomed, and welcome it we do.
My right hon. Friend is right to highlight the significant challenge that an ageing population with multiple medical co-morbidities presents to the health and care system. In that context, it is not just about extra funding, which is obviously welcome to the care system; it is also about transforming the way we deliver care. Is it not time to consider a single point of commissioning for health and social care? If we were designing the system today, given the demographic challenges he has outlined, it would look very different from the system we have.
My hon. Friend is right that it is about more than just money. The money is, of course, important, but it is also about how the system is structured. There are parts of the country where the co-commissioning he calls for already exists, and we can see the improvement in efficiency that we get out of that. The hon. Member for Worsley and Eccles South (Barbara Keeley) rightly mentioned those with learning disabilities and autism, of whom there are more than 2,000 in in-patient settings. We are reducing that number and supporting more people to move into the community, including in the example that she mentioned. She talked about the challenge of that requiring more money. Actually, community settings are often better for the patient and cost the taxpayer less. As my hon. Friend says, improving the commissioning and the system is a critical part of the solution, so that yet more people can be moved out of in-patient settings.
The Secretary of State talks about transforming care and services so that we focus more on prevention, early intervention and help in the community and at home. That is what we should be doing, so why, as the National Audit Office has just reported, have we seen less money spent on public health, primary care and community care under this Government in the last five years? This Government are obsessed with hospitals, which is not the way that we want to go—it is about care in the community and at home.
The hon. Lady is dead right, and I have changed that direction of travel. This year is the first year for a generation when there has been an increase in the proportion of the NHS budget going to primary and community care. That change was at the core of the long-term plan. I insisted on that because I entirely agree with her analysis that getting more support out into the community is critical. This has been going in the wrong direction for a generation, and we are just starting to fix it.
I want to pick the Secretary of State up on the point that he made a few moments ago. We had an exchange at the end of January about life expectancy. He says that life expectancy is increasing. It is absolutely clear from Professor Sir Michael Marmot’s report, and it has been clear since 2017, that life expectancy is stalling. Sir Michael said that
“life expectancy actually fell in the most deprived communities outside London for women and in some regions for men.”
I have written to the Secretary of State and I have not yet had a response, but he has an opportunity to correct the record now.
I saw the letter and I absolutely will reply to the hon. Lady. What I have said before, and I repeat now, is that life expectancy in this country is rising. There are parts of the country where that is not true.
It is flat.
It is not flat, it is rising, and it is really important that this debate, which is so critical, is based on the facts. The increase in life expectancy should be shared right across the country, and it is not, and we are determined to fix that. We are determined to ensure that life expectancy in this country rises everywhere. That is not the case and it needs to be the case, but life expectancy overall is going up. That is the fact.
The report says that it has almost ground to a halt since 2011. These are the facts, and there is an onus on the Minister to be absolutely clear about this. We cannot fudge this issue.
As I said, life expectancy is rising, Madam Deputy Speaker.
The Secretary of State will have seen Sir Michael Marmot’s report, launched today. Indeed, one of his own departmental officials spoke at the launch, because he could not make it, and said that no one could disagree with the analysis. Sir Michael Marmot says that life expectancy advances are flattening and even going backwards—they are decreasing—for the poorest 10% of women. Is Sir Michael Marmot wrong? Is that what the Secretary of State is saying?
No. What I am saying is that life expectancy, as I have repeated, is going up, but there are areas where it is not, and we will and we must tackle that. The challenge for us as a country is not to try to pretend that things are different to the facts. The challenge here, which Opposition Members will not accept, is that there are parts of the country where life expectancy is advancing rapidly and there are parts where it is not, and we must tackle that. We cannot have a decent policy conversation if half of the debate will not accept the facts on the ground.
The Marmot report was published this morning. It is absolutely critical that we level up life expectancy. The fact that in Blackpool a healthy life expectancy for men is 53 years yet in Buckingham it is 68 years is a disgrace, and we will put that right, but you cannot put things right if you ignore the facts when you are starting.
I just want to round this point off. What does the right hon. Gentleman think happens with life expectancy when 1.5 million older people are going without care? Does he not think that the impact of the lack of social care, especially on women in deprived areas, is a key factor?
I do not recognise those figures, because—
Because they don’t suit.
No, I do not recognise those figures because they are not the accurate representation of what is actually happening. There are many within that figure who are judged under legislation to need to pay for their own care, and they do. We have to start from a basis of fact and, frankly, until Labour Members start working on this from a basis of fact, it is very difficult to take their contributions seriously.
The critical thing is that, as life expectancy is increasing, more people are looking forward to ageing in comfort and dignity, and that is good news. Opposition Members may not like it. It is odd; they do not seem to want to think that life expectancy is going up. We have a duty to ensure that our social care system is equal to the task. There are many things we should be proud of in our social care system, although we would not have gathered that from the speech by the hon. Member for Worsley and Eccles South. Some 84% of providers of social care are rated as good or outstanding, and 90% of people who receive care are satisfied with its standard. The proportion of adults with learning disabilities living in their own home or with their family has increased every year since 2014-15. That is good news, which we should welcome.
Is my right hon. Friend not right to say that life expectancy is continuing to go up? We would expect it to slow down, because we are not all going to live forever. The key thing is not just how long we live for; it is how long we live a high-quality, healthy life for.
My hon. Friend is absolutely right, and that is the sort of analysis on which we can make decent policy progress, because it based on the facts, rather than on making things up.
I will give way to the hon. Lady one more time and then I will move on, because we need to make some progress.
Again, for the record, let me say, as a former public health consultant, that healthy life expectancy is also going down.
I will write to the hon. Lady to give her the facts. Do Members know what the facts will say? The facts show that life expectancy is going up—I think I have made that point. Opposition Members may not like the fact that things are getting better in this country, but we will make sure that we level up, so that things get better in all parts of this country. We welcome progress, but we demand more.