Bank of England and Financial Services Bill [Lords]

John McDonnell Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Harriett Baldwin]

By popular demand, this is what the letter states:

“Dear Andrew,

During the passage of the Bank of England and Financial Services Bill, we have considered the role of the Treasury Select Committee (TSC) in scrutinising the appointment of the Chief Executive of the Financial Conduct Authority (FCA).

This scrutiny is important and welcome. I will therefore ensure that appointments to the Chief Executive of the FCA are made in such a way to ensure the TSC is able to hold a hearing, after the appointment is announced but before it is formalised. Should the TSC recommend”—

this is more exciting news—

“in its report that the appointment be put as a motion to the whole House, the government will make time for this motion and respect the decision of the House.

Additionally”—

it does not stop there—

“I will seek, in a future Bill, to make a change to the legislation governing appointments to the FCA CEO to make the appointee subject to a fixed, renewable 5-year term. This would not apply to Andrew Bailey, who I recently announced as the new head of the FCA, but would first apply to his successor.

I believe that these changes will reinforce the Treasury Committee’s important scrutiny role.”

[John McDonnell (Hayes and Harlington) (Lab)]

It would be helpful if the Economic Secretary could assure the House that that future Bill will be introduced sooner rather than later.

[Harriett Baldwin]

I am sure that the shadow Chancellor welcomes Government new clause 12 and the news that we will carefully consider the earliest possible opportunity for doing that, following today’s debate.

As the letter states, should the Treasury Committee follow the pre-commencement hearing with a report recommending that the appointment be put as a motion to the whole House, the Government will make time for that motion and, should it result in a vote, they will respect the decision of the House. We will also seek an opportunity to alter the legislation governing appointments to the FCA chief executive officer, to make the appointee subject to a fixed, renewable, five-year term. I can confirm that Andrew Bailey, the new CEO of the FCA, has been appointed to a five-year term that can be renewed, so the agreed process will first apply to his successor. The agreement is the right way to reinforce the crucial scrutiny role of the Treasury Committee.

Tax Avoidance and Evasion

John McDonnell Excerpts

Wednesday 13th April 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I beg to move,

That this House notes with concern the revelations contained within the Panama Papers and recognises the widespread public view that individuals and companies should pay their fair share of tax; and calls upon the Government to implement Labour’s Tax Transparency Enforcement Programme which includes: an immediate public inquiry into the revelations in the Panama Papers, HMRC being properly resourced to investigate tax avoidance and evasion, greater public sector transparency to ensure foreign companies wanting to tender for public sector contracts publicly list their beneficial owners, consultation on proposals for foreign companies wanting to own UK property to have their beneficial owners listed publicly, working with banks to provide further information over beneficial ownership for all companies and whom they work for, the swift implementation of full public country-by-country reporting with a fair turnover threshold as well as ensuring robust protection for whistle blowers in this area, ensuring stricter minimum standards of transparency of company and trust ownership for Crown Dependencies and Overseas Territories, consideration of the development of the Ramsey Principle by courts, implementation of an immediate review into the registry of trusts, and the strengthening and extension of the General Anti-Avoidance Rule to cover offshore abuses.

I see that the Chancellor is absent again today. Much as I look forward to seeing the various members of his Treasury team, is there a specific reason why he is not here for this important debate? I am happy to give way. [Interruption.] Is it critical? In respect of his attendance at the International Monetary Fund, he might look at yesterday’s IMF report that downgraded the growth expectations for our economy and think again about the policies he is pursuing, which fail to invest in the infrastructure, skills and new technology that our economy needs to compete in the world market. Perhaps we will send him a letter and he can say hello to the Chamber some time when he happens to be passing through.

We need to move the debate about tax avoidance and evasion on to the issue of the fairness and effectiveness of our tax system, and we need to do so as constructively as we can. The leak of documents from Panama lawyers Mossack Fonseca has provoked an extraordinary public discussion, and an entire hidden world has been brought into the light. What it reveals is profoundly unsettling.

We now know that Mossack Fonseca sat at the centre of a vast web of tax evasion and tax avoidance. The world’s super-rich commissioned its services to hide their income and wealth from the public gaze. Some of them had plainly criminal intentions. Money from the Brink’s-Mat robbery was allegedly laundered through a shell company set up by Mossack Fonseca, while the Mexican drug baron Rafael Caro Quintero held his property through a shell company established by Mossack Fonseca.

[James Cartlidge (South Suffolk) (Con)]

Disturbing points have been raised about Putin and the Russian regime. Will the hon. Gentleman confirm whether the shadow Treasury spokesman, his hon. Friend the Member for Leeds East (Richard Burgon), raised any of those points about the Russian Administration when on “Russia Today”?

[John McDonnell]

That certainly will happen in future.

Even if they were not criminals, many of Mossack Fonseca’s clients, if not all, had the strong intention of evading or avoiding the taxes that would otherwise have been due from them.

[Catherine West (Hornsey and Wood Green) (Lab)]

I thank my hon. Friend for his excellent speech and for bringing this debate to the House. Does he agree that this is a real issue for people in London, particularly in respect of the impact that these shady characters have on our London property market? It is a tragedy that Londoners, who want to remain in London, have to move out because these criminal elements are messing up the international finance system.

[John McDonnell]

That confirms the need for open and public disclosure of beneficiary ownership and beneficiary interests. As my hon. Friend and every London MP knows, speculation on property in this capital city denies many of our constituents a decent roof over their heads.

[Jo Cox (Batley and Spen) (Lab)]

Will my hon. Friend give way?

[John McDonnell]

Let me press on a little, and I shall give way shortly.

Mossack Fonseca exploited the presence of loopholes and entire jurisdictions that favour secrecy and minimal taxation. We can expect further news over the next few weeks and months, as the investigative work continues. Yesterday the Panama headquarters of Mossack Fonseca was raided, but 10 days on since the initial leak, I believe that its UK offices in Hitchin—not far away—have not been, despite the raising of concerns by the firm’s founder about the lack of due diligence performed by the UK office in relation to a company in its charge, and a clear legal precedent for the UK authorities to intervene.

There may be more revelations to come, set to tarnish individual reputations. I put this mildly: the Prime Minister has done himself no favours over the last 10 days. A lesson for the future is that, when asked a straight question, one should answer straightforwardly and straight away. The Prime Minister could and should have come clean about his relationship with Blairmore Holdings far earlier.

[Sammy Wilson (East Antrim) (DUP)]

Perhaps the hon. Gentleman will give a straight answer to a straight question. Does he regret the support that he gave to the IRA? They are still laundering money and still avoiding taxes in Northern Ireland, and he supported their activities in the past.

[John McDonnell]

I have never given the IRA support in relation to money laundering or any other activity. Let me make it absolutely clear that wherever laundering takes place, it is illegal and should be tackled, and I shall welcome the hon. Gentleman’s future contribution to the establishment of procedures to ensure that that happens.

[Jo Cox]

Having spent 10 years as an aid worker, I am acutely aware of the millions of pounds that are lost to development in poor countries as a result of these tax havens. Does my hon. Friend agree that, before the anti-corruption summit that will take place in London in May, the Prime Minister needs to do far more to reassure the House that he will accelerate his efforts to persuade British overseas territories to mirror the United Kingdom’s welcome move, and establish a transparent public register of beneficial ownership?

[John McDonnell]

The issue of a public register is critical to any measures that are taken in the future, because such a register will enable these kleptocrats to be held to account—particularly in the developing world, where they have denied development resources to the economies of their countries.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Transparency throughout the Crown dependencies and the overseas territories is, of course, crucial. Does not the lack of such transparency further reinforce the message to our constituents that there is one tax rule for the rich and powerful, and another for everyone else?

[John McDonnell]

One of the key things that I think the whole House must do in the coming period is re-establish the credibility and fairness of our taxation system, which has been so badly damaged.

[Christopher Pincher (Tamworth) (Con)]

The shadow Chancellor has called for greater transparency on the part of the Crown dependencies. Can he explain why this is the first time he has made such a call? Why did he not make such calls during the 13 years of the last Labour Government?

[John McDonnell]

May I ask the hon. Gentleman—[Hon. Members: “Answer!”] I am. Calm down.

If the hon. Gentleman looks at my parliamentary record over the last 18 years, he will see that I was one of the first MPs to set up the tax justice meetings in the House that brought the Tax Justice Network here, and to do the necessary research. He will also see that, as shadow Chancellor, I have commissioned a review of HMRC’s activities in terms of the tax base, including those relating to avoidance and evasion. However, I understand his concern. I have worked on this issue on a cross-party basis for a number of years, and have criticised successive Governments for not doing enough.

[Albert Owen (Ynys Môn) (Lab)]

My hon. Friend has spoken of tax fairness. Does he agree that the Panama papers have revealed a channelling of moneys to the very rich while the poor have to pay their taxes, and that that comes on top of a Budget in which capital gains tax was cut for the top 3% through changes in personal independence payments for the disabled? Does that not show that we are not “all in it together”?

[John McDonnell]

I think that what people found extremely disappointing in the Budget debate was that, as my hon. Friend says, the cut in capital gains tax was being paid for by cuts in benefits for people with disabilities. That did indeed demonstrate very starkly that we were not all in it together. Perhaps these revelations will enable us to take steps towards the establishment of a fair taxation system that will fund our public services effectively.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I thank the shadow Chancellor for being so generous with his time.

Last night, an all-party parliamentary group to which I belong held an excellent meeting with a journalist from The Guardian and the campaigners who exposed the scandal. They informed us that openness and transparency in the overseas territories could be achieved quite simply through an Order in Council from the United Kingdom Government. The achievement of those aims is a matter of will on the UK Government’s part.

[John McDonnell]

My hon. Friend the shadow Leader of the House made that point last week, giving example after example of cases in which Orders in Council had been issued. They have been used very effectively by successive Governments, and it bewilders me that this Government are not taking that opportunity now.

[Robert Jenrick (Newark) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

May I press on for a little while? I am only on the third page of my speech. This is getting ridiculous. I will give way to the hon. Gentleman later, but I have already given way a fair amount. As you know, Mr Speaker, I am generous, but I do not want to speak for too long.

Even today, we have not seen the Prime Minister’s full tax return or that of the Chancellor, and it is important that that should happen. The Prime Minister established the principle, which I advocated three months ago, that the Prime Minister, the Chancellor, the Leader of the Opposition and the shadow Chancellor should publish their tax returns—not summaries; their full tax returns—but that has not happened.

However, what confronts us today is an issue far bigger than any individual. At the centre of the allegations is a single issue. The fundamental problem is not tax avoidance by this individual or that company; those are symptoms of the disease. The fundamental issue is the corruption of democracy itself. At the core of our parliamentary system is the idea that those who levy taxes on the people are accountable to the people. If those who make decisions about our taxation system are believed to be avoiding paying their own taxes, that undermines the whole credibility of our system.

[James Cartlidge]

Will the hon. Gentleman give way?

[John McDonnell]

I had better give way to the hon. Member for Newark (Robert Jenrick) first; otherwise, he will be disappointed.

[Robert Jenrick]

I am grateful to the shadow Chancellor. May I hark back to the point about Orders in Council? Was the shadow Chancellor surprised to learn that his friend and leader, the right hon. Member for Islington North (Jeremy Corbyn), once described the use of Orders in Council by the last Labour Government as “extremely undemocratic” and, in fact, “medieval? Does he think that the Leader of the Opposition is a johnny-come-lately on this issue?

[John McDonnell]

It depends on the issue that is being addressed. Sometimes harking back to the medieval period may be the most effective way of dealing with these problems.

[James Cartlidge]

rose—

[John McDonnell]

I must press on. I will give way to the hon. Gentleman later, if that is okay.

The common understanding is also that those who live here and benefit from public services will make a proportionate contribution towards them. The level of taxation may vary—sometimes it is higher, sometimes lower—but because we have a shared sense of fairness, we expect those with the broadest shoulders to carry the greatest burden in taxes. Over the last 30 years, however, we have witnessed the growth of wealth inequality on such a scale that it has undermined that basic principle of democracy. Figures from Oxfam suggest that the richest 1% own more than the rest of the world combined.

[James Cartlidge]

rose—

[John McDonnell]

Let me press on for a little while. I will return to the hon. Gentleman, I promise.

Great hoards of assets, in property and in financial wealth, have been built up. According to the best available measures, the levels of income inequality in Britain today are climbing as high as they were at the time of the first world war. The share of income going to the super-rich has risen almost inexorably for three decades. We are returning to the levels of inequality that were experienced before universal suffrage—before women had the vote, and before the development of universal free education and healthcare—in a world that existed before the gains of democracy brought obscene levels of wealth inequality under control, and created a more humane society for the majority.

[James Cartlidge]

rose—

[John McDonnell]

Let me press on. I will come back to the hon. Gentleman.

The world of the Rockefellers and the robber barons is the one to which we are returning: a world in which there is immense, almost unimaginable wealth for a gilded elite, but insecurity for growing numbers. Much of that wealth is now held offshore in secretive, unaccountable tax havens. According to the most recent estimate, $21 trillion dollars, equivalent to a third of global GDP, is hidden from taxation systems in global tax havens. It is estimated that, if taxed fairly, that wealth would raise $188 billion a year in extra taxation.

This is not about a few families seeking to “minimise their tax bill”, as was claimed by the hon. Member for Gainsborough (Sir Edward Leigh). It is systematic. An offshore world is operating parallel to the world in which the rest of us live. This is not an accident. The offshore world is being constructed, piece by piece, by multinational corporations and the super-rich, aided by shady offshore operations such as Mossack Fonseca, and—we must be honest about this—supposedly reputable accountancy firms here in London are also playing their part. According to the Public Accounts Committee, PwC has aided tax avoidance “on an industrial scale”. Deloitte has advised big businesses on avoiding tax in African countries. Ernst and Young act as tax advisers to Facebook, Apple and Google, and just last month KPMG had one of its tax-avoidance schemes declared illegal by the High Court. Together, the big four accountancy firms in this country earn at least £2 billion annually from their tax operations.

But it is not just them. Banks headquartered and operating in London have been particularly proficient in directing their funds through Mossack Fonseca shell companies. HSBC and its affiliates created more offshore companies through Mossack Fonseca—over 2,300 in total—than any other bank. Coutts, a subsidiary of RBS, created over 500 offshore companies through its subsidiary in Jersey. Supposedly reputable companies are aiding and abetting the systematic abuse of our tax system.

We should be clear: the City of London is being viewed by many as a tax haven in the middle of a dense network of havens created for the super-rich to avoid the taxes the rest of us must pay.

[James Cartlidge]

Does the hon. Gentleman accept that in 2010 the richest 1% contributed 25% of all tax, and does he welcome the fact that the Chancellor revealed in the Budget that that has now increased to 28%?

[John McDonnell]

It is not just a matter of tax, is it? It is not just a matter of income tax, either. Of course I recognise those figures, but distributional analysis has been undertaken independently of the Government. Conservative party policy since 2010 has seen some of the biggest losses for the poorest, not the wealthiest. The Women’s Budget Group put together the tax gains, the tax paid, the services cut and the benefit cuts. The poorest 10% will lose 21% of their income annually as a result of this Government’s policy—five times more than the top 10%. The analysis of the Institute for Fiscal Studies clearly shows that this year’s Budget hits the poorest 80% harder than the richest. Eighty per cent. of those cuts fall on whom? It is on women.

[Huw Merriman (Bexhill and Battle) (Con)]

I am grateful to the hon. Gentleman for giving way—he is always generous with his time. As well as appreciating the fact that 1% of the highest-income earners pay 28%, would he consider that since 2010 this Government have taken millions out of tax altogether by increasing the tax allowance—it is now £11,500?

[John McDonnell]

Let me deal with the tax threshold issue. The IFS has said that the biggest gains from the shift in the lower tax thresholds come for the higher earners. They are the ones who get the most and they benefit from the tax threshold moves. It describes the shifting of the tax thresholds as

“very much a giveaway to the better off”.

[Robert Jenrick]

Will the hon. Gentleman give way?

[John McDonnell]

I gave way earlier to the hon. Gentleman. I will press on because I know that others want to speak and I am sure he will want to speak himself.

This is a world that the super-rich inhabit. They live by different rules and it is an alien world for the majority of the rest of us.

[Maria Caulfield (Lewes) (Con)]

Does the hon. Gentleman agree that his party’s opposition to the removal of the family home from the income tax threshold affects those on the lowest incomes in London and the south-east because it will mean that only the wealthy can afford to stay in London when the family home is sold and they have to pay inheritance tax?

[John McDonnell]

The hon. Lady makes an important point. We have supported the increase in tax thresholds to try to take people out of tax altogether, but the benefits overall have actually accrued to the highest earners rather than the lowest and we need a more sophisticated system than that. With regard to inheritance tax, the cut that was made this time around by the Government benefited the top 5% of the population. There must be a better way of ensuring that people can pass on their wealth to their children, rather than just benefiting the super-rich. We have to look at that again. I am happy to do that and meet her to discuss it.

[Maria Caulfield]

I thank the hon. Gentleman for being extremely generous in giving way, but there are low-income families in London and the south-east whose home’s value has increased beyond recognition. They are now asset rich but income poor. How will the Labour party help them if it does not take them out of inheritance tax?

[John McDonnell]

The important thing now, as my hon. Friend the Member for Bolsover (Mr Skinner) has said, is that we build more homes to house those people. That will be an effective way of reducing prices, too. That will give access to home ownership to thousands more in the capital.

[Mr David Anderson (Blaydon) (Lab)]

Can we put this discussion on thresholds to bed once and for all? The people who are paying 28% income tax will get a small rise. Every one of us standing here will get a 10% pay rise next year and we will get a much bigger tax threshold rise than the ordinary men and women of this country. That is what they cannot understand. We and the super-rich are getting richer. They keep getting poorer. That is what this debate is about—it is about fairness.

[John McDonnell]

We have to find a better way in our taxation system to benefit those at the lower end of the scale. At the moment, although we are happy with the rise in tax thresholds, there needs to be a way to compensate for that more equitably. Again, it is not us saying this; it is the IFS and many other independent assessors. They are saying that this is not the most effective way of redistributing wealth in this country.

May I go back to my speech? I do not want to try your patience, Mr Speaker.

It is an alien world for the majority of us. It is a world of offshore trusts and legal trickery that would put Byzantium to shame; a world in which it is perfectly normal to buy property in London through a company registered in the British Virgin Islands, managed by lawyers in Panama with offices in Bermuda; a world in which citizenship and attachment to a country are something to pick and to choose depending on price. The scandal of the “non-doms” continues, in which a few super-rich can pay a notional fee instead of the taxes that would otherwise be due from them as residents.

Tucked away in this year’s Budget was an extraordinary clause that wrote off selected non-doms’ entire capital gains tax bill on any gains made before April 2017—a giveaway to the wealthy. This is not the world that most of us live in. Most of us pay our taxes. Contrary to the shocking opinion of the right hon. Member for Rutland and Melton (Sir Alan Duncan), that is not because we live in a country of “low achievers”, as he described them. We do so because we understand that a decent society depends on the contributions all of us make. Without the payment of taxes, we cannot run the public services that are essential to a decent society.

[Christopher Pincher]

Will the hon. Gentleman give way?

[John McDonnell]

Let me press on. I have given way to the hon. Gentleman once.

We do not have access to the specialist services that Mossack Fonseca and other companies provide. We cannot negotiate with HMRC when and how much to pay in tax. However, for the global elite, tax avoidance is as much a part of their world as the yachts and the mansions. This world is a corrosive influence on our democracy. The more the super-rich can escape the burden of taxation, the more it falls on the rest of us in society.

It is morally wrong that a billionaire oligarch should be paying proportionately less in taxes than the migrant cleaner of his mansion. It is a disgrace that an immense global corporation such as Google should pay no corporation tax for nearly a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. [Interruption.] It is also a corrosion of democracy when a revolving door apparently exists between HMRC, charged with collecting taxes—[Interruption.]

[Mr Speaker]

Order. It is very unseemly when the shadow Chancellor is addressing the House for there to be a side exchange between a member of the Opposition Front-Bench team and the hon. Member for South Suffolk (James Cartlidge). He must not get into this bad habit. His father-in-law is a distinguished Member. He will tell him how to behave properly, and I will do so as well.

[John McDonnell]

It is always best to keep the in-laws on-side, Mr Speaker.

It is a disgrace that an immense global corporation such as Google should pay no corporation tax for a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. It is also a corrosion of democracy when a revolving door apparently exists between HMRC, which is charged with collecting taxes, and major accountancy firms whose business depends on minimising taxes. HMRC’s last director went to work for Deloitte, and now we find that the executive director appointed by HMRC to oversee its inquiry into the Panama leaks is a former adviser to tax havens who believes that tax is a form of “legalised extortion”. The structures of Government are being bent out of shape by tax avoidance. Decisions are warped around the need to protect the interests and wealth of the super-rich and of giant corporations. Democracy becomes corroded.

On party donations, the Conservatives receive more than half their election campaign funding from hedge funds. In public view, here in London, its party leadership has made loud and repeated noises about tax avoidance, yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block the EU-wide measures against tax avoidance. As we have heard in evidence this week, the Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new tighter EU regulations on avoidance. The Conservatives’ own record reveals that people no longer trust them on this issue. Not only have they impeded efforts to clamp down on tax avoidance, but these schemes directly implicate senior figures in the Conservative party. Several Conservative party donors, three former Conservative MPs and six Members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca.

As the super-rich flee their obligations to society, the burden of taxation is pushed elsewhere. As I have said, independent assessments of the tax and benefit changes introduced since May 2015 show that the poorest 10% are forecast to see their incomes fall by more than 20% by 2020, with 80% of the burden falling on women. It is the poorest and those least able to carry the burden who will suffer the most under this Government. An economic system that allows tax avoidance on this scale is one in which the inventor and the entrepreneur come second to the owner of wealth, the worker comes second to the plutocrat and the taxpayer come second to the tax dodger. It is a system in which inherited wealth and privilege, rather than talent and effort, are rewarded.

There has been criticism of the last Labour Government, and I was not enamoured of all their economic policies, but they did take measures against avoidance. Their measures on corporation tax avoidance are forecast—not by me, but by the Financial Times—to raise 10 times as much revenue as the present Chancellor’s schemes.

The Panama leaks must act as a spur to decisive action. In response to the leaks, the Government have stepped up their rhetoric on tax evasion but much of what has been announced falls short of what is needed or repeats existing announcements. I remind Ministers that page 223 of the Office for Budget Responsibility report that accompanied this year’s Budget outlined a disclosure scheme for companies operating in Jersey, Guernsey and the Isle of Man. The report said that owing to HMRC’s consistent underfunding, it did not have the resources to follow up on the links of the scheme. I again offer some words of advice to those on the Government Front Bench: fewer press releases and more action. It is time to move on and to close down tax havens and clean up this muck of avoidance.

Let us take this step by step. We need an immediate and full public inquiry into the Panama leaks. The Government’s proposed taskforce will report to members of the Government, the Chancellor and the Home Secretary, who are members of a party funded by donors featured in the Panama papers. To have any credibility, the inquiry must be fully independent. We must shine a light on, and start to prise apart, the corrupt networks that operate through tax havens. Part of that will involve creating a proper register of MPs’ interests. Members of this House should not be able to hide behind spurious claims of privacy. We want HMRC to be properly resourced to chase down the tax avoiders, with a new specialist unit dedicated to the task. Foreign firms bidding for Government contracts here should be required to name their owners. Full, public, country-by-country reporting of earnings and ownership by companies and trusts is a necessity if fair amounts of taxation are to be charged.

The measures announced by the EU this week do not go nearly far enough, requiring only partial reporting by companies. The turnover threshold is far too high, and Labour MEPs in Europe will be pushing to get that figure reduced much more to make it more difficult for large corporations to dodge paying their fair share of tax. Banks need to reveal the beneficial ownership of companies and trusts they work with. That means creating a public register of ownership of companies and trusts, and not only of companies, as the Government are currently enforcing. The Prime Minister has a role to play in this, as it was he who lobbied for the exclusion of trusts from the proposed EU measures. Labour will work alongside leading tax experts to lead a review into publishing a public register of the trusts too often used to avoid paying tax and reduce transparency in our tax system.

We must ensure that Crown dependencies and overseas territories enforce far stricter minimum standards of transparency for company and trust ownership. The Government’s current programme for reform is being laughed at by the tax havens. As my right hon. Friend the Leader of the Opposition said today, it was only this week, after signing a new deal on beneficial ownership, that the Cayman Islands Premier Alden McLaughlin celebrated a victory over the UK, saying:

“This is what we wanted, this is what we have been pushing for three years”.

The truth is that the Government are playing into the hands of those who want to abuse the tax system.

[Christopher Pincher]

Will the hon. Gentleman give way?

[John McDonnell]

Let me press on if I can.

We need serious action on enforcement. We need not central registers but, as Christian Aid and others are calling for, full public registers accessible to all, including journalists and other businesses, if we are going to curb the activities exposed in the Panama papers. This package of measures is Labour’s tax transparency and enforcement programme. We believe that it offers a sound basis to take the first necessary steps against avoidance and towards openness and transparency. We are presenting it today as we want to see immediate effective action.

This is a test of leadership. The leadership of the Conservative party could take this opportunity to correct the series of errors that it has made. It could join us today in taking effective steps towards dealing seriously with avoidance. People want to see the Conservatives take these steps. Otherwise, they will rightly stand accused of siding with the wrong people and of being the party of the tax avoiders. Incidentally, it was not long ago that the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products”, as he described them, that would allow the wealthy to dodge inheritance tax.

[Mr Dennis Skinner (Bolsover) (Lab)]

Dodge? Can you use that word?

[John McDonnell]

Don’t tempt me, Mr Speaker.

Some of the Conservative party’s Back Benchers believe that tax avoidance is a sign of success. The party’s donors are named in the Panama papers, and the Prime Minister himself is a direct beneficiary of a scheme set up in an offshore tax haven through his prior ownership of Blairmore Holdings shares.

The Panama leaks have presented a stark political choice. Do we continue to allow a system of corruption and avoidance, or do we now take the action necessary to restore fairness to our taxation system and to correct the abuse of democracy? That is the challenge, and the choice, ahead of us. I urge the Government and all Members of this House to join us in a serious programme of work to tackle the abuse of our tax system. The Government can make a start by supporting our motion today and adopting Labour’s tax transparency enforcement programme. I commend this motion to the House.

[The Financial Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure, for the second time this week, for the Government to be able to inform the House of how much more we have done than the previous Government to tackle evasion, avoidance and aggressive tax planning and to become a world leader in tax transparency. In 2010, we inherited a situation in which no one could find out who really owned a company in the UK or find out the details of a London property if it was owned by a foreign company. Not only were the international rules governing multinational companies out of date, allowing the tax base to be eroded and profits to be shifted, but there was no attempt to bring those rules up to date. Nor was there any sign that those matters were going to change. Loopholes, secrecy and concealment are the issues that we are sorting out, not only through what we are doing in the UK but through our firm and decisive action overseas.

[John McDonnell]

I want to clarify something that the Minister just said. Can he confirm that, under his proposals, members of the public will not have access to the register of beneficial owners of companies and trusts in overseas territories or elsewhere?

[Mr Gauke]

Let me tell the hon. Gentleman precisely what I just said. In 2010, no one could find out who really owned a company in the United Kingdom. From June, we will be publishing a public register of beneficial ownership. What is more, HMRC could not find out who owned a company based in an overseas territory. As a consequence of the agreements we have reached this week, HMRC will be able to do exactly that. That is evidence of the progress that has been made under this Government, and that was not the case under the previous Government.

Budget Resolutions and Economic Situation

John McDonnell Excerpts

Tuesday 22nd March 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I beg to move amendment (b), in paragraph (2), after “tax”, insert—

“(except in relation to value added tax on insulation, solar panels and any other category of energy-saving material or their installation)”.

I and my party share the sentiments expressed by the Chancellor and those across the House in condemnation of what happened in Brussels today. Our thoughts and prayers are with the victims and their families. We support the security measures, of course, taken by the Government and say to the people of Belgium that we stand with them.

I am glad to see the Chancellor has at least turned up today. Let me make it clear from the outset that, in my view, and I believe the view of many others, the behaviour of the Chancellor over the last 11 days calls into question his fitness for the office he now holds. I also believe that it certainly calls into question his fitness for any leading office in government. What we have seen is not the actions of a Chancellor, a senior Government Minister, but the grubby, incompetent manipulations of a political chancer.

For the record, let us go back to last Friday week. The Chancellor personally forced through cuts in personal independence payments. The statement issued by the Government that Friday on PIPs was not a consultation and not a suggestion; it was a statement of policy. Personal independence payments are the benefits that, for many disabled people, make life worth living. They help them get to work. They help them have some normality in their lives. Often, they keep people out of residential care. The Chancellor was willing to cut away that vital support to some of the poorest and most disadvantaged members of our community. Do not tell us that we are all in this together.

[Kevin Brennan (Cardiff West) (Lab)]

Would it not at the very least help to dispel the impression that the Chancellor is acting in his own political interests, rather than in the national economic interest, if he made it clear today that he was not going to stand for the leadership of the Tory party so that he could concentrate on his job as Chancellor of the Exchequer?

[John McDonnell]

The reason I refer back to fitness for office is because many of us know the distress that has been caused to so many people over the past week.

[James Cartlidge]

The hon. Gentleman makes a very personal point about fitness for office on the day of a major terrorist attack. Will he withdraw his previous support for terrorist organisations that have attacked this country?

[John McDonnell]

Mr Speaker, you heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable. [Interruption.]

[Mr Speaker]

Order. I made it clear earlier that attempts to shout the Chancellor down were unacceptable. That was made very, very clear and I do not think anybody would doubt or deny it. I make it similarly clear that no attempt in this Chamber will be successful if it is an attempt to shout down the shadow Chancellor. Get the message: it ain’t gonna happen.

[John McDonnell]

On that Friday before last, there was outrage among disability groups—the Multiple Sclerosis Society, Parkinson’s UK and Disability Rights UK. Why? Because all of them, like many of us, had gone through that process of agreeing the criteria—at least coming to some compromise on what would constitute the criteria for access to this benefit. But the Chancellor moved the goalposts, those already agreed through consultation. Disabled people and their families have been sick with worry about the threats to their benefits.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

The hon. Gentleman has called into question the morality of the leadership of my right hon. Friend the Chancellor, but would the hon. Gentleman please discuss with this House the morality that allows him to stand with bombers who murdered my friends in Northern Ireland and to question the integrity of the Chancellor? [Interruption.]

[Mr Speaker]

Order. Before we proceed further, perhaps I can just say to the House, on my own account and on the basis of sound procedural advice, that we must stick to the matter of the Budget. [Interruption.] Order. I do not require any comeback or any comment, agreement or disagreement. Let us proceed in a seemly manner with the debate. That is in the House’s interest, and that is what the country has a right to expect.

[John McDonnell]

This is a challenge to the judgment of the Chancellor.

[Clive Efford (Eltham) (Lab)]

During the Chancellor’s opening speech, we heard him say that the Government have legislated to make £12 billion-worth of savings within the welfare budget. That means that this £4.4 billion attack on PIP was in addition, and it was based neither on social justice nor on compassion. Does that not show that this Government are mean-minded and prepared to attack people who have disabilities? It is not necessary to make these cuts in welfare and they should guarantee that they are not going to return with this cut.

[John McDonnell]

The proposals that came forward did not just shock those on our side of the House; they shocked many Members from across the whole of the House with their brutality.

[Christopher Pincher]

Will the shadow Chancellor give way?

[John McDonnell]

No, I have given way enough—I will come back to the hon. Gentleman.

There is scheduled to be a 6% real-terms decline in spending on disability benefits between 2015 and 2020. After that Friday, when we reached the Wednesday of the Budget, we discovered that these cuts to disabled people were being made to pay for capital gains tax cuts benefiting the richest 5% in our society and for corporation tax cuts. Of course, a deep feeling of unfairness was felt in this House, among Members in all parts of it. I welcome the expression of concern by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) during that period and his conversion to our cause of opposing these benefit cuts. But the first person to call attention to the scandalous targeting of people with disabilities was my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams). She rightly said, in response to the announcement:

“In coming to this decision, the Tories are yet again ignoring the views of disabled people, carers and experts in the field, trying to press ahead with changes, just two years since the introduction of the system.”

After it became clear that the cuts to PIP were planned as a way to fund tax cuts for the wealthy, my right hon. Friend the leader of the Labour party made this issue a key part of his excellent response to the Budget last week, and he was not alone in doing so. My hon. Friends the Members for Ilford North (Wes Streeting) and for Nottingham East (Chris Leslie) were among several Opposition Members who pressed the Chancellor on the issue, as I did when opening the Budget debate last Thursday. I want to give thanks to everyone on our Benches and across the House who has helped to force this rethink and helped end the worry that thousands of disabled people have been experiencing in the past week.

[Andrew Bridgen (North West Leicestershire) (Con)]

The shadow Chancellor is right about U-turns being embarrassing, but I remember his embarrassing U-turn on the fiscal responsibility charter. Does he regard himself at the moment as a socialist or a Marxist, and does he agree that all that the politics of the far left offers people is an equal share of misery?

[John McDonnell]

This is a debate about the threat of cuts facing some of the most vulnerable people in our society. This is not a time for engaging in student union politics in this Chamber.

By Friday of last week, the Chancellor was facing so much criticism that he needed to find someone to blame. So, in one of the most despicable acts we have witnessed in recent political history, the Chancellor sent out his large team of spin doctors to try to lay the blame on the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green. That was a disgraceful act of betrayal of one of the Chancellor’s own Cabinet colleagues to save his own skin and his leadership hopes.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Will the shadow Chancellor give way?

[John McDonnell]

indicated assent.

[James Cleverly (Braintree) (Con)]

Will he give way? [Hon. Members: “Ooh!”]

[Pete Wishart]

I am surprised that the shadow Chancellor is taken in by some of the crocodile tears from the Tories and this concern for the disabled. Surely he agrees that this is nothing to do with the Tories’ new-found concern for the disabled in this country—it is all about their euro civil war.

[John McDonnell]

Let me move on. I appreciate the point made. The betrayal was why the right hon. Member for Chingford and Woodford Green resigned. I have not agreed with a single policy that he has brought forward, but I do not doubt his sincerity in the policies that he has pursued.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

Does my hon. Friend not agree with the words of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) that this Chancellor’s policies are

“in danger of drifting in a direction that divides society rather than unites it”?

Was the right hon. Gentleman not right when he said that?

[John McDonnell]

I believe that the right hon. Gentleman’s interview on the Marr programme on Sunday expressed a profound concern that he had about the unfairness of the Budget, and we agreed with this. As I said, I have not agreed with a single policy he has pursued, but I do not doubt his sincerity. The right hon. Gentleman saw—

[James Cleverly]

Will the hon. Gentleman give way?

[John McDonnell]

I will in a minute. There is no need to shout out so loud again.

The right hon. Gentleman saw the unfairness of the PIP cuts to disabled people in the Budget. As he said, it is a Budget that benefits high earners. He also saw himself being set up by his own Cabinet colleague.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The shadow Chancellor is right to say he does not agree with the former Secretary of State’s policies. Indeed, even with the U-turn on PIP disabled people are still left distressed by the reforms that will still be going through. Will he join me in urging the Chancellor and the new Secretary of State for Work and Pensions to look again at this very flawed process?

[John McDonnell]

I fully concur. The same week that this was being discussed, ESA was being cut by £30 a week.

[James Cleverly]

I thank the hon. Gentleman. He has been speaking now for 14 minutes. He has criticised Conservative Members for making this about politics and people, but I was just wondering when he will actually get around to talking about any of the Budget proposals.

[John McDonnell]

The role of the Opposition is to hold the Government to account. We are holding this Chancellor to account for a potential attack on disabled people that I believe would have devastated their lives.

What I find most disgraceful through all of this is that there has been no word of apology from the Chancellor or any Conservative Member. Apologise, I say. I say apologise for the pain and anguish he has caused disabled people and their families in the past two weeks. We all make mistakes. I understand that. But when you make a mistake and correct it, you should at least apologise.

[Anna Turley (Redcar) (Lab/Co-op)]

Does my hon. Friend share my view that the most distressing thing the former Secretary of State said this weekend was the point he made about

“it doesn’t matter because they don’t vote for us”?

Is there not a constant thread running through everything—from the bedroom tax to local government cuts to this Budget—that this is a deeply political Government who do not care unless people vote Tory?

[John McDonnell]

I find a form of electoral politics, where you target a vulnerable group in society just because they do not vote for you, unacceptable. Not a word of apology! One nation Conservativism? It is a contradiction in terms.

[Chris Philp]

May I remind the shadow Chancellor that the richest 20% are now paying 52% of all income tax, which is up from 49%, and that the national living wage is putting money into the pockets of our country’s poorest citizens?

[John McDonnell]

The hon. Gentleman refers only to income tax. If he had looked at last weekend’s analysis of the overall cuts and what has happened with regard to tax and benefits, he would have seen that it is actually the poorest decile who are paying the most. The two groups hit hardest are young women with children and older women with caring responsibilities. Some 81% of the cuts are falling on women. This is a discriminatory Budget.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

We are pleased that the Chancellor has found that the PIP cuts are a cut too far, even for this ideological Government. Does the shadow Chancellor agree that characterising all benefits claimants as workshy, stay-in-bed, lazy scroungers, which the Chancellor of the Exchequer has done on many occasions, contributes to an atmosphere in which it is acceptable to enrich the better off at the cost of the poorest among us?

[John McDonnell]

That language has been used by the Conservative party. Let me return to the Budget. The hon. Member for Braintree (James Cleverly), who has now left us, asked me to return to the Budget, so let me press on.

Even worse, there is still no certainty about further welfare cuts. We were told yesterday by the new Secretary of State for Work and Pensions—this was repeated today—that there were to be no further cuts to welfare in this Parliament. Within minutes, the Treasury were briefing to correct the Secretary of State, as that then became “no planned cuts”. There is complete confusion—chaos on chaos. Nobody believes or has any confidence in the mealy-mouthed assurances that are being given today.

[Steve Brine]

Will the hon. Gentleman give way?

[John McDonnell]

In a second.

The PIP withdrawal now leaves a £4.4 billion hole in the Chancellor’s Budget, as has been consistently pointed out by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper).

[Steve Brine]

Will the hon. Gentleman give way?

[John McDonnell]

Let me finish this point.

The simple fact is that the sums in the Budget, as my right hon. Friend pointed out, simply do not add up anymore. They simply do not compute.

[Yvette Cooper]

The shadow Chancellor will be aware that page 26 of the Red Book states that the Chancellor will set out plans to meet the welfare cap by this autumn, and that page 198 of the OBR report says that that will require further welfare savings of £3 billion a year. Did he hear the Chancellor say clearly this afternoon that he was going to ditch the plans for £3 billion a year of additional welfare cuts by the end of this Parliament?

[John McDonnell]

Cuts upon cuts, and who to? The most vulnerable in our society.

[Steve Brine]

I believe that the shadow Chancellor and the Leader of the Opposition, with whom I have served on Select Committees, are decent men. The shadow Chancellor said five minutes ago that he did not agree with a single policy introduced by the former Secretary of State for Work and Pensions during his time in office. Given the shadow Chancellor’s new fiscal responsibility, with the new rules he announced just a week or so ago, will he tell the House—people will be looking to him, because he is the shadow Chancellor—whether he would keep the welfare cap? If he cannot tell me that, will he tell me just one single saving that he could make from the welfare budget?

[John McDonnell]

We supported the welfare cap. I find it ironic that that point is being made on behalf of a Government who are not meeting their own welfare cap. They are breaching it and then moving it up. They are moving the goalposts again.

Let us be clear that the £4.4 billion black hole in the Chancellor’s Budget means either further cuts in departmental budgets and to benefits, or stealth taxes. No solution has been announced today. We are told that all this will be resolved by the autumn. Between now and then, no public sector job, benefit or service will be safe.

[Tim Farron]

The hon. Gentleman is right that the Chancellor has a £4.4 billion black hole that needs to be filled by cuts to public services or by stealth taxes, but that is in existence only because the Chancellor has set himself a false target. Does the hon. Gentleman agree that the real problem at the heart of the Chancellor’s credibility is the fiscal charter?

[John McDonnell]

I am grateful for the hon. Gentleman’s intervention and I will come back to that point in due course. I realise we are under pressure of time, Mr Speaker, so I will try to be as brief as I can.

The Chancellor’s political manoeuvring has real consequences. The drama over Budget week has clouded a further astounding revelation about his behaviour. His former Government colleague David Laws revealed at the weekend that the Chancellor pressurised senior officials to reduce their estimates of the funding needed to maintain the NHS. We discovered that the Chancellor had forced through a cut of almost half the funding—this was independently assessed—needed by the NHS. The result is that the NHS and hospital trusts around the country cannot plan. They are facing a crisis: waiting times are rising, staff are under intense pressure and morale is at rock bottom. At the start of the year, the NHS recorded its worst ever performance as services struggled to cope with demand. It is now facing its biggest funding crisis for a generation and that is putting patient care at risk.

[Sammy Wilson (East Antrim) (DUP)]

Does not the welfare cap, and support for it, suggest that if welfare spending goes up, we will have to revisit that spending? At that stage, would the shadow Chancellor cease to support the cap, or would he support measures to keep within it?

[John McDonnell]

We support a welfare cap, and we believe we have better policies—building homes, for example, rather than spending money on housing benefit—that would enable us to meet it.

Nothing in the Budget says that the NHS can find £22 billion in savings over the next few years. The idea is pure fantasy written into the Budget. It is typical of this Chancellor to opt for spin and presentation over addressing the real problems. He needs to stop living in fantasy land and to start being honest with the public over his own numbers.

[Michael Ellis (Northampton North) (Con)]

rose—

[John McDonnell]

I have been extremely generous in giving way, but we are running out of time.

On schools, this was far from a Budget for the next generation, as the Chancellor claimed it was. Not only is the plan to turn every school in the country into an academy unpopular with parents and teachers, but we now know that schools face an 8% real-terms cut in their funding. This is the first time since the 1990s that schools’ funding has been cut.

As the hon. Member for Westmorland and Lonsdale (Tim Farron) said, at the heart of all this failure is the Chancellor’s economic incompetence. His huge mistake was to force through a fiscal rule that has proved to be unworkable. Against all sound economic advice, he put politics above economics and imposed a fiscal rule that now, like his Budget sums, simply does not add up. Virtually every target he set himself has been missed. On the deficit, which he promised would be eradicated last year, he has failed. The debt was supposed to be falling, but it is rising.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The former Work and Pensions Secretary described the cuts to PIP as deeply unfair when juxtaposed against tax cuts for the wealthy. Does my hon. Friend agree that the Chancellor should consider scrapping that tax decrease for the wealthy to help to fill the £4.4 billion black hole, which might help to improve his competence?

[John McDonnell]

That is the sort of proposal we should be considering and voting for today.

[Several hon. Members rose—]

[John McDonnell]

I want to finish the next section of my speech. I am straining your patience, Mr Speaker, so I shall press on.

The Chancellor is set to leave our children with £1.7 trillion of Government debt. Hundreds of billions have been borrowed on his watch. The welfare cap, which the hon. Member for East Antrim (Sammy Wilson) mentioned, is set to be breached each year until 2020. The OBR confirmed to the Treasury Committee that it would be breached by £20 billion over five years. The Chancellor has broken two of his own rules already. The third—the overall surplus—now hangs by a thread, and only with some seriously creative accounting will he meet it.

Meanwhile, across the country, the Chancellor’s economic approach is failing, as was evidenced by last week’s OBR report: forecast for growth—down; forecast for wages—down; forecast for productivity—down; and forecast for business investment—down again. Why will he not take responsibility for the last six years?

[Antoinette Sandbach (Eddisbury) (Con)]

Does the hon. Gentleman celebrate the fact that 1,700 of the lowest paid in my constituency will be taken out of tax altogether as a result of the Budget, and that 1.3 million of the lowest paid have already been taken out of tax altogether in this Parliament?

[John McDonnell]

That is why we support the increase in the lower-rate threshold, but we have concerns that shifting the thresholds in that way actually benefits higher earners too much.

At the bottom of the Budget is a Chancellor who, as some have mentioned, is more interested in his political career than the welfare of disabled people, and more interested in becoming the leader of his party than in the health of our economy. He is not a Chancellor but a political chancer. I pay tribute to colleagues on both sides of the House who forced him to U-turn on his proposed cuts to disabled people.

This is not a one nation, compassionate Budget—nobody believes that—but a Budget shot through with unfairness at its heart. Even one of the Chancellor’s own Cabinet colleagues last week denounced it as fundamentally divisive and unfair. It is not a competent Budget. It fell apart within a couple of days, and the Chancellor still cannot explain how he will fill the £4 billion hole. This is not a Budget for the long term either—a long-term economic plan that lasts three days? It is a Budget built around short-term political tactics and it has backfired spectacularly. They used to say that a week was a long time in politics but, under this Chancellor, a weekend is the length of a long-term economic plan. What a failure!

This is not a Budget for the economy or the country, either, but one that is constructed around self-imposed austerity. It is about politics—incompetent politics at that —not economics, and it has blown up in the Chancellor’s face. For the sake of his party—he might think about that—and certainly for the sake of the country, it is time for him to go.

Budget Changes

John McDonnell Excerpts

Monday 21st March 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on changes to the Budget.

[The Financial Secretary to the Treasury (Mr David Gauke)]

Immediately after this urgent question the Prime Minister will make a statement, and following that the Secretary of State for Work and Pensions will set out the Government’s position on personal independence payments and the welfare cap. For the rest of the day the debate on the Budget will continue, and tomorrow it will conclude with the Chancellor of the Exchequer responding. The House will therefore have three opportunities to discuss these issues before voting on the Budget tomorrow. I am grateful for the opportunity to talk about how this Government, through our long-term economic plan, are creating growth, generating employment, cutting the deficit, and securing long-term prosperity for the people of this country.

The Budget delivered last week by my right hon. Friend the Chancellor of the Exchequer set out how we are taking more people out of income tax, supporting small businesses, encouraging investment, tackling tax avoidance, helping young people to save, and investing in our education system, all while restoring the public finances. That is what the British people voted for last May, and that is what we are delivering.

[John McDonnell]

Thank you, Mr Speaker, for granting this urgent question. I asked it because the Budget process is in absolute chaos. It is unprecedented for a Government to have withdrawn a large part of the Budget and accepted two Opposition amendments before we have even reached the third day, and from what we have heard from the Chief Secretary to the Treasury today, we are little wiser. I have some sympathy for the hon. Gentleman, who has been sent out yet again to defend the indefensible, while the Chancellor insults this House by his refusal to attend.

This whole debacle started two weeks ago when the Government announced cuts of up to £150 a week in personal independence payments to disabled people. By the day of the Budget last week, we discovered that those cuts to disabled people had been forced through by the Chancellor to pay for cuts in capital gains tax for the wealthiest 5% in our society, and for cuts in corporation tax. I agree with the former Work and Pensions Secretary: such cuts are not defensible when placed in a Budget that benefits high earners.

How can the Chancellor any longer suggest that we are “all in this together”, when the Institute for Fiscal Studies confirmed today that poorer working age households with children will be the hardest hit? Will the Minister rule out any further cuts to support for people with disabilities in the lifetime of this Parliament? Over 600,000 disabled people and their families have been caused considerable distress over the last week, and they need the reassurance that their benefits are safe. If the PIP cuts are not going ahead, the money required from the Department for Work and Pensions still sits in the Red Book.

Will the Chief Secretary tell us which other vulnerable groups the Chancellor is considering targeting for cuts? If the Chancellor halts the attack on disabled people, a £4.4 billion black hole is created in the Budget. Add to this the billions of unidentified cuts, and the amendments on the tampon tax and solar power that we have won today, and within five days an enormous hole has appeared in the Budget. Is not the prudent thing for the Chancellor to do to withdraw this Budget and start again? I say that this is no way to deliver a Budget and no way to manage an economy.

[Mr Gauke]

First, may I thank the shadow Chancellor for promoting me to Chief Secretary to the Treasury? Secondly, may I just make this point about disability benefits? There is no question of this Government cutting disability benefits to the level we inherited in 2010. Spending on disability benefits has gone up by £3 billion in real terms. Thirdly, does the shadow Chancellor really want to talk about fiscal black holes? Does he really want to do that? [Interruption.]

Last week the Chancellor of the Exchequer reported on an economy set to grow faster than any other major advanced economy in the world. With wages up, the deficit cut by almost two thirds and 1,000 more people in work every single day, our economic plan is delivering for Britain. It is a Budget that continues this economic recovery, a Budget that takes us into surplus by the end of this Parliament, a Budget that backs British businesses, protecting jobs in difficult economic times, a Budget that helps more people buy their first home or save for their retirement, a Budget that builds our young people’s skills and invests in educating the next generation, and a Budget that helps to close the gaps between rich and poor and between north and south, because we believe in helping people to succeed wherever they come from. Since 2010, inequality is down, child poverty is down, pensioner poverty is down, the gender pay gap is smaller than ever, while the richest—[Interruption.]

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 1st March 2016 Commons Chamber

[Mr Speaker]

Order. Sit down. It is a terrible waste of time—long-winded, boring and unnecessary.

[John McDonnell (Hayes and Harlington) (Lab)]

In the debates at the time of the charter, I and many others warned the Chancellor of the potential impact of global adverse headwinds. The Chancellor responded by boasting

“of having an economic plan that actually produces better results than were forecast”.—[Official Report, 25 November 2015; Vol. 602, c. 1385.]

Since then, we have seen business investment fall, his export target recede into the distance, the trade deficit widen, manufacturing and construction enter recession, and the biggest productivity gap for a generation. Last week, to crown it all, the Chancellor told us the economy is smaller than we thought. I say to him that if his economic plan is now producing worse results than forecast, imposing more stealth taxes and cuts in the Budget will only—[Interruption.]

[Mr Speaker]

Thank you. We need a question mark. [Interruption.] Order, order. I said what I said because Ministers are responsible for answering for Government policy, not that of the Opposition. People who ask questions, be they from the Front or the Back Bench, must do so pithily. A pithy reply, Chief Secretary.

[Greg Hands]

All forecasts at the moment still show the UK performing extremely well, with strong rates of growth compared with other G7 countries. The Chancellor was right to say over the weekend that we may need to undertake further reductions in spending because this country can afford only what it can afford. He went on to say:

“I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.”

I am equally clear that it would be a fundamental disaster for this country if we pursued the policies that the hon. Member for Hayes and Harlington (John McDonnell) has been promoting in the six months that he has been shadow Chancellor.

[John McDonnell]

Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?

[Greg Hands]

I remind the shadow Chancellor that, over the past five and a half years, this Government have been fixing the problems in our banking system, after the poor regulation and tripartite regime that we inherited from the previous Government. We have been taking action. On economic policy, I just have to look around at the Labour party and see what kind of reactions there are.

Tax Avoidance and Multinational Companies

John McDonnell Excerpts

Wednesday 3rd February 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I beg to move,

That this House notes the agreement reached between HM Revenue and Customs and Google to pay £130 million in respect of taxes due over the period 2005 to 2015; and calls on the Government to publish the full details so that the British public can judge whether this is, as stated by the Chancellor of the Exchequer, a major success; and further calls for a swift international agreement to implement country-by-country reporting of company accounts.

I welcome the Minister who is responding to the debate. I truly sympathise with him as he has been placed in this situation by the Chancellor. I understand that the Chancellor is in Rome today. If it is true that he is associated with the current EU negotiations on the future of our relationship in Europe, may I say that it is unfortunate to say the least that securing a firm agreement on tax avoidance and evasion has not been a core issue in those negotiations so far. It could be a significant missed opportunity for this Government.

We have called this debate today because, over the past 12 days, we have witnessed the most supine capitulation to corporate interest by any British Government in the recent history of this country. Understandably, it has caused immense anger within our community among individual taxpayers, businesses small and large, independent commentators and people across the political spectrum. At a time when many of our constituents were filling in their tax returns and paying their taxes, they saw what the Government were allowing Google to get away with.

[Several hon. Members rose—]

[John McDonnell]

I will give way in due course, but may I remind Members that this is a time-limited debate and I wish to press on as quickly as I can? Of course Members will have the opportunity to engage.

On the Friday before last, Google announced late in the day by press release the company’s tax deal with HMRC. Google celebrated a deal comprising a payment of £130 million to HMRC in respect of taxes from 2005 to 2015. Astoundingly, in the early hours of the morning, the Chancellor was in an equally celebratory mood and tweeted that this was a “victory”—a major success.

[Several hon. Members rose—]

[John McDonnell]

I will give way in due course. Calm down.

The Google deal and the Chancellor’s exultation about it were immediately received with incredulity by independent tax analysts—understandably. The Chancellor and HMRC were all too keen to publicly parade the deal, but when challenged to release the detail of it, hid behind confidentiality conditions.

[Mark Spencer (Sherwood) (Con)]

What assessment does the shadow Chancellor make of the Labour Government, who were in charge of taxation during part of that period?

[John McDonnell]

I am grateful for the intervention. The hon. Gentleman probably knows that I was not the most enamoured of the Labour Government’s track record during that period, but it was a Labour Government who started this inquiry and the hon. Gentleman’s Government took six years to complete it. According to a recent estimate by the Financial Times, the measures introduced by the Labour Government will reap 10 times the amount of tax that this Government have secured.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will not many of our constituents find it difficult to understand the fact that this information is largely in the public domain? We know the profits, assets and liabilities of Google in the United Kingdom because those finances are public. We also know how much tax is being paid. Does that not lead us to the conclusion that the tax rate is 2.77%, not 20%?

[John McDonnell]

Let me come on to that point.

It did not take long for independent analysis to show what a derisory sum the Google tax payment was. The word “derisory” is not just my description, but the word used by the hon. Member for Uxbridge and South Ruislip (Boris Johnson), the Mayor of London, as well as many others. Google had a UK turnover of approximately £4 billion in 2014-15. If profits here were similar to those across the whole group, about a 25% return, that implies £1 billion-worth of profits. If the standard 20% corporation tax is levied, that implies a £200 million tax bill for the one year, not the £200 million paid by Google for the decade. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, independent assessors have estimated that the Google tax rate for the past decade was 3%.

[Mike Wood (Dudley South) (Con)]

Companies such as Simworx in my constituency are extremely successful at selling products around the world that are based on their intellectual property developed in the UK. Does the shadow Chancellor think the profits from that intellectual property should be taxed in the country where those products are sold, or here in Britain?

[John McDonnell]

The economic activity definition has to be examined when profits are assessed. I will come on to that point because it is valid and reasonable.

[Several hon. Members rose—]

[John McDonnell]

Let me press on as we are time-limited.

It is no wonder that local small businesses and taxpayers in all our constituencies feel so strongly that the arrangement with Google is grotesquely unfair. They have not been allowed to ignore their tax demands for a decade, then negotiate a sweetheart deal at mates’ rates. It show who counts with this Government that, in the month when they let Google pay a paltry sum in back tax, they lose in court in their pursuit of disabled people over the issue of the bedroom tax, and then they decide to appeal the court decision so that they can persecute some of the most vulnerable and the poorest people in the land over a relatively insignificant sum. That demonstrates to us a bizarre, upside down and callous sense of justice and fairness.

[Neil Gray (Airdrie and Shotts) (SNP)]

Does the shadow Chancellor agree that what compounds the sense of unfairness that our constituents feel is that the tax gap has been estimated by many to be well over £100 billion, and at the same time this Government are cutting HMRC offices and at the weekend announced compulsory redundancies for tax collectors? How on earth can we narrow the tax gap when that is happening?

[John McDonnell]

I will come to that in my recommendations for the future.

[Alex Chalk (Cheltenham) (Con)]

Under Labour, hedge fund managers were routinely paying a lower rate of tax than their cleaners because Labour was a soft touch on tax. Is not the hon. Gentleman’s argument just political opportunism on stilts?

[John McDonnell]

I am not sure whether the hon. Gentleman was listening. I just answered that point by reference to my critique of the Labour Government. I convened the Tax Justice Network campaign meetings in this building, and I have campaigned for 18 years. The FT assessment is that the measures introduced by the Labour Government will reap 10 times as much as anything introduced by this Government.

Let me press on. Last Monday, to get some answers about the Google deal, I tabled an urgent question to the Chancellor, and I am grateful that Mr Speaker granted the question. Typically, the Chancellor failed to turn up and the Minister was left to defend this “victorious” deal. By that time, No. 10 was furiously distancing itself from the Chancellor. Within 72 hours the Google deal had gone from “a major success” to merely “a step forward”, according to No. 10. I see that this weekend the Business Secretary was describing the deal, with masterly understatement, as “not a glorious moment”.

Yesterday Ruth Davidson, the leader of the Scottish Conservatives, said:

“It doesn’t feel fair. And in our hearts, I think we all know it isn’t fair.”

I agree wholeheartedly.

During the urgent question discussion last Monday the Minister was specifically asked by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) whether he knew the rate of tax that Google was paying. He said bluntly, “No.” We heard the assertion that the HMRC calculation of back tax was on the basis of tax levied on profits as a result of an assessment of economic activity. That implies very little economic activity in Google UK. That argument wore a bit thin when it was pointed out that Google employs 2,300 staff in the UK on average earnings of £160,000, and is building a new headquarters in addition to the two it already has.

[Joan Ryan (Enfield North) (Lab)]

May I join the shadow Chancellor in demanding more transparency? I have been contacted by people in my constituency who are concerned that the Government are creating a loophole especially for Google and nobody else. We in the House and in this country deserve full transparency on this deal.

[John McDonnell]

I will come on to the recommendations for future action, which cover my right hon. Friend’s point.

[James Cartlidge (South Suffolk) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

In due course; let me press on a little further.

As last week wore on, there was a growing sense of outrage at the Google sweetheart deal. Many felt betrayed by the Chancellor. We supported the Chancellor on the introduction of the diverted profits tax legislation to tackle firms using complex profit-shifting schemes to avoid tax. It was referred to as “the Google tax”. We learned last week that Google will not be paying a penny under that legislation.

We also supported the Chancellor in seeking international agreements on tackling tax avoidance, but we discovered at the weekend that Conservative MEPs had been directed by the Chancellor on at least six occasions to vote against the very tax avoidance measures being introduced by the EU that the Chancellor told us he was supposedly promoting.

[Steve Brine (Winchester) (Con)]

I know the shadow Chancellor seeks consensus when he can and I am listening to what he says. I have been doing some totting up and I reckon that there have been about 40 changes to tax law since this Government have been in office, which has led to about £12 billion being raised since 2010. For the record, does he welcome that?

[John McDonnell]

Of course; I have welcomed that. I have just been saying that I have supported the Chancellor on each piece of legislation that he has introduced to tackle tax avoidance and tax evasion. This deal flies in the face of everything the hon. Gentleman and I have been supporting in the Chamber.

[Rachel Reeves (Leeds West) (Lab)]

Last year Google funnelled £8 billion-worth of royalty payments to Bermuda. Does my hon. Friend believe that the British Government should be doing much more to crack down on tax havens, particularly those that are British overseas territories?

[John McDonnell]

I will address the Bermuda question, so if my hon. Friend waits a few minutes she will hear just how shocking the situation really is.

The Chancellor appears to be missing an opportunity in the EU negotiations to secure a robust international agreement to tackle tax avoidance and tax evasion, which Members across the House have been calling for.

[Several hon. Members rose—]

[John McDonnell]

I am going to press on.

We all supported the changes to public procurement rules that enabled the Government to prevent public contracts from being awarded to companies found to be engaged in tax avoidance schemes. Staggeringly, it is understood that no company has been denied a public contract on those grounds and that, even though its tax affairs were under such lengthy investigation by HMRC, Google was awarded public contracts to supply services—who to?—to HMRC.

[Chris Philp (Croydon South) (Con)]

On the point about international agreements, the United Kingdom Government have been at the forefront of the base erosion and profit shifting initiative. Richard Murphy, who describes himself as the author of Corbynomics, told the Treasury Committee yesterday that he was “pleased and very surprised” by the progress the Government have made since 2010.

[John McDonnell]

I support the Government in that action, but this deal flies in the face of that action and undermines the agreements that we are trying to make.

Over the weekend we also heard from Mr Jones, the Google whistleblower. In his view, HMRC ignored his exposure of Google’s tax avoidance methods. That evidence was received by the Treasury Committee on a cross-party basis.

We all accept that the existence of tax havens and the complexity of national tax systems present an ongoing challenge to national Governments. As a result, we have all supported the negotiation of international agreements on tax collection. The UK is a signatory to some of these. As the hon. Member for Croydon South (Chris Philp) said, the Government have agreed in successive steps to abide by the base erosion and profit shifting programme under the auspices of the OECD. We supported that.

[Several hon. Members rose—]

[John McDonnell]

Let me press on, because time is short.

At the end of last week, the UK joined 30 OECD partner countries in signing up to the multilateral competence co-operation agreement. We supported that. That is the kind of international co-operation, albeit limited, that will help close the loopholes and ultimately close down the tax havens. It is the kind of agreement that we have backed for years and that we support the Chancellor in undertaking, but last week, by allowing the special treatment of one company, the Government drove a coach and horses through the entire international approach. As the EU’s Competition Commissioner suggested, that could amount to unlawful state aid. The UK is now being depicted across Europe as a tax haven. It risks establishing a race to the bottom in which all countries seek to outbid each other to offer the lowest possible taxation. We have written to the Competition Commissioner to request a formal investigation of the deal.

[Mrs Sheryll Murray (South East Cornwall) (Con)]

Does the hon. Gentleman not accept that this Government have done more than the previous Labour Government to close those loopholes? He says that he did not agree with the previous Labour Government, so will he tell us what he did to oppose those measures and raise the matter when he was in Parliament?

[John McDonnell]

I know that the hon. Lady was not here at the time, so perhaps she should check my voting record throughout my 18 years in this House. I do not want to keep on repeating this. I wanted both Governments to go further, but an independent assessment has shown that the legislation introduced by the previous Labour Government will drag in 10 times more in tax than the current Government’s legislation, and even then I wanted to go further. We should at least accept the independent assessment that has been made.

[Robert Jenrick (Newark) (Con)]

rose—

[John McDonnell]

I am going to press on, because time is short.

I have written to the Competition Commissioner to request a formal investigation of this deal. There was a visible flicker of life from the Chancellor a few days ago. In the pages of Monday’s Financial Times he let it be known that he might, after all, favour country-by-country reporting for multinational corporations. Tax experts and campaigners and I have long argued that this is a vital step towards transparency, and therefore towards fair collection. By revealing in their accounts in which tax jurisdiction their revenues were earned, a proper rate of tax can be applied to multinational companies. If the Chancellor now supports country-by-country reporting, I welcome that. However, the impression was given that even without international agreement the Government would act. Is this the case, or was it just a publicity stunt that has now been dropped?

My hon. Friend the Member for Leeds West (Rachel Reeves) referred to Bermuda. On the “Andrew Marr Show” on Sunday a senior Google representative revealed that the company has £30 billion of profits resting in Bermuda, a British overseas territory. This is in order to avoid US tax rates. We now know that the Chancellor has been lobbying the EU and instructing his MPs to vote against anti-avoidance measures against Bermuda. It is a disgrace.

It was also revealed last week that Government Ministers have met Google 25 times over the past 18 months. I note that the Prime Minister himself has spoken at Google’s conference not once, but twice. If Ministers are to meet anyone, my advice is that they go and meet the trade union representatives of HMRC staff. With almost half the workforce having been laid off, and with offices having been closed across the country, it is widely known that morale is at rock-bottom, especially with the loss of highly experienced and expert staff. [Interruption.] Madam Deputy Speaker, a reference has just been made to declaring an interest. I have no interest to declare. I think that was a reference to the Public and Commercial Services Union and part of its trade union group. It does not fund the Labour party or my constituency. There is no interest to be declared.

We cannot allow the Government to go on like this. Trust and confidence in our tax system is being undermined. Every pound in tax avoided by these large corporations is a pound taken from the pockets of honest taxpayers. It is also a pound not spent on our schools, our NHS and our police. We need a real tax reform agenda, based on the principle of complete openness and transparency. First, that means, as a start, the publication of the details of this deal in full, so that we and our constituents can judge whether it is fair enough. Secondly, we need real country-by-country reporting of a company’s activities, and not just a secret exchange of information between tax authorities, but full publication so that we can all judge.

[Graham Stuart (Beverley and Holderness) (Con)]

The shadow Chancellor said that he would set out his ideas, and I had hoped that he would talk about a more revolutionary change to the methods of taxation. With the massed ranks of corporate lawyers put up against national tax jurisdictions, it is an uneven battle, so perhaps we need some more radical thinking altogether.

[John McDonnell]

The hon. Gentleman has taken an interest in this matter over many years and has regularly been in debates with me in this Chamber. I fully agree that we need a more radical approach.

Let me complete the recommendations briefly, because I think that they will open up a much wider debate. Thirdly, we need an end to mates’ rates and sweetheart deals with major corporations. Tax law should be applied fairly whatever the size of the company. Fourthly, we need full transparency in the relationship between Ministers and companies, so I want to see publication of all the minutes of all such meetings. Fifthly, we need firmer action to curb the tax avoidance industry, so action should be taken against the advisers when the tax avoidance schemes they designed are found to be unlawful by tax tribunals and courts. The same advisers advise Her Majesty’s Treasury and help write our tax laws. That is unhealthy and unacceptable.

[Chris Heaton-Harris (Daventry) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

I cannot give way, because I am concluding my speech.

Sixthly, we clearly need independent scrutiny of HMRC and the implementation of taxation policy overall. Let us now explore the establishment of a cross-party committee, along the lines of our Intelligence and Security Committee, to perform that role. Finally, we need an end to the counterproductive staffing cuts and office closures at HMRC.

For most of my time in Parliament, I have been campaigning for a fair tax system that secures tax justice. Of course companies such as Google make a significant contribution to research and development and through the employment they provide, and I welcome that, but we expect all companies to play fair when it comes to their tax responsibilities. I am unable to accept the Government’s amendment because it fails to support our key demand for openness and transparency. The amendment would remove Labour’s central demands for publication of the Google deal and the adoption of full public country-by-country reporting. If anything good is to come out of the sordid deal that the Government cut with Google, I urge Members of this House to use this opportunity to secure a just, fair, open and transparent system of taxation for our country and to start that process by backing our motion today.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I have to inform the House that Mr Speaker has selected the amendment in the name of the Prime Minister.

Before I call the Minister to move the amendment, I should tell the House that a great many people have indicated that they wish to catch my eye this afternoon. More than 20 hon. Members wish to speak, and this debate will last for considerably less than two hours. There will be a time limit of three minutes initially on Back-Bench speeches. [Interruption.] There is no point in people complaining about it—that is the amount of time there is. There will be three minutes and, even then, not everyone who wishes to be called to speak will be called to speak.

I say, very importantly, to the House that people who have intervened and taken part in the debate must remain in this Chamber for the whole of the debate—leaving for the odd five minutes is fine—because they are taking up time that other people, who have sat through the whole of the debate, will then not have. This is nothing to do with old-fashioned rules or conventions—it is simple courtesy by one Member of Parliament to another. I call Mr David Gauke to move the Government amendment.

[The Financial Secretary to the Treasury (Mr David Gauke)]

I beg to move an amendment, to leave out from “House” in line 1 to end and add:

“notes that the Government has taken action to promote international cooperation in relation to clamping down on tax avoidance by multinational companies, challenging the international tax rules which have not been updated since they were first developed in the 1920s, that multilateral cooperation at an international level has included the UK playing a leading role in the G20-OECD Base Erosion and Profit Shifting Project to review all international tax rules and increase tax transparency, and as part of that, the UK was the first country to commit to implementing the OECD country-by-country reporting model within domestic legislation, that the Government recognises the case for publishing country-by-country reports on a multilateral basis, that the Government has introduced more than 40 changes to tax law, that the various measures taken by the Government have included the introduction of a diverted profits tax aimed at targeting companies who use contrived arrangements to divert profits from the UK, stopping the use of offshore employment intermediaries to avoid employer National Insurance contributions, stopping companies from obtaining a tax advantage by entering into contrived arrangements to turn old tax losses or restricted use into more versatile in-year deductions, and requiring taxpayers who are using avoidance schemes that have been defeated through the courts to pay the tax in dispute with HM Revenue and Customs upfront, and that the Government is committed to going further, enabling HM Revenue and Customs to recover an additional £7.2 billion over the Parliament.”

It is a great pleasure to move the Government’s amendment. There is much that we have heard from the Labour party today on this subject that is wrong, confused and, to put it kindly, oblivious to the record of the last Labour Government. However, before addressing those points, I hope to strike a note of consensus. Both sides of the House believe that all taxpayers should pay the taxes due under the law. Both sides believe that taxpayers should refrain from contrived behaviour to reduce their tax liabilities, and all taxpayers should be treated impartially. That is why the Government’s record is one of taking domestic and international action to tackle tax avoidance.

I will set out details of that action, but first I want to address another issue. The shadow Chancellor’s approach has generated more heat than light, and often reveals a complete misunderstanding of how the corporation tax system works. Let me take this opportunity to explain to the House how it does, in fact, work.

The independent Institute for Fiscal Studies, in a paper it published last week, puts it well:

“The current tax rules are not designed to tax the profits from UK sales. They’re certainly not designed to tax either revenue or sales generated in the UK. They are instead designed to tax that part of a firm’s profit that arises from value created in the UK. That is the principle underlying all corporate tax regimes across the OECD.”

I make that point because it is fundamental to understanding the tax we are entitled to receive from multinational companies. It is not a point that the shadow Chancellor appears to have grasped.

Let me give an example of why this matters, and it is similar to the point made by my hon. Friend the Member for Dudley South (Mike Wood). The UK is home to one of the most successful video games sectors in the world. Would it be fair for a firm to design a game here, develop it here and take the risks here, but to go on to sell it overseas and then have to pay corporation tax on all that activity in the country in which it makes the final sale, and not in the UK? The current international tax arrangements are clear that such profits are taxed in the UK—the place of economic activity—rather than in the place where the sales are made. That is the internationally agreed and internationally applied concept of corporation tax. That is the law that HMRC applies. Quoting numbers to do with revenues or profits from sales, as opposed to activities, demonstrates a lack of understanding of how the tax system works, or—and this is worse—an understanding of the way the tax system works, but the hope that those following these debates do not.

[John McDonnell]

Is the Minister saying that Google employs 2,300 staff in this country on an average salary of £160,000, and they cannot be defined as involved in economic activity or as adding any value? What are they doing? Playing cards all the time? Are they not actually involved in economic activity—this sizable proportion of the Google workforce?

[Mr Gauke]

The point I am making is that the shadow Chancellor goes around quoting numbers based on profits from sales. To be fair, he went through the methodology carefully in the House today, but that methodology appears to be based on a complete misunderstanding of how the tax system works.

HMRC and Google (Settlement)

John McDonnell Excerpts

Monday 25th January 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer to make a statement on the settlement reached between HMRC and Google.

[The Financial Secretary to the Treasury (Mr David Gauke)]

I am proud of the work the Government have done to make our tax system internationally competitive, but also to make sure that those taxes are paid. Time and again, we have taken the lead, domestically and internationally, when it comes to getting international companies to pay their fair share of tax. This is the Government who, working through the G20 and OECD, led on the base erosion and profit shifting project—BEPS—making the international tax rules fit for the 21st century. This is the Government who introduced a diverted profits tax to address the contrived movement of profit out of the country, so that profits from UK activities are taxed in the UK. And this is the Government who have invested heavily in HMRC to strengthen its compliance activity, which has allowed HMRC to secure around £100 billion in additional compliance yield over the last Parliament, including more than £38 billion from big businesses.

We have competitive taxes—that is why we have cut our rate of corporation tax so that it is the lowest in the G7—but we are also making sure those taxes are paid, reforming the international tax rules, introducing a diverted profits tax and investing in HMRC’s capacity. That is action taken by this Government that was sadly lacking in 13 years of Labour rule.

The statement made by Google at the end of last week is solid evidence that companies are changing their models and reviewing their structures because we have strengthened the rules. The statement comes at the conclusion of a lengthy inquiry by HMRC. The tax that individuals and companies pay is collected by HMRC enforcing the law, not politicians who are, rightly, not engaged in or informed of particular cases. I am therefore unable to go into the details of the inquiry’s conclusion beyond those made public at the end of last week. I would point out, however, that the National Audit Office examined the HMRC settlement process in 2012 and examined specific settlements. In all cases, the NAO concluded that HMRC obtained a reasonable settlement for the Exchequer. It also made recommendations on the process by which HMRC should operate when reaching a settlement—recommendations that have been implemented.

It might be helpful to the House if I reiterate what the law is and how the corporation tax rate works, both in the United Kingdom and around the world. The first thing to note is that corporation tax is charged on profits, not on turnover. Equally important, corporation tax is not calculated on the basis of profits attributed to sales in the United Kingdom, but to economic activity and assets located in the United Kingdom. To illustrate my point, imagine a UK company—a car manufacturer, for instance—manufactures its vehicles in the United Kingdom, but half its profits come from sales in the United States. The law as it stands in the UK, as elsewhere, would mean that those profits would be taxed in the United Kingdom, the place of activity, and not the United States, the place of sales.

Ever since 2010, we have been engaged in reforming the tax system both domestically and internationally. Government action is levelling the playing field among businesses, giving worldwide tax authorities more effective tools to tackle aggressive tax planning and helping us to better align the location of taxable profits with the location of economic activity. We are incentivising businesses to do the right thing and come to the table early. Last week’s announcement represents an important result of those actions. I can assure hon. Members that we will continue to tackle the tax risks posed by multinational companies over the coming years, giving the Exchequer more money to fund the public services we all rely on.

[John McDonnell]

I thank the Minister for his statement. However, many will feel it is a display of disrespect to this House that the Chancellor of the Exchequer confirmed the deal with a tweet over the weekend, but has refused to come here today personally to make a statement.

I pay tribute to the former and current Chairs of the Public Accounts Committee, my right hon. Friend the Member for Barking (Dame Margaret Hodge) and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), as well as all the campaigners for tax justice who have forced this issue on to the agenda. The Chancellor has managed to create an unlikely alliance between myself, the Sun newspaper, the Mayor of London and, according to reports, even No. 10 this morning. All of us think this deal is not the “major success” the Chancellor claimed at the weekend.

The statement offered today has left a number of questions unanswered, which I turn to now. Does the Minister not agree that it is important in our tax system that everybody is treated equally and fairly, whether they be large multibillion-pound corporations or small businesses? In that respect, independent experts have suggested that the effective tax rate faced by Google is now about 3%, despite estimated profits of £1 billion in 2014 alone. Will the Minister confirm whether this is the effective tax rate faced by Google over the past 10 years? In the interests of openness and transparency, will he now publish details of the deal and how it was reached? Will the Minister confirm that Google is not changing the company structures that enabled this avoidance to take place over the past decade? Are the Government not concerned that the agreement creates a precedent for future deals with large technology corporations, such as Facebook and Amazon? Will the Minister assure us that this deal does not undermine international co-operation on tax avoidance, such as the OECD base erosion and profit shifting scheme that the Chancellor once supported?

I also ask the Minister, once more, to halt the programme of HMRC staffing cuts, which is undermining morale and removing the very staff with the collective experience and expertise in collecting these taxes. Finally, will he address a confusion that seems to have arisen? Does he agree with the Chancellor, who thinks the deal was a major success; with the Prime Minister’s Office, which said this morning it was only a step forward; or with the Mayor of London, who described it as derisory?

[Mr Gauke]

I welcome the progress the Government have made over the past six years in ensuring that large companies pay more tax. At a time when we have been cutting the rate of corporation tax, corporation tax receipts, excluding North sea oil, have remained buoyant, partly because we have been more effective than ever at collecting tax from large companies. HMRC’s operational capability in this area has been strengthened—by the way, HMRC staff numbers are going up, not down, this year.

The shadow Chancellor mentioned the 3% figure. That is the very reason I drew attention to how corporation tax is worked out. It is worked out on the basis not of sales profits in a country, but of the economic activity and assets held in a country, and there would be severe dangers to moving in the direction of basing it on sales profits. He is right that every taxpayer should be treated fairly and has to pay the rate determined by the law; there is no lower, special rate for Google or any other taxpayer in this country.

We are collecting more tax, which is evidence of the steps we have taken, in both the BEPS process and the diverted profits tax, forcing companies to change their behaviour. That should be welcomed around the House. The real threat to collecting tax revenue from big businesses would be the anti-business policies of the Labour party.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 19th January 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Only eight weeks ago the Chancellor promised

“an economic recovery for all, felt in all parts of our nation”—[Official Report, 25 November 2015; Vol. 602, c. 1358.]

On the day that the International Monetary Fund warned about the global economy and called on Government to increase their investment spending—something that Labour Members have consistently called for—will he now reconsider his economic plan, and particularly his investment plans?

[Mr Osborne]

The economic plan has seen employment rise and unemployment fall, and it has meant that for the IMF forecasts that the hon. Gentleman mentions, the UK’s forecast has not been changed and remains one of the strongest among all advanced economies in the world. Perhaps I may gently suggest that the hon. Gentleman might want to change his own economic policy, since in the last week he has called for the return of flying pickets, and said that he wants to ban companies from paying dividends and spend billions of pounds on nuclear submarines without any nuclear missiles. Today he said that he is going to tour the country with the former Greek Finance Minister, Mr Varoufakis, to educate us all about economics—the one thing they have in common is that they have both lost their marbles.

[John McDonnell]

If the Chancellor will not reconsider his investment plans, can he at least appreciate how angry the families of steelworkers in south Wales are this morning? They know that when the bankers’ bonuses were threatened, he immediately shot across to Brussels with an army of lawyers to defend them and that he will jump into a helicopter for a Tory fundraiser. It has taken him four months to lift a finger to save steelworkers’ jobs. Does that not prove that he is actually the bankers’ Chancellor?

[Mr Osborne]

We want a successful financial services industry, because hundreds of thousands of people across the country work in it. We also want a successful manufacturing and steel industry, which is why we have taken action to reduce energy costs—something that had not happened previously and which comes into effect today—and why we are taking action to change procurement rules so that the British Government and others are encouraged to buy British steel. Again, that never happened when the Labour party was in office. We are acting internationally to deal with the dumping of Chinese steel. That is what we are doing. Of course it is an incredibly difficult situation, but as the hon. Gentleman knows, and everyone in this House knows, steel jobs are being lost in every single country in the world at the moment. The question is: what can we do nationally to defend and protect our steel industry? We are doing everything we can. If the hon. Gentleman has constructive suggestions, he should put them to me.

Oral Answers to Questions

John McDonnell Excerpts

Tuesday 1st December 2015 Commons Chamber

[Mr Osborne]

I am, of course, always happy to listen to representations from my hon. Friend and others, but we have put a substantial sum of taxpayers’ money into compensating the people who lost out through Equitable Life. We have also ensured, through our payment system, that those payments have been made. That is why the scheme is coming to a close.

[John McDonnell (Hayes and Harlington) (Lab)]

The Chancellor bowed to Labour pressure last week and made a U-turn on tax credits. Although tax credits will not be cut in the new year, as planned, the cuts to universal credit are going ahead in full, so he has not reversed his cuts to family incomes, but just delayed them. I am sure that he has looked at the impact of the changes in detail, so will he tell the House how much a single parent with one child who works part time on the so-called national living wage will lose as a result of his planned changes to universal credit?

[Mr Osborne]

First, let me say that I did not feel a huge amount of Labour pressure last week, but I am happy to see the hon. Gentleman at the Dispatch Box. With universal credit, we are introducing a fundamental improvement to our benefits system. Anyone on tax credits, including in the case that he refers to, who is moved on to universal credit by the Department for Work and Pensions from next year will have their cash awards protected.

[John McDonnell]

Let me explain to the Chancellor exactly what a single parent with one child who works part time on the national living wage will lose. They will lose an average of £2,800 a year as a result of the cuts to universal credit. This was not an autumn statement that supported families, but one that punished them because 2.6 million families will still be worse off by £1,600 on average.

Let me offer the Chancellor another way out. If he reversed the tax giveaways to the wealthy that he announced in his summer Budget, he could reverse fully these cuts to family incomes, while still achieving his fiscal mandate. Will he now address the threat to these families?

[Mr Osborne]

Universal credit is a new benefit where it will always pay to work and it will always pay to expand the number of hours that are worked. It will get rid of a complex series of benefits. That will help working families. Let me make this point, since the gang of four on the other side of the House are chuntering away. The hon. Member for Leeds East (Richard Burgon), who is a shadow Treasury Minister, has not bothered to turn up today because he is marching on the Labour party’s headquarters on a Stop the War march. The truth is that until the shadow Treasury team get their act together in this Chamber, their cases will not be listened to seriously.

Spending Review and Autumn Statement

John McDonnell Excerpts

Wednesday 25th November 2015 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Mr Speaker, like me, you have witnessed many autumn statements and other statements by the Chancellor of the Exchequer. You will know that there is the iron law of Chancellor’s statements: the louder the cheers for the statement on the day, the greater the disappointment by the weekend when the analysis has been done. From what we have heard today, we do not need to wait until the weekend for the statement to fall apart. Over the past five years, the Chancellor has barely set a target that he has not missed or ignored.

Five years ago, the newly elected Chancellor and Prime Minister came to the House and warned us that the dire economic situation that our country faced meant that a five-year programme of austerity measures was needed: job cuts, wage freezes and cuts in public services. But we were promised, specifically by this Chancellor, that by today the deficit would be eliminated and debt would be under control and falling dramatically. People put their trust in that commitment. [Interruption.]

[Mr Speaker]

Order. I said earlier that the Prime Minister would be heard; the shadow Chancellor will be heard too. If people think that they are being clever when they are shouting their heads off, they need not bother to try to ask a question, but they should at least try to have the sense to realise the conflict between the two.

[John McDonnell]

The Prime Minister also assured us that although it was going to be hard and sacrifices had to be made, we were all in it together. Today, five years on, the Chancellor must have some front to come to the House and lecture us about deficit reduction. Today is the day when he was supposed to announce that austerity was over and the deficit was under control. Given what people have heard today, I think that they will feel absolutely betrayed. The reality is that, after five years, the deficit has not been eliminated, and this year it is predicted to be over £70 billion. Instead of taking five years to eliminate the deficit as the Chancellor promised, it is going to take 10. Furthermore, debt-to-GDP will not be the 69% that he promised five years ago. As he said today, it will be 82.5%.

We are now potentially to bequeath to our children a debt of £1.5 trillion. That will be their debt. The Chancellor —[Interruption.] The Chancellor—[Interruption.] The Chancellor continues to miss—

[Mr Speaker]

Order. Both sides are still shouting their heads off. It is very downmarket, it is very low grade, and it is very widely deprecated by the public. How people can think it is legitimate to behave in that way while trying to reconnect with an electorate who are disillusioned with politics is just bizarre. If some people are so unintelligent that they still cannot grasp the point, I pity them.

[John McDonnell]

After five years as Chancellor, with that level of debt, there is no one else for him to blame. Past Governments can be blamed for only so long; there are no more excuses for this Chancellor after five years.

We were also promised that if sacrifices had to be made to tackle the deficit, we were not to worry, because we were all in this together. No, we are not. Eight-five per cent. of the money saved from tax and benefit cuts in the last Parliament came directly out of women’s pockets. Disabled people were hit 18 times harder than anyone else. Moreover, 4.1 million children now live in absolute poverty, an increase of 500,000 since 2009-10. The fiasco over tax credits demonstrated once and for all that we were not in this together. At the same time as the Chancellor was planning to cut tax credits for working families, he cut inheritance taxes for some of the wealthiest families in the country.

When the Chancellor and the Prime Minister were first elected to their current positions, they were attacked for being “posh boys”. I disagreed with that strongly. People do not choose the class that they are born into, or the wealth that they inherit. Nevertheless, if people are fortunate enough to have wealth or good incomes, like all Members of Parliament, the onus is on them—on us—to take particular care when making decisions about the lives of those who are less fortunate than themselves.

What shocked and, indeed, angered many, not just in the House but throughout the country, was the fact that the Chancellor made no attempt to understand the effects of the decision to cut tax credits. For many families, it would have meant a choice between the children being able to go on that school trip like the other children, and having a decent Christmas or a winter coat. Today the Chancellor has been forced into a U-turn on his tax credit cuts, and I congratulate the Members on both sides of the House who have made that happen. I congratulate the Members in the other House as well. I am glad that the Chancellor has listened to Labour, and has seen sense.

As ever with this Chancellor, however, we await further clarification of the details, particularly if the limit to two children remains, and we are aware of the impact on universal credit. It appears that the 14,000 families who are already on universal credit will still suffer the full cut, and that all families who would newly qualify for tax credits in 2018 will suffer the full cut under universal credit; so this is not the full and fair reversal that we pleaded for. Moreover, the Chancellor remains committed to £12 billion of welfare cuts over the course of this Parliament. We know that they will fall on the most vulnerable, the poorest, and those who are just struggling to survive.

Some believe that the Chancellor is using the deficit and austerity to reshape the role of the British state, and that this is some well-thought-through Machiavellian scheme. Well, I do not think that any more. I am convinced that it is sheer economic illiteracy, built on incompetence and poor judgment. Only four weeks ago, the Chancellor brought his charter for fiscal responsibility to the House. An essential part of it was adherence to his welfare cap, which we supported. Today he has broken his own welfare cap, although he said himself when he introduced it last year that breaking it would be a

“failure of public expenditure control”.—[Official Report, 26 March 2014; Vol. 578, c. 380.]

He is condemned on his own terms, in his own language.

The Government are cutting today, and not investing in the future. The Chancellor is putting us all at future risk. I congratulate my right hon. Friend the Member for Leigh (Andy Burnham) on his campaign against policing cuts, which has forced a U-turn, but we do not forget that we face the highest level of risk from terrorist attack in a generation. We have already lost 17,000 police officers as a result of the cuts that have been made under this Government. We know that the first line of intelligence collection, prevention and response consists of the local police officers in the community, so we claim today another Labour gain and victory. However, there are now concerns about the impact of the local council cuts and freezes in expenditure on other emergency services. We fear for the people’s safety as more firefighters’ jobs are cut and fire stations close as a result of today’s settlement.

The Chancellor has announced that he is front-loading part of the additional £8 billion of funding for health. In reality, that will plug only some of the gap in the huge deficits that health trusts are reporting, but the Government are also relying on the finding of £22 billion of unrealistic savings. The extra money seems to be coming from nurses’ training, the public health budget, and other aspects of local authority support for care. That will be a false economy, which will simply cause more burdens to fall on the NHS. All the signs are that we are facing a massive winter crisis in our NHS, and that, yet again, we will have to rely on the professional dedication of its staff. The Health Secretary’s refusal to go to ACAS to settle the junior doctors’ dispute is no way to maintain morale among our NHS professionals.

One of the greatest scandals under this Chancellor has been the attack on social care. Three thousand beds have been lost already and according to the Association of Directors of Adult Social Services, the 2% care precept announced by the Chancellor is not nearly enough to fill the funding gap this Government have created. The result is that some of the most vulnerable people in our society will be at risk and more people will be forced to resort to their local hospital for their care.

We also know much more about the scale of people suffering from mental health problems. We welcome the additional funding today devoted to mental health, but it is no use funding mental health support through the health service when local authority support is being cut as a result of this settlement. More people will be left vulnerable.

In education, the Government claim that schools budgets will be protected, but we fear that the Government will use the new funding formula to take funding away from the pupils who need it most—the most deprived. We will monitor the funding formula carefully to ensure equity.

In today’s statement, the Chancellor has announced that for further education there will be a settlement that restricts it to cash protection. In effect, that means that around the country sixth forms and FE colleges will be under threat and at risk of closure. At a time when the economy is crying out for a skilled, educated workforce, the Government are denying young people access to the local courses they need. On today’s announcements on childcare, we note there is a delay yet again—for another two years. That is another delay following a commitment given.

The Chancellor’s much vaunted pledge on house building is cobbled together from reheated promises from the past. The vast majority have already been announced. The Tories should be judged by their actions, not their words.

The Chancellor’s first act in office was to slash housing investment by 60%. His plans today could still mean 40% less to build the homes we need, compared with the investment programme he inherited from Labour. As a result, house building remains at its lowest peacetime level since the 1920s. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) said this morning,

“if hot air built homes, then conservative ministers would have our housing crisis sorted.”

I worry that the vast majority of young people hoping for a new home will be disappointed by the Chancellor’s failure to deliver. His record on building anything so far does not inspire confidence at all. Over the past year, he has forced himself on to building sites throughout the country to secure a photo with a high-vis jacket. When he did his Bob the Builder speech at the Tory party conference, what he did not tell delegates was that his investment record is abysmal. Only 9% of the projects have started under his infrastructure pipeline in two years. In 2012, he announced a £40 billion guarantees scheme. Three years on, only 9% of that sum has been signed up. In 2011, he announced a £20 billion pensions infrastructure platform but four years on only £1 billion of commitments have been secured. The construction industry is actually shrinking this year and going into recession.

The Chancellor has also failed to invest in skills. The Royal Institution of Chartered Surveyors has said that the UK’s biggest infrastructure programmes could grind to a halt unless the Government adopt new measures to tackle the skills and funding issues. The most ironic cut of all must be the virtual closure of large sections of the Department for Business, Innovation and Skills. There are 146,000 unfilled vacancies due to the lack of skilled workers, so naturally the Government’s solution is to move to effectively close the very Department tasked with improving skill levels.

On the environment, the Government have announced today various measures but let us be clear. Ministers can go to the Paris summit on climate change with the proud record of nearly killing off the UK’s once flourishing solar renewable energy sector. On international aid, let me caution that the international aid budget was supposedly protected, but now it is to be raided for defence spending.

On defence, the Government commissioned an aircraft carrier last year. A few years ago, they at least woke up to the fact that it needed aircraft as well. But the funding for the defence review is to come from £1l billion-worth of cuts, with the inevitable loss of thousands of defence workers’ jobs, whose specialist skills will be lost forever.

Alongside those cuts and many more to help dig himself out of the financial hole he has got himself into, the Chancellor is selling off whatever public assets he can. It is no longer the family silver up for sale—the furniture, fixtures and fittings are now being sold. We know who is the first in line to buy. I never envisaged that when it came to nationalising I would be outdone by a Conservative Chancellor. The only difference between us is that I would like to bring services such as rail back into the ownership of the British people. The Chancellor wants to sell them to the People’s Republic of China. Nationalisation is okay for him as long as it is by any state but ours.

To assist Comrade Osborne in his dealings with his new found comrades, I have brought along Mao’s little red book. Let me quote—[Interruption.]

[Mr Speaker]

Order. I want to hear about the contents of the book.

[John McDonnell]

I think the Chancellor will find this invaluable. [Interruption.]

[Mr Speaker]

Order. The hon. Member for Kingswood (Chris Skidmore) is a historian, if a rather excitable one.

[John McDonnell]

I thought this would help the Chancellor. Mao is rarely quoted in this Chamber. The quote is this—[Interruption.] Behave.

“We must learn to do economic work from all who know how, no matter who they are. We must esteem them as teachers, learning from them respectfully and conscientiously. We must not pretend to know when we do not know.”

I thought it would come in handy for the Chancellor in his new relationship.

I am sure that Tory Back Benchers will be under instruction to shoehorn into their speeches at every opportunity references to the mythical long-term economic plan. What we have been presented with today is not an economic plan but a political fix. It is not a plan when you ridiculously commit yourself to unachievable policies and leave yourself no room for manoeuvre. It is not a plan when you sell off every long-term asset you have for short-term gain. It is not a plan when you leave important industries to go to the wall—as we have seen with steel—and it is not a plan when you cut the support for those in work, leaving working families to rely on food banks. It is not a plan when you force councils up and down the land to close the very services that people depend upon, and it is not a plan when you invest so little in skills and infrastructure that our future is put at risk.

Instead what we have seen today is the launch of a manifesto for the Conservative leadership election. Our long-term economic security is being sacrificed for the benefit of one man’s career. I want to tell both the Home Secretary and the hon. Member for Uxbridge and South Ruislip (Boris Johnson), my neighbour, who has now left the Chamber, not to worry. The economic reality that is emerging in our economy will mean that this will be seen as the apex of the Chancellor’s career.

The hon. Member for Uxbridge and South Ruislip exudes classical references in his speeches. He will recognise in the Chancellor Icarus the boy who flew too close to the sun and burned and crashed. I fear that for the Chancellor it is all downhill from here. Labour Members will do all we can to ensure that he does not take this economy and our country down with him.

In the end this debate is about what sort of society we want to live in. The Government are systematically dismantling all those aspects of our society that make our community worth living in and celebrating. The Chancellor is not just cutting our services today—he is selling off our future.

But there is an alternative. Our alternative is that we will eliminate the deficit but we will do it fairly and effectively. We will do it by ensuring that we end the tax cuts to the rich, that we tackle tax evasion and avoidance, and that we invest to grow. We will grow our economy on the basis of investment in skills and infrastructure. In addition to becoming the financial centre of Europe, under a Labour Government research in science and technology will enable us to become the technology centre of Europe. That means high skills, high investment and high wages. That is what Labour Members are committed to, and that is what we will secure when we return to office.

[Mr Osborne]

So the shadow Chancellor literally stood at the Dispatch Box and read out from Mao’s little red book. And look—it’s his own personal signed copy. The problem is that half the shadow Cabinet have been sent off for re-education. People treat this Labour leadership as a joke, but they are actually a deadly threat to the economic and national security of this country.

The hon. Gentleman comes here to complain that the deficit and the debt are too high, yet he wants to increase the deficit and the debt and to borrow forever. The problem is that he would borrow in the good times, because he says the country can afford it, and borrow in the bad times because the country could not afford not to. He would always be borrowing money. And how would he be able to afford it? He could afford it because, as he says, his policy

“can readily be funded...through printing money”.

He has said that he would end the Bank of England’s control over interest rates, and he calls it the “people’s quantitative easing”. That is called deficit financing, and it has only been tried in Weimar Germany and Zimbabwe. It would lead to the economic ruin of this country. The Labour leadership’s chief adviser on the economy has said that it would cause a sterling crisis, but that the

“sterling crisis would pass very quickly”.

The shadow Chancellor talks about our support for business and defence industries, but he is a threat to the free market of this country. He wants literally to take control of the commanding heights of the economy. His manifesto is all about nationalising industries. He wants to nationalise the whole banking system of this country—as if the last Labour Government did not do a good enough job by nationalising half of it.

The hon. Gentleman gave a speech at the weekend in which he described his policies as “socialism with an iPad”. The problem is that if the socialists built an iPad, it would weigh a ton, it would be impossible to use and no one would design any programmes for it. It would literally be app-less. And then he has the temerity to get up and talk about defence industry jobs and the police. He has spent his entire career attacking the police forces of this country and calling for them to be disarmed. He has sent me a letter saying that I should fund the Security Service, but it turns out that he has been campaigning to disband MI5. He says he is on the side of the British Army, but he has been sharing platforms with the Irish Republican Army. That is the truth.

Let me end by asking this question. Where is the shadow Chancellor going this evening? He is travelling to Waltham Forest to support the new hard-left members of the constituency Labour party there who are trying to deselect the hon. Member for Walthamstow (Stella Creasy). He is addressing a rally called “Keep up the momentum”—[Interruption.] Well, if he was actually in charge of this country, we know where the momentum would be. It would be in one direction: growth down, jobs down, the security of the country destroyed. In the last three months, he and his friends have taken control of one of the great institutions of our political democracy, the Labour party, and they have brought it to its knees. That is their business, frankly, but Conservative Members are going to make sure that they never get their hands on any of the other institutions of this country, so that we can keep our country safe.