Amendment of the Law

Lord Foster of Bath Excerpts

Monday 26th March 2012 Commons Chamber

[Ms Harman]

But certainly not to do what this Government have done—without any consultation or any discussion at all. We certainly promoted the film industry.

To return to the tax break for video games, we first proposed a tax break for the games industry, and we put it in our Budget in 2010, but what did the Tory Chancellor say in his very first Budget? He said that

“we will not go ahead with the poorly targeted tax relief for the video games industry.”—[Official Report, 22 June 2010; Vol. 512, c. 175.]

And what did he do? He axed it. For the UK games industry, it could have been game over. He is introducing the tax relief now, but this misjudgment and delay have come at a price. Our video games industry was the third biggest in the world and has now fallen to the sixth. Many jobs have been lost, with nearly half going abroad to countries such as Canada, lured by its tax relief.

This policy, then, is not an original; it is a cover version—and like most cover versions, just not as good as the original. Although tax credits are worth while on their own, they are not enough to ensure that Britain fulfils its potential as a global hub for the creative industries. Just as this Government do not have a plan for jobs and growth in the economy, they do not have a plan for jobs and growth in the creative industries.

Where is the long-awaited communications Green Paper? The Minister did not say a word about it—not one word. Perhaps it is still waiting for some high-level policy input from a premier league Tory donor.

Where, too, is the action on protecting intellectual property? This is a fundamental issue for the creative industries—the bedrock of the knowledge economy. A tax break helps to boost investment, but more investors would be more confident if they knew that the product to which they were committing was not vulnerable to theft on an industrial scale. If an industry has been given a tax break, it makes it even less sensible to stand by and watch any of the value drain away through IP theft. The last Labour Government recognised that, which is why in 2010, we passed the Digital Economy Act with cross-party support. It needs to be implemented now. We already have the Digital Economy Act; it would be good to go with it. Professor Hargreaves has conducted another review of the same issue, but what the industry and economy are crying out for is action.

[Mr Don Foster (Bath) (LD)]

I have listened to a lot of drivel in my time, but is the right hon. and learned Lady seriously telling me that she recommends going ahead with all aspects of the Digital Economy Act when Ofcom has shown that part of it was simply unworkable, as Liberal Democrats pointed out during the passage of the Bill?

[Ms Harman]

But it needs to be implemented now, with a clear timetable and a code of conduct so that notification letters can be issued. We want the Government to show leadership by ensuring that search engines such as Google play their part, and, if there is no agreement, to carry on and legislate in the forthcoming communications Bill.

Where is the action on young people and skills in the creative industries? The future of our creative economy is built on our young people—young people who are consumers, and many of whom want to work in those industries. We must ensure that there are opportunities for creative development from primary school to the workplace, but the signs are not good. Creativity is being stifled in schools, and since last year the number of applications for degree courses in creative arts and design has fallen by 27%. We all know why that is: it is because of the Liberal Democrats’ shameful betrayal on tuition fees. The Liberal Democrats were meant to be a brake on the Government—remember that?—but it is obvious that they have zero influence on policy. Perhaps they just did not have enough money to buy dinner with the Prime Minister.

Where is the action on access to finance for the creative industries? London is a global financial capital and Britain’s creative industries are world leaders, yet they struggle to obtain the finance they need to grow. Most creative businesses are small or medium-sized, and they need the banks to lend to them to help them get started and grow. However, as has been pointed out by the British Chambers of Commerce, credit easing

“will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place.”

Operation Merlin figures show that banks are still failing to meet their lending targets. Net lending to small businesses fell by £10 billion last year. Banks must start lending to creative businesses rather than throwing money away in bankers’ bonuses, and the Government must start making that happen rather than throwing money away on tax cuts for rich bankers.

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[Mr Don Foster (Bath) (LD)]

I am delighted to follow the right hon. Member for South Shields (David Miliband) who said quite clearly that the coalition Government were not responsible for and had not invented the problem. I might ask him to consider who did. Our country has had to face the biggest boom and bust, with the biggest deficit in the G20, and has had to cope with the biggest banking failure and the biggest crisis among our European neighbours. As a result, we have seen, under Labour, manufacturing falling and personal and national debt rising to a situation in which for every £4 we spend, we have to borrow £1. Every single day, we are spending £120 million just to pay off the interest on the country’s debt. Of course this coalition Government did not create the problem: we are trying to put it right and we are now in the early stages of recovery.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The hon. Gentleman is making some pressing points, but in the light of everything he has said is he seriously saying that the priority at this time should be a tax cut for those earning more than £3,000 a week?

[Mr Foster]

Let me come to that in a moment. First, let me tell the hon. Gentleman what I thought this Budget needed to do. First, it needed to continue the process of reducing the deficit. It needed to continue to maintain confidence in the international markets not least to keep interest rates low and it needed to develop a fair taxation system. I believe that the tax policy that was introduced through this Budget is a fair one. It has moved us more rapidly than many of us could have hoped to a Liberal Democrat aspiration to achieve a tax threshold of £10,000. As a result of what this Government have done by lifting that tax threshold to more than £9,000 by April next year, we will have taken 2 million of the lowest paid out of paying tax altogether and 24 million people will have been given a tax cut of more than £500. That is in marked contrast to the 5 million low-paid people who had to pay more under the Labour Government who cut the 10p income tax band.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) seems to suggest that the rich are getting off lightly, but if he looks at all the figures, he will see that that simply is not the case. Under the measures that have been included in the Budget with the 7% increase in capital gains tax, the 15% on stuff that is owned offshore by foreign companies and the measures on tax loopholes, the figures demonstrate that those who are best placed to pay will be paying even more as a result of this Government.

[Several hon. Members]

rose—

[Mr Foster]

I will not give way because I want to make progress.

I was pleased with the comments of my hon. Friend the Minister because he was able to put at the heart of what the Government are doing some of the really important work of the Department for Culture, Media and Sport. He showed how the work being done there can help to deliver the growth in the economy that is really necessary, particularly in relation to the creative industries. As he said—and I am grateful to the deputy leader of the Labour party for agreeing—we have in this country some of the brightest and best people working in our creative industries. We need to give them as much support as we can. Even before the Budget, work had been done to try to achieve that, such as the establishment of the creative industries council, which is already making valuable recommendations on the skills and training needs of the sector.

[Tristram Hunt]

Is the right hon. Gentleman happy that as a result of the tuition fees introduced by his Government, we are seeing a massive collapse in the numbers studying modern languages, humanities and the creative industries?

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[Mr Foster]

If the hon. Gentleman looks at the figures on applications to our universities, he will see that the predicted fall-off has simply not happened. As we heard earlier in the debate and in the Budget statement, investment in science is being increased. The creative industries want a better base than what is taught in our schools. Because of this coalition Government, the way computing is taught in schools is to be changed, and because of the work of the Henley review, we are going to put culture and creativity back in schools. That will be crucial to the sector. The former Chancellor talked about young people; I hope that he has looked at the real benefit that will be produced by the enterprise loan scheme for young people introduced in this Budget. Work is now being done to roll out high-speed broadband and ultra-high-speed broadband in many of our cities. Everyone in the creative industries will benefit from measures such as the cut in corporation tax, the simplification of tax collection, the loan guarantee system, the enhanced business finance partnership and so on.

I welcome many of the measures that have already been introduced and those that are in this Budget, but of particular importance are the tax breaks for producers of computer games, high-end television productions and animation. They will bring real benefits to those elements of the creative industries, helping the UK economy and increasing employment and opportunities for innovation and investment. As many have said, their effect is already being felt. Only a couple of days ago, I received an e-mail from an animation company, Blue-Zoo, saying that it

“has scrapped all planned moves abroad and intends to make shows 100% in this country”

It also says:

“not only that, we are now planning to invest further in our infrastructure, creating jobs, and growing our industry”.

There are many other examples.

Having been very positive, in the few seconds remaining let me raise three concerns about the Budget. First, the Budget introduces a change in gaming machine taxation, the broad thrust of which is welcome, but the failure to take account of irrecoverable VAT in the calculation will, I believe, be to the disadvantage of some aspects of the gaming industry, particularly bingo. I am also concerned about the impact of tax relief changes on philanthropy, and of VAT changes on work done on listed buildings. With those three—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

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[Mr Campbell]

The only place I could take them is the canteen. I might get something there, but I am sure I would not get anything in Downing street.

The 50p tax rate has been widely discussed since the Budget statement. We were told it does not do anything and that no one is paying it, which makes me wonder why we have it. We have just heard the previous Chancellor explain why he put it on, but I have to ask: if people can fiddle a 50p rate, surely they can fiddle a 45p rate? And if they are fiddling the 50p rate, what else are they fiddling?

In the Budget statement, we heard the Chancellor say he opposes people fiddling their taxes. I have been here 25 years—I suppose I am an old man compared with some—and I have heard that time and again. Every Chancellor in history—certainly while I have been here—has said, “I’m going to come down heavy on tax evaders”, but what do we see? People making profits in this country and swanning off with their swag to some tax haven—an island somewhere. They cannot go to Switzerland now, because the Swiss will give the show away, but the Government should remember the old saying, “There’s honour among thieves.” There is honour among bankers as well, so I doubt they will be getting much information from the Swiss.

The Liberals have been telling us how wonderful the Budget is, but 14,000 people in this country are going to get a £40,000 tax rebate at the expense of £3 billion from old people—pensioners. I always thought the Liberals had a little heart in them. I do not know what deal they did to get what they wanted, but I am getting a weary feeling in my bones that they sold out the health service to what they think is a good deal. I am sure, when it comes down to it, that is what they did. They sat round the table and told the Tories, “We’ll get your health Bill through Parliament, but we want this and we want that.” Well, they have come unstuck, because in fact they are getting nothing.

[Mr Foster]

I do not know whether the hon. Gentleman has looked at the detail of the OBR’s calculations, but if he does he will see that the additional money going to pensioners totals £1.75 billion and the cost of the removal of the age-related allowance is £360 million. That means a net increase to pensioners—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman has made his speech and there are many Members who will not get in. It is fine to intervene, but I certainly do not want a second speech.