I inform the House that I have certified clause 3 of the Bill as relating exclusively to England, Wales and Northern Ireland on matters within devolved legislative competence.
I inform the House, moreover, that I have selected the amendment in the name of the official Opposition.
I beg to move, That the Bill be now read a Second time.
When our party first came to office after the great crash, after the years of borrow and spend, our country was close to the abyss. We inherited then the greatest deficit in our peacetime history, a deficit of a magnitude that posed a real and present danger to every one of us, to every man, woman and child in our country and, indeed, to generations yet to come.
This was a deficit greater even than that created by another profligate Labour Government decades before that party reduced our country to scampering cap in hand to the International Monetary Fund for a bail-out, because they had brought us to the point of bankruptcy. It is the Conservative party that has once again—just as we did then—brought our country back from the brink and into better times.
I will make a little progress.
What does this history teach us? Is it that that Marxism provides the answers, as the Labour leadership would have us believe; that fomenting the overthrow of capitalism, as the shadow Chancellor put it, can lead to prosperity; or that high taxation, nationalisation, the blatant sequestration of private capital and borrowing on a scale hitherto unimagined might provide us with the answers or some easy way out? No, the lesson is rather more prosaic but, none the less, noble: that living within our means matters; that those who work hard for their money should get to keep more of it; that the taxman should be held back from the pay packets of those who create and strive; that those parts of our country that have, for too long, felt neglected and left behind should once again be included and heard; and that economies, our communities and our very liberty thrive if we are freed from the burdens of the excessive state interference advocated by the Labour party.
My right hon. Friend may not have read “Economics for the Many” by the shadow Chancellor, but he will not be surprised to learn that in that book the shadow Chancellor says that the fact that Labour’s figures do not add up is “largely irrelevant.” Does he agree that that shows a shocking disregard for the economic future of our great country?
My hon. Friend is entirely right. Of course, it is easy to make pledges when in opposition. Indeed, in the run-up to the last general election the Leader of the Opposition appeared to pledge the abolition of student fees, only to discover that the measure would cost around £100 billion and is totally unaffordable.
What I can confirm to the House is that in reducing corporation tax from 28% to 19% since 2010, we have increased the yield from corporations, not just by a few per cent. but by 50% over that period. We are now talking about taxation, so let us ask: what is Labour’s plan? It is to put taxes up to 26% for large companies and to 21% for small businesses, which would be a full 50% increase in tax bills for large companies and a 25% increase in tax bills for smaller companies.
I thank my right hon. Friend for making that important point. Does it not underline the fact that if we cut the rate, we up the take? Does it not also show that Labour’s plans would result in reduced revenues, meaning more spending, more borrowing and more debt, which would take us back to the brink once again?
My hon. Friend is entirely right; there is no doubt that if you keep on putting up taxes, as Labour says it will do and would be forced to do if, heaven forbid, it was ever to form a future Government, because its numbers do not add up, you end up killing the goose that lays the golden egg.
My right hon. Friend is an excellent Minister, knocking on the door of the Cabinet, so I am sure he will agree with everything—[Interruption.] I know he is one of us, too. Is he slightly concerned that we are increasing spending by £30 billion a year up to 2023 and that we are taking out of the state the same proportion as Gordon Brown took out? As a fellow traveller in the Conservative cause, can he convince me that he is committed, as I am and those on our Benches are, to reducing government debt?
I can assure my hon. Friend that we are indeed reducing government debt. The Office for Budget Responsibility has forecast that in each year of the coming period we will be reducing debt as a percentage of GDP. We have of course met our two intermediate targets a full three years early. We are fiscally responsible, which is why we are in a position to be able to support our public services in the very significant way that we are doing.
The Conservative party came to power in 2010 promising to eliminate the deficit by 2015. Not only has it not done that, but it has doubled this country’s debt and brought public services to their knees. Is the Minister claiming that this project has been a success?
The hon. Lady will know that the deficit was up at about 10%—£150 billion a year—at the time we inherited the mess that her party left us with. That deficit has now reduced by a full 80%, to below 2% of GDP, and will go down further as we move forward. Now, let me make some progress.
As I was saying, these are the economic facts of life and, as a great lady once said:
“The facts of life are conservative.”
Under this Conservative Government, sound finances are being restored. The future is brighter, bringing with it our increased commitment to our public services, most notably to our highest priority of all, our national health service. Thanks to the commitment of this Government and the hard work of the British people, we are now entering a new era. The deficit is fading, real wages are rising, the debt is declining and better times are returning. We now have a near record level of employment, with unemployment at a 40-year low, and we have halved youth unemployment since 2010. Central to this progress is my right hon. Friend the Chancellor’s Budget and this Bill.
This Bill introduces a tax cut for 32 million people, through bringing forward by a year our manifesto commitment to increase the personal allowance to £12,500 and the higher rate threshold to £50,000.
My hon. Friend is absolutely right; a large proportion of the tax cut that has been delivered is in the form of a significant increase in the personal allowance—that amount someone can earn before they pay any tax—and that of course has benefited the low paid very significantly and will continue to do so.
Will the Minister also confirm that this Government are raising the living wage—the national living wage—and that that really is giving people more money? Although that might be difficult for businesses, it is really beneficial for our constituents.
My hon. Friend characteristically makes an important and insightful point. The national living wage, which this Government brought into being, was raised by 4.4% last year and will be raised by a full 4.9% in the coming year. That is well ahead of inflation, which is why in respect of net income those in the lower deciles of the income distribution have benefited disproportionately compared with those at the top end. I remind the House that the wealthiest 1% pay some 28% of all income tax that the Exchequer receives.
Perhaps I can amplify the Financial Secretary’s point about the minimum wage. Since 2010, the national minimum wage, or living wage, has gone up by 38%. When that is combined with the increase in the personal allowance, somebody who works full time on the minimum wage is 44% better off post tax, and inflation over that period was around 25%. Is that not delivering for those on the lowest incomes?
My hon. Friend is absolutely right. The Labour party will tax and tax, borrow and borrow and spend and spend. The Conservative party is reducing the tax burden. Collectively, we have now taken more than 4 million people out of tax altogether, which has disproportionately helped those on lower incomes.
That is the wonders of the management and proper stewardship of the economy. It is about taking a balanced approach to our economy, which is getting the debt and the deficit down and restoring our country’s reputation for financial stability and confidence. That is now coming through to the point where we can start to take away some of the pressures of tax and of public expenditure as we move forward to more positive times.
Does that not underline the fact that we can have strong public services and strong investment in the NHS only if we have a strong economy? It is because of the difficult decisions that the Government have taken over the past few years that the economy and the job market are so strong that we are able to make the investment in the NHS that the Labour party would not have been able to make.
My hon. Friend is entirely right. Let us take employment: in this country we have a near record level of employment, we have a near record number of women employed, and we have the lowest level of unemployment since the 1970s. What is Labour’s record? Every single Labour Government in history have left office with unemployment higher than when they started. That is a simple fact. [Interruption.] It may be an inconvenient one, but it is a simple fact none the less.
The tax cut in the Bill is worth £9.5 billion. That means more money in people’s pockets. Since 2015, some 1.7 million more people have been taken out of tax altogether. The saving to the average taxpayer has been more than £1,200 since 2010.
What the Financial Secretary has neglected to mention but the Treasury Committee has heard clearly is that in respect of the long-run impact of the tax and benefit changes under this Government since 2015 alone—putting the coalition to one side—it is clear that their successive policies have left the wealthy better off and the very poorest worse off. That is deeply regressive and unjustifiable and it is why the Bill should not be supported.
Hopefully, the hon. Gentleman will welcome the announcement that the Chancellor made in the Budget that we will provide a £1,000 uplift to the universal credit work allowance, which will be worth, when we reach full roll-out, a total of £630 million for 2.4 million recipients of that benefit.
Does the Financial Secretary agree that were we to go back to the situation in 2010, when people had to start to pay tax after their first £6,750-odd, that would mean that ordinary, hard-working taxpayers would have to pay an additional £1,000 in tax and would therefore have less money to meet their day-to-day priorities?
My hon. Friend is right. The problem with Labour’s approach to taxation, and to personal taxation in particular, is that it is a huge discouragement to going out and creating wealth and jobs and the kind of economy that supports the vital public services that Members from all parties wish to see prosper.
Will my right hon. Friend confirm that, for somebody on the minimum wage, if we combine the increases in the national living wage with the increased personal tax threshold, somebody in full-time work is £3,955 a year better off in cash terms than in 2010?
My hon. Friend, as usual, makes a very significant point, which is that by increasing the national living wage by, as I said earlier, 4.4% last year, and by 4.9% coming up in April next year, and by raising that personal allowance to take more and more people out of tax altogether, we are supporting the lowest paid in our country.
Does the Minister agree that, as well as taking people out of tax, with a whole raft of policies this Government are helping wages increase? In Redditch, for example, there has been a 35% increase in median weekly payments to full-time employees, which means that Redditch workers have more money in their pockets.
My hon. Friend is right. For the past six months, we have seen rising real wages, and the latest data show that they have been rising faster than at any time in the past 10 years, so we are the party that is fixing the economy and improving living standards.
I thank the Minister for giving way. Does he agree that abolition of certain restrictions in the labour market, such as payment between assignment contracts, would also increase people’s wages? Will he be making a statement on the Taylor review and its contribution to this debate?
This debate is not the place to make pronouncements about the Taylor review. The Government are considering the Taylor review and the way in which people are working. There are a number of aspects in the Budget that relate to the taxation elements of the way that people work, but we will come back in the fullness of time with a full response to the Taylor review.
As the hon. Gentleman will know, we have made, within this year, more finance available to various Departments, and the Chancellor was very clear about that in the Budget. He was equally clear that there will be a number of decisions to be made in the spending review next year relating to all the Departments across Government.
I am sorry to burst the Minister’s balloon, but if things are as rosy as he says, why is the UK economy not only at the bottom of the G7 for growth forecasts, but at the bottom of all EU countries for projected growth?
I do not think that the hon. Gentleman is entirely right. I do not think that we are at the bottom of the G7 growth table at this precise moment—I think that we are some way off the bottom. He mentioned the important element of growth, and the forecast from the Office for Budget Responsibility is that our economy will continue to grow for the next five years and, of course, we come into this period on the back of five years of continuous growth.
I thank the Minister for my hat trick of interventions and for being so generous. I was looking at the amendment in the name of the Scottish National party in relation to VAT and the policing situation in Scotland. Can he confirm to the House that this VAT muck-up is entirely the responsibility and fault of the SNP? It should take responsibility and apologise for it.
My hon. Friend is right: the Scottish National party will know that when it took the decision to reorganise fire and police in Scotland, it was fully aware and cognisant of the fact that that would mean that VAT was not recoverable. It really is thanks to the Members on the Conservative Benches who represent Scottish constituencies who have made the case so strongly to the Treasury that we were able to change that situation going forward. Perhaps I may now be able to make a little progress.
We have, of course, also announced that we are freezing fuel duty for a ninth year in succession and increasing the living wage by 4.9% from April. In this Bill, we deliver a freeze on the duty on beer and spirits, keeping living costs down and supporting our pubs. Our freezing duty on spirits comes as a direct consequence of Conservative Members representing their constituency interests in the industry.
I support so much of this Budget, which was superb, with the cut in business rates and, especially, the beer duty freeze. Will the Minister agree to meet me and pub owners from the Isle of Wight, because there is still a problem with the way that publicans—small business owners—are being treated by the big pub companies, especially Enterprise Inns, which has quite an aggressive business style that is pushing many of my local pubs into bankruptcy? Is there more that we can do on the pubs code?
I thank my hon. Friend for that important intervention. I know what a doughty supporter he is of the high street, and pubs in particular. We do of course, as a Government, support and have frequent conversations with organisations such as the British Beer and Pub Association. However, I would be very happy to meet him, as he requests, to have that discussion.
This Bill will provide additional relief from stamp duty for first-time buyers who enter into a shared ownership arrangement, and will back-date this relief to benefit those who entered into their purchase on or before the date of the Budget. We will continue to champion home ownership, as well as backing hard-working people and bearing down on the cost of living.
For every Member of this House, the high street lies right at the heart of the communities that we serve. High streets hold within them the very essence of the best of the human spirit—community, creativity, individuality and a collective purpose. They are the places we come together to work, to shop, to socialise, to support, to celebrate, and to invent and create, and this Government wish to see them thrive. That is why we have announced a two-year reduction in business rates of one third for smaller retailers, meaning that up to 90% of high street retailers will benefit. It is also why, in this Bill, we will legislate to allow for the further reduction of corporation tax from 19% to 17% in 2020, helping businesses both large and small. As tax rates have declined—as we have discussed—the corporation tax yield has increased by 50% since 2010. Backing our high streets means backing Britain, and this Government will play their part in this great endeavour.
This Bill will support businesses through the introduction of key allowances and enhancements to important tax reliefs. The structures and buildings allowance will provide a vital tax break for those businesses investing in new commercial property. The annual investment allowance will be increased from £200,000 to £1 million for the next two years, ensuring that companies have a critical additional incentive to invest.
For businesses concerned with deep-sea oil extraction, we will allow for the transfer of their historical tax history, ensuring that jobs, expertise and businesses involved in the North sea are preserved—a measure that the shadow Treasury Minister, the hon. Member for Norwich South (Clive Lewis), described as “corporate welfare” and said should be voted down. That position should be evidence enough that Labour has truly given up on Scotland, something that the Conservative and Unionist party will never do. On the Opposition Benches we have Labour Members who have given up on hard-working people, SNP Members who have given up on our precious Union, and Liberal Democrat Members who have just given up.
This Bill is also about fairness. It introduces a number of important measures that will further clamp down on tax avoidance and evasion. The House will know that this Government have an outstanding record with regard to the collection of tax. We have one of the lowest tax gaps in the world—far lower than was the case under Labour. In fact, the additional revenue raised by having our tax gap at its current level, compared with that in 2005-06 under the last Labour Government, is enough to pay for every policeman and policewoman in England and Wales.
Collecting tax also matters because where taxation goes uncollected, others who do the right thing are required to pay still more, our vital public services go without, or we have to increase borrowing and the burden is passed on to our children. Tax avoiders, whether the largest corporates or the wealthiest best-advised individuals, diminish us all. This Government will continue to clamp down on avoidance, evasion and non-compliance. Specifically, this Bill brings in measures further to address corporate profit fragmentation, whereby companies reduce their tax burden by artificially shifting around their revenues. In the Bill, we will ensure that non-residents pay tax on the capital gains they make on UK commercial property. The Bill also strengthens our diverted profits tax, which has already brought in and protected £700 million since 2015.
This House will know that we have announced a digital services tax, so that large multinational businesses such as search engines, social media platforms and online marketplaces pay their fair share in tax—right here in the United Kingdom.
I want to ask the Minister a technical question. Given that the digital companies’ turnover and, indeed, profits are substantial, why have the Government been so modest in seeking to achieve only a £400 million tax take from those companies?
As the hon. Gentleman will know, the scope of this tax is very clearly targeted on businesses that make substantial value in the United Kingdom as a consequence of the interaction of UK users and the digital platforms they trade across. He will know that there is a small number—relative to the size of the UK economy—of important businesses that are therefore within the scope of the measure. A figure of 2% is very much in line with the kind of figures that the EU was looking at or is continuing to look at—[Interruption.] From a sedentary position, the hon. Member for Oxford East (Anneliese Dodds) is talking about 3%, but she is not actually comparing like with like, because different revenues would be in scope under the two different approaches. The short answer is that this has to be proportionate: it is about levelling the playing field. Along with this particular measure, we have also announced that, for our high streets, we will be reducing business rates by a full one third for 90% of smaller retailers.
My hon. Friend is right. If we look at some of the relieving measures on tax that have been provided to Scottish taxpayers, we can see that they come by way of the increases in the personal allowance that this UK Government have made. He is absolutely right to highlight the fact that Scotland is becoming more of a high tax jurisdiction.
If the Minister is serious about introducing a digital services tax, why did he not just introduce it overnight? When we look at the Red Book, we see it says that the income and the delivery of this policy are both high risk. If he is serious about taxing the digital giants that are offshoring their money, why is he giving them a couple of years to make provision elsewhere? [Interruption.]
The hon. Lady will know that we are a first mover: we are one of the first countries in the world to take this approach. She will also know that this is a complicated tax and a tax that we absolutely have to get right. I have already spoken about the restricted scope of this tax. We want to make absolutely certain that it works and that it does not discourage technology companies from coming to this country, as they do in their droves under the economic policies of this Government.
Given that digital companies know no borders, does the Minister agree that, while we take this first step to introduce taxes on international digital companies, it is important to continue to work with our neighbours and others across the world on an international effort to do so?
My hon. Friend is totally right. We have been in the vanguard of efforts conducted through the European Union, the OECD and the G20 to come up with a multilateral approach on this matter. That is the preferred option of the Government, and rightly so, because it obviates the problems that one would otherwise have with aspects of double taxation. It is helpful if we all move together, and that is still our aspiration, but we have said that if we do not get that multilateral agreement within the next year or so, we will move ahead with our measure.
The Financial Secretary may be going to touch on this, but I will ask him the question anyway. He has not said much about investment in climate change technology. There is a lot of concern among scientists about the effect of climate change. Can he give us any indication of how the Government are investing in this technology?
We are investing hugely, and the evidence is there that we are succeeding. We have had a 43% reduction in carbon emissions since 1990. We are still pursuing, committed to and confident that we will meet our 80% reduction target by 2050. There are measures in the Bill, for example, to provide a tax relief for those who charge their cars through the businesses for which they work. We will continue to be very forward-leaning on the issue of the environment.
On that point, the Government’s failure to introduce a latte levy on single-use disposable coffee cups and bottles or to introduce a tax on virgin plastic until 2022 means that 700,000 tonnes of plastic packaging will be thrown away before 2022. Is that what the Financial Secretary means by making sure that the polluter pays in tackling climate change?
What I mean by our environmental credentials in that area is that we are consulting, as the hon. Lady will know, on the amount of packaging that contains recyclable plastics. We see that not only as informing what we will subsequently do but as helping to change behaviour, much as the sugar levy changed behaviour in the sugar-based drinks sector. We have a very strong record in this area. We have already done a number of things in the public health area, and we will also make progress on the environment.
On that point, I was pleased to see in the Budget that there is money for the planting of millions of trees. That will have a huge impact not only on ameliorating the effects of flooding and on health and wellbeing, but in terms of the carbon that those trees will take in, which will affect climate change.
My hon. Friend is right to highlight that commitment, which will see 11 million trees planted as a direct consequence.
Our country faces the great challenge and opportunity of leaving the European Union. Some say that Brexit has been so all-consuming that we are not capable of seeing beyond it—that we are not able to lift our eyes to the future because we are too fixated with the challenges delivered by the past. However, Conservatives are better than that. On the eve of the D-day landings one of the greatest pieces of legislation passed by this House—Rab Butler’s Education Bill—received Royal Assent. Even war did not stop us then.
As we take our country forward to a world beyond austerity, beyond the toughest of times, beyond the sacrifices that have been endured and, indeed, beyond Brexit itself, our country will show that we are capable of not just enduring but thriving, and that no challenge is too great for us and no opportunity is beyond our reach. This Bill, following this Budget, sets us firmly on that path. I commend it to the House.
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House declines to give the Finance (No. 3) Bill a Second Reading because it derives from the 2018 Budget which confirmed the continuation of austerity and tax cuts for the wealthiest, failed to introduce a fair taxation system which protects middle and low earners but requires a greater contribution from the top 5 per cent of highest income earners, implied real terms per capita cuts for unprotected departments between 2019-20 and 2023-24, failed to halt roll-out of Universal Credit with planned social security cuts still to come, failed to raise the funding needed for mental health services, failed to provide the long-term funding needed for long-term adult social care, failed to provide adequate school funding, failed to address the funding gap that local councils face, failed to end the funding crisis facing public services, with police, teachers, nurses and doctors having no reassurances that the public sector pay squeeze will end in 2019, failed to tackle child poverty and growing inequality across our country, failed to tackle the fact that 87 per cent of the impact of the Government’s tax and benefit changes since 2010 has fallen on the shoulders of women, failed adequately to address climate change and delayed the much-needed reduction in the maximum stake for fixed-odds betting terminals until October 2019, and because the Bill is not based on an amendment of the law resolution, thus restricting the House’s ability to properly scrutinise and improve the Bill.
I have to give credit to the Financial Secretary to the Treasury: he managed to keep his face straight throughout his delivery. We had lots of flowery words from him, and I am surprised that we did not have phrases in his cliché-ridden speech such as “sunny uplands”, “green shoots of recovery” and “the end of the rainbow”. Why were those clichés not in his speech as well?
We have been asked to scrutinise a Finance Bill under the most difficult circumstances the Government could create, short of barring the Opposition from actually attending the House. The timetable set for the Bill meant we were expected to table amendments on Second Reading before the Bill had even been published—an abuse of power. To add insult to injury, printed copies of the explanatory notes to the Bill only arrived in the Vote Office earlier today. How busy Members are expected to provide proper scrutiny under these conditions is beyond me. It is an abuse of power. Worse still, the Government’s refusal to table an amendment to the law for the third Finance Bill in a row means that we will be unable to meaningfully amend this proposed legislation following Second Reading. As I said in my speech on the Budget resolutions, that is unprecedented. It is another abuse of power.
Last week, the President of the United States fired his Attorney General to undermine an investigation against him. Mr Trump also barred a journalist asking legitimate questions from the White House. Perhaps he gave the Prime Minister the odd tip on how to side-step conventions and constitutional process. Stitching up Committees with a false majority, obstructing scrutiny of the Finance Bill and giving a £1 billion bung to a minority party to keep the Prime Minister’s Government alive are further abuses of power. In any other country, we would use a word for this behaviour: malfeasance, plain and simple.
This is a desperate state of affairs, especially given how much the Bill is in need of change. The Government’s policies announced in the Budget fail to tackle a single one of the great challenges now facing this country after eight years of austerity. Most notably, this Bill of broken promises fails to end austerity, as the Prime Minister said it would during her conference speech—once she had finished gyrating. As our reasoned amendment points out, this promise has been broken: £4 billion of Tory social security cuts are still on their way. Only half the money cut from universal credit work allowances was returned to the programme. There was nothing on the social security freeze or the two-child limit.
The hon. Gentleman mentions the reasoned amendment, which refers to the long-term funding of adult social care. Two Select Committees, the Health and Social Care Committee and the Housing, Communities and Local Government Committee, recommended a social insurance system in their inquiry’s report. Is he willing to support that cross-party recommendation as a solution to the future funding of adult social care?
The hon. Gentleman needs to speak to his own Government about cross-party support. My party cannot discuss these issues in this Chamber, let alone outside it. He would be better off engaging with his own Government on these matters.
What we have in the Budget is more spent on potholes than on our schools, not a penny more for everyday policing or fire services and nothing to begin to unravel the 40% budget cuts that have taken place across local authorities.
My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) asked a very straightforward question, and I am going to give the hon. Gentleman another chance to answer it. Will he, as suggested by my hon. Friend, engage in cross-party support—yes or no?
From a sedentary position my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) says that one in four policemen have gone from his constituency. That is similar to what has happened in my constituency and, I suspect, in the hon. Lady’s constituency. There is not one penny more of day-to-day spending in the Budget. She should be asking her Government why the police are still being underfunded.
“Regressive” and “Conservative Government” go in the same sentence pretty easily.
The Budget does not move us towards parity for mental health services. It does nothing to end the crisis in social care, to which the hon. Member for Thirsk and Malton (Kevin Hollinrake) referred, or in children’s services. It gets worse as the days go on. The Budget was a continuation of austerity under anyone’s definition, and the Bill is a written testament to that broken promise.
As ever, the hon. Gentleman is very passionate. May I just take him back to the question put by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake)? Will he support that generous and very sensible proposal? Does he think that that is the right way to go about things?
Back in 2010, at the height of the crisis the hon. Gentleman’s party left us with, it was a Labour Chancellor, Alistair Darling, who said that Labour would close the deficit by 2020. That will not now happen until 2025. How can the hon. Gentleman credibly suggest that this is an austerity Budget?
The Government have apparently suggested that we should have a cross-party talk to resolve the issue of social care. They were offered that chance by the Labour Government before the 2010 election and they turned that opportunity down. Let us set the record straight. Tory Members talk about Labour Governments leaving office with high unemployment, but the Major Government left 3 million people unemployed. We introduced the minimum wage, and they said it would lead to 3 million people unemployed.
National living wage—the clue is in the title—but what the Government have proposed is not a living wage.
The Chancellor did not use the phrase “climate change” once during his hour-long speech—it felt longer than an hour, I’ll grant you that—despite the recent Intergovernmental Panel on Climate Change report, which warned that we only have 12 years to avert climate catastrophe. The Government cling to their woeful plastic straws initiative, but the only measure in the Bill addressed to the 100 corporations that produce 71% of our global emissions was yet another tax break. That is the sort of stuff that the Government should be tackling. This is for the oil industry. The Government have really got to get to grips with its approach to climate change. This oversight is catastrophic. History will remember the Government’s failure to tackle the greatest threat to humanity—that does not overstate it.
Meanwhile, the vulnerable suffer. The Government reneged on their promise to tackle the social devastation wreaked on our communities by fixed odds betting terminals, causing the resignation of yet another Minister. It has since become apparent that they reneged after lobbying by the gambling industry, in spite of the known link between these machines and people taking their own life. Here we have it: the Chancellor of big business pays little regard to the tragedy of lives lost to this awful addiction, as long as the gambling industry can keep making a return and continue its donations to the Conservative party—a fact.
So what remains in the Bill when all these pressing issues have been left out? There has been much discussion about the Government’s change to tax thresholds in clause 5. Let me make our argument clearly: after eight years of austerity, we will not stand in the way of any change that will put additional income into the pockets of low and middle earners, regardless of how that is brought about—[Interruption.] We have said that time after time. However, Labour’s policy remains that we believe we should be taxing the wealthiest more to deliver the end of the austerity that the Tories have failed to provide. We will therefore table an amendment to clause 5 setting out our tax proposals. These proposals would protect everyone earning below £80,000 a year— 95% of the population—from any further tax increases, while ensuring that the top 5% of our society pay their fair share. We call on the House to support our amendment in the Committee of the whole House.
Will the hon. Gentleman concede that 1 million people will be lifted out of the higher rate of taxation and that many of them are consultants working in hospitals, GPs, senior police officers and senior council officers? Does he not recognise that that is a good thing?
The hon. Gentleman really must listen more—[Interruption.] I will send him a signed copy of my speech; he might learn a thing or two.
We believe in building a coalition of the many—a broad, democratic movement of 95% of the public—to spread prosperity across the furthest reaches of our country. We cannot in good faith increase taxes on those who have struggled for eight long years while the richest continue to accrue even more wealth.
Actually, we set out our tax policies in “Funding Britain’s Future”, and I will send a signed copy to the hon. Lady for her to have a look at. Perhaps Government Members can have a tutorial with Sir Roger Scruton and tease out some of the issues.
On Brexit, yet again, we have seen the Government using our exit to hand themselves broad powers, indefinitely. This is a continuation of the theme that I described—of a Government’s demand for power, even though they are clueless about how to exercise it.
The whole House understands that the hon. Gentleman is very enthusiastic about raising the rates of taxes for richer people, but does he not remember that the experience of reducing the top rate of tax from 80% to 60%, and then from 60% to 40%, was that more money was brought into the Treasury on each occasion? Labour’s plans to increase taxes will mean less money for the Treasury and less money for the NHS.
What I do not understand—if the hon. Gentleman really believes this—is why, for 99.3% of the time that the last Labour Government were in power, the top rate of income tax was 40%, whereas for the duration of this Government, it has been either 45% or 50%. Does Labour say one thing in power and a completely different thing in opposition for purely opportunistic, party political and vote-winning purposes?
A Conservative Member of Parliament talking about opportunism! It is not quite as bad as the Liberal Democrats talking about opportunism, I grant you, but there we are—[Interruption.] I think the hon. Gentleman should worry about working people in his constituency who, overall, are £800 a year worse off after the longest fall in wages since the Napoleonic era—I suspect that one or two Government Members were here at the time. The Prime Minister has stood staring at the Brexit menu for two years while her Cabinet devours itself in the queue behind her.
According to the economist David Smith, if Labour policies at the last election had been implemented, people who were earning between £100,000 and £120,000 a year would have been paying, on that element of their earnings, a marginal rate of taxation of 72%. Does the hon. Gentleman feel that that is a fair burden of taxation on earners at that level?
In the context of a fair taxation system, as set out in “Funding Britain’s Future”—which, again, I exhort the hon. Gentleman to look at—we look at everything, and we will look at everything, unlike the Government.
The indecisiveness that I referred to means that the Government have to try to amass as much power as possible so that, if the Prime Minister cannot make her mind up, our hands are tied in a constitutional sense. It seems that, when Tory Brexit theocrats talked about wanting to take back control, they wanted us to give it to them. We cannot allow such a vast power grab to take place from a Government who have shown such disregard for our constitution already.
Turning to another issue, I draw the House’s attention to the measures that are supposed to address tax avoidance—hope springs eternal. Once again, these are simply inadequate. They are a series of half-measures that leave so much room to wriggle, they must have been written by the Prime Minister. The Government promised us a full public register of beneficial owners. Where is it? I have looked through the Bill numerous times—I have to admit, it was painful—and I can see no reference to it. It is yet another broken promise.
We have been waiting for two years for the Government to act to tackle burning injustices, yet they seem more focused on fanning the flames. Again, we find ourselves being forced to debate a Bill that is heavy on rhetoric, as evidenced in the speech from the Minister, and light on content. No wonder the Government will not let us amend it. They are scared that we would put something useful in it and add some policy to the lacuna that is there now.
The hon. Gentleman talks about the policy on tax collection, so surely he will welcome the Government’s innovative approach to unexplained wealth orders. These measures have already been implemented. They are an innovative approach to capturing people who seek to avoid our tax system, and they are bringing wealth into the Treasury. Surely he can find something to welcome in that.
The Bill might be thick, but it is low on content when it comes to public sector funding for public sector pay—we notice that that is for the spending review—and it is very light on content in relation to the Taylor review and people on zero-hours contracts.
My hon. Friend, who is a great advocate for his constituency, is spot on. Some 4.5 million children—7,000 per constituency—are living in poverty in the UK. Conservative Members should concentrate on sorting out that kind of problem. That is what the Government should be focusing on.
The hon. Gentleman just talked about spurious rhetoric, but I want to take him back to what he said about climate change, because he completely misses the point. The Government are doing more on climate change than any before them. A great deal of it is being done by the Department for Business, Energy and Industrial Strategy, the Department for Environment, Food and Rural Affairs and the Foreign and Commonwealth Office—it is about joined-up thinking. We have the 25-year plan, the Agriculture Bill, the green growth strategy and the electric car strategy, and measures in the Budget draw this together. The plastics tax is one very good example of how seriously we take the issue.
Investment in renewables is down. The idea that the Government are green is itself green—it is a pathetic claim.
The Government promised us a public register of beneficial ownership. I have asked before: where is it? It is another broken promise. I call on the House to support the amendment to give the people of the United Kingdom action on the great challenges facing our nation, which the Government appear incapable of addressing and which have been ignored for too long.
I end on the note I started on: the abuse of power. It was once said that:
“Worse than a corrupt government is an incompetent one, not least because having the second characteristic does not exclude the first”.
Given the way the Government have behaved over the ability of Parliament to do its job, that notion is becoming closer and closer as the days progress. It should be deeply worrying to any democrat.
I have declared my business interests in the Register of Members’ Financial Interests.
In the third quarter of this year, the United Kingdom economy grew considerably faster than the euroland economy, which is very welcome. It is a timely reminder that since 2010, under first the coalition and then the Conservative Governments, we have seen conditions created in which there has been rapid jobs growth, a general expansion and improvement in profitability and investment, and some return to the better growth rates we saw before the crash at the end of the last decade.
We also see, however, that in the third quarter the United States economy grew considerably faster than the United Kingdom economy, and the reason is simple. The US has decided on a bold tax reform and reduction programme, which has injected a large amount of extra money into the economy, allowing families and individuals to spend more of their own money without having to give so much to the state, and allowing companies to keep more of their profits. As a result, more American corporations have repatriated their profits to the US, where they then pay the reduced tax rates and either invest that money, give wage rises or better remunerate their shareholders to encourage yet more investment. That model is clearly working. The tax reductions are the main reason the US has experienced much better growth this year than either the EU or the UK.
The Government should not be complacent. While we have so far had a long-lasting and moderate-paced recovery, which is welcome, and a very good jobs recovery, which is extremely welcome, although it gets little credit from the Opposition, policy now is too restrictive. We have an exceptionally tight monetary policy—the tightest of anywhere in the advanced world. We have had two interest rate rises; the ending of all new quantitative easing; the removal of all special facilities from the Bank of England to the clearing banks to lend more money for enterprise and good purposes; much stricter rules to commercial banks that have been very effective in leading to big reductions in new car loans and mortgages for the higher-priced properties; and of course the attack on the buy-to-let sector in the 2016 Budget. This is quite a big monetary tightening.
At the same time, there is still a tough fiscal tightening. What worries me—and clearly the Chancellor, too, given some of the actions in the Budget—is that the fiscal tightening was even tighter this year than was planned. Between the March figures and those in this Budget, an extra £12 billion was taken out of the economy and put into the public sector, mainly through extra tax revenues, but also a bit through the shortfall in the planned spending increases. That is quite a severe extra negative adjustment to impose on an economy that we are already trying to throttle with a very tight monetary policy. I fear that the relatively good growth figures of the third quarter will be slowed by these twin actions.
Now let me praise the Chancellor. He is absolutely right to say that the fiscal squeeze was getting too tight and to take action to try to relax the involuntary fiscal squeeze next year, but he is not doing anything much this year. I would like to see something over the winter as well, because the involuntary tightening is unreasonable. That said, the measures he has introduced to relax the fiscal position a bit are very welcome. With my colleagues on these Benches, I strongly welcome the early fulfilment of the promise on tax thresholds. It was a bold promise, and it is good to see it met, as it is a good way of allowing many more hard-working individuals and families to keep more of the money they earn.
Does my right hon. Friend also recognise that the idea that people on the higher rate of tax are somehow storing their money away in the Cayman Islands is an absolute nonsense. These are hard-working people—often people such as locum GPs and deputy headmasters. Normal working people are being caught in this tax trap.
That is right. Many people who have been relatively successful and got to more senior positions are now being caught by quite penal taxes. I would like to see, in either this or a future Budget, more progressive work done to cut the tax rates to raise more revenue. That has come out very well so far on the Government Benches. We all strongly support what the Government have done on corporation tax rates, which have come down a long way and are coming down further. That boldness has been rewarded with a 50% increase in revenue—an increase that the Opposition do not want. They want to put the rate back up to avoid that increase in revenue. [Interruption.] They nod and say it would not happen, but it does happen. It happens every time they get into office: they put the rates up, tax revenue falls, and we have to come in and lower rates again, but we also have the problem of dealing with the extra borrowing.
I cannot wait until half-past nine when I get to wind up the debate. I say again: causation and correlation are not the same thing. Every independent assessment of what has happened to corporation tax over the last few years, such as that by the Institute for Fiscal Studies, very clearly shows that the reductions in corporation tax have been very expensive and cost this country a great deal of revenue.
Let us take another tax where very clearly a lower rate has produced a lot more revenue: the higher rate of income tax. Labour wisely kept the highest rate of income tax at 40% throughout most of its time in government, knowing it was the way to attract people with money into the country, to attract investors and entrepreneurs, and to encourage people to take more risks. It set a more penal rate just as it left office, as a kind of tax trap for the Conservatives. When the Conservative Chancellor eventually summoned up the courage to lower the rate from 50% to 45%, there was a big surge in revenue.
As one of my colleagues has already pointed out, there was an even bigger surge in revenue when a previous Conservative Government cut the rate from 80% in two stages to 40%. The amount of tax went up in cash terms and in real terms, and the amount of tax paid as a proportion of the total by those on the top rate went up. It was a win, win, win. I would urge the Chancellor to reconsider reducing it back down to 40% because he would collect more revenue and provide that stimulus to enterprise.
I hope that the Government will think again about a couple of tax rises that have been deeply damaging to our economy. The first is the rise in car tax, or vehicle excise duty. The graph showing car sales and output in the UK was increasing progressively between the Brexit vote and the spring Budget of 2017, but it then fell very sharply, and we now have a serious problem. The tax attack on diesel cars, allied to the threat of more controls on diesels, has been particularly damaging. Governments of both persuasions have gone out of their way to attract a lot of inward investment, and new investment, in diesel output and diesel vehicles. They encouraged that, only then to kick the props away and make such investment very difficult.
Indeed. Modern diesel engines are much cleaner, and are comparable to petrol engines. The Government have damaged our industry needlessly, and that, along with the squeeze on car loans, has led to a sharp drop in car output, which is not welcome.
The other issue is stamp duty. The Government have cut it for many people, which is extremely welcome, and I am pleased that they are continuing the trend so that houses can become more affordable for those who do not own them. However, we need to think about people who are trying to buy a different house, perhaps to move up the property ladder in expensive parts of the country; we need to think about the impact of transactions at the dearer end on chains and on people buying cheaper houses; and we need to think about the workloads of removal firms, estate agents, decorators and so forth.
I think that the Government have overdone the tax attack at the top. The market has become ossified, and they must be losing quite a lot of revenue. As the Red Book shows, they are having to scale back the stamp duty revenue forecast, and I am sure that that is to do with the damage that the tax attack has done in relation to the more expensive properties.
I agree. I do not think we will reach the happy position that my hon. Friend and I would like to see, with no stamp duty at all, but I think we could make a great deal of progress by introducing a more realistic stamp duty rate so that people could fulfil their dream of moving up in the world on the housing ladder, or go the other way and buy a smaller home or one in a cheaper location. At present, those penal stamp duties are getting in the way of all kinds of mobility and the fulfilment of aspiration. Surely we should be helping people to fulfil their aspirations, and the wish to live in the right home in the right place is an important part of that.
I strongly welcome the relaxation of austerity in the public sector. We did need more money for health services—I certainly needed it for the hospitals and surgeries in my part of the world—and for social care. More needs to be done, but there has been a bit of progress. I also strongly welcome the extra money for road improvement and maintenance, although, again, more needs to be done.
We want more housing for more people. There are people who need homes, and I am very much in favour of helping to provide them. The Government have many programmes relating to house building and more affordable housing, and that is all very welcome.
However, we need to continue the progress. We need to look at the defence budget, the social care budget, and the schools budget. Certainly, in both the West Berkshire Council and the Wokingham Borough Council areas—parts of which are in my constituency—we need more for our local schools. They are at the back of the queue for funds nationally, and the amounts that we are receiving are simply not enough to sustain the quality of service that we need to supply.
There is one big issue overhanging this debate that few people ever seem to mention. I would like us to have access to the £39 billion that some people want to spend on the European Union withdrawal agreement. We do not owe that money, and I do not think we will get anything out of a 21-month additional period for an argument with the EU about the future relationship. If we cannot secure a good future relationship by March, I do not think it will be easier to do so once we have given all the money away, and signed and sealed a deal on it.
I urge the Government to regard the £39 billion as something that we Leave voters voted to take back control over, and to spend on our priorities. What a transformation we would see both in our public services and our economy if, instead of signing that money away in a withdrawal agreement in the naive hope that it will produce something better—which it will not—we spent it on our priorities. We could have tax cuts with a tax cost, not just tax cuts to raise more revenue in the instances that I have described; and we could have quite a lot of extra money for our schools, hospitals and defence, and our other priorities, much more quickly. We know we have access to that £39 billion over a two to three-year period, because we know the Chancellor has costed it all and made provision for it. Most of it would be spent during the period, which, over that time, would provide a 2% boost for our GDP. That would be an extremely welcome addition, and it would be rather like what the United States of America is trying to do through easier monetary and fiscal policies than those that we are following.
I want a true end to austerity. I am with the Prime Minister in saying that we must end austerity, because ending it means more money for our schools, hospitals and other priorities. As I have explained, we can afford that, if only we do not keep on giving all this money to rich countries that do not want a free trade agreement with us. However, I also want to end austerity for all the people who work in the private sector, and that is about more tax cuts.
So, Government, well done so far; but be bolder, show more courage, and then you will create a much more prosperous country.
It is great to be back here, speaking in another Finance Bill debate—especially when we know that yet another is likely to be just around the corner, in March, if there is a no-deal Brexit and there then has to be what the Chancellor euphemistically calls “a fiscal event”.
As we heard from the hon. Member for Bootle (Peter Dowd), this Budget was a continuation of austerity. We continue to have the benefits freeze, we continue to have the rape clause, and we continue to have cuts in Government Departments. The Scottish Government fiscal resource block grant allocation will have been cut by 6.9% in real terms between 2010-11 and next year, and the Barnett allocation for health has not been passed on in full, despite repeated assurances from the Government that it would be.
Next week we will get into the nitty-gritty of the Finance Bill. Breaking with the tradition so far in the debate, I am going to talk a lot about the measures that are in the Bill, and about some of the aspects that concern me. I shall talk a fair bit about process as well. As the hon. Member for Bootle said, there have been real issues in relation to process, in this Bill more than in previous Finance Bills.
Paper copies of the Bill were not made available until Wednesday, when the House was in recess and those of us who do not live in London were mostly not in London. I had to go to the people in the Vote Office and ask them to post a copy to me. They did post it to me, which was terribly kind of them. However, I had already had to ensure that the Scottish National party’s reasoned amendment was tabled before I had seen any copy of the Bill, let alone a paper copy. The process was not fit for purpose. It is not right that we should have to table amendments before seeing a Bill, and I implore the Minister to ensure that it does not happen again. If it does, we will protest even more vociferously.
There are other issues relating to process. The Chartered Institute of Taxation has said:
“Just 37 of the 90 substantive clauses in the Bill, and 12 of the 19 lengthy schedules, were included in the draft bill published for consultation over the summer.”
It is unusual for so few measures to be consulted on, but what is even more unusual is the timescale. The Government are expecting external organisations to digest clauses that they have never seen before and then to comment on them, in advance of the Committee of the whole House, which we expect to be on Monday and Tuesday next week. Having had the Bill in their hands for less than a week and a half, they will be expected to make serious suggestions for improving it. Let us not forget that the purpose of the scrutiny is to try to make the legislation better. In fact, the Government have pointed out that two measures in the Finance Bill exist to correct errors made in previous years. The Government made errors in previous years when there was a more lengthy consultation process for most of the measures, so I contend that there are likely to be even more errors in this Finance Bill, given that it has not had external scrutiny due to tight timescales.
On that point—the Minister probably knows what I am going to say now—we need to have evidence sessions in the Public Bill Committee. If we are not going to have enough time for appropriate scrutiny in writing that is provided to MPs in advance, it is even more important, especially this year, that external organisations give evidence in the Public Bill Committee. I will move an amendment to that effect when we come to the programme motion. Members across the House have voiced support for the Committee taking public evidence. The problems raised by the Government regarding the fact that we will already have had Committee of the whole House by that point are realistic ones when it comes to the measures going before a Committee of the whole House, but we would still benefit from scrutiny of the measures that are going to Public Bill Committee. If the Minister could find a way, through the programme motion, for the Public Bill Committee to begin with an evidence session including organisations such as the Chartered Institute of Taxation and the Association of Accounting Technicians, it would be incredibly appropriate and even more necessary than usual this year.
As is noted in the Opposition amendment, there is no amendment of the law resolution, which means that any amendments to the Budget have to be tight in relation to the Budget resolutions. That means that we table an awful lot of amendments saying, “We’re calling for a review into this”, and then the Government stand up in the Public Bill Committee and say, “Why would we do a review? You’re only calling for a review. You’re not calling for anything tangible.” But we cannot call for anything tangible because the Government have tied our hands. I have made this point before and I will make it again: the Government must remember that they will not be in government forever. When they are in opposition and the same thing is being done to them, they will be standing up and complaining about it. They have caused this problem and opened these floodgates, and it is really bad for transparency and scrutiny if they keep behaving like this.
Clause 5 is about the personal allowance and the basic rate allowance, and the Government have chosen not to separate out the reserved and devolved matters in this clause. Now, I get that we have not had this devolved situation for particularly long, so this may be an oversight by the Government, but I implore them to ensure that in future years these matters are dealt with in separate clauses. It would be easy for them to do that. Indeed, it would also be easier for Mr Speaker, because he would be able to certify one part as English votes for English laws and not the other part, which is a reserved competency in relation to the personal allowance. This would make scrutiny and read-across better. It would just be a better process of making tax law if these two things were separated out. I ask that these points are taken into account the next time we have a Finance Bill, whether that is in March, October or November next year.
I sit on the European Statutory Instruments Committee, which is currently looking at the proposed negative instruments—it is riveting, honestly. As with lots of the legislation that is coming through just now, the Brexit clauses in the Bill allow the Minister further delegated powers. In fact, one of these clauses allows the Government to set spend for a new tax in relation to current pricing, without saying what that spend would be—I think that is around clause 80. The right hon. Member for Wokingham (John Redwood) talked about taking back control, but parts of this legislation allow the Government more control and more unfettered power. It would actually be more sensible for this House to take decisions over how much spending should be allocated in this regard, rather than giving Ministers more control.
As hon. Members would expect, I am going to mention fixed odds betting terminals. The Government say that they cannot lower the stakes from April next year because it would not give companies enough time to prepare adequately for the changes required, yet they expect companies to prepare adequately for Brexit by April next year, despite not actually having told companies what Brexit will involve. If the Government are serious about making changes to fixed odds betting terminals, they need to stop listening to the lobby on this and start taking into account the public health benefits of the changes.
Does the hon. Lady agree that the delay in introducing the cut to the maximum stake on fixed odds betting terminals will lead to an increased number of people developing gambling addictions, getting into debt and, in the case of problem gamblers, even taking their own lives?
I am very clearly on the record as having supported changing the tariff that people can spend on fixed odds betting terminals from £100 to £2; it is absolutely the right thing to do. Let me be clear that it is quite extraordinary for a Labour Member to stand up and start lecturing the Government on having made an incredibly important and valuable change to legislation that rights the wrong of this fixed odds betting terminals—
I should say that I am not from the Labour party. The Government’s reasoning for the delay is what concerns me, especially when it is completely the opposite of the reasoning they are using about Brexit, where they are saying, “It’s fine. Everybody has heaps of time to prepare—loads of time.”
I thank the Government for the changes to transferable tax history. They have worked very well with the industry to ensure that late-life oil and gas assets can be exploited for longer. I first raised this issue in March 2016, so I am very glad that the Government are now moving on it. However, this is not the whole picture. It is appreciated that this change has been made, as it will have a small but positive effect. I am pleased that this measure has come through, but we still have not seen the oil and gas sector deal, nor have we seen proper unequivocal support for carbon capture and storage. I want the Government to make louder noises about carbon capture and storage, and they need to after pulling the rug from under the feet of the industry three years ago. They need to be even louder and more vociferous in their support because the industry has been stung. The companies that were keen to take part in carbon capture and storage have been stung by the decisions of the previous Chancellor, so the Government need to be as clear as possible about support for carbon capture, utilisation and storage, which is a real industry for the future.
My hon. Friend correctly said that we have not seen an oil and gas sector deal. Is that not disgraceful considering that the Red Book shows that, over the lifetime of this Parliament, the industry is going to bring in an extra £6 billion of tax revenue. Instead, the Chancellor stood up and bragged that he is holding the tax at the current level for the oil and gas industry, instead of actually working to get an oil and gas sector deal?
The sooner that deal can be announced and that commitment can be made by the UK Government, the better for the industry. Confidence is still shoogly just now, and although that confidence is rebuilding, we need clear commitments for the industry and the clear support of the UK Government so that the industry feels more secure and takes decisions on investment and exploration. That is why signing a sector deal as soon as possible would be hugely appreciated.
More generally, one of the things that infuriates and frustrates me about this UK Government particularly is that they think that if they stand up and invent a new definition for something, it will immediately become true. They have decided that if they say “living wage” instead of “minimum wage”, people will actually be able to live on it. That is not how it works. People still cannot live on it, even if the Government call it a living wage, and that is especially the case for the under-25s, who are not eligible for the living wage. It does not cost someone who is 24 less to live than someone who is 25. The Government need to get rid of those differential rates.
The UK Government say that they have ended austerity. By anyone else’s definition, they have not ended austerity. Just because they say, “We’ve ended austerity,” it does not mean that they have actually ended austerity. There are still cuts to Government Departments. There is still the benefits freeze. We still have all those issues.
I am not taking any more interventions.
The OBR has made economic growth forecasts on the basis of a smooth and orderly Brexit. It has not made economic growth forecasts on the basis of us crashing out in a no-deal scenario, so its forecasts are only worth anything if the Government can strike a deal, as the Chancellor knows, which is why he has spoken about another fiscal event coming.
Frictionless trade is not frictionless just because the Government call it frictionless. If a good has to be stopped at the border, if somebody has to fill in an additional form or if there is any delay, that is not frictionless trade. Just because the Government say, “This is frictionless trade,” it does not mean that it is actually frictionless trade.
The Government need to improve their processes around the Finance Bill. This year has been the worst in terms of those processes, and they have to improve. The Government could do that by ensuring that we take evidence at the Public Bill Committee.
The Government have to actually do the things they say they are doing. If they say they are going to give Scotland the Barnett consequentials for health, they should give it the Barnett consequentials for health. If they say they are ending austerity, they should end austerity. If they say they are putting in place a living wage, they should put in place a living wage.
Lastly, if the Government are talking about tax cuts, they need to look at the situation in Scotland. The figures I have from the Library say that around half of taxpayers in England pay more than they would if they lived in Scotland, and that half of taxpayers are the people who earn the least, not the most. The UK Government should look at what the Scottish Government are doing and learn some lessons.
It is a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman).
I welcome the Bill, which implements a Budget that helps individuals and families in my constituency and across the whole country to keep more of the money they earn and helps the businesses in my constituency and across the rest of the UK to invest and grow. This is a Budget that secures the public finances and helps us to repair the damage caused by the Labour party. More importantly, it helps us to prepare for the challenges ahead. As the fourth industrial revolution accelerates, it is important that we help our start-ups and our scale-ups and our engineers, innovators and entrepreneurs. This Budget does all those things.
Ultimately, this Budget will improve our productivity, so that as we leave the European Union, this country is fit for the future and in the best possible position to seize the opportunities presented by new technologies, new industries and new sectors and to support the entrepreneurs who create so much of the wealth that drives our growth and funds our public services.
This Budget builds on the financial and economic stability that we have built over the past eight years. It is a Budget that builds on rising wages, rising employment, a growing jobs market and the rising productivity that has allowed this country to maintain its top 10 position in the World Economic Forum’s competitiveness index. It is a Budget that allows us to seize on our strengths and improve our productivity as we leave the European Union.
This Budget contains measures that will help individual taxpayers in my Havant constituency. It increases the personal allowance to £12,500, allowing us to meet an important manifesto commitment one year early. It raises the higher rate threshold to £50,000, which helps not only the entrepreneurs and small business owners who are prevalent in my constituency but many of our senior public servants to keep more of the money they earn and have more disposable income, so that they can make choices for their families and their own future. That is important to Government Members at least, so despite the pressure in our public services, I welcome the tax cuts in this Budget.
In 2017, we had a record number of start-ups in this country, with 660,000 new businesses, up from just under 600,000 in 2015. This Budget, along with the package of measures being introduced, helps entrepreneurs across the piece. I look forward to more entrepreneurs starting their own business in this country, as I and other Members have done across the country. The work allowance measure helps those who want to get off benefits and into work, and I welcome it.
My hon. Friend is making an excellent point. Does he agree that the whole point about being an entrepreneur is not to be reliant on benefits, but to invest in a business, grow it and succeed, so that people can stand on their own two feet and support others, including those they employ?
My hon. Friend makes a characteristically powerful point. I know that he is an entrepreneur who has started his own business, as I have.
Measures such as the cut to corporation tax will make our country even more competitive. When we started cutting corporation tax in 2010, we embarked on a journey that will allow this country to become one of the most competitive in the G20, with the lowest possible rate of corporation tax. I welcome that measure.
When the hon. Gentleman says, “despite the pressure in our public services,” does that mean he thinks it is acceptable that we have lost 21,000 police staff and so many nurses and that people wait in ambulances outside A&E for four hours or more? Is that acceptable?
I thank the hon. Lady for her intervention. I actually said that it was despite the pressures on our public finances, rather than our public services. We have to get the balance right between cutting taxes for our hard-working taxpayers and investing in our public services. She will know that the Government have announced an increase of £20 billion a year for our NHS—a step that I welcome—but we can only invest that money in our NHS and our public services if we are creating the wealth in the first place. It is the measures in the Budget, including those that cut corporation tax, that will allow us to generate that wealth. It is the measures we have implemented since 2010 that allow us to cut corporation tax.
I welcome my hon. Friend’s intervention. He is absolutely right that small businesses in his Aldershot constituency and in my constituency are the backbone of our economy. We want more of those small businesses. That is why we had a record number of start-ups in 2017, which I very much welcome.
The changes to corporation tax in the Budget will increase the take-up of entrepreneurship, increase entrepreneurs’ ability to start a business and ensure that the marginal rate on them is much lower. We will have the lowest rate of corporation tax in the G20, and we will maintain that ultra-competitive edge as we leave the European Union. The OECD’s evidence suggests that the more we cut corporation tax, the higher the rate of revenue we get for our economy. This is a welcome step that will turbo-charge our economy as we leave the European Union.
Finally, Havant is known for its engineering and manufacturing prowess. Manufacturers such as Dunham-Bush, Lewmar and Kenwood export from Havant to countries all around the world. The reforms to the capital allowance rate and the increase in the annual investment allowance will allow them to buy the machinery, plants and technology they need to expand and grow. I welcome the Bill, because this Budget helps taxpayers to keep more of the money they earn, it helps our businesses to grow and it prepares our country to seize the opportunities of the new technologies of the future.
I am glad to see that those on the Government Benches have stopped making fun of our SNP colleagues’ accents. Of course, as a Londoner, I do not have an accent, do I?
I will address finance for housing in London, where many of the problems we experience are common across the nation, and I will begin by giving a little history. In 1966, leading modern movement architect Richard Seifert completed his iconic Centre Point commercial building on Tottenham Court Road. There were no takers for office space at the asking rate, and Harry Hyams, the developer, refused to lower it. This is an important historical point and it was very much debated at the time. It was empty until 1975—the developer got it wrong.
In an area near Soho where homeless people gather, it was inevitable that the building would be occupied for a period. The charity Centrepoint—ironically named after the building—was set up in a nearby church to tackle the problem of street homeless young people. Recently, a huge redevelopment of this building has been completed, with a change of use to residential.
Centre Point Residences is prime residential property next to a Crossrail station. The conversion is magnificent—if you like that kind of thing. However, it was reported two weeks ago that the developer had been unable to sell half the flats at the price he wanted, so he has taken them off the market completely, saying that he had already covered construction costs and leased the retail spaces at ground level—there was “no point” trying to sell. He got his timing wrong. Half the flats will remain empty long term, and there is no incentive to sell or rent them out.
This is the ultimate irony: homeless people line the streets in their hundreds—many, as we know, are servicemen—and they are ever more visible and desperate as winter approaches. Meanwhile, there are a recorded 20,000 empty homes in dark buildings across the capital, and 15,000 high-end properties on the market, and that does not count those taken off the market. Centre Point Residences is a monument to developer greed, and its empty homes distort the market further. It is obscene.
Meanwhile, the chief executive of Persimmon has been able to make a hasty retreat from his job to save the company embarrassment, with a £75 million bonus. Persimmon—which has a very mixed reputation, to put it politely—benefits hugely from Government grants via Help to Buy—another alarming example of the trickle-up economy.
What has the Chancellor done to address these issues in the Budget? He has given a few small inducements for new shared-ownership buyers, including no stamp duty; an extension of Help to Buy; further inducements to convert retail to residential; removal of the borrowing cap for council building programmes; and funding for housing associations. Most of, if not all, those schemes have problems: some inflate housing prices, and a majority still rely upon developers for delivery. The housing revenue account housing cap will apply only to council housing not already transferred to housing associations. That is about half.
In Kensington, in London and in other areas where property is expensive, the delivery of social rented housing still relies upon selling private high-value property, but this market has failed spectacularly. If we leave the provision of housing to the vagaries of the market, with no inducements to ensure people will ever live in the homes built, we will never house our homeless. If we leave disposal of new homes to the conscience of developers, we will never house our homeless.
Let us look briefly at the tax breaks that encourage people into private home ownership, for better or worse, all at the taxpayer’s expense. Council tax, based on 1991 values, is effectively a subsidy to landlords. Capital gains tax relief costs the country about £6 billion a year. The lack of property tax costs, apparently, £11 billion a year. The right-to-buy subsidy costs £2 billion a year. We also have shared-ownership subsidy, tax relief for buy to let, and Help to Buy, which pushes prices up, and indeed even subsidises second homes for those earning six-figure sums.
We need a thorough and honest review and a frank discussion about these subsidies—who in reality they are helping—and whether there are better ways to spend taxpayers’ money to provide stable homes for our families, not embarrassing pay-outs to chief executives.
We need a thorough review and a frank discussion of the role and practice of housing associations, now self-styled “developers with social purpose”, and their management of existing and new buildings. We need to get a grip on construction companies offering apprenticeships, for which many quite simply do not have the capacity, let alone the will. A billion pounds in apprenticeship levy lies unspent. We cannot build without builders. We need a nationwide needs assessment to inform our house building. Evidence is a better guide to housing need than developer greed.
On matters of concern in relation to work being carried out, or not, post Grenfell, the Chancellor’s Budget speech mentioned tax 34 times and housing 10 times, but there was not a single mention of Grenfell—not one. Now, residents are very anxious about the possible effects of toxic soil, after a report in The Guardian some weeks ago.
I do agree. There are 151 households, many of whom I see, and many of them are experiencing deteriorating mental and physical health, so it does not help that, throughout all this, the council has continued its—shall we say?—reputation-covering exercise.
I was present at a council meeting in mid-October, when the council denied knowing about the report on toxic soil, which had been made in February. Two weeks later, the council admitted it did know about the report. That is eight months of inaction, followed by its usual opaque practice, misrepresentation or, some would say, lies. Now there will be soil toxicity tests, but no funding for this, and it will not happen straight away. The council is going to “think about” screening tests on affected residents, but not straight away. Why is this failing and untrustworthy council still in control of Grenfell-affected people and services? My neighbours want an answer, as do I.
I also live there. I have a veg plot within the radius of the soil tested and have been enjoying it all year. Public Health England’s advice is to wash and peel home-grown vegetables, but how do you peel lettuce? We were told the “Grenfell cough” could be caused by anxiety. Five people I know are coughing blood. Now we are told the “Grenfell cough” is real, but we knew that.
The council stated publicly that no housing blocks in Kensington and Chelsea had combustible cladding, but the truth is that we have two with combustible render. The council is trying to minimise bad publicity, while deciding to strip the combustible envelope, as winter approaches. Residents are scared, upset and angry. Communication is appalling. Last week, the council said that there was no start date to this work. Today, it has said Wednesday.
The council applied to the Government for £50 million for the Grenfell recovery plan, including a lot of this work, but there has been not a penny from the Chancellor. If the Government do not trust the council, why would my constituents?
I have been working with fire safety specialists to try to get a grip on the spectrum of issues related to our current situation. The £400 million announced earlier this year for cladding replacement in council buildings was welcome, but it is not enough. Who will pay for the shortfall? Residents who have bought flats in new developments, some under Government schemes, face bills of tens of thousands of pounds. They do not have it. Who will pay for that?
Around London and nationwide, there are social tenants whose buildings have been unclad. Some are in for a second freezing winter. Who will pay their fuel bills? How many elderly and frail people will we lose this winter because they are too afraid to turn up the heating? Not a penny more has been allocated for this. Is that what the end of austerity looks like? I commend the work of Fuel Poverty Action and various local groups that are campaigning hard on the matter. Money must be found. This is a public health emergency. Cold kills.
That brings me to the work of updating or reinstating fire safety and building regulations. I spend a lot of time with specialists in these fields, too. I will be frank: I heard the policing, fire and Grenfell Minister speaking last week on this issue, and it seems that there is no action now. The Government are thinking about it, but we desperately need some movement on this, and there is no commitment even to upgrade building regulations long term. We are instead informed that the industry will deal with this; the industry will pay. I think the industry will pay itself. I am not convinced we are getting anywhere anytime soon on this, and that is completely unacceptable.
In this midst of this housing crisis, the Secretary of State for Housing, Communities and Local Government has decided to reinstate the much discredited architectural style wars of the 1980s. This is my period; I started as a journalist at that time and I went through that battle. Pitching neo-classical pastiche against the modern movement will not solve our housing crisis. That is a battle of style over substance, and it is based on snobbery and elitism. I have written a dissertation and a half on this very subject. This is a thinly disguised class war. I sincerely hope that the Secretary of State realises that this is based on fallacy, before we start to see poorly constructed Noddy’s Toy Towns such as Poundbury dumped on our green belt. I would be happy to give Members a full lecture on this one day—just let me know.
Architectural style wars are a distraction from the real issue of providing well-designed, well-constructed homes to suit the needs of desperate families, single people, our elderly and people with specific physical needs. There is nothing in the Budget to fix the unholy mess that we are in, post Grenfell. There is nothing in the Budget to address the dishonesty and greed that have been allowed to flourish in the housing and construction industry, and without such provision we cannot tackle the serious housing crisis that we are facing. Distraction techniques and platitudes will not save lives. Shame on you all.
It is a great pleasure to speak in this debate. The Financial Secretary to the Treasury got it right in his introduction—I can see he agrees with that—when he set the financial scene and reminded us of the history of the past eight or so years. When this Government came into office in 2010, we faced an economic crisis of almost unprecedented scale. At around 10% of GDP, the deficit was running out of control and unemployment was at a record high. Over the past eight years, the coalition and then the Conservative Government have worked hard and tirelessly to get our public finances back under control. It has not been an easy task. Had we listened to Labour Members, who frequently challenge our agenda, the deficit would still be extremely high and the debt would be a great deal higher than it is now—[Interruption.] The shadow Minister says from a sedentary position, “You’re joking”, but I have lost count of the number of measures of fiscal responsibility that the Opposition have voted against over the past eight years. Had Labour’s programme been adopted, the deficit and the debt would both be far higher than they are today.
Next year, borrowing is going to be down to about 1.4% of GDP, and it will be down to 0.8% by 2023. Critically, the debt as a proportion of GDP has been falling since 2016. The consequence of not getting our deficit and debt under control is that we pay far more in interest payments. Even today, we are paying around £45 billion a year in interest payments, but if the debt were any higher, as it would have been under Labour’s programme, those debt payments would be higher and the interest rates on that Government debt would be a great deal higher as well. That would mean having much less money to fund vital public services.
Hand in hand with the deficit reduction programme goes the Government’s track record on jobs. The unemployment rate has decreased from around 8% in 2010 to around 4% today, and it is now at a 43-year record low. It has never been lower in my lifetime. To those who say that the jobs that are being created are not high-quality jobs, I would say that 80% of them are full time, and I would remind those who say that they are all zero-hours jobs that only 3% of the jobs in the UK economy involve zero-hours contracts.
This track record of financial responsibility over the past eight years has now enabled a certain amount of fiscal loosening, providing extra money to be spent on public services. Both Opposition Front-Bench spokesmen said that austerity was continuing, but let us look at the Red Book. The cumulative effect of all the Budget measures being announced will result, in 2023 alone—the final year of the forecast period—in a £27 billion fiscal loosening relative to the measures that were in place before. There is no way that anyone can describe a £27 billion a year fiscal loosening as a continuation of austerity. In any case, it is not austerity. Austerity implies that it was a choice. It was not a choice; it was a necessity—
The hon. Gentleman says that it was a choice, but it was not. We simply cannot go on spending way more every year than we raise in tax revenue, because we would eventually lose the confidence of the bond market, as this country did in 1976. At best, we would end up saddling the next generation with a gigantic bill that they would have to pay off. There is nothing noble, ethical or moral about spending more than we can afford and sending the bill to the next generation.
If we look at the fiscal loosening in the Budget, we can see that the NHS is the principal beneficiary, to the tune of £20 billion a year by the end of the forecast period. More immediately, the Ministry of Defence gets an extra £1 billion and the universal credit system gets an extra £1.7 billion. The shadow Chief Secretary to the Treasury specifically mentioned universal credit in his characteristically lively speech earlier. I remind him that the universal credit system massively strengthens work incentives. Before, we had a system in which effective marginal tax rates were often running at 90% and in which there were cliff edges at 16 and 32 hours, after which people would actually get less money for working more hours.
The Resolution Foundation has carried out research on this. I understand that its chief executive is the former economic adviser to the right hon. Member for Doncaster North (Edward Miliband), and even he says that the total fiscal cost of the universal credit system, with these changes, will be higher than the cost of the old benefits system that it is replacing. So it is going to cost more public money than was being spent before. Universal credit’s track record of getting people off benefits and into work is better than the track record of the benefits system it is replacing. I think that universal credit has been properly funded. It might need a bit of fine tuning in some areas to do with the way in which some of the dates work, and I have spoken to Ministers about some technical changes that could be made. As a whole, however, I believe that the system is fully funded and that it will work.
The hon. Gentleman believes that universal credit is fully funded, but has he seen the evidence from DWP staff who are saying that they are spending so much time answering telephone calls that they cannot go through and answer the online journals from claimants? Does he not think that there is a problem there?
When we introduce any new system that involves 5 million recipients, there will inevitably be some level of operational teething problems. These teething problems are on nothing like the scale of those we saw in the early 2000s when Gordon Brown rolled out tax credits and there was unmitigated chaos for some years.
I have had direct experience of universal credit in my own constituency. Croydon South is the joint highest constituency in the country—with Great Yarmouth, I think—for universal credit roll-out, with 43% of claimants now on universal credit. I estimate that around 4,000 Croydon South constituents are now in receipt of universal credit, and in the past six months I have had 21 complaints or problems raised by constituents. That is obviously 21 too many, but viewed in the context of about 4,000 recipients, it would appear that the teething problems are limited in their extent.
The growth in the use of food banks is of course a phenomenon that we have seen across western Europe. After the Budget, people on universal credit will be £630 a year better off than they were before—[Interruption.] The hon. Lady shakes her head, but that is a simple fact: the allowance has been increased. As I was saying a moment ago, the Resolution Foundation has found that the Government will be spending more money on universal credit following the Budget changes than would have been the case under the old benefits system. I would further point out that the track record of getting people off benefits and into work is better under universal credit than it was under the old benefits system. The way to combat poverty and create prosperity is to get people into work.
I realise that many people on universal credit are working. It is, by definition, an in-work benefit. The point I am making is that it is encouraging more people to take more hours, and it is encouraging people who are not working at all—[Interruption.] I would be happy to take another intervention from the hon. Lady, but perhaps she would like to listen to the answer to her first one. Universal credit is encouraging people who are not working at all to get into work, which is why unemployment is at a 43-year low. A legitimate question that she might ask is whether work is paying enough. This Government have successively increased the level of the minimum wage. This Budget increases it to £8.21 as of next April. That is up from £5.93 in 2010, which is a 38% increase. As I said in my intervention on the Financial Secretary, when we combine that with the increase in the personal allowance, from some £6,500 to £12,500 from next April, the post-tax income of someone on the minimum wage working full time—40 hours a week—has gone up by 44% over that eight-year period. Over the same time, inflation was 25%. So the personal allowance changes and the minimum wage increase have helped people on low incomes more than any other group. That is why income inequality is at a significantly lower level today than it was in 2010.
I turn for a moment to Labour’s plans. Inevitably, they involve spending a great deal of money—more money than contemplated even in the Budget. There is no great merit in spending more than we can afford today if we send the bill to our children and our grandchildren, saddling them with debt and burdening the Exchequer with very high interest charges, which are already high, at some £45 billion a year. As for Labour’s mass nationalisation programme, which it says is fiscally neutral, I point out that the last time we had mass nationalised industries—up to the 1980s—they tended to be grossly loss-making and required taxpayer subsidy, rather than generating revenue for the Exchequer. To assume that a mass nationalisation programme would be fiscally neutral is a dangerous assumption.
It seems to be assumed that the only measure of a Government’s effectiveness—or compassion—is the total amount that they spend. Of course it is important to fund public services properly, but it is the outcomes that matter, rather than the amount of money spent. Gordon Brown’s mistake was always to confuse spending money with success, when what actually matters is outcomes.
In education, for example, 86% of pupils are now in schools rated good or outstanding, compared with 68% in 2010. Notwithstanding any points that may be made about the funding levels in schools—and finding room to spend more is always welcome—the fact is that children are getting a better education today than they were eight years ago, according to Ofsted, which we can agree is an impartial observer. To the extent that the opportunity to loosen fiscally allows us to spend a little more, especially on services such as the police, it will of course be extremely welcome.
When the SNP leader replied to the Budget, he made some points about Brexit and the risks it poses. Some 61% of Scotland’s exports go to the rest of the UK, and only 17% go to the European Union. The single market that is of the most importance to Scotland, by a factor of about 4, is the United Kingdom single market—[Hon. Members: “Hear, hear.”] I see that view has support from my colleagues. That is the single market that the SNP should focus on most, because it is the one on which their prosperity most depends.
As many hon. Members wish to speak, I shall conclude shortly—[Interruption.] However, I would not want to disappoint Opposition Front Benchers by concluding too soon, so before doing so I wish to thank the Chancellor for the business rate change that he announced in the Budget. Cutting business rates for 90% of the high street—any business with a rateable value of less than £52,000—is a welcome move, and will do something to level the tax playing field. High street stores, which use real estate intensively, suffer a tax disadvantage relative to online companies. Online multinational companies also use lawful, but creative mechanisms so that they do not pay as much corporation tax as our high street shops. The business rate cut for smaller shops will really help them and I strongly welcome it.
One measure on entrepreneurship that I commend to the Chancellor for future Budgets is something that is close to my heart. Before being elected, I set up and ran businesses for 15 years. I set up the first one when I was 24 and floated it on AIM four years later—[Interruption.] I thank Opposition Front Benchers for promoting my career, but I am happy where I am. In setting up and growing that business and others, we benefited from all kinds of relief, including the enterprise investment scheme and entrepreneurs relief. I particularly commend the seed enterprise investment scheme, which is very effective in getting money into complete start-ups—companies being started from scratch. It is a very effective tax break for getting individuals to invest in greenfield start-up companies. I should declare an interest as my wife recently set up a company that used SEIS to raise capital. The limit is low—£150,000 per company—but it is very effective in getting individuals to make investments. The fiscal cost is quite low: according to Treasury figures it is about £110 million a year. I suggest that future Budgets may have scope to increase the £150,000 per company limit to encourage further significant investment in start-ups at relatively low fiscal costs—I can see the shadow Chief Secretary getting his pen out to write this down. I commend that idea to the Chancellor for future budgets.
I thank the Chancellor for the welcome business rate cut. I commend him and the Financial Secretary for delivering record high employment, record low unemployment and getting our public finances firmly back under control. Had we listened to the Opposition Front-Bench team, we would still be facing financially ruinous debt bills. It will be my pleasure to vote for the Second Reading later tonight.
I wish to say a few words in support of the amendment in my name, about the economic context and specifically on some of the tax measures. Everything we are talking about, whether on the tax side or the spending side, depends on the overall performance of the economy and economic growth. This year, we have had fluctuations from one quarter to another, but the assumption is that growth is about 1.5%. According to the independent OBR, it will continue at about that rate for the next five years. As the hon. Member for Aberdeen North (Kirsty Blackman) reminded us, that not terribly optimistic picture is based on optimistic assumptions about the outturn of the Brexit negotiations that may of course not be realised.
There are two underlying reasons why the British economy is growing at just over what it was for the whole of the post-war period up to the financial crisis. One is the serious problem of productivity—a problem that has existed since the financial crisis. A paper was published this morning by analysts from Stanford and Nottingham who looked at why productivity performance is so poor at the moment. After an exhaustive survey, they found that the problem was that high-performing companies in the UK, in productivity terms, had fallen back very badly. The main reason is that those high-performing companies do a lot of a trade, in particular with the single market, and uncertainty has caused their performance to deteriorate. That is reinforced by the second element in the slowing of growth, which is poor business investment—less than half of 1% in terms of fixed business investment last year, and that is clearly a function of the uncertainty that is hanging over the economy because of the Brexit exercise.
I suspect that quite a lot of Members thought that the Finance Bill would be some light relief from the Brexit debate, but unfortunately it hangs over everything. It is the elephant in the room and it explains the economic problems that we face. There was an interesting debate between Conservative Members that, because of the adversarial way we discuss things, was rather glossed over. The hon. Member for Gainsborough (Sir Edward Leigh) and, in the Budget debate, the right hon. and learned Member for Rushcliffe (Mr Clarke) expressed the strong view that the Chancellor was taking too many risks and the Budget should have been a good deal tighter than it was. Today we heard the exact opposite argument from the right hon. Member for Wokingham (John Redwood)—that it was far too tight and should have been more relaxed. It was an important debate, and it would be interesting to know how Ministers will combat the arguments from those formidable people.
I will highlight one particular aspect of that debate. This is not a party political point—it happened in the coalition—but the Government continue to refer to the deficit as if it is the same as Government borrowing. Well, of course it is not. The Government borrow for different reasons. They borrow to cover the current deficit and they borrow for investment. Just as companies borrow to invest, the Government sensibly do so. The problem with the current trajectory, as I understand from the Red Book, is that we are potentially heading for yet another squeeze in capital spending. Perhaps the Paymaster General can correct this, but my understanding is that CDEL, which is awful Treasury speak for capital spending, is due to fall next year, 2019-20, as a consequence of the attempt to maintain borrowing at moderate levels while at the same time expanding the current Budget. Perhaps he will enlighten us, because if it is true we are doing potentially serious damage to infrastructure that has been starved of capital for many years, as well as to public sector housing and much else.
I would also like clarification on the overall tax burden of the economy. There is a sleight of hand in this Budget. On the one hand, the Government have given tax cuts, but on the other hand—as a consequence of the squeeze on local government spending, which continues unabated and is having a severe impact on local services—council tax will almost certainly have to rise because councils are severely stretched and are providing inadequate services. In some cases, they are approaching bankruptcy and cannot meet their legal obligations. It is not restricted to any one party but, by and large, Conservative county councils are in this position.
Council tax will have to rise, and, in some cases, it probably should have risen earlier. There is nothing in the Red Book that tells us how much revenue local authorities actually get from council tax. That is rather an important figure, and it is important that we see a future projection, which would give us a much clearer picture of what is happening to taxation. On the one hand, the Government are offering direct tax cuts, and on the other they are offering increases in council tax, which at least in income terms is one of the most regressive taxes of all.
The Government have provided substantial additional funding for the national health service for several years ahead, and rightly so, but there is no such guarantee for personal care beyond next year. That matters, because the shortfall in care will fall on the NHS.
Several Conservative Members have been bobbing up and down to ask why we do not take a cross-party approach to this problem. Of course we should—this is a long-term problem—but memories are short, or maybe they are recent Conservative Members, because there have been repeated attempts at cross-party agreement on personal care financing. There was an attempt before 2010, which the then Conservative spokesman, Andrew Lansley, pulled out of on the grounds that it constituted a death tax. We then had another attempt in the coalition, when Andrew Dilnot did an authoritative piece of work for us. We reached a consensus and both sides of the coalition agreed to it, and then, come 2015, the key implementation measures were not introduced, so we are back where we were before. Ten years later, and after several attempts at cross-party consultation, there has been no progress, which is why care funding is in such terrible difficulty.
I have been looking at the Red Book while the right hon. Gentleman has been speaking. He asked two questions. First, he asked about council tax receipts, which will be £34 billion this year and are forecast to rise to £40 billion in 2023-24. Secondly, he asked about CDEL, which is £50.2 billion in the current financial year and is forecast to rise to £65.5 billion by 2020-21.
I think there are separate sets of figures, but I thank the hon. Gentleman for his clarification. His first point is particularly interesting, and I thank him for his rapid desktop research. His figures suggest there is potentially a very big tax increase in the pipeline, which is one of the assumptions in the Budget that was not spelled out on Budget day.
Last year’s Red Book explicitly mentioned the impact of immigration and population change on public sector borrowing, and it said that, as the population increased with net migration increasing, public sector net debt would fall. Does the right hon. Gentleman share my concerns about the likely impact of a future immigration Bill on the public finances?
Yes. All the evidence we have shows that net migration has had a positive effect not only on the economy, in per capita terms, but on Government revenue because, by and large, these are young people who work and pay tax revenue to the Government. I totally share the hon. Lady’s concerns about future immigration legislation.
The right hon. Gentleman spoke earlier about cross-party consensus on social care. Is he aware of the joint report of the Health and Social Care Committee and the Housing, Communities and Local Government Committee? One of its recommendations was for a social care premium—social insurance of the type used in Germany—to solve this problem. There are no Liberal Democrats on those Committees but will his party nevertheless support such a cross-party approach?
That was at the heart of the Dilnot proposals that Lib Dem Ministers sponsored and supported in government. If that is the idea, we do not have any problem.
On the income tax changes, and particularly the lifting of the higher-rate threshold at a cost of about £1.3 billion, I certainly do not regard people on £50,000 a year as rich—they have a lower income than we do, among other things—and, in an ideal world in which there was plenty of tax revenue and the economy was booming, lifting the threshold would be perfectly reasonable, but given other priorities it is a bad choice. As it happens, that £1.3 billion is equal to the shortfall between the amount of money the previous Chancellor took from universal credit two years ago and the amount that was reinstated this year. Filling that shortfall would be a much better use of the funding.
Has the right hon. Gentleman thought about the effect of fiscal drag on productivity? The fact is that, as more people get into the higher-rate tax bracket, the less productive they may become, which lowers tax receipts and lowers productivity in the economy.
It is a good policy, in general, to eliminate fiscal drag, and the Government should do that. But it is a question of priorities, and the disparity between standard-rate taxpayers, who stand to gain £130 a year from this measure, and upper-rate taxpayers, who stand to get £800 a year, reflects the Government’s priorities, which are completely wrong.
It would be less bad if the Chancellor had been willing to tackle something that he acknowledges is a problem, which is the expense of the reliefs given to higher-rate taxpayers through the pension system. He described the pension tax relief, which costs the Treasury £25 billion a year, as “eye-wateringly expensive”. We started to approach it in coalition, and, in a difficult fiscal situation, this is something that the Government should be addressing here, but they are not. However fair-minded we want to be to all groups of taxpayers, it is very clear that this is a political gesture. The social priorities are completely wrong.
It is very welcome that there has been a big relief for shopkeepers and others through the business rates system, but it does not address the underlying problem that business rates are a bad tax—they tax improvement in property. The Liberal Democrats and some of the think-tanks have been associated with another proposal, and it would not be difficult to replace the business rates system with a tax on commercial landowners. That would be a much simpler system, as there are far fewer landowners than there are people who pay commercial rates. It would be much more equitable, and it would not discourage business improvement. Currently if a factory installs machinery, it makes itself eligible for higher commercial rates. This is a thoroughly bad system, and extreme Treasury conservatism is why the problem is not being addressed.
One thing the Government have done, which is positive, is attempt to deal with the digital sector, but I reinforce the point made by the hon. Member for Dundee East (Stewart Hosie) that the magnitudes involved are very small. We are talking about £5 million next year, rising to £440 million, in a context where the National Audit Office, not a political body, has estimated that the retail sector in the UK had lost £9 billion of revenue as a result of competition from internet platform companies—in essence, we are talking about eBay and Amazon. The disproportion is enormous and the measure, although welcome, is very weak.
To conclude, there are a lot of small, sensible things in this Budget—I do not want to be grudging about them—but the big picture is dire, and the big Budget judgment, which is about giving priority to reducing income tax, is fundamentally wrong.
It is an honour to follow the right hon. Member for Twickenham (Sir Vince Cable), who had government experience at the Department for Business, Energy and Industrial Strategy and therefore will support what is clearly a Finance Bill supporting business and the economy.
I rise to support the Bill and to recognise that this Government are focused on the economy. I declare an interest, as a business investor and business person. Hon. Members have applauded growth forecasts; employment has been revised up and wages are set to rise. I think we can all recognise that these are obviously good things. The OBR can give us all comfort that the estimates are independent and therefore scrutinised. Economic growth is vital to our public services and for household incomes, and it is what delivers living standards for all our citizens.
I wish to focus on income tax. The Chancellor has fulfilled our promise to raise the personal allowance to £12,500 and increase the higher rate threshold to £50,000. Nearly 1 million fewer people will pay the higher rate of income tax. We have a responsibility to ensure that the tax burden is fair and that the economy grows—surely that is what the purpose of government is. Conservative Members want to see the whole cake grow; we do not want to see just bigger and bigger slices taken of a smaller cake. We should not demonise the wealth creators, the job creators and those who drive the economy.
The £50,000 threshold benefits many public sector employees, such as headteachers, consultants, GPs, senior council officers, senior police officers and senior nurses. The threshold lifts 1 million people out, including middle management, engineers and pilots—the list goes on and on. As the right hon. Member for Twickenham said, these are not the fabled rich, who are condemned. How this measure is not progressive is beyond me.
I thank the hon. Lady for the intervention. I think she will be well aware that many people in the public sector, including those in hospital management, and those who may go on from being nurses to being in hospital management, are paid substantially more than £50,000.
The OBR is concerned about this next issue. My hon. Friend the Member for Dumfries and Galloway (Mr Jack) asked the Financial Secretary about tax divergence, which is very much the crunch, as it has the potential to affect my constituency. The Financial Secretary mentioned that 1% of the population are paying 28% of tax—in Scotland, that constitutes 19,500 taxpayers. The OBR recently reported to the Treasury Committee that the number of higher taxpayers is lower in Scotland than it estimated, and this has actually cost Scotland between £550 million and £700 million in respect of the original estimate. The OBR said:
“It implies that a much lower share of UK-wide income tax is coming from Scottish taxpayers.”
That means the Scottish economy is more vulnerable to losing higher rate taxpayers, which is a serious consideration, because it affects the growth of the Scottish economy. As Scotland is part of the United Kingdom, it should concern us all. The Scottish economy is clearly vulnerable to the loss of these higher rate taxpayers, and it would look as though they are already beginning to move; they are already beginning to react to the divergence.
The OBR gave evidence on how people, for tax purposes, could change their behaviour. It talked about
“a relatively high income individual with a property in Scotland and one elsewhere in the UK, writing to HMRC to say, ‘I live more than half the year”
somewhere else. That would mean that their tax would be paid elsewhere in the UK. Here is the absolute proof that cutting tax rates increases the tax take. As was said by my right hon. Friend the Member for Wokingham (John Redwood), who is no longer in his place, if there is tax divergence, people will vote with their feet. They are already doing that, as we are seeing the tax take falling in Scotland. [Interruption.] Would the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) like to intervene? No, he would not. Labour should look closely at Scotland and it should be a lesson on why not to raise taxes.
It is interesting that the hon. Gentleman talks about “tax avoidance” because there is no tax avoidance in this. If we are losing people who would be paying higher tax rates in Scotland because they are choosing not to move to Scotland or they are registering their addresses in England because they spend a lot of their time in England, that is a loss to Scotland, because Scotland is getting greater tax independence. It is interesting that Scottish National party Members will talk about tax avoidance, because this is the demonisation of people who are paying a higher rate of tax. They are not the enemy; they are the friends of the Scottish economy.
I do not know and I really cannot understand it. Now that the Scottish Government are getting tax independence, one would think that they would want to grow the entire economy, instead of damaging parts of it. This should be a salient lesson that tax divergence is damaging; making your country uncompetitive will hurt services. It will cost higher rate taxpayers in Scotland £2,000 to £3,000 more per £100,000 of income. That means that a consultant in Newcastle may not choose to come to Aberdeen Royal Infirmary, which supports my constituency, and that would be very damaging for the public services.
The Finance Bill stimulates the economy; lower taxes will grow the economy. The hon. Member for Aberdeen North (Kirsty Blackman) is no longer in her seat, but she mentioned a transferable tax history, which is estimated to stimulate the oil and gas industry by £30 billion of investment. I consider that an enormous figure, not a small change. Fiscal stability will benefit the oil and gas industry, and we are grateful to the Chancellor that that is still the target of this Government. Slashing business rates, as the Chancellor has promised, will benefit businesses. However, of course, slashing business rates is not going to happen in Scotland, because that is a devolved matter; the north-east of Scotland got half of the increase in tax, which is damaging businesses in my constituency and other north-east constituencies. Buildings in the north-east of Scotland are being demolished because empty building rates—
Am I hearing the hon. Gentleman right? Is he completely ignoring the some 100,000 small businesses that have benefited from paying no business rates at all because of the Scottish Government’s small business bonus?
I remind the hon. Gentleman that businesses in the north-east of Scotland—large employers there—are considering knocking down warehouses and large offices, which are not redundant, as they are still fresh and good buildings. That is happening in the north-east of Scotland. One such building in my constituency, which had 2,500 office workers, may well be lost very soon.
I could recommend to the hon. Gentleman that he reads the famous The Press and Journal, which I was in just under a year ago, standing in front of a building that had just been knocked down and which used to house 500 people in an office—I shall send him a signed copy of it. Buildings are being demolished in the north-east of Scotland.
I wish to focus on two main issues that have already been mentioned by quite a few Members. The centrepiece of the Budget and, in turn, the Bill is the Chancellor’s decision to bring forward the increases to the income-tax thresholds, which has been praised by many Members today. From April 2019, the income tax personal allowance will increase to £12,500 and the higher-rate threshold will increase to £50,000. These increases will come a year earlier than planned, and the thresholds will then be frozen for a year.
Since his announcement, the Chancellor has been basking in praise from Conservative Members for his generosity, when in reality it is a relatively meagre giveaway. In its post-Budget analysis, the Institute for Fiscal Studies highlighted the fact that had the Chancellor allowed the thresholds to increase in line with inflation, as they do by default, they would have reached £12,390 and £48,590 respectively by 2020. That clearly shows that the Chancellor’s income tax commitment is little more than a tokenistic attempt to sustain the myth that the Government are ending austerity. He would have us believe that these policy changes are designed to benefit the low and middle-earners in this country, but once the empty rhetoric is stripped away, the reality is quite different.
Extensive post-Budget analysis from a variety of organisations all comes to the same clear conclusion: the raising of the income tax thresholds will disproportionately benefit the wealthiest individuals and families. Resolution Foundation analysis clearly shows that 84% of gains from the income tax cut will flow into the top half of the income distribution, and almost half will go to the top 10% of households alone. Although both basic-rate and higher-rate taxpayers will benefit from the increases in some way, the scale of the benefit is drastically different. According to the IFS, the typical basic-rate taxpayer will gain £21 per year in 2020-21, while in the same timeframe the typical higher-rate taxpayer will gain £156 per year. That sum is the only meagre offering in the Budget for those people who have borne the brunt of eight years of benefit cuts and pay freezes.
To make matters worse, for some the increase in the personal allowance, coupled with the Government’s inaction on pension tax relief, will mean that they will lose out on the tax relief on their pension contributions. Ahead of the Budget, campaigners including Age UK, Now: Pensions and two former Pensions Ministers, Steve Webb and Ros Altmann, wrote to the Chancellor to urge him to use the Budget and Finance Bill to take action to set straight an inconsistency in the tax rules. According to the Low Incomes Tax Reform Group, together the higher personal allowance and increased contribution rate will mean that the minimum pension contribution for someone earning £12,500 will now cost them £323.40—an increase of £64, or a week’s food shopping for a family or a tank of petrol for the family car. The inconsistency already affected more than 1 million people; with the Budget changes, it will now impact many more.
The Chancellor’s refusal to use the Budget to rectify the issues facing low earners who have fallen victim to a pension lottery is just one of many examples of inaction in the Budget. The Chancellor also failed to use the Budget to halt the roll-out of universal credit; to provide the long-term funding that is desperately needed for social care and mental health services; to end the funding crisis facing public services; and to address the funding gap facing local authorities. That is to name but a few.
Another main issue is the police cuts, with 21,000 fewer police officers. Just in Cheshire, where my constituency is, £60 million has been cut from the police, with a further £12 million to come. The police and crime commissioner and acting chief constable wrote to me a couple of weeks ago to say that it will be very difficult to sustain those cuts and provide the services. It is important that we provide security for our communities. If we do not, it will be difficult for people to come to this country and to invest, as well. It all depends not only on how we create economic activity but on how we provide a safe environment. That is absolutely key. I urge the Government to increase police funding.
Use of food banks is increasing. As the hon. Member for Aberdeen North (Kirsty Blackman) said so eloquently, just saying that austerity has ended does not mean that it has ended, unless the right action is taken and policies put in place. How can we say that austerity has ended when the use of food banks is on the rise, crime is rising, homelessness is rising, NHS waiting times are increasing and councils are struggling? We are talking about the basic services provided by councils—what can they do? Councils are going bankrupt. The Government need to look into that. Austerity has not ended.
Along with my Labour colleagues, I will continue to urge the Government to adopt a fair taxation system. This Finance Bill is nothing more than half measures and tax giveaways. It does nothing to address eight years of economic failure and it fails to include measures that would create a truly progressive tax system, address tax avoidance and close the tax gap. It is time for radical reform of our entire tax system. Only then can we truly transform our economy and ensure a fairer taxation system that shifts the emphasis on to those best able to afford it. Sadly, as it stands today under a Tory Government, we are left with a Finance Bill that will disproportionately affect those people who are already struggling to make ends meet.
What a pleasure it is to follow the hon. Member for Warrington South (Faisal Rashid), but I profoundly disagree with what he has just said. In his last point, he referred to eight years of economic failure, but nothing could be further from the truth. It is worth pausing for a moment to consider some key figures. In 2010, this country was spending a total of £700 billion or so a year and bringing in just £548 billion of tax revenue. In other words, a full £152 billion was borrowed. Fast forward eight years, and this country will spend £842 billion in the next financial year. Why? Because the economy has grown by 17% in that time. Crucially, of that £842 billion, a full £810 billion will be raised in tax revenues. In other words, that £152 billion deficit has shrunk, and shrunk dramatically. The reality is that a country that in 2010 was staring into the abyss can now look forward to a future and say, “Our best days are ahead.” Had this country not got on top of its finances over the past eight years, it would have been not the rich who would have suffered but the poor, the needy, the vulnerable and the hungry. If we look at countries such as Greece and Venezuela that have lost control of their finances, we see that it is the poorest in society who suffer most.
It is important to note a point that increasingly seems to be lost but should not be, and that is how far we have come in respect of employment. The country risks taking it for granted. We have 3 million more jobs than in 2010. In 2010, unemployment had gone up by half a million; that is half a million people whose futures were curtailed, whose opportunities were reduced and whose dreams were eroded. Unemployment means misery, lack of self-esteem and wasted potential. It means hollowed-out communities and a corrosive sense of despair. We should reflect on the successes that have happened since 2010.
Unemployment in our country today stands at just 4%. In Cheltenham, it is under 2%, compared with the rate in France, which is 9%. It is 8% in the eurozone. In Italy, youth unemployment stands at 32%. When I speak to young people in my constituency—last week over the recess, I was speaking to young people at St Mark’s Junior School—I am able to say that, as they grow up and reach the age of 18, I want them to be in a position where they can choose whether to go to university, which is fine, or whether to have an apprenticeship, which is also fine, but, if they want to go into the world of work, driving true social mobility, there also are opportunities for them to do so.
Income inequality is declining. Any poverty is, of course, something that we want to address, but the best route out of poverty is through employment. If we were to ask individuals whether we should turn the clock back to 2010 when we had half a million more people unemployed, I do not think that they would choose to do so. The reality is that there is no true economic strength without fairness.
I must take issue again with the point made by the hon. Member for Warrington South. He suggested that raising the personal allowance a year early to £12,500, resulted in only “meagre” benefits—that was his expression. For the average family in my constituency, two wage earners each earning the average wage of about £28,000, that will mean a combined addition to the family budget of £260 a year. Does he want to stand up and seriously suggest that that is a meagre benefit? Does he? It is not a meagre benefit. It is more money in people’s pockets to focus on their priorities—on support for their children, support for their futures and support for their daily lives.
Strong families and strong communities require strong healthcare. It is important to note what managing the economy—taking a balanced approach—means for healthcare. It was the Leader of the Opposition who suggested during the last election that a 2.2% increase in health spending would make the NHS the “envy of the world”. Well, it is this Government who will be spending 3.4% above inflation every year. The figures are stark: the total budget will go from about £122 billion a year today to £149 billion a year in 2023—a real-terms increase above inflation of £20.5 billion a year.
It is critically important that we do not have a cap for those people who want to become nurses. One thing I found very depressing when I was first elected back in 2015 was that people wrote to me saying, “I want to become a nurse, but I can’t become a nurse, and yet the trust is off taking trips to other parts of the world to recruit nurses from overseas, while I cannot do it here in the UK.” That is something that we should not allow to continue. It is important that the money is spent in the communities that require it. In Cheltenham at the moment, trust managers want to shift all general surgery facilities from Cheltenham to Gloucester, but, as 58 clinicians wrote only today, that would be a mistake. It would be unsatisfactory for care in the whole of Gloucestershire, and I am calling on the trust to think again.
There was also £400 million for potholes, which is a priority for my constituents and something that I take very seriously as well. That is an extra £8 million or so for Gloucestershire. I also welcome the measures to safeguard businesses in our high streets. We all know that they are facing increased pressures, but to take a third off the business rate bill of small businesses in my constituency is a shot in the arm for our high streets and is something of which we can be proud. When I went round high streets in Cheltenham over the weekend, the news from the Chancellor was welcomed. Businesses could look towards a future with real optimism. The scope to roll out these measures is only provided by managing the economy fairly and sensibly. We do not take measures simply because we take some pleasure in eradicating the deficit for the sake of it; we do so because we want to create opportunity in our society. We want to say to our young people, “Be brave and be bold about the future because it is an exciting future.” A country that loses control of its finances loses control of the prospects of its young people. That is why I take pride in what the Chancellor has delivered and why we can say in confidence across this House that the United Kingdom’s best days lie ahead.
I rise to speak today to express my sheer frustration at the refusal of this Government to change the implementation date for the stake reduction on fixed odds betting terminals. A six months’ delay from April 2019 to October 2019 may appear to be a short period, but in that six months, the bookies stand to gain nearly £1 billion profit, while many families will lose a loved one.
The industry has known about the stake reduction since April this year, yet, arrogantly, it has made no plans to alter the technical capacities of the machines, and we have to ask ourselves why. Why has it refused to authorise the necessary changes? Why has it refused to accept the moral argument that these machines are dangerous? And how has it been able to use a flawed report, funded by it and structured only to support its argument, to convince this Government to stall the implementation date? Every day snippets appear in the press suggesting that things are not as they should be when it comes to this decision. Private conversations with no opportunity for scrutiny seem to have had more influence than the evidence of the all-party group on FOBTs, the Church, the voluntary sector and, most importantly, the families of those affected and the gamblers themselves.
Unfortunately for this Government, the strength of feeling right across this House regarding this shocking decision to delay the stake reduction will have consequences that may make their position very uncomfortable. I urge the Treasury to accept that it is wrong; that the decision that it has made is immoral; and that people’s lives are more important than the bookies’ profits. However, if the Government are not prepared to do the right thing, I and 76 Members across this House are prepared to do so. We will table a new clause and an amendment after the Second Reading debate tonight to ensure that the real story behind these dreadful machines is heard on the Floor of this House.
Thank you, Mr Deputy Speaker, for giving me this brief opportunity to raise this issue about which I am passionate and to which I am committed.
Thank you, Mr Deputy Speaker, for letting me speak a bit earlier than I expected. It is a great pleasure to be called so early and I will not abuse that generosity by speaking for too long, because I know that many colleagues want to speak in the debate. I just wish to cover a few areas that have come up in the debate and the Budget more generally: first, the higher rate tax thresholds, which have been mentioned by many hon. Members; secondly, corporation tax and small businesses; thirdly, debt, which my right hon. Friend the Member for Wokingham (John Redwood) spoke about so interestingly; and, finally, fuel duty and car taxes more generally, which is pertinent to my constituency, with its 9,500 car workers.
On the higher rate tax, I was interested in what was said by the right hon. Member for Twickenham (Sir Vince Cable), who is no longer in his place. There is an amendment in the name of all the Liberal Democrats and it is good to see them here this evening in such numbers. The amendment mentioned the
“provision for a £1.3 billion tax cut for higher earners”.
I pressed the right hon. Gentleman to explain what that would actually mean for productivity and for what we term fiscal drag, a term first used when Gordon Brown was Chancellor of the Exchequer. It happened in the early part of the Labour Government, which came to office in 1997, and was eased over time. In 2010, it was decided, as an issue of morality, that we would also freeze the higher rate of income tax at the threshold. The reality is, however, that in the long term that has quite a damaging effect on the economy. It means that people are being brought into the higher rate of tax who really should not be there. I know that in my constituency there will be, for example, deputy headteachers, locum GPs and middle managers in local government who are paying the higher rate of tax. They would not have done so within the last generation, but they do now.
When people—this applies in the private sector as well—who pay the higher rate of tax are offered any extra work or overtime, they make a calculation: “Do I take that or do I trade that off against what my tax will be as a result of this?” If people are being charged too much tax at this marginal rate, that reduces productivity, and that, in itself, has a damaging effect on the economy. As my hon. Friend the Member for Dover (Charlie Elphicke) mentioned, in 1987, the then Chancellor, Nigel Lawson, lowered the rate of tax from 60p in the pound to 40p in the pound—and guess what? We actually took more tax in as a result.
This is a fundamental point that also applies to corporation tax. Labour Members have made their views very clear in that they would like a restitution of the rate of 26% for large businesses and 21% for small businesses. However, with regard to corporation tax, the proof of the pudding is in the eating—that is, employment. As my hon. Friend the Member for Cheltenham (Alex Chalk) said, the unemployment rate in the UK is 4%. I grew up in a town in the north of England in the 1980s, when the unemployment rate was about 25%. We went through a horrendous recession in our light industrial town. We could not even dream of a rate of 4% at that time. In the EU, unemployment is 8%, on average, and it is 9% in France. My hon. Friend also mentioned Italy and Spain. Think about all those lost opportunities and lost lives through high unemployment. This beds down in communities—I have seen it for myself. The way in which we bring about a culture of work and of higher employment is fundamental to the development not just of productivity but of our society itself.
Does my hon. Friend agree that unemployment has such a crushing effect on self-esteem and self-worth, and that that is one of the key reasons we should celebrate increased employment—not just for the sake of statistics but because of the individuals whose life chances lie behind them?
I thank my hon. Friend for his intervention—that is absolutely true. If someone is unemployed for 18 months, they are often unemployed for the very long term—for the rest of their life, in some instances. It ruins lives, shortens lives and makes those lives more miserable.
The way in which we have approached corporation tax is absolutely correct. On small business rate relief, my hon. Friend, again—I do not wish to just copy his speech—talked about how that had been very well received in his business community and on his high street. It is a blessed relief that will bring a much-needed boost to our small businesses and to our high streets, which we have to nurture. We cannot have the high street of just the bookmaker, the pub next door, and the charity shop—although charity shops do very valuable work. We need diversity in the high street, not just in terms of retail but living space, opportunity, health and social services.
On debt, as I said in the Budget debate, with a ratio of 82% to GDP, we really should not give ourselves a pat on the back. It is not a good place to be at all. It makes us less likely and less able to effectively withstand the winds of global recession that happen on a cyclical basis. However, we have chosen a path by which, over time, we bring that under control. There are two ways to reduce the GDP-to-debt ratio: through productivity or inflation. The choice of British Governments, for years and years, was inflation. Inflation is a fool’s errand: it destroys living standards and destroys savings. The second approach is productivity. I am really pleased to see in the Red Book that many elements of this Budget really focus and home in on productivity, but we need to keep that going. We need a step change in our economy in this respect.
I turn to what I call car taxes. As the vice-chair of the APPG on fair fuel, and the former chair of said august APPG, I am absolutely delighted to see the freeze in fuel duty. However, I want to make a point about diesel cars in this respect. That is not, obviously, just because my constituency has 9,500 workers in this sector and 93% of the engines that come off the track are diesel cars. We have seen a 45% fall in diesel sales, and that hurts the Exchequer.
This problem originated in Wolfsburg. The irony is that the Germans are now changing their approach with regard to diesel, so the originators of the difficulty within the diesel market are now looking at the market and saying, “Hold on a minute—we need to ensure that clean, modern diesels are supported.” We have a higher excise duty on modern, clean diesels. According to the AA, 270 of the diesel cars currently tested are now within tolerance in that respect. If we have this disincentive, people will hold on to their older cars for longer. These cars can run for a quarter of a million miles—I know; I have one. That means that the older EU5 and EU4 engines will stay on the road longer and pollute more. We need to get really smart about this and construct the tax system to support all modern petrol and diesel engines while, at the same time, aiding the transition towards new technologies.
On the Budget as a whole, it is quite remarkable to note, as a former personal finance journalist, how we used to have a merry time pulling Budgets apart. We could almost guarantee that, by the end of the first day, we would have something to go at the Government on. With this one, that is not the case. That is a testament to the Chancellor and the team. I will be absolutely delighted to vote for this Bill tonight.
Living standards in this country are a national disgrace. The “little extras” Budget did nothing to address society’s systemic issues and continued to prioritise the few over the many. Perhaps the Minister does not appreciate that the future is not brighter if you are standing in a queue at a food bank.
After eight long years of austerity, our public services are deprived of proper funding. Our fire service, NHS, police service and education services are all at breaking point, and “little extras” are simply not enough. While the taxation system continues as it is, with Conservative policies only tinkering around the edges, we will not see a substantial redress of economic inequality in this country. Put simply, the top 10% of the population own 44% of the nation’s wealth. Who does this country’s economy work for? Some in society have suffered eight years of austerity, and some have not. If the Government’s policies are benefiting the few more than they are benefiting the many, we have a systematic issue at the heart of society. Our economic system resembles what the economist Piketty would describe as “useless for growth”. It perpetuates further inequality over time and creates low social mobility, ingraining and preserving the status quo. The rich get richer and the poor get poorer, widening economic inequality.
Labour has a different outlook that sees real value in working people and offers them a fair deal by not raising taxes for 95% of workers but instead fairly raising taxes for the 5% who prosper the most in society. It acknowledges corporations’ role in society and expects them to pay their fair share, raising an estimated £19.4 billion for the public purse. It is not afraid of tackling the very wealthiest and commits to a comprehensive anti-tax avoidance plan—a plan that will work for those who are prepared to pay their fair share of tax and a society that will reap its benefits. This funding will be distributed to all the areas that all of society will benefit from: a properly funded NHS, free university education, a national education system, and a national transformation fund. Labour will rebuild Britain and make this Government’s destructive austerity programme an ideological choice of the past. This is how we will radically change society; this is how we will end austerity; and this is how the Labour party, when—not if—we are in government, will offer a fair deal for everybody in our society.
It is a great pleasure to speak in this debate not only to support the Bill, but to associate myself with the comments of my right hon. Friend the Financial Secretary to the Treasury, who unfortunately is no longer in his place. In his opening remarks, he mentioned some words by the late Baroness Thatcher, and on reflecting on that, it is clear to me that some things never change. From what we have heard this evening, it is clear that the Labour party would still have the poor poorer as long as the rich were less rich. As I say, it is a great pleasure to speak in the debate. I will keep my remarks brief, as many other colleagues—from across the House, I am sure—will want a chance to speak about the great things this Government have included in the Bill.
Just two short weeks ago, we heard a Budget from the Chancellor of the Exchequer, and the Bill delivers on a number of promises made in that Budget. Key among these is that this Conservative Government are cutting taxes for hard-working people and lifting the lowest paid in our society out of income tax altogether. Our increase in the personal allowance will mean that, in 2019-20, basic rate taxpayers will pay about £130 less tax than in 2018-9 and £1,205 less tax than in 2010-11, when the coalition Government came to power.
Unfortunately, as I pointed out in the Budget debate just two weeks ago, my constituents will be unable to benefit from the raising of the higher threshold, as the SNP Government in Edinburgh would rather punish the strivers and the grafters—the policemen, teachers, entrepreneurs and wealth creators—than reward them, as we do. Instead, the tax gap between Scotland and the rest of the UK is growing wider and wider, with the Scottish Government squeezing out every penny.
I am sorry the hon. Gentleman is having to get used to speaking from the Back Benches again, after his tremendous turn from the Front Bench in the UK Youth Parliament, but I am sure that, if he keeps up this line of complimenting the Government, it will not be long before he is back there. Does he not accept that the reality of the progressive tax reforms agreed by the Scottish Parliament as a whole—not just by the SNP Government—is that most people in Scotland are actually paying slightly less tax than they were this time last year? [Interruption.]
As is being said from a sedentary position behind me, I think the total amount of money by which somebody in Scotland will be better off, if they are below a certain level, is about £24 a year. What the SNP is doing is punishing aspiration and stopping people—[Interruption.] As is being shouted from behind me, it is gesture politics. The SNP is punishing the entrepreneurs and the wealth creators that we need to attract to Scotland, especially to the north-east of Scotland. I could go on, but I will not because I have a lot to get through.
We are hearing exactly what we heard two weeks ago from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—doom and gloom. This is the politics of gripe and grievance, and SNP Members cannot even find it within themselves tonight to welcome the huge strides that we have taken in supporting the oil and gas sector since 2014. I share the frustration of the hon. Member for Aberdeen North (Kirsty Blackman) about the oil and gas sector, although I would say that that is an issue for the Department for Business, Energy and Industrial Strategy, rather than the Treasury right now. But no reference was made to the welcome given by Oil and Gas UK or indeed by individual companies in that sector for our commitment to the stable regulatory and fiscal regime that, since 2014, has made the North sea one of the most attractive basins in the world in which to invest. I think that is something all representatives from Scotland, especially from the north-east of Scotland, should celebrate and thank this Government for.
As well as slashing income tax for millions of people, the Bill will implement a number of indirect tax cuts, such as the freezing of duty rates on beer, on ciders and most of all on whisky. This is a measure that we Scottish Conservatives have lobbied on relentlessly, and it will be a great boost to our local breweries and distilleries, such as Deeside Brewery in Banchory and Royal Lochnagar at Balmoral, both of which I have the honour of representing in this place.
There are freezes to support our haulage sector—heavy goods vehicles duty will be frozen for 2019-20. I am sure the importance of this freeze to the British haulage industry will be obvious to everyone as we prepare to leave the European Union. I have a dream that one day these vehicles will be able to transport Scotch whisky, which we as a Government are supporting; Aberdeen Angus beef from farms that are championed by the Conservatives, but abandoned by the SNP; and Peterhead haddock fished from this new sea of opportunity, with us out of the common fisheries policy, being delivered by this Government, along the Aberdeen western peripheral route, if the Scottish Government ever manage to resolve the mess they have got into on that road and do so without wasting even more of Scottish taxpayers’ hard-earned cash.
If we do get this wonderful Aberdeenshire produce—it is the best in the world, I would suggest—on to lorries and they drive down to Dover but are then not able to cross the channel, what does the hon. Gentleman expect will happen to the Peterhead haddock?
The hon. Lady has no faith in this Government to deliver a deal that is going to result in frictionless trade, and that surprises me. It surprises me that she does not have the faith that I have in this Government to deliver the deal that I think will be coming and result in frictionless trade between ourselves and the European Union, just as we have frictionless trade right now.
The measures in this Bill are exactly what the Government should be introducing to support our economy at a time when it has its fair share of challenges to overcome, but that is also rich with opportunities. For this reason, I will be supporting the Bill tonight. We are supporting aspiration, encouraging growth and creating jobs, with unemployment at its lowest level since the 1970s. We are making Britain an attractive place in which to invest, and we are helping the lowest paid.
I was struck by what my hon. Friend the Member for Cheltenham (Alex Chalk) said about speaking to the next generation. He spoke about the huge strides we have taken and about the strength of the economy since 2010. As the hon. Member for Glasgow North (Patrick Grady) mentioned, on Friday, I was privileged to address the UK Youth Parliament and listen to its Members. This Chamber was packed with enthusiastic, passionate, committed and driven youngsters. We owe it to them to leave this economy in a better state than the one in which we found it in 2010, and to create opportunities, not lumber them with debt, as the 40 unfunded spending commitments made by the Opposition since the general election would do.
Quite frankly, Labour Members should be ashamed of themselves for the reckless way in which they trot out commitments without recognising that we have to pay for them and the damage that they would reap on the next generation. I am proud to support a Government who are refusing to do that and who, with this Bill, are committed to helping the working people of this country. This is the party of the working people of this country—all of this country—and I am proud to give the Bill my support tonight.
It is a pleasure to follow the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie). He has proved for me the point I came to when I was listening to the Financial Secretary and putting together my remarks for this debate. Politics is a mixture of rhetoric and reality. It was two years ago at that very Dispatch Box that the former Chancellor, George Osborne, announced that austerity was over, and now the current Chancellor tells us that austerity is coming to an end.
The rhetoric we have heard during the past two weeks has led me to conclude that many Conservative Members are modern-day Warleggans. They remind me of the scene when Captain Poldark—he is no doubt viewed by Conservative Members as some sort of Marxist-Leninist—asked the landowners to cut the price of grain, and George Warleggan said, “Well, if I cut the price of grain, then my profits will decrease, and if my profits decrease, then I won’t have enough money to give provision for the poor.” There it is: modern day Conservativism found in a period drama.
The reality is that, by any measure, this Budget and this Finance Bill benefit the rich on the backs of the very poor. The Resolution Foundation has told us in its research that those in the bottom 30% of the income distribution will on average gain less from the work allowance and income tax changes than they will lose through the benefits freeze. Indeed, a low-income family with children will lose £210 next year as a result of the benefits freeze.
Let us discuss universal credit and the broken social security system in this country. The money announced for universal credit changes is mainly to do with managed migration. Two weeks ago, the Social Security Committee in the Scottish Parliament heard evidence from the Crookston Community Group in my constituency. An eight-year-old boy in my constituency was stopped by a teacher and asked why he was taking so many tomato ketchup sachets. His answer was so he could take them home and put them in boiling water to make soup for him and his family. That makes me want to weep, but it is not a special case. Suzanne McGlone of the Crookston Community Group said:
“While this incident would shock most people, it is actually the lower end of the scale.”
That is the reality of the current social security system.
On top of the cuts, the litany of evidence about the pressures faced by beleaguered staff in the Department for Work and Pensions is coming to fruition. I tabled a parliamentary question, and I got the answer during this debate. I asked a simple question: how many workers in the Department for Work and Pensions are currently dealing with the national tier telephony service? I was advised that 400 staff are now dealing with phone calls. To put that into perspective, according to parliamentary answers, 4,504 DWP staff are chasing social security fraud. That is an unbelievable comparison. DWP staff are telling us that they are having to deal with so many telephone calls from claimants that they are unable to process online journals. What does that mean? It means payment delays, rising food bank use and more people getting into poverty.
I recognise the passion with which the hon. Gentleman approaches this subject, but perhaps he can enlighten the House as to why, after it was agreed that social security powers would be devolved to the Scottish Parliament and the Scottish Government in Edinburgh, it is taking so long for the SNP Scottish Government to get to grips with the issues of social security.
I have just given some examples of how broken the UK social security system is. If the hon. Gentleman seriously believes that any devolved Government could address the mess of the social security system in the UK within weeks, he is kidding himself on.
The hon. Member for Stirling (Stephen Kerr) is clearly unaware that there are 4,000 people, not 400, chasing rather than helping. I heard Gaelic mentioned today, and he should know that the word “Tory” comes from the Irish Gaelic “Air an Toir”—pursuers. That is what they are doing in the DWP—pursuing people mercilessly, rather than helping them, as my hon. Friend pointed out.
My hon. Friend is quite right. Conservative Members try to divide people on the basis that Conservatives are for aspiration and the rest of us are not. According to the Conservative party, there are the undeserving and the deserving poor. No one deserves to be poor in this country, and that should always be the case.
I held a debate recently in Westminster Hall about split payments, and I asked the Minister answering the debate what support was going to the Scottish Government and what money there was to help create a different system in Scotland. I have yet to receive an answer. I also asked the Treasury how it defines austerity, and it could not give me an answer. What does the hon. Gentleman think about that?
I thank the hon. Lady for that, because the point is well made. I was at the Westminster Hall debate she secured, and she gave an excellent speech on why we need split payments in universal credit. The reality is that the Scottish Government want to do split payments, but the Department for Work and Pensions is trying its best not to. That is despite the Work and Pensions Committee, of which I am a member, telling it that it should engage positively with the Scottish Government. The Department should perhaps use what is happening in Scotland as a pilot, which it could then roll out across the UK. Where individuals are subjected to domestic abuse and go through the universal credit system without split payments, the hon. Lady and I have a very real fear that that domestic abuse will become worse.
Not at the moment.
We have heard warm words about rising wages from those on the Government Benches, but there has been no mention whatever of the fact that 4 million people are in insecure work. There has been complete silence about the Taylor review and what measures the Government will introduce as a result. The reality is that low pay and poorer living standards are on the rise.
As I said, there are 400 people dealing with telephone calls in the Department for Work and Pensions, but 4,504 chasing DWP social security fraud. There are also 400 people employed across the UK by the national minimum wage compliance unit. How are we going to chase these rogue employers if there are only 400 staff chasing up compliance with the minimum wage?
That brings us nicely to the issue of public sector pay and whether there is a public sector pay cap. Earlier, I made an intervention on the Minister. I did not really get an answer, and I do not think that anyone who has raised this issue in the last few weeks has got an answer. The reality is that the public sector pay cap is still in place across UK Government Departments. Why is it still in place? Under freedom of information, we now know that the departmental permanent secretaries got together in February this year and agreed the joint position across all UK Government Departments that there would be a pay rise of 1% to 1.5% for public sector workers. I find that extraordinary, because there are 200 separate pay negotiations across UK Government Departments, so how about a bit of efficiency and small Government from those on the Conservative Benches? Let us reduce the number of pay negotiations from 200. If the departmental permanent secretaries can agree one negotiation, there can surely be one negotiation with the trade unions.
Those on the Scottish Conservative Benches have made a number of, shall we say, interesting observations today. I was interested in the elaborate tax avoidance scheme suggested by the hon. Member for Gordon (Colin Clark): if someone is a higher rate taxpayer in Scotland, they should consider registering themselves somewhere else in the United Kingdom. That is tax avoidance by any description.
On a point of order, Madam Deputy Speaker. The hon. Gentleman is making comment on the speech given by my hon. Friend the Member for Gordon (Colin Clark), who is being reported as having said something he did not say. The hon. Gentleman should not be permitted to say that. How can that be corrected?
I appreciate the hon. Gentleman’s point, but it is a point of debate, not a point of order for the Chair. It is, I am very glad to tell the House, not my responsibility to adjudicate between Members who sit on the Government Benches and Members who sit on the Opposition Benches on particular points of fact. The hon. Member for Glasgow South West (Chris Stephens) is in order in the eloquent speech he is making.