Oral Answers to Questions
Rushanara Ali Excerpts(7 years, 8 months ago)
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Mr Speaker
I look forward to learning more about blockchain. I am uninitiated on the matter, as the hon. Member for Walsall North (Eddie Hughes) can tell, but I feel sure that he will put me in the picture erelong.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Governor of the Bank of England has stated that economic uncertainty caused by the Brexit vote will knock 5% off wage growth and is costing the UK economy £10 billion a year. Does the Chancellor agree with the Governor?
Mr Hammond
We have not yet concluded our negotiations with the European Union, so it is impossible to make any assessment of the impact of our departure until we know what the future relationship with the EU will be. This Government’s agenda is to get the best possible deal for Britain that protects jobs, prosperity and businesses, so that we can protect our existing trade with the EU as well as build new trade opportunities beyond Europe.
Oral Answers to Questions
Rushanara Ali Excerpts(7 years, 11 months ago)
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Rushanara Ali (Bethnal Green and Bow) (Lab)
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
The Chief Secretary to the Treasury (Elizabeth Truss)
It is right that more of our money that is spent locally is raised locally. In 2010, councils were 80% dependent on Government grants. By 2020, they will largely be funded by council tax and other local revenues.
Rushanara Ali
Local councils have faced devastating cuts. The Institute for Fiscal Studies estimates that, between 2010 and 2020, councils will have had their direct funding cut by 79%. In Tower Hamlets, we have lost £138 million through budget cuts since 2010. With one of the Conservative party’s own councils going bust, will the Minister now finally commit to funding local authorities properly, so that they can provide vital services to their communities?
Elizabeth Truss
As I have pointed out, it is right that we rebalance council spending from central Government grants to locally raised taxes, to help to keep councils accountable. We have seen councils up and down the country finding innovative ways of working, such as sharing back-office services and doing things such as installing wi-fi and improving waste collection. We have also seen Labour councils wasting money. For example, Momentum-supported Birmingham City Council bin strikes have cost the taxpayer £40,000 a day, and Reading—
Budget Resolutions
Rushanara Ali Excerpts(8 years, 2 months ago)
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Nicky Morgan (Loughborough) (Con)
Thank you very much indeed, Mr Deputy Speaker, for calling me to take part in a Budget debate for my first time as Chair of the Treasury Committee. If media reports are to be believed, I am not the only former Education Secretary who is using “long, economicky words” at the moment. At this point in the debate, my predecessor as Chair of the Committee would always congratulate the Leader of the Opposition on making the most difficult speech of the parliamentary year. I am happy to continue that tradition, although much of the Leader of the Opposition’s speech appeared to have been written in advance, and I suspect he will want to look at more of the detail of the Budget and to find more to welcome in the remarks of my right hon. Friend the Chancellor.
Today, it was perhaps the Chancellor who had the hardest task. Beset by demands for more public spending, rising economic uncertainty and downgrades in forecasts, he has taken a common-sense approach that will no doubt displease many on both sides of the Chamber. We have to remember, however, that it is only thanks to seven years of common sense and concerted efforts by Conservative-led Governments to reduce the deficit and restore credibility to the public finances that the UK has the resilience necessary to face the challenges ahead.
The reclassification of housing associations might have given the Chancellor some timely room for manoeuvre, but it does not alter the underlying picture or the risks in the outlook, and those risks could grow. Although the OBR has made a more negative assessment of productivity, it still forecasts a relatively benign Brexit—a smooth adjustment to the new trade arrangement, with no cliff edge in March 2019. But that cannot be guaranteed, and even though a transitional arrangement that would allow for such a smooth adjustment is manifestly in the interests of both the UK and the EU, it might, of course, not happen. The Treasury Committee will be looking closely at the consequences of failing to reach a deal on transition and expects to make a report to the House in the coming weeks.
Beyond the public finances, household balance sheets are also under pressure. Rising interest rates, high inflation, lower wage growth and a working-age benefits freeze all stand to put pressure on ordinary households. My right hon. Friend the Chancellor has set out two important principles for Conservative-led Governments: first, work should always pay; and, secondly, people should keep more of the money that they earn. I am happy, as I think all Conservative Members are, to support him on those two principles.
The pressures on household finances—the Committee is looking at them as part of our inquiry into household finances—will be exacerbated, particularly for the younger generation, if action is not taken to tackle long-standing problems in the housing market, as my right hon. Friend said. I therefore welcome the measures on housing. He has announced a comprehensive package on skills, land availability and financial incentives to get Britain building. I also welcome the review that will be chaired by my right hon. Friend the Member for West Dorset (Sir Oliver Letwin). We always know there is a problem when my right hon. Friend is sent for to solve it. He will look at the gap between permissions granted and houses built, and why it exists.
I also hugely welcome, as I think all Conservative Members will, the stamp duty cut for first-time buyers. As the Chancellor said, it will make home ownership a reality for more young people. The Committee intends to hear from housing experts as part of our Budget scrutiny, and we will investigate whether the rousing wartime rhetoric of my right hon. Friend the Secretary of State for Communities and Local Government matches the reality of what has been announced today.
Of course, pressures on the public finances and on household balance sheets can be alleviated in the long term only if, as the Chancellor said, productivity growth improves. I welcome very much his further investment in the national productivity investment fund, and he was right to emphasise the challenge regarding productivity in the UK, which is now the weakest in the G7. The average UK worker has to slog from 9 until 5 to produce the same value of output that a worker in Germany produces between the hours of 9 and 3. The regional disparities in the UK are even greater, so I welcome what the Chancellor said about more devolution. I do not know where the Leader of the Opposition got the idea that Conservative Members do not take seriously the northern powerhouse and the midlands engine. I can tell him, as a midlands Member of Parliament, that we take them very seriously. We believe in devolution.
There are no easy solutions to the UK’s weak productivity, but we can do two things to help with the productivity puzzle. The first is better infrastructure, including digital infrastructure. The chair of the National Infrastructure Commission told the Treasury Committee recently that the big political divide in infrastructure policy is not between the parties, but between action and inaction. The Chancellor must act on the commission’s recommendations when they are published, and I welcome his commitment today to implement its recommendations on the Oxford-Milton Keynes corridor. I also welcome the proposal for discounted lending to local authorities so that they can invest in infrastructure.
The second response on productivity is to retain the UK’s historical commitment to openness to trade, investment and migration. Global Britain must be a reality, not just a slogan. The economic case for leaving the EU has always rested—and continues to rest—on openness, and we must not allow the Brexit process to mark the start of a descent into economic nationalism. It is only through productivity growth that households can be weaned off consumer credit without cutting their consumption and reducing their living standards. It is only through productivity growth that the Chancellor has any hope of meeting demands for additional spending—on welfare, social care, prisons, the NHS, public sector pay and Brexit contingency measures—without damaging the Government’s hard-won reputation for fiscal credibility.
For the avoidance of doubt, let us for the thousandth time dismiss the idea that a Brexit-induced fiscal windfall will relieve the pressures on our health service. There are no easy choices and there is no pot of gold under the Brexit rainbow. Those who persist with this myth may win short-term approval from certain quarters of the media, but only at the cost of long-term damage to trust in politics.
On the industrial strategy, the Chancellor is absolutely right to have identified the technology revolution and to say that Britain is at the forefront of it. He is right to identify the need for more young people to learn maths and computer science to a higher level. We have to find a way of exciting everyone in this country—the next generation, and their parents and grandparents—about the technology revolution. We need them to be confident that they have the skills that will meet the demands of the future labour market, rather than frightened by change in the 21st century. This key part of our plan for a fairer Britain will unlock prosperity.
Rushanara Ali (Bethnal Green and Bow) (Lab)
May I pick up the point about education funding? The Government proposed £3 billion of cuts, which was reduced to just under £2 billion, but that means that there is still a £2 billion gap in our education funding system, and the Chancellor said nothing about how schools will cope with that. Does the right hon. Lady agree that there ought to have been some thinking about investment in our schools to prevent the reversal of the progress that has been made?
Nicky Morgan
First, I can say to the hon. Lady—I am pleased to serve with her on the Treasury Committee—that educational standards have actually improved dramatically in this country during the past seven years. I do not recognise her figures. The Secretary of State for Education announced an extra £1.3 billion for schools in July, and this Government are spending more on schools than any previous Government. If the hon. Lady is really concerned, she will want to deal with the debt that this Government are still paying off, given that we spend almost as much as our schools budget on paying debt interest.
The Chancellor announced a number of new tax measures. I was pleased that he said that our tax system can help to protect our environment. That is an important signal to send to those who are particularly concerned about the environment and to the next generation.
Tax Avoidance and Evasion
Rushanara Ali Excerpts(8 years, 3 months ago)
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Rushanara Ali
Does my right hon. Friend agree, in the light of what she has said, that Britain has a unique leadership role? Developing countries lose income amounting to between $100 billion and $160 billion a year. Imagine what we could do to tackle poverty if that money were available.
Dame Margaret Hodge
I completely agree with my hon. Friend’s very powerful point.
Unbelievably huge sums of money are hidden in these jurisdictions. It is impossible to measure accurately how much tax is lost through the presence of tax havens, but it runs into hundreds of millions of pounds every year. We do know that developing countries lose three times as much in tax avoidance as they gain from the global investment in international aid. Our tax havens, acting as secret, low or no-tax jurisdictions, are utterly central to much of the tax avoidance. We cannot continue to pretend that we are leading the international fight against tax avoidance and evasion when, by what we do and what we fail to do, we allow avoidance to prosper; and not just tax avoidance, but money-laundering, corruption, bribery and other financial crimes, which prosper through the secrecy that we allow to prevail. Our failure to tackle our tax havens, our weak regulatory regime and some of our tax rules means that we are now seen as the country of choice for kleptocrats and criminals as well as tax avoiders and evaders, as they seek to hide their money and minimise their tax bills.
We need our Government to hold to the commitments made by the Prime Minister and the Chancellor in 2013 and 2014. They understood that transparency was the key ask. We need public registers of beneficial ownership, showing who owns what and where. That, at a stroke, would undermine so much. Would Bono have invested in tax havens if he had thought that we would all know? Would Lewis Hamilton have created a complex structure of companies to avoid VAT? Would the actors in “Mrs Brown’s Boys” have hidden their earnings in artificial financial structures if they had thought that we would find out? The answer is no.
David Cameron understood that when he told the UK tax havens to rip aside “the cloak of secrecy” in 2013, when he urged them in 2014 to consult on a public register that was
“vital to meeting the urgent challenges of illicit finance and tax evasion”,
and when he proclaimed in 2015 that
“if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer.”
However, in the last two years the Government have fundamentally watered down that commitment to public registers in British tax havens, and now we hear Ministers say that we must wait for other countries to go first. The proper call for international action on transparency has become the lame excuse for inaction in our own territories.
We should lead by example. We should demonstrate that transparency can and does change behaviour. We should compel our overseas territories and Crown dependencies to publish public registers. In the past, a Conservative Government used their powers to outlaw capital punishment in our Crown dependencies and overseas territories, and a Labour Government used the same powers to outlaw discrimination against gay people. Today we should work together to outlaw the secrecy of those jurisdictions, which leads to such massive tax injustices.
The Paradise papers show us that the problems created by secrecy are much bigger and more complex than we ever thought possible, and that is why we need to legislate for transparency in our tax havens. We should help them to transform their economies, so that they stop depending on hidden wealth, unsavoury people, and questionable financial practices. I cannot think of one good reason for us not to do that, and to do it now. Indeed, there is more that we can do, right now: it simply requires the Government to have the necessary political will. They will certainly have the support of the whole House, and the whole country, if they demonstrate by their actions, not their words, that they will work to stamp out tax avoidance.
We can and should now implement the legislation requiring multinational companies to report their activity and profits on a country-by-country basis—legislation successfully steered through Parliament by my right hon. Friend the Member for Don Valley (Caroline Flint). We can and should also introduce immediately the public register of property ownership that was enacted before the general election, promoted by Transparency International and Global Witness and supported by members of the all-party group on anti-corruption. Nobody knows why this legislation has not been implemented; it is a key element in the fight against corruption, avoidance and evasion. We can and should properly resource HMRC now so that it has the capability to pursue all who seek to avoid paying tax, not just the small businesses who form an easy target that can be hounded with little effort. Every £1 invested in HMRC enforcement yields £97 in additional tax revenues. It is a complete no-brainer that we should be strengthening HMRC and reversing some of the cuts.
The Paradise papers have helped place tax avoidance back at the heart of the political agenda and back at the top of the list of public concerns. The Government need to grasp this moment to act. They have an opportunity to do so in next week’s Budget. Britain will never get rich on dirty money, and our public services cannot function if the wealthiest individuals and the most powerful companies deliberately avoid paying their fair share towards the cost of those services. And this Government will not be forgiven if they fail to heed the lessons we can all learn from the Paradise papers. Proper transparency will come. The Government can choose whether they lead the changes needed or whether they want to be dragged kicking and screaming into implementing essential reforms. I hope they will listen, learn and act.