Finance Bill

Stephen Hammond Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

The House has become familiar with having a time limit for every item of business, but I hope that we can manage to consider this stage of the Bill without a time limit. I appeal to Members who are taking part to have consideration for other Members, and not to speak for too long. How long is too long? More than five minutes is too long, but if somebody takes five and a half minutes because they are making some important points, that would be fine. If the occasional person take interventions and it comes to six and a half minutes, that would be fine. But if people take longer than is necessary, I will have to impose a time limit, which makes for a less good debate. Let us try to behave like parliamentarians and not take too long. That puts a tremendous amount of pressure on Stephen Hammond.

[Stephen Hammond (Wimbledon) (Con)]

Thank you, Madam Deputy Speaker. I am sure the House will benefit from your strictures towards my speech, and I welcome the opportunity to make a short contribution on the amendments. As the hon. Member for Ealing North (James Murray) rightly says, the OECD-Biden proposals are an attempt to ensure a multinational, legal framework to ensure that multinational countries pay tax in the countries from which they derive that revenue. Unlike him, I think any sensible look at history will show that this Government have led the way on this since 2010. There can be no suggestion that they have not led the way on ensuring that multinationals should not be able to shift profits to avoid taxation. They have tried to lead the arguments on securing, over many years, a multinational, multilateral agreement on where revenues and profits are derived and how those are taxed. Across the House, we ought to recognise that the Government have been trying to achieve that and that they support it. It has been true since 2010. One of the former Chancellors, George Osborne, led the way on the matter.

The OECD proposals, as the hon. Gentleman put it, are in two pillars, as we all recognise. Pillar one rightly seeks to address the matter of base erosion, as the UK Government have done historically and continue to do. Pillar two, however—I think he failed to recognise this point—would go well beyond what is normally considered to be within the ability of national states, in terms of using the flexibility of fiscal policy to ensure that investment and incentives are properly rewarded within their economies, and may well have some perverse effects on a number of multinational industries, such as the insurance industry. Given your strictures, Madam Deputy Speaker, I shall not give my long peroration on that matter.

However, the key point is that there is a difference between what the Government have been trying to achieve—a multilateral, multinational agreement on the need for a combined approach, which I have no doubt that the Prime Minister and the Chancellor will wish to speak about at the G7—and a legal, minimum international tax rate. It is right that Governments still retain the ability to set fiscal measures according to their economic circumstances. Therefore, I wholeheartedly support—as the Government do—the international agreed approach to ensure that we tax multinational companies on where they derive their revenues and profits.

The problem with new clause 23 is that it talks about a review of the impact of the global minimum tax, but in reality, it is superfluous, because many of the consequences of setting a tax rate of 21% can easily and readily be calculated. The OECD discussions on the precise nature of the agreement are still under review. Therefore, speculating about how that might assess and impact on different economies could hinder the global efforts to achieve that aim.

Finally, as I am sure the Financial Secretary will wish to assure the House, the Government have already agreed that as, when and if there is a global agreement on minimum taxation, they will—when they are a party to that—ensure that the Office for Budget Responsibility assesses the impact for the UK economy and globally. So while this new clause is an interesting amusement for the House tonight, it is superfluous and I wholeheartedly encourage the Government not to accept it.

The hon. Gentleman spoke a bit about the need for investment and for addressing the historical UK underperformance in that area. We all agree with that. As we seek economic recovery post-pandemic and, in the longer term, as we build a cleaner, greener and stronger economy, clearly, the problem of underinvestment has to be addressed on a long-term, sustainable basis. However, it is clear that what the Chancellor has done, with what is popularly known as a super deduction, is likely to bring forward investment in the economy at just the time it is needed. There is an element of saying that, of course, we want to concentrate that on any number of small businesses that may not benefit from investment relief and this may or may not be at the margin, but it may or may not be at the margin that it has the greatest impact. I think the super deduction, which the Opposition seek to criticise, will do exactly that. They want the OBR to assess the impact in other areas of the Finance Bill, but the OBR has already made an assessment of this particular measure in the Bill, which is that it will derive at least 10% extra investment in the UK economy. At this stage of our economic recovery, that seems to me to be fundamentally important, so I hope that the Government will push ahead with the super deduction, as they are doing in this Finance Bill, and even consider it on a longer-term basis as well, because it is hugely important that we address the under-investment in both physical and human capital. Therefore, Government amendment 2 to clause 9, which will allow leased buildings to qualify for that super deduction, seems to be eminently sensible.

Given your stricture, Madam Deputy Speaker, although I could share with the House another 15 minutes of brilliance, I shall now sit down.

[Alison Thewliss (Glasgow Central) (SNP)]

I will also bear in mind what you have said, Madam Deputy Speaker, and keep my comments fairly brief.

I wish to start with the words of the US Treasury Secretary, Janet Yellen. She said:

“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids…It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

That is something that this Government ought to be getting behind, as it makes absolute sense. It is exciting to see that the Biden plan for a global minimum corporation tax rate is gathering pace. It is reported that the G7 is close to a deal, perhaps paving the way for an OECD deal later on in the year. The action is described in the Financial Times as

“the largest shake-up in corporate taxation for a century.”

As the shadow Minister set out, the Government have been ducking questions on this and ducking responsibility. It feels to me at the moment that an agreement will take place in spite of the UK Government’s hesitancy—less global leadership, more like pulling teeth. Why would the UK Government be in favour of the types of profit shifting that this international co-operation is trying to stamp out? Why would they let our businesses be undercut? Why would they forgo valuable tax revenues?

Our new clause 12 is asking the UK Government to prepare a report on an OECD agreement, which seems very much like the direction of travel, as it would cover 135 countries and the largest corporations in the world. It is important that the UK Government fully understand the impact of such an agreement on each and every part of these islands: on business investment, employment productivity, GDP growth and poverty. The impact of not reaching a deal has been included in new clause 12, too, as it is important that we can fully understand the impact should the UK pursue some kind of crazy isolationist stance against this global growing consensus.

The SNP has great sympathy with new clause 22 and amendment 31. Those using tax havens and with a history of corporate tax avoidance should not seek to obtain benefit from schemes intended to support businesses that already pay their fair share. I ask Treasury Ministers what safeguards they intend to put in place if they do not accept these sensible and logical amendments.

I am glad that, in Government amendment 2, there is some recognition of the issues facing those who have background plant and machinery in leased properties, allowing them to qualify for the super deduction. I remain hugely frustrated that there is yet to be any wider support and any wider recognition of the many businesses both involved in leasing and those that lease machinery themselves. I seek assurances from Ministers that they will continue to hold the door open on this issue and to look at it, because there are so many companies that would benefit from the super deduction if it were not for the fact that they have always leased machinery. They contribute hugely to the productivity of this country and there should be some recognition of that within the Government’s proposals.