Budget Resolutions

Robert Syms Excerpts

Tuesday 30th October 2018 Commons Chamber

[Kirsty Blackman]

Absolutely. The potential benefits of CCS are unquestionable and, as my hon. Friend says, we need to get ahead of the curve again. We need the UK Government to commit to putting the money in now. That is especially important because their pulling the plug means there is now a lack of trust among the companies that are developing CCS. The UK Government need to make a clear and unequivocal commitment.

On evolving technologies, Scotland is a global leader in tidal, and the UK Government must work with the Scottish Government on the contract for difference process to support the technology journey from development to commercialisation, which is particularly important for tidal.

On solar power, we have been contacted by so many individuals who are concerned about what is happening to export tariffs for homes, small businesses and community energy projects from next April. The tariff is a vital support that encourages people to invest in solar power, and it must continue.

Lastly, in order to reduce climate change and to increase the use of healthier methods of transport, this Budget was an opportunity to reduce VAT on bikes. Just as we would like to see VAT removed from digital books, reducing VAT on bikes would make them cheaper for all and would be a real statement of intent from the Government on reducing climate change.

[Sir Robert Syms (Poole) (Con)]

Is the hon. Lady not aware that reducing VAT is very difficult while we are a member of the European Union, but it is something that we might be able to do after Brexit?

[Kirsty Blackman]

Actually, reducing VAT is quite possible for a member of the EU. Zero rating things is a problem, but reducing VAT is fine.

The Scottish fire and rescue service and Police Scotland are still owed £175 million of VAT. The UK Government have recognised that the system they had in place was unfair, yet they have refused to pay back the £175 million they owe our two vital life-saving industries. It would be incredibly useful if they could see their way to giving us back that £175 million.

On the subject of the UK Government reallocating funds that should rightly have gone to Scotland, the convergence uplift of £160 million should have been paid to Scottish farmers. The Secretary of State for Environment, Food and Rural Affairs has admitted that the money has been spent elsewhere. We need a commitment that this money will come to Scotland in future years, and we need the previous years’ money to come to Scotland now, so that our farmers can have the cash they have been allocated.

I am pleased that the Budget includes measures to ensure that companies pay their fair share of tax in the digital sphere, but the reality is that this is a consultation and the measures are not going to be in place yet. We also do not have a solid idea of what those measures will be. The Scottish National party would therefore like to propose two measures on digital taxation, and we hope that the Government will take them into account. First, we believe that online retailers should be held liable for tax fraud committed by their suppliers. Sometimes when people order a product from a well-known online retailer it is delivered from China with a customs declaration and a stamp that says “gift”. Large online retailers should be held responsible for ensuring that those who use their platform pay the correct customs duties. We also believe that in order to combat tech firms that avoid corporation tax by registering implausibly low UK profits, the Chancellor should levy corporation tax on an assumed UK share of worldwide profits that is equal to their UK share of worldwide revenue. That could be subject to a dispute tribunal process to ensure fairness. The SNP will submit these suggestions in the consultation process, and we hope that they will be considered seriously.

Scotland’s cities have received city deal funding from both the UK and Scottish Governments. That is welcome, but what is not welcome is the fact that the UK Government have contributed far less to those deals than the Scottish Government. In total, the Tories have failed to match more than £350 million of Scottish Government funding for city deals and growth deals in Glasgow, Aberdeen, Inverness, Stirling and Clackmannanshire, Tay Cities and Edinburgh. We believe that they should match our contribution, and we call on the Chancellor to make that commitment, as well as to fulfill the Chief Secretary to the Treasury’s commitment to provide each part of Scotland with a regional deal.

I come to an ask, for the NHS, that would require only a small financial contribution but would have significant positive benefits. The UK Government could have used this Budget to follow Scotland’s lead on PrEP—pre-exposure prophylaxis. In Scotland, PrEP is available on the NHS, but England has been dragging its heels on making it available. The benefits in terms of the reduction in new cases of HIV are unchallengeable, and it is not fair that those in England cannot currently access the drug on the NHS. That change would not cost a huge amount of money, but it would make a massive difference to people’s lives.

If the UK Government are serious about taking their place on the global stage, they need to reform the immigration system. Countries will be looking for a more flexible immigration policy before signing trade deals with us, and we should start by getting rid of the fees that EU citizens will be expected to pay to acquire settled status. The OBR mentions the ageing population at many points throughout the Blue Book. The UK Government must recognise this challenge, and recognise that we need and want people to come to live and work in our communities. Last year’s Red Book said that a reduction in net migration of 20,000 would reduce GDP by about 0.2% by 2022. The Government need to be honest about the benefits of immigration and be clear that it is good for our country. They need to be clear that, with an ageing population, it is incredibly important that we get people to come to work here, particularly in the care sector and in the NHS. We also need a more flexible working visa policy that gives those who are seeking asylum the right to work, as the current system is dehumanising and unsustainable. Lastly, we should scrap the fees paid that families have to pay to get their children citizenship, which are ridiculously high and are yet another tax on families.

On health spending, the UK Government gave commitment after commitment that they would pass the full Barnett consequentials of the increased health spending on to Scotland, but they have chosen not to do so. They have chosen to short-change Scotland by £50 million. This comes on top of the fact that the Scottish Government’s fiscal resource block grant allocation will be almost £2 billion—or 6.9%—lower in real terms than it was in 2010-11. Despite the addition of consequentials and other non-Barnett allocations in 2019-20 that the Chancellor announced, Scotland’s fiscal resource block grant is still lower in real terms than it was in 2010-11 and at the start of the current spending review in 2015-16.

The Chancellor had the chance to make a real difference. He had political choices to make and at almost every turn he chose the wrong path. Is it any wonder that people do not trust the Tories? This Government need to follow the lead of the Scottish Government, who have put dignity and respect at the heart of decision making, rather than punishing those who are not born rich. The reality is that people in Scotland are faced with a choice of two futures: they can choose to continue to have a Westminster Government, who make political choices that disadvantage those who can least afford it; or they can fight for a fairer Scotland, where our Parliament has the powers and the responsibility to make choices on behalf of our citizens—choices that will make our country fairer, not create further inequality.

--- Later in debate ---

[Sir Robert Syms (Poole) (Con)]

I have been in the House long enough to remember lots of Labour Budgets, and I remember the claim that boom and bust had been abolished—only to be followed by the biggest bust that we have had in our history. It must have been a big bust, because only that would have made the Conservative party and the Liberal Democrats work together. We normally fight like ferrets in a sack, but in the context of 2010, a real crisis had to be dealt with.

If we look at what has occurred over the long term, we can see that we have made a great success of it. First, we have reduced the deficit from 10% to about 1%. That is a good thing, because if we borrow lots of money, we pay interest, which means that taxpayers’ money goes to pay bondholders and shareholders, not on the things that people want. I think that a compassionate Government is one who balance the books, because that means they can devote resources to the priorities that people have.

We have managed to do that without crashing the economy. Despite the calls that were often made about the economy going into recession, we have had eight years of a growing economy, which is actually pretty good. On top of that, we have created 3 million jobs. We all know that the best way to deal with poverty, to give people life chances and an opportunity to train, and the best thing for families is employment. If there is a challenge now it is to get wage levels and take-home pay up. When we compare our performance on employment with the EU and most of our neighbours, we can see that we have done a pretty good job. I am pleased there are signs that pay is picking up and that British workers will be paid more.

There is a lot of good to be said about the Budget yesterday. I do not think that Budgets in themselves make much of a difference. What makes a difference is long-term economic success and planning. If we look at Germany and other countries, we can see that they have pretty sane policies year after year—over seven, 10 or 15 years—which grow the economy gradually. Certainly since 2010, we have made pretty good progress, and there is more progress to be made as we exit from the European Union.

I welcome what the Chancellor has done on public spending. We all know that there are pressures with an ageing population and with mental health, and the Government have started to address some of those pressures. They have been able to do so because of careful management of the public finances. I also welcome the additional spending on defence. I am one of those who have always felt we have cut defence too much, perhaps because of the economic crisis. I think that Britain, as a world power and as a member of the United Nations Security Council, does need to spend sufficient resources on defence, so the £2 billion announced in the Budget is to be welcomed.

I think we have made good progress, and all that the Government need to do now is to keep that progress up year on year. We have a decent balance in this Budget because not only have we been able to spend more on public services—with the proviso that we need reform, and the proviso that we need productivity to rise because spending money will not necessarily in itself produce better outcomes—but we have managed to reduce taxation. Since 2010, we have doubled the allowance to £12,500 for those who pay tax, which is pretty good, and it massively increases the incentive for people to get into work. It is no accident that we have record employment, because we have made raising the tax allowances to help people get a job a very critical part of our employment strategy. It is also quite right for the upper rate of tax to go up as well, because that lifts all the tax bands for many middle earners. The fact of the matter is that, as a country, we tax people too much too early, and we need to increase incentives. There has to be a balance between incentives and extra spending, and on this occasion we have got that right.

We have a key task over the next few months in getting a good deal on Brexit. I note that the shadow Chancellor criticised the Government for contemplating leaving without a deal, yet as far as I know the Labour party are going to vote against the deal, so there seems to be a slight double standard.

[John McDonnell]

What deal?

[Sir Robert Syms]

Well, we shall see what comes back in the next few months.

The reality is that the Government have actually managed the economy well, and because of that, despite the level of uncertainty, we are still creating jobs and we are still growing. The interesting point is that, despite the soft patch earlier this year, the third quarter growth figures show that we are now growing more than the EU, so we are starting to pick up again.

I am confident that we have a good team at the Treasury and that they are listening to what colleagues are saying about their constituency concerns. I think we have had a really decent Budget, which has balanced sensible spending with reform and a sensible reduction of taxation. We are also maintaining a sensible management of the economy, certainly in the plans to have a 1% deficit, which is a massive reduction. I hope that we over-perform, and that if we do, we can reduce that further. The reality is that this Government have done well, and the country is doing well. We need not run down the country; the country’s best years are still ahead of us.