Bankers’ Bonuses and the Banking Industry

Debate between Helen Goodman and Charlie Elphicke

Wednesday 25th February 2015 Commons Chamber

[Charlie Elphicke]

The issue is not the extent of regulation, but the format of regulation and the fact that the previous Government took the Bank of England out of the picture. The one organisation that understands the prudential nature of risk management was pushed to one side. That, together with the failure to police risk, was at the heart of what went wrong with our banking system, so I completely reject the hon. Gentleman’s point.

The Opposition say, “Let’s have a bankers’ bonus tax, so we can raise some money.” Yet again, we have heard that the Opposition want to spend it, this time on

“a guaranteed paid starter job for young people who have been out of work for over a year”.

That is what they say today but that is the 12th time over that they have spent it; I hate to correct my hon. Friend the Member for Redcar (Ian Swales), who thought it was only the 10th time and had lost count. That is understandable, because previously the Opposition have spent this on: the youth jobs guarantee; reversing the VAT increase; more capital spending; reversing the child benefit savings; reversing tax credit savings; more money for the regional growth fund; cutting the deficit; turning empty shops into community centres; spending more on public services; building 25,000 new houses; and free child care. Now it is being spent on starter jobs for young people, but perhaps next week it might be spent on houses again—who knows? It just depends on the thing of the moment, does it not? That underlines the ludicrousness of the Opposition’s position: they simply cannot add up and cannot spend their various banking bonus tax ideas in any competent way at all.

Leaving that aside, the permanent bank levy introduced by this Government is expected to raise £2.9 billion in 2015-16 and then £2.8 billion each year thereafter. That is more than was raised by the one-off bonus tax introduced by the previous Government. I suspect what will happen is that the Labour party will end up with its madcap plans raising less money and the party then being in a quandary as to where to spend it, because it has committed it on multiple occasions. That goes to the heart of the massive contradictions of Labour policy making.

The one thing I want to touch on is the idea that we should have the European Union decide on the levels of pay, bonuses or indeed anything in this country. Let me gently remind the Opposition of a couple of things. First, we are an independent nation. Secondly, we have an independent currency—we are not part of the eurozone. I do not understand why the Opposition think it is a good idea to have the European Union tell us how to manage our banking system. We are competent enough as a country—goodness knows, we have run our own affairs for the past 1,000 years—to decide how we should organise our banking system, and pay, bonuses and bonus taxes in our banking system, without needing help from the European Union.

[Helen Goodman]

I do not think every last detail of the running of these things should be handed over to the European Union, as the hon. Gentleman describes it, but the fact is that all the time we hear from the bankers that they will whizz off to Geneva—some of them do seem to be whizzing off there—to Paris or to Frankfurt. The purpose of having a European-wide approach on bonuses is to avoid exactly that kind of behaviour.

[Charlie Elphicke]

I hear what the hon. Lady is saying, but we are not in the euro. The only time that we would need some measure of control from the European Union is if we were in the euro. I simply do not accept the argument. Our objection to the European Union trying to tell us how to run our banking system and our bank bonuses is that we do not want to see pay rise and rocket in the banking system, which is what would happen—permanent fixed pay would rise. That is what we are most concerned about and why we have put up such resistance. There is also the principle that we can manage our own affairs in the City of London and in the financial services market, and we do not need any assistance from Brussels. I say shame on the Labour party for thinking that it is better to accept diktat from Brussels than decisions made in this Chamber.

UK Poverty

Debate between Helen Goodman and Charlie Elphicke

Wednesday 4th February 2015 Westminster Hall

[Helen Goodman (Bishop Auckland) (Lab)]

What a delight it is to see you in the Chair this afternoon, Mr Crausby.

I begin by congratulating my hon. Friend the Member for Wigan (Lisa Nandy), who has secured an important debate. She made a passionate speech, in which she described eloquently the impact of poverty on her constituents. Because she has given us so many concrete stories about real people, I will give an overview and talk about the national picture. However, I remind the Minister that this is the second time in the space of a month that she has been asked about sanctions. We asked her to do a number of things about sanctions during a debate in the north-east, and to check what was going on. When she winds up the debate, I would like to know whether she has done those things.

During the previous Parliament, I was privileged to be the Minister who took the Child Poverty Act 2010 through Parliament. Because of the complexity of measuring child poverty, we had four measures: relative poverty, absolute poverty, persistent poverty, and combined low income and material deprivation. The Bill was passed with all-party agreement, and everybody agreed that we wanted to make progress on all those fronts. What has been the record? The record of the Labour Government between 1997 and 2010 was a reduction of 1.8 million in the number of children in absolute poverty. The record under this Government, according to the DWP’s own statistics, which the Minister published last summer—I hope that she is listening to this—is that the number of children living in absolute poverty has gone up by half a million.

The next measure is relative poverty. Between 1997 and 2010, the number of children living in relative poverty fell by 1.3 million. The number fell by 200,000 between 2009 and 2013, but the Institute for Fiscal Studies forecasts an increase of 400,000 by the time of the election in May. Government Members have to ask themselves why absolute poverty has increased and relative poverty has reduced. What is going on here? The explanation is this. The median income in this country has dropped by 8% under this Government, whereas the income of those in the poorest decile has dropped by 5%, so everybody is poorer; it is just that those at the bottom are not quite as much poorer as are those in the middle. The hon. Member for Esher and Walton (Mr Raab) can shake his head, but those are the figures that the Government published only in July, and the Government should think about that.

[Charlie Elphicke (Dover) (Con)]

Labour’s crash.

[Mr David Crausby (in the Chair)]

Order. A Parliamentary Private Secretary should be seen and not heard, Mr Elphicke.

Corporate Structures and Financial Crime

Debate between Helen Goodman and Charlie Elphicke

Thursday 4th July 2013 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to speak in this debate and am grateful to my hon. Friend the Member for Bassetlaw (John Mann) for persuading the Backbench Business Committee to hold it. I am extremely concerned, as are all hon. Members, about the morality of cheating in the tax system and, as my hon. Friend said, the economic distortions it creates.

Ordinary small and medium-sized enterprises cannot cheat in that way, and the collapse in the high street is being exacerbated by the tax advantages enjoyed by the internet companies that facilitate online shopping. Indeed, the international internet companies are among the most significant offenders when it comes to tax avoidance. Their business model is built on an apparently free offer to consumers, but the services are paid for by advertising, which is targeted through the collection of personal data from consumers based on the cookie system. I have secured a separate debate in a fortnight’s time on the internet companies’ use of personal data. Today I wish to say something about their business model and its implications.

A Public Accounts Committee report found that between 2006 and 2011, Google paid the equivalent of $16 million in income tax in this country on revenues estimated at $18 billion. It claimed that advertising sales were being made in Ireland, when in fact the two contracting parties were in the UK.

Facebook, another US-based company, has 33 million users in the UK, with 25 million people visiting the site each day. Its revenues from advertising are estimated at around £170 million a year, but last year it reported sales of only £20.4 million. Using that figure for its sales, it reported a pre-tax loss of £13.9 million in 2011, enabling it to pay just £238,000 in tax last year. The position with Twitter is even worse, if that is possible to imagine. It did not even submit any accounts last year.

I want to set the behaviour of those companies, in relation to their corporate structures and tax performances, in the context of the cost to society and the public purse that they are creating. Everyone agrees that online child abuse is a serious crime. We in Parliament, the public and the industry are committed to its eradication. The Internet Watch Foundation is a fantastic organisation that takes down sites that carry child abuse images. It is a membership organisation for the industry, so we were all shocked to hear of the very small contributions that the industrialists were making to its work. Until a month ago, Google was donating £20,000 to the Internet Watch Foundation. In recent weeks, it has upped its contribution to £250,000 a year for four years, and the other media organisations have collectively offered a further £250,000 a year for the same period. I learned this week that Facebook makes a contribution of only £10,000 a year.

The problem with that is that the Internet Watch Foundation is hugely strapped for cash and unable to deal with all the alerts it receives. It is worried, because a survey that it undertook has suggested that, although 1.5 million people have seen child abuse images, only 40,000 reports have been made to the organisation. It is calling on the public to report more, in the interests of child protection, but it requires more resources to enable it to respond. Furthermore, once members of the public start to respond, they are not going to be able to distinguish between the different categories of image—illegal, obscene and indecent—and they will report everything that disgusts them.

We have a similar situation with the Child Exploitation and Online Protection Centre—CEOP—which is the part of the police force that deals with these issues. It believes that 60,000 people in this country are downloading child abuse images, yet its resources are so limited that it was able to secure only 1,570 convictions last year. At the same time, the companies that distribute that material are not paying the taxes that would help properly to resource the police. I have met representatives of those companies and written to Ministers about these issues. I am still waiting for a reply from Ministers.

Returning to the business model that Facebook uses to generate its revenues, I want to explain a further connection between the two kinds of crime. A whistleblower recently informed us that advertisements were appearing alongside the indecent images of children. They were advertising the services of a large number of household-name companies, including PayPal, John Lewis, Procter & Gamble, EE, Hewlett Packard, Betfred, Bing, Johnson & Johnson, Google, BSkyB and Western Union. Facebook has now agreed to do a manual sweep to remove the advertisements from the sites, because the advertisers do not want to finance them and do not want to be seen to finance them. It would be helpful if we had public statements from those companies on their views on that, and on whether they are happy to have so much advertising being channelled to other organisations that are not paying their proper taxes.

[Charlie Elphicke (Dover) (Con)]

I might have misheard her, but it sounded to me as if the hon. Lady was making serious allegations about John Lewis. Will she please reconfirm them for the benefit of Government Members?

[Helen Goodman]

rose—

[Helen Goodman]

Thank you, Madam Deputy Speaker.

Let me respond to the hon. Member for Dover (Charlie Elphicke). The companies that I listed have been inadvertently caught up in financing in this particular way, but the question for them is whether they have made it clear, publicly, that they do not wish to be financing the distribution.

In response to your point, Madam Deputy Speaker, the problem is that we have a system through which money is hoovered up in one way and can then be used to finance any other kind of crime—the crimes that I have described, but also those mentioned by my hon. Friend the Member for Bassetlaw. What we do not have from these organisations is any proper accountability that would allow us to get to the bottom of the issues and tackle them properly. It is extremely problematic that we do not have international agreements about how to deal with these internet companies when it comes to their taxes and their other behaviour. Although it is true that tax avoidance is a scourge and tax evasion is a crime, the industry’s use of these sites helps to promote other kinds of crime. I believe that there is a serious cultural issue about these companies that must be addressed.

[Charlie Elphicke]

I thank the hon. Lady for giving way again. I have used privilege in this place to name and shame financial wickedness and, indeed, industrial scale tax avoidance. I have always done so, however, in an attempt to provide evidence. The hon. Lady has made some serious allegations in respect of which I am concerned she has not provided us with any evidence.

[Helen Goodman]

The hon. Gentleman may not be aware that a whistleblower showed me a large number of pages on which I saw some of these advertisements. The point I am trying to make to him is that the companies are inadvertently drawn into this through the targeting and retargeting of advertisements. Their money is being used to finance the internet companies according to the business model that operates, so if they do not want to be involved, they must take steps to avoid doing so.

To offer the hon. Member for Dover some comfort, Marks & Spencer, for example, took the view that it really wanted action to be taken—and it took it publicly, which had a tremendous impact on Facebook and on what Facebook was doing. The other companies have not yet come out as clearly as Marks & Spencer did.

I had better not speak for too long. This is an important debate, and I am grateful to my hon. Friend the Member for Bassetlaw for opening it up. I am very concerned, however, about what the debate is uncovering.

Welfare Benefits Up-rating Bill

Debate between Helen Goodman and Charlie Elphicke

Monday 21st January 2013 Commons Chamber

[Charlie Elphicke]

I will in a moment.

It is also unfair on those people who are not in work, because they have no incentive to go and seek work. We need to provide that incentive, not because we want to attack people who are unemployed but because we want to give them every incentive to get work, realise their potential and take the opportunity to do really well in life and be a great success.

[Helen Goodman]

In that case, why does the Bill apply to statutory maternity and paternity leave, adoption leave and sick pay—all those things that are provided for people exactly when they cannot possibly go to work?

[Charlie Elphicke]

As the hon. Lady knows, the principal part of clause 1, which we are discussing, deals with out-of-work benefits. As she also knows, the policy of the Opposition—that uprating should continue according to inflation—and their opposition to this Bill would cost £3.5 billion. Money is tight in this country today. The reason for that is that she and her party drove our economy off a cliff, overspending for years and displaying fiscal incontinence that was unparalleled in this country in the last century.