Professional Standards in the Banking Industry

Priti Patel Excerpts

Thursday 5th July 2012 Commons Chamber

[Priti Patel (Witham) (Con)]

Many good and relevant points have been made from the Government Benches already, so I want to make just three brief points.

In any debate on the banking sector, it is vital to remember the importance of financial services to the UK economy. I say that as someone who represents a constituency in Essex. Thousands of my constituents work in the City of London, and I can assure the House that they are not criminals. They are not the type of bankers who should be vilified; they are, of course, hard-working, law-abiding, tax-paying individuals, who help to contribute to that £100 billion to the UK economy and that £63 billion in taxes to the Exchequer. We should remember that we are world leaders in financial services, and it is wrong to vilify the entire sector for the sins of the few. It is because the overwhelming majority of City workers, including those from Essex, take such great pride in their work that the scandals currently rocking the financial sector are so damaging, not just to them and their jobs, but to the reputation of UK plc and our financial services sector full stop.

That is why it is important for us all to consider seriously the professional standards of the financial sector and the banking industry in a sober and considered way in this House. Today’s debate has been incredibly lively, as well as quite partisan, but I would like to pay tribute to my hon. Friend the Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee, for bringing sanity back to the debate. As my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) said, although many issues need to be addressed right now, we have to look at the role of Parliament, the role of Select Committees and the ability of parliamentarians to scrutinise these issues in the right and proper way.

I think we would all agree that any criminality or wrongdoing that has hampered the fair functioning of the financial markets thus far must be fully investigated. Those who are found guilty should face stern punishment. In my view, there should be an unprecedented crackdown on those who lied and cheated, but we should not be demonising everybody in the City. It is our job as legislators to review what has gone wrong, to examine the wrongdoing, and, where possible, to legislate to reduce the prospect of serious misdeeds ever happening again. That is why a parliamentary inquiry led by a Joint Committee of both Houses is the most appropriate way to proceed. We have heard arguments in favour of that option today.

We have also heard about the abilities of parliamentarians. We have been elected to this House not only because of our backgrounds and our judgments. We have been elected to bring our experience to the fore, to articulate and to challenge, to be advocates and to be significant interrogators. We have heard evidence of hubris today, but it is important that we get on with the job. We need to find out why the regulatory system is broken. Vested interests have been mentioned on a number of occasions. We now need to get on with the job and fix this in the shortest possible time frame.

Nobody should be playing at party politics now. If we do that, it will take longer to clean up the City and even longer to bring in new regulations and laws. On that basis, I welcome the inquiry. It is incumbent on us all to get on and repair the damage that was done in the past by all those who have been involved in bad legislation and bad regulation. We need to restore the reputation of our financial services sector.

Budget Resolutions and Economic Situation

Priti Patel Excerpts

Friday 23rd March 2012 Commons Chamber

[Priti Patel (Witham) (Con)]

Over the years, Conservative Chancellors have stood at the Dispatch Box on Budget day and outlined great programmes of reform to transform the economy, modernise the country, improve lives and restore Britain’s standing in the world. That is exactly what our current Chancellor of the Exchequer did in his Budget on Wednesday. He has had to reverse the socialist doctrine of an over-bloated state fuelled by the last Labour Government’s binge-spending, which resulted in an unprecedented economic crisis.

I fully support this Government’s aim to earn our way out of the economic crisis. I support the Budget principle of rewarding work, backing business, and being on the side of those who aspire to do better for themselves. I also support the introduction of the new enterprise allowance, which will help young people not just get into work, but start up enterprises. Importantly, I also support the principle of sticking to the plan to deal with Labour’s debts.

This will also be seen as a historic Budget, with the largest increase in the personal tax allowance ever, which will benefit 24 million ordinary families throughout the country. Most basic rate taxpayers will gain £220 every year. This Government will have taken 2 million low-paid people out of tax entirely.

The foundations of our economic strength were left to crumble by Labour, but this Chancellor has put forward strong and credible plans to rebuild our economy. Just as the reduction in the main rate of corporation tax to 22p sends a resounding signal to the rest of the world that would-be foreign investors are welcome in Britain, so this country needs a Government who are committed to reducing the overall tax burden and letting low, middle and high earners keep more of what they earn in their pockets. The Labour party may not, for all we know, like the idea that people should be free to spend their money as they like, but my constituents want to be able to control more of their money—the money that they earn—rather than have the state raid their pockets and waste their money on an over-bloated public sector.

In addition to the scandal of leaving the country with the biggest ever national deficit, the Labour party failed to serve the country well, and certainly failed to serve Essex well, on infrastructure investment. In Essex, our infrastructure desperately needs investment, with the A120 being a case in point. It is the 10th most dangerous road in the country, and I am sorry to report that last week a young constituent of mine was very badly injured in an accident on this dreadful road. Despite being one of the largest large net contributors to the Treasury, Essex was left behind under the previous Government. The Labour Government were prepared to profit from the labours and endeavours of hard-working Essex families and businesses, but were never prepared to put anything back. With a record like that, is it any wonder that voters there refused to return a single Labour MP to the House of Commons and have made Essex a Labour-free zone? I hope that the Government will look to fast-track and implement mechanisms to bring inward investment in our infrastructure. In particular, I would welcome the opportunity to work alongside government to examine the financing models for roads such as the A120.

Whether through supporting small and medium-sized enterprises, attracting foreign investment or helping hard-working families by providing the largest increase in the personal allowances in 30 years, this Budget is giving this country’s economy the strong foundations it needs for future growth and economic prosperity.

Living Standards

Priti Patel Excerpts

Monday 5th March 2012 Commons Chamber

[Mr Gauke]

I will happily re-fight the 2010 general election with the hon. Gentleman any time. He will remember how well his party did on that occasion. The fact is that the UK had the worst deficit of any major economy.

[Priti Patel (Witham) (Con)]

This debate is about living standards, and central to good living standards in our country are job creation and economic growth. Does my hon. Friend agree that the role of the private sector is central to creating jobs, to make up for Labour’s failure to rebalance the economy and provide job creation?

[Mr Gauke]

My hon. Friend is absolutely right. The recovery that this country requires will be driven by the private sector. It cannot be driven by more borrowing and more debt, which is the policy of the Opposition.

--- Later in debate ---

[Priti Patel (Witham) (Con)]

I welcome the opportunity to speak in this debate, because from what I have heard thus far it seems to be a chance to draw a contrast between the policies that this Government are pursuing to support jobs, growth and living standards and the record of economic failure that hangs like a millstone around the necks of Labour Members. Few things would be more damaging to the living standards of all our constituents than the introduction of the Labour party’s discredited policies.

I should like to focus on three areas in which the Government are making a real, positive difference to living standards despite the challenging economic circumstances and the appalling state of the public finances inherited from the previous Government. The first is business and growth.

Supporting jobs and growth is essential to maintaining good living standards, and the Government are putting Britain on the right track. The commitment to a lower main rate of corporation tax of 23% will boost Britain’s competitiveness, and I emphasise that that will mean more jobs being created and better living standards for all our constituents. Importantly, that pledge rules out a financial transaction tax and gives great stability to the City of London and the financial markets, which are key to the triple A rating that provides the financial stability underpinning our economy.

The Government have also cut the small profits rate to 20%, which is a welcome step forward to support growth. That, of course, helps to stimulate economic activity, particularly among small businesses. In my constituency, 83% of jobs depend on small businesses, compared with the national average of 68%. Few things would have been more damaging to business men, entrepreneurs and wealth creators looking to invest more and create jobs than the previous Government’s plan to increase the small profits rate to 22%. Jobs and growth are fundamental to our living standards, and it is a shame that the previous Prime Minister, who did so much to damage our economy and undermine our triple A credit rating, is not in the Chamber today to listen to the debate and account for the previous Government’s failures.

I should also like to touch on support for pensioners, which is central to living standards. The Government deserve great praise for the action that is being taken to support our pensioners. Council tax freezes in particular are a welcome way to keep more money in the pockets of all our constituents, including pensioners, whereas the Labour party doubled council tax when it was in government. That hit pensioners the hardest. We have also protected the winter fuel allowance and made cold weather payments permanent. The triple lock on pensions, which has been mentioned, has led to a record increase of £5.30 in the state pension, which will benefit about 13 million people and of course have an impact on living standards.

In the time that I have left I wish to refer to the reform of public services. Only last week, we learned that 17 million adults—about half the working-age population—have the numeracy skills of primary school pupils. Having a work force unable to do the basics in maths and arithmetic is naturally detrimental to our living standards. The Labour Government have much to account for on that front, as well.

The Government are investing a great deal in education and reforming public services. Frankly, after the previous Government left the country with an unprecedented scale of economic and social problems—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

Public Service Pensions

Priti Patel Excerpts

Tuesday 20th December 2011 Commons Chamber

[Danny Alexander]

I am grateful to the hon. Lady for picking up on that point. We will certainly look at the impact on opt-outs of the first year’s contribution increase. That will allow us to make adjustments to how we deliver the increase in years 2 and 3. I will be happy to share the relevant evidence in an appropriate form, perhaps in a statement or debate in the House.

[Priti Patel (Witham) (Con)]

In light of the hard-line position taken by the PCS union, what indication has my right hon. Friend had that it is serious about pension reform and will come back and sit at the negotiating table?

[Danny Alexander]

I am not sure that I have had any such indications so far, but I would, of course, welcome them if they came in the future?

Business, Innovation and Skills

Priti Patel Excerpts

Tuesday 20th December 2011 Commons Chamber

[Priti Patel (Witham) (Con)]

I start by wishing everyone a happy Christmas. I have been waiting a considerable time for this debate, and I am glad that it is now upon us. I would like to talk specifically about businesses and growth and some of the barriers affecting growth in my constituency.

By way of background, 83% of the local work force in my constituency are employed by small and medium-sized enterprises, which is around 15% more than the national average. Jobs and growth in my constituency are disproportionately dependent upon the success of small shops and medium-sized businesses. My constituency is home to around 3,800 SMEs that each employ fewer than 250 people across a wide range of sectors. I pay tribute to all the business men and women across the county of Essex. We are a highly entrepreneurial constituency full of small businesses, because they do a hell of a lot to create vital jobs.

My constituency has some outstanding world-class businesses and family-run businesses, such as Crittall Windows, an award-winning international company. We have the world-famous Wilkin & Sons jam factory in Tiptree, an outstanding chocolate maker, Amelia Rope, and a worldwide logistics company called Simarco. They all exemplify Essex’s attitude and status as a county of entrepreneurs. As ever, with most independent and small businesses, given the right kind of macro-economic and fiscal framework, they will adapt to the changes and challenges thrust upon them by any Government, by international circumstances and—dare I say it?—by Europe.

The Government deserve much praise for the actions already taken to support small businesses and growth, and the decision to reduce the small profits rate to 20p stands in stark contrast to what we saw under previous Governments. We also heard from the Chancellor last month that he will now halt the fuel duty rise in January, which is welcome news for small businesses. Businesses are now eagerly awaiting the promise of red tape reform. The one-in, one-out rule is all well and good, but all I hear is that we should just have a bonfire, throwing many out and bringing none in.

There are still many barriers to growth. Interestingly, in the past 10 days we have heard about the Portas review. I should declare an interest as the daughter of small retailers; my parents are shopkeepers. I think that we all recognise the fact that our high streets are having a very challenging time. They need reform. Even in a place such as Witham, where businesses work hard, we have empty shops on our high street; it is a fact. Although there is no silver bullet or magic wand, the Government and local authorities need to start looking at the recommendations and implementing some of the excellent proposals that Mary Portas has outlined. I would like local authorities to become really ambitious in their agenda for growth and in how they support business, which might mean removing some of the licensing and planning restrictions that have been detrimental so that we can find ways to boost growth on the high street and make our town centres far more vibrant. We must also support national market day. Those of us who represent market towns want to see much more emphasis on that area. I hope that the Government will start prioritising some of the reforms she advocated.

The other area is red tape, including the ever-burdensome red tape that comes from the European Union. For example, the agency workers regulations will cost Britain £1.5 billion. To put that into some kind of context, that is more than the apprenticeship budget alone, which we debated last night. I would rather see that money go into businesses and job creation in this country.

The other concern for Essex and my constituency is infrastructure. Essex and the constituency are well placed. We have Tilbury, Felixstowe, Harwich, the A12 and the A120, but our roads are struggling because there is no infrastructure investment. We also desperately need infrastructure investment in our railways in Essex. We need to get freight off the roads and back on to the railways. Anything that can be done to deal with that area would be useful, because ultimately businesses will grow if we can sort out our infrastructure problems.

Finally, I want to touch on banking. I hear endlessly from small businesses in my constituency that banks are simply letting them down, not on a small scale, but on a macro scale. I am concerned by the actions of the banks, which are effectively causing my constituency and small businesses misery. While the small businesses are creating jobs, the banks are leveraging, with shocking terms and conditions and fees being added to business accounts. They are dealing with individuals and small businesses in quite a threatening way. I had one dreadful case in my constituency involving one particular businessman, about whom I have written to Ministers this week, and I should like an official, if not a Minister, to meet him. Businesses now feel compelled by aggressive banks to sign up to unfavourable terms and conditions, and that has to change. I hope that Front Benchers will respond positively to the issues that I have outlined and give small businesses an early Christmas present by committing to remove some of those barriers.

Fuel Prices

Priti Patel Excerpts

Tuesday 15th November 2011 Commons Chamber

[Dr Wollaston]

My hon. Friend makes a good point. Indeed, one organic business in my constituency said that it would find a rise more acceptable if it could be seen directly as a green tax. Unfortunately, that is not the case. In my constituency, people will be badly hit by a double whammy, in that the bus service operators grant is set to be reduced by 20% next year. Just when they cannot afford to use their cars, people are being hit by a real threat to rural bus services, which are already at a critical level in south Devon. I hope that the Minister will set out what proportion of the rise will be set aside for green taxation purposes.

[Priti Patel (Witham) (Con)]

Does my hon. Friend agree that the points she is making show precisely why motorists need to see greater transparency in how fuel prices are determined? I am thinking, in particular, about the disparity between pump prices and the price of oil.

[Dr Wollaston]

I fully support that, because in south Devon those on the lowest incomes will be hardest hit. They will be spending yet more of their disposable income on fuel or they will be waiting at the side of a road for a bus service that can no longer afford to operate.

European Union Fiscal Union

Priti Patel Excerpts

Wednesday 14th September 2011 Westminster Hall

[Priti Patel (Witham) (Con)]

I shall be brief.

I congratulate my hon. Friend the Member for Stone (Mr Cash) on securing this debate and on all that he does on all matters European and their scrutiny in the House. This is a timely debate, and it is essential that all necessary steps are taken to protect hard-pressed British taxpayers from paying the costs of eurozone bail-outs, full stop, and to defend Britain from efforts to enforce closer fiscal integration in the wider EU.

Having campaigned for several years against Britain’s entry into the euro, I strongly recall the arguments that monetary union in Europe would inevitably lead to fiscal union. We heard many of the arguments today. We now see Europe heading in that direction, and it is a road down which we should never be drawn. As we heard over the summer, the desire in Europe to move towards fiscal union has accelerated, and the eurozone crisis is being used to support ever-closer union and to further federalist ambitions.

The EU’s Competition Commissioner said:

“This is one moment where we need greater integration…We need fiscal union”.

As we have heard this afternoon, that is not the right way forward, and I support all the views I have heard. I appreciate that much of the talk about a fiscal union is concerned primarily with the 17 eurozone countries, but there would be dire consequences for Britain, and we have a role in the wider discussions of the implications, particularly with those countries that are trying to take the whole EU with them. We must stop that.

The Europe 2020 strategy, which my hon. Friend the Member for Stone touched on, has implications for our fiscal and economic policies, including scrutiny of national reform programmes, and for plans to increase the size of the EU budget. The European semester, for example, includes proposals for greater monitoring and peer review of our domestic budgets. Our pre-Budget report is being looked into, but it is only a matter of time before Europe tries to grasp more control of such matters, because it believes that interdependence within the EU requires tighter economic governance to apply to all member states, and not just to those in the eurozone.

I urge the Minister, politely but forcefully, to notify our European partners that any interference in our fiscal policy is unwelcome. We should not encourage that. I and many others have argued that Britain should not surrender any of its fiscal powers, but should instead use this and all opportunities presented by the prospect of any new treaty to repatriate powers to this country. That is the right way forward.

Finally, I reiterate the importance of cutting all costs relating to Europe. Over the lifetime of this Parliament, our contributions to Europe will increase by between £8 billion and £9 billion, which is unsustainable. Businesses and consumers in this country keep facing additional costs. We know the direction of travel for all matters financial in the EU. It is preventing the creation of jobs here, and action must be taken.

Hard-pressed taxpayers in my constituency and throughout Britain want cuts in the EU budget—and no more increases, not even the proposed 2% increase. We must just say no. We must defend the rebate, and if we tighten our belts at home Europe must get the message and tighten its belt. Such matters should be a priority for the Government in the months ahead and, importantly, now, while there is a eurozone crisis, but they are also an opportunity.

The Economy

Priti Patel Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Priti Patel (Witham) (Con)]

I thank the Opposition for this debate, which provides Government Members with the opportunity to remind the country of the economic disaster that the Labour party presided over, and the appalling legacy that they left for this Government to deal with. I find it pitiful but ironic that Labour Members have the audacity today to make sweeping claims and generalisations about the economy, when it was their former Chief Secretary to the Treasury who left that dreadful note to his successor that said, “There is no money.”

Rather than being advocates for job creation, enterprise growth and the private sector in their constituencies up and down the country, Labour Members have consistently talked down the economy in this debate. They complain that the Government are not spending enough hard-pressed taxpayers’ money, but that would lead to further deficit. As everyone knows, the Labour party left the economy on the verge of bankruptcy.

This time last year, my right hon. Friend the Chancellor stood in the Chamber and set out a robust plan to rid the UK of its worst ever peacetime budget deficit. As we all know, deficit denial syndrome is rife on the Labour Benches, so let me repeat: the aim of the emergency Budget was to rid the country of its worst ever peacetime budget deficit. There is a strong message to the country: Labour should never again be allowed to run our economy into the ground.

[Several hon. Members]

rose—

[Priti Patel]

I will take one intervention, from my hon. Friend there.

[Alec Shelbrooke]

I am most grateful to my hon. Friend for giving way. Labour Members like to harp on about the ’80s, but if we are going to go that far back in history, let us go back to the ’70s, when again a Labour Government completely bankrupted the country. They have learned nothing.

[Priti Patel]

I thank my hon. Friend for that comment. The 1970s was also the era of strikes, and as we all know, strikes cost jobs, they do not create them. Before last year’s Budget, we had the deepest recession, record rates of job losses, and national debt increasing to a peacetime record—

[Mr Anderson]

Will the hon. Lady give way?

[Priti Patel]

I have said that I will take only one intervention, because of pressure of time; other Members want to speak.

Families and businesses across the country, and across my constituency, have faced genuine hardship, and I speak as someone from a small family business background. Let us not forget that 12 months ago the country faced a severe sovereign debt crisis. The prospect of Ministers having to go with a begging bowl to the IMF, as Labour did in 1976, was daunting. The Government should be congratulated on bringing Britain back from the brink.

Last year’s emergency Budget was about rescuing the nation’s finances and paying for Labour’s mistakes and its scorched earth policy. The Government have absolutely the right focus: reforming the economy, ensuring jobs and growth for the future, and doing what we can to help families with the cost of living. Last year’s Budget marked the first step towards rebalancing the British economy on to the path of long-term sustainable growth.

I want to highlight three areas in which the Government have laid the foundations for future growth: first, the promotion of business and job creation in the private sector; secondly, focusing on getting people into work, with the creation of half a million private sector jobs, which Labour Members seem to be mocking, which is completely insulting to the people in those jobs; and thirdly, restoring confidence in the British economy. The Government are doing the right thing: sticking to the plan, backed by the IMF, OECD, PIMCO and every major business body in the country, the key objective of which is to put the public finances back on track, after the Labour party maxed out the nation’s credit card.

Instead of being positive and optimistic, Labour Members have the audacity to talk our economy down. They sneer at this, but when they do so they talk down to the enterprising individuals who run independent shops and small businesses, who create jobs and have the initiative to invest, start new businesses and generate welcome prosperity for our country. That should not be overlooked. The Opposition’s dogmatic attitude to those who work hard, pay their taxes and contribute to our economy is starkly obvious, and I believe that they should never again be trusted with the nation’s economic finances.

The Government are boosting manufacturing, jobs and growth by cutting key taxes for business and entrepreneurs and scrapping much regulation, although I think that we could scrap even more, particularly the gold-plated stuff that comes out of Europe. They are also giving more support to young people by providing 50,000 more apprenticeships, as well as work experience schemes. At long last we can start making things in this country again.

Let me end by making a salutary point. There is no doubt that it will take time for the economy to recover fully given the extent of our dreadful legacy, but throughout the business world, from investors in the City to small shopkeepers and small businessmen, it is recognised that we have a business-friendly Government who are committed to cutting the deficit and promoting job creation and investment.

HM Revenue and Customs

Priti Patel Excerpts

Wednesday 2nd March 2011 Commons Chamber

[Priti Patel (Witham) (Con)]

I welcome the opportunity to discuss the work of Her Majesty’s Revenue and Customs. I pay tribute to the Treasury Committee for its work in scrutinising that organisation and for the many helpful inquiries it undertakes.

I have a particular interest in the administration and effectiveness of HMRC, because it is clear to me and to many residents and businesses in my constituency that it is a failing organisation that all too often treats people and businesses in the most appalling fashion. I have endeavoured to raise these points before in the House, but have had the misfortune to be unsuccessful in the ballot for Adjournment debates. I am pleased that I can now put these matters on the record in the House. I should add that I am immensely grateful to the Exchequer Secretary, who has faced a deluge of correspondence from me regarding the numerous cases in which my constituents have felt harshly treated by HMRC. I thank him for meeting me earlier this year to discuss the numerous complaints and concerns about the administration and processes of HMRC.

We are all aware of the highly publicised issues associated with HMRC, which range from problems with PAYE and tax credits to lost child benefit discs. Many hon. Members have touched on those areas. As constituency MPs, we see at first hand in our surgeries and in the letters we receive the distress and sheer misery that these mistakes and errors cause. I am exasperated by the extent and seriousness of the cases, and by the level of distress among the constituents who have come to me. Such constituents usually come to us in desperation, after experiencing tremendous difficulties in communicating with HMRC and in getting answers from it. They are the human victims of HMRC. I will draw to the House’s attention some of the cases that I have come across in my 10-month tenure as a Member of Parliament.

First, my constituent Mr Philip Wright has an ongoing dispute with HMRC that dates back to 1999, in the days of the Inland Revenue. It relates to employment and tax status in the construction industry—a notoriously complex matter. Six years later, in 2005, the case was heard before Colchester general commissioners, who ruled in Mr Wright’s favour. Despite that, HMRC refused to let the matter rest and appealed on the grounds that the general commissioners had misdirected themselves. The case has since gone from one tribunal to another, including a sitting two years ago at which neither Mr Wright nor his representative could be present. There have been suggestions of irregularity in the process, and HMRC appears to be making it as difficult as possible for Mr Wright.

It is now 2011 and the case is still ongoing. The cost to HMRC of pursuing the case his spiralled out of control and has gone well above the claim that it has against my constituent. I saw Mr Wright on Saturday in my surgery and the stress of the case has clearly had a devastating impact on his health and emotional well-being. I urge senior HMRC officials who are paying attention to this debate to reflect on this case.

Another distressing case in which HMRC has gone after a local business in a thoroughly disproportionate way came to my attention just this week. A firm in Witham sent its VAT payments to HMRC two weeks late because there was a delay in it receiving a payment from a customer. Instead of exercising a dose of common sense, HMRC is pursuing the firm for a surcharge of almost £5,500 on a VAT bill of about £36,000. Of course there are rules about paying taxes, but at a time when so many businesses are struggling, it seems thoroughly inflexible of HMRC to target such small businesses, especially when they have paid their taxes in full. I get the impression that officials are waiting like vultures to target their prey when they are at their weakest. The effect on businesses of that approach, as many hon. Members have said, is to put jobs and prosperity at risk. A £5,500 surcharge might seem like small pickings for HMRC, but for most businesses in my constituency, where 80% of the local jobs are in SMEs, such a sum could enable somebody to be employed or a financial investment made in the business. The instruments of government should be helping business and the private sector, not causing such unnecessary burdens and distress. I have written to HMRC this week about these cases, and I hope that, among the 70,000 people it employs, there are enough who will have enough common sense to do the right thing.

I have come across other cases in which businesses have suffered at the hands of HMRC. One business that was applying for VAT exemption encountered nothing but excessive delays. Another case, which landed on my desk in June last year, alarms me no end. A local business received what I would describe as a generic letter from HMRC on 1 June, stating that the business was £64,000 in arrears. The letter stated that that sum had to be repaid by 14 June, even though it arrived only on 1 June. That is a significant sum of money. During that 14-day window, my constituent made a number of attempts to contact HMRC about the issue, but no one would return any calls. It was not until I intervened that HMRC finally replied. Its inability to return calls, its automated actions and its generic letters cannot be justified. It would be a shock to anyone’s system to receive a notification of that nature.

[Mr Love]

I want to take up the point made by the hon. Member for Chichester (Mr Tyrie) about the shift in compliance costs from HMRC not only to small businesses but to individuals and large businesses. As that shift is already catalogued as having happened in recent years, does the hon. Lady think that the implications of the comprehensive spending review are that small businesses will have to meet even greater compliance costs in future?

[Priti Patel]

I do not, actually. Many other measures came out of the comprehensive spending review and last year’s Budget that will help small businesses to further their interests and, we hope, grow their businesses as well.

I come from a small business background—my parents have a small business—and I am stunned by the attitude and the bureaucracy associated with HMRC. Its lack of accountability is also deeply disturbing for all our constituents. I have had constituents in my surgery who have been reduced to tears when describing their own personal experiences and the distress that HMRC has caused them. In one case, a couple who had separated were having endless complications with their tax credit awards, and the wife was receiving demands from HMRC for the repayment of overpaid credits. In another, problems were caused by HMRC’s delay in processing the correct levels of tax credit for a constituent because—surprise, surprise!—HMRC had made mistakes with the information that it held on her, and my constituent subsequently had to supply it with a great deal of additional paperwork and ID. That involved a lengthy and inconvenient process.

I should like to draw the House’s attention to another tax credit case. It concerns a couple who received overpayments as a result of HMRC’s mistakes. HMRC even gave my constituents a reward of £35 in recognition of that. However, the errors mean that that family are now being pursued for a range of repayments and are undergoing another lengthy and bureaucratic process, even though they have done nothing wrong. Make no mistake, HMRC is effectively still persecuting them and treating them like criminals.

In all those cases, and many others, my constituents have endeavoured to do the right thing, and there has been no evidence of any attempt to avoid paying taxes or to mislead HMRC. However, due to an overly complicated tax system and what seems to be endemic incompetence at HMRC, my constituents, and, as we have heard today, many others, have suffered. My constituents feel that HMRC, with the full force of the state behind it, is effectively bullying them and persecuting the disadvantaged, the weak and the powerless, and that it fails to realise the worry, stress, anxiety and misery that its errors cause the businesses and individuals who are threatened. Those unreasonable actions defy common sense and undermine how HMRC operates and the tax system.

[Charlie Elphicke (Dover) (Con)]

When my hon. Friend takes up cases with HMRC, does she find that they are suddenly sorted out extraordinarily quickly?

[Priti Patel]

I wish that the answer was yes, but unfortunately it is no. As with all large organisations, I am staggered by how long it takes to get a response. I am the one chasing up cases on behalf of constituents months after a complaint has been made.

That brings me on to accountability. Despite the fact that I have taken up every single constituency case directly with HMRC’s chief executive, she has yet to respond personally on any case I have written to her about. It seems that there is a lack of transparency in HMRC. I should also point out that it has an organogram that reaches about 45 pages, which tells me that it is a substantial bureaucracy, but there seems to be no manager for common sense in the organisation. I urge it to start seeing common sense.

In my view, that bureaucracy adds weight to my constituents’ impression that HMRC is an unwieldy, unaccountable organisation that seems effectively to be a law unto itself and never to take responsibility for its errors. I have concluded that that is its practice because it does not feel it has to do so. All too often, officials seem to hide behind complex rules and leave businesses and families having to pursue lengthy appeal processes, whether through the adjudicator, the tribunal, the ombudsman or the courts. Clearly, that puts those who feel that they have suffered an injustice at a significant disadvantage. In many cases, people do not want to go through a lengthy and perhaps costly process to seek a resolution. When they do pursue a matter, those who are unable to seek legal help are left to pitch up with their own amateur efforts against the professional force that is HMRC’s bureaucracy.

I make those criticisms and comments not to attack or damage HMRC but because I want it to make drastic improvements in the service it provides to the British taxpayer. I draw my remarks to a conclusion by congratulating the Treasury Committee on its ongoing and important investigations into HMRC. I praise the Exchequer Secretary for the attention he has given my constituents’ cases, and I wish him luck and all the best in the challenge ahead of him.

Draft EU Budget 2011

Priti Patel Excerpts

Wednesday 13th October 2010 Commons Chamber

[Priti Patel (Witham) (Con)]

It is a delight to speak in this debate as a new Member, particularly as the country was denied a vote on the Lisbon treaty and this is the first post-Lisbon budget.

When the Lisbon treaty was passed, we heard claim after claim that it would make the EU decision-making process more efficient and democratic. How can it have led to more efficiency, when the EU budget is due to increase by 5.8% in payment appropriations? Even the Opposition, with their astonishing record on spending and waste, would struggle to justify an annual increase in spending on that scale. I very much doubt that, in the current economic climate, any Department calling for such an increase in its budget would be given any consideration.

The Government’s position is to keep cash levels at the same rate as last year, but, at a time when most domestic Departments are looking to make efficiencies and cuts ranging from 25% to 40%, why is the EU not being pushed further? With a total budget exceeding €130 billion, it is not unreasonable for the Government and the Economic Secretary to the Treasury, in her negotiations, to pursue the Commission and other member states to make deeper cuts in order to bring down the cost of the EU and to protect the British taxpayer.

My constituents in Witham and the majority of the British public now understand that the Government are dealing with spending, and that spending must come down. As decisions affecting my constituents are taken, however, they will be furious to see that, although they cannot have their new school buildings or road improvements for now, more and more of their hard-earned money is being handed over to Europe.

Having gone through the draft budget, which is a significant document, I note that there are some significant and questionable increases in spending, which the Economic Secretary should seek to reverse in her negotiations. There is an extraordinary document entitled, “Administrative expenditure of the institutions”. Linked to the budget, it is an alarming read, and figures for each institution, line by line, give a shocking insight into bureaucratic waste in the EU.

Those figures include an 85% increase in “Entertainment and representation expenses”; a 440% increase in

“Miscellaneous expenditure on the organisation of Euromed Parliamentary Assembly meetings”;

a 43% increase to €19.6 million on

“Expenditure on publication, information and participation in public events”;

a 23.6% increase in

“Contributions to European political parties”;

a 24.7% increase in

“Contributions to European political foundations”;

and, on top of that, as we have already heard, the

“Provisional appropriation for the 18 additional Members of the European Parliament”,

which under the Lisbon Treaty will cost €9.4 million.

I have previously questioned the Europe Minister, who is not here today, on that matter, but, while this Parliament reduces its numbers and cuts its costs, subsidies and expenses, surely the Economic Secretary should make the same point about Europe when she comes to negotiate with her European counterparts.

Only last month, another example of EU waste was brought to my attention. Promoted by the East of England Development Agency and the East of England European Partnership, the document entitled, “Europe for Citizens”, opens with an extraordinary and, one could argue, helpful statement, proclaiming:

“Europe for Citizens is a funding programme that basically provides a large number of small grants.”

I find that statement astonishing. In spite of the economic difficulties that face this country and, in fact, other European states, a pot of money amounting to €215 million is available for “High visibility events”, “Town twinning”,

“Structural support for think tanks”,

and

“Support for projects initiated by civil society organisations.”

Trimming those budgets and other activities would save the British taxpayer quite a lot of money and even bring some long overdue financial management to the EU.

Next month, as we have heard, we will have the spectacle of the European Court of Auditors finding, no doubt, even more irregularities in the EU budget for yet another year running. In any well-respected democracy, no organisation spending money on that scale would be able to get away with the auditors not signing off its books, or with the level of previous errors, which most Government Members attribute to the previous Government’s maladministration. I urge the Economic Secretary to ask for stringent guarantees that money spent by the EU will be spent not only efficiently but robustly and effectively, and that the auditors are doing their job properly, because there are so many instances of waste and unaccountability. British taxpayers are not sufficiently up in arms about that issue.

Instead of acknowledging the deficiencies in its budgets and its incompetent financial management, the EU lives in denial, pursuing a policy of blatant spin and propaganda, and attacking any organisation that dares to question how taxpayers’ money is being spent. On its website, there is a whole section devoted to so-called “EU budget myths”, and a “myth-buster guide” has been published. The EU goes as far as to state that we should

“not confuse errors with fraud”

and that there are

“too many errors, usually made by the end users of EU funding.”

This budget and the forthcoming negotiations clearly provide an opportunity to challenge the EU in its way of working.

[Nick de Bois (Enfield North) (Con)]

Does my hon. Friend agree that when the Economic Secretary engages in these negotiations, which I have no doubt that she is more than qualified to lead given what she said earlier, it would be to her advantage if we supported amendment (b), because going in and asking for a reduction in the budget instead of just the status quo would help our case?

[Priti Patel]

I totally agree with that.

The situation is without a doubt unsustainable. Particularly given the EU’s previous track record as regards misappropriation of funds and lack of transparency, current funding levels cannot continue. EU officials need to understand that the British public cannot be treated like fools. We can clearly see through the spin, the propaganda, and the abuses of taxpayers’ money for endless self-serving vanity projects that are not in our democratic, economic or national interest. Just as sunshine has proved to be the best disinfectant on issues such as MPs’ expenses, it is about time that some sunlight was shone on to the EU budget.

[Nick de Bois]

Give them IPSA.

[Priti Patel]

They are welcome to IPSA, as well.

It is an appropriate coincidence that we are discussing the EU budget on the very same day that Baroness Thatcher celebrates her 85th birthday. What better way to celebrate the Iron Lady’s birthday than for the Economic Secretary to go to Europe tomorrow, stand up and really fight our corner, and say those immortal words, “No, no, no”, giving an ultimatum to her European counterparts and the Commission bureaucrats as they press for larger sums of money to be spent and attack our rebate?

I wish the Economic Secretary well in those fundamental discussions and negotiations. Our country has paid a high price on previous occasions, and our sovereignty has been undermined. We have Europe meddling in our affairs, taking billions of pounds from the hard-pressed British taxpayer. I urge her to put Britain’s interests, and the interests of the British taxpayer, first.