Finance (No. 3) Bill

Colin Clark Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Peter Dowd]

National living wage—the clue is in the title—but what the Government have proposed is not a living wage.

The Chancellor did not use the phrase “climate change” once during his hour-long speech—it felt longer than an hour, I’ll grant you that—despite the recent Intergovernmental Panel on Climate Change report, which warned that we only have 12 years to avert climate catastrophe. The Government cling to their woeful plastic straws initiative, but the only measure in the Bill addressed to the 100 corporations that produce 71% of our global emissions was yet another tax break. That is the sort of stuff that the Government should be tackling. This is for the oil industry. The Government have really got to get to grips with its approach to climate change. This oversight is catastrophic. History will remember the Government’s failure to tackle the greatest threat to humanity—that does not overstate it.

Meanwhile, the vulnerable suffer. The Government reneged on their promise to tackle the social devastation wreaked on our communities by fixed odds betting terminals, causing the resignation of yet another Minister. It has since become apparent that they reneged after lobbying by the gambling industry, in spite of the known link between these machines and people taking their own life. Here we have it: the Chancellor of big business pays little regard to the tragedy of lives lost to this awful addiction, as long as the gambling industry can keep making a return and continue its donations to the Conservative party—a fact.

So what remains in the Bill when all these pressing issues have been left out? There has been much discussion about the Government’s change to tax thresholds in clause 5. Let me make our argument clearly: after eight years of austerity, we will not stand in the way of any change that will put additional income into the pockets of low and middle earners, regardless of how that is brought about—[Interruption.] We have said that time after time. However, Labour’s policy remains that we believe we should be taxing the wealthiest more to deliver the end of the austerity that the Tories have failed to provide. We will therefore table an amendment to clause 5 setting out our tax proposals. These proposals would protect everyone earning below £80,000 a year— 95% of the population—from any further tax increases, while ensuring that the top 5% of our society pay their fair share. We call on the House to support our amendment in the Committee of the whole House.

[Colin Clark (Gordon) (Con)]

Will the hon. Gentleman concede that 1 million people will be lifted out of the higher rate of taxation and that many of them are consultants working in hospitals, GPs, senior police officers and senior council officers? Does he not recognise that that is a good thing?

[Peter Dowd]

The hon. Gentleman really must listen more—[Interruption.] I will send him a signed copy of my speech; he might learn a thing or two.

We believe in building a coalition of the many—a broad, democratic movement of 95% of the public—to spread prosperity across the furthest reaches of our country. We cannot in good faith increase taxes on those who have struggled for eight long years while the richest continue to accrue even more wealth.

--- Later in debate ---

[Colin Clark (Gordon) (Con)]

It is an honour to follow the right hon. Member for Twickenham (Sir Vince Cable), who had government experience at the Department for Business, Energy and Industrial Strategy and therefore will support what is clearly a Finance Bill supporting business and the economy.

I rise to support the Bill and to recognise that this Government are focused on the economy. I declare an interest, as a business investor and business person. Hon. Members have applauded growth forecasts; employment has been revised up and wages are set to rise. I think we can all recognise that these are obviously good things. The OBR can give us all comfort that the estimates are independent and therefore scrutinised. Economic growth is vital to our public services and for household incomes, and it is what delivers living standards for all our citizens.

I wish to focus on income tax. The Chancellor has fulfilled our promise to raise the personal allowance to £12,500 and increase the higher rate threshold to £50,000. Nearly 1 million fewer people will pay the higher rate of income tax. We have a responsibility to ensure that the tax burden is fair and that the economy grows—surely that is what the purpose of government is. Conservative Members want to see the whole cake grow; we do not want to see just bigger and bigger slices taken of a smaller cake. We should not demonise the wealth creators, the job creators and those who drive the economy.

The £50,000 threshold benefits many public sector employees, such as headteachers, consultants, GPs, senior council officers, senior police officers and senior nurses. The threshold lifts 1 million people out, including middle management, engineers and pilots—the list goes on and on. As the right hon. Member for Twickenham said, these are not the fabled rich, who are condemned. How this measure is not progressive is beyond me.

[Karen Lee]

The hon. Gentleman just referred to senior nurses. I was a nurse some 18 months ago. I was part-time, because I was a councillor, but had I been full-time I would have been on about £29,000. So can he explain where the figure he gave comes from?

[Colin Clark]

I thank the hon. Lady for the intervention. I think she will be well aware that many people in the public sector, including those in hospital management, and those who may go on from being nurses to being in hospital management, are paid substantially more than £50,000.

The OBR is concerned about this next issue. My hon. Friend the Member for Dumfries and Galloway (Mr Jack) asked the Financial Secretary about tax divergence, which is very much the crunch, as it has the potential to affect my constituency. The Financial Secretary mentioned that 1% of the population are paying 28% of tax—in Scotland, that constitutes 19,500 taxpayers. The OBR recently reported to the Treasury Committee that the number of higher taxpayers is lower in Scotland than it estimated, and this has actually cost Scotland between £550 million and £700 million in respect of the original estimate. The OBR said:

“It implies that a much lower share of UK-wide income tax is coming from Scottish taxpayers.”

That means the Scottish economy is more vulnerable to losing higher rate taxpayers, which is a serious consideration, because it affects the growth of the Scottish economy. As Scotland is part of the United Kingdom, it should concern us all. The Scottish economy is clearly vulnerable to the loss of these higher rate taxpayers, and it would look as though they are already beginning to move; they are already beginning to react to the divergence.

The OBR gave evidence on how people, for tax purposes, could change their behaviour. It talked about

“a relatively high income individual with a property in Scotland and one elsewhere in the UK, writing to HMRC to say, ‘I live more than half the year”

somewhere else. That would mean that their tax would be paid elsewhere in the UK. Here is the absolute proof that cutting tax rates increases the tax take. As was said by my right hon. Friend the Member for Wokingham (John Redwood), who is no longer in his place, if there is tax divergence, people will vote with their feet. They are already doing that, as we are seeing the tax take falling in Scotland. [Interruption.] Would the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) like to intervene? No, he would not. Labour should look closely at Scotland and it should be a lesson on why not to raise taxes.

[Chris Stephens]

The hon. Gentleman needs to be careful with this argument, which I have heard expressed before. Is he seriously encouraging people to engage in tax avoidance?

[Colin Clark]

It is interesting that the hon. Gentleman talks about “tax avoidance” because there is no tax avoidance in this. If we are losing people who would be paying higher tax rates in Scotland because they are choosing not to move to Scotland or they are registering their addresses in England because they spend a lot of their time in England, that is a loss to Scotland, because Scotland is getting greater tax independence. It is interesting that Scottish National party Members will talk about tax avoidance, because this is the demonisation of people who are paying a higher rate of tax. They are not the enemy; they are the friends of the Scottish economy.

[Chris Stephens]

Is the hon. Gentleman seriously suggesting that people in Scotland should register themselves in England in order to pay less tax? With all due respect to him, I would have to say that many of us would view that as tax avoidance. [Interruption.]

[Colin Clark]

As my colleagues are saying from a sedentary position, these people are being driven away. The actions of the Scottish Government are leading to divergence in tax rates between Scotland and England, and that is damaging the Scottish economy.

[Stephen Kerr (Stirling) (Con)]

Why does my hon. Friend feel that the SNP Government in Scotland are so against aspiration?

[Colin Clark]

I do not know and I really cannot understand it. Now that the Scottish Government are getting tax independence, one would think that they would want to grow the entire economy, instead of damaging parts of it. This should be a salient lesson that tax divergence is damaging; making your country uncompetitive will hurt services. It will cost higher rate taxpayers in Scotland £2,000 to £3,000 more per £100,000 of income. That means that a consultant in Newcastle may not choose to come to Aberdeen Royal Infirmary, which supports my constituency, and that would be very damaging for the public services.

The Finance Bill stimulates the economy; lower taxes will grow the economy. The hon. Member for Aberdeen North (Kirsty Blackman) is no longer in her seat, but she mentioned a transferable tax history, which is estimated to stimulate the oil and gas industry by £30 billion of investment. I consider that an enormous figure, not a small change. Fiscal stability will benefit the oil and gas industry, and we are grateful to the Chancellor that that is still the target of this Government. Slashing business rates, as the Chancellor has promised, will benefit businesses. However, of course, slashing business rates is not going to happen in Scotland, because that is a devolved matter; the north-east of Scotland got half of the increase in tax, which is damaging businesses in my constituency and other north-east constituencies. Buildings in the north-east of Scotland are being demolished because empty building rates—

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Am I hearing the hon. Gentleman right? Is he completely ignoring the some 100,000 small businesses that have benefited from paying no business rates at all because of the Scottish Government’s small business bonus?

[Colin Clark]

I remind the hon. Gentleman that businesses in the north-east of Scotland—large employers there—are considering knocking down warehouses and large offices, which are not redundant, as they are still fresh and good buildings. That is happening in the north-east of Scotland. One such building in my constituency, which had 2,500 office workers, may well be lost very soon.

[Drew Hendry]

Evidence it—

[Colin Clark]

I shall carry on speaking to you, Mr Deputy Speaker, rather than to the hon. Gentleman, who speaks from a sedentary position. I would welcome the Chancellor’s business rates commitments—

[Drew Hendry]

rose—

[Colin Clark]

I will give way, as the hon. Gentleman has got back up again.

[Drew Hendry]

I am keen to see how the hon. Gentleman provides evidence to support these accusations that people are knocking down buildings and fleeing their country.

[Colin Clark]

I could recommend to the hon. Gentleman that he reads the famous The Press and Journal, which I was in just under a year ago, standing in front of a building that had just been knocked down and which used to house 500 people in an office—I shall send him a signed copy of it. Buildings are being demolished in the north-east of Scotland.

[Mr Jack]

Opposition Members ask for evidence; the evidence is the Michelin factory in Dundee, which has had its rates increased by some £300,000.

[Colin Clark]

That must be of enormous importance to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).

I shall support the Bill and the UK economy. Most importantly, I shall support a Finance Bill that supports jobs.