European Affairs

Lord Redwood Excerpts

Thursday 15th March 2018 Commons Chamber

[Mel Stride]

It is standard practice for the Government to use non-disclosure agreements, and delivering a seamless post-Brexit border is a top priority for us. Non-disclosure agreements with key delivery partners for the border are crucial to the open exchange of information and opinion on options and scenarios, and they ensure that all planning negotiations and decisions are based on what is achievable and most appropriate for the UK to ensure a safe and secure border.

In respect of our future trading relationship, draft EU negotiating guidelines have been circulated to the EU for comment, and we expect final guidelines to be formally adopted next week at the March European Council. We trust that these will provide the flexibility to allow the EU to think creatively about our future relationship, and, looking ahead, we are confident that we will conclude a deal on the entire withdrawal agreement by the European Council in October. This confidence is not just grounded in our mutual interest of striking a deal, but also because we enter these negotiations from a point of striking similarity: our rules, regulations, and commitment to free trade and high standards are the same. So, as we build this new relationship, we are doing so from a common starting point.

The next milestone in the negotiations will be an agreement of an implementation period. We saw the implementation period prioritised in the Chancellor’s Mansion House speech and the Prime Minister’s Florence speech, alongside a frictionless customs arrangement and a comprehensive agreement on trade in goods and services. The implementation period is the essential first step to ensure that we can all experience an orderly exit from the EU, plan accordingly, and enjoy certainty during the transition.

[John Redwood (Wokingham) (Con)]

How can we possibly agree an implementation period when at the moment we do not have anything to implement?

[Mel Stride]

While being ingenious in his use of language, my right hon. Friend will I am sure agree with me that the purpose of the implementation period is to make sure we have a period of certainty for business, so that when we end up with our final withdrawal agreement we only have one set of changes to make from where we are now to where we will be at that point. That is the purpose of the implementation period.

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[Paul Blomfield]

The hon. Gentleman is right to talk about the difficulties that would be faced, and there was naivety on the part of the Government in assuming that these deals can just be rolled forward. This is one of the arguments behind our approach and our policies on the customs union. We want to face the hard truths that the Prime Minister talked about at Mansion House and it is why we believe, along with the CBI and the EEF, that a new customs union with the EU is best for manufacturing and for our economy, and it is the only way of resolving the Northern Ireland border.

[John Redwood]

Is it not crystal clear to anyone who reads the Labour manifesto that Labour set out its bold vision for an independent UK trade policy—I agreed with some, but not all, of it—but that that would have been completely incompatible with staying in a customs union? It is completely misleading to suggest that it is compatible.

[Paul Blomfield]

We could draw some interesting conclusions from the Conservative manifesto at the last election, but we all need to face facts and perhaps the Government need to change views in the cold light of those facts. I always find it interesting to take interventions from the right hon. Gentleman. I do not know whether he is still advising—

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[Paul Blomfield]

Thank you, Madam Deputy Speaker. As I say, I always find it interesting when the right hon. Member for Wokingham (John Redwood) talks about the interests of the British economy. I do not know whether he is still advising readers, through the Financial Times, to get money out of the country.

[John Redwood]

As the hon. Gentleman well knows, I never did that, I made a clear statement to the House and he should apologise.

[Paul Blomfield]

Well, the right hon. Gentleman’s comment in the column in the Financial Times on 3 November 2017, under the heading

“Time to look further afield as UK economy hits the brakes”,

read:

“I sold out of the general share ETFs”—

exchange-traded funds—

“in the UK after their great performance for the year from early July 2016 when I saw the last Budget and heard the BoE’s credit warnings. The money could be better put to work in places where the authorities are allowing credit to expand a bit, to permit faster growth.”

So I am completely accurate in my quote.

[John Redwood]

The hon. Gentleman should look at the whole portfolio, which still had massively more in the UK than in the general global representation, and this was nothing to do with Brexit.

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[Peter Grant (Glenrothes) (SNP)]

I am grateful for the opportunity to contribute to this debate, although I note with sadness that, having set aside two days to debate European affairs, in reality we are all talking about the same European affair. This place has become consumed with Brexit to the extent that other vital matters in the continent of Europe that we would normally have found the time to debate at length are now hardly even mentioned in this place.

Where is the Chamber debate on the persecution of journalists and dissidents in Turkey? Where is the debate on the crackdown of almost neo-fascist proportions in Catalonia, where academics are now being ordered to hand over anything that they might have written in support of constitutional change and civilians are threatened with arrest for the crime of wearing a yellow scarf? Where is the debate on the worryingly regressive steps being taken in Hungary and Poland, so much so that an Irish court this week refused an extradition request to Poland because Ireland can no longer trust the Polish judicial system to give people a fair trial? Where is the debate on the instability that may engulf the Government of Slovakia—a country that was previously a frontier land for the iron curtain and that is now becoming something of a buffer zone between western Europe and the more worrying developments further east?

Had it not been for the appalling incident in Salisbury, it is unlikely that we would even have found time to debate the growing and brutal expansionism of Russia—whether its illegal actions in Ukraine, its equally illegal and covert actions in parts of Georgia or its increasingly threatening behaviour towards the Baltic states. None of these issues is getting anything like the attention in this place that they are entitled to. None is getting the attention that it would have had, had it not been for Brexit taking up so much of everybody’s time and an increasing proportion of the civil service budget in every Department in Whitehall.

I have only listed the European affairs business that we are not talking about. As a number of Labour Members mentioned during business questions today, a whole host of pressing and urgent social issues in these islands are not being debated or talked about. There is inadequate parliamentary scrutiny, and there is inadequate or non-existent legislation to address these problems because everything has been sacrificed on the altar of Brexit. It might not be so bad if, by sacrificing everything to talk about Brexit, there were some signs that we were getting it right. But all the signs are that, having started off getting it wrong by calling the wrong referendum at the wrong time in the wrong circumstances and on the wrong date, things have gone from bad to worse. The catalogue of disastrous misjudgments from the Prime Minister and her predecessor would be hilarious if the consequences were not so disastrous for us economically and, perhaps more importantly, socially.

The referendum was promised to heal divisions within the Conservative party. That has worked well, hasn’t it? The date of the referendum was set because the then Prime Minister was worried that it would have been engulfed by further controversy if there was another summer of refugee disasters in the Mediterranean. It was also deliberately designed to cut across local and national election campaigns in many parts of the United Kingdom. With indecent haste after the referendum and after the Conservative leadership non-contest, the Prime Minister unilaterally—without consultation, as far as I could see—announced the red lines of leaving the customs union and leaving the single market. Those are two lines with which the Prime Minister has painted herself into a corner, and she now wants to blame the Europeans for being unwilling to knock down the walls to get her out of that corner.

[John Redwood]

The hon. Gentleman made a very good point that there are lots of interesting European issues that are not to do with Brexit. We have a general debate on European affairs, so why does he not talk about them?

[Peter Grant]

I have raised them all. If it were possible for me to speak quickly enough to debunk even half the nonsense on Brexit that we get from Government Members, I might be able to speak about some of the other issues. The record will show that the Scottish National party has made a number of attempts to raise these issues including, for example, the situation in Catalonia, but we have been pushed back by Her Majesty’s Government at every opportunity.

Having made bad worse by inserting red lines on the customs union and on the single market, the Prime Minister decided to waste three months of negotiating time and six months of parliamentary scrutiny time by having an election to guarantee a three-figure Conservative majority, so that everything else could just be steamrollered through without opposition. That worked even better than the referendum that the Government had to bring the Conservative party together.

As I said, this would be funny if the consequences for 60 million people on these islands, and potentially for several hundred million people in other parts of Europe, were not so grave. They are so grave that the Government still do everything in their power to prevent us and the people we represent from knowing just how bad their own analysis shows that the situation will become. Before the most recent Brexit papers had been fully published, one of the reasons we were told not to be too worried about them was that they only talked about the direct impact of different Brexit scenarios and did not take account of the massive benefit of all the new trade deals we were going to get. Supposedly, everybody would be falling over one another to trade with us after Brexit.

As the hon. Member for Sheffield Central (Paul Blomfield) pointed out, the Government’s analysis indicates that maybe we can increase GDP by as much as 0.75% because of those deals. We could be looking at a Brexit deficit of between 7% and 9% of GDP, depending on just how hard the hard Brexiteers are able to push Brexit. A 0.75% mitigation of that will not do an awful lot of good in the communities that will be devastated by this downturn in our economy.

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[John Redwood (Wokingham) (Con)]

My business interests are declared in the Register of Members’ Financial Interests, but I do not plan to talk about them today.

Before the referendum, I made a speech in the House saying that we had become a puppet Parliament. All too often, regulations came from the EU that we could do nothing about, because they acted directly. In many other cases, even if we had been outvoted or were not happy about a proposition, a directive instructed the House to put through massive and complex legislation whether it wished to or not. We had a situation in which the Front Benchers of the main parties, alternating in government as they tended to do, went along with this. The convention was that the Opposition did not really oppose, because they knew that Parliament was powerless and that the decision had been made elsewhere, whether the British people liked it or not. That even extended to tax matters, such as a number of VAT issues, including areas where we cannot change VAT as we would like, and to corporation tax issues, which included occasions when we thought that we had levied money on companies fairly, but the EU decided otherwise and made us give it back.

Many British people shared my concern, and that was why we all went out together and voted in large numbers to take back control. The British people wanted to trust their British Parliament again. Of course they will find times when they dislike the Government, individual MPs and whole parties, but they can live with that, because they can get rid of us. They know that come the election, if we cease to please, they can throw one group out and put in place a group who will carry out their wishes. They said very clearly to our Parliament in that referendum, “Take back control; do your job.”

A recent example is that of Her Majesty’s Government presenting a very long and complex piece of legislation to completely transform our data protection legislation. Because it was based entirely on new EU proposals, it went through without any formal opposition. The Opposition obeyed the convention and did not vote against it or try very hard to criticise it. I am sure that if the proposal had been invented in Whitehall and promoted actively by UK Ministers, the Opposition would have done their job, found things to disagree with and made proposals for improvement. We will have this “puppet Parliament” effect all the time that we are under control from Brussels.

[Jonathan Edwards]

Given the scenario that the right hon. Gentleman is putting forward, is it not the truth that the Welsh and Scottish Parliaments will also be puppet Parliaments post Brexit?

[John Redwood]

No, that is not true. In their devolved areas, they have genuine power, which they exercise in accordance with their electors’ wishes, but of course this is the sovereign United Kingdom Parliament, and the devolved powers come from the sovereign Parliament, as the hon. Gentleman well understands, which is presumably why he likes being here.

[Sir William Cash]

Will my right hon. Friend also bear in mind the manner in which laws are made in Europe? They are made behind closed doors in the Council of Ministers with no proper record of who votes, how and why—we are outvoted more than any other country—and then those laws come here and are imposed upon us in this Parliament.

[John Redwood]

I quite agree.

We wish to take back control. We will be a very different and much better country when this Parliament can settle how much tax we levy, how we levy it, how we spend money, how we conduct ourselves and what kind of laws we have.

My main remarks for the Minister and his colleagues on the Treasury Bench, however, concern the conduct of the negotiations. Like the Minister, I wish the Government every success. I hope that they get a really good deal—I look forward to seeing where they get to—but the EU is trying to make the process as difficult as possible by insisting on conducting the negotiations in reverse order. It says first that we have to agree to pay it a whole load of money that we do not owe. It then says that we have to agree a long transition period that coincides with its further budget periods, so that it can carry on levying all that money, and that is before we get on to what really matters: the future relationship and the questions of whether there be a comprehensive free trade agreement, what it will cover, and if it will be better than just leaving under WTO terms.

In order to have a successful negotiating position, the Government have rightly sketched out a couple of important propositions. The first is that nothing is agreed until everything is agreed. That is fundamental, and I urge Ministers to understand that they must not sign any withdrawal agreement unless and until there is a comprehensive agreement that is credible and that can be legally upstanding, because there is no point paying money for nothing. There would only be any point in giving the EU all that money if there was a comprehensive agreement that the Government and the country at large could be proud of, and which enough leave voters could agree with as well as remain voters.

The second thing that the Government have rightly said is that no deal is better than a bad deal. That, again, is fundamental to the negotiations. I have never made any bones about this, because I said before the referendum that no deal was quite a likely outcome, and a fine outcome. For me, no deal is a lot better than staying in the EU: it would give us complete control over our money, meaning we could start spending it on our priorities; it would give us complete control over our laws, meaning we could pass the laws and levy the taxes that we wanted; it would give us complete control over our borders, meaning we could have the migration policy of our choosing; and it would give us the complete right and freedom to negotiate a trade policy with the EU and anybody else. That would depend, of course, on the good will of the other side as well, but I would far rather be in that position than part of a customs union in which I had little influence and that was extremely restrictive against others. There is therefore an awful lot going for no deal.

The Minister and his colleagues must stick to the proposition that they will recommend a deal to the House only if it is manifestly better than no deal. They need to keep reminding the EU negotiators that no deal offers Britain most of what it wanted when it voted to take back control.

[Anna Soubry]

Will my right hon. Friend confirm whether he has seen the Government analysis—apparently it involves excellent modelling and is far better than anything they did in the run-up to the EU referendum—showing that if we were to crash out without a deal and rely on WTO tariffs, our projected increase in productivity and economic growth would be reduced by 7.7%? Is that what his remain-voting constituents—the majority—voted for?

[John Redwood]

No, of course it is not, but that is not true. I have written at great length about that elsewhere. Unfortunately, I do not have time to go into a detailed rebuttal of those proposals, but we know that the Treasury modelling got entirely the wrong answer for the first 18 months after the referendum. Its short-term forecast, which should be easier to make, was massively wrong and predicted a recession. I and a few others put our forecasting reputation on the line during the referendum by saying that there would be growth after an out vote, rather than what the Treasury forecast. We were right.

I assure my right hon. Friend that I have not voted for anything that will make us poorer. We will be growing well, as long as we follow the right domestic policies. It is complete nonsense to say that there will be that kind of hit. It implies that we lose over half our exports to the European Union, and it is not a proper reflection of what would happen to our trade adjustment were anything that big to happen. I want to concentrate on the customs union.

[Vicky Ford]

Will my right hon. Friend give way?

[John Redwood]

I am sure that my hon. Friend wants me to concentrate on the customs union, because she shares my wish that the Government will be well supported if the Opposition decide to have a third go at voting through a customs union or customs union membership.

I remind the House that we have twice had big votes in the Commons in which Members have voted by a very large majority against our staying in the or a customs union. One was on an amendment to the Queen’s Speech motion, and the other was on an amendment to the European Union (Withdrawal) Bill. I hear that some Labour Members may have changed their minds and want to vote again. I am a democrat, and the Opposition have their own ways of doing what they want to do, but I urge them not to vote to stay in the customs union.

Above all, are Labour Members not at all worried about poverty in emerging markets? Do they not think it is wrong that we place huge tariffs on poor countries’ tropical produce—produce that we cannot grow for ourselves? Would it not be great, when we are outside the EU customs union, to be able to take down those tariffs and give those countries more hope of promoting themselves by good trade, while at the same time benefiting our customers because they would be able to buy cheaper tropical products? Can we not do good trade deals with those emerging market countries across the piece? The tariff barriers are too high, and we could make mutually advantageous changes if we were free to do so. I urge the Labour party to remember its roots in campaigning against poverty and to join me in saying that the best way to get the world out of poverty is to get down the high tariffs on emerging market countries that the EU imposes, which I certainly do not agree with.

The Minister must remind Labour Members that no deal is better than a bad deal, and that no deal allows us to take back control of all the things that he and I promised to take back control of. He must also remember that we do not owe the EU any money. It would be fatally wrong to pay it loads of money if everything else does not work in the way we want.

[Vicky Ford]

Will my right hon. Friend confirm that he agrees with the Prime Minister that we should look for a deal that covers many sectors that are not covered by the WTO, such as aviation, data exchange and having a mutual recognition of financial services, so that trade in those areas can easily continue?

[John Redwood]

I am afraid that I am out of time, so I cannot go into detail on all these matters. I believe that we should negotiate strongly and positively. I wish my right hon. Friend the Prime Minister every success, but I wish to strengthen her hand by saying that out there in the country, the message is, “Get on with it.” If that means leaving with no deal, that is absolutely fine.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

There is a quote to place on the side of a big red bus, which I hope the right hon. Member for Wokingham (John Redwood) will drive around the streets of Wokingham in the years to come—especially if we do end up with no deal, which he seems to be advocating is absolutely fine, and the UK crashes out of our long-standing alliance with our friends and nearest and greatest trading partners and we end up with, as the Treasury forecasts, a hit of 8% to our GDP by 2033.

[John Redwood]

indicated dissent.

[Mr Leslie]

The right hon. Gentleman shakes his head. Those on the Front Benches will be noting that figures from Her Majesty’s Treasury have been disputed by their own Back Benchers.

It is important that we talk about European affairs. The right hon. Member for Wokingham advocated taking back control as though he on his own, isolated from all around him, can thrive and prosper without relationships and links with the outside world. It is tempting to envisage him locked in this room on his own, with the doors closed, just to see how he would thrive without the sort of relationships and sustenance that others provide.

So too, for the British economy, there is this fallacy about our independent sovereignty—that as a small island, we can cope on our own, without the rest of the world. These days, in the 21st century and in a modern economy, we rely on the rest of the world, and they also benefit from our engagement with them. We risk serious self-harm if we try to pretend that detaching ourselves from those alliances and relationships and going for the very first time towards less market access, as the Prime Minister advocates, is somehow going to make us better off. It will not; it will make us poorer.

Taxation (Cross-border Trade) Bill

Lord Redwood Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

The important point is that we are in discussions with HMRC about its funding—[Interruption.] If I may, I will answer the hon. Gentleman’s question. We are discussing with HMRC the funding arrangements it will need in the 2018-19 financial year. As he suggested, Jon Thompson has said that between 3,000 and 5,000 staff will perhaps be required. Incidentally, they need not be new recruits; they may be people who are reallocated from other parts of HMRC as we change priorities, depending on how the negotiations pan out. I am very confident that an organisation of in excess of 50,000 people will be capable of recruiting sufficient individuals of the right calibre and with the right skills to ensure that the job is done.

[John Redwood (Wokingham) (Con)]

Will the Minister confirm that on our current frontiers with the rest of the EU, excise, VAT, general taxation and currency are all different on the other side of the channel or the other side of the border with the Republic of Ireland, and that that all works very smoothly and mainly electronically today? Why do people think there would be a bigger problem if we needed to add another line to the electronic register because there was a customs charge as well?

[Mel Stride]

My right hon. Friend makes a very important point. There is no doubt that we can foresee an end state in which a very frictionless process pertains on the borders between the EU27 and the United Kingdom as a separate customs territory. There are many examples around the world of technology in particular facilitating the free flow of goods across international boundaries.

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[Mel Stride]

As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.

[John Redwood]

Will the Minister confirm that the European Union made it clear to the United Kingdom that we cannot stay in the customs union and single market if we will not pay contributions or accept freedom of movement?

[Mel Stride]

It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.

It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.

The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.

The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.

Exiting the EU: Costs

Lord Redwood Excerpts

Wednesday 29th November 2017 Commons Chamber

[Elizabeth Truss]

When the hon. Lady stood up, I thought that she was going to thank the Government for the £2 billion additional spending power that we gave to the Scottish Government in the Budget, which they will no doubt be able to use to improve their public services. As I have said before—and, indeed, as has been pointed out by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds)—talking about the money now would cut across the negotiations and prevent us from getting the best possible deal. That is not in anyone’s interests.

[John Redwood (Wokingham) (Con)]

I am glad that the Government have confirmed today that they are carrying on with comprehensive preparations for no deal, because it is very important that we are not up against the clock at the end and forced into a bad deal because we have no alternative. Will the Chief Secretary confirm that no deal has the great advantage of no payments whatever under the divorce bill heading, meaning that when the Government recommend a deal, it has to be visibly better?

[Elizabeth Truss]

My right hon. Friend is correct. It is irresponsible for Opposition Front Benchers to suggest that any deal is better than no deal. That is the way that we will not get our preferred option, which is an implementation period plus our preferred economic partnership. We are allocating £3 billion to ensure that we are prepared for all eventualities.

Budget Resolutions

Lord Redwood Excerpts

Wednesday 22nd November 2017 Commons Chamber

[John Redwood (Wokingham) (Con)]

I remind the House of my business interests declared in the Register of Members’ Financial Interests.

A few weeks ago, I was strongly criticised by some for saying that we wanted realistically optimistic forecasts. I am delighted that the latest set of official forecasts are more realistically optimistic than the forecasts after the referendum vote, when we were told that we were going to plunge into recession and that the British economy would be badly damaged. I thought that that was completely wrong at the time; I argued strongly against it and am very pleased to be on the winning side. I welcome today’s realistic set of forecasts. Although they are still a tad pessimistic for next year and the year after, they are broadly in the right direction. The reason that they have been downgraded in this way—to which some Labour Members object—is that the OBR now does not think that we can get back the rate of productivity growth we had before the crash, because the rate of productivity growth has been disappointing around the world.

I now find that I am facing extremely distorted interpretations of something I wrote more recently, and would like to assure the House absolutely that I was extremely confident then—as I am now—about the prospects of the British economy. There has been a lot of inward investment in the United Kingdom economy, and those inward investment people were wise. The UK is a great place for people who want to set up a factory, expand a business, develop a new business, take on commercial space and hire a good workforce. [Interruption.] I can see that the Opposition think this is ridiculous, but that has always been my view, and anyone who suggests that that is not my view is simply making it up. I would like to get that very firmly on the record. They should have read the whole article and understood the point I was making, but they were clearly not able to do so.

Can we get productivity up? Well, the Chancellor has made some good proposals in his Budget, but it will take time. It really comes down to education, mentoring and training, and it is about taking our economy on to the next part of the journey. The recovery since the crash of ’09 has been gradual but progressive, and the Government rightly take pride in the success of many British businesses and people in generating 3 million extra jobs and getting many more people into work. The next part of the journey is trying to get people into better-paid work. That is about the Government, further education colleges, universities and schools working with young people and people already in work on training programmes so that they get the extra skills to adapt and improve. It is easier to get a better-paid job from a job than to get one from unemployment.

[Mrs Main]

I thank my right hon. Friend for building on the apprenticeships scheme that this Government have been championing. They are doing such a good job of getting young people into learning those skills through a different route.

[John Redwood]

Yes, indeed. I hope that the public sector, as well as the private sector, takes that fully on board, because the Government and local government, with representations and leadership from a range of parties in this House, have a great opportunity to do more to promote, encourage and mentor. As the Chancellor has indicated, we are going to face a major revolution in robots, artificial intelligence and all kinds of applications of the digital economy. Great digital companies are making huge changes that have a big knock-on effect for more traditional businesses. We need to put all our weight behind a Government who wish to understand that revolution and try to ensure that more people are winners from it by changing jobs and developing new skills so that their careers can respond to the huge changes under way.

Quite rightly, a focus of attention for the public sector—in this Budget as in any other—is whether there will be enough money to do a decent job for public services. I, like any Labour MP, want to ensure that my local schools have enough money to pay good teachers and to have enough of them, and that my local hospital and surgeries have enough financial support to do a good job. I see from this Budget that there is a £6 billion overall fiscal relaxation in 2018-19 and a £10 billion relaxation in 2019-20, mainly on the spending side. I am quite sure, from what the Chancellor said, that as some relaxation of pay agreements occurs, money will come forward to meet those bills. It is important that when pay deals are reached, the health service, schools or whoever have the money to be able to meet those requirements. A modest fiscal relaxation like that is eminently affordable.

The current levels of debt or deficit are not alarming. I am pleased that the Government think that the level of debt as a percentage of GDP will come down very shortly, but we need to take into account the fact that the state now owns quite a lot of the debt itself. That makes a bit of difference. The United States of America is now embarking on a programme of cancelling and reducing the debts because it controls both sides of the balance sheet through the Federal Reserve Board.

I want to concentrate a little more on house building and housing. I am pleased that the Government are to have a speedy—and, I hope, thorough—investigation into the issue of how existing planning permissions can be better used and can translate into more homes more quickly. That is very much an issue in the Wokingham borough part of my constituency, where the borough has issued around 11,000 planning permissions for individual homes—more than enough, one would think, to allow the fast build rate required under the agreements in the local plans. There has been considerable delay, however, in bringing forward some of those houses. There is also a wish by others to try to get planning permissions elsewhere and to build outside the areas where the plan would prefer the building to take place. There is a lot to be said for concentrating the areas of building, because then the moneys can be applied in a planned and predictable way to the surgeries, primary schools and extra road capacity that are needed, whereas if inspectors grant permissions in a variety of different places around the borough on account of a slow build rate, far more capital will be required to keep up with the demands, because distance would become an issue for people needing to get to those facilities.

Looking at the national picture on house building, I welcome the idea that we should be able to have five new garden cities. The garden town movement was a fine one, many years ago, and there were some great successes with new towns and new cities in our country. I am not going to start choosing places where the new ones should go, because none of them will be in my constituency as we already have an awful lot of house building and development going on.

[Wera Hobhouse (Bath) (LD)]

From what I heard earlier, the Chancellor never mentioned homes for social rent. Can the right hon. Gentleman confirm that he, too, did not hear them mentioned?

[John Redwood]

I think that the hon. Lady is wrong; I think he did mention them. That is certainly part of the Government’s plan. It is clearly a comprehensive housing plan that involves homes for rent and homes for purchase.

I would like to see new settlements where a suitable location can be found, and I am pleased to hear that there is already some agreement on the university arc from Cambridge through to Oxford via Milton Keynes, where there are all sorts of exciting opportunities. One of the really good things about the UK economy now is the momentum that is clearly gathering pace in technology investment and technology business set-ups. It is obviously easier to create those opportunities close to the great centres of learning where there is an extremely good workforce to recruit and there may well be entrepreneurs as well. It is excellent that we reinforce success, and I see that part of the country as a major area for development.

I agree with my hon. Friends who have said, in relation to the housing issue, that it is important to promote home ownership. There is clearly a great yearning for more home ownership, and it is one of the big social problems of our day that many people under the age of 35 are unable to afford their first home. I welcome anything that can make the gap a little more bridgeable, and it is excellent that we will be getting rid of stamp duty for most first-time buyers.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

First-time buyers in my vast and remote constituency will absolutely welcome the abolition of stamp duty. Does the right hon. Gentleman agree with his colleague, the hon. Member for Stirling (Stephen Kerr), who has now left the Chamber, that it is high time that the Scottish Government followed suit and abolished stamp duty north of the border? We do not want any inequality that will disadvantage Scots.

[John Redwood]

That is fine by me. I have no problem with that, but nor do I have any constituency interest in the matter. It is interesting that Scottish National party Members have not stayed to follow that debate through— [Hon. Members: “There’s one!”] We look forward to the hon. Member for Glasgow Central (Alison Thewliss) pledging that her party will cut stamp duty, if she wishes to do so and is capable of making that offer.

The proposal is sensible and welcome. Some are saying that allowing some remission of stamp duty right up to £500,000 is unrealistic, but the earnings multiples now being applied are rather greater than the earnings multiple that Labour Members have suggested. Some relief for people struggling to buy is as necessary in London as it is elsewhere in the country; we need to take into account the much higher prices in London. I speak as someone who does not represent a London seat, but I understand the difficulties involved.

In summary, I welcome the new forecast, which is considerably better than the forecast of just over a year ago. The UK is a great place to invest in, and growth should be fairly steady from here. The productivity plans need rolling out and developing, and much more is going to have to be done, because this is about influencing conduct, behaviour and opportunity in thousands of companies around the country, and about working with educational and training establishments to achieve what we need to bring about. This is, above all, about the Government being open to and conscious of the need to adapt themselves quickly to the huge changes that technology is producing.

I would welcome experiments within the public sector to determine how we can greatly improve public sector productivity in a positive way, by ensuring that people can keep their jobs while enriching those jobs and making them better. Those jobs could then be better rewarded because they were better graded. It would be really good to have some pioneering examples in parts of the public sector, and if the public sector was good at that, it could be a demonstrator for the private sector. I wish the Government every success with that. It should be something that unites the House, which has been in a fairly fractious mood today. We live in hope that, in due course, we will see that this country is on an exciting journey, and joint work to crack the productivity puzzle would be very welcome.

[Ms Angela Eagle (Wallasey) (Lab)]

It is a pleasure to follow the right hon. Member for Wokingham (John Redwood). The Office for Budget Responsibility forecast, which was published today, has demonstrated that we are in a downgraded economy. Real wages are down, business investment is down and productivity is downgraded now and far into the future. It is therefore no wonder that growth is down from the Chancellor’s modest forecast in March of this year. He has presented news today of a slowing economy for the next three years—an economy that is forecast to be £65 billion smaller in 2020 than was expected early last year. Aside from setting apart £3 billion to plan for Brexit, which is more than he gave to the NHS, he made no mention of the £40 billion or so divorce payment that is presumably going to be agreed with the EU soon. He used headroom and some reclassification of housing association debt to announce some tinkering, but, fundamentally, nothing has changed with this Budget.

This is the eighth Tory austerity Budget in a row, and it is taking place against a backdrop of an economy in the doldrums. We were told by George Osborne in the first austerity Budget that we all had to make sacrifices in order to eliminate a deficit caused by the global financial crisis. Entirely predictably, that five-year plan failed, so the pain was extended for another five years. Now we are told that the second five-year plan has failed too, so this Chancellor is extending austerity for another five years until 2025. That is already a 10-year delay on what was meant to be a five-year recovery plan. That means 15 years of austerity, cut after cut and pressure on the public services year in, year out, with no end in sight. This austerity policy has a huge human cost that we on this side of the House see daily in our constituency advice surgeries. Homelessness and destitution are on the rise, food bank use is soaring and the benefit system is failing most of those who have to rely on it through no fault of their own.

The Conservative party is in thrall to a right-wing, libertarian ideology. It wants to shrink the size of the state as a deliberate political aim. It wants state expenditure to be as low a percentage of GDP as possible, despite the increasing demands of an ageing population and the need to make our economy fit for the future in rapidly changing times. It expects people to sink or swim, and it is not that not concerned about providing them with any lifeboats—

[John Redwood]

rose—

[Ms Eagle]

The right hon. Gentleman has just spoken; he can go off and advise his clients on investing their money abroad.

The Conservative party saw an opportunity to pursue a minimal state agenda in the aftermath of the global financial crash, and it has done so at great cost to many. It made a deliberate choice that cuts to public spending would bear 80% of the cost of eliminating the deficit and that only 20% would be accounted for by tax changes, and we now know that the cuts have fallen disproportionately on the most vulnerable and those least able to look after themselves. The Chancellor’s predecessor liked to claim that we are all in this together, but he cut the top rate of tax for his super-rich friends at the same time as ensuring that public sector workers had a decade of pay freezes and falling real living standards.

Meanwhile, the Government have systematically reduced the social safety net to tatters for some of the most vulnerable people in our society. By 2021, Wirral Council, which is my local authority, will have had its funding cut by 40% since 2010. Efficiency savings cannot cover cuts on that scale, and it is no surprise that that level of cuts has decimated council services such as adult social care, which for a second time was not mentioned in the Budget and saw a 26% cut between 2011 and 2016, meaning that essential social care for the elderly is not available and people in dire need are being left with little or no help. In education, real-terms funding cuts have led to a loss of £149 per pupil and 29 teachers in Wallasey alone. Cheshire and Wirral Partnership NHS Foundation Trust is being told to cut £1 billion in the next five years. Merseyside fire and rescue service used to have 40 fire engines to save lives; it now has 28.

Finance Bill

Lord Redwood Excerpts

Tuesday 31st October 2017 Commons Chamber

The House should be clear that offshore trusts continue to operate outside the law and with impunity. They remain one of the last bastions for international tax dodgers. The value of the assets hidden in these trusts remains unknown, and they continue to operate under a veil of secrecy. None the less, a conservative estimate made by the economist Gabriel Zucman suggests that at least 8% of the world’s wealth is illegally unreported, although other estimates actually put the figure higher. In short, it is impossible to know how much money the UK Treasury is forgoing in tax, as this Government continue to stonewall any attempt by the Opposition to introduce a public register for offshore trusts.

[John Redwood (Wokingham) (Con)]

Does not the hon. Gentleman think that his well-intentioned proposal might actually backfire, as it would mean that fewer rich people would come here and pay us any tax at all?

[Peter Dowd]

The problem is that that has been a persistent argument for years, but there does not actually appear to be any evidence to back up such an assertion.

I understand that HMRC is responding to EU directives on money laundering and has started the process of registering new trusts and that those already operating must provide additional information by 31 January 2018. However, HMRC has also confirmed that it will not penalise anyone as long as they register before 5 December 2017. The rules state that all trusts with UK tax liabilities must be registered, but the process is conveniently silent about trusts registered in Crown dependencies and overseas territories. The information provided to HMRC will not be made publicly available.

The Minister and Government Members have made much of the claim that the Conservative party has been clamping down on tax avoidance. In fact, that was considered such a priority in the general election that the Prime Minister—at her most imperious, at that stage—gave the subject a grand total of eight lines in the Conservative party manifesto. However, after seven years in power, the Government’s record is still there to see. The measures in the Bill are another example of how the Government wish to be seen to be doing something, but in fact their proposals are artificial and will amount to little while the exemption for offshore trusts remains intact.

--- Later in debate ---

[Peter Dowd]

That is a starter and I am sure that much more could be brought in. Again, I am sure that in an effort to get that figure up, the hon. Lady will support the new clause. I am really pleased that she agrees with us on that matter.

The only message this Government want to send is one of supine support for tax dodgers. The dodgers may want to hear that message, but public sector workers who have not had a pay rise for years do not want to hear it, the people waiting months for an operation do not want to hear it, and the police and firefighters do not want to hear it. I assure Government Members that at the next general election, the public certainly will hear that message loud and clear, because Labour will be there to remind them of a Government in chaos and disarray that is beginning to have a putrefying decay about it.

[John Redwood]

I think that we all agree in this House that we need to collect substantial revenues to have decent public services and that we all condemn people who break tax law, evade taxes and commit crimes against the tax code. However, tax avoidance—the legal avoidance of taxation—is a more difficult issue.

Many Labour MPs trotted through the Lobbies under a Labour Government to make sure that individual savings accounts had tax advantages, and to support tax breaks for Members of Parliament who choose to save for their retirement through the pension scheme. That is a kind of tax avoidance. Is the hon. Gentleman saying that the Labour party no longer agrees with that kind of avoidance, which was recommended by previous Labour Governments in the interests of spreading saving? Is he of the view that there are certain kinds of avoidance that are perfectly reasonable, such as those undertaken by Labour MPs and others, and other types of tax avoidance that are also perfectly legal but of which he does not approve?

[Peter Dowd]

Does the right hon. Gentleman agree that there is a difference between an ISA and institutional, systematic avoidance and abuse of the tax system?

[John Redwood]

There is a huge difference between breaking the law and living within the law. However, where Governments of both persuasions and the coalition have put provisions into the tax code that encourage people to save or invest in a certain way to pay less tax, that surely is the will of Parliament and the will of those parties, and we cannot object if people and institutions take advantage of it. The right thing to do—as I think the Labour party is now trying to do in some ways—in respect of rich people who come to our country to undertake part of their affairs but not all of their affairs, is to ensure that we have settled on a law that we think is fair and then to enforce it. Obviously we should take a tough line were any of them to break our law, but we cannot object if they take advantage of measures that have been put into the tax code to encourage certain kinds of investing or saving behaviour, in exactly the same way that most MPs take advantage of the avoidance provisions to save through a pension scheme or an ISA.

The subject of this debate is whether the assets of very rich people—often productive assets that they have saved for, earned and accumulated before they came to the UK—are a suitable object of taxation if they choose to do some things in the UK in respect of which they are clearly subject to our law codes and have to pay our taxes. In the past, Labour Governments as well as Conservative Governments have taken the pragmatic view that there is an advantage in very rich entrepreneurial successful people coming to our country setting up businesses, making investments here and committing part of their capital to our country; that we will tax that fairly in exactly the same way that you or I would be taxed, Mr Speaker, if we were making such investments on a much smaller scale; and that that is fair to us as taxpayers and investors, but that it is not our business to try to tax their assets and income accumulated or earned elsewhere that they have established by other means before, which are presumably being taxed in those other countries and would normally be governed as well by some kind of double taxation arrangement or agreement.

I would therefore just say to Labour Members who think there is a huge crock of gold here, which for some unknown reason successive Labour, coalition and Conservative Governments have been reluctant to pluck, that maybe they did not do it in the past because there is not, and that maybe we are quite close to that point. If we go further and further encroach on the legitimate income and assets of foreigners coming here, which are asset and income not actually in this country, we might get to the point where more of them say, “I’d rather go somewhere else. Plenty of other countries around the world would actually welcome the money, investment and income I wish to spend, which is going to be taxable in that country. If they are prepared to not tax my other income and assets elsewhere, then they will have the benefit of me rather than not.”

The art of taxation is finding the right balance, so the host country gets enough out of it and where there is obviously a fair imposition of tax on anything they do in that country alongside fellow residents of that country, while not deterring so many that we are no longer a great centre for people with money, investment and talent who would otherwise come here.

[Robert Jenrick (Newark) (Con)]

Does my right hon. Friend agree that we do not make these decisions in isolation? We are competing with other countries, which might also like to host very rich individuals and investors. While we in the UK are making the climate more hostile and difficult to raise more money for our public services, the opposite is true in many other countries. In the EU, Malta, Portugal and, most prominently, Italy are moving in the other direction and creating their own non-dom regimes to draw away such individuals from the United Kingdom.

[John Redwood]

My hon. Friend anticipates my next point. We live in a global world. The richer people are, the more footloose they can be, and the better the tax and legal advice they can get. Most of them want to obey the law in the country they choose to live in and the countries they choose to operate in—they usually operate in several countries not just one, which creates genuine definitional problems about where they are truly resident and where is their main centre—and they will compare all the time, on good advice, the different regimes available. It is quite obvious that in the EU there is a lot of jealousy of London and the wider UK’s success in attracting talent and investment from around the world. As my hon. Friend says, regimes are being created in to tempt people away by giving them a better deal in other European countries.

I was about to draw the attention of the House to hugely important debates about to be undertaken in both the Senate and the House of Representatives in the United States of America. New York and other great centres are already very attractive magnets for rich people and large-scale investors. They are suggesting that they might take their top rate of tax down from 39.6% to 35%, simplify their income tax brackets from seven to just three, and take their corporation tax rate down from a very high headline 35% to an effective rather lower rate of 20% or even lower, because they are very serious about becoming tax competitive again. They will be a lure, just as surely as some European countries on the continent are trying to be more of a lure.

The Opposition would be well advised to understand how global the world is, how dynamic it is, and how, to maximise tax revenue, there is a need to set ways of taxing and rates of taxation that enable people to stay and pay.

[Charlie Elphicke]

Does my right hon. Friend agree that the greatest threat to tax havens is not the blustering of the Labour party, but countries such as the United States of America reducing their tax rates so much that it does not become in any way effective to be using these kinds of places for any function and business?

[John Redwood]

That is correct. Tax havens have helped to drive down tax rates in other centres. We only have to look across to Ireland to see how attractive it can be if a mainstream country decides to take its corporation tax rate down to very low levels. Ireland attracts a lot of company-based investment. Each country has to decide where it wishes to be on that spectrum. A high enough rate is required to collect serious money, but a low enough rate is needed to not deter some of the best prospects for coming, staying and paying taxes. In the light of what America is about to do and what some of the smaller European countries are doing, this country is in danger of becoming uncompetitive on taxation.

[Robert Courts (Witney) (Con)]

My right hon. Friend makes a very important point: how important it is that this country does not deter people who bring in money, which in turn funds our public services. Does he agree that if we were to take the course of action urged upon us by the Labour party, we would put at risk the £9 billion of investment into our coffers brought in each year by those who are not domiciled in this country?

[John Redwood]

That is exactly the kind of sum of money I am talking about. That is a serious sum of money for our economy and it is a nice balance. All of us want to collect serious revenues. We are here because we want good-quality public services, but we also want a productive, growing and exciting economy. We need to have realistic tax rates and tax rules. All the evidence is that every time the coalition and Conservative Governments have had the courage to cut rates, they have raised more revenue. That shows that our rates have been on the high side for optimising the revenue.

[Sammy Wilson (East Antrim) (DUP)]

Does the right hon. Gentleman accept that the Opposition probably fully understand and acknowledge the arguments he is making? The fact is that when they were in power they did not take the steps they are recommending now because they recognised the reality. It is very easy to argue that in opposition; it is a bit different in government.

[John Redwood]

I entirely agree. I pointed out at the beginning that Labour in office was probably more gentle on this group of people than the Conservative party in office has been. I think Labour came to that judgment for good reasons. Labour Members disagree with their previous Governments, but they will discover that that is the luxury of opposition and that Governments are responsible for sustaining as well as growing the revenues. It is very easy to get rid of revenue by annoying people and companies. It is far more difficult to systematically build up a good tax base by promoting economic growth.

[Mel Stride]

Does my right hon. Friend agree that when the Opposition refer to non-doms as tax dodgers, they are referring not just to the super wealthy, but to many tens of thousands of individuals who come over here who do not have overseas assets on which to draw, who make a contribution to our economy and who pay all their taxes in the normal manner in this country?

[John Redwood]

Yes, it is very offensive language to call people tax dodgers. If they willingly come to our country, make a big investment in our country, spend a lot of their money in our country and pay all legal dues that this Parliament requires of them, I do not think calling them tax dodgers is wise, friendly or helpful. That is why I began my remarks by asking the hon. Member for Bootle (Peter Dowd) if he could draw a distinction between a non-dom who came here, paid all legal taxes but was, in his terms, dodging taxes on wealth legally held elsewhere, and a Labour MP who deliberately puts their savings money into an ISA or the pension fund to avoid paying tax. It seems to me that they are very comparable and I do not regard either as tax dodgers.

I do not think my Labour colleagues are tax dodgers because they take advantage of the savings breaks that both Conservative and Labour Governments offer UK taxpayers. Similarly, I do not regard a rich person from abroad who pays all legal dues here with no questions over their tax affairs as a tax dodger. I think they are a welcome contributor to greater growth and prosperity in our country, and we could think of a nicer way to sum them up.

I urge the House to resist the blandishments of the Labour party in opposition, to remember the stance of the Labour party in government, which was rather wiser, and to unite behind what I hope my colleague on the Front Bench will be saying, which is that we welcome talent, industry, enterprise and money into this country and that we want to have a fair basis for taxation that does not deter them from coming.

--- Later in debate ---

[Bim Afolami]

I am. The hon. Gentleman made some interesting remarks, but I am going to pick him up on one phrase, which we should think about and bear in mind as we look not only at the implications of new clause 1 but at the Bill as a whole. He said that the British public are no fools. As I listened to him expound on that, I thought to myself, “The British public in the public gallery and the many millions undoubtedly watching the debate at this moment are no fools and will realise that this Conservative Government, since 2010, have brought in more than £160 billion-worth of anti-avoidance and tax evasion measures.” The British public are no fools. They will realise that the Conservative Government, since 2010. have reduced the tax gap—the gap between what should be collected in tax and what actually is collected—to 6.5%, the lowest that has been recorded. The British public are no fools and will see that this Government, a Conservative Government, will abolish permanent non-dom status for the first time. Those are the practical achievements that the Bill helps to build on.

On the precise nature of new clause 1, I can do no better than agree with my dear and honourable Friend the Member for Chelmsford (Vicky Ford), who suggested entirely accurately that the timing of such a review may cause disruption. It may be a significant disincentive and difficult from a business perspective because of the Brexit negotiations and the situation at that time. It is also important for us, whatever party we represent, to recognise that this Government are making the case for a sustainable fiscal policy that makes sense in the modern world.

We have heard from many Members on both sides of the House about the international context in which we operate. We are in a smaller world; we all know the impact that technology and ease of travel are having on every aspect of life. Bearing that international context in mind, things are more competitive. We cannot rest on our laurels.

[John Redwood]

On that point, would my hon. Friend care to reflect on the issue of footballers? The Labour Front-Bench team was saying that footballers often got away with things under this heading, whereas I thought many people in Britain like the idea that very talented footballers could come to our country for a limited period of time under sensible arrangements for their tax affairs. Does my hon. Friend think that is reasonable?

[Bim Afolami]

Not only do I agree with my right hon. Friend about footballers, but I think that most people—among the millions watching this debate, as I have said—will recognise, because they see and enjoy the top-quality premier league football in this country, the impact that top foreign players make. It is not just footballers but music stars, artists, creatives, writers, financiers, businesspeople, entrepreneurs—all of them can be such an asset to this country. Footballers are a very visible example, but we should not forget the more hidden, less public face of that. Britain is good at attracting such people, and we should continue to be good at it, and be proud of that fact in this House.

On the Bill, the Government are making the case for a sustainable fiscal policy, and we must bear in mind the case for the simplification of taxes. The hon. Member for Aberdeen North (Kirsty Blackman) always makes good speeches, and made the point that simplifying taxes is a good aim that we should always think about. The Minister, the Government and everybody in this House should always be thinking of ways in which we can make things simpler. We should also always be thinking about ways in which we can make things fairer, and ensure there is a genuinely level playing field for all businesses that seek to work in this country. That is not only fair from an ethical perspective, but having a level playing field is an integral part of what makes Britain a good place to do business. We should focus on both simplifying our tax code and on making it fairer.

--- Later in debate ---

[Bim Afolami]

I hugely respect my hon. Friend. It is worth mentioning for the benefit of those who do not know it that he was a top tax lawyer, so he knows the value that complexity brings to tax lawyers in the City of London. On his point about the EU, I am no expert on these matters and defer to the Minister and other Members, but my view is that we must be more realistic and accept that a lot of things are of our own making; and with the advent of our leaving the EU we have the opportunity to make ourselves even better as a place to do business. I am sure that my hon. Friend and the Minister would support that.

[John Redwood]

The problem with the comments of the hon. Member for Aberdeen North (Kirsty Blackman) is that she wanted both a simpler tax code and to close loopholes. As I understand it, a great deal of its complexity and length has come from adding detailed ways of trying to close the loopholes, so there is a conflict there. Genuinely simpler tax codes have fewer taxes, which would be a great start, as would having lower rates with a common tax base. At present, however, we have too much complication, partly because of trying to close loopholes.

[Bim Afolami]

I accept that point. Members present appear to be reaching consensus that the Government should always be thinking of how to balance the need for fairness and simplicity with closing loopholes so that people do not take advantage of the fair laws in this country.

Many Members have discussed in the speeches made so far—I told you, Mr Speaker, that I was listening—the importance of businesses bringing in money to fund our public services. We all recognise that that is important; indeed, it is the reason why many, if not all, of us became Members of Parliament. However, it is also worth making the point that having a thriving economy in which individuals, on their own merit and through their own effort and time, can make the most of themselves is in and of itself a good thing. We should not always revert to thinking about business as something simply to be milked for the Exchequer; the Exchequer, the Government and Parliament should set, and are setting, a clear, simple, as-low-as-possible framework in which individuals and corporations can thrive. That is the sort of fiscal and economic policy that I support.

Finance Bill

Lord Redwood Excerpts

2nd reading: House of Commons
Tuesday 12th September 2017 Commons Chamber

[Jonathan Reynolds]

I feel I have heard quite a lot from the Conservative party, so if the hon. Gentleman will forgive me, I shall proceed.

Today’s proceedings, along with the ways and means discussion last week, have been characterised by deeply held concerns about the state of our economy. There have been many fine and noteworthy contributions in what has been a wide-ranging debate, taking us from Venezuela to the application of the Laffer curve to corporation tax. I feel that Conservative Members will find it quite difficult to cope when I point out that the average rate of corporation tax in OECD countries is 25%, or that in Germany, the strongest economy in Europe, it is between 30% and 33%—and it is even higher in America. The hon. Member for South Thanet (Craig Mackinlay), who is no longer present, even questioned the very basis of taxing companies at all, but it is a reasonably held position that companies benefit from good infrastructure, a skilled workforce and a proven legal system, and it is reasonable to balance the impact of taxation between individuals and corporate entities. I feel duty-bound to point out that the tax gap fell every year between 2005 and 2010—from 8.5% to 7%.

I wish to pay tribute to two particular contributions—

[John Redwood]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will not give way; I have listened to the Conservative party for more than eight hours.

The first contribution to which I pay tribute is the maiden speech of my hon. Friend the Member for Liverpool, Walton (Dan Carden). It was at times funny and moving, and it captured the character of his constituency extremely well, but it also had a serious and thoughtful message about the changing nature of work, automation, and the fundamental lack of opportunity faced by young people today. He described Liverpool as one of the great cities of the world, which it undoubtedly is—perhaps not quite as much as Manchester, but we can take that outside—and he proved he will be a fine representative for it. With 85.7% of the vote at the election, I imagine we will have the chance to hear from him for some time to come.

It was also a pleasure to hear the maiden speech of the hon. Member for Moray (Douglas Ross). He was extremely articulate and gracious about his predecessors, and that came across very well. I have visited his constituency: I have been to Elgin and to Cullen, and I have tried Cullen skink, a dish every bit as tasty as his maiden speech. I congratulate him on such an assured debut.

Despite the party political nature of much of the debate, we have heard serious concerns about ailing productivity. We have heard worries about the lack of certainty in the Brexit negotiations and what that means for the public finances. We have heard Members reference the challenging demographic and technological changes that face our nation, and yet we have a Bill before us that has nothing to say about any of that.

When I was talking to residents in my constituency during the EU referendum, leave voters raised specific concerns about immigration and sovereignty, but more than anything else it was a sense of recurrent anger and of post-industrial decline that they had witnessed and lived through that animated so many of them. My constituents told me that they were voting leave because of zero-hours contracts, because they could not get on the housing ladder, or because they had lost their job due to austerity and now had to work for less pay and poorer conditions. For me, those people were voting not to leave the EU, but to try to leave the UK. All of us, whichever side of that referendum or this House we are on, must be concerned about that. We should want to tackle that disconnection and alienation—not just paint a rosy picture of statistics and how we want to see them for our own political benefit.

I will let the House into a secret: I am jealous—I really am—of the Ministers on the Front Bench. I am jealous of the power that they have to put this right. I am jealous of the opportunity that they have to do good. However, instead of using that opportunity and that power, this Government do not even appear to see the problems. The Finance Bill before us today seems to be legislating for a completely different set of economic circumstances. It is not difficult to see why there may be frustration among those who look at these measures and feel that they are being left behind and among those who look at this Government and ask: why is there always one rule for the people at the top, and another for everyone else?

We have had an absurd set of interventions about student debt, pretending that the Leader of the Opposition had said something, which evidently he had not. It says to me that the Conservative party is still in denial about what happened in the general election—how it lost a majority despite being so far ahead in the polls. If Members think that it was down to something that they are wilfully misinterpreting, I am afraid that they will face further difficulties ahead.

The backdrop to last week’s ways and means debate was a rally of nurses outside Parliament, rightly asking for redress for the 14% real terms pay cut they have endured since 2010. Yet while that was happening, this Government were proposing a resolution, which expanded business investment relief for non-doms. It was a stark reminder of where this Government’s priorities lie: look after the people at the top, and the rest of us will supposedly benefit from the trickle down. It is just that on the Labour Benches, we see it the other way round.

Only this Government could pretend to flirt with the public and say that they were ending the public sector pay gap, and then, on the day that the consumer prices index comes out at 2.9%, announce rises well below that. If we end up, as is looking likely, with people like those nurses taking industrial action in protest at their treatment, public sympathy will not be on the Government’s side.

As a country, we are on the cusp of huge change driven by deeper globalisation, environmental change, technology, and, most pressingly, our exit from the European Union. Brexit is now the defining issue of our generation and it brings with it significant challenges and uncertainty. Our worry is that we are approaching Brexit not from a position of economic strength, but as a rudderless ship, already taking on water and listing badly off course. The Government are failing to plan ahead for our future outside of the EU and this Bill is another demonstration of that.

I want to refer specifically to the Government’s provisions around HMRC. The Conservative party certainly talks a good game on tax avoidance, but the Government have yet to explain how HMRC will better battle tax avoidance while accommodating another £83 million of cuts. Surely this is the time that we should be investing in HMRC, not taking resources away.

One of the most pressing areas is the future of our customs system. This Bill sees the introduction of a fulfilment house registration scheme to deter VAT abuse by overseas businesses. However, experts are already suggesting that abuse may escalate faster than HMRC can keep up, particularly given the ever growing popularity of online business. More urgently, the legislation makes no reference to how this will change once we have left the EU. The scope of these measures will be altered hugely should our customs arrangements with the EU change, which they almost certainly will. There are huge implications for policing our own customs border, and for getting an IT system ready to manage customs and excise once we leave the EU, but this Government cannot even tell us what the likely transition arrangements will be, let alone start preparing for them. Surely the worst possible place to start is from a situation in which we have already lost 5,000 staff from HMRC. Time and again, we find ourselves in a situation where it is hard not to conclude that this is a Government without any substantive agenda, other than hanging on to office at all costs.

This Finance Bill, now finally coming to the end of its Second Reading after months of delay, was sadly not worth the wait. It is a damning reflection of the Tories’ priorities—fiddling on the deck of the rudderless ship as it cruises straight towards the rocks. We need answers on investment, productivity, fairness and prosperity, but we have a Government who are not even willing to ask the right questions. Listening to some of the contributions today—we heard some presidential quotes in the maiden speeches—I was reminded of a line from President Obama’s first campaign, when he said

“it’s not the magnitude of our problems that concerns me the most. It’s the smallness of our politics.”

Our message to the Government is that we will vote against this Bill tonight because it is not worthy of the challenges this country faces. The British people have had enough of an austerity policy that has comprehensively failed, and they are desperate for something better. If this Government cannot bring themselves to face up to the challenge of building a post-Brexit country that is fairer, more competitive and more prosperous, they should get out of the way for the people who can.

Finance Bill

Lord Redwood Excerpts

Tuesday 12th September 2017 Commons Chamber

[Peter Dowd]

Conservative Members acquiesced in their droves, and it is a shame—it is absolutely shocking—that they did so.

[John Redwood (Wokingham) (Con)]

Will the hon. Gentleman give way?

[Peter Dowd]

In a moment.

Last week, we witnessed the Brexit Secretary, also known as Britain’s Brexit bulldog and master negotiator, on the receiving end of more punches from my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), the shadow Secretary of State for Exiting the European Union, than a well-oiled guest at a summer Tory Pimm’s party. What a cocktail of horrors it must have been for the Brexit Secretary.

--- Later in debate ---

[Peter Dowd]

Thank you, Madam Deputy Speaker. Your judgment is wonderful, as ever, on these matters.

What a cocktail of horrors it must have been for the Brexit Secretary. I almost felt sorry for him by the time my right hon. and learned Friend the Member for Holborn and St Pancras had finished his humiliating dissection of his case—but not quite. If squirming was an Olympic sport, the Brexit Secretary would have won a gold medal, hands down.

[John Redwood]

Will the hon. Gentleman confirm that when a Minister brings a statutory instrument to the House, it can be debated by the House and voted down if the House does not like it? That is a parliamentary process; it means Parliament is in control.

[Peter Dowd]

It depends on the nature of the order, so let us move on.

I come to the future economic credibility of the country, where we have David the deluded, Boris the blunderer and Liam the loner—what a team! They would be out of their depth in a puddle. Regrettably, the importance of the Ways and Means resolutions and the Finance Bill has been somewhat overshadowed by the Brexit debate, notwithstanding its significance. That has given the Government a collateral opportunity to sneak the Finance Bill through while everybody else’s attention is elsewhere. That is a murky approach to the respect that should be afforded to Parliament, but this caliginous Government are bent on pursuing it, come what may. The Chancellor, who has now gone, doubtless to check his spreadsheets, commented from a sedentary position last week that the Ways and Means resolutions were just “technical”. There is nothing technical about aiding and abetting non-doms to avoid paying taxes. There is nothing technical about legislating to tax those who have been injured on grounds of discrimination.

Let us consider the following:

“the economy we have today is creating neither prosperity nor justice.”

Those are not my words but the words of the Institute for Public Policy Research in its recent publication “Time for Change”.

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[John Redwood (Wokingham) (Con)]

I felt for the shadow Minister’s being asked to speak in this debate after many hours of toiling away on a different subject yesterday. He obviously struggled, because he produced his notes for yesterday’s debate and gave us 10 minutes or so as if we were still debating ministerial powers and Parliament’s right to control all secondary regulations. Just to clarify the point that I made to him, and which he tried to muddle: everything is a parliamentary process when it comes to legislating by statutory instrument, because those statutory instruments that are tabled for negative resolution—meaning that they would not normally get a debate or a vote—are an invitation to the Opposition. It is their job to go through them all and decide whether Ministers have made any mistakes, and therefore whether those instruments should be brought before the House for debate and a vote. They are all debateable and voteable if the Opposition do their job, but it is clear that this Opposition do not want to do their job; they want to make synthetic points instead.

Thanks to your excellent guidance, Madam Deputy Speaker, the shadow Minister did come to understand that this is the debate on the Finance Bill. We then moved to the interesting issue of the student debts. A number of my right hon. and hon. Friends quite rightly wanted clarification on whether, were we to accept Labour’s advice, we would need to find provision in the Bill to retire £100 billion of student debt. The poor shadow Minister found that even more difficult than working out which debate he was in. I am sure he knows full well that before the election the Leader of the Opposition made a statement on student debt that was interpreted by two shadow Ministers as categorically offering the end of student debt for all those who have incurred it. Now, after the election, we are told that the Leader of the Opposition did not mean that, although he failed to clarify it at the time.

[Michael Tomlinson]

The Leader of the Opposition’s precise words were:

“I will deal with it.”

Those were his words. The hon. Member for Ilford North (Wes Streeting) wandered into the Chamber, made an intervention and has now left. He should have stayed to hear this. His leader said that he would deal with it and has now gone back on that.

[John Redwood]

My hon. Friend is much tougher than I am and has made it clear that the Leader of the Opposition misled the electors; I was being a little kinder. The right hon. Gentleman used tricksy language, in some ways, but his shadow spokesman did not. More importantly, millions of voters out there heard what my hon. Friend described, believed that Labour was making an honourable offer to get rid of all student debt and voted accordingly. They are now told that they were conned, let down and completely misled.

[Ruth George]

Had the Treasury team shown the House some respect by publishing the Bill and the explanatory notes in time for us to read them and properly give the matter some scrutiny, Members from all parties, but particularly Conservative Members, might not have had to concentrate on old arguments about Labour from the election that have since been cleared up, and might instead have been able to look at the matter we are meant to be debating.

[John Redwood]

We think that this is a debate about the Finance Bill, and about how much money we raise and how we raise it. A very important question to consider when deciding how much money we raise is how much we need to spend. We are debating, in part, a very important promise that was made by the Opposition party. My electors—and many other Members’ electors—thought that that party would want to sustain it and come up with ideas about how to raise the odd £100 billion, but we now discover that that promise was not meant to be for any time other than the election and that it has now reneged on it. That is exactly what the people outside this House want to hear about. They want us to be topical and relevant to their lives. Very technical matters that deal with certain kinds of tax abuse are all very important to a limited number of people and in the interests of fairness, but what matters out there, and what should go back from this debate today, is this: does the principal party of opposition have any principles, or did it merely offer to cancel student debt before an election knowing full well that we cannot raise in this Finance Bill, or any other, £100 billion to deal with it?

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Given that Conservative MPs want to spend a considerable amount of time on this matter—indeed, they appear to have decided to filibuster their own Finance Bill—and given that the quote from the Leader of the Opposition has been used, let me finish that quote, word for word. He said:

“I don’t have the simple answer for it at this stage—I don’t think anybody would expect me to, because this election was called unexpectedly. We have had two weeks to prepare all of this, but I am well aware of the problem.”

That is the quote.

[John Redwood]

I am very grateful for that clarification. I think that we can rest our case. It seems very clear that an impression was given. This is relevant because the Opposition now have the opportunity to tell us how they would raise £100 billion. I will let them into a secret: if there was an easy way to cancel everybody’s student debt, I would be delighted, because it would make us extremely popular. Clearly, it made Labour very popular before the election. I am not persuaded that there is a simple way of raising £100 billion, which is why it would be interesting to hear in this debate whether there is something that we have missed.

The hon. Member for High Peak (Ruth George) chided me for not debating what is in the Bill, and said that she did not have time to read it all. That is very odd, because I seem to remember that this Budget was delivered weeks and weeks ago—before the general election. She has had plenty of time to study the Bill and to come up with some principles that the rest of us here could debate today. I wish now to move on to some of the actual measures that the Government are recommending, but, first, I give way.

[Rachel Maclean]

I thank my right hon. Friend for giving way. He is making an extremely powerful speech. It is relevant, because the shadow Minister mentioned that the deficit was going up under this Government. Will the hon. Gentleman be straight with the country about how much he would add to the deficit if his party were to make good on that pledge on the £100 billion of student debt? Otherwise, he is letting down the young people who voted for him and betraying them cruelly.

[John Redwood]

Let us move on. Let me summarise the situation by saying that what we have learned today is that the Opposition have no intention of honouring what we thought was a pledge and what they say was not a pledge. Labour does not want to retire the student debt. It does not have a clue how to do it, and it even admits that £100 billion is too big a sum to raise in this Finance Bill to honour that pledge.

[Philip Davies]

My right hon. Friend is being a bit unkind to the Labour Opposition, because they have given us some indication of how they would go about raising the money that they need for their fantasy policies. They have told us that they would adopt the policies that were used in Venezuela. Was my right hon. Friend as surprised as I was when the shadow Minister mentioned how appalled he was at the rate of inflation, given that he wants to adopt the policies of Venezuela? Perhaps my right hon. Friend can tell us what those policies led to in Venezuela.

[John Redwood]

I have written and spoken about that in other contexts. I fear that I might be straying a bit far from the strict words of the Finance Bill, but my hon. Friend tempts me. I do remember that the leadership of the Labour party was full of praise for the two last leaders of Venezuela, but we now know that that very expensive experiment has ended in terrible tears with a lot of civil dispute, an inability to buy simple foods in shops, complete chaos in getting in basic supplies, a country near bankruptcy, having run out of foreign exchange, and a country that cannot even run its own oil resources properly because it does not know how to invest, to balance its budget and to run finance prudently. It is very sad that the Labour party backed this particular wrong horse. It is even more bizarre that it will not now distance itself from it and admit that the experiment failed badly. However, it does tell us something very interesting.

When the Venezuela experiment began, it was great. The Government gave more money to the poor, which was extremely popular. In the first instance, the policy just about worked—people had a bit more money to spend—but shortly the Government ran out of other people’s money to spend and they ran out of borrowing capability. Instead of helping the poor, they crushed the poor. Instead of making a prosperous economy, they bombed the economy and they are now all much worse off as a result of their policy of generosity.

I am grateful that the Government understand that we need to have a prosperous and growing economy and to run our finances sensibly in order to pay for the attractive programmes for better public services and to create less inequality of income by giving more money to those who, through misfortune or for other reasons, cannot earn as much as others.

[Lucy Frazer]

One matter that is in the Finance Bill is in relation to tax avoidance and tax evasion. Does my right hon. Friend remember that the Labour Government committed to recover £8 billion that had been lost through tax avoidance, and that the Institute for Fiscal Studies said that they would not recover even half that sum?

[John Redwood]

I do remember that. We also have the respective abilities in Government, and we see that this Government have been rather more successful at clamping down on tax loopholes that Parliament has thought unacceptable and that, in turn, has generated more revenue.

Very important to this Government’s strategy is the principle that, yes, we have to tax rich companies and rich people because they have the money, but that there is not enough money if we just tax the very rich. We must tax people who are comfortably off as well. There is also an understanding that, if we try to over-tax the very rich, we would end up getting less money, not more money, because the very rich have privileges and freedoms that the rest of us do not have. They have good lawyers, good accountants, and addresses in other countries. They can shift their businesses around, invest somewhere else, decide to spend their money somewhere else and go and live in a home in another country, which the rest of us are not able to do. Therefore, it is very important that the Government monitor the situation extremely carefully. For example, when the Government are taxing non-doms—they have got £9 billion in tax from non-doms, which is an extremely important contribution to our public services—they should be careful that they do not overdo it, because it would be quite easy to flip the thing.

I am not a particular friend of the non-doms. I have certainly never had the advantage of all these offshore facilities. I have always had a salary in Britain and paid PAYE like everybody else. Everything that I have had has had to go through the tax books quite properly, so I do not speak from any personal experience. However, what I do know is that I would rather live in a country that was tolerant of people who have riches and enterprise and who want to invest here than in a country that was completely intolerant. I would also rather that the non-doms paid some of our taxes for us than live in a country where the rest of us had to pay all the taxes because we had driven all the non-doms away.

So far, the Government have charted a sensible course, but I hope that they will watch the situation very carefully. I hope also that those in the Labour party who are serious about government and want to learn a bit more about how successful Governments, past and future, operate might learn from the corporation tax proposals in this and related Finance Bills. Interestingly, during the time when the Government have taken the corporation tax down from a 28% rate to 19%, they have massively increased the amount of revenue that companies pay. One problem with the Labour proposals before the last election was that Labour recommended a lot of spending that was not going to be financed by tax at all. It also recommended quite a lot of spending that it said would be financed by tax. One of its biggest alleged increases was from raising the corporation tax rate. If we tried that, we might find that we raised less money from corporations, drove marginal businesses away from our country and enabled clever accountants and lawyers in large corporations legitimately to base activities and profits in other countries, because they would no longer find our tax rates so acceptable.

[Alex Norris (Nottingham North) (Lab/Co-op)]

Given that the only numbers in the Conservative manifesto were the page numbers, does the right hon. Gentleman understand why Labour Members are slightly concerned that, despite what he says, the numbers in the Finance Bill do not add up?

[John Redwood]

No, I do not share that view and I do not think that was a very effective point. There was quite a lot in the Conservative manifesto. Indeed, there were some things in the Conservative manifesto that the Conservatives were rather surprised about, and we have been having friendly family conversations about them ever since. I am sure that my hon. and right hon. Friends will discern that there are some better parts of the manifesto which we are most keen to get on with. However, we certainly did not just have a manifesto of page numbers, as I am sure the hon. Member for Nottingham North (Alex Norris) will remember. The smile on his face tells me that he enjoyed some parts of the Conservative manifesto as well. We are all very pleased about that, even though he was probably amused by different parts of that particular publication from the ones that I was amused by and pleased about.

We wish to see a policy that promotes enterprise and growth. That means taxing people in companies with the money fairly and sensibly, but also setting internationally competitive tax rates that they will stay to pay and ensuring that the country is an attractive place in which people want to do business, invest and employ.

[Simon Hoare (North Dorset) (Con)]

My right hon. Friend is talking about practical application, rather than merely theory. When President Hollande took office in France, he hiked the French tax system in order to squeeze the rich until the pips squeaked, as it were. My right hon. Friend will recall that the wealthy French then moved in very large numbers to Chelsea. The lingua franca of Chelsea changed from Russian to French overnight. People will move to where they find the tax regime benign and fair.

[John Redwood]

That is quite right. And they will all contribute to our tax revenues and not to the French tax revenues in the process, which means the French state has an even more difficult task.

There was one particularly important thing in the shadow Minister’s speech. He correctly agreed with the Government that we need to raise productivity. He would not take my intervention, in which I wanted to raise one of the sadnesses in the long period of Labour Government from 1997 to 2010. The Labour Government had so much money to spend because they inherited a prosperous economy. In fact, they extended that prosperity in the first part of their government before they went for the crash in the end. However, although they had quite a lot of money to spend, there was no growth whatever in public sector productivity over those 13 years.

In this House, we all say we want to raise productivity. Surely we should take a special responsibility for public sector productivity because that is the sector in which we directly spend the money, employ the people, hire the managers, and set the aims and objectives. As the Labour party is particularly close to the public sector in many ways, it would be good if it shared with us some thinking on having a policy that really does promote higher-quality and better-paid jobs in the public sector. If we have a more productive workforce, we can pay them better and create better conditions. That is what we all want to do.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

If we want to improve productivity, why do we not stop the Department for Work and Pensions closures and keep the people who will chase the tax dodgers? Those are the people we want. If we want to improve productivity, we need to keep the jobs, stop the centralisation programme and keep the DWP jobs going.

[John Redwood]

The idea is to provide a better-quality service, applying modern technology and techniques to serve those who need the scheme. I am sure that the Minister will be interested in any detailed criticisms the hon. Gentleman may have. This Government have spent a lot of our public money on dealing with abuse on the tax side, because they rightly believe that we should be fair, crack down on tax abuse and ensure that people do not cheat the welfare system. Neither is a good thing to do. If we want a sensible financial balance, we should surely be fair to both sides by ensuring that we are not cheated out of public money and that we are not short-changed by people who break the law on tax.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The right hon. Gentleman was waxing lyrical about corporation tax earlier. Of course, private finance initiatives—with companies that Members on both sides of the House have concerns about—have been beneficiaries of the Government’s changes to corporation tax. Those companies benefit from the lower corporation tax espoused by the right hon. Gentleman, even though they signed contracts with the Government to pay a higher rate of corporation tax that was part of the value-for-money assessment for those contracts. If he wants to get the money owed to the public sector, does he recognise that corporation tax may need to be amended in certain ways and with some companies to reflect that?

[John Redwood]

The hon. Lady is very brave to mention PFI because that was a failed experiment by the Labour Government, who got through an awful lot of public money needlessly by not doing good deals with the private sector and not understanding that they had to be more careful in the kinds of contract they signed.

[Stella Creasy]

rose—

[John Redwood]

I will give her another go.

[Stella Creasy]

I welcome the right hon. Gentleman’s concerns about PFI. I would like to hear him talk about Private Finance 2, which is this Government’s proposal, including £23 billion of infrastructure investment that will be done under the same contracts, and which therefore faces the same challenges. Many Labour Members recognise the need to deal with PFI. I would hope to hear the right hon. Gentleman—a man who has been so proud of the role of corporation tax—deal with them equally rather than avoid the question. I am sure that his constituents would like that too.

[John Redwood]

I did not avoid the question at all. I pointed out that most PFI contracts were signed under the Labour Government. When I was a Secretary of State, I remember being offered a PFI route to financing a new hospital. I looked at the numbers and did not think they worked, so I said, “I’d rather finance it in the normal way by public borrowing because that would clearly be cheaper and give us more control.” That was a bit of a surprise to my officials but they quite liked the advice I gave them on the subject. It is the job of a Minister to understand these things, but a lot of Labour Ministers did not understand the contracts they were signing, and those contracts had weaknesses. If the hon. Lady has problems with contracts that Ministers are currently signing, it is her job as an Opposition MP—she will not be shy about doing this—to give chapter and verse. She has not been specific, but we do not have time to turn this into a debate about individual contracts. I am sure that my ministerial friends, particularly in the Treasury spending department, would be very interested to hear where she thinks they have gone wrong. However. we probably need to move on.

[Stella Creasy]

rose—

[John Redwood]

Oh, if she really wants to intervene again, she may.

[Stella Creasy]

I thank the right hon. Gentleman for giving way again. I am pleased to hear his concerns. I note his intention to increase public sector borrowing. I repeat that the Government are talking about £23 billion of infrastructure spending financed by this Bill. They are looking at PF2, which is “exactly the same” as PFI. They are not my words, but those of the National Audit Office. Will he join me in supporting amendments to the Bill to ensure that those companies pay their fair share of tax and the public sector gets the money it deserves?

[John Redwood]

I have no evidence that makes me believe they will not pay their fair share of tax. I am sure that my ministerial friends have heard the hon. Lady’s point and will look carefully at the issue. It is good that a lot of our future infrastructure programme will be privately financed, but I always apply a simple test. If the thing is going to be privately financed, I want to ensure that the private sector is bearing significant risk in return for the reward it wants to earn. I do not like phoney PFIs, whereby the private sector cajoles the public sector into taking all or most of the risk while giving a higher reward than one would get on a normal Government bond in order for the contract to be signed. There were quite a lot of those under the Labour Government and the taxpayer is much the poorer as a result. It is part of the reason that we did not get the gains in public sector productivity that we would like to achieve. If we do not discipline the big investment spend, we do not drive forward the productivity gains that we clearly need to make across a large public sector.

In conclusion, the best way to raise the extra money we need to pay wages and improve public services—an aim that is shared across the Chamber, contrary to Labour’s belief—is to drive further growth in the economy so that more people are in jobs to pay tax, and so that more companies are doing things here and making profits here on which they can pay tax. We need a series of tax rates that are not too complicated and that are low enough to be sensible so that we are internationally competitive. Then individuals and companies will have every incentive to do more, invest more, work harder and work smarter in order to carry the economy forward. I trust that is what my hon. and right hon. Friends will be doing.

I do have some worries about the length of modern Finance Bills. It is useful to have another doorstop, but it is a bit of a barrier to our reading every page and giving it the credit that it undoubtedly deserves. It would be good to see whether we could have a period of fewer and simpler taxes so that we do not need quite so much language in Finance Bills. It would also certainly be good to look at what one can learn from the success of raising more revenue from richer income tax earners by going from 50% to 45% and getting more revenue out of companies by going from 28% to 19%. We could apply that principle more generally to other taxes because we would then have a win-win situation. We would have more money for our public services, more economic growth, more people in jobs and more people keeping more of the money they earn. That might make for happier constituents, and that is my main aim in being here.

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[John Redwood]

Is the hon. Lady aware that there was also a sharp upward spike in inflation in Germany and the United States of America, and that the main underlying cause was, of course, energy prices and world commodity prices?

[Kirsty Blackman]

It frankly does not matter what the inflation figures there were. What matters is that people here are feeling the squeeze, that people here are finding that things are more expensive, and that people here are finding that their wages have not gone up. That is the concern; that is what we are discussing here.

On the subject of investing, our programme for government in Scotland involves creating a national investment bank to support economic growth and to invest in business research and development. We hope to channel finance where it can do the most good. The Government here have the national productivity investment fund. We are still not entirely clear where all that money will be spent and how it will be spent, and I look forward to seeing what will happen. I hope that the UK Government can look at similar measures to the ones the Scottish Government are looking at in relation to the Scottish national investment bank, which will ensure that investment and economic growth are in the right places.

--- Later in debate ---

[Mr Harper]

I am always grateful to have excellent suggestions from colleagues in Northern Ireland. It is worth remembering that they bring a particular perspective to Brexit, given that they have a land border with the Irish Republic. We need to be very conscious of tax effects across the border as we leave the European Union.

I set out in my Westminster Hall debate, which I will not reprise now, our good record on economic growth since 2010, our reduction of the deficit and the significant number of jobs that businesses in the United Kingdom have generated. That is all very positive. But I am perfectly happy, as are the Government, to accept that there is one area in which the country’s economic record since 2007-08—under both the Conservative party and the Labour party, when it was in government—has been less impressive, and that is productivity. Since the economic crash, productivity growth has stagnated, and the level of productivity is significantly below that of the G7.

As I have said, it is essential to raise productivity if we are going to increase pay in both the public and private sectors. I want—I think all Conservative Members want—to give public sector workers a pay rise, just as much as Opposition Members do. But we understand that that has to be paid for. There is also an element of fairness. Private sector wages fell, in cash terms, after the crash, but that did not happen in the public sector. The work done by the Institute for Fiscal Studies shows that after a number of years of pay restraint, pay in the public and private sectors is now roughly in balance. It is, perhaps, a little ahead in the public sector if we take account of the more generous pension schemes. I want workers in both the private sector and the public sector to be properly rewarded; I do not want to favour workers in one sector at the expense of those in the other. That idea is missing in the comments we have heard today from the trade unions about public sector workers. We have to have a balanced settlement for workers across the economy, not just those in one area of it.

It is not clear what has caused the lack of growth in productivity. It will probably not surprise anyone in the House to learn that according to economists—I apologise if there are any economists in the Chamber; I stopped my economic training when I left university—a number of things seem to be at the root of this, one of which is that there could well be a lack of wage growth, which means that companies are not investing in capital equipment to make work more effective. As a former Minister for Immigration, I think that having unlimited unskilled migration—it is definitely at the lower end of the labour market, keeping wage growth low—has certainly not encouraged companies to invest in machinery and equipment to drive up productivity. Leaving the European Union gives us the opportunity to reduce importing unskilled workers from the current level. That does not mean reducing it to zero, but reducing it a little will help to improve such an incentive.

[John Redwood]

To help my right hon. Friend, let me say that there is a good reason and a bad reason why productivity has been disappointing. The good reason is that we have generated lots of lower-value jobs—it is better to have a job than no job—and we now need to help those people to work smarter so that they can be paid better. [Interruption.] Labour Members do not want jobs for their constituents, but I do, and I then want to go on and get them, when they have been trained and skilled up, into better-paid work. The bad news is that we have lost a lot of top-end jobs in the North sea oil industry because of the maturity of the fields and the decline of output, as well as the hit on the price, and we have also lost quite a lot of top-end jobs in the City—some people did not like those top-end jobs very much, but the crash destroyed quite a lot of them in the City—and that has obviously depressed the overall productivity figures.

[Mr Harper]

My right hon. Friend makes a very good point. I agree with him that the response to what he said about the growth in jobs was very disappointing. One thing I touched on in my Westminster Hall debate was the comparison between this country and some of our European neighbours. I must say that in Britain, where the level of unemployment for young people has fallen from 20% to 13%—I accept that that is still too high—the record, particularly for younger people, is phenomenally better even than in countries such as France, where the rate remains at 20%, while in some European countries that have completely lost control of their public finances, the rate is—

--- Later in debate ---

[John Redwood]

Fifty per cent.

[Mr Harper]

My right hon. Friend is absolutely right. Half of young people in Greece are unemployed, and that is after a significant number of other young people have come to countries such as the United Kingdom and Germany to work. I must say that that is not a sustainable economic model. I suspect there is going to have to be a shake-up in the eurozone at some point—more fiscal transfers, or looking at the currency—because it is not sustainable for half of a country’s young people to remain unemployed for a considerable period.

Thankfully, we have not had to confront such a problem in our country—we have a different set of challenges—but my right hon. Friend is right about productivity. Let us look at the Bank of England analysis. He has already referred to falling productivity in the oil and gas sector and the financial sector. As I have said, there has been the impact of the financial crisis on allocating capital. I think there is now enough capital in the economy, but the issue is about getting it to the right businesses. There has also been a slowing rate of growth in innovation and discovery, as well as some inaccuracies in the data.

There is no single thing that we can do, which is why I am very pleased that the Government have set out a range of options in the productivity plan published by the previous Chancellor, George Osborne, in his Budget immediately after the general election in 2015, and in the measures set out by my right hon. Friend the present Chancellor, who was in the Chamber earlier. In relation to the national productivity investment fund, the Chancellor has set out some very important areas of spending, which I will briefly mention.

The first area is accelerating the housing supply, which is absolutely critical. I share the concerns expressed by Opposition Members. It is absolutely critical that we look at growing the housing supply urgently so that younger people, and not only younger people, can find affordable houses for them either to rent or to aspire to buy. A very significant sum in the national productivity investment fund will go towards that incredibly important area. The second area is investment in transport. I welcome today’s announcement about the very significant investment in the A303 and the significant amount of money to ensure that we properly protect the ancient monument of Stonehenge. That is very important for me and colleagues from south-west England. We are also seeing improvements to rail, and to the missing link on the A417—the bit of the road that is not dualled—in which the Government are committed to investing. Therefore, there is investment in some important areas of transport.

I also welcome the conversations that my right hon. Friend the Secretary of State for Transport is having with colleagues in the north of England about significant investment that we could make on top of HS2 to connect cities in the north properly. My understanding is that if we see an agreed plan from Transport for the North, the Government will be very keen to fund that to drive productivity growth in the north of England, in the same way that significant investments in road infrastructure have driven productivity growth in London and the south of England.

It is important that we invest in other transport infra- structure such as airport connectivity. Particularly in the light of our leaving the European Union, Britain needs to be able to join up with global markets all around the world. I am particularly keen, as a south-west MP, for the Government to move forward on the Heathrow option and install that extra capacity so that businesses in my constituency, the south-west of England and elsewhere can be joined up properly with the rest of the world.

Public Sector Pay Cap

Lord Redwood Excerpts

Wednesday 5th July 2017 Commons Chamber

[Elizabeth Truss]

First of all, public sector pay is comparable with private sector pay. In addition, public sector pensions are set at a higher level, on average, than private sector pensions. The pay review bodies have a remit to look at retention and recruitment when they make their independent decisions. Of course, I will look at all their recommendations when they come out. The right hon. Gentleman has made an omission that was also made earlier; a lot of those roles have pay increments independent of the 1% cap. Teachers’ pay increased by 3.3% in the last year for which we have records, so it is not right to talk solely about the 1% cap. In fact, public sector workers are rewarded in a number of different ways.

[John Redwood (Wokingham) (Con)]

A recent Office for National Statistics study shows that public sector productivity fell by 5.7% in the long period from 1997 to 2014. Is not the way forward better pay for smarter working? Do we not want pay awards that give something for something, so that the taxpayer wins, the service user wins and the employee wins?

[Elizabeth Truss]

My right hon. Friend is correct to say that we want improvement in our public services. I have highlighted education, where more children are going to good and outstanding schools; and I have highlighted our health service, which is dealing with more patients than ever before. School pay policy is set by individual academies, for example, so we are giving more freedom over pay and pay determination. It is important to look at the public finances as a whole, and to ensure that, overall, we are living within our means as a country.

Section 5 of the European Communities (Amendment) Act 1993

Lord Redwood Excerpts

Wednesday 19th April 2017 Commons Chamber

[Mr Gauke]

Clearly, since last year’s convergence programme debate there has been a momentous change in the UK’s relationship with the European Union. The article 50 process is now under way and the United Kingdom is leaving the European Union. There cannot, as some suggest, be any turning back from that. In accordance with the outcome of the referendum, we are leaving the European Union and will make our own decisions, take control of the things that matter to us and seize every opportunity to build a stronger and fairer Britain.

Given our decision to leave, some Members might find it odd that we are debating the UK’s convergence programme here today. It is right that we should do so, however, because we continue to exercise our full membership of the European Union until our exit and because to do so is a legal requirement that we must take seriously. I should, however, remind the House that the content of the convergence programme is drawn from the Government’s assessment of the UK’s economic and budgetary position. This assessment is based on the spring Budget report and the Office for Budget Responsibility’s most recent economic and fiscal outlook. It is that content, rather than the convergence programme itself, that requires the approval of the House.

I should also remind the House that although the UK participates in the stability and growth pact, which requires convergence programmes to be submitted, we are required—by virtue of our protocol to the treaty opting out of the euro—only to endeavour to avoid excessive deficits. The UK cannot be subject to any action or sanctions as a result of our participation.

[John Redwood (Wokingham) (Con)]

On that point, would my right hon. Friend like to comment on how much influence he thinks the convergence criteria and the deficit reduction requirements have had on successive UK Governments to drive more austerity and cuts?

[Mr Gauke]

In the seven years that I have been a Treasury Minister, I have not noticed the convergence programme having an influence on the decisions that we have taken. We have taken decisions to reduce the deficit because we believe that that is in the long-term interests of the United Kingdom, rather than because of any requirements under the EU treaties.

Let me provide a brief overview of the information that we will set out in the UK’s convergence programme. Members should note that this does not represent new information; rather, it captures the Government’s assessment of the UK’s medium-term economic and budgetary position, as we set out in the spring Budget. It is fair to say that in March 2017, we were in a better position economically than many had predicted. Growth in the second half of 2016 was stronger than the OBR had anticipated in the autumn statement. In fact, the UK economy grew faster last year than most other advanced major economies, and employment remains at a record high. So, following a period of robust economic growth, record employment and a falling deficit, we sought to safeguard that economic stability in the Budget. That is particularly important as we prepare our country to leave the European Union.

The OBR forecasts that business investment will remain subdued as we begin the period of negotiation with our EU friends and partners, and it continues to judge that, in the medium term, growth will slow due to weaker growth in consumer demand as a consequence of a rise in inflation. Accordingly, putting the public finances in good order will remain vital for the foreseeable future, and all the more so given that the deficit remains too high and that there is a range of potential risks in the global economy. That is why we are getting ourselves into a position of readiness to handle difficulties of any kind that might come our way. Our fiscal rules, which enable us to do that, strike the right balance between reducing the deficit, maintaining flexibility and investing for the long term.

Overall public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year. This means that we are forecast to meet our 3% stability and growth pact target this year for the first time in almost a decade. Borrowing is forecast to be 2.9% in 2017-18 and then to fall to 1.9% in 2018-19 before reaching 0.7% in 2021-22, which will be its lowest level in two decades. The economic forecasts are broadly unchanged since the autumn, but the OBR has substantially revised down its short-term forecast for public sector net borrowing. As a consequence, we are within sight of bringing to a halt the increase in the national debt as a proportion of GDP. Debt is forecast to peak at 88.8% of GDP in 2017-18, and then to fall in subsequent years.

[John Redwood]

On that point, it is important to remind the House that £435 billion of the debt is now owned by the state, so the state owes the money to itself, meaning that it is not a debt in any normal sense.

[Mr Gauke]

My right hon. Friend is correct about where the debt is owed, but as a country we must none the less be wary of a debt that is high by recent historical standards. It is right that we show determination to set out a plan for how the debt to GDP ratio can be reduced to ensure that the UK is in a more resilient place to absorb the shocks to our economy and to the public finances that occur from time to time.

Beyond our fiscal rules to protect the public purse and prepare our economy, the Budget also set out a wide range of things that this Government will be doing to invest in our future. That includes giving our children the chance to go to a good or outstanding school that sets them up to succeed; helping young people across the country get the skills they need for the high-paid, high-skilled jobs of the future; and investing in cutting-edge technology and innovation, so that Britain continues to be at the forefront of the global technology revolution—three things that will be at the heart of our efforts finally to address the country’s long-standing productivity challenges.

The Budget also promised greater support for our social care system, with substantial additional funding so that people get the care they deserve as they grow older. The Budget works to strengthen our public services over the long term, too, in our determination to bring down the deficit and get the UK back to living within its means, and to fund our public services for the long term through a fair and sustainable tax system. The spring Budget, therefore, was one that made the most of the opportunities ahead by laying the foundations of a stronger, fairer and better Britain.

Following the House’s approval of the economic and budgetary assessment that forms the basis of the convergence programme, the Government will submit the convergence programme to the Council of the European Union and the European Commission, with recommendations expected from the Commission in May. The submission of convergence programmes by non-euro area member states, and stability programmes by euro area member states, also provides a useful framework for co-ordinating fiscal policies. A degree of fiscal policy co-ordination across countries can be beneficial to ensure a stable global economy, which is in the UK’s national interest.

The UK has always taken part in international mechanisms for policy co-ordination, such as the G7, the G20 and the OECD. Although we are leaving the EU, we will of course continue to have a deep interest in the economic stability and prosperity of our European friends and neighbours, so we will continue to play our part in this process while we remain an EU member and in other international policy co-ordination processes once we have left the EU.

The Government are committed to ensuring that we act in full accordance with section 5 of the European Communities (Amendment) Act 1993, and that this House approves the economic and budgetary assessment that forms the basis of the convergence programme.

[Peter Dowd (Bootle) (Lab)]

We find ourselves in a strange position. We are debating a motion to approve the Government’s programme for convergence with the EU at the start of an election campaign in the context of leaving the EU. That is an unusual set of circumstances, to say the least. Some see it as almost theological. There will no longer be a requirement for convergence, and the Conservatives have no idea how our economy might work post-Brexit, other than their plan for a bargain-basement deregulated tax haven. It is a simple, if flawed and dangerous, plan regardless of the position that people took in the referendum.

A complete lack of vision from the Government means that no one can be confident about what our economy will look like in just two years’ time. Labour accepts the referendum result, which is why we did not frustrate the triggering of the article 50 negotiations, but we will never support the chaos of a Conservative plan for Brexit that will potentially put our economy in danger. That does not mean being a “saboteur”, as suggested in some newspapers today; it means doing the job that we were sent here to do. Wealth concentrated in the hands of a tiny super-rich elite and corporations treating us like a tax haven is not particularly good, and it is not what people voted for.

We have heard much in the debate over the past few months about taking back control. We heard time after time that we will take back control, but we should not take back control and put it in the hands of a group of plutocrats while leaving most people across the country worse off year after year. When we take back control, it has to be shared by everyone, not just a few.

A Labour Government would deliver a final deal that reflected Labour’s values, ensuring a strong and collaborative future relationship with the EU, which the Minister mentioned. We would defend people’s rights and protections, preventing the race to the bottom that is feared. There is a clear choice between a better future for the whole country under a Labour Government and a bargain-basement tax haven under the Conservatives.

The Brexit course set by the Prime Minister will have huge repercussions for our country and our economy. In 2016, the UK exported goods and services to the EU totalling £548 billion, with imports totalling £585 billion. The EU accounts for 44% of UK exports of goods and services, and 53% of imports. Despite the Government’s laid-back approach to trade with the EU, a hard Brexit puts much of those exports and EU imports at risk. Sterling has already dropped by nearly 20% against the dollar since the UK voted to leave the EU, becoming the world’s worst performing major currency in October 2016. Many economists now suspect that the pound may depreciate even further as negotiations inevitably deadlock and begin to flounder.

When the Conservatives came to office, they committed to balancing the books by 2015, and they broke that promise. It is unequivocally a promise broken. They then put the date back to 2019-20, and again it was not delivered. Here we are, days away from the Dissolution of Parliament, without the Government making as much progress on the deficit as they promised. The Chancellor regularly says that it is a rolling target, but there is no such thing. He either has a target or he does not.

Under this Government, debt as a percentage of GDP has continually risen and now stands at 85%. How can that be a sign of a healthy economy, notwithstanding that the Minister has indicated it will start to come down? GDP growth per capita under this Government has not once surpassed the pre-crisis trend of 2.3%. In fact, growth has been revised down for 2016, 2018 and, now, 2019 and 2020. Again, that is hardly the sign of a strong economy.

In seven years, the Conservatives have borrowed £750 billion, and I remind people time and again that that is more than all Labour Governments combined. Since 2010, 10 of the Government’s 14 Budgets and autumn statements have seen an increase in forecast borrowing, and their record on borrowing can be summed up in two words: missed targets. Make no mistake that the Conservatives are the party of borrowing. Is it any wonder that the Conservatives borrowed so much when the public finances each year have huge gaping holes? This year, we saw the Chancellor’s attempt to hit self-employed workers with a rise in national insurance contributions, and the Conservatives’ U-turn on that measure left a £2 billion black hole in the projected public finances. How can we rely on the Conservatives’ rosy assessment of the economy when we know that the sums do not add up?

That feeds into the wider problem with the public finances under the Tories. Children are beginning to sit in crumbling schools, and across the country people are waiting ever longer to be seen by professionals in the NHS, which is undergoing the worst crisis in its history. Why do we have that sorry state of affairs? Because the Conservatives have sacrificed the services that everyone uses just to pay for £70 billion of tax cuts for corporations and the super-rich over the next few years. The Government have presided over the slowest recovery since the 1920s, with both economic growth and average earnings growth downgraded yet again. Despite falling unemployment, workers are suffering the worst decade of pay in 70 years. Rising inflation is now outstripping wage growth.

The Government have done little to address the scandal of chronic low pay and insecure employment, which is reflective of an economy that is not working as they claim. So their promise of a £9 national minimum wage has drifted downwards, while inflation is increasing the cost of living for everyone.

The Government’s assessment of the economy makes no mention of the continued economic imbalance in respect of the devolved nations and the regions. We simply cannot continue to have such an unbalanced and unequal economy. That comes back to the point I made at the start about the disparity in regional economic growth, which I see in my region and in many others.

[John Redwood]

So how much extra tax should the Government impose next year to deal with the budget deficit the hon. Gentleman is worried about?

[Peter Dowd]

I am sure we will have that debate during the general election process.

As I mentioned, this Government have pledged to take back control from Brussels, but what about control for the millions of people who live outside the M25? How can this Government square their desire for less interference from Brussels with the Secretary of State for Communities and Local Government not batting an eyelid when banning local councils all over the country from charging £1 for fun runs in local parks? Is it really the job of the Secretary of State to micro-manage park budgets? Have we come to that? Have we come to a British Secretary of State telling local authorities, “You can’t charge these people £1, you can’t charge them 50p”? That is ludicrous, which is we why have to take back control, so that when control comes back to this country it is pushed down.

It is all the more bizarre that the Secretary of State has taken that position, given that both he and his predecessors have cut local government support by as much as 60% in some areas. Authorities have had not only huge cuts in their budgets, but interference on piddling amounts of money, such as £1 for park runs. It is pretty pathetic.

--- Later in debate ---

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

It is a pleasure to make my final speech in the Commons before the general election. The electors of Kirkcaldy and Cowdenbeath will determine whether I return to make any speeches here in future.

I was intrigued by and enjoyed the opening remarks of the hon. Member for Bootle (Peter Dowd), who pointed out that it is rather strange to be debating this subject: we are facing being dragged out of the European Union, yet we are discussing convergence. I knew this would be a tremendously popular debate—we need only to look around the full Benches to see how popular it is—so I took a leaf out of the Leader of the Opposition’s book and tweeted that I was going to be speaking on this important topic, in the hope that I would get the equivalent of “Mary from Rochdale” letting me know the key points I should raise. Only one person replied with a suggestion of what I should include in my speech, and it was: “Can you say hello to my Auntie Sadie in Balloch?” I could not possibly do that in a speech of such importance, but perhaps that clarifies how many of the things we debate in this House are very technical and difficult for the public to engage in. On a serious note, they are none the less very important.

The Minister talked about the OBR forecasts. Yesterday, I showed great prescience—or lack of it. Scott started to work for me on the day that the general election was declared. I gave him one task to prepare for this speech: I asked him to contact the Library and to find out how many independent evaluations had ever been done of the Treasury or OBR models of the UK economy. This morning, the Library staff got back to say that they could not find that any such evaluations had ever been undertaken. That is perhaps not surprising when we see some of the results of those models.

In following up, I asked the Library staff to look into how the OBR model was described by the OBR. They directed me to the OBR’s website, on which we find the wonderful statement that much of its model is based not on hard fact but on the judgment of those who use it. Different people might get incredibly different results using the same model. There will come a time when Governments of whatever shade are going to have to consider the way in which we understand and model the economy, and how far we can ever rely on forecasts of the type the House has been receiving for a good number of years.

This could obviously be a fairly wide-ranging debate but, thinking about the future, I thought I would make one or two remarks about issues that will still need to be addressed when we have exited the European Union. Exiting itself will not contribute anything; it will require the will of Government to do something. The Minister rightly mentioned the importance of business investment. Last year, the House held a debate on quantitative easing —I seem to recall that the hon. Member for Bootle took part in it—that I think was slightly less popular, in terms of the numbers taking part, than this debate. None the less, it was interesting that so many of those who spoke in that debate talked about the problem that QE had created for investment. The assumption from the original essay by Friedman in 1969 was that introducing QE would lead to a rise in asset prices, the consequence of which would be to increase confidence in business and a significant increase in investment. We know that that has not happened, despite well over £600 billion of QE being introduced. It would be interesting to know how the Government, or the future Government, will tackle the rewinding of QE.

In recent days, senior bankers have made some very intemperate remarks about the business sector. I wish to point to one that was made just two days ago in the Daily Express by a senior executive from the Royal Bank of Scotland. He described as a “bunch of chancers” a group of small and medium-sized enterprises that were pursuing some reconciliation of the problems they experienced from the Global Restructuring Group and the like. Can Members imagine any other industry talking about its customers as a bunch of chancers? Apparently, those customers were called that because they may have the audacity to go to the courts to seek redress. If Members look at the RBS accounts, they will see that RBS has tripled the amount of money that it has set aside for the hiring of lawyers to defend cases—I see a Member nodding. It expects to defend cases worth something in the order of £1 billion. Surely that says something about our banking culture which will need to be addressed.

One matter that I have been pursuing in this House is the issue of Scottish limited partnerships and other forms of limited partnerships that have been, particularly since 2008, subjected to use by international criminals, including, and perhaps particularly, those from eastern Europe, Ukraine, Russia and the like. The amounts involved now total many billions of pounds. About 10 days before recess, there was an urgent question on the latest money laundering scandal. When I questioned the Minister at the time, I pointed out that, at the heart of these scandals, lie these limited partnerships. Since 2008, 22,000 Scottish limited partnerships have been created. They are completely opaque; we have no idea who owns them. Many of them seek to operate in tax havens and to launder significant amounts of criminal assets.

[John Redwood]

Before he closes his remarks, do the hon. Gentleman and his party think that the EU is right to say that state debt should not be above 60% of GDP?

[Roger Mullin]

It is perfectly reasonable for the EU to make such a statement and to seek to have some control over debt. It is interesting to note that the Scottish Government can at least say today, all these years after the Scottish Parliament was created, that they have absolutely no debt. That is certainly something that this Government cannot claim.

Regardless of whether we were going to be in or out of the EU, this country—the UK and all its member nations—would still face major economic challenges that require will and intelligence to address. Surely that is the message that we should all be taking to our constituents as we face the future.

Autumn Statement

Lord Redwood Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Mr Hammond]

I am not responsible for remarks that may or may not have been made during political campaigns. The British people made a decision to leave the European Union, and we must respect that decision. If we are to make a success of this process and if we are going to ensure the success of the British economy in the future, we must move on and not repeat this sterile debate over and over again. We must focus our attention on building an economy that is match-fit for the future and that will enable us to deliver high living standards as we make our way in the world.

[John Redwood (Wokingham) (Con)]

As someone who is much more optimistic about the UK economy’s prospects under the Chancellor’s stewardship than the OBR usually is, I welcome the increased OBR forecast for this year—a faster rate of growth than in its pre-vote forecast. I also welcome its recognition that there will be no post-vote winter recession, as was forecast by some. Does the Chancellor agree that the OBR is probably still quite wrong about 2017? Its forecast is too low, its borrowing forecast is far too high, and we will get good access to the single market once we are out of the EU.

[Mr Hammond]

I hope that my right hon. Friend is right on that last point, which will of course be our objective. I am grateful to him for his implicit confidence in my stewardship. I am well aware of his views, which are, as always, long standing and utterly consistent. However, it is not my job to opine on the report that the OBR has made by statute to Parliament; it is my job to respond to it. That is what I have done today. Obviously, economic forecasting is not a precise science, and I absolutely recognise, as would the OBR, that individual Members will have their own views on the likely future trajectory of our economy. It is probably worth mentioning that the OBR specifically says in its report that there is an unusually high degree of uncertainty in its forecasts because of the unusual circumstances.