Finance Bill

Chris Leslie Excerpts

Wednesday 2nd July 2014 Commons Chamber

[Madam Deputy Speaker (Mrs Eleanor Laing)]

No, the hon. Gentleman may not take my advice. It is not the position of the Chair to advise hon. Members, far less the Leader of the Opposition, on the content of their speeches, but the hon. Gentleman has put his facts on the record, and I am sure that they have been noted on both Front Benches.

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

Further to that point of order, Madam Deputy Speaker. Is there anything that you can do to stop these eager Front Benchers seeking Cabinet preferment in the forthcoming reshuffle from making spurious points of order, when what they should do with statistics is allow the Office for Budget Responsibility to audit these—

[Madam Deputy Speaker]

Order. The hon. Gentleman knows that that is not a point of order, nor could it be further to a point of order, as there was no point of order.

--- Later in debate ---

[Chris Leslie]

Now that we have reached the final stages of consideration of the Finance Bill, may I join the Minister in commending all hon. Members in all parts of the House who took part in the scrutiny, and in considering all the details? As he said, there were 31 hours of consideration of the Bill. I particularly pay tribute to my hon. Friends the Members for Kilmarnock and Loudoun (Cathy Jamieson), for Newcastle upon Tyne North (Catherine McKinnell), and for Birmingham, Ladywood (Shabana Mahmood). Let us be honest: they did the heavy lifting in Committee and on Report, as did—in an equal but perhaps less audible way—my hon. Friend the Member for Scunthorpe (Nic Dakin), the Opposition Whip, who made sure we kept to time and that everything was pursued diligently. Many hon. Members, certainly from the Opposition side of the Chamber, pushed Ministers and probed on specific matters of policy, and I grant that Ministers tried to address many of those points, though they were ably assisted, I suspect, by the officials from the Treasury, who also put a lot of work into these Finance Bills.

The Bill is long on clauses but short on ambition, I am afraid. I said on Second Reading that our goal was to try to improve the specifics. We have tried our best in a number of areas, but I fear we have not always succeeded in persuading Ministers to see the error of their ways. Let us consider some of these specifics, such as the crass and ill-timed tax cut for investment fund managers through the abolition of stamp duty reserve tax. At a time when so many people in this country are struggling with cuts to tax credits, such as the bedroom tax, and finding it difficult to make ends meet, the Government’s priority was to give that support and help first and foremost to those poor, hard-up investment fund managers. It is a badge of shame that that was their priority.

[Ian Swales]

Will the hon. Gentleman give way?

[Chris Leslie]

I do not know whether the hon. Gentleman is an investment fund manager who has done well out of this, but I will give way and find out.

[Ian Swales]

The hon. Gentleman is repeating something we have discussed over and over again. Does he not understand that the money from the change in stamp duty goes to the investment funds, not the manager, and that, in fact, millions of ordinary people up and down the country benefit from this change?

[Chris Leslie]

I am sure those investment fund managers have absolutely no interest in the abolition of SDRT in any way! I thought the hon. Gentleman was once a Liberal Democrat. Before the general election, the Liberal Democrats used to pretend they were in favour of standing up for the vast majority of people, against the vested interests in society who tend to look after their best interests, yet here he is again, voting for tax cuts for investment fund managers. This is a specific element of the Bill that we opposed. We tried to persuade the Government to drop that measure, but we were unsuccessful.

[Mark Field]

I feel I must stand up for investment fund managers, not least because their business brings significant amounts of money to the UK. I reiterate the sensible words of the hon. Member for Redcar (Ian Swales): ultimately it is all of us who are investors in such funds who will reap the benefits of ensuring that this business comes to these shores, rather than to many other globally competitive financial centres.

[Chris Leslie]

The hon. Gentleman represents very many of those investment fund managers. He is doing the job he was sent to do, but this is a matter of priorities, and I have to say that the Opposition just disagree. The Treasury has finite resources at its disposal, and at a time of pressures, cuts, and rises in tax—through VAT and in other ways—that hit the least well-off in society, I just disagree with Ministers and Members on the Government Benches that this should have been the priority.

There were other specific areas where we tried to persuade the Government to improve the Bill, such as the proposal to give shares to employees in exchange for employment rights. We believe that undermines what should be a healthy approach to employee share ownership, because it gives the sense that something is being taken away, and that there is a disadvantage. That point was voiced not just by Opposition Members, but by some Government Members. Again, however, we could not persuade the Government on that.

So many tax loopholes need to be addressed, and the Finance Bill should have been the opportunity to tackle some of them, not least the notorious quoted eurobond exemption, which is costing taxpayers hundreds of millions of pounds. Ministers ought to have had the courage to take on that issue. Some of the Bill’s proposals for pensions flexibility are sensible, but big questions remain about the advice we will be able to give retirees to make sure that they get the guidance they need, at that most crucial point in their financial lives, to make the right choice, if they are not purchasing an annuity. Ministers have not lived up to the challenge of ensuring that that guidance and advice is possible. In the debate, I heard that that guidance may currently equate to 15 minutes of face-to-face advice—perhaps I should say face-to-faces advice, because the Minister with responsibility for pensions is now saying, “We will give you some guidance, but it might be as part of a group of people.” The Government have to improve the legislation in this area.

The Bill contains a proposal for a married couples allowance. The Chief Secretary to the Treasury and, I suspect, the Chancellor personally disagree with it, but in a coalition they have to throw a bit of meat to the Back Benchers. The allowance discriminates between forms of partnership and does not help many married couples at all, as we see when we look at the total number who will benefit. If we have tax cuts to give, they should be given to as many people as possible.

Of course, we also tried to improve the specifics and dissuade the Government from continuing their tax cut for millionaires—the reduction from 50p to 45p in tax on earnings of more than £150,000. Again, that is a sign of their priorities: they stand up for those who already have significant wealth in society, but do not respond to the needs and requirements of the least well-off.

We tried our best to improve the Bill, but it missed a number of opportunities. Significant reforms should have been in it, but are conspicuous by their absence. Why did the Treasury not put the cost of living concerns front and centre in this legislation? I am not just talking about making sure that energy companies stop ripping off households up and down the country, or about passing on wholesale price reductions to ordinary households; the Bill should have contained, for example, steps towards a 10p starting rate of tax. There are a number of ways in which cost of living issues should have been far higher up in this legislation.

[Mr Jim Cunningham (Coventry South) (Lab)]

The Conservative Government of the early 1970s recognised that there was a cost of living problem in this country, and they gave a cost of living payment, through the wage packet, to the low-paid in industries.

[Chris Leslie]

One would have thought that by now Ministers would have twigged that for all the talk of growth and the recovery, their constituents, never mind ours, are not seeing the benefits in their daily lives. That should have been a focus in the Finance Bill. It should have focused more on housing, as we have a crisis in this country, whereby demand exceeds supply and we have the lowest level of house building since the 1920s. Yet Ministers seem intent on structuring a lopsided recovery in our housing market, failing to deliver the 200,000 properties a year we should be aiming towards by 2020. In addition, many tenants are being ripped off by lettings agencies in our private rented sector. We need reforms to deal with those sorts of things and the Budget ducked those issues, as did the Finance Bill.

The Bill could have dealt with some of the exploitative zero-hours contracts. It should have contained measures to help small and medium-sized enterprises with business rates, because many firms in our constituencies are finding it difficult to get by. We should make sure that we help them, not just with business rates but by making sure that the banks do their job and provide credit. Those are the sorts of reforms that would make a big difference, but again, they were not in this Finance Bill.

[Mr Brooks Newmark (Braintree) (Con)]

The hon. Gentleman should at least acknowledge that we dropped the small business rate by at least 1p, which has helped businesses. Will he guarantee before the House that he would not increase corporation tax should the country be unfortunate enough to see a Labour Government in power after 2015?

[Chris Leslie]

That is already on the record. Our view is that the proposed change in corporation tax from next April—from 21p to 20p—should not proceed. That help, instead of going to 2% of companies, should go to 98% of businesses, including the small and medium-sized companies that are the backbone of our economy and that form the bedrock of enterprise in this country. Funnelling that resource through business rates is our preferred choice, but we will set out all our plans in a manifesto, as I suspect the Minister will do as well. We had a debate on this matter earlier, in which we focused on annual investment allowances—the capital allowances for businesses. As we all know, the Minister cut that allowance to a very small level straight after the general election, causing great chaos for very many businesses. Amazingly, it is going up again, in time, coincidently, for the next general election. He revealed in the small print today that it is a temporary change, so the allowance will presumably go back down again.

[Mr Gauke]

rose—

[Chris Leslie]

I will give way to the Minister if he will tell us what that investment allowance will fall back down to in 2015. Will he tell us?

[Mr Gauke]

It is hardly in the small print. It was in the announcement that was made when we extended and increased the annual investment allowance until December 2015. After that, it is a rate of £25,000. That rate is in the public domain, and, presumably, it is the rate that the Opposition have as well.

As the hon. Gentleman did not quite respond to the question from my hon. Friend the Member for Braintree (Mr Newmark), let me ask it again. The Labour party has given a heavy hint this week that it could increase corporation tax up to 26%, as that would still be the lowest rate in the G7—that is the test that it has set itself. Will he provide some reassurance today that a Labour Government would not increase corporation tax to 26%?

[Chris Leslie]

We know the Minister’s game. He is again trying to scare firms and businesses with various suggestions on tax. We have made it very clear that we need to ensure that corporation tax levels remain at their most competitive among the G7. We will set out our tax plans in a manifesto, as the Minister will be required to do as well. If my hon. Friends think that VAT is due to stay at 20% under a Conservative Government, they should think again. I have heard that the Conservatives may wish to increase VAT to 21% or 22%. I will give way to the Minister if he can rule it out for us right now, here in the Chamber, that he does not have any plans to increase VAT in the next Parliament. Will he rule that out?

[Mr Gauke]

I will tell the hon. Gentleman what we can do: we can continue to reduce the deficit without increasing taxes. That is more than he can offer. Unlike his party, we have not given a heavy hint that the test based on the most competitive rate in the G7. Canada has a rate of 26.5%. If the Labour party imposed a rate of 26%, it raises the question of whether it would be complying with that commitment.

[Chris Leslie]

Let the record show that the Conservative Minister did not rule out increasing VAT to above 20%. It is telling that he gave a heavy hint that that remains open as an option. We can have these discussions and examine these particular issues, but I am looking at the missed opportunities—the things that should have been in the Finance Bill. We are now on its Third Reading, and it is time that Ministers realised that people from across the country are crying out for significant changes and improvements that will affect their lives.

I am thinking, for example, of the 5 million people in low pay and the incentives to deliver a living wage. That could have been part of the Finance Bill, but it is not. I am thinking of those families who are struggling with the high cost of child care, which is increasing at a rate higher than inflation. If only the Minister had designed his bank levy properly in the first place and collected the £2.5 billion that he promised the country, we could afford to move from 15 hours of free child care for working parents of three and four-year-olds to 25 hours. That is the sort of reform that could make a big and appreciable difference to the lives of working people up and down the country.

[Mr Jim Cunningham]

Once again, it comes back to helping families with the cost of living. The Government cut Sure Start, nursery places and so on. Although they boast that they expanded that provision, they did not—they cut it, although we do not have the exact figures. The situation is exacerbated for a lot of families by the bedroom tax, which is forcing people into more expensive accommodation and thereby driving rents up. There is also a lack of social house building in this country.

[Chris Leslie]

That is my point. The Press Gallery is not bursting at the seams because the Government do not want people to think about what could have been in the Finance Bill. That is not something they want to talk about. They want it to be a “steady as she goes” Finance Bill. They do not want to address the problems of the bedroom tax or to supply real help to the long-term unemployed through starter jobs to give them the opportunity to repair their CVs and get a foot on the ladder. Repeating the bankers bonus tax would have supplied the revenue for that. There are funded ways of doing those things; despite how Ministers seem to want to portray it, this is not about unfunded commitments or borrowing. There are clear, practical and well-costed ways of delivering real improvements to people’s lives, but Ministers refused to do them.

Why are Ministers missing the opportunity offered by this Bill? As far as they are concerned, everything is fine with the economy. It is all going perfectly well. That is their view, but I am afraid that we disagree on that point. As far as Ministers are concerned everything is fine with living standards, but the OBR has said that people will be worse off in real wage terms in 2015 than they were in 2010. Ministers think that everything is fine in the welfare system, but they do not realise that the welfare bill is rising because they are not tackling the root causes of welfare inflation, such as rising rents, long-term unemployment and the subsidies required for low wages. Those are the sorts of challenges that should have been covered in the Finance Bill but are not.

On the deficit and the national debt, Ministers think that everything is fine even though the past couple of months have seen the deficit rise. It is going in the wrong direction. They have added a third to the national debt, which is now at £1.2 trillion. If interest rates go up even by 25 basis points—0.25%—an extra £2 billion of public expenditure will be required to service the debt that they will be accumulating.

Ministers think that everything is fine with productivity, yet infrastructure output is down by 10% compared with in 2010. They think that everything is fine in the housing market, yet we can see by the lopsided nature of what is happening in the economy that there are real risks that mortgage rates might well rise prematurely because of how they have failed to recognise the need to match demand and supply more effectively. They might be satisfied with the state of the economy, but we are not.

[Mr Cunningham]

It is interesting that my hon. Friend has mentioned interest rates, because, one way or another, they are bound to go up over the next 12 to 18 months. That will have a major effect on negative equity for people who have bought their houses, but, more importantly, it can affect small businesses that want to borrow money and are not getting much help from the banks at the moment. The Government spend half their time blaming a Labour Government for the mess that the banks created. They have never attacked the bankers, who made the economic situation worse, not better. They are apologising for the bankers and blaming us.

[Chris Leslie]

Government Members and Ministers do not understand how important it is that we ensure that the recovery is sustained and sustainable. A premature rise in interest rates has considerable risks. Three quarters of credit and debt is floating, so if interest rates do rise prematurely, significant harm will come to many householders. Even a quarter point rise in interest rates will cost the typical householder £240 per year. [Interruption.] The hon. Member for Suffolk Coastal (Dr Coffey) may be relaxed, as the Chancellor is relaxed, about interest rates. The Chancellor says that he is not bothered—that he is relaxed about rising interest rates. Is the hon. Lady relaxed about rising interest rates? I will give way to her if she is.

[Dr Thérèse Coffey]

All I will say is thank God we have not had a Labour Government for the past four years, because I expect that interest rates would now be at 10% and people would be handing back their keys and hoping that the hon. Gentleman does not get into power next year.

[Chris Leslie]

I do not know what evidence the hon. Lady has for that spurious assertion.

We will see what happens in the coming months. We will make sure that mortgage customers in the hon. Lady’s constituency know that the increases in interest rates are partly related to the condition of the housing market, which is causing significant risk. The Governor of the Bank of England is trying to deal with this very lopsided situation. Of course, it is a matter for him to decide on. Government Members need to speak to the Chancellor to get him to pull his finger out on the housing market and make sure that this is pursued correctly. They do not understand why it is important for the recovery to be fair for all—to be something that everybody in every part of the country benefits from. The richest 1% having been doing especially well in the past year.

[Mr Gauke]

The hon. Gentleman says that it is important that the whole country benefits from the recovery, and I entirely agree. Does he accept that three out of four new jobs created in the past year have been outside London?

[Chris Leslie]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Just to be helpful, there are three more speakers to come. The debate that is ping-ponging across the Chamber is very interesting, but I would like to hear from Back Benchers as well.

[Chris Leslie]

You are completely right, Mr Deputy Speaker. We have had this debate going on throughout the day.

The Minister is a Member of Parliament for Hertfordshire. If his constituents find work in London, under one set of statistics the jobs are classified as located in London, but under the set of statistics he prefers, they are located in Hertfordshire and not London. We can talk about the methodology used in relation to these things.

Ultimately, this Finance Bill is not focused on the long-term best interests of this country. It is not a long-term Finance Bill for stability and for the vast majority of this country; it is a short-term Finance Bill from a part-time Chancellor who is more concerned about getting from here to election day than building a sustained recovery that is fair for all. The defining challenge of our times is to reconnect the wealth of our country with the ordinary finances of households up and down the country. I urge my hon. Friends to vote against the Finance Bill and to send this Bill and these Ministers back to the Treasury drawing board.