Finance (No. 4) Bill

Edward Leigh Excerpts

Monday 16th April 2012 Commons Chamber

[Rachel Reeves]

My hon. Friend speaks from her knowledge of her constituency in Hull and of the East Riding of Yorkshire, which will be particularly affected by changes to the caravan tax.

I was in Leicester on Thursday last week with my hon. Friend the Member for Leicester South (Jonathan Ashworth), speaking to small businesses which will be affected by the changes to VAT on hot snacks. Many businesses are worried, about both the additional tax they will have to pay and the additional bureaucracy of form-filling. As hon. Members said, it is not at all clear at which point VAT will stop being charged. What temperature does the food have to be, or by how much must it have cooled down before the tax rate goes to 0% from 20%?

We will also have a chance this week to debate and vote on important tax simplification measures. Given the generous decision of the Chancellor to simplify the tax arrangements of 4.4 million pensioners, I am surprised that they are not more grateful. That tax simplification will cost pensioners £83 a year on average and will cost hundreds of thousands of people who are coming up for retirement next year up to £322 a year.

The Chief Secretary referred to the Office of Tax Simplification. Its tax director has registered his concern about the changes to the tax allowance for pensioners and has said that the Government’s claim that they were only following its recommendations

“was not 100 per cent accurate”.

Meanwhile, Age UK was moved to write to the Chancellor about the change to tax allowances for pensioners. It stated:

“Age UK supports the OTS review of pensioner taxation and was very pleased to have been invited to be represented on the consultative committee. However given the OTS was set up with the aim of providing”

the Chancellor

“with independent expert advice on simplification we are very surprised and disappointed that”

he has

“announced a change to simplify the system without waiting for that advice.”

Contrary to coalition spin, this tax simplification will hit not those with big pension pots, but people with personal or occupational pensions that pay around £5,000 a year. It will hit people who worked in ordinary jobs for modest salaries, and who made sacrifices during their working lives to put away just enough to give themselves a small pension, which means that they do not need to depend on means-tested benefits in retirement. It is simply not true that they have been insulated from the effects of the current economic climate and other changes to taxation. Pensioners have been hit hard by VAT, quantitative easing, cuts to services that they rely on—not least the national health service—and massive increases in the heating and electricity bills for their homes. Older people deserve better than this mean-minded, penny-pinching measure. If Government Members agree, they will have a chance to vote down the granny tax later this week.

It tells people all they need to know about this Government’s priorities and the balance of power in the coalition that when the Deputy Prime Minister said that he would agree to cut the 50p rate if it was paid for by a mansion tax and the Opposition said that we would support a mansion tax if it was used to relieve the pressure on ordinary hard-working families, the Chancellor forgot the mansion tax, cut the 50p rate anyway and paid for it with a raid on pensioners’ incomes and a raid on charities.

Finally, we will offer the Chancellor a last chance to make good the great omission of the Bill—its failure to offer a shred of hope to the 1 million young people who are desperate to find work and its failure to do anything about the fact that long-term youth unemployment has more than doubled in the past year. Our amendment will open the way for the funding of a guaranteed job for every young person who is out of work for more than a year—a job that they would have to take up. That is the kind of measure that our country is crying out for. It would change the lives of thousands of young people and transform the prospects for our economy. It could easily be funded by raising new resources from the banking sector, which still squanders billions on bonuses while doing little to support British businesses and families. We will therefore offer Members a chance to vote for the reinstatement of the tax on bank bonuses to fund the creation of 100,000 new jobs for young people and the construction of 25,000 new affordable homes.

[Mr Edward Leigh (Gainsborough) (Con)]

If the 50p tax rate was such a painless revenue raiser, why did the Labour Government take 13 years to implement it?

[Rachel Reeves]

As the Chancellor once said, we are all in it together, and if we have a deficit to reduce it is right that those with the broadest shoulders bear a little more of the burden. That was why the former Chancellor increased the top rate of tax to 50p. This Government have reduced it and are instead asking millions of ordinary families and pensioners to pay more so that millionaires can pay less. That is their priority; the Opposition’s priorities are very different.

--- Later in debate ---

[Mr Edward Leigh (Gainsborough) (Con)]

Everything that the hon. Member for North Ayrshire and Arran (Katy Clark) says would be fair enough if what this Government were doing were any different from what a Labour Government would have been doing at precisely this time. The public sometimes lose track of the reality of the situation that we are in. We politicians talk in terms of billions or—perhaps soon—trillions of pounds, but a constituent put it to me like this, offering a better way of describing our situation. It is as if we were somebody who had an income of £50,000, who had knocked up a credit card debt of another £50,000, and who had promised to repay £4,000 of it but was actually repaying only £2,000. We are in a dire financial situation. I suggest that whoever were in government at this time would be doing much the same. In fact, I suggest that what the Government are doing is the bare minimum necessary to maintain market confidence.

We have had a lot of debate about the ratings agency, and I am sure that the Labour party is gearing up to tease the Government if there is any decline in our rating score, yet if we did anything less than what we are doing to address this deficit, we would be in dire trouble with the markets, and I have no doubt that interest rates would eventually have to rise, with all the consequences we know about for businesses and for ordinary mortgage payers. I therefore do not accept this apocalyptic view of the Government’s proposals. As I say, the Government are doing the bare minimum necessary to maintain market confidence.

I do not accept either the argument put forward by the hon. Member for North Ayrshire and Arran that there is some sort of right-wing plot—that we have been waiting for years for this crisis in order to take a stab at Keynesian politics and that, really, all we are interested in is a slash and burn of the public services. It is hardly a slash and burn, given the sort of figures we are talking about. In fact, Government spending is as high as it has ever been. All we are doing is trying to get to some sort of grip with the deficit.

Personally, I have always argued that the economy would benefit from deregulation and from simplification particularly of the tax system, leaving aside the total size of the public sector. I would have thought that Members on both sides of the House could accept that what is needed is simplification. How, then, are we going to get it?

I spoke in the Budget debate at about 6 o’clock. Such is the complexity of the modern Budget process that it is difficult for people to get a handle on what is going on as it is being enunciated by the Chancellor of the Exchequer. I was teased by one of the Whips because, apparently, precisely as I stood to say that it was a courageous Budget, coincidentally all the press started turning against the Government—and it has been pretty bad ever since. I say that it is courageous because the Chancellor has started to take some difficult decisions to simplify the tax system. We have heard a good speech about charitable giving. So much of the so-called bad publicity that the Government have attracted over the Easter break—whether it be over the so-called granny tax or charitable giving or child benefit or all the other problematic areas—shows that the Chancellor is beginning to try to address these appallingly difficult structural problems.

There has been a lot of talk about the Titanic this week—nobody should worry, as I am not going to repeat the tired old cliché about deck chairs—and I think that the whole structure of the ship is wrong when it comes to the tax system. The ship is unbelievably badly built, and it is gradually sinking under us. What I have found in listening to 28 successive Budgets in this Chamber is that the tax system has become progressively more complex. It was possible 25, 30 or 35 years ago for a Chancellor to come across as providing a reasonably coherent lecture in his Budget statement—we all used to get very excited because tax on whisky or the basic rate of tax was going to go up or down by 1p—but such levels of complexity have been loaded on to the whole tax process that it has become virtually impossible for any Chancellor to come out on Budget day with any coherent proposal that is not in succeeding days unpicked and trashed because of the hundreds of pages of small print. If the structure is fundamentally flawed—it is, I think, the longest tax code in the world apart from India, and one of the most complex in the world—it is virtually impossible for any Chancellor to get a grip on it. I have never made any secret of my personal belief that we have to be prepared to be radical. We cannot just try to improve the structure; we have to go back to first steps and argue what we really believe in. What I really believe in is a much flatter—ideally, flat—rate of tax.

I have recently read an excellent book written by one of our colleagues, my hon. Friend the Member for Stone (Mr Cash), about the 19th century statesman John Bright. He was wholly uninterested in politics, but was a substantial statesman, who continually argued in terms of retrenchment, sound public services and a sound financial system. He said:

“Better teach the people something good for the future than resign oneself to work institutions already in existence”.

I suspect that too many politicians—I do not blame those on the Treasury Bench, as I know what they are paid to do—are fundamentally doing what John Bright did not want to do, which is resign themselves to work institutions already in existence. I think that the purpose of politics, certainly for those on the Back Benches, is to try as John Bright said to try to teach the people something good for the future.

I believe that this idea of a much simplified tax system or a flatter and ultimately a flat rate of tax, which has always been dismissed as an idea of the radical right, is of increasing interest to those on the left. Why? We have heard a great deal about tax avoidance, and the more complex the tax system, the easier it is to avoid it. Every time we try to deal with the problem, we create more loopholes and more difficulties, making it easier for the rich to avoid paying tax. With a much flatter—ideally, flat—rate of taxes, there is no possibility for avoidance. The TUC claims—I am sure it is right; it is not known to be a particularly right-wing organisation—that tax avoidance results in a loss to the Treasury of £13 billion a year from individuals and £12 billion a year from corporations.

To make another left-wing point, some politicians have recently had a bad press; they have been standing for various public offices or arriving in this House with good incomes outside politics, but instead of paying tax like the rest of us at the basic and then higher rates, they have put their money into private companies in order to pay much lower rates. Some politicians in America who have huge incomes, including some bidding to become President, have had a very bad press, as we found that they paid minimal rates of taxation. Why is this? It is because the tax codes in both countries are so complex that the rich and the powerful can always avoid paying tax. They cannot do that, however, under a much simplified tax system.

[Charlie Elphicke]

Does my hon. Friend not think that politicians should give a lead? It is not just Ken Livingstone who has been egregiously avoiding paying tax. It is clear from the Register of Members’ Financial Interests that some Labour Members have been routing their funds into private service companies. Should that not be stopped; should not politicians set an example?

[Mr Leigh]

I do not want to ruin my argument and I do not want to lose any support that I might have from my friends on the Opposition Benches by recommending a tax on particular Labour politicians. The trouble is that there is always a huge temptation for anyone with a high income—a politician, an entertainer or a business man—to listen to the advice provided by chartered accountants. They will say, quite rightly, “Oh dear, why is a successful chap like you”—a successful chap like, for instance, my hon. Friend the Member for Dover (Charlie Elphicke), who doubtless has a very large income—“paying all this tax, when you could be setting up a small company and paying about 11%?”

In the past I have argued for a much flatter, ideally flat, rate of tax throughout earned income, but now I will be even more radical, and suggest that there is an increasing case for transposing that to small company income. I am not privileged to serve on the Treasury Bench, and I do not have teams of civil servants to advise me. I constantly come up with ideas such as this during Finance Bill debates, and I can produce figures, but I do not know whether they are correct. I have been told that a flat-rate tax of 22% with a £15,000 allowance would result in a reduction of £63 billion in tax revenue in the first year. Although I believe that the extraordinary savings that would be made through the ending of tax avoidance might well enable us to claw that back, there is no point in my simply going to the Library and then coming up with figures.

I see that the Minister is busily scribbling down every one of my pearls of wisdom at this precise moment. It would be really nice if, rather than just saying at 10 or 10.30 tonight “I thank my hon. Friend the Member for Gainsborough for making such an interesting speech”, he wrote to me in the next week or two, when he has the necessary leisure, telling me—on the basis of the Treasury model—how much of the cost of avoidance could be saved through the adoption of a much flatter, or ideally a flat, rate of taxation, under which it would increasingly not be worth people’s while to try to shift their income from one pot to another. Is that, in fact, such a radical idea? Has it been tried out anywhere else? Well, of course it has.

As I have said, the size of the UK tax code has more than doubled since 1997. The present situation is absurd. The Chancellor is doing his best, but whereas 15% of taxpayers will pay a higher rate in 2012, only 3% paid it in 1978. Graphs showing the rise and fall in people’s incomes according to whether they have one child or more feature extraordinarily sudden and tremendous blips because of the child benefit clawback from people who earn more than £50,000 a year, of which I have been very critical. I do not know whether this is correct, but I have been told that a family with three children and an income of between £50,000 and £60,000 faces an additional effective marginal tax rate of 24%, on top of income tax and national insurance. I cannot believe that the Chancellor wanted to impose such a sudden, steep burden of taxation on middle-income taxpayers.

Many Members favour helping people on very low incomes. I happen to believe that the best way of helping poor people is not to churn more and more tax and benefits in their direction so that they have very high marginal tax rates—as high as 73% in the case of those who increase their earnings if they earn less than £10,000—but to take them out of tax altogether. Let me say to my Liberal friends that the one good thing that they have done in recent years is to present that argument, and I think that they have made their case. An extraordinary burden has been placed on people on lower incomes, who have been taxed far too much far too early.

I believe that my idea of a flat rate of tax is not such a radical or bad idea but one that could appeal across the spectrum, and I urge my hon. Friends on the Treasury Bench to consider it carefully. Otherwise, every time the Chancellor seeks to tamper with the screws and the bolts on the Titanic to ensure that those watertight compartments do not just reach halfway up the forward decks but reach the top so that the thing does not sink, he will produce a Budget that sounds good on the first day but will be unpicked and unpicked.

I think that, rather like John Bright, the Chancellor needs to see that shining light on the horizon. He needs to say, “This is my strategy, this is my philosophy, this is what I want to do. I want to say to the British people that ultimately I will take pretty much the same share of the cake as has been taken in recent years.” We all know that, for all Mrs Thatcher’s reputation for being such a right-wing radical Prime Minister, it was only after many years that, by an almost infinitesimal margin, she gradually reduced the extent of the state’s take from ordinary people. It may be impossible for the Chancellor to make a great deal of difference in those terms, but he can say, “This is my strategy. I want to be upfront and fair to the British people, so that they know exactly where they stand. If you have an income of £300,000, I will take a third of it: I will take £100,000. If you have an income of £100,000, I will take £33,000—and so on across the spectrum.” Then there will not be all the hillocks and valleys and clawbacks and allowances and churning of benefits and taxation.

I am, in a sense, sympathetic to the philosophy behind what the Chancellor has been trying to do with child benefit. Why should middle-income earners pay tax at a certain level and then be handed it back in child benefit? I agree with the Chancellor that that is absurd. However, he got himself into a dreadful mess by taking the appalling step that meant that the moment there was one higher-rate taxpayer in a family, all that family’s child benefit vanished. I thought that that was very unfair on a family in which one person worked and another, usually the wife or female partner, wanted to stay at home and look after the children. I am not suggesting that such an arrangement is better or worse than the other form of family life, but I believe that it is simply unfair, which is why I have argued for a marriage tax allowance.

I will do a deal with the Chancellor. I will give up my campaign against his reduction in child benefit and my campaign against his continued failure to introduce a marriage tax allowance, despite what he said in his manifesto, if he will say to me, “I will get rid of all these allowances, and introduce a greatly simplified tax system which is fair and equitable for all classes of people.”

I agree that there should not be a tax system that distorts people’s choices. I agree that any attempt to influence behaviour through the tax system, whether it affects marriage, children, mortgage tax relief—as in the old days—or, now, charitable giving, will produce perverse incentives. It will cause people to adjust their behaviour to reduce their tax bills rather than doing what is right, and I want people to do what they feel to be right. I want the state to be open, fair and upfront about what it is going to take, and I want the Chancellor to come to the House and say in his next Budget “This is my strategy, and this is my belief.”

I accept that—bravely, courageously, with great difficulty, and in the face of an enormous amount of bad publicity over the last three weeks—the Chancellor has taken the first essential steps towards getting rid of those allowances, and I am prepared to stand by him. I am prepared to be unpopular over the granny tax, because I can see where he was coming from. The Chancellor considered it absurd for people to be paid that allowance. Although it was apparently very popular, when there was talk of abolishing it, no one remembered that it had been introduced by Winston Churchill in 1925. I am prepared to be unpopular by supporting the Chancellor on all those issues if he is prepared to enunciate his philosophy of creating a fairer and simpler tax system. That is a fair deal, I think.

Amendment of the Law

Edward Leigh Excerpts

Wednesday 21st March 2012 Commons Chamber

[Mr Edward Leigh (Gainsborough) (Con)]

It is a pleasure to follow the hon. Member for West Bromwich West (Mr Bailey), who always makes his arguments well. I apologise for the fact that I cannot stay for the whole of the rest of the debate; I wish to attend the memorial service downstairs for David Atkinson. I will take this opportunity to pay tribute to him on the Floor of the House. He served the House with tremendous distinction for many years, particularly in the Council of Europe. He was particularly hard-working on promoting democracy throughout Europe.

I see my neighbour, the hon. Member for Great Grimsby (Austin Mitchell), on the Opposition Benches. We have been in the House together for a long time, and we have heard many Budgets. I said to my wife this morning, “We have heard so many Budgets. Will this be just another Budget that takes with one hand and gives with the other?” but I think it is a very courageous Budget that is rather different from many that I have heard. I have sat through so many—from Nigel Lawson, John Major and the previous leader of the Labour party.

The Budget is courageous for two reasons. First, my right hon. Friend the Chancellor is persevering with dealing with the deficit, which is the greatest problem that we face. Politically, it is in the interests of the Labour party to claim that we are indulging in a tremendous campaign of cutting everything in sight. One of the problems that it faces is that it knows perfectly well—as do the public—that, if it had remained in power, as it very nearly did, it would have done much the same as us. It is also politically convenient for the Government, of course, to proclaim that they are taking difficult decisions, but we are probably not cutting public expenditure enough to keep interest rates low. We are cutting what would otherwise have been a runaway increase in the deficit, and that is very different indeed.

The decisions that the Chancellor faces are extraordinarily difficult, and he is conducting himself very well. I have watched him ever since he was a freshman Member of Parliament, serving on the Public Accounts Committee. What he is achieving, both on the deficit and on many other things, is important and courageous. The other brave thing that he has done today is deal with the issue of the 50p top rate of tax. I know that that is not necessarily populist. I listened to the speech by the Leader of the Opposition, which was very good, and afterwards I congratulated him on it. It was good politics, and it appealed to his people, but the question that the Labour party has to ask itself is: does it want its leader to give a speech that appeals to his core supporters, or a speech that addresses the real problems of the country? This is the problem in respect of the top rate income tax payers: the top 1% of taxpayers pay about 28% of total taxes and they are highly mobile in the way that they conduct their lives and their businesses, and simply imposing a 50p tax—which Tony Blair and Mandelson resisted year after year—does not actually achieve anything for the economy. It may be good Labour politics, but it does not achieve anything for the economy. As we heard from the Chancellor today, it is only giving us about £100 million. Therefore, although this measure may not be popular, it has to be taken if we are to revive entrepreneurship.

The task facing the Chancellor is very difficult and complex, but he has set about it in the right way. He is trying to close many of the tax loopholes. The difficulty here, however, is that we do not want the very rich just to bury their money in the ground. Instead, we want them to be “white knights”, to set up businesses and to become entrepreneurs. Indeed, many of the so-called tax avoidance schemes were designed by previous Governments to encourage the rich to invest in business.

The Chancellor has also taken a brave decision on child benefit. I was critical of his original proposals, although I understand why he suggested them. There was the overriding need to deal with the deficit, and his child benefit reforms were going to save £2.5 billion. There was also a desire to “detoxify” the Tory brand, and to attack higher income tax payers. There may have been some pressures within the coalition, too. However, we all know that the Chancellor’s original proposal would, as it were, have created a cliff edge and would have been fundamentally unfair, because the situation would have been very different for a family with one higher tax earner than for a family with two taxpayers whose earnings are just below the £41,000 limit.

The Chancellor has taken the courageous and right decision to try to deal with that problem, but we still have a long way to go, and I believe that a better way forward would be to have a tax allowance. That would solve the problem of the higher income tax payer family. In France, instead of getting child benefit, couples are given a family tax allowance, which is spread between themselves and their children, irrespective of their income. An adult counts as one unit of tax allowance, and children count as half units. Therefore, a married couple with two children are given three units-worth of tax allowance. As a result, the level of income at which they start to pay tax is higher than it would be in Britain. That system has the added advantage of addressing the perverse incentives against family life and couples staying together.

I will continue to argue that the Government must fulfil their pledge to recognise marriage in the tax system. Critics of my arguments often say, “Just a little tax break isn’t going to make people get married or stay married.” That is perfectly true, but what we currently have is almost a perverse incentive against family life. A married couple where one parent stays at home to look after the children are hugely more taxed than almost any other taxpayer. We do not want to create a tax break for marriage because we think that that alone will deal with the wider problems; we just want to right an injustice.

The Chancellor has remained true to the overriding need to have a fiscally neutral Budget and to attack the deficit, has demonstrated a determination to promote entrepreneurship even if that means taking unpopular decisions, and has courageously recognised that he may have made a mistake on child benefit and that he should try to reform the system in a more equitable way. Although the Budget may not be popular with everybody, it is certainly a good Budget, and the right Budget for the nation.

Financial Services Bill

Edward Leigh Excerpts

Monday 6th February 2012 Commons Chamber

[Mr Osborne]

Well, that is a bit like the John Cleese sketch—the right hon. Gentleman started it by creating the biggest banking crisis in this country’s history. We are trying to clear it up. That is what this Bill is about. In all those interventions, we heard not one word about whether he will support what we are doing to clear up the mess he created.

[Mr Edward Leigh (Gainsborough) (Con)]

Does not the ding-dong of the last four or five minutes illustrate the dangers of political interference in regulation? Once we get back to the subject of the Bank of England, and given that the top 1% of taxpayers provide 28% of total taxes, can we have regulation in the future less by populism on bonuses, salaries and the rest, and more by the raising of the right eyebrow of the Governor of the Bank of England?

[Mr Osborne]

The key issue in our regulatory system that we are seeking to restore is judgment by the regulator, and I will explain how the Bill will enable us to do that. I agree with my hon. Friend that the financial services are an incredibly important industry for this country. They employ more people than any other industry in Britain and, crucially, its proper regulation is not only good for the economy, but essential to prevent taxpayers from being exposed to what they have been exposed to in recent years.

Banking Commission Report

Edward Leigh Excerpts

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

I do not think that it automatically follows that if we ring-fence the banks, we double the number of bankers. It is our intention, yes, to have a successful financial services industry, which is very important in Derbyshire, Cheshire, where my constituency is, the west midlands and Scotland, as well as in the City of London.

However, we do not want our entire economy to be in hock to the City of London; that is what we are seeking to avoid. We do not want to put all our bets on the City of London. That is what happened over the last 13 years, and it went disastrously wrong. The Government are determined to build up other sectors of the economy, including manufacturing and small businesses. The very fact that later today we are debating the Government’s apprenticeship programme shows our commitment as a Government to building up those other industries.

[Mr Edward Leigh (Gainsborough) (Con)]

After these reforms, will our banks be more or less regulated than their international competitors?

[Mr Osborne]

In certain respects, they will be more regulated compared with some other regimes. Obviously, the ring-fencing requirement that we are introducing is not present in every other financial centre. However, it is an appropriate course of action for the UK, given the size of our banking system relative to our GDP—it is 500% of our GDP; the United States banking system is only 100% of its GDP. As I said, there is now quite a lot of international interest in what we are doing, so we may find that other financial centres follow our lead.

The Economy

Edward Leigh Excerpts

Tuesday 6th December 2011 Commons Chamber

[Mr Edward Leigh (Gainsborough) (Con)]

The hon. Member for Birmingham, Hall Green (Mr Godsiff) suggests that RBS should be made into a national investment bank and that it would then be our saviour. I wonder whether he watched a programme on BBC2 yesterday, which relayed the entire history of how it cost the nation £20 billion. I am not sure it is an entirely good model, therefore.

First, I want to say a few words about what is happening in Europe this week. An express train is coming in our direction in the shape of the putative agreement between the Chancellor of Germany and the President of France. The shadow Chancellor said we should learn the lessons of history. Well, I have been reading about the congress of Vienna, and it is extraordinary how history repeats itself. Our whole national policy in those days—and for 300 years—was to prevent an agglomeration of power on the continent. Indeed, Napoleon created the continental system precisely to exclude us from the continent. That is why we fought so many wars over the centuries.

We are now faced with a worrying situation. If the eurozone creates fiscal and monetary union, we will, of course, voluntarily exclude ourselves from that. However, although we may exclude ourselves from the euro, because of qualified majority voting the eurozone countries will have not just influence but enormous power over our financial institutions. We should be extremely worried about that. Over the next few days the Prime Minister must ensure that we have real protection from what will be going on.

There has been much comment about the EU financial transaction tax. We may be able to refuse to implement it, or be given an opt-out. I certainly hope that that is the case, because the City of London is the global derivatives trading centre. Astonishingly, it accounts for 45% of all global trades in interest-rate derivatives, and this tax could cost us £26 billion. Vague reassurances are not enough.

The ex-head of the Financial Services Authority has recently said that between 80% and 90% of our prudential rule book originates from Europe. In 2010-11, the FSA has listed 29 financial regulations that come from Europe. All this is coming in our direction because the eurozone countries can muster 230 votes, and we will have no way of stopping it. We should be prepared to say no or to demand a treaty reassurance, and if necessary put any proposal to the British people in a referendum.

Turning away from Europe, I want now to talk about our woeful economic situation. It is in the interests of both parties to claim that the deficit reduction programme is tough and is hurting. It is in the interests of the Government because it shows that they are being prudent and implementing austerity measures, and it is in the interests of the Labour party because it is arguing that we are deepening the recession. In fact, however, we are not doing nearly enough to address the problems we face. Some 38% of all our output goes to Government. That is a higher proportion than in the USA, Canada or Australia. Contrary to what we have heard, many EU countries have a lower tax burden than ours.

[Mr Andrew Turner (Isle of Wight) (Con)]

My hon. Friend has alluded to the situation in Greece. Does he agree that much is borrowed but not accounted for?

[Mr Leigh]

That is absolutely right. We do not know what is going on in a lot of areas. Many EU countries, including Greece and Spain, tax their economies less than might be thought.

I apologise to Opposition Members for having to say this, but much of the blame lies with the previous Government. They increased Government spending by more than 55% in real terms and, contrary to all the political argument here today, we are cutting that by just 3%. The Government must decide whether they want to be liked or to deliver long-term prosperity and growth. As we have also heard today, we are still borrowing £141 billion every year. The cost of servicing that debt is £43 billion every year, more than we spend on defence. This is a staggering burden. I want to hear more of an intellectual case for smaller government. Big government leads to big waste. Sir Philip Green calculated in his study that £700 million could be saved on the Government telephone bill alone.

People are hit with a double whammy by all this Government spending. Like a black hole, it sucks in enterprise, and it inflates prices and taxes people of all their spare income so they have less to spend on their families and themselves. As a result, the economy deflates.

Governments say in such circumstances that more must be done and propose a fiscal stimulus, usually through public works, but those works are often driven by politics not the marketplace. A better way to deliver stimulus is to cut taxes.

[Glyn Davies (Montgomeryshire) (Con)]

I have a lot of sympathy with the case my hon. Friend is making, but can he point to any international examples of countries or organisations that recommend going further and more quickly in terms of austerity measures?

[Mr Leigh]

I can point to successful economies in the world that have the taken the view that the way to get out of the problem of a flatlining economy is to release more money back into the economy through the stimulus of lower taxation. I have referred to one tax that raises little money but acts as a tremendous disincentive to enterprise: the 50% tax rate. I would abolish that, as it achieves very little apart from bearing down on enterprise.

We still have the longest tax code in the world; indeed, it is longer than the tax code in India. The Centre for Policy Studies estimates that the marginal tax rate on poor people is as much as 96%, while the marginal tax rate on higher earners is 57%. There is a greater imperative than ever before for Government to be the facilitator, not the central planner. They can, by all means, deliver some public works, but they must not be fantasy or vanity projects such as high-speed railway lines. Instead, they must be works such as the third runway at Heathrow, which the market is prepared to build for us because the market wants it. By all means, let us have public works, but they must make sense in terms of the marketplace, and let us also have tax cuts. I support the Liberal proposal to take the lower paid out of tax, because that also delivers incentives and cuts the marginal tax rate on the lower paid. I want us to have a much flatter overall tax system, too.

Despite all that we have tried to do, Great Britain ranks as the 72nd country in the world for Government wastefulness, which is lower than Tajikistan and Ethiopia. The House may not accept all my arguments, but I hope Members will accept that an intellectual case must at least be made for a smaller and leaner Government who tax people less and deliver more vitality and entrepreneurship back into the economy. That is the only way we will fight our way out of this recession.

Eurozone Crisis

Edward Leigh Excerpts

Tuesday 15th November 2011 Westminster Hall

[Neil Carmichael]

Inflation did go down, but after the IMF loan was made. It reached a peak in 1976, which I think was 26%. That happened to coincide with the time of the IMF loan, so that is the position that we should discuss.

[Mr Edward Leigh (Gainsborough) (Con)]

My hon. Friend has been very generous in giving way. He will accept—will he not?—that we should not have stayed in the exchange rate mechanism.

[Neil Carmichael]

Well, we were blasted out of the ERM. We do not want to repeat that fiasco, and we should all recognise that.

We talked briefly about the United States. Gerald Ford, President of the United States in the mid-1970s, refused to bail-out New York, and quite right, too. He was a fiscal conservative. That was the right decision in the long run, and, of course, a decision that did not affect New York’s membership of the dollar. I just wanted to put that on the record.

We must focus on two things, and the Prime Minister identified them both in his speech yesterday. I want to ram home the importance of reforming the European Union, because that is what it needs. In particular, we have to drill down on the single market, to ensure that it is a single market and that competitiveness in goods and services is enhanced. We can really do that.

On euro measures, this country would be making a big mistake if we assumed that the euro will not affect us significantly, because it certainly will. [Interruption.] I shall wind up. I have been so generous with interventions that I do not have the time to point out that we need fiscal union in the eurozone, the ECB to be enhanced—as my hon. Friend the Member for Cities of London and Westminster (Mark Field) rightly said—and much more rigorous auditing of what is going on.

Last but not least, there is a democratic deficit, although the IMF extension was discussed in the House and we voted on 11 July. I have noticed two things. First, Germany and France are effectively bypassing the Commission in a lot of their decisions—

Independent Banking Commission Report

Edward Leigh Excerpts

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

As I said in my initial statement, an important part of this report—it will not be at the top of the evening news tonight, but it is important—is the proposals to enhance competition on the high street and create a new challenger bank, so that customers have real choices. There is also a proposal for a free service that would enable anyone who wanted to switch their current account to do so almost immediately, with all their direct debits and all the other things attached to their account switched too. That will really help customers to shop around—at the moment, customers do not switch their current accounts because they think that it would be too difficult and cumbersome—and is one of the most retail-friendly proposals in the report.

[Mr Edward Leigh (Gainsborough) (Con)]

If there is one class of people more unpopular than MPs, it is bankers—and I know where all the populist pressure is coming from. However, regulators do not create wealth; they stifle it. Does my right hon. Friend acknowledge that we have to live in the real world and that London’s pre-eminent position is based on the fact that we have the lightest regulatory regime in Europe? Will he undertake to preserve that for the sake of our wealth creation and not kill the goose that lays the golden egg?

[Mr Osborne]

Well, it was not much of a golden egg, unfortunately, in recent years. It is important for this country that London, Edinburgh and other centres remain globally competitive and that London remains the pre-eminent global centre for finance. Some of the changes taking place in the City, such as the one I mentioned, involving trying to develop an offshore renminbi market, are all part of London being a competitive place to do business. However, being a competitive place in which to do financial services does not mean that there has to be a huge taxpayer subsidy for universal banks and their retail banking arms in the UK. John Vickers explicitly deals with the competition issue. People might have expected him to come to a different conclusion on this, but one of the interesting things he said was that we should not impose additional capital-to-equity ratios on investment banks, precisely because he does not want us to make them internationally uncompetitive.

Sovereign Grant Bill (Allocation of Time)

Edward Leigh Excerpts

Thursday 14th July 2011 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

We are clearly making a momentous decision today with the biggest change in the royal finances since 1760, so it is obviously important that we should have a full debate. We had a full debate a fortnight ago and we have that opportunity again today. Given the fact the statements have run on so long, the Chancellor is correct to say that we have a difficulty. The Opposition will be happy to have a full debate on clause 1 stand part and obviously the sooner we start that debate, the better.

[Mr Edward Leigh (Gainsborough) (Con)]

On a point of order, Mr Deputy Speaker. I just need your guidance as I have a particular general point that I wanted to make. It pertains to clause 13 but I would normally have made it on Second Reading. Will you immediately call me to order if I seek to raise it?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I think we will need to listen to what the hon. Gentleman has to say.

Sovereign Grant Bill

Edward Leigh Excerpts

Thursday 14th July 2011 Commons Chamber

For 250 years, the Crown Estate has been at the disposal of this Parliament but, as then so today, it is the responsibility of Parliament to ensure that a fair and proper balance is struck between the interests of the taxpaying public and the needs and dignity of the royal household. As we enter the second decade of the 21st century, that is our task, not just today, but in the months and years to come.

[Mr Edward Leigh (Gainsborough) (Con)]

I am humbled, Mr Evans, that you should have called me before my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I am grateful that there is somebody who is even more royalist and reactionary than me in the Chamber; my hon. Friend reminds me of one of the French courtiers who was plus royaliste que le roi—more royalist than the king—and that is no bad thing.

Of course I agree with the substance of what my right hon. Friend the Chancellor is trying to do today, but I hope that he will accept a couple of bits of advice or warnings. The constitutional position of the monarch and Back Benchers is rather similar: we warn and we advise. The difference is that the Queen does so in private and is listened to and we do so in public and are never listened to, but we will try our best. [Interruption.] Well, perhaps we are listened to sometimes. I am a bit worried about some parts of the Bill, particularly about how fixed in concrete the sum of money is.

We all know that there is no point having the British monarchy as a cycling monarchy or having it on the cheap. I know from my experience of looking at the accounts during the last two Parliaments that they are right on the edge of the £34 million. If one was trying to maintain extremely expensive buildings—I am not just talking about Frogmore now, but about large and complex buildings such as Buckingham palace or places such as Windsor great park—one would struggle. Some people, particularly in this House and particularly those with a slightly republican bent, might say that we are all making sacrifices, but this is part of our national heritage and it is not as if they are living in anything like the whole palace. They have a modest flat: as we know from one of the tabloid stings, the Queen lives very modestly with her Tupperware in a small flat in Buckingham palace. Ultimately, we, the public, are benefiting from Buckingham palace, Windsor and St James’s palace and they must be properly maintained. I am not sure whether we might need looser arrangements so that—I will not use the phrase “raid the reserves”—there is some sort of mechanism to handle that. Will the Chancellor comment on that when he sums up? It is terribly important that there should not be a constant constraint on the treasurer of the royal household to skimp on maintaining the royal palaces, because that is clearly happening at the moment.

[Paul Flynn]

One example of many of royal spending was a trip by Prince Charles and Camilla from Buckingham palace to Balmoral for which the taxpayer—[Interruption.]

--- Later in debate ---

[Paul Flynn]

I shall ask the question again. Is it an example of people with financial limits skimping when the heir to the throne and his wife take a journey that costs £29,000 without any public engagements being involved—the journey was a private one—and send that bill to the taxpayers?

[Mr Leigh]

I am delighted that the hon. Gentleman has made that point. He is making the precise point I want to make, although we come from different directions, of course. That is the danger. As so often happens in the House of Commons, we are rushing at things and there are many unforeseen consequences; it would have been preferable to consider the Bill more closely and for longer. The point that the hon. Gentleman has made will be made in the Public Accounts Committee and such subjects will be dragged into the public debate.

Why do I think that is dangerous? Let me make it clear that I am not against the move in any way. I welcome it and I am grateful that the Chancellor had a private word to brief me on this before he made his announcement. I am grateful for what he is doing, which is in response to the constant campaign that we members of the PAC have waged for many years to have greater transparency. No present or previous member of the PAC and nobody in Parliament doubts that we want more transparency about the public duties, the official travel, the official expenses and so on. That is modern, transparent and right.

The difficulty is where we draw the line. I am worried that the PAC and the Comptroller and Auditor General will gradually be dragged into the debate on precisely the sort of point that the hon. Member for Newport West (Paul Flynn) has made. How will the system work? The CAG will effectively be able to look at everything, but a defence is built into clause 13. The clause states:

“Any reference to the support of Her Majesty’s official duties includes the maintenance of Royal Palaces and related land.”

That is fair enough. Subsection (9) states:

“Any reference to the Royal Household if limited to that Household so far as it is concerned with the support of Her Majesty’s official duties.”

The clause also states:

“Any reference to the use of resources is to their expenditure, consumption or reduction in value.”

I suspect that subsection (9) was included to try to prevent the whole debate from widening to cover the private travel, private expenses and private servants of the royal family. Why is there a danger?

[Paul Flynn]

Will the hon. Gentleman give way?

[Mr Leigh]

May I make some progress first? I want to develop this point and if the hon. Gentleman is not satisfied he can come back to me.

If the PAC was a normal Select Committee that set its own agenda, we would have some people who were very pro-royal family and some who were not so pro, and there would be tremendous pressure on the Chairman in private sessions, with people saying, “We want to look at this aspect of travel,” “Why did the Prince of Wales make this official trip and spend all this money,” or “Why did they bring all their servants?” There would be a great argy-bargy. At the moment, our defence is that, uniquely, the PAC’s agenda is set not by the Committee or politicians but by the Comptroller and Auditor General. That acts as a kind of backstop to protect the royal family, but the changes could bring a real danger for them. Why? It is because we do not live in an entirely fair world.

The royal family is not like the Department for Work and Pensions—I shall not labour this point because I made it in the last debate on this. When the PAC looks at the DWP or another Department, it does its work and investigates the spending of billions of pounds, which is sometimes spent wisely and often not so wisely. With those reports there is limited public interest and the report tends to get into The Times, the Financial Times or the serious pages of The Guardian. With the royal family, things are completely different: not only is there massive public interest and huge pressure from journalists, but some newspapers have an agenda of constantly attacking the royal family and its members.

[Paul Flynn]

Will the hon. Gentleman give way?

[Mr Leigh]

I am going to develop my point; the hon. Gentleman can come in later.

We have seen that agenda in the Daily Mail campaign against the Prince of Wales and in the Murdoch press—against many members of the royal family. We are getting into dangerous territory.

[Mr Mark Spencer (Sherwood) (Con)]

Will my hon. Friend give way?

[Mr Leigh]

Let me go on a bit and then I shall give way to both hon. Members, as I want to be fair to both sides.

When I was the Chairman of the Committee I put no pressure on the Comptroller and Auditor General, but members of the Committee, including the hon. Member for Glasgow South West (Mr Davidson), who is present, Mr Alan Williams and others quite rightly had serious questions about the royal family. They took a particular view and were always agitating for us to do more work, but I was able to say that it was not my decision. It was the decision of the Comptroller and Auditor General who, frankly, took quite a conservative approach and did not allow many reports to come to the Committee or do much initial work. Although there is massive public and media interest in this issue, particularly in the tabloid press, there is much more important work that we need to be doing on public expenditure.

Hon. Members might ask what I am worried about, given that we can surely rely on the Comptroller and Auditor General—although I think that he will be under a lot of pressure via members of the PAC because they are eternally under pressure from the media to raise these sorts of questions. Why am I worried about all this? It is because I wonder whether clause 13 is an adequate defence. How do we define exactly what are the private affairs of the Queen? We know what she does in the homes that she owns—in Sandringham or Balmoral. We know about the gardener and the cook she employs and about private travel around the estate. That is completely out of all this. but what about what goes on in Buckingham palace and Windsor great park? Is the Comptroller and Auditor General going to be under pressure to investigate value for money, the number of servants and what happens with the private office? When does official travel start and when does private travel start? There have been attacks on Prince Andrew for taking official trips and then going on elsewhere to play golf. There will be more and more pressure mounting all the time and that could be extraordinarily damaging to the royal family, which is a very fragile institution. In no other major country is there a royal family; it survives on public opinion and I am afraid that there are some people, particularly in the tabloid press, who simply are not fair and who want to go on pushing and pushing because they want as damaging a story as possible. I shall now give way to the hon. Member for Newport West because he asks about precisely the sort of story that they will try to raise through the National Audit Office and the PAC.

[Paul Flynn]

I am grateful to the hon. Gentleman for giving way, although I am sorry that he has not answered my question about why a multi-millionaire should send a bill to the taxpayer for a private visit. May I take him back to his previous speech to the House on this issue in which he spoke as the former Chairman of the Public Accounts Committee—the guardian of the taxpayer’s interest—when he said that he had approved royal spending that he described as “fantastically wasteful”? Is that the way to guard the taxpayer’s interest?

[Mr Leigh]

The fact is that we must take everything in the round. I was making comparisons with the Heads of State of Germany and Italy, which are republican institutions that cost more and have virtually no public impact whatsoever and do nothing for the economy. I am afraid that it makes absolutely no sense in providing value for money to Great Britain plc to get rid of the monarchy. I do not accept that the institution of the monarchy is fantastically wasteful.

[Mr Spencer]

Does my hon. Friend agree that, as we are talking not only about the Head of State but about the next in line to the crown of this great nation of ours, they should be allowed to travel in such a manner? Can he imagine a circumstance where the President of the United States arrived in the UK on easyJet? We should be proud that the head of this nation is allowed to travel in such style.

[Mr Leigh]

We live in such a public world now that the Prime Minister took Ryanair when he went on holiday.

[Mr Davidson]

I am grateful to the former Chairman of the Public Accounts Committee for giving way, and I have to tell my colleagues that he is not nearly as bad a man as he often appears. Does he accept that there is a difference between what the royal family undertake as their public duties, which should, quite rightly, be examined by the Independent Parliamentary Standards Authority or a similar organisation, and what they undertake in their private lives, which should not be accessible to the public? Does he accept that extravagances in their private lives should not be charged to the public purse? That really is the difference. Like the hon. Gentleman, I recognise that we do not wish to intrude into every element of that family’s life; but if they do not want us to intrude, they should not charge such things to the public.

[Mr Leigh]

I am not sure whether the Queen or the Prince of Wales charges “extravagant” aspects of their private lives to the public purse, but what worries me is that if Prince Charles went on an official trip to America and took so many hairdressers, butlers, private secretaries and all the rest, the media and the hon. Gentleman, if he was still a member of the PAC, would immediately demand a public inquiry, and there would be a gradual drip, drip of attacks in the tabloid press against the royal family. We should be aware of that and warn about it. That is why the role of the Comptroller and Auditor General is absolutely crucial; he is not a politician. The reason I am making these remarks—if he reads Hansard—is that he must stand firm and make an overall judgment.

[Mr Davidson]

I can assure the House that, when I have travelled abroad, I have certainly never taken a hairdresser with me.

The sort of rules that apply to the Prime Minister ought to apply to the royal family in this context. The Prime Minister and senior members of the Government must have a certain degree of support and status when they travel abroad on parliamentary and official business. The royals similarly ought to have some status when they travel abroad. However, the two ought to be comparable. To be fair, the Prime Minister has never taken hairdressers, butlers, valets, chauffeurs or anything similar with him.

[Mr Leigh]

This debate is useful in a way, because it shows precisely the problem. I understand that the Duke and Duchess of Cambridge have taken extremely modest entourages and staff on previous trips. Apparently, the Duchess has had more than 37 different changes of outfit in America and Canada. I do not suppose that the Prime Minister or even the hon. Gentleman changes his outfit 37 times when he goes on Select Committee trips abroad. There is a completely different order of scale between a Head of State, who is part of the ornamental part of the constitution and who represents our country, and even the Prime Minister. If we are now to have questions and relentless pressure in the PAC about how many dresses need to be taken on every royal trip, it will be ridiculous, and it would start to make the royal family look more and more ridiculous. That is what I am warning against.

[Mr Kevan Jones]

Does the hon. Gentleman think that this country’s defence budget should subsidise the royal flight? If we believe what was reported in The Mail on Sunday last week, the Ministry of Defence did the right thing by charging the going rate for use of the royal flight. Only because of complaints to the Chancellor of the Exchequer by the Prince of Wales was that amount reduced. Therefore, every flight that the royal family takes is being subsidised by the defence budget. That cannot be right.

[Mr Leigh]

I do not know the exact truth about that particular aspect.

[Mr George Osborne]

The part about my involvement is completely untrue.

[Mr Leigh]

All that I know—the Public Accounts Committee having had all those accounts over the past two decades—is that steps are constantly being taken to deliver a better-value-for-money monarchy. If that is not true, why has the cost gone down from £49 million to £34 million? I shall sit down now, because we are only on clause 1 stand part.

[Paul Flynn]

rose—

[Mr Leigh]

I will not give way; I have already given way to the hon. Gentleman once. I want to emphasise this point to the Chancellor: I hope that there is a flexible arrangement, so that we can protect the structure of the royal palaces. I sincerely hope that the Comptroller and Auditor General will take a very conservative view of his responsibilities when he draws up reports, and that he will focus them absolutely and firmly on the public duties of the royal family, in the spirit of the Bill.

--- Later in debate ---

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Is the hon. Member for Gainsborough (Mr Leigh) giving way, or has he sat down?

[Mr Leigh]

My hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) is desperate to get in, so I give way to him.

[Stephen Phillips]

I am not sure that I have ever been desperate to get into anything. I think it was in 2005, when my hon. Friend was the Chairman of the Public Accounts Committee, that the Committee published a report, which he will probably remember, that drew attention to a potential conflict of interest between the Duke of Cornwall and future Dukes of Cornwall. That is not addressed at all in the Bill. Does he share my hope that my right hon. Friend the Chancellor of the Exchequer will deal with that point in his wind-up, and that the Government will look at the issue in future?

[Mr Leigh]

That is a serious and important point. We have had mention of the Duchy of Cornwall; I should say that we did some trailblazing work in our hearing about the duchy. The hon. Member for Glasgow South West will remember that we ranged widely over all aspects of its management. One of the issues that we raised was whether we should maximise resources—income and capital—for the present Duke of Cornwall, or for future generations. I hope that the Chancellor can also reply to that point when he winds up.

[Several hon. Members]

rose—

Civil List

Edward Leigh Excerpts

Thursday 30th June 2011 Commons Chamber

[Mr Edward Leigh (Gainsborough) (Con)]

It is a pleasure to follow the right hon. Member for Barking (Margaret Hodge), who is the current Chair of the Public Accounts Committee. Under my chairmanship and hers, the Committee has for many years fought a relentless campaign on this issue, but I never thought this day would come. My right hon. Friend the Chancellor has risen to such distinction, but I remember his being a member of our Committee when he was a very new, young Member of Parliament, and he may recall a visit we made to Kensington palace together. The trouble with dealing politically with royal family matters—I know this from my many years of chairing the Public Accounts Committee—is that whereas an incredibly worthy report about tens of millions of pounds, or even hundreds of millions of ponds, being wasted in the Department for Work and Pensions will end up only on page 15 of the Financial Times, if we are lucky, something involving the royal family gets much more interest. I think that the visit we made to Kensington palace was on pages 2, 3, 4, 5 and 6 of the Daily Mail. There is enormous public interest where the royal family is concerned.

My right hon. Friend is to be commended for being the first Chancellor of the Exchequer to have the guts to take this issue on and deal with it. As I said, I thought this day would never come. When we started this campaign and really tried to gear it up, we were looking at three areas in which we thought that parliamentary accountability was absolutely vital: the royal family and all aspects of royal finances, the BBC and the Bank of England. Those three great institutions stand without Parliament and we were told for all sorts of reasons why it was quite inappropriate for the National Audit Office to crawl all over their accounts. It has been like pushing water uphill, but I think that after many years and many bloody battles we are going to drag the BBC to full accountability—and not a moment too soon. That is quite right. Again, I commend the Chancellor for what he is doing. The Bank of England is a more difficult issue and we are still struggling on that, but we have a great victory today. For the first time since this modern settlement was made in 1760, Parliament will, through the Public Accounts Committee, be able to scrutinise all aspects of royal finances.

Although there has been great resistance to this proposal, I have to say that in all my many conversations with the royal household I never detected any resistance from it. I think it has been Governments who have worried about certain republicans on the Public Accounts Committee crawling over the royal finances. I should like to pay tribute to a great and wonderful parliamentarian, who has not been mentioned yet and who is a personal friend of mine—Mr Alan Williams, a former Father of the House, who served with great distinction for many years on the Committee. We all know that he gave the royal finances a good going over. Unfortunately, another personal friend of mine, the hon. Member for Glasgow South West (Mr Davidson), is not here, but I am sure that if he were still on the Committee he, too, would be giving the finances a good going over.

This will be tough for the royal household—there is no doubt about that—and there will be strong questioning in the Committee, as there is on all these subjects, but that is absolutely right because that is what we are about: accountability. I think they have absolutely nothing to fear. As the shadow Chancellor made clear—we do not need to labour this point, because we all know it so well—the Queen has throughout her reign acted with incredible grace and wisdom and with such enormous constitutional propriety. We know all that, but what is not so well appreciated—certainly not by the general public and perhaps not by many Members of Parliament—are the enormous strides that the household has made in delivering efficiency savings and cutting costs. I am pretty confident that when the Committee, working with the National Audit Office, is allowed to crawl over the accounts, it will find a first-rate, modern institution.

It is unfortunate that up to now the Committee has been able to deal only with royal travel and palaces and not with the rest. That seemed a strange state of affairs. We managed to save the royal train, by the way, which is, in terms of modern accountability, a fantastically wasteful but noble instrument of royal travel. [Interruption.] It is necessary. It is so old that it can only travel at night.

[Jacob Rees-Mogg (North East Somerset) (Con)]

rose—

[Mr Leigh]

I give way to an ornament of the constitution.

[Jacob Rees-Mogg]

My hon. Friend and his colleagues saved the train but unfortunately not the yacht. Is there any chance that for the diamond jubilee we will get the yacht back?

[Mr Leigh]

Well, some stingy previous Government, whom I will not mention by name, got rid of the royal yacht. What a tragedy. It is not the working part of the constitution but it is an important part. As for the royal train, it is quite right that this wonderful elderly lady should sometimes be allowed to sleep on the royal train so that when she visits Newcastle or Manchester she can wake up and perform her duty refreshed, and not be forced out of bed at 5 am to take a plane. We saved the royal train; that, I think, is something that the PAC achieved.

The PAC, then, will not cause any unnecessary trouble. Although I cannot speak for the new Committee, I have great respect for the right hon. Member for Barking, and I know that she will handle the matter in an effective and completely non-partisan way. I am sure that the Committee will do a wonderful job.

Before I finish, I want to say something about royal palaces. We paid that visit to Kensington palace, and we visited Buckingham palace. We found a lot of peeling wallpaper there—there was a lot of under-investment.

[Chris Ruane (Vale of Clwyd) (Lab)]

Disgraceful!

[Mr Leigh]

Yes. This is the Head of State. She should not be in a palace that is falling down, and we should not be mean and stingy about that. I think that the Government had been a bit stingy. Perhaps these new arrangements will allow her to look after her palaces better.

There is one scandal that I want to raise: Frogmore, the royal mausoleum. It is falling down. As I understand it, under the new arrangements there will be an opportunity for the royal household to have greater control of its own affairs so that it can rehabilitate Frogmore, which is an important national monument and in an appalling state. It is a national scandal that the mausoleum for Queen Victoria and the Prince Consort is in such a derelict state that the public can no longer be admitted. That shows some of the problems with the royal finances. The Queen and her household have been making enormous strides in creating efficiency savings, but they simply have not had the independence or the resources to try to maintain the whole of the estate. It is vital for the nation that they be allowed to do so.

In conclusion, I warmly commend the Chancellor, and say well done for finally getting parliamentary accountability. We now want to continue doing battle with the BBC and the Bank of England, and make sure that this Parliament can audit all aspects of our national finances.

--- Later in debate ---

[Mr MacShane]

I actually believe that a plane should be made available for the use of senior Government Ministers, including the PM. He had to scrounge a lift from Prague to Brussels with the Czech President the other day. He got something out of it, but frankly, every senior Minister in most democracies has that mode of transport available to them. Our planes are continually available to any member of the royal family, while elected Ministers come second.

We then have the problem of explaining why the present monarch and the next one are such giant landowners. Is that an issue that we might be able to debate, Mr Deputy Speaker?

Of course we all enjoyed the royal wedding celebration this year and we will enjoy the diamond jubilee next year. Roman emperors promised their subjects panem et circenses: the current Government are doing their best to reduce the quota of panem with their cuts and cruelties imposed on the poor and handicapped, but they are increasing the availability of circenses through the royal shows.

I do not believe that there is any kind of republican mood in the country. It was interesting to hear the oleaginous loyalty, if I may put it that way, expressed by my hon. Friend the Member for Newport West (Paul Flynn), who had a tremendous enthusiasm for the monarchy, which has surprised many of us. I remember the silver jubilee in Rotherham in 1978, when I am told that 41,000 Union Jack flags were sold in the socialist republic of South Yorkshire.

If we look at the European Union, we see that the states that are monarchies—Sweden, Denmark, the Netherlands and even, with all its troubles, Spain—enjoy less partisan and less conflictual politics. When it comes to growth, distribution and a fair social settlement since the second world war, we find that the EU’s monarchies generally have a much better record than the EU’s republics. The royal families, however, are also much cheaper there. In Spain, with its King, Queen and wonderful royal palace where I had the privilege and honour of having dinner with the Crown Prince of the Asturias and the lovely Princess—and Prince Charles—a few weeks ago— [Interruption.] The food was free, but I paid for my own air fare. The total cost of the whole Spanish monarch is €8.4 million, while the Queen of the Netherlands gets by on €828,000.

I ask only that we do some comparative analysis before simply continuing with an arrangement that, even with the Chancellor’s proposed modernisations, remains deeply anachronistic.

[Mr Leigh]

Surely we should make a comparison with other major countries. In fact, the cost of the Queen bears favourable comparison with the cost of the Italian and the German Presidents—and who has ever heard of them, and what do they do for their country in comparison with our Queen?

[Mr MacShane]

I do not really want to get into discussions about German lineages. I recall a previous German President who actually walked the length and breadth of Germany in his summer holiday, and he did not receive anything remotely like what we pay our official Head of State.

It is interesting to note that Scotland’s First Minister, Mr Salmond, has ditched his party’s original republicanism and now asserts that an independent Scotland—if that unlikely event were to take place—would keep the monarch as its Head of State. However, I would like to see any future monarch living a lifestyle in tune and in touch with that of the nation. We can see the Duke of Cambridge, who serves with RAF officers, and his wife living a lifestyle much closer to that of the rest of the nation.