Oral Answers to Questions

David Davis Excerpts

Tuesday 15th March 2022 Commons Chamber

[Rishi Sunak]

The forecast for the public finances will be updated next week. As for jobs, I am happy to confirm that, according to today’s figures, there are record numbers of people on payrolls, record numbers of vacancies, and, indeed, more people in work now than before the crisis—and the unemployment rate is now lower than, or at the same level as, it was before coronavirus hit.

[Mr David Davis (Haltemprice and Howden) (Con)]

The Government have repealed many of the powers in the Coronavirus Act 2020, but they have not repealed the Act itself. This means that the Treasury can still order Her Majesty’s Revenue and Customs to start support schemes such as furlough without recourse to Parliament. Control of expenditure is Parliament’s first responsibility, so are the Government going to repeal the Act in total, or will the Treasury take action to give the proper powers back to Parliament?

[Rishi Sunak]

I would be very happy to look into the matter that my right hon. Friend raises.

Budget Resolutions

David Davis Excerpts

Wednesday 27th October 2021 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

It is a privilege to follow the hon. Member for Eltham (Clive Efford). Although I may disagree with much of what he says, he always speaks with compassion, commitment and belief, and that is important in this place.

Unlike the Opposition, I took pleasure in the optimism and cheerfulness of the Chancellor’s presentation—something has obviously rubbed off from next door in that respect—which was because he was able to announce any number of increases in spending, from the national health service to local infrastructure and from R&D to the numeracy multiplier in education. As my right hon. Friend the Member for Wokingham (John Redwood) pointed out, the Chancellor was able to do that because of a Treasury re-forecast for the growth rate—a Treasury error.

When people have heard the number of Budgets that I have, they come to realise that finding £20 billion down the back of the sofa is not unusual. In this case it was £44 billion, but the Chancellor’s predecessor but one found £20 billion in his last Budget. That arises because the Treasury, the OBR and the Bank of England are all very bad at forecasting; they generally get it right within about £20 billion but not much closer.

The first thing I will say about the Budget strategy we are talking about today is that we have to make allowance for it being £20 billion out. The key point in that is the growth rate. As my right hon. Friend the Member for Wokingham pointed out in his brilliant speech, the key to the whole strategy must be growth—private sector growth—without which we cannot pay for anything. That is what I will briefly focus on today; given his speech I can do it more quickly that I might otherwise have.

Before I get to that, the overhang of debt that arises from the covid crisis, which is £400 billion of borrowing or thereabouts, is crucial to the broad economic strategy. We have not seen that scale of debt since after each world war, and the approach should be the same. In essence, we should create war bonds that are paid off over 50 to 75 years. Both sets of war bonds were paid off in the last decade or so, which gives us a measure of how long was taken over it.

In the 1920s, when Winston Churchill was Chancellor, he consolidated the war debt on a 4% basis when our Bank rate was 4.5%. The Bank rate today is barely above 0%—0.1%—so now is the time to do that. If we are worried about the £27 billion cost of each 1% increase in interest rates, we should lock it up as quickly as we can so that we can sterilise it from our future decisions about spending and growth. That is key.

The Chancellor says that he aims to broadly balance the books by 2023. Given the error margin in our forecast, he ought to say 2025 and base balancing the books on growth. To that end, the area where I disagree with the Government’s strategy is on the level of income tax, national insurance contributions and taxation generally which, in my view, is likely to raise significantly less money than the Treasury spreadsheet tells them. The simple truth is that the increase in NICs will undoubtedly depress growth and employment and, as a result, depress the tax take.

Similarly, the freeze in the income tax personal allowance will have a big effect on the poorer families who we care about and who matter to us—that goes to the point about levelling up that the hon. Member for Eltham made. It will have a big effect on consumption and, as a result, a big effect on growth. There is a real issue there. My view, like that of Nigel Lawson, who I think is one of the Chancellor’s heroes, is that cutting tax rates leads to more growth, more investment, more employment and, as a result, more tax take. That is, essentially, the normal Conservative strategy.

The other element of the Budget strategy is based on higher wages—not just raising the living wage, but the whole wage bill—with which we all agree, but that can be done only if we increase productivity. Again, we come back to a tax issue. Notwithstanding the arguments about the bank sector, we are talking about increasing corporation tax. Of course there are a lot of offsets for investment, but I am afraid that when investors are deciding which country to invest in, they take the headline rate of corporation tax into account.

We may be the best in the G7, but when someone is looking at whether to invest in Great Britain or the United Kingdom, they are not looking at the G7 but at Ireland or the Netherlands as comparators. Those places have significantly lower corporation tax rates than we do, which is important because, as well as trade, investment is the key to productivity. As a result, we should look hard at reducing that tax. I hold no brief for the individual capitalists involved; it is simply a question of where the money will go and whether we need it here, and the answer is yes.

It is really very simple. The route to maintaining a growth rate higher than 1.3%, which is in the Red Book, for a few years is lower taxes and more investment and, as a result, more employment. The level of 1.3% applies because of demographic factors, which we cannot change. We cannot change the demographics that we face. We can do very little—we can attract research, investment and talent—but we will not materially change them. Tax cuts, however, will increase investment and productivity rates. That is the key to a successful strategy.

0.7% Official Development Assistance Target

David Davis Excerpts

Tuesday 8th June 2021 Commons Chamber

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

I beg to move,

That this House has considered the matter of the 0.7% official development assistance target.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

Mr Speaker, yesterday you made one of the strongest statements that I have heard from the Chair in more than 30 years, and you made it clear that the House should receive from the Government a meaningful vote. Naturally, in accordance with what you have said, we do not seek to divide the House on the motion today. We seek the meaningful vote that will enable the House to decide whether the Government can break our promise and arguably our law.

I see that my right hon. and hon. Friends and I are described as rebels. It is the Government who are rebelling against their clear and indisputable commitments. Who are these so-called rebels? A short perusal of yesterday’s Order Paper shows that we have among our number eight Select Committee Chairs, four distinguished former Select Committee Chairs, 16 former Ministers, 12 Privy Counsellors and four knights of the realm. From the new intake, my hon. Friends the Members for Totnes (Anthony Mangnall), for Milton Keynes North (Ben Everitt), for Bury South (Christian Wakeford), for Penrith and The Border (Dr Hudson) and for Keighley (Robbie Moore), along with others who have recently arrived in this House, have shown great courage and determination in the face of the possibility of being tarred and feathered by the Government Whips Office.

We are also supported by every former Prime Minister and, I believe, by every former leader of all four major political parties. Over the weekend, the Archbishop of Canterbury said:

“The foreign aid cut is indefensible…Let us…pray”

that it is reversed

“and that our unconscionable broken promise to the world’s poorest people is put right.”

All four distinguished current or former Chairs of the Public Accounts Committee who are in the House support our cause. My right hon. Friend the Member for Gainsborough (Sir Edward Leigh) describes himself as the last Thatcherite on the Government Benches.

[Mr David Davis (Haltemprice and Howden) (Con)]

Cheek!

[Mr Mitchell]

My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) might possibly wish to disagree there. My right hon. Friend the Member for Gainsborough said:

“There is no public accounting justification for slashing budgets by 80% in this way. It is like telling the builder before he finishes your garden wall that you won’t pay at the end. Cancelling projects overseas is just a waste of taxpayers’ money when we should be providing long-term stability for schools, clinics and clean water projects.”

--- Later in debate ---

[Mr David Davis (Haltemprice and Howden) (Con)]

I will be brief. The arguments for the moral case that we are arguing today should be clear to anybody who has listened to the discussions of the last few days, weeks and months. The Government’s arguments on financial grounds are clearly wrong. This is a rounding error in the national accounts. The Treasury cannot forecast the economy to within £4 billion each year, so how can it account on that basis for this judgment?

I heard that the reason is political; that it is a judgment that the working class of the northern red wall seats do not like foreign aid. Well, I have defended a blue brick in that red wall for 33 years, and I can tell the House that that is wrong. The simple truth is that if we said to someone in one of those seats, “Do you want to spend money on the Ethiopian Spice Girls?” they would say that no, they would rather spend it on a local school or on cutting poverty in Barnsley or whatever it may be.

However, if we asked them the proper question—the real question—they would give us the real, British, generous answer. If we said, “Do you want to act to prevent children dying from dirty water?”, 76% would say yes. If we said the same about starvation, about the same number would say yes. If we said, “Do you want to act to prevent an emergency in a crisis?”, 92% would say yes, as my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) mentioned. Some 92% of all British citizens would want their money spent on that. What would they think of the 60% cut in the contribution to Yemen, the most difficult emergency in the world today? Or South Sudan? Or the Democratic Republic of Congo? Or Syria? These decisions have consequences, and they are just as smart as we are; they will see those consequences, too.

In the Sahel, 270,000 people a year get life-saving medical support, and that is going to be cancelled this year. That is interesting, because we are also sending 200 British soldiers to the Sahel to help suppress terrorism, and what will this do for that? This will be a recruiting sergeant for terrorism in the Sahel. This is actually acting against our interests and against our soldiers’ interests, and we should remember that when we are doing our accounting sums. Bear in mind that this will not just be poverty; it will be poverty that will be blamed on the west by the people acting against us in the Sahel.

The Minister claimed that the actions he has outlined are in our national interest. While in the long run doing the morally right thing is what is always in our national interest, this is not the right thing. It is the morally wrong decision for the world, and it is the practically wrong decision for our country.

Finance Bill

David Davis Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Abena Oppong-Asare]

I rise to speak to new clauses 2 and 24, tabled by the Leader of the Opposition, other hon. and right hon. Friends and myself.

New clause 2 draws attention to the announcement made by the Chancellor in 2019, when he was Chief Secretary to the Treasury, on implementing a non-resident stamp duty surcharge at 3%. As hon. Members will have noted, the Finance Bill introduces a non-resident surcharge at 2% rather than 3%. In Committee, I asked the Minister why the Government had watered down that commitment; I do not believe I have received an answer. We believe that this means that the Government will lose out on about £52 million a year in revenue, which they said they would have spent on tackling homelessness and rough sleeping. Perhaps the Minister could use his closing speech to clear up any confusion. Why have the Government moved from a 3% to 2% non-resident surcharge, and what assessment has been made of the impact on tax revenues and the housing market?

I turn to new clause 24. In Committee of the whole House, my hon. Friend the Member for Ealing North (James Murray) asked the Financial Secretary to the Treasury to explain whether the Government will meet their own deadline of introducing legislation to set up a register of overseas entities by 2021. The Minister’s response was that

“the Government plan to introduce the Bill in due course.”—[Official Report, 20 April 2021; Vol. 692, c. 914.]

Since that debate in Committee of the whole House, we have had the Queen’s Speech—the Government’s opportunity to lay out their legislative plans for the year ahead. I listened carefully to that speech and read the accompanying notes, but I heard no mention of the registration of overseas entities Bill.

It is now more than five years since David Cameron first announced proposals to introduce a beneficial ownership register for UK property owned by overseas companies and legal entities. Since then, we have had more announcements, consultations and draft Bills, but still no indication from the Government of when they intend to introduce this vital piece of legislation. The failure to include it in this year’s Queen’s Speech means that it is now beyond doubt that the Government will miss their 2021 deadline.

It is worth considering what that means more broadly. First, let us look at the scale of the problem. In 2014, the National Crime Agency received around 14,000 reports of transactions that were believed to involve illicit activity. By 2020, that had risen to over 62,000 reports. Of course, the true scale of the problem is extremely hard to quantify, given the lengths that individuals and organisations go to hide their illegal activities.

In 2019, Transparency International UK said:

“The London property market is highly vulnerable to corrupt wealth flowing into it.”

Its analysis found that since 2008, £100 billion of properties have been bought in London alone by overseas companies in secrecy jurisdictions and high-risk corruption countries—both indicators for illicit wealth. In 2017, it identified that 160 properties worth over £4 billion were purchased by high-corruption risk individuals. The tidal wave of dirty money is poisoning the housing market for ordinary people. There is growing evidence that the purchase of UK property to launder illicit finance from abroad has a direct impact on housing prices. As Transparency International UK—among others—has shown, attempts to clamp down on corruption around the world have led to a rise in property prices here as illicit finance flows into the UK market to avoid detection in its home country.

This is not just about luxury properties. There is a ripple effect, where activity at the top causes a rise in prices throughout the market. As demand outstrips supply in high-value areas, buyers look out to more affordable places. This leads to a cycle of rising housing prices—my hon. Friends know this story very well. Illicit finance also distorts the supply of housing as developers increasingly focus on luxury property targeted at international investors, who have no intention of living in the properties. So dirty money, from crime and corruption abroad, is pricing people out of their local communities in cities across the country.

This has a direct effect on the housing crisis. The Government know this, of course. They have committed to act and set up a register of beneficial ownership for UK property owned by overseas entities. This would let the disinfectant of sunlight into the murky world of high-end property bought by shell companies and overseas bodies. As the Government stated:

“It is intended to act as a deterrent to those who would seek to hide and launder the proceeds of bribery, corruption and organised crime in land in the UK.”

The fact the Government are aware of the problem but are still failing to act is inexplicable.

Our new clause 24 requires the Government to review how the Registration of Overseas Entities Bill could work alongside the non-resident surcharge to mitigate the housing crisis. But what we really need is for the Government to introduce this Bill as soon as possible and begin the process of implementing this important legislation. I will end by paying tribute to the Members from across the House who have campaigned on this issue relentlessly. I know they will share our disappointment that the Government are still not taking the action that we all agree is needed. I urge the Government to correct this wrong and get on with doing what they have committed to do.

[Mr David Davis (Haltemprice and Howden) (Con)]

I rise to speak to amendments 32 to 34 and new clause 31 tabled in my name and those of other right hon. and hon. Members. The Government’s historic IR35 policy has dated from long before this Minister was in his office. Far from rationalising the collection of tax from contractors, it has created and has now unwittingly extended a wild west of umbrella companies that operate without regulation and where malpractice is rife. This malpractice has seen contractors forced to operate through non-compliant umbrella companies that maximise their profits by using sleight-of-hand tactics. This includes: misrepresenting tax thresholds; skimming off pension contributions and other payments such as the apprenticeship levy; forcing contractors to opt out of their rights as agency workers; and withholding billions in holiday pay that is legally due.

The Government policy to date has triggered the increased proliferation of mini umbrella companies. BBC Radio 4’s “File on 4” found that 48,000 of these companies had been created in the past five years. The fact that policies in this area are flawed is proven beyond doubt by the fact that HMRC is having to de-register 22,000 of these umbrella companies. The frauds involved here cost the taxpayer hundreds of millions of pounds every year in lost tax, but as well as that, the boom of these non-compliant companies means that legitimate umbrella firms are being run out of business by them. The illegitimate umbrella companies making most of their profits through appropriating funds through tax scams, withholding holiday pay, skimming from the apprenticeship levy and the like are driving those honest firms out of business. There exist comparison websites for contractors to see which umbrella company they can do best with, and of course the ones that look best to them are the ones that make them money through illegitimate mechanisms.

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

Does the right hon. Gentleman agree that some well overdue changes to Companies House’s approach would be very welcome, and that the Government are taking an awful long time to get round to it?

[Mr Davis]

I have a lot of sympathy with what the hon. Lady says. There are many ways to attack the issue; I will mention one or two, including my proposals to build in some changes to that effect. There are many ways to make sure that these scams cannot happen, but we need to undertake some of them. To pick an example that I was not going to cite, we understand that something like 40,000 Filipino employees have been taken on as cheap frontmen for these companies as directors. Those sorts of things do not serve our economy or the contractors well.

[John Spellar (Warley) (Lab)]

Is there not also a responsibility on the Government as a client to insert in the contracts with their main contractors a clause stating that if such practices are found within their supply chain, they will not be considered for future contracts? The Government could do that quite rapidly, quite apart from HMRC catching up with what is going on.

[Mr Davis]

The right hon. Gentleman is right. The first phase of IR35 was about contractors for Government, so the whole wild west that I have described was actually created for public services.

To come back to my point about illegitimate contractors forcing the legitimate ones out of business, it is quite understandable that ordinary contractors will be attracted to a scheme that seems to offer them the best terms, yet they will be unaware that in doing so they risk unwittingly entering unintentional tax avoidance schemes. That is one of the problems that troubles me most.

These contractors, remember, are not fat cats, big bankers or city slickers. They are hard-working, decent people such as locum nurses and supply teachers—contractors whose work is vital. To take up the right hon. Gentleman’s point, the FT reported that NHS locum workers returning during the height of the pandemic were targeted by firms mis-selling these schemes. Ordinary and comparatively low-paid workers do not have the advantage of expensive tax advisers. They cannot be expected to navigate the minefield of extremely complex tax law if we allow these predators to play unfettered within it.

[Sammy Wilson (East Antrim) (DUP)]

Does not the situation get even worse once these tax avoidance schemes have been identified and shown to be illegal? It is very often the people who were conned into operating with umbrella companies who are penalised, while the umbrella companies walk away with no investigation and there is no means of holding them to account.

[Mr Davis]

That is entirely right. Indeed, one of the flaws that HMRC exhibits is that although it very often has real-time information on the issues, it acts only much later. That doubles or quadruples the problem for the ordinary person who is effectively a victim of these schemes, who suddenly finds years later that they have vast sums to meet—and, indeed, the shame of being held up as a tax avoider, if not evader.

The Government should take action to clean up this wild west, for example by providing guidance and templates for the preferred model of working. This is not so difficult. Why cannot we lay out a template for ordinary contractors and legitimate umbrella companies that says, “This is how you should do it, and this is what we expect”? Failing that, my amendments give the Government and Parliament three clear and simple options.

Ideally, the Government will take note and enact new clause 31. It would review—it does not require law to do this—the whole operation of umbrella companies and off-payroll working. For me, that is the de minimis position. My preferred option is that the Government should introduce regulation into this problematic sector to clear up some of the most egregious aspects, including mis-selling and malpractice. They should require—this deals with the Companies Act point to some extent, but it is the simplest way of doing it—umbrella companies to meet five strict requirements: they should pay all holiday pay due; maintain all employment rights; ban kickbacks to third parties; end the skimming off of excess profits through sleight-of-hand tactics; and, finally, ensure that the worker himself has no material interest in the umbrella company. That would not deal with the propriety issues of the Companies Act, but it would deal with the main, most socially damaging aspects of the wild west we have now.

Better Jobs and a Fair Deal at Work

David Davis Excerpts

Wednesday 12th May 2021 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

When I saw that I was number 7a on the call list, I thought perhaps I was the first reserve for my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown); I did not realise that I had promotion rights too, so thank you for that, Madam Deputy Speaker.

One of the effects of the shock of the pandemic, along with other geopolitical changes, is that after 50 years of global trade liberalisation, the world is facing a long period of aggressive mercantilism, and we have to deal with that. The Government are to be congratulated on their ambitious agenda, including record increases in research spending, which has not been mentioned today, the employment drive, the freeport programme, the campaign for ambitious free trade agreements and the bold infrastructure plans. On the non-economic front, I also welcome the excellent proposals to guarantee free speech on campuses. However, I have serious concerns about several aspects of the Queen’s Speech.

[Mr Mitchell]

Do those concerns include the issue of the 0.7%, on which my right hon. Friend and I have not always agreed in the past?

[Mr Davis]

My right hon. Friend is quite right: I opposed the increase to 0.7% because I thought that it was too fast and that it would encourage inefficiency, but, once you are at 0.7%, reducing it will lead to the loss of lives, so I absolutely agree with him on that.

The most important of the domestic issues that concerns me is the Police, Crime, Sentencing and Courts Bill. The Bill reverses the reforms that we put in place in 2017 after the scandal of the treatment of Paul Gambaccini, who was on police bail for well over a year before not being charged. Even now, after that reform, far too many suspects are still bailed for years on end. I currently have a case in front of me where an individual has spent five and a half years on bail without an end in sight. This is crippling to an individual’s life—it is like a loose house arrest—and the National Crime Agency shows zero understanding of the cruel damage that is being done to a person’s life by its ridiculously slow investigation. The Bill, as it stands, will make those problems worse by relaxing the current restrictions on police bail. I give notice to the Government that I will aim to amend the Bill.

The Bill also contains a proposal for the mass collection of data under the auspices of preventing and reducing serious violence. Here we have the Government countenancing pre-crime, and to deal with pre-crime, they have to have someone’s medical data, health data and education data—there is no restriction on it. It imposes a duty on an array of authorities, including health providers, to share data with the police. We know from history, including from when people have their phone confiscated, that once the police have this data, getting them to delete it and give it back is the devil’s own job. Indeed, it is near impossible; anybody who has tried it knows that. We are talking here about massively enhancing the powers of the state or an agent of the state to collect as much data on as many individuals as they see fit. I want to see that restricted.

I am concerned about the threat to the right of protest, which this country has enshrined in our national fabric for over 800 years—the right to peaceful demonstration. The Home Secretary promised me from the Dispatch Box that we will be incredibly careful to protect that fundamental right. However, I am afraid that the wording of the Bill, as it stands, simply does not do that. It needs reform and I will endeavour to ensure that it is put right.

Finally, my name, along with that of the hon. Member for Walthamstow (Stella Creasy), is on the amendment to the Queen’s Speech that calls on the Government to obey the law in areas where the courts have ruled that they are acting illegally. There are a number of cases where the Government have not done what they have been told to by the courts three or four years ago. Many of these cases affect the rights of children. Rule of law is not a theoretical constitutional concept. It affects lives and living standards of bereaved adults and deprived children.

We should, as a Conservative party and a Conservative Government, stand up for the rule of law, even when it is inconvenient and when the Treasury finds it unpleasant because it has to pay out a few hundred million pounds. This Conservative Government should limit the power of the state rather than enlarge it, celebrate freedom rather than curtail it, and operate under the law rather than under ministerial fiat. I hope that this Parliament and all the parties will hold the Government to that. Otherwise, we will risk betraying the ideals of the country that we live in.

Spending Review 2020 and OBR Forecast

David Davis Excerpts

Wednesday 25th November 2020 Commons Chamber

[Rishi Sunak]

I am grateful to the right hon. Gentleman for welcoming the £900 million in Barnett funding for Northern Ireland. He will be pleased to know that we have had productive conversations about fixing some technical baseline issues for the budgeting as well, which I know will be welcomed by the Executive.

With regard to pay, we are protecting those who earn less than the UK median salary. Whichever part of the public sector they work in, if someone earns less than £24,000, they will receive the £250. It is the right approach to provide that support to those with lower-than-average earnings.

[Mr David Davis (Haltemprice and Howden) (Con)]

I lend my support to everything said by the Father of the House. Covid-19 means that the Chancellor’s strategy is broken into three phases: first, as we are doing now, spending everything necessary to stop the economy collapsing, which he is doing successfully; secondly, essentially from next spring, doing everything possible to maximise growth and recovery in the economy; and thirdly, after that, when things get on to an even keel, returning to conventional economics. Does he agree that the enormous deficit inevitably created in the first and second phases of the strategy needs to be financed in a similar way to major incidents such as wars, with very long-term bonds, not destructive short-term taxes?

[Rishi Sunak]

I am grateful to my right hon. Friend for his comments. I would distinguish between two things. The borrowing that we are carrying out this year, which is, as he knows, at a peacetime high, is financed through the gilt markets. He will be pleased to know that we push as much as we can to the long end of the curve relative to our international peers; the average maturity of our debt stock is about 14 or 15 years, which is almost double the average of the G7. He is right that we should do that. I would differentiate that from an ongoing structural deficit, which is with us for many years. As he said, our first priority coming out of this will be to get growth going again.

Covid-19: Disparate Impact

David Davis Excerpts

Thursday 22nd October 2020 Commons Chamber

[Kemi Badenoch]

I thank the hon. Lady for her questions. She is absolutely right to mention older people, who are the most disproportionately impacted group. Someone who is over 70 or 80 is 80 times more likely to have the disease, whereas someone from an ethnic minority background is between 1.2 and 1.8 times more likely to have it. We must keep this in perspective, and we are looking at everybody who is impacted and vulnerable in whatever way.

The hon. Lady asks about money we are spending on adult health and social care. We are spending an unprecedented amount in the pandemic. We have targeted as much money as we possibly can to all the groups we believe need it. It may not be exactly what people asked for, but we are looking at decisions in the round to ensure that we are covering all groups.

[Mr David Davis (Haltemprice and Howden) (Con) [V]]

I congratulate the Minister on a comprehensive report. She has clearly done a great job of identifying the numerous factors that exacerbate the problem and acting rapidly on them. However, of the first 26 doctors in the national health service to die of covid-19, 25 were from minority ethnic backgrounds. Those doctors will have been comparatively well paid, so poverty cannot be the full explanation.

Vitamin D deficiency is prevalent across virtually all the groups who suffer disproportionately from covid-19, from the elderly to the obese, diabetics and ethnic minority communities. Today’s review considers only two studies on vitamin D and does not consider a huge range of new evidence that has come out in the last couple of months that shows powerful links. Will the Minister commit as her colleagues at the Department of Health and Social Care have done and look at the latest evidence on this matter?

[Kemi Badenoch]

It was the number of ethnic minority doctors who died right at the beginning of the pandemic that alerted us to this issue. We did look across a range of issues to see why that was the case. I remind my right hon. Friend about occupational exposure, which we believe is the biggest cause, and those doctors were the most exposed, probably doing the shifts right before we knew what was going on and catching the virus. We looked at vitamin D. The SAGE report from 23 September shows that it looked at vitamin D studies to see if it had had an effect and did not find any relationship.

We have found that there is a small residual risk, and I am looking at the interaction between comorbidities and occupational exposure, which we think provides the explanation. We had a second literature review and stakeholder engagement report where many people talked about their experiences of systemic racism—I asked the Race Disparity Unit specifically to look at that—but the findings were that systemic racism did not explain that. For example, when we take into account comorbidities, Bangladeshi women and white women have the same rates of mortality. Systemic racism also does not explain the differences between groups, such as black Africans and black Caribbeans. If it was systemic racism, we would expect the figures to match and they do not.

There is still quite a lot going on as we look at the socioeconomic and geographical factors, occupational exposure, population density, household composition and pre-existing health conditions. We will continue to do this work. Remember that this is the first report, not the last, and the review will be ongoing.

Finance Bill

David Davis Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

It is for those reasons that we believe that the yardstick by which the Bill should be judged, and the focus of next week’s statement, must be jobs. Having supported the economy this far, we cannot stop now. It is moments like this for which Governments exist. We need not only the capital spending but the investment in people to help the country through it. That is what the country is looking for now from its Government, and that is why we tabled the new clause.

[Mr David Davis (Haltemprice and Howden) (Con)]

I rise to speak to the amendments and new clauses tabled in my name and the names of other Members of this House. They include new clause 31 and the consequential amendments relating to the loan charge legislation, and amendment 20 and the consequential amendments relating to the application of the so-called IR35 regulations, which deal with off-payroll taxation arrangements.

It is a pleasure to follow the right hon. Member for Wolverhampton South East (Mr McFadden). I am even older than him: I can remember discussions across the table in my household about the means test when I was too young to understand it.

When I first spoke in this House about the loan charge arrangements, I quoted the Chief Justice of the US Supreme Court who once said that the power to tax is the power to destroy. That description could be used of both the policies that I wish to talk about today. The loan charge destroys lives. To date, at least seven people have taken their own lives as a result of this unfair and retrospective policy—and I will use that word “retrospective” over and over again, even though HMRC fails to recognise it. For many ordinary, decent people, including locum nurses, teachers and contractors—ordinary folk, not big City bankers—who were misled by their employers in many cases, the loan charge has robbed them of their peace of mind, their self-respect and, in some cases, their lives. Some 39% of them have considered suicide, 49% could lose their homes and 71% could face bankruptcy.

New clause 31 would simply stop the Government pursuing any employees who were innocent parties who did not know that what they were doing was illegal and who believed they were acting correctly and in good faith. Yesterday, when I spoke on immigration, I had to deal with a briefing from the Government supposedly rebutting the lines in my proposed amendment, and I have the same again today. A disgraceful and frankly wrong briefing has been handed out by the Government describing what they thought we were saying. I will not go into details, but I hope that others will have time to do so. I will simply say that HMRC seems to have forgotten that in English law you are innocent until proven guilty. It is about time we followed that principle with respect to the loan charge.

[Sir Edward Davey]

As the right hon. Gentleman knows, I am the second name on new clause 31, and he will note from the amendment paper that 54 hon. and right hon. Members have signed it. That is more than any other amendment before the House today, and the only one that comes close to it is another amendment on the loan charge. Does he not think that that is a signal that the House wants to divide on new clause 31, and that whatever the Front Benchers think, the Back Benchers who have signed new clause 31 want a vote?

[Mr Davis]

The right hon. Gentleman makes a good point, but he should make it to the Speaker rather than me, as he well knows. He has been a Member nearly as long as I have.

[Crispin Blunt (Reigate) (Con)]

On a point of order, Mr Deputy Speaker. Forgive me; I might have missed the reason why are we are not going to be able to divide on new clause 31, but I would be grateful if you could explain it to me. I have today become the longest serving Member for Reigate since the Great Reform Act, so I might have missed one or two things that are going on, but I would be obliged if you could tell me why we are not going to have the opportunity to divide on new clause 31.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Member for his point of order, but I think we have to wait until the end of the debate before these decisions are made.

[Mr Davis]

Thank you, Mr Deputy Speaker. I shall move on to the other issue that I want to discuss today.

Amendment 20 would delay the imposition of the IR35 rules from 2021 until April 2023. It is very unlikely that the economic crisis we are facing will be over by April 2021, and attempting to implement IR35 will cost jobs and do serious economic damage. A few months ago, the powerful Cross-Bench House of Lords Economic Affairs Committee wrote a report on IR35, and much of what I am going to say involves quotations from that report. I will start with this:

“It is right that everyone should pay their fair share of tax. But the evidence that we heard over the course of our inquiry suggests that the IR35 rules—the government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.”

It is right not to impose unnecessary burdens on business at a time like this. I agree with a great deal of what the right hon. Member for Wolverhampton South East had to say about the importance of preserving—and, indeed, not destroying—employment in the current circumstances. This goes right to the issue of IR 35. The report states that

“the government made this decision after considering the issue too narrowly, in terms of its tax take. It has severely underestimated the costs to business of implementing the changes…And it did not analyse sufficiently the unintended behavioural consequences of the proposed reforms or their wider potential impact on the labour market, and on the gig economy in particular.”

Many contractors in the coming years will be left in an “undesirable halfway house”. They do not enjoy the rights that come with employment, yet they are considered employees for tax purposes. In short, IR35 will create “zero-rights employees”. I am saying this directly to Labour Members, because the idea that a Government action can create a class of employee with zero rights is an issue close to their hearts. Such employees have no rights under employment law but under tax law they are employees.

The Lords Committee called on the Government to commission an independent review to devise a better implementation of the scheme. I think that is exactly right, which is why I want to see another two years before we implement whatever the decision is. We need that time to understand precisely what the effect of our new policy will be.

It would be a disaster if, in the context of the economic crisis and the growing gig economy, the Government accidentally created that class of zero-rights employees with no holidays, no sick pay, no pension, no redundancy —no employment rights whatsoever. We must stop that happening either accidentally or deliberately, and on that basis I ask the House to support amendment 20.

[Alison Thewliss]

I am glad to follow the right hon. Member for Haltemprice and Howden (Mr Davis), who set out well the impact that the loan charge has had on many people’s mental health and wellbeing. Many of them will be watching the House tonight.

The implementation of the loan charge has been a disgrace. Our new clause 1 would force the Treasury to come clean on its unfairness and would require a review of the impact of the scheme. That reflects the limitations of Finance Bill amendments, but given the freedom of information revelations released yesterday by the all-party parliamentary group on the loan charge, suggesting that there was too cosy a relationship between Government officials and the staff working on the independent Morse review, looking again at this whole shambles seems appropriate.

It remains a scandal that tax professionals advise their clients to use such loopholes. It is important that people pay their fair share for the public services we all use, and the UK Government must pursue the organisations and individuals who facilitated these loans. An independent review should be carried out of the advice given. As I said in Committee, those who trade in the business of loopholes are surely looking for the next thing to come along, so coming down on those scheme promoters now would prevent future loss to the Treasury.

There is widespread concern that HMRC has failed to work constructively with those seeking a loan charge repayment plan, with concerns that some may face bankruptcy and homelessness. I thought the right hon. Member for Haltemprice and Howden laid that out quite well. He mentioned the seven people who sadly took their own lives.

We continue to call on the UK Government to review the implementation of this policy, and our new clause 1 would force them to publish one within six months, including on the fairness with which HMRC has implemented the policy and whether it has provided reasonable flexibility on repayment plans, with the aim of avoiding business failures and individual bankruptcies.

My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) tabled early-day motion 296 to welcome the publication of Sir Amyas Morse’s loan charge review and the fact that, through this Bill, the UK Government would amend relevant legislation such that loans made before 2010 would no longer be subject to the loan charge. The motion also welcomes the fact that the self-assessment deadline has been delayed until 30 September 2020.

Initial analysis suggests that more than 30,000 individuals will benefit from those and related measures, but a pause in the policy is still necessary to assure MPs that HMRC is working constructively with those who are seeking a reasonable repayment plan—one that recoups the unpaid tax while avoiding the unacceptable risks that people face. If HMRC cannot deliver on that, an independent arbitration scheme should be used.

We on the SNP Benches support the cross-party amendment 55 and new clause 31, which, as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) pointed out, has 54 names to it and would provide that a prior settlement with HMRC could be unwound unless the worker failed to account for a pre-2016-17 tax liability in his or her return deliberately, despite knowing that the loan should have been included as income.

It is disappointing to hear that there may be no vote on new clause 31, given how many signatories there are to it and the lobbying we have all had. People watching this debate at home will not understand why. Since we are trading FDR quotes, we should note that he said: “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.”

The Tories have failed to address our concerns about IR35, which is why we tabled amendment 16 to scrap it. Instead of pressing ahead with the discredited IR35 in the Bill, the Government should take the advice of the House of Lords—that is not something I often say, but they should; they should pause this policy and go back to the drawing board. It seems evident that the UK Government have not learned from their previous experience in the public sector and are ploughing on regardless.

On a process issue, we maintain that it was not acceptable that the Government introduced all this through a deeply contentious 45-minute money resolution debate instead of going through the full scrutiny of the Budget process. We have been against IR35 since the start, and these proposals would introduce a new group of zero-hours employees, paying full taxes without the associated employment rights—something that should give us all pause for thought. People working in our constituencies in a huge range of jobs should be entitled to those employment rights.

Under the present economic circumstances, it is wrong to place new and unfair taxes on firms. Contractors are particularly liable to be struggling at this point—not least those who are part of the 3 million people excluded from the UK Government’s support schemes. I pay tribute to ExcludedUK and all those who have sought to highlight this issue.

--- Later in debate ---

[Stephen Hammond]

I am not very good at holding my breath, so I certainly shall not try it now—but probably people do not want me to expend much more breath in my remarks tonight.

I must say to my right hon. Friend the Member for Haltemprice and Howden that my problem is with part of what his new clause does. I absolutely accept the premise, as everybody in this House must, that people are innocent until proven guilty. However, and I do not know whether this has really been addressed so far, his new paragraph 1(c)(1A)(c) says that condition 1 is that

“P knew that the loan or quasi loan should have been accounted for as income in the relevant year.”

There is a fundamental problem with that, in that anyone could say they did not know that, and how do we prove it? The clear problem is that, much as I support the intent of what he is trying to do, the effect of what he seeks would be to create a precedent that seems to me to take away the basis of the UK tax system, because I might say to someone, “We both know that we should not be paying tax on this and therefore we can proceed on that premise.” The precedent that that sets is a major problem for gathering tax.

[Mr David Davis]

If my hon. Friend thinks that this is the precedent, he should go back to the Finance Act 2008, which gives HMRC a 20-year assessment period in which it can assess whether the taxpayer participated in a transaction knowing that it was part of an arrangement attempting to bring about loss of tax. That is precisely what it says.

[Sir Edward Davey]

It is on the statute book.

[Mr Davis]

Yes, it is on the statute book. The precedent is there.

[Stephen Hammond]

The precedent that I am looking at is very clear that there seems to be an issue with the whole tax system.

Finance Bill (Ways and Means)

David Davis Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 19th May 2020 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

In the light of the impact that coronavirus is having across all sectors of the economy, the Government have rightly committed, in the motion, to postponing the planned reforms to IR35, but only until next April. The effects of the pandemic are going to be felt for considerably longer than one year. On this basis, in April next year self-employed contractors will be hit with unnecessary costs, confusion and uncertainty, just as many of them are getting back on their feet after the coronavirus has wreaked havoc across the economy. It is the self-employed and small businesses that make up the beating heart of our economy, and they will power the recovery of our economy out of this crisis.

The IR35 rules, as the Minister said, have long applied to the public sector. This is about applying them across the private sector. In that light, they were studied by the House of Lords Economic Affairs Committee in a report referred to by the shadow Financial Secretary to the Treasury. The report stated that the rules

“have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.”

The report found a system riddled with unfairness and unintended consequences and called for a wide-scale independent review—not just a few research reports, Financial Secretary—focused on how the reforms would affect the wider labour market and the costs that would be forced on businesses. The Lords Committee said that IR35 had the effect of reducing contractors to

“an undesirable ‘halfway house’: they do not enjoy the rights that come with employment, yet they are considerably employees for tax purposes. In short, they are ‘zero-rights employees’”.

That is, zero-rights employees effectively created by the state.

The Lords recommended that the Government adopt the Taylor review proposals, which we as a Government promised to do years ago, as they offer the best long-term alternative solution to the off-payroll rules and provide an opportunity to consider tax, rights and risk together, as they should be. Despite what the Financial Secretary said, however, the Treasury has neither the time nor the capacity for a wholesale review right now. Therefore, the only sensible course of action is to pause these reforms and take the time to properly review the impact they will have on the self-employed. So, I will vote for this motion today, if we have the opportunity, but only in the expectation that will be back here in nine months’ time to do all this again.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call Alison Thewliss, who is asked to speak for no more than five minutes.

Covid-19

David Davis Excerpts

Monday 11th May 2020 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con) [V]]

It is always a privilege to follow the hon. Member for Brighton, Pavilion (Caroline Lucas). May I commend in the strongest possible terms the speech that has just been made by the Chairman of the Science and Technology Committee, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), who has given the best analysis I have heard today of the mistakes we have made? While I am at it, I also commend the Chairman of the Health and Social Care Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt), who made a similarly incisive speech earlier.

We should be honest: most of the western nations have handled this crisis badly. They have made mistakes, mostly in being late to control the virus—not all of them; some are different. For example, Greece, perhaps surprisingly, has controlled it much better than many of the others. It has about 15 deaths per million of the population versus us at about 477 at the moment. Those mistakes have cost thousands, if not tens of thousands of lives. A primary mistake, as pointed out by my right hon. Friend the Member for Tunbridge Wells, was the failure to test, track, trace and contain from the very beginning.

I would like to speak, in the brief time I have, about what we did once the disease took hold, because I think there are also potential mistakes there. The Government adopted a slogan—“protect the NHS, save lives”—which we all, including myself, took to enthusiastically and enthusiastically signed up to. My question for the Minister when she winds up is: did the strategy we pursued in good faith to protect the national health service exacerbate, in some respects, the death rate?

In addition to the lockdown, we did four things to protect the NHS and to protect it from being overwhelmed by the pressure on it. First off, we asked people with the illness to self-isolate at home and come to hospital only when the symptoms got really bad. When they did exactly this—exactly the same thing—in New York City, some of the doctors noticed that the patients were arriving in emergency too late, frankly, to be rescued. Their disease had advanced too fast, although they could have been cured earlier. My first question is: did that strategy cost lives?

The second question is: we applied triage on the basis of the so-called frailty index so that people who got a poor score on the frailty index were simply put on palliative care, again partly to protect intensive care unit capacity, so did that strategy cost lives? Two Members—my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) and the hon. Member for Blaenau Gwent (Nick Smith)—have already raised the question of care homes. We discharged patients from hospital early, when some of them still had this disease, into care homes, with the consequences that we have heard in graphic terms already. Did that strategy cost lives?

The final thing we did to protect capacity was that we cancelled operations for other illnesses—cancer and other illnesses—and that almost undoubtedly cost lives. We can see it in the excess mortality rates. Indeed, Britain holds the highest place in Europe, equal with Spain I am afraid, for the highest excess mortality over this period, so the combined effect of these strategies has to be looked at very carefully indeed. Bear in mind that throughout this time our intensive care unit capacity was used only to 81%. That is normal for this time of year. The Nightingale hospitals stood almost empty, and now only 30% of ICU capacity is being taken up by covid-19 patients. Did we get this balance wrong? Did we, at the cost of lives, just give ourselves empty beds, rather than doing the best thing for the patients the NHS is there to look after? That is not the fault of the staff of the NHS; it is a question of whether the strategy was the wrong one to pursue once we were where we were.

I finish by coming back to the point made by the Chairman of the Science and Technology Committee. The best way to protect both the NHS and the lives of our citizens is the approach taken by other countries, and that is to use testing, tracking and tracing to isolate the illness as well as to bring it down. The Prime Minister talked about the R number; that is just an average. The R number in my constituency, a rural area, is lower than that for a care home. We must put all the resources—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We have to leave it there, I am sorry. I remind everybody that the wind-ups are not tonight but at the conclusion of the debate tomorrow.