Budget Resolutions and Economic Situation

Debate between Geraint Davies and Gordon Birtwistle

Wednesday 19th March 2014 Commons Chamber

[Gordon Birtwistle]

I thank my hon. Friend for that remark. When it comes to the north-west, I can only speak about my constituency of Burnley, which is a prosperous manufacturing town. We have invested heavily in manufacturing over the years, and I am pleased to say that we are not one of the problems in the north-west.

I am delighted to hear about the continuation of the triple lock on pensions, which is great for pensioners. I have to declare an interest as I am a pensioner and I understand how it all works. I welcome the end to the hideous 75p rise that was awarded to pensioners under the previous Government.

I am also delighted that we still have the excellent pupil premium, as I have a number of junior schools in my constituency. One school alone receives more than £100,000 a year to help children from really poor backgrounds.

My main interests are manufacturing and apprenticeships. The Chancellor’s decision two Budgets ago to introduce capital allowances was something that I had argued for and that he had agreed were a great idea, but as the scheme had run for two years, I fully expected him to cancel it in this Budget. However, he did not cancel it; he doubled it to half a million pounds a year. An Opposition Member said that she could not understand the reason for capital allowances. She asked what they could do for manufacturing. Obviously, she has never been involved in manufacturing, and probably has never been in business. She is probably one of the few Members who do not understand what is going on.

I also want to comment on the amazing rise in apprenticeships. In my role as apprenticeships ambassador, I have been able to visit apprentices in different industries across the country. I have seen apprentices build Typhoon fighter jets at BAE Systems in Preston, missile systems in Bolton and Airbus aircraft wings in Chester. I have also seen the other side of manufacturing. Only yesterday, I went to see apprentices at Starbucks in the Westfield shopping centre in White City and they showed me how to make a proper latte with a fancy topping. I met some amazing young people.

I have also met apprentices at Next—one would not expect that such industries would have apprentices. The young apprentices at Next were absolutely amazing and a credit to the young people of this country. I did not realise that Next ran such an excellent apprenticeship scheme, which rivals the one run by Rolls-Royce. Next is committed to its young people, and it sees apprentices as its assets for the future. It is fantastic to see the massive rise in apprenticeships. Apprentices are the future—[Interruption.] If the hon. Member for Swansea West (Geraint Davies) wants to intervene, I am happy to give way.

[Geraint Davies]

I am amazed that the hon. Gentleman compares the apprenticeships at Next with those at Rolls-Royce. What a disgraceful thing to say about one of our foremost companies. Picking socks is not the same as fixing engines.

[Gordon Birtwistle]

If the hon. Gentleman had listened rather than talked to his friends, he would have realised that I was talking about the apprenticeship scheme, and not the apprentices themselves. Next treats apprentices properly, and they go through a proper three-year training programme, as do the Rolls-Royce apprentices. It is a different industry, but those young people are as keen as the apprentices at Rolls-Royce to have a proper career—rather than the career that the Labour party offered them when they were in government—and one of which they can be proud.

The hon. Gentleman might not think that is a good idea, and perhaps in his constituency he would like young people to go on Government training schemes that deliver nothing. These schemes are delivered by proper companies for young people.

Tax Fairness

Debate between Geraint Davies and Gordon Birtwistle

Tuesday 12th March 2013 Commons Chamber

[Geraint Davies]

I am simply saying that those with the broadest shoulders should take the greatest weight, that there is a strong case for a 50p rate of tax and that some people already pay the 50p rate. I am not saying that they should pay that. Our tax system is not very fair, and I will move on to that later.

The problem we face is that there is no growth in our economy because there is no consumer demand, and although the deficit—the rate at which the debt is increasing —has gone down by 25%, as we are constantly reminded, the overall debt continues to rise to unprecedented levels. We are almost back to a pre-1997 situation in which we are paying people to stay on the dole and, at the same time, cutting services. That is the old Tory vicious cycle. We want to get back to Labour’s virtuous cycle, with people in jobs and paying tax and with unprecedented growth.

The other point that is always made is that the banks were unregulated and that is why everything went wrong. The reality is that the Financial Services Authority—I know that it has had a bad name—was introduced in the teeth of opposition from the Tories, who said that there was too much regulation already. Then, when the banks started going bust, the Labour Government said that we had better nationalise them so that people could still get money out at the hole in the wall. The Tories said, “No, let them fall.” That would have been a complete catastrophe. So in other words, the previous Labour Government did a very good job. We now have a situation in which, instead of confronting the deficit, which is what we should be doing, the Government have the wrong balance between growth and cuts, and within the cuts there is the wrong balance—80% cuts and 20% tax.

As for the claim that we are all in this together, we are now in a situation in which the poor are paying the most. I mentioned in a brief intervention—I also raised this in Prime Minister’s questions—a man who came to see me who had £20 a week, after utility bills, for food and clothing. He now faces a further hit of about £7 a week for having an empty bedroom. How will he survive on £2 a day? Allegedly, that change will save the Government about half a billion pounds, but of course it will not, because obviously people will move to the private sector, where rents are higher, and there will be empty houses in the public sector because councils will be forced to evict people. It makes no economic sense at all. However, if it did raise half a billion pounds, which is about one twentieth of what the Chancellor is investing in the tax thresholds, the hit to the very poorest will be similar to the gain to a very large number of people, and that will cost a great deal of money.

The point I am trying to make is that what will probably result in no savings will inflict enormous hardship on the most vulnerable, which is unnecessary and wrong. Those people, because they are very poor, have no option but to spend all their money locally, which helps to boost growth. If that money is redistributed from the very poorest to the squeezed middle, which is obviously good for votes—a callous and cynical manoeuvre in difficult economic times—then clearly that is not in favour of growth either. In so far as it will push money right up the income scale to the millionaires who live in mansions—the people we have been talking about—what will they do with the extra money the Government will have bunged to them? The threshold has gone up, so those at the top will also gain as a result. They will hide it away offshore.

There are therefore difficult issues to confront. We need to invest in our productive economy, but what is a fair way to do that in a—dare I say it—one nation way? Britain wants a one nation future that works and a future that cares, and the question for us all in difficult times must be how we deliver that. How do we invest, as I mentioned during Treasury questions, in super-connectivity for the city of Swansea? We do it on the back of investment in universities, electrified rail and communications and by marketing city regions, and indeed Britain, for inward investment. Those are all important. The Minister mentioned some of the issues about marginal corporate taxation, but the research tends to show that the major inward investment drivers are around research and development skills and access to markets, and we are well positioned on that.

On corporate taxation, there is a lot to be said—to be fair to the Minister, he mentioned this—for the idea of taxing economic activity where it occurs, whether we are talking about Google, Amazon or other companies. Amazon is local to my constituency and provides valuable jobs, but it needs to be fair and there needs to be a level playing field. If people are buying on Amazon rather than at a local shop, it is important that the local shop knows that they are all playing the same game.

Let us take the example of Apple phones and all the technology in the phone I am holding in my hand. The internet was invented here, and the other stuff, such as touch-screen and voice-activated technology, was invented in the national institute of science in California. So Apple is being taken to court by California for $26 billion because it does not pay any tax. Apple has taken innovation from the public sector, repackaged it, branded it, manufactured it overseas and got it taxed somewhere else. A big issue is that global conglomerates need to be brought to account and to pay their contribution to the public services where people are consuming their products.

Some of these people obviously live in mansions. The issue about the mansion tax, of course, is that it is part of a more general review of council tax, as other Members have mentioned, which has not been uprated. There needs to be a progressive system of taxation. Obviously the mansion tax, which is a Liberal Democrat proposal, had not been completely thought out in all its intricacies, but it is a direction of travel. If someone lives in a £2 million house, it is not that difficult to find ways of getting income out of it. It can be rented out and, with the rental income, the owner could have a palatial place in south Wales and a profit, so they could sit by the sea and enjoy themselves. For those people who are stuck in £2 million cupboards in London, allegedly, and we feel sorry for them, there are ways of releasing equity, as they could be rented out and people will pay the market rate.

[Gordon Birtwistle (Burnley) (LD)]

I am listening to the hon. Gentleman make some progress on the mansion tax. Obviously it is a Liberal Democrat policy, and I am really looking forward perhaps to voting for it later. Can he explain to me—I am keen to know—whether it will be in the Labour party manifesto at the next election?

[Geraint Davies]

Sadly, I cannot confirm that at the moment because I am not quite in a position to be writing the party’s manifesto, although I have ambition.

In difficult times we should focus on growth and ensure that those with the broadest shoulders take the weight and that we do not just squeeze the poor for the bankers’ mistakes. This proposal is part of a tapestry of opportunity to move forward on that, and we call on the Liberal Democrats to support us on what is, after all, their idea. Locally in Swansea the Liberal Democrats have been a very strong party with control of the council. Since 2010, they have been in a woeful state because people are worried about their broken promises on tuition fees and so on. This is their chance to redeem themselves so that there can be some glimmer of belief in a future for the Liberal party. If they do not vote for their own policy, what hope is there? Very little, I am afraid.