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.

Bill Presented

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).

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.

Ordered,

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).

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, my hon. Friend the 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, 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, one 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 in with 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 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 cases 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 as 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 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 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 paywall 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.