Oral Answers to Questions

Greg Mulholland Excerpts

Tuesday 18th April 2017 Commons Chamber

[Mr Gauke]

As I said a moment or so ago, we are investing more than £13 billion in transport projects in the north. HS2 will benefit the north of England. We make no apologies for also wanting to ensure that we invest in Crossrail to deliver for London, yes, but also for the economy of the whole United Kingdom.

[Greg Mulholland (Leeds North West) (LD)]

Before the last general election, Conservative Ministers were committed to the electrification of the Leeds-Harrogate-York line, on which commuters still suffer from travelling on Pacer trains. Will we do any better after the next general election and finally see the electrification of this line?

[Mr Gauke]

As I said, we are investing in our infrastructure. We already had significant plans before the autumn statement, which involved further investment to give us scope to improve our transport infrastructure. It is worth pointing out, however, that aggregate investment in economic infrastructure will rise by almost 60% between 2016-17 and 2020-21.

Breathing Space Scheme

Greg Mulholland Excerpts

Wednesday 29th March 2017 Westminster Hall

[Kelly Tolhurst]

It was truly terrible to hear of those practices in Sheffield this week. I completely agree: an opportunity to implement a breathing space will allow a regulated, clear way to enable people to go to legal credit agencies and deal with charities, so that they can borrow and deal with debt in a managed way, without having to seek help from organisations such as the hon. Gentleman refers to.

[Greg Mulholland (Leeds North West) (LD)]

I join others in commending the hon. Lady for securing this debate, for her Bill and for her leadership. The Liberal Democrats are delighted to work with and support her. I also commend the volunteers in my constituency and others who have raised this very important campaign. I am sure the Minister will be very sympathetic, but as a society we need to understand that the costs of debt can be far bigger than we realise. The hon. Lady has mentioned the health costs. When it affects children, holding them back at school and meaning they do not get the qualifications they might otherwise do—that is quite common—it can have a lifelong impact on their earning potential, so the economic costs of debt of this nature are really devastating.

[Kelly Tolhurst]

The hon. Gentleman is absolutely right. We can look at these things in silos, but this is actually about the whole of society. Debt is just one factor, and if we look only at debt we sometimes do not recognise or take account of its effects. I completely agree with his point.

As hon. Members said, debt has a profound effect on children. Children in households that are struggling with debt problems are twice as likely to say at school that they are being bullied. Adding up all the social impacts that are endured—the loss of health, the broken families, the loss of production and the hardship—there could be an £8 billion cost to the state and society, which would fall on all of us. Those unthought-of issues have an impact on families. My Bill would enable us to look at those issues further.

I want to dwell for a moment on the damage that problem debt does to families and children living in such households. Unfortunately, the presence of children in households corresponds with a rise in debts. One in five parents said that they have faced problem debts in the past year, compared with one in 10 adults without children. Geographically, families and children are more likely to have debt problems in the north-west, the midlands and Wales, where at least a quarter of households have struggled in the past year. That compares with Scotland, which has a form of breathing space scheme, and where only 10.9% families with children suffer debt problems.

Research from the Children’s Society shows that families trapped in problem debt are also more than twice as likely to argue about money problems, leading to stress on family relationships and causing emotional distress for children. It found that children living in families with problem debt are five times more likely to be at risk of having low wellbeing than those without debt difficulties. More than half of parents in council tax debt polled for research carried out by the charity said that they thought their children suffered anxiety, stress or depression as a result of that debt. The Children’s Society research shows that is not the amount owed by households that directly impacts on children’s wellbeing but the number of creditors to whom they owe money.

StepChange Debt Charity clients typically take between six and 12 months to stabilise their finances. It estimates that, in just six months, a typical StepChange Debt Charity client would have an extra £2,300 added to their debts if creditors applied default interest and charges to all their accounts. John Kirkby, the founder and international director of Christians Against Poverty, said that even three months could be a sufficient period to enable a stabilisation of finances.

The debt trap and the direct impact it has on children in the household brings me to why this scheme is needed. There are two main problems with the current system. First, this House has given people who need to go bankrupt legal protection against spiralling debt problems, but we have simply failed to deliver for people repaying their debts more manageably over time. Our laws have focused on people with the most intractable problems, who need debts written off and the chance of a fresh start. However, there is a cost for families who go down that route—bankruptcy is not free. It is the right solution for many people and undoubtedly meets an important need, but fewer than one in 10 people seeking debt advice enter into an insolvency option. For the majority of families who are likely to recover from a temporary setback and repay their debts in an orderly way, there is no equivalent protection. We all know about the issues associated with bankruptcy. They are often a step too far for those families.

Secondly, the voluntary approach to breathing space fails far too often. We know that creditors agree with the general principle, because it is in industry and Government codes, yet sadly there is a widespread failure to abide by those codes. According to StepChange, between a third and a half of people who contacted creditors for help said they were not given any kind of temporary breathing space. Without such protection, pressure to repay debts at an unaffordable rate and threats of enforcement can leave households cutting back on everyday essentials, or falling even further behind on other bills. The benefits of a breathing space scheme go across the board. Indeed, Martin Lewis of MoneySavingExpert, who spoke at the launch event for my Bill, called it a

“win, win, win—for the creditor, the state, and the individual.”

The evidence is clear: 60% of StepChange clients said that their finances stabilised once further interest, charges and collection actions on their debts were frozen voluntarily. However, not one client who received no such help reported that their finances had got back on a steady footing. That is not all. Many firms that provide that sort of support when their customers have a temporary financial difficulty say that the repayments they receive are higher in the long term.

We need a scheme on a statutory footing that enables families to recover. That is what breathing space sets out. It will help more families to recover and repay their debts. It will reduce the social cost of debt, which affects us all. Ultimately, breathing space will benefit the wider economy. I want to propose the introduction of such a scheme, with two key protections. The first would provide a guaranteed period of time—breathing space—without additional interest, charges, collections and enforcement action. First, that would stop the spiral of worsening debt while people gain control of their financial situation, for example by moving into new employment or recovering from ill health. Secondly, it would give people who need more time to repay their debts through an agreed affordable payment plan the same statutory protection from further interest, charges, collection and enforcement action that the law currently gives to people who need an insolvency option.

I am delighted that a breathing space scheme has had support from across this House, including from the Work and Pensions Committee, the all-party parliamentary group on debt and personal finance and the many Members who have supported my Bill. It is important to stress that we are not starting on this endeavour from scratch. A comparable scheme—one we seek to improve on—is already in place in Scotland. The debt arrangement scheme has been in place in Scotland since 2004, and in 2015-16 £38 million was repaid through it. Over time, the number of people using the debt arrangement scheme has increased. Crucially, its use has increased as a proportion of the available debt options. At the start of available data in 2009-10, over half—57%—of debt options were bankruptcies. That number has now shifted significantly down to 36% bankruptcies and 22% for the debt arrangement scheme. That means that more people are paying back their debts and are being supported to do so, rather than having their debts written off.

The scheme works for all. It works for creditors, which get back the money owed to them rather than seeing it written off through bankruptcy. It works for the state and services who support families. Most importantly, it works for families and children, who can repay their debts free from enforcement action, rising fees and charges and spiralling interest repayments.

I welcome the Prime Minister’s announcement in January that she will review the unfair practice of charging people with mental health problems up to £150 to fill in crucial debt help forms. I pay tribute to the Money and Mental Health Policy Institute and MPs across the House for campaigning to end that unfair practice, which prevents people with mental health problems from getting the help they so desperately need, but we need to tackle the causes, drivers and consequences of mental ill health in all services.

Addressing the impact of debt on children’s mental health is central to the breathing space scheme. This week, we launched the all-party parliamentary group for young people’s health, which seeks to look at ways in which we can improve the health, and particularly the mental health, of young people, and seek to understand all the reasons for the increase in mental health issues that we see in our young people. Working with families and helping families thrive is a way of improving the health of our young people. As I have outlined, debt is a factor. We now have the ideal opportunity to introduce a comprehensive breathing space scheme to give people in debt a guarantee of protection from the escalating pressure that blights families’ lives and affects the wellbeing of children and families who are trying hard to do their best and work their way through life. I hope we do not miss this opportunity, and I hope the Minister will agree that this is a sensible way forward in improving outcomes for families who are just managing.

Money Laundering: British Banks

Greg Mulholland Excerpts

Tuesday 21st March 2017 Commons Chamber

[Simon Kirby]

The people with significant control register is open for everyone to see. Thousands, if not millions, of people are able to see it. Transparency is absolutely the best thing to make people aware of wrongdoing and to make sure that nothing is hidden.

[Greg Mulholland (Leeds North West) (LD)]

It is clear that the current measures, though welcome, are simply not sufficient to tackle this sort of money laundering. Considering that dirty money is channelled through our British banks, how much worse would it be if the Chancellor achieved his vision of this country becoming a corporate tax haven—another Panama—post-Brexit?

[Simon Kirby]

That is not the Chancellor’s vision. The Government are currently consulting on the fourth money laundering directive. I have mentioned the Criminal Finances Bill, which is in the other place. The FCA is also vigilant in enforcing measures, and it takes misconduct very seriously.

Class 4 National Insurance Contributions

Greg Mulholland Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

I am grateful to my hon. Friend, but what I see on the Opposition Benches these days is very often not so much desiccated socialists as dedicated opportunists.

[Greg Mulholland (Leeds North West) (LD)]

This Budget was disappointing and unambitious, and is now mired in this chaos. Is it not now time to properly consider having an NHS tax specific to funding our NHS, which did not receive enough funding? As the Chancellor knows, this has the support of the majority of the British public.

[Mr Hammond]

What we need to fund our NHS is a strong economy and a Government who have the political will to make the commitment that we have made to a £10 billion post-inflation increase in NHS spending. It is very nice to have a contribution from the Liberal Democrat Benches. I do not know whether that is a precursor of the Liberal Democrat manifesto for the next general election—we shall wait to see.

Autumn Statement

Greg Mulholland Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Mr Hammond]

The Prime Minister has made it clear that we have to accept not only the decision of the British people to leave the European Union, but that clearly implied in that decision is a desire for control over movement across our borders. That is not the same as cutting ourselves off from Europe, or turning our backs on Europe, but there has to be control of the flow of people into the United Kingdom. The challenge, therefore, is to get a deal that effectively allows our businesses and workers to sell their products into Europe, and European businesses and workers to sell their products into the UK, while still meeting the political mandate that we have received from the British people.

[Greg Mulholland (Leeds North West) (LD)]

Leeds remains the biggest city in Europe without a light rail or an underground scheme. I welcome the announcement on transport infrastructure to tackle congestion. Can some of that money go towards the existing £250 million that could be used on a ground-breaking light rail scheme connecting with Leeds Bradford airport, which does not have any fixed rail link?

[Mr Hammond]

I am afraid I am just going to repeat that I am not going to get into the weeds of trying to allocate every pound of funding that I announce in these statements to specific projects. This must be an issue for my right hon. Friend the Transport Secretary.

Sale of Annuities

Greg Mulholland Excerpts

Wednesday 19th October 2016 Commons Chamber

[Greg Mulholland (Leeds North West) (LD)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on why the Government have abandoned plans to allow savers to sell their annuities in return for a cash lump sum.

[The Economic Secretary to the Treasury (Simon Kirby)]

This Government have taken a great step forward in giving more and more people freedom to choose how they use their pension savings when they retire. We have already seen more than 300,000 people choosing to access their pension flexibly since the reforms were introduced. Alongside our efforts to do that, we also said that we would look at how we could spread that flexibility to people locked into existing annuities. We consulted extensively with the industry and with consumer groups to explore whether we could put in place the right conditions for a market to develop to facilitate that idea.

Throughout our investigations, one of our very highest priorities was to establish whether people could get a good deal through such a market. In the course of our efforts to investigate the viability of a secondary market in annuities, two things became clear. First, without compromising on consumer protections there would be insufficient purchasers of these annuities to create a competitive market in which British pensioners could get a good deal. Secondly, pensioners trying to sell their annuities would also be likely to incur high costs in doing so.

This Government have made it very clear that we want this to be a country that works for everyone, and that includes making sure that everyone gets a high level of consumer protection. It has become clear, through our extensive research, that a secondary market would not be able to offer this. Rather than being to the benefit of British pensioners, it would instead be to their detriment. It is for that reason that we are not prepared to allow such a market to develop, and we will not be taking this policy further.

[Greg Mulholland]

No disrespect to the Minister, whom I like, but the Chancellor should have been here to answer this question, particularly given the disgraceful way in which the announcement was made.

The move towards pension freedoms was the flagship announcement in the Budget just two years ago, in 2014. Originally the brainchild of the former Liberal Democrat Pensions Minister Steve Webb, it was embraced by the former Chancellor and specifically included in the manifesto on which this Government were elected. Yet yesterday afternoon, the Government announced via the press, not via this House, that they were scrapping the whole deal. This is a huge U-turn, which was announced after clear lobbying by an industry that never really subscribed to it, and a failure by the Government to build a reasonable secondary annuity market. Of course it is right that protections are put in place to ensure that people are not exploited on the secondary annuities market, but there are tens of thousands of people trapped in poor-value annuities who are eager to be able to take advantage of the new freedoms. Based on the promises in this Government’s manifesto, many of them will already have been considering how to take advantage of the plans in order to release themselves from their annuity and invest their savings differently. This announcement will leave many people having to make different decisions about their retirement from those to which they were being directed—if, that is, they have even heard of the change, given the way that it was rushed through and the way it was announced by the Government.

Can the Minister say, first, when the decision was made to drop the new pension freedom plans? Secondly, why was this decision not announced to Parliament before it was announced to the media? Thirdly, what are the Government doing to inform those who may wish to cash in their annuity that they will no longer be able to do so? Fourthly, what assessment have the Government made of people’s change of behaviour in response to the freedom, and how will this affect their financial decisions?

The pensions freedom plan was about trusting people with their money. Clearly, this Government have decided that they no longer trust people. They owe an apology to those who have spent time and money examining their options for retirement, and I hope we get one today.

[Simon Kirby]

It is easy to wish to have the cake and eat it, as the Lib Dems regularly do. It is difficult being a Minister. Sometimes we have to make hard decisions, but on balance, the interests of the consumers, often older people and the most vulnerable in our society, have trumped the desire to further increase pensions flexibility. The hon. Gentleman is disingenuous. It was one element of our pension freedoms and, after extensive consultation, it transpired that it would not provide value for money. Which?, which is totally independent of Government, has said that

“it would have been wrong to move forward without assurances that consumers could get value for money and have the necessary protections”—

assurances and necessary protections protecting those most vulnerable people in our society.

Tax Credits: Concentrix

Greg Mulholland Excerpts

Wednesday 14th September 2016 Commons Chamber

[Jane Ellison]

This is a payment-by-results contract. As I said in my response to the hon. Member for Salford and Eccles (Rebecca Long Bailey) at the outset, Concentrix will not be paid when it has not acted appropriately and when it has not got a result. It is important that we get these things right and I take my hon. Friend’s point. I reassure him that HMRC, and indeed Ministers, will always seek to get the right contracts. Clearly, when there are lessons to be learned, we must reflect on them and ensure that they are reflected in future arrangements.

[Greg Mulholland (Leeds North West) (LD)]

Last week in evidence to the Institute for Government, the former Work and Pensions Secretary, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), admitted that outsourcing to the private sector was not a panacea. Surely after the Concentrix contract fiasco it is time for full review of outsourcing to private companies in the welfare system. Is it not time to look at whether outsourcing is appropriate at all or, if it is to continue, at what better civil service oversight provision is needed to ensure that this sort of thing never happens again?

[Jane Ellison]

I again urge hon. Members to keep a degree of perspective. Many contracts deliver what we want. It is worth noting that the Concentrix contract delivered more than £280 million in savings to the taxpayer, which represents a sensible return on that investment. I have said what I have said about service levels—they must be acceptable and to the standard we have contracted for—and there are circumstances in which the use of private companies offers a cost-effective way to get something that the Government might not otherwise have, which could mean flexible capacity or the capacity to do something for an uncertain period. Sometimes, the flexibility that such contracts offer makes it easier than doing something in-house. I take the hon. Gentleman’s points and will reflect on them but I do not draw the same general conclusion as he does.

Finance Bill

Greg Mulholland Excerpts

Monday 5th September 2016 Commons Chamber

[Greg Mulholland (Leeds North West) (LD)]

I can worry the right hon. Member for Cities of London and Westminster (Mark Field) a little more by telling him that there was a “Hear, hear” from these Benches as well—[Interruption.] Members will be surprised at how loud we can be, and they will see that in the coming months and years.

It is absolutely time to have the debate about the best way to tax our businesses and to do what the Government claim they are doing—but are actually insufficiently doing through the changes to corporation tax—and support business in this country better through taxation that works but that also recognises and incentivises business.

Amendment 177 is a probing amendment that would sweep away corporation tax altogether and is intended to try to trigger that debate, which we should be having as a country. The reality is that the Government will continue to argue that a cut in corporation tax will somehow boost growth, but the evidence for a cut below 20% is simply not there. The Government are failing to ask whether corporation tax actually works. As the right hon. Member for Cities of London and Westminster has said, it is only a matter of time before we hear the next scandal of a company managing to avoid paying corporation tax. Last week, it was Apple’s deal with Ireland, a few months before it was Google, before that it was Facebook and before that it was Amazon. Even the Labour party got into hot water for having managed to offset profits to reduce their corporation tax bill, so surely Government Members will recognise that there is an issue.

We have endless arguments about the morality of some of these large multinational corporations and how they operate. There is often outrage—sometimes faux outrage—in this place, but that is not good enough and it will not deal with the problem. We must also accept that while the Government are making unnecessary and damaging cuts to HMRC, it makes it harder to challenge these companies that are testing the limits of the law.

There is an underlying unwillingness to address corporation tax and its fitness for purpose regarding the reality of multinational corporations in the 21st century. As Martin Sorrell, the chief executive of WPP, said in 2013 during the Starbucks corporation tax scandal, for many multinational companies whether to pay corporation tax is simply a “question of judgment”, something to be decided according to PR perception and perhaps their own corporate social responsibility policies but not something decided by Her Majesty’s Revenue and Customs as it surely should be.

As the right hon. Member for Cities of London and Westminster made clear, this is not and should not be seen in any way as a left or right issue. It is an issue of practicality. Last week in the Telegraph, Allister Heath published a piece entitled “The Apple fiasco shows why corporation tax is an outdated anachronism”. As the right hon. Gentleman has already said, Lord Lawson famously called for corporation tax to be a tax on revenue rather than profit. There are flaws with that but at least he was seeking to challenge the status quo, which is surely outdated. On the other side of the spectrum, The Guardian, Oxfam and the excellent Tax Justice Network have all rightly highlighted the ease with which multinationals can avoid corporation tax altogether.

There are ways in which we could better support business and could have a tax system that works. Businesses of all sizes are crying out for changes in the tax system. I know many businesses that say that the first thing they would like to see reformed is business rates and the second is VAT. There are industries that provide a huge amount to the British economy and pay a significant amount of tax that are not being listened to because they are not large corporations. For example, a change to VAT would have a much greater impact on the tourism and hospitality industries than tinkering with corporation tax in an attempt to grab headlines for being supposedly supporting business.

As the right hon. Gentleman has said, there is no obvious solution, but surely it is time to find a solution to properly, fairly and sensibly tax businesses in the 21st century. My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) has already appointed Sir Vince Cable, the former distinguished Business Secretary, to lead a review of corporation tax and business rates for my party. That will make a contribution to the debate. Instead of claiming that the Government are standing up for business, surely it is time to acknowledge that yet more cuts to corporation tax over the next year will not truly deliver that and will not deal with the reality, which is that we are not collecting tax efficiently from companies that are now run in a very different way.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I rise to speak to amendment 162 and new clauses 10 and 11, which stand in my name and those of my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Bootle (Peter Dowd). I also support new clause 5, which has been explained articulately by the hon. Member for Aberdeen North (Kirsty Blackman), and confirm the Opposition’s support for amendment 177, which has just been spoken to articulately by the hon. Member for Leeds North West (Greg Mulholland).

Amendment 162 would remove clause 45 from the Bill, thereby halting the Government’s cut to the rate of corporation tax to 17% by 2020. The Government claim that cutting the corporation tax rate would make Britain even more attractive to inward investors and more competitive, and that it would support growth and investment. I would be grateful if the Minister elaborated on the evidential basis for those claims.

We all know the theory that states that if we cut tax on profits there is more cash for companies to invest in expansion, research and development and labour, and, theoretically, we become more attractive to foreign businesses. The problem is that, somewhere in the development of that theory, the Chancellor forgot to check the reality, as the figures do not support that age-old Conservative mantra.

Figures provided by the House of Commons Library show that in 1998 business investment as a percentage of GDP was 10.8%, and that in 2000 it was 10.6%. The rate of corporation tax in those years was 31% and 30% respectively. In 2015, business investment as a percentage of GDP was 9.7% and the rate of corporation tax was considerably lower than that in 2000, at 20%. Why, therefore, were businesses not in a state of investment frenzy in 2015, if, indeed, slashing corporation tax is a golden ticket to investment? Of course, I appreciate that there are many factors that affect the level of business investment in the economy, but a comparison of the figures seems to suggest that a lower rate of corporation tax does not correlate with a higher level of business investment.

Let us look at a different variable, namely foreign direct investment. The level of FDI in the UK has been steadily falling since 2005; there have been a few anomalies along the way, but the trend is most definitely downwards. That has coincided with a steady reduction in the rate of corporation tax. In 2005 the level of FDI flows into the UK was £96.8 billion and corporation tax was 30%. In 2014 FDI was £27.8 billion and corporation tax was 21%. Again, there could be many factors at play, but the figures demonstrate that there is no strong correlation between low rates of corporation tax and higher rates of investment and FDI.

I appreciate that, to a degree, low corporation tax rates may attract some companies to locate here, because they will want to pay less tax, but attracting them to truly invest in the development of industry here, as well as encouraging our UK companies to flourish, is another matter entirely, and that requires much more than just a tax break.

According to the Government’s own analysis, this cut is expected to cost the Exchequer almost £1 billion in 2020-21, in addition to the £2.5 billion cost in the same financial year of cutting corporation tax to 19% from 2017. The Institute for Fiscal Studies has also calculated that the Government’s cuts to corporation tax have cost £10.8 billion a year. That gives rise to the question of whether the money could be better spent to incentivise much-needed investment in the UK. The Minister will not be surprised to hear that the Opposition most definitely think it could.

Many businesses already have cash. The House of Commons Library has provided figures showing that the total amount of currency and deposits, or cash reserves, held by non-financial companies in the private sector is currently at a 20-year high, at £581 billion. The problem, then, is not that businesses need more cash, but that other factors in our economy need improvement, including skills, infrastructure, innovation and productivity.

The £10.8 billion estimated by the IFS is a large sum that would be better invested in filling the gaps in our economy that are failing business. We should not be engaging in a race to the bottom to become the world’s next big immoral tax haven, but providing the building blocks to make business actually succeed, and with that comes more revenue in taxes as businesses flourish and well-paid jobs are created.

The Minster would do well to take notes at this point, because Labour has committed to such investment, through a national investment bank and the bank of the north, to address specifically those areas left behind after decades of regional decline. Our national and regional development banks would help unlock £500 billion of investment and lending to small and medium-sized enterprises, including £250 billion of capital investment in the infrastructure that we urgently need and to help prevent economic slowdown. The regional focus of development banks would enable the Government to make sure that investment and lending is spread around the country, not just siphoned into the south, and that it benefits from local knowledge and expertise, thus ensuring that no area in Britain is left behind. Our bank of the north would also unlock the potential of the north of England, with a push to deliver the sort of infrastructure and investment that it has been deprived of for far too long.

We have also committed to ensuring that our workforce have the skills that business needs in a modern economy, through reinstating the education maintenance allowance and maintenance grants for poorer students, which would be funded by a corporation tax rate of 21%. That is the kind of intervention businesses are looking for—policies with a substantive impact on a company’s ability to do and develop business, not simply cuts to the headline rate of corporation tax.

The cut to corporation tax brought about by clause 45 is not the best use of public money to support businesses in the UK. I urge hon. Members on both sides of the House to join us in the Lobby to vote in favour of amendment 162.

The right hon. Member for Cities of London and Westminster (Mark Field) made some fantastic comments earlier on new clause 10, which relates to the patent box. The new clause would require the Chancellor to publish an independent review of the efficacy and value for money of the patent box legislation. The report would have to make an assessment of, first, the size and nature of the companies taking advantage of the patent box legislation; secondly, the impact of the patent box legislation on research and innovation in the UK, including supporting evidence; and, thirdly, the cost-effectiveness of the patent box legislation in incentivising research and development compared with other policy options. My hon. Friends and I are, of course, supportive of Government action to incentivise R and D, but we are not convinced that the patent box legislation has been efficient thus far in achieving that. We are not alone. Many commentators criticised the patent box, even before its introduction in 2012. The IFS has stated that the

“Patent Box is poorly targeted at research as the policy targets the income which results from patented technology, not the research itself…to the extent that a Patent Box reduces the tax rate for activity that would have occurred in the absence of government intervention, the policy includes a large deadweight cost.”

--- Later in debate ---

[Rob Marris]

I agree that it is designed to help some companies in their early stages, but with the effluxion of time, those companies should pass through the pipeline and we should see the fruit of their endeavours, helped indirectly by taxpayer support. The evidence should be coming through now. We could not have looked after one year to see whether it had been effective, but now that it has been around for a few years, we can.

I move on to amendment 177. I was amazed to hear the right hon. Gentleman say that he would be prepared to examine the question of having a turnover tax instead of corporation tax. The hon. Member for Leeds North West (Greg Mulholland) said the same thing. I absolutely agree, and I have long advocated looking at that, precisely because of tax avoidance. If it turns out to be the case that Apple has been avoiding tax in the United Kingdom, it would not have been able to do that so successfully if we had had a turnover tax rather than a corporation tax.

I have to say to the hon. Member for Leeds North West that I am a bit bemused. He said tonight that the leader of his party had set up a review of corporation tax, but the leader of his party has also tabled amendment 177 —supported, as far as I can tell, by the hon. Gentleman—which would abolish corporation tax completely for the financial year 2017, without bringing in a turnover tax instead. It seems a very strange amendment to table.

[Greg Mulholland]

As I think I made clear, amendment 177 is a probing amendment, which is designed entirely to make that point. We share the view that the reduction of corporation tax is flawed, but through this amendment we are saying that it needs to be done in a better way. It is a probing amendment and we will not be voting on it, but it is time that we had that debate and put something better in place.

[Rob Marris]

It is a strange way to do a probing amendment. I am not saying that it is wrong; that is not for me to say. However, it is common for the Opposition to table new clauses or amendments—as with those that we are considering tonight, such as new clause 10—that are designed to produce evidence. Presumably, the hon. Gentleman’s party will be looking at such evidence in its review. If the House could produce that evidence, it would speed up the process and help all of us towards evidence-based policy making.

On new clause 5, interestingly, I think that the Scottish National party reveals its hand; it is not much concerned about greenhouse gas emissions from oil production, let alone from burning oil. We saw the same thing last year in the debate on air passenger duty, when the SNP was all in favour of loads more people flying, despite what it does to the environment. The tenor of the remarks made by the hon. Member for Aberdeen North (Kirsty Blackman) was that she wants the taxation of oil and gas cut. Essentially, she is advocating indirectly, yet again, for another bung for Scotland from English taxpayers. The SNP Government have the power to put up taxes in Scotland and fail to do so, but they want English taxpayers to give them a bigger bung.

Oral Answers to Questions

Greg Mulholland Excerpts

Tuesday 7th June 2016 Commons Chamber

[Harriett Baldwin]

I hope that my hon. Friend has experienced only the ambulance chasers, not the whiplash. He is right to highlight the cost that this puts on motorists, which we estimate is about £90 a year for every motorist in the country. That is why we have already taken steps to reform this area. Last year in the autumn statement we announced further reforms, which will remove the right to cash compensation for minor whiplash injuries, while ensuring that genuine claimants are rehabilitated.

[Greg Mulholland (Leeds North West) (LD)]

Genuine tax avoidance must be tackled, but HMRC pursuing people who invested legally in schemes, not to avoid tax, and who are now being hit with accelerated payments, is an affront to natural justice, treating them as guilty until proved innocent. Will the Chancellor meet me and a group of people who are seriously detrimentally affected by this?

[Mr Osborne]

I am afraid I completely disagree with the hon. Gentleman. He is opposing a measure that we have introduced which says to people who are in dispute with HMRC about the money they pay because of their potential use of tax evasion or avoidance schemes that they should pay up front and, if they win their case, they get their money. Every other taxpayer has to do that. As a result of the measure, we have raised hundreds of millions of pounds for public services and won some key court judgments. I find it remarkable for a Liberal Democrat to be siding with those who want to try to evade their taxes.

Finance (No. 2) Bill

Greg Mulholland Excerpts

Monday 11th April 2016 Commons Chamber

[Greg Mulholland (Leeds North West) (LD)]

I thank the Minister for being so accommodating in giving way. Looking at part 10 of the Bill and given the pressure the Prime Minister has been under this week, with the Panama papers and the statement today, I wonder why the Bill does not include a measure to allow HMRC to name and shame publicly those who are involved in tax avoidance not after the third warning but after the first warning, and so send a much clearer signal?

[Mr Gauke]

I will discuss avoidance and evasion shortly, but on that specific proposal, we have strengthened HMRC’s capabilities in this area. The ability to name and shame facilitators of tax avoidance was introduced by this Government, and I think it is right that we have done that. As for the precise process, we think the balance is about right—it is difficult to see that there would be a substantial difference in terms of effectiveness if action were taken earlier. The whole idea of the regime was introduced by this Government.

As well as helping working households, the Government are committed to creating a nation of savers. In the Bill, we legislate to increase the personal savings allowance from April 2016, meaning that basic rate taxpayers will pay no tax on their savings income up to £1,000 and higher rate taxpayers will pay no tax on their savings income up to £500. As a result, 95% of taxpayers will pay no income tax on savings.

While supporting savers, we must also ensure that support is well targeted. The pension lifetime allowance is currently set at £1.25 million, but 96% of individuals now approaching retirement have a pension pot worth less than £1 million. We want a system that is targeted and sustainable and supports the majority of those approaching retirement. That is why the Bill reduces the pension lifetime allowance to £1 million—a change that will affect only the wealthiest pension savers.

The Bill also implements long overdue reform of the outdated and complex dividend tax system. The current system was designed at a time when total tax due on dividends was as high as 80% for some taxpayers; it also provides incentives for individuals to set up a company and pay themselves through dividends to reduce their tax bill. For those reasons, the Government are modernising and simplifying the dividend tax system by abolishing the dividends tax credit and replacing it with a new £5,000 tax-free allowance. The Bill also sets the dividend tax rates at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers. Some 95% of all taxpayers and more than three quarters of those receiving dividend income will either gain or be unaffected by the changes.

Supporting home ownership and first-time buyers is a key priority for the Government. Although people should be free to purchase a second home or invest in a buy-to-let property, that can affect other people’s ability to get on the property ladder. The Bill therefore implements higher rates of stamp duty land tax for the purchase of additional residential properties that are three percentage points above the standard rates.

I have been made aware that the Bill as drafted might lead to some main houses with an annexe for older relatives attracting the higher rates of SDLT intended to apply to additional properties. I thank my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles) for bringing that to my attention. I am happy to reassure the House that that is not our intention and the Government will table an amendment in Committee to correct the error and ensure fair treatment for annexes.