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A study published at the end of June showed that average pay for chief executives at 15 leading banks in the US and Europe increased by 12% over the last financial year. That may be less than the 36% increase in the previous year, but whatever the increase—it is about 50% when we add both increases—it is wildly out of line with falls in profits and share prices that have frequently characterised the sector. That is not performance-related pay in any sense that most people would understand and it is certainly not a performance that would justify what is effectively a further tax cut on top of a tax cut for the highest paid.
A tax targeted on bank bonuses is necessary because the existing attempts to curb the bonus culture have so obviously failed. That is the key point. The issue is not about saying that people should not be very well paid at the top of banks and financial institutions, but we want to get away from a position in which sums wildly in excess of anything that could be said to be deserved are paid as a matter of course. None of the steps taken so far has changed that culture, even in an era of financial crisis among the banks and beyond.
The second reason why we want a bank bonus tax is that it would raise money for some valuable purposes. The issue of jobs for young people affects all our constituencies. My constituency normally comes in the middle range of unemployment across the UK, and we have seen a substantial increase in youth unemployment. I certainly want that issue to be tackled in my constituency.
We are also saying that the bank bonus tax would be used to provide affordable housing. That, of course, would bring two benefits. First, it would bring more housing into the sector. Constituencies such as mine have to some extent, although on a lesser scale, experienced the same phenomenon as happened in London, where high rates of pay in certain sectors such as financial services have pushed up house prices and made it harder for people on lower incomes to get affordable housing, so this proposal would be important for those people as well. Of course, building affordable housing and new homes also gives a boost to the economy through providing new jobs in the construction sector and helps people who have been out of work because of the collapse of that sector in many parts of the country.
Our proposal of a bank bonus tax would not only tackle the excessive bonus culture but provide jobs for our young people and affordable homes, giving a boost to the construction sector. I therefore hope that the House will support it.
Mr Hoban: We have heard a series of slightly strange speeches by Labour Members. We have become accustomed to their belief that they left us a golden economic legacy, but the reality is that when they left office unemployment was higher than when they came into office. They seem to believe that the problems of youth unemployment started under this Government. At least the right hon. Member for South Shields (David Miliband) has the good sense to recognise that it is a long-standing and deep-seated issue and that its growth started under the previous Government.
Labour Members seem to forget that when they left office the deficit was out of control. We have tackled that and reduced the structural deficit by a quarter.
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Bill Esterson: Youth unemployment is higher than when Labour left office, unemployment generally is higher than when Labour left office, and the economy was growing when Labour left office whereas now we are back in recession. Will the Minister confirm all three of those facts?
Mr Hoban: The challenge that we face is dealing with the economic legacy left by Labour, with the huge boom in financial services and the huge bust that followed.
We have heard Labour Members’ story that they presided over a golden age in the financial services sector. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) could not bring herself to admit that the scandal over LIBOR fixing took place between 2005 and 2008 or that the interest rate mis-selling that affected so many small businesses took place in the same period leading up to the financial crisis.
Labour Members deplore the bonus culture, but let us not forget that when they were in government, bonuses were paid out in the year that they were earned and paid out in cash. That was the hallmark of the age of irresponsibility that characterised their time in office. This Government are taking action to tackle the bonus culture. This Government have introduced rules to ensure that bonuses are not paid out in the year they are earned but spread over a three-year period, that they are not paid out in cash but in shares, and, crucially, that they can be clawed back where there have been problems in the business or where there has been wrongdoing. This Government have tackled the bonus culture in the UK whereas the previous Government let it run riot, and we have seen the financial consequences of their so doing.
Mr Hoban: Perhaps the hon. Gentleman will apologise for the approach that his party’s Government took towards the bonus culture.
Mark Lazarowicz: The bank bonus tax was first introduced by the previous Government. In fact, I think that our Government should have done much more about the bonus culture in the banks in the past and was wrong not to do so. However, will the Minister at least accept that at no stage did his Government suggest any action whatsoever to tackle the bonus culture? He should not suggest that the responsibility lies only with Labour but accept his share of the responsibility as well.
Mr Hoban: We have taken action to tackle the bonus culture by ensuring that the interests of shareholders and management are aligned and that where there is wrongdoing bonuses can be clawed back. That is a significant change that has happened since this Government came to office. In the same way that we are remedying the regulatory failures left behind by the previous Government, particularly by the shadow Chancellor, the inquiry set up into the fixing of LIBOR will ensure that in future LIBOR is regulated to fill the hole in the Financial Services and Markets Act 2000 and ensure that there are criminal penalties for manipulating LIBOR—again, filling the hole left by the shadow Chancellor when he designed the regulatory system.
Mark Durkan:
The Minister refers to what the Government have done since coming to office. What did the then Opposition suggest in the previous two Parliaments
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by way of concrete proposals on regulation or bonus culture or amendments to any of the flawed measures that the previous Government introduced?
Mr Hoban: When the previous Government brought forward the Financial Services and Markets Act 2000, we voted against the decision to transfer the supervision of the banks from the Bank of England to the FSA. We are putting right that failure by the previous Government. We criticised the financial services reforms brought forward by the previous Government in the aftermath of the financial crisis. We said that they were tinkering around the edges and did not address the fundamental problems at the heart of regulation. The work that we did in opposition laid the foundations for a much tougher, more intrusive and more interventionist regulatory regime to tackle the problems left by the previous Government.
9.45 pm
Mr Ronnie Campbell (Blyth Valley) (Lab) rose—
Mr Hoban: I will give way to the hon. Gentleman; otherwise he might explode.
Mr Campbell: When the Minister talks about the economic mess, does he mean the £600 billion that the Labour Government had to give to the banks to bail them out and keep them afloat?
Mr Hoban: The UK economy has suffered hugely as a consequence of the financial crisis. It has lost £140 billion in growth. We have to tackle the causes of that failure, as well as tackling the deficit that the previous Government left behind. That is what we are doing through the Financial Services Bill, which is passing through Parliament at the moment.
John Hemming (Birmingham, Yardley) (LD) rose—
Mr Hoban: I will take one last intervention on this point, then I will move on to the substance of the debate.
John Hemming: In December 2008, the then Chancellor said:
“The measures that I announced in October have stabilised the banking system, and inter-bank lending rates have fallen. The three-month LIBOR rate halved to just over 3 per cent. this week.”—[Official Report, 18 December 2008; Vol. 485, c. 1213.]
Does the Minister think that that was a fantasy, like much of what the Opposition propose?
Mr Hoban: The last Prime Minister had a problem recognising his responsibility for the problems that befell the economy.
One way in which we have sought to get the balance right in the taxation of businesses is by introducing the bank levy. We took that decision in opposition. We thought that it was right to ensure that banks paid their fair share towards dealing with the risks that they pose to the economy. The measure was opposed by the previous Government. They did not want to introduce a bank levy on a unilateral basis. We had the courage to make that decision and to ensure that banks pay their fair share.
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The bank levy is a tax on the balance sheets of banking groups and building societies. It complements the wider regulatory reforms that are aimed at improving financial stability, such as the higher capital and liquidity standards. It thereby ensures that the banking sector makes a fair and substantial contribution that reflects the risks that it poses to the financial system and the wider economy. The levy is also intended to encourage banks to move away from risky funding models.
From the outset, the Government have been clear that we intend the levy to raise at least £2.5 billion each year. The Opposition should get their facts right. They have trotted out the gross figure that was raised by the bank payroll tax. They must bear in mind that the tax also reduced pay-as-you-earn and national insurance receipts. That is why the actual yield of the bank payroll tax was only £2.3 billion. Our levy will therefore raise more, year after year, than was raised by their one-off bank payroll tax.
The target yield for the levy was set out in the Government’s first Budget. We also announced our intention to make significant cuts to the main rate of corporation tax. Let me deal with another red herring from the Opposition. We were clear at that time, as we are now, that the bank levy yield will far outweigh the benefits that banks will receive from the corporation tax changes. Other sectors, including manufacturing, will benefit from the reduction in corporation tax, but banks will not benefit because of the bank levy. In the 2011 and 2012 Budgets, the Chancellor has gone further and announced two more cuts in the main rate of corporation tax. It now stands at 24%. The increase in the bank levy announced in the Budget offsets the benefit of those additional cuts to maintain the incentives on banks to move towards less risky funding.
New clause 13, tabled by the shadow Chancellor, is, in the words of Yogi Berra, the great American baseball coach,
“déjà vu all over again”.
This is at least the fifth time in this Parliament and the second time in the passage of the Finance Bill that we have debated the bank payroll tax. We have heard no new arguments from the Opposition and nothing to persuade us to vote for it.
Yet again, we have to point out to the Labour party that such a tax would be counter-productive and unnecessary. The bank payroll tax was introduced as a one-off interim measure in the last Parliament ahead of regulatory reforms and changes to remuneration practice and corporate governance. The previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling)—somebody the hon. Member for Newcastle upon Tyne North should listen to and learn from—said that it could not be repeated. He pointed out that it was a temporary measure until bank remuneration practices were changed, and we have changed those practices.
The new clause calls for the proceeds of the tax to be used to help employment, but I should take some time to remind the House of the measures that we are already taking to do that. We have introduced the youth contract and are investing £1 billion over the next three years in supporting half a million young people into employment and educational opportunities. We will provide
3 July 2012 : Column 864
160,000 wage incentives worth up to £2,275 each to employers who recruit an 18 to 24-year-old through the Work programme. There will be an extra quarter of a million voluntary work experience or sector work academy places over the next three years and a further 20,000 incentive payments to encourage employers to take on young apprentices, taking the total to 40,000.
We are also providing additional support through Jobcentre Plus and the opportunity for people to be referred for a careers interview with the national careers service. We are already providing more apprenticeship places than any previous Government, with a record 457,000 apprenticeships delivered in 2010-11 and a commitment to delivering 1.2 million over the entire spending review period. That is a quarter of a million more than the previous Government’s commitment.
The hon. Member for Newcastle upon Tyne North says that the bank payroll tax should be used to help youth employment, but let us consider the number of ways the Labour party has already announced it would be used. The Leader of the Opposition was asked where the money would come from to reverse the increase in VAT, and he said:
“I said for example we should have a higher bank levy.”
It was also suggested that it be used to pay for higher capital spending of about £7.5 billion in 2010, which would have required £6 billion from the bank levy. The Leader of the Opposition said that reversing child benefit changes could be afforded by using the bank payroll tax—yet another use for it.
The bank payroll tax is the tax that continues to give, the tax that the Opposition always turn to when they want to find a way of plugging the black hole in their figures. They used it to explain how they would reverse tax credit savings, spend more money on the regional growth fund, cut the deficit and turn empty shops into community centres. We have heard a remarkable number of ways in which something that the previous Government said was a one-off would be used to fill the black hole in Labour’s economic thinking.
Charlie Elphicke: How many times over have the Opposition spent that money so far?
Mr Hoban: My hon. Friend is right to ask me that question. About 15 times. Every time there is a tricky question, what is the answer? Let us reintroduce the one-off bank payroll tax. That demonstrates the emptiness at the heart of Labour’s economic policy. It has no concrete ideas to tackle what happened in the financial crisis or the economic problems that it left behind. The Opposition are reduced to trotting out the same stale arguments for the fifth time running, and I urge the House to reject them once again.
Catherine McKinnell: We have heard some passionate speeches from Labour Members, but I am concerned about the lack of contributions from Government Members. Only one, the hon. Member for Dover (Charlie Elphicke), contributed in the entire debate. He put forward some interesting views and theories, and I commend him for engaging in the debate, because there is little of more importance right now than youth unemployment.
The hon. Gentleman concluded his speech, however, by hailing a return to the 1980s. I do not know about other Opposition Members, but it sent a shudder of
3 July 2012 : Column 865
fear through me, because although some people had the time of their lives in the 1980s—we have fond images of the City, the champagne flowing, the pinstripe suits and the brick-sized mobile phones—for many the 1980s were not pleasant or a time of growth but devastating, particularly for youth unemployment. Parts of the UK, including my region of the north-east, other English regions, Scotland and Wales, suffered dreadful decimation of their traditional manufacturing industries, and in many ways are still paying the price. We risk repeating that fate today, which is why we are proposing to impose a bank payroll tax on the very institutions that played a large part in causing the international financial crisis that led first to the recession and then to today’s double-dip recession.
Catherine McKinnell: I give way to the only Conservative Member to contribute to today’s debate.
Charlie Elphicke: How do the Opposition justify spending this money 15 times over?
Mr David Evennett (Bexleyheath and Crayford) (Con): No answer.
Catherine McKinnell: No, we have clear plans: we would like to spend the bank payroll tax on creating youth jobs. I would have thought that Government Members would grasp that opportunity, given that short-term unemployment is up 112% and long-term unemployment is up 156%. I would have thought that Conservative Members would be shouting out for any solution to bring those figures down.
Or are Government Members happy to see another generation of young people thrown on to the scrap heap with no opportunities and no way out? The future jobs fund gave opportunities to young people. It was heralded by the Prime Minister as a good scheme and promises were made not to scrap it, but as soon as the Government took office it was put in the bin. And we have seen little put in its place: the work experience scheme, for which we waited a whole year, is producing very few results.
For that reason, we are proposing a solution. On a cautious estimate, we believe that this year the bank bonus tax could raise at least £2 billion, which the Government could use to create thousands of affordable homes and introduce a real jobs guarantee for long-term unemployed young people. As part of Labour’s five-point plan for jobs and growth, the real jobs guarantee would cost £600 million—a small price to pay for tackling the chronic youth unemployment about which Labour Members have spoken passionately this evening.
Under the real jobs guarantee, the Government would pay full wages directly to businesses—again something I would have thought Government Members would support—and support businesses taking on new members of staff. It would cover 25 hours of work at the minimum wage—£4,000 per job—and in return the employer would cover the training requirements and the young people would be required to take the jobs made available. It would be a genuine contract and a real jobs guarantee.
3 July 2012 : Column 866
We cannot stand by and watch another generation of young people left to suffer the effects of this double-dip recession, which is why we propose this bank bonus tax as a real solution and why I urge hon. Members to vote for the new clause.
Question put, That the clause be a read a Second time.
The House divided:
Ayes 241, Noes 314.
[9.59 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Bayley, Hugh
Beckett, rh Margaret
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Gregory
Campbell, Mr Ronnie
Caton, Martin
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Donaldson, rh Mr Jeffrey M.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Harman, rh Ms Harriet
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
MacShane, rh Mr Denis
Mahmood, Shabana
Mann, John
Marsden, Mr Gordon
McCann, Mr Michael
McClymont, Gregg
McCrea, Dr William
McDonagh, Siobhain
McDonnell, Dr Alasdair
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miliband, rh Edward
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruddock, rh Dame Joan
Sarwar, Anas
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodcock, John
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Chris Ruane and
Julie Hilling
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Bruce, Fiona
Bruce, rh Sir Malcolm
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, Paul
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chope, Mr Christopher
Clappison, Mr James
Clark, rh Greg
Clarke, rh Mr Kenneth
Clegg, rh Mr Nick
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Farron, Tim
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, Mr Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Harvey, Nick
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howarth, Mr Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lamb, Norman
Lancaster, Mark
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Luff, Peter
Lumley, Karen
Main, Mrs Anne
Maude, rh Mr Francis
May, rh Mrs Theresa
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McVey, Esther
Mensch, Louise
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Milton, Anne
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Osborne, rh Mr George
Ottaway, Richard
Paice, rh Mr James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Stride, Mel
Stuart, Mr Graham
Stunell, Andrew
Sturdy, Julian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Teather, Sarah
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Watkinson, Angela
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Stephen Crabb and
Mark Hunter
Question accordingly negatived.
The Deputy Speaker then put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).
3 July 2012 : Column 867
3 July 2012 : Column 868
3 July 2012 : Column 869
3 July 2012 : Column 870
Amendments made: 5, page 120, line 19, at end insert—
‘() in subsection (1), after paragraph (c) insert “or,
(d) in a case where paragraphs (a), (b) and (d) of section 74A(1) are satisfied—
(i) it is a reversionary interest, in the relevant settled property, to which the individual is beneficially entitled, and
(ii) the individual has or is able to acquire (directly or indirectly) another interest in that relevant settled property.
Terms used in paragraph (d) have the same meaning as in section 74A.”.’.
Amendment 6, page 120, line 23, leave out from beginning to end of line 30 on page 121 and insert—
“(3D) Where paragraphs (a) to (d) of section 74A(1) are satisfied, subsection (3)(a) above does not apply at the time they are first satisfied or any later time to make the relevant settled property (within the meaning of section 74A) excluded property.”.’.
Amendment 7, page 121, line 32, leave out from beginning to end of line 7 on page 122 and insert—
74A Arrangements involving acquisition of interest in settled property etc
(1) This section applies where—
(a) one or more persons enter into arrangements,
(b) in the course of the arrangements—
(i) an individual (“the individual”) domiciled in the United Kingdom acquires or becomes able to acquire (directly or indirectly) an interest in property comprised in a settlement (“the relevant settled property”), and
(ii) consideration in money or money’s worth is given by one or more of the persons mentioned in paragraph (a) (whether or not in connection with the acquisition of that interest or the individual becoming able to acquire it),
(c) there is a relevant reduction in the value of the individual’s estate, and
(d) condition A or condition B is met.
(a) the settlor was not domiciled in the United Kingdom at the time the settlement was made, and
(b) the relevant settled property is situated outside the United Kingdom at any time during the course of the arrangements.
(a) the settlor was not an individual or a close company at the time the settlement was made, and
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Amendment 8, page 123, leave out line 15 and insert—
74C Interpretation of sections 74A and 74B
(1) Subsections (2) to (4) have effect for the purposes of sections 74A and 74B.
(2) An individual has an interest in property comprised in a settlement if—
(a) the property, or any derived property, is or will or may become payable to, or applicable for the benefit of—
(ii) the individual’s spouse or civil partner, or
(iii) a close company in relation to which the individual or the individual’s spouse or civil partner is a participator or a company which is a 51% subsidiary of such a close company,
in any circumstances whatsoever, or
(b) a person within sub-paragraph (i), (ii) or (iii) of paragraph (a) enjoys a benefit deriving (directly or indirectly) from the property or any derived property.
(3) A “relevant reduction” in the value of the individual’s estate occurs—
(a) if and when the value of the individual’s estate first becomes less than it would have been in the absence of the arrangements, and
(b) on each subsequent occasion when the value of that estate becomes less than it would have been in the absence of the arrangements and that difference in value is greater than the sum of any previous relevant reductions.
(4) The amount of a relevant reduction is—
(a) in the case of a reduction within subsection (3)(a), the difference between the value of the estate and its value in the absence of the arrangements, and
(b) in the case of a reduction within subsection (3)(b), the amount by which the difference in value mentioned in that provision exceeds the sum of any previous relevant reductions.
(5) In sections 74A and 74B and this section—
“arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable, and any associated operations;
“close company” has the meaning given in section 102;
“derived property”, in relation to any property, means—
(a) income from that property,(b) property directly or indirectly representing—(c) income from property which is derived property by virtue of paragraph (b);
“operation” includes an omission;
“participator” has the meaning given in section 102;
(a) the time the relevant reduction occurs, or(b) if later, the time section 74A first applied;
“51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of the Corporation Tax Act 2010).”.’.
Amendment 9, page 123, leave out lines to 17 to 22 and insert—
(a) a charge to tax arises under or by virtue of section 74A, or
(b) in a case where paragraphs (a) to (d) of section 74A are satisfied, a charge to tax arises under section 64 or 65 in respect of the relevant settled property (within the meaning of section 74A),
subsection (1) of this section has effect as if the persons listed in that subsection included the individual mentioned in section 74A(1)(b)(i).”.’.
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Amendment 10, page 123, line 23, leave out subsections (5) and (6) and insert—
‘(5) The amendments made by this section are treated as having come into force on 20 June 2012 and have effect in relation to arrangements entered into on or after that day.’.—(Mr Gauke.)
Amendment made: 4, page 550, line 41, leave out from ‘subsection’ to end of line 8 on page 551 and insert ‘(5) insert—
“(5A) In relation to the carriage of a chargeable passenger on an aircraft to which section 30(4F) applies—
(a) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (3)(a) or (b), the following rate is to apply instead—
(i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or
(ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (3)(b),
(b) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (4)(a) or (b), the following rate is to apply instead—
(i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or
(ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (4)(b), and
(c) if the rate which (apart from this subsection) would apply is the rate set for the purposes of subsection (5)(a) or (b), the following rate is to apply instead—
(i) the rate set by an Act of the Northern Ireland Assembly for the purposes of this paragraph, or
(ii) if no rate is so set for the purposes of this paragraph, a rate equal to twice the rate set for the purposes of subsection (5)(b).”.’.—(Mr Gauke.)
10.14 pm
Mr Gauke: I beg to move, That the Bill be now read the Third time.
The Bill proposes wide-ranging reforms of the tax system to reward work and promote growth. It supports business and growth, creates a fairer, more efficient and simpler tax system, and builds on our commitment to improving the tax policy-making approach. However, it should be seen against the fiscal backdrop that we inherited.
Before I discuss the Bill in more detail, let me remind Members of the challenges that we face. When we came to power, we were confronted by the largest peacetime deficit that the country had ever seen. One pound in every four was borrowed. Members will recall—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans): Order. I am finding it rather difficult to hear the Minister.
Mr Gauke:
Members will recall that the independent Office for Budget Responsibility revealed that the underlying damage to the economy and our challenge in repairing it was much greater than anyone had thought. It was therefore vital for us to take decisive action to restore the economic stability that was needed for recovery, and the Bill is part of that. In order to address the enormous
3 July 2012 : Column 873
debts that we inherited, confront Britain’s problems and get the economy moving, the Government have undertaken a sustained programme of deficit reduction.
As I said earlier, the Bill supports business and growth. It implements milestones for the corporation tax roadmap, overhauls the controlled foreign companies regime, and introduces the patent box.
Mr Alan Reid (Argyll and Bute) (LD): My hon. Friend mentioned the controlled foreign companies regime. I support the Government’s efforts to ensure that all the tax that must be paid in the UK is paid in the UK, but, as he knows, concern has been expressed about the possibility that by introducing these rules the Government will inadvertently harm small developing countries which may lose tax revenue. I hope that they will ensure that there is no such side effect.
Mr Gauke: We debated that in the Committee of the whole House. The purpose of the CFC rules is to protect the UK tax base, as has always been the case, but the Government have a proud record of supporting developing countries, and we have a firm commitment to meeting our international obligations on that front. This country also has a proud record of building capacity in developing countries and improving their ability to collect taxes. In many developing countries, the UK has already made a substantial contribution, and we will continue to do so.
Both the patent box and the CFC changes form part of the Government’s wider plans, which will help UK businesses to operate in an increasingly globalised world. I am sure all Members agree that those measures are essential to restore medium and long-term growth.
Despite the challenging economic backdrop that the Government inherited, we have made significant progress. We have already introduced a further cut in the rate of corporation tax that will give us the lowest rate in the G7, the fourth lowest rate in the G20, and the lowest rate that this country has ever known. By next year, the Government will have cut corporation tax by 6%, helping to make the UK the most competitive country in the G20. According to the OBR’s assessment of the Budget, the reduction will increase the level of business investment by about 1% by the end of the forecast period. That is equivalent to an increase in the total amount of business investment of £3.4 billion between now and 2016.
Many businesses have seen that we are, as promised, open for business. WPP and others have recently announced that they are considering returning to the UK, or that they wish to set up business here. I am delighted to say that Rowan and Lancashire have already come here, and once the CFC rules are in place in 2013, we shall be looking for more businesses to follow them. Following the Bill’s publication in March, one of the big four advisory firms announced that it was engaged in discussions with between 10 and 15 multinational companies that were considering locating substantial operations in Britain as a result of corporate tax reforms. The CBI has commented that these much-needed changes
“will help make the UK a more attractive place for companies to invest, do business and create jobs.”
The Government aim to create a tax system that is easy to understand and with which it is easy to comply, and the Bill contributes to that. It provides real help for families and business. It raises the personal allowance
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to £8,105—which, curiously, was not mentioned very frequently in Committee—and, combined with the further increase of £1,100 next year, will mean a tax cut for 24 million people and 2 million people being taken out of income tax altogether.
Mr Gauke: The hon. Lady made many contributions in Committee, although I am not sure that she ever dwelt on this particular issue, but I will give her the opportunity to do so now.
Sheila Gilmore: The Minister was waxing lyrical about simplification, and I was wondering whether he has reconsidered his view as to whether the proposed child benefit reform creates simplification or complication.
Mr Gauke: If we do not want people earning £20,000, £25,000 or £30,000 a year to be paying for benefits to go to much wealthier households, the alternative would be an extension of the tax credit system. That would have placed a much greater burden both on households and the Government. Of the available alternatives, we have gone for the simpler option.
We are deferring the 3p per litre duty increase that was planned for August to January next year. Action by this Government to reduce the deficit and rebuild the economy is already benefiting businesses and families and keeping mortgage rates low. As hon. Members know, this Government have also had to make difficult decisions so we can tackle the deficit left to us by the previous Administration. They include withdrawing child benefit from households earning more than £50,000. That is a fair way to make savings, so we can meet our targets to cut the deficit.
We are also taking steps to ensure that the wealthy pay their fair share too. The Budget package ensures that the wealthiest will pay five times more than the cost of reducing the additional rate of income tax. The introduction of a new higher rate of stamp duty land tax of 7% on properties sold for more than £2 million will raise over £1 billion in the next five years. At the same time, this Government are also tackling avoidance, as demonstrated in the Bill. The new SDLT enveloping entry charge rate of 15% will deter those seeking to put their high-value property into corporate structures to avoid tax. Also, debt buy-back measures will raise over £500 million from banks that try to avoid paying the tax due, and the introduction of the UK-Switzerland agreement will ensure we can address the tax loss from those who put their money into Swiss banks to evade tax.
There has been extensive scrutiny of this Bill, including about 44 hours in Public Bill Committee. From looking at some of the new clauses tabled for today, I am happy to see that the Opposition continue to stick to their same theme on this Bill, which is to ask for reports, rather than focusing on policies. We have seen 34 Opposition-requested reports over the last 10 weeks, but no real policy alternatives. Yesterday, we were discussing Groucho Marx, and I wonder if the Opposition ever needed to be reminded of the quote:
“The problem with doing nothing is that you never know when you are finished.”
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In order to make progress with Government business in good time, we agreed with the Opposition, through the usual channels, to programme parts of this Bill.
It is a delight to see my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) once again in his usual place. As he rightly said yesterday, this legislation is the body, soul and guts of this Budget.
I thank all who participated in Committee and on Report.
Fiona O'Donnell (East Lothian) (Lab) rose—
Mr Gauke: I will even welcome a contribution from the hon. Lady—for the first time today, I think.
Fiona O'Donnell: It is very generous of the Minister to give way. Would he also like to reflect on the comment made by the hon. Member for North East Somerset (Jacob Rees-Mogg) that a good government is one that take tough decisions and stick to them? Does the Minister think that could be said in respect of their handling of this Bill?
Mr Gauke: This Government have taken tough decisions to bring the deficit down, and we are sticking to that plan even though some Opposition Members would rather give up on deficit reduction and continue to borrow in the same unsustainable way that we borrowed up until 2010. This Government remain determined to stick to that plan. I thank the hon. Lady for giving me the opportunity to underline that point.
I thank all those who have been involved in every stage of this Bill, including both Front Benchers and Back Benchers engaged in this matter, not to mention various others. I wish briefly to mention a couple of Treasury officials. First, I congratulate Mr Edward Troup, who, as announced earlier this week, has accepted the post of tax assurance commissioner and second permanent secretary at Her Majesty’s Revenue and Customs. His wealth of experience and enthusiasm will be a great asset for HMRC, but a sad loss to the Treasury. I also thank Jamie Miller, who has been the Bill manager for this Bill, and indeed has served on the past six Bills over the past four years. Despite that, he has remained remarkably cheerful, notwithstanding the provocation that all of us have given on that front.
In conclusion, this is a good Bill that builds a stronger and more balanced economy. It will strengthen the UK, making us more competitive and more ready to face the challenges ahead, and I commend it to the House.
10.25 pm
Rachel Reeves (Leeds West) (Lab): I thank my hon. Friends the Members for Pontypridd (Owen Smith), for Newcastle upon Tyne North (Catherine McKinnell) and for Kilmarnock and Loudoun (Cathy Jamieson) and others for serving on the Public Bill Committee with me over the past several weeks. I also thank our able Chairs for supervising us during that process and the Commons Clerks for their advice and assistance throughout the process in Committee and in the House.
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The Bill has been on quite a journey since it was first presented to the House just a few months ago. I fear that the Exchequer Secretary spoke too soon last December when he announced that
“the Government’s more open, predictable and simple approach to tax policy making is working well.”
He said that by publishing tax legislation in draft form first,
“we are giving greater certainty and stability to taxpayers and businesses”.
I do not think that taxpayers and businesses, or indeed Members of this House, realised that the Finance Bill itself was still only a draft when it was published in March. This Finance Bill has been through so many stages of crossing out and rewriting that it would have been easier for the Government to have scrapped it and started again, perhaps with some measures that would have supported jobs and growth.
As we have heard throughout the Committee and Report stages, the Budget has been a total and utter shambles. When we first saw this Bill back in March, it contained provisions to raise VAT on hot food, on static caravans and on improvements to listed buildings.
Mr Reid: What was in the Budget back in March was a consultation exercise on VAT on static caravans and so on. I am glad that after that exercise the Government listened and amended their proposals, but it was a consultation. This Government, unlike the previous one, listen to what people say in consultations.
Rachel Reeves: That is the first time I have heard a Finance Bill being called a consultation—I do not even know where to start.
The Budget in March also included a 3p rise in fuel duty in August and limits on charitable donations. All this was necessary, we were told, to deal with the deficit. Yet the Bill before us, as we reach Third Reading, contains none of those measures. We have had a series of abrupt reversals that, according to one estimate, will cost the Exchequer nearly £700 million.
Opposition Members argued that these measures were misconceived from the start, and that adding to the costs faced by families and small business at this time would make it even harder for our economy to climb out of the recession that this Government have dug us into. But it must be a matter of regret that so much uncertainty and confusion has been created for those affected, doing real damage to businesses, charities, pensioners and families, and that at a time of tight public finances the Government’s financial and fiscal planning seems to be in such disarray, with no one at all clear what the Government’s priorities actually are.
Despite the Government’s belated change of heart on those matters, the Bill remains a deeply flawed, unfair and utterly inadequate response to the problems facing our country today and that is why the Opposition will vote against it this evening. The Bill still offends against the most basic principles of fairness by giving priority to a reckless and irresponsible tax cut worth tens of thousands of pounds for a few thousand millionaires while at the same time asking millions of ordinary people who are already under pressure from rising prices, falling wages and cuts to tax credits and benefits to make further sacrifices and endure further hardship.
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The Bill breaks a promise that the Chancellor made in the Budget last year to Britain’s pensioners that their age-related allowance would rise in line with inflation for the rest of this Parliament and instead imposes a stealth tax that will hit 4.5 million people over the age of 65, all of whom live on modest pension savings. The Bill is breaking the principle of universal child benefit and still means that one-earner families will lose thousands of pounds a year while a two-earner family on almost twice as much will keep all their benefit. It is a botched, half-baked measure dreamt up for a party conference speech but the measures are described by the Institute of Chartered Accountants in England and Wales as a “policy disaster” that are
“in danger of becoming a practical disaster when they come into effect”.
We have raised a number of other concerns about the Bill, such as the controlled foreign companies changes and the impact that they will have on developing countries. What is most wrong with the Bill, however, is that it represents a massive missed opportunity to end the recession and get our economy working for ordinary working families, pensioners, businesses and young people. It could have been a Bill that took the tough decisions necessary to ensure that those who could make a fair contribution to deficit reduction did so, so that those hit hardest by the current crisis were not put under even more pressure.
It could have been a Bill that cut VAT, giving immediate relief to hard-pressed families and giving our economy the stimulus it needs to get growth under way again and to make unemployment fall. It could have been a Bill that redirected money wasted on excessive bank bonuses and put those resources to better use, helping young people get back to work and constructing new affordable homes.
Mr Edward Leigh (Gainsborough) (Con): Where would the money have come from?
Rachel Reeves: The Government are borrowing £150 billion more. That is the cost of the Government’s failed economic policies. The reality is that with more people out of work claiming benefits and fewer people in work paying taxes, Government borrowing is higher and not lower.
Jacob Rees-Mogg (North East Somerset) (Con): I am grateful to the hon. Lady for giving way, but there is a little problem with her maths. She is accusing Her Majesty’s Government of spending £150 billion more and then wants to spend umpteen billions on top of that on a VAT cut. There is absolutely no sense in that.
Rachel Reeves: We have seen that this Government’s plan has failed, as unemployment remains far too high, with a million young people out of work. It has failed, and the economy is back in recession—we are one of only two countries in the G20 that are in recession—and the Government are borrowing more. In fact, in the first two quarters of this financial year, the Government are borrowing £4 billion more than they were last year. Their plan has failed and it is time to try an alternative that gets the economy moving again and that gets people back to work and paying taxes so that the economy can grow and the deficit can be brought down sustainably.
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We have proposed a bank bonus tax because we think that it is right that those people with the broadest shoulders should pay a little more. On the day that Bob Diamond has resigned after taking £100 million of bonuses in just a few years, would it not have been far better tonight if we had supported the bank bonus tax and used that money to fund a programme of youth jobs to get our economy working again?
We could have used the Budget and the Government could have used the Finance Bill properly to accelerate infrastructure investment to help the struggling construction industry and to create much needed jobs in our economy. Instead, we have a Bill that will go down in history as a monument to this Government’s incompetence, complacency and inability to grasp that what the current economic situation demands is a Government who stand up for ordinary working people. The Bill fails on fairness and asks millions to pay more so that millionaires can pay less. It fails to address the real challenges that this country faces—a recession made in Downing street and a Government with no plan to get us out of it.
10.35 pm
Stephen Williams (Bristol West) (LD): Before I turn to the broad sweep of the Bill, I want to mention again clause 180, to which the Minister referred in his winding-up speech in response to my hon. Friend the Member for Argyll and Bute (Mr Reid). Many of us will have been written to by a coalition of charities such as Christian Aid and ActionAid, with which I have been working closely on the effects of the clause. The reason for that concern is felt internationally. The OECD has estimated that developing countries lose three times the amount of aid that they receive from developed countries through tax avoidance in their own countries.
In 2011, the United Nations, the International Monetary Fund, the World Bank and the OECD came together and said that the G20 countries have an obligation to ensure the smooth running of the international tax system. It was therefore appropriate for G20 countries to undertake spill-over analyses of proposed changes to their own tax systems and the possible impact of those changes on the fiscal circumstances of developing countries.
Fiona O'Donnell: Will the hon. Gentleman take this opportunity to explain to the House why, if he is so passionate about the issue, he withdrew his amendment in Committee and failed to vote for ours?
Stephen Williams: If the hon. Lady was so interested, she could have studied the Hansard record of the debate. The purpose of my amendment at that stage of the Bill was to probe the intentions of the Government and to get on the record statements from my hon. Friend the Minister that the Treasury and the Department for International Development were going to work more closely together. The hon. Lady’s party made it clear that it would not support my amendment in order not to hold up that controlled foreign companies change going through. I suggest that she has a word with her Front-Bench team.
I move on to new clause 6, which I tabled. Because of the length of time spent once again discussing the bank bonus levy and Labour’s five-point plan, we did not get to it this evening. Perhaps the hon. Lady might like to think about why that was the case. New clause 6 called
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for joined-up working between the Treasury and the Department for International Development. You, Mr Deputy Speaker, I and many other hon. Members and Members of the House of Lords were in Committee Room 14 this morning to listen to President Carter, Archbishop Desmond Tutu and former Irish President Mary Robinson, three of the Elders, who were talking about human rights and in particular developing nations. They specifically praised the record of this Government as the first major Government in the world to reach the 0.7% target for overseas aid. I urge my colleagues in Government again to build upon that achievement by making sure that our aid is well spent and raises the capacity of overseas Governments to develop their own tax collection capability so that they are not so dependent on us in the future.
As others wish to speak, I turn to the wider measures in the Bill. For those of us who have been on the entire journey, it has been a long trip from the Budget to Second Reading, to Committee of the whole House, to 18 sittings of the Committee, and to the past two days. Some of the things that were there at the start did not make it all the way through to the end. Maybe somewhere in Cornwall there is someone sitting in a caravan, eating a pasty washed down by sports drinks, filling in a gift aid form, perhaps to a church restoration fund. Such a person ought to be happy that this Government listen.
Some things, to be fair, were consistent all the way through that process. We heard them again this evening from the hon. Member for Leeds West (Rachel Reeves)—Labour’s five-point plan. As a boy, I was brought up to go to Sunday school, so I cannot help but be reminded of the parable of the feeding of the 5,000; they start off with such a small amount and expect it to achieve so many things, but without the benefit of miraculous intervention.
When all these measures are long forgotten, having simply been about tens of millions or hundreds of millions of pounds, it is the really significant measures in the Budget, which involve billions of pounds, that will be remembered in the sweep of history. The most significant of those is the progress towards raising the income tax threshold towards £10,000. My party, the Liberal Democrats, can take particular pleasure in the fact that the Budget and the Finance Act, as the Bill is soon to become, set us off towards another milestone on the route to achieving the £10,000 tax-free threshold. It will already lift 800,000 people out of income tax, and it will do so for 1.1 million people over the coming year and 2 million next year, allowing more people to retain the benefits of their work. We also saw in the Budget the introduction of effective wealth taxes, new rates of stamp duty, a new clampdown on stamp duty avoidance, something the previous Government shirked on many occasions, and new restrictions on reliefs against tax.
When the history of this Government and this Budget is written, it is the rise in the threshold to £10,000 that will be long remembered when all the ephemera we have been dealing with, and which Opposition Members have been so keen to raise over the past 12 weeks, are long forgotten. The raising of the threshold, which will lift people out of taxation, is the big issue that will be remembered for many years to come.
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10.41 pm
Jim Shannon: I know that on Third Reading we cannot debate the issues again, but I want to ask a quick question on a commitment the Government gave last year during a debate in which recognition of marriage in the tax system was discussed. They gave a commitment to bring in the necessary changes to introduce transferable allowances, the need for which is urgent. I would like to remind the Government of their commitment to recognise marriage in the tax system and press the Minister to respond on the matter. The Prime Minister said:
“I have always supported the idea of supporting marriage through the tax system, specifically supporting the idea of a transferable tax allowance. The idea of a transferable tax allowance is in the coalition agreement.”
I am sure that the Minister will be able to reaffirm that. The Prime Minister continued:
“It’s something we would like to do in this parliament”.
As he is the Prime Minister of the coalition, I am sure we can look forward to a commitment on that at some time in the future.
The Government have made a number of U-turns, or J-turns, as some Members called them—or, as the hon. Member for Brigg and Goole (Andrew Percy) called them, recalibrations. It does not matter what we call them, so long as they are done for the right reasons, and the Government’s U-turns so far have been for the right reasons and we welcome them.
However, perhaps it is now time to have a commitment from the Government on transferable allowances. If the Minister is unable to tell us exactly when the Government will introduce legislation to recognise marriage in the tax system, will he provide clarity on a different but related point? Recognition of marriage in the tax system will require HMRC to make various operational changes, particularly in the IT systems. Can he reassure us that this preparatory work is already under way so that when the Government bring forward legislation to recognise marriage in the tax system there is no further delay? If he cannot do so tonight, will he make it an urgent priority to make a statement to the House setting out the time that will be required to change the IT systems and announce that he has instructed that work to begin in readiness for the introduction of the transferable allowance legislation?
10.43 pm
Bill Esterson: When listening to the hon. Member for Bristol West (Stephen Williams), I was reminded of the rather depressing speeches and interventions from some of his Tory colleagues in our previous debates on youth unemployment and the bank bonus tax, who showed very clearly that they do not live in the real world. They have no idea of the impact on young people of the chronic levels of unemployment they now face or the depressing reality that this is a repeat of what happened under the Tories in the ’80s and ’90s.
The shadow Chief Secretary to the Treasury mentioned Bob Diamond’s £100 million in bonuses, which, under the real jobs guarantee scheme, would create 25,000 jobs for young people. I wonder whether Government Members consider that a better use of £100 million in bankers’ bonuses, because I certainly do.
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We have already seen new schemes from the Government which are depressingly familiar; they remind me of the youth opportunities programme and its successor, the youth training scheme, in the early ’80s, and of how benefits were withdrawn from young people during those years when there were no jobs. There are no jobs for young people in my constituency or in many parts of the country.
Heather Wheeler (South Derbyshire) (Con): Will the hon. Gentleman give way?
Bill Esterson: I will always give way to a fellow member of the Communities and Local Government Committee.
Heather Wheeler: Why is it that in South Derbyshire the number of apprentices has gone up by 80%, when the hon. Gentleman says that there are no jobs for young people? What is going on in his constituency that is not happening in South Derbyshire?
Bill Esterson: People in the hon. Lady’s part of the world must be incredibly lucky, because it must be the only place in the country where that is the case.
In reality, every Member knows that the youth unemployment figure has gone over the 1 million mark; that is a fact which everyone here accepts.
Richard Graham (Gloucester) (Con) rose—
Bill Esterson: I ask the hon. Gentleman, when he intervenes, to explain why one of this Government’s first acts was to scrap the successful future jobs fund, which the previous Government introduced and Members who are now on the Treasury Bench said they would keep.
Richard Graham: I am very grateful to the hon. Gentleman for giving way, after some careful thought. In answer to his question, in my constituency the biggest difficulty with the future jobs fund was that, first, the placements were not real jobs but national service, because they were from the Government or charities; and, secondly, they had no future. They did not, therefore, meet even the definition of their own title: future jobs fund.
The hon. Gentleman has heard about the situation in South Derbyshire. The situation in Gloucestershire is that the number of apprenticeships has risen massively over the past three years and has continued to go up by 20% over the past year, and that youth unemployment has fallen by 150 every month for the past three months. It is not perfect, but things are getting better.
Bill Esterson: I cannot decide which of those 14 questions to answer, but as a former banker the hon. Gentleman is in a good position to comment on the financial crisis, which was caused by some of his former colleagues. What he says gives no comfort. He mentions national service, and I went back to the ’80s and ’90s, but he has gone back far further than that, to something that really did not solve any problems for young people.
Richard Graham: I am very grateful—
Mr Deputy Speaker (Mr Nigel Evans): More briefly this time, Mr Graham.
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Richard Graham: I shall be very brief, I promise. I have a specific suggestion for the hon. Gentleman—in two questions. First, how many jobs fairs has he organised in his constituency? Secondly, how many apprenticeships have been started in his constituency?
Bill Esterson: I speak to people in my constituency all the time, and they tell me just how hard it is to find jobs. I have employed somebody who was on the future jobs fund, and they have been extremely successful, but people who have been out of work for more than six months, whether they have left school, college or graduated from university, find it almost impossible to get jobs.
The reality is that, in this situation, just as in previous decades under previous Conservative Governments, employers are already turning to people who have just left school or college or just graduated; they are not looking at people who have been out of work for a long period. The depressing reality is that we will see another generation of young people consigned to the scrapheap unless this Government take the action that the Labour party proposes in repeating the bankers’ bonus tax.
Julie Hilling: I wonder whether my hon. Friend, like me, sees a constant stream of young and older people coming to his constituency surgeries desperate for work. Does he agree that the future jobs fund provided something better than having to work in a supermarket for nothing?
Bill Esterson: My hon. Friend gained vast experience of dealing with young people before coming to Parliament, and she has been a strong advocate for them ever since. Her experience is very similar to mine. It is absolutely disgraceful that we have Ministers sitting there laughing at what is happening to young people up and down this country, who cannot get jobs because we have a Government who entered office when the economy was growing strongly—[Hon. Members: “Oh!”]—despite a global economic downturn and a global economic and financial crisis caused by the friends of people like the hon. Member for Gloucester (Richard Graham).
Gordon Birtwistle: Will the hon. Gentleman give way?
Bill Esterson: Let us hear what the Lib Dems have to say for themselves.
Gordon Birtwistle: Would the hon. Gentleman like to comment on the large number of young people who have come from abroad and now have jobs in the UK?
Bill Esterson: I am not sure what that has to do with what I was talking about. Perhaps the hon. Gentleman can agree with me that what we need is action from this Government—action to help young people find jobs.
The hon. Member for Dover (Charlie Elphicke), who is no longer here, mentioned several times the fact that the banks are not lending and said that that is the problem, but he forgot to say that the reason the banks are not lending is that they have no confidence in this Government—the Government who have pushed us back into a double-dip recession so that we are now one of only two countries in Europe in that position, the other being Italy. That lack of confidence is why banks would rather shore up their own position—and, of course, pay exorbitant bonuses to their top executives.
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The banks are not lending to the small businesses that need the money to create the jobs and drive the growth that is needed. Unless the banks start to do that, the Government need to step in.
That is why the proposal from Labour is so important. It is why repeating the bankers’ bonus tax would make so much difference to young people and to this country as a whole. But what did we get from this Government? The cut in the 50p tax rate. Three hundred thousand of the wealthiest people in the country will benefit from a tax cut paid for by the rest of us, particularly the poorest and pensioners through the granny tax. That is the reality of the Government’s proposal, which they are pushing through tonight. That is why we should oppose the Bill.
What I expected was an end to the sort of heckling we have heard from Ministers, who clearly enjoy the prospect of young people being out of work. I would like to think that that is not what they really think. I had hoped for a degree of fairness from the Government—perhaps I was being unreasonably optimistic. There is nothing fair in 300,000 of the wealthiest—
Mr Reid: Will the hon. Gentleman give way?
Bill Esterson: The hon. Gentleman keeps coming back for more—I am intrigued.
Mr Reid: The fair thing in the Budget is that the personal allowance for income tax is being raised by a record amount, taking a large number of low-paid people out of paying tax altogether and giving a tax cut to many more. That is what makes this Budget fair.
Bill Esterson: If it were true that it helps the poorest people in our society, perhaps the hon. Gentleman would have a point, but it does not help many of the very poorest and it does not help those young people I was talking about who cannot find a job because the Government will not take action and because they cut the future jobs fund when they first came into office.
What we really needed from this Government was a Budget of fairness. Instead, we got that tax cut. What they should be doing is repeating Labour’s bankers’ bonus tax, which raised £3.5 billion—[Interruption.] Government Members do not have to take my word for it; they can take the word of the independent Office for Budget Responsibility, which they themselves set up. They are even questioning their own organisation’s figures. That £3.5 billion was nearly twice as much as the £1.8 billion raised by the bank levy. The bank levy is a start, but the Government could repeat the bank bonus tax and use the money to get young people back to work and the housing industry going. The temporary VAT cut would help small businesses that cannot get loans from the banks.
I know that people want to get home. [Hon. Members: “Hurrah!”] Always happy to oblige. We have had a Budget for the wealthiest in our society. The Bill gives help to the top 300,000 earners, but does nothing for young people or those out of work.
Sheila Gilmore:
During the various debates on the Bill, there have been references to the 1980s and the 1970s. Does my hon. Friend agree that there were probably
3 July 2012 : Column 884
comments like the ones we heard tonight in the 1930s, when people in the south of England said that there was no depression?
Bill Esterson: I thank my hon. Friend for her comments —[Interruption.] If the right hon. Member for New Forest West (Mr Swayne) would like to make an intervention, I will happily take it.
My hon. Friend is absolutely right that we are seeing a repeat of what happened in the ’30s, and we have none of the policies necessary to get us out of this situation.
Geoffrey Clifton-Brown (The Cotswolds) (Con): Will the hon. Gentleman give way?
Bill Esterson: No, I am not going to take any more interventions; the hon. Gentleman can sit down.
We should be seeing the investment from the bank bonus tax and a temporary cut in VAT. The Bill—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans): Order. Please—I cannot hear Mr Esterson speak.
Bill Esterson: The Bill does nothing to help grow the economy or get us out of the problems we face. The House should vote against it.
Question put, That the Bill be now read the Third time.
The House divided:
Ayes 308, Noes 233.
[10.57 pm
AYES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, Paul
Burt, Lorely
Byles, Dan
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Clappison, Mr James
Clark, rh Greg
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Farron, Tim
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, Mr Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hammond, Stephen
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Harvey, Nick
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Howarth, Mr Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lamb, Norman
Lancaster, Mark
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Mr Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Luff, Peter
Lumley, Karen
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McVey, Esther
Mensch, Louise
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, Maria
Mills, Nigel
Milton, Anne
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Osborne, rh Mr George
Ottaway, Richard
Paice, rh Mr James
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Stride, Mel
Stuart, Mr Graham
Stunell, Andrew
Sturdy, Julian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Teather, Sarah
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Truss, Elizabeth
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
Stephen Crabb and
Mark Hunter
NOES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Bayley, Hugh
Beckett, rh Margaret
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Gregory
Campbell, Mr Ronnie
Caton, Martin
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Donaldson, rh Mr Jeffrey M.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Harman, rh Ms Harriet
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Kaufman, rh Sir Gerald
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacShane, rh Mr Denis
Mahmood, Shabana
Mann, John
Marsden, Mr Gordon
McCann, Mr Michael
McClymont, Gregg
McCrea, Dr William
McDonagh, Siobhain
McDonnell, Dr Alasdair
McDonnell, John
McGovern, Alison
McGovern, Jim
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruddock, rh Dame Joan
Sarwar, Anas
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Shuker, Gavin
Simpson, David
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodcock, John
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Chris Ruane and
Julie Hilling
Question accordingly agreed to.
3 July 2012 : Column 885
3 July 2012 : Column 886
3 July 2012 : Column 887
3 July 2012 : Column 888
Bill read the Third time and passed.
Business without Debate
Delegated Legislation
Mr Deputy Speaker (Mr Nigel Evans): With the leave of the House, we shall take motions 3 to 6 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Terrorism Act 2000 (Video Recording with Sound of Interviews and Associated Code of Practice) Order 2012, which was laid before this House on 10 May, be approved.
That the draft Counter-Terrorism Act 2008 (Code of Practice for the Video Recording with Sound of Post-Charge Questioning) Order 2012, which was laid before this House on 10 May, be approved.
That the draft Terrorism Act 2000 (Codes of Practice for the Exercise of Stop and Search Powers) Order 2012, which was laid before this House on 10 May, be approved.
That the draft Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Codes C, G and H) Order 2012, which was laid before this House on 10 May, be approved.—(James Duddridge.)
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Education (Amendment of the Curriculum Requirements for Fourth Key Stage) (England) Order 2012, which was laid before this House on 11 June, be approved.—(James Duddridge.)
3 July 2012 : Column 889
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until tomorrow (Standing Order No. 41A).
Mr Deputy Speaker: With the leave of the House, we will take motions 8 to 12 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Renewable Heat Incentive Scheme (Amendment) Regulations 2012, which were laid before this House on 11 June, be approved.
That the draft Green Deal (Energy Efficiency Improvements) Order 2012, which was laid before this House on 11 June, be approved.
That the draft Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) Regulations 2012, which were laid before this House on 11 June, be approved.
That the draft Green Deal (Qualifying Energy Improvements) Order 2012, which was laid before this House on 11 June, be approved.
That the draft Electricity and Gas (Energy Company Obligation) Order 2012, which was laid before this House on 13 June, be approved.—(James Duddridge.)
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11)),
That this House takes note of European Union Document No. 14879/11 and Addenda 1 to 3, relating to the Commission Report on the Protection of the European Union’s financial interests: Fight against fraud - Annual Report 2010, together with two unnumbered Reports from the European Court of Auditors dated 10 November 2011, relating to the Annual Report on the Activities Funded by the Eighth, Ninth and Tenth European Development Funds in the financial year 2010, and the Annual Report on the implementation of the budget concerning the financial year 2010; regrets that the EU budget has been given a qualified audit by the EU oversight body the Court of Auditors every year for the past 17 years; agrees that, in these challenging economic times, the same high standards applied to national budgets should be applied to the EU budget, especially as national taxpayers fund the EU budget; supports the Government’s decision to, for the first time, oppose signing off the EU budget earlier this year; and encourages the Government to continue to call for important and urgent improvements to the quality of EU financial management.—(James Duddridge.)
3 July 2012 : Column 890
Violence against Health Workers
Motion made, and Question proposed, That this House do now adjourn.—(James Duddridge.)
11.13 pm
Nic Dakin (Scunthorpe) (Lab): Our national health service employs more than 1.7 million people. Of those, just under half are clinically qualified, including 120,000 hospital doctors, 40,000 general practitioners, 400,000 nurses and 25,000 ambulance staff, as well as an army of other health care workers. Only the Wal-Mart supermarket chain, Indian Railways and the Chinese People’s Liberation Army directly employ more people.
On average, our health service deals with 1 million patients every 36 hours. That is about 500 people a minute or eight people a second. As those figures suggest, the size and volume of the NHS means that literally millions of interactions between patients and staff occur every single day. In the vast majority of cases, these interactions are positive and result in successful outcomes for patients and staff alike, which is why, simply put, the NHS is one of the best health care models on the planet. But sadly, things sometimes go wrong for patients and badly wrong for staff. The superb staff who provide such sterling service to the public can find themselves the victims of violence while working on our behalf to provide those very services. The purpose of this debate is to highlight this wrong and seek support from the Government for righting it.
The NHS management service’s latest statistics reveal more than 150 reported physical assaults on health care staff per day—and that is before verbal assault is taken into consideration. According to the latest 2010-11 NHS survey, 7% of NHS staff had been victims of assault in the previous 12 months. The Royal College of Nursing’s research reveals further troubling statistics, with almost 11% of those surveyed having been assaulted at work in the previous two years and more than 60% of all respondents having suffered verbal abuse at work. Indeed, one respondent commented that
“verbal abuse seems to just be accepted as part of our work”.
In Northern Lincolnshire and Goole hospital trust, which serves the Scunthorpe area, there were 13.1 assaults per 1,000 members of staff in 2009-10. Although that figure is below the national yearly average of 16.8 per 1,000, it is still far too high. One assault against any person simply trying to do their job in any profession, never mind people who routinely save lives every day, is completely unacceptable.
Two weeks ago, I joined a local ambulance crew for five hours of their 12-hour shift, and I was hugely impressed by the professionalism of the paramedic team and the staff at Scunthorpe general’s accident and emergency department. Patients were treated with great skill, care and dignity, which is exactly as it should be, but I was shocked to learn that the fantastic paramedic I was with had gone to a house call about a year ago and was seriously assaulted by the man he had gone to help. He was chased around the house by the man, who violently and persistently assaulted him. The assault was so bad that it resulted in his being off work for six months.
3 July 2012 : Column 891
I received today this e-mail from a staff nurse at Scunthorpe general hospital:
“I understand that you are taking part in an adjournment debate tonight on the above subject. I was assaulted by a patient in January this year. With colleagues I went to clean up a patient that…had attacked a nurse earlier in the day and no one felt able to approach him since. I was subjected to a violent attack which meant I was on sick leave for three months. I have had intensive physiotherapy and still attend physio regularly. I suffered a needlestick injury while trying to sedate the patient and will be tested for blood borne viruses in the next few weeks. During the time I was off work and, for some time since, I have been in constant pain, I had limited use of my right arm and restricted movement of my neck. I could not hold a pen to write or brush my teeth. Everyday tasks took hours and I became depressed and withdrawn. Even now I am unable to perform all my duties as a nurse. Yet, mine was not a serious injury. I have made considerable improvement but will always have some level of pain and restriction of movement.”
She goes on to thank us for raising this issue in Parliament.
Jim Shannon (Strangford) (DUP): I congratulate the hon. Gentleman on bringing this issue to the Chamber, and I wish to associate myself with his comments. In Northern Ireland, including in my constituency and in particular the Ulster hospital, there have been several attacks on accident and emergency personnel and ambulances. It is not specific to Scunthorpe but happens across the UK. Would better co-ordination between the hospital authorities, ambulance and emergency personnel and the police be a way of addressing some of these issues?
Nic Dakin: I thank the hon. Gentleman for his comments. He reminds us that, sadly, the problem affects people across the nations of the United Kingdom. I will come to the issue he raises later, but I want now to quote the final comments of the nurse who wrote to me:
“You can have no idea what it means to have this problem recognised and debated. I do not expect to be compensated in monetary terms for the pain I have suffered or the possibility that I may not be able to work to retirement age but I do want to see measures put in place to effectively protect staff who are expected to deal with difficult and violent patients.”
The costs of such assaults are multi-fold. There is the cost to the NHS of care for the victim, the cost to the NHS of the health worker’s absence from work and the possible loss of an employee if recovery is not complete. Added to that is the potentially devastating impact on the health worker’s own health and well-being, with further strain on family, friends and the wider community. I would like to pay tribute to all the fantastic people working in the NHS, including the people and organisations working hard to prevent such violence from taking place against health workers. Northern Lincolnshire and Goole Hospitals NHS Trust has launched an e-petition to heighten public awareness of the issue. The fact that the trust has recognised it in this way is to be applauded, but there is much more to be done. That is why the trust’s partnership approach, working with Unison and others to find ways of practically addressing the issue, is to be welcomed.
NHS Employers—part of the partnership for occupational safety and health in health care—is also actively involved in raising the issue of violence and aggression against staff, and is looking at how it can be managed, working hard to help create healthy and productive workplaces.
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Work is also under way—led by NHS Protect, with input from the Royal College of Nursing and others—to look at preventing and managing physical assaults on staff which result from a patient’s underlying medical condition, such as dementia. Many physical assaults result from a patient’s underlying clinical condition, but rather than ignoring this, steps can be taken to reduce the risks. Work to take these positive initiatives forward needs to be systematically supported and funded if it is to bring real change and reduce the risk to health workers from such patients.
All these initiatives are positive and to be welcomed. However, I want to highlight a number of concerns raised with me by the Royal College of Nursing, Unison and others. I am keen for the Minister—who I know is committed to ensuring that the Government do their best in this area—to say in his response what practical steps the Government are taking to address those concerns. The Government have funded work by the Design Council with a limited number of A and E units to reduce violence through design solutions. That is to be welcomed. How will the work be evaluated, and how will any improvements to the safety of staff and patients in such units be shared and implemented more widely? With the end of Secretary of State directions, which required NHS trusts to have measures in place to protect staff, how will it be possible to ensure that all provider services meet standards similar to those currently set under Secretary of State directions? They include access to a local security management specialist, training on conflict resolution, central reporting of physical assaults and a requirement to follow policies and guidance—for example, lone working guidance—published by NHS Protect.
Lone working nurses and health care workers absolutely need protection. They often form an invisible work force. Many health workers already work alone with limited, if any, back-up or support. The quite proper policy direction of providing more services in the community means that more health workers are likely to find themselves in potentially vulnerable situations as sole workers. How will Government ensure that there are systems in place to minimise risk and protect the work force?
Full consideration needs to be given to the possible impact of changes in health care delivery combined with efficiency savings on the likelihood of risk of violence against staff. In particular, a risk assessment of the impact of closing units, lengthening A and E waiting times and staff shortages needs to be undertaken and the effects mitigated. That needs to be recognised. In this climate of cost-cutting and austerity, how can we be certain that such measures will be put in place to reduce the risks to staff? Staff who report incidents need more support from their employers and the police. They need feedback after they have reported incidents, and they need to know what action is being taken to prevent any reoccurrence. Lack of feedback and support can lead to under-reporting of incidents and reduced morale.
I welcome the fact that pressure from Unison has resulted in a change to the code for Crown prosecutors to increase the number of prosecutions for assaults on public servants. The closer working relationship between NHS local security management specialists and trade union safety representatives has been a positive development. NHS Protect has also agreed protocols with the police and
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the Crown Prosecution Service. Under the memorandum of understanding with the Association of Chief Police Officers, the police are committed to progressing all cases of violence and abuse against NHS staff as a priority. The Crown Prosecution Service has also made a commitment to
“work with the police to ensure that these cases are treated with the seriousness that they deserve and encourage a robust charging policy”.
It is crucial that that should lead to a more consistent approach by police forces to following up the perpetrators of either physical or verbal abuse. RCN research suggests that police follow-ups are sometimes inconsistent around the country. Some forces follow up complaints robustly and work closely with local hospitals, but others appear reluctant to get involved in procedures, especially when the incident involves a patient with an underlying mental health condition. Such incidents in particular need more close examination, as a significant number of physical assaults on health workers are by patients with underlying mental health problems. How can the Government ensure that the memorandum of understanding between ACPO, the CPS and NHS Protect will be consistently and effectively implemented?
The reporting and investigation of assaults also need to be properly addressed. According to the RCN survey, although only about 11% had suffered physical abuse at work, 74% of the incidents they recalled were never reported to the police. Staff need to be confident that they will be supported by their employers and the police. They need to be given the confidence always to report assaults. There needs to be a culture of trust that, when reported, such assaults will be taken seriously and fully investigated, with proper support given to the victims. Proper feedback and support in the reporting process will help to keep up morale in the NHS work force and reassure staff that they should not expect to be put in danger while carrying out their duties on behalf of all of us.
In this age of austerity, budgets are being squeezed, and organisations that protect workers are being asked to do important jobs with a lot less funding. For example, the Health and Safety Executive, which plays an important role in keeping people safe at work, has had its work force reduced by a third in the last 10 years, with the number of inspections that it carries out falling from 75,000 to 23,000 a year. That could lead to the real danger of worker safety being jeopardised, which makes it even more important for NHS employers to take completely seriously the need to protect their work force and minimise the risk of attack from patients. Health and safety is not red tape; health and safety saves lives.
Worryingly, the cuts in NHS and local authority budgets and in the Health and Safety Executive are in danger of combining with the confusion caused by the NHS reforms to cause local security management specialists to become increasingly reliant on safety representatives to help them to identify those work areas in which NHS staff will be most at risk. Many local security management specialists used to work with primary care trusts. With the abolition of PCTs, there is a possible danger of confusion and uncertainty about their role in the workplaces that they cover. How will the Government ensure that the risk inherent in the changes does not lead to more health care workers finding themselves in situations in which their personal safety is put at risk?
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Every single person should be able to go to work without the fear of physical harm. I strongly back Unison’s calls for a zero-tolerance approach to safeguarding NHS staff. Everyone needs to work together with a clear and persistent focus to make sure that all staff can carry out their work free from the fear and the threat of physical or verbal assault. When individuals are found guilty of attacks on health care workers, that should inform the sentencing and be treated with the utmost seriousness.
As Julian Corlett, Unison branch secretary for Scunthorpe general hospital, wrote to me:
“Violence directed at health workers is never acceptable and is not part of the contract of employment. We must dispel the myth that violence in the NHS is inevitable, or unpredictable and therefore uncontrollable. It therefore remains our key objective to see a significant and sustained reduction in the number of violent incidents directed at NHS staffs across the country, with more prosecutions and severe sanctions for those perpetrating such violence. There has to be the presumption that those committing these offences are more likely to face prosecution than not if we are to see sustained reductions in the figures anytime soon.”
Julian speaks from experience with great passion and clarity; his words will echo round this Chamber and in the world outside it. We should be vigilant and proactive in ensuring the safety of those who work within the NHS. In the words of the children’s laureate, Michael Rosen, on the 60th anniversary of the NHS, we must do all we can to protect the
“hands that touch us first...and the hands that touch us last”.
11.31 pm
The Minister of State, Department of Health (Mr Simon Burns): I begin by congratulating the hon. Member for Scunthorpe (Nic Dakin) on securing this debate on violence against health care staff. It is an issue that every Member of this House can agree is totally and utterly unacceptable in every instance. I would like to praise the reasoned and measured way in which the hon. Gentleman made his points. I also share with him the disgust about what has happened to some of his constituents who work—day in, day out—on behalf of patients in his constituency. Sadly, this problem is not restricted solely to his constituency, as it applies to all constituencies where, regrettably, acts of violence are directed against NHS staff. I can assure him that this Government have zero tolerance of that sort of treatment —physical or verbal—against people who work in our NHS on behalf of patients.
Violence against health care workers can never be tolerated. Nobody should expect to suffer violence at work. This is especially the case for those who are committed to caring for others. Clearly, the human cost alone makes it unacceptable; although the physical effects may be transient, the deeper emotional scars can often last a lifetime. Beyond the effect on the individual, too, there are other factors: the disruption to services caused by the incident and its aftermath; the impact on staff welfare, sickness absence, recruitment and retention and the cost of additional security, all of which divert resources, human and financial, away from providing health care.
In short, the cost to the NHS of violence is huge and it affects us all. I am determined that we should do all we can to prevent violence against health care staff and to take the toughest possible action when violence does occur to ensure that those responsible are held accountable
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for their actions. From the outset, the Government have been committed to taking action to tackle the problem of violence. We have encouraged NHS organisations to work more closely with their local police forces to clamp down on anyone who is aggressive or abusive to staff—and while we may have made progress, there is still a long way to go.
In 2010-11, the latest year for which figures are available, there were almost 58,000 reported physical assaults on members of NHS staff. Hon. Members are able to consult the reported figures for each health body, as these are placed in the Library each year. In the majority of those assaults—some 40,000—the patient’s medical condition was a factor. This means the culpability of the assailant may have been in question or that a legal sanction may not have been appropriate. However, that still leaves some 18,000 cases in which the assailant’s medical condition was not a factor. While this number is smaller than for the previous year, it is nowhere near small enough: 18,000 is 18,000 too many. We are committed to taking whatever further action is required. The hon. Gentleman expressed concern about sanctions and convictions. I can tell him that sanctions against offenders, ranging from cautions to fines to imprisonment, have increased—there was a 24% increase in 2010-11—but the number is still not high enough.
We are taking action in a number of ways. Some are new, while others have succeeded in the past and we have therefore continued to support them. Of course, the main priority is to prevent violence by protecting staff and managing high-risk situations before they escalate. NHS Protect, which the hon. Gentleman mentioned, is the body that leads the work to tackle crime throughout the health service. It has identified violence against staff as one of its key priorities for 2012-13, and has developed a work programme aimed primarily at preventing assaults.
There are trained security management specialists at more than 90% of NHS trusts in England. They are responsible for investigating security breaches, along with the police, and for implementing new systems to protect NHS staff more effectively. NHS Protect supports NHS organisations by providing advice, assistance and best-practice guidance.
The Criminal Justice and Immigration Act 2008 introduced powers to deal with antisocial behaviour on NHS hospital premises, which enable an authorised person to remove those who are suspected of creating a nuisance or disturbance. A three-year training programme funded by the Department of Health and managed by NHS Protect, which will end in April 2012, has enabled more than 600 staff at over 80 hospitals to be trained in the implementation of the Act. They have been empowered to respond to disruption such as foul language and verbal abuse, intimidating gestures, excessive noise in waiting areas or wards, and the obstruction of thoroughfares. Feedback from staff trained by NHS Protect in the use of the Act’s provisions indicates that the powers are working well in practice on the front line, helping to provide a safer environment for NHS patients, staff and visitors.
The hon. Gentleman raised the important issue of design, particularly but not solely in accident and emergency departments. In November last year, I was pleased to be
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able to speak at the launch of a project organised jointly by the Department of Health and the Design Council involving the use of design to reduce violence in A and E departments. Leading experts developed and tested potential solutions and identified areas for action. We are currently in the implementation phase of that project. Early indications are positive, but in order for the impact of the solutions to be fully evaluated, a detailed framework has been generated by the design team to record both quantitative and qualitative data. Those data will generate the evidence base that will formally endorse the concepts, proving their efficiency and their impact on the costs of violence and aggression in A and E departments. The evaluation has not yet finished, but we hope to communicate the results later in the year.
The Government intend to change the legal framework in respect of antisocial behaviour. One of those changes is designed specifically to tackle antisocial behaviour affecting the NHS. As Members may have noted from the Home Office White Paper that was issued in May this year, we propose that NHS Protect be named as a relevant authority to apply for crime prevention injunctions. That is intended to enable a quicker response to the problem of antisocial behaviour, and to avoid the need for the police or local authorities to apply for injunctions on behalf of an NHS body.
While much of the work will focus on assaults for which the person committing the act can be held responsible, we will not ignore cases in which a person’s medical condition is a factor in violence, especially as such cases represent the majority of reported physical assaults against NHS staff. NHS Protect is working with a clinically led expert group to develop guidance on the prevention and management of violence in circumstances in which the medical condition of a patient puts staff at greater risk of assault.
When necessary, we need to challenge the idea that the existence of a particular medical condition is a bar to prosecution. Whenever an assault occurs, an assessment of the assailant's culpability must be made. When assailants cannot be considered legally culpable for their actions, prosecutions cannot be appropriate, but when assessments reveal that people were in control of their actions and knew what they were doing, there should be a presumption that sanctions will be sought. Indeed, there is some clinical opinion that such action can assist in making a person understand the impact of their behaviour, and so affect it in a way that discourages repeated incidents. For action to be taken against offenders, we first need staff to report when they have been subject to violence, either verbal or physical. That staff have confidence in the action that will be taken is paramount in encouraging them to do so, and the role of the local security management specialists is key to that.
All the initiatives I have mentioned are designed to prevent violence from occurring. We must, however, remain prepared for the times this prevention activity is not as effective as we would like it to be. When violence does occur, we need to ensure that those responsible are held to account.
To pick up on the valid point the hon. Gentleman made about joint collaboration, NHS Protect has signed a three-way agreement with the Association of Chief Police Officers and the Crown Prosecution Service, with the stated intention of curbing violence and antisocial
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behaviour in the NHS. This agreement recognises that the police and the CPS are bound by guidance and codes of practice on communications with victims and witnesses, and that employers have a duty to support in every way they can staff who have been victims. This joint-working agreement supports the Government’s commitment to act. NHS Protect will this year be working to translate this national agreement into local protocols for more effective collaboration between the police, the CPS and health bodies in seeking appropriate sanctions for acts of violence. NHS Protect is currently identifying best practice in the management of physical assaults in mental health settings, with a view to issuing specific guidance for that sector. This will include working with the police to take forward prosecutions where it is appropriate to do so.
The hon. Gentleman also raised the important issue of how to protect the lone worker. To better protect lone workers, NHS Protect led the delivery of a lone worker alarm service for the NHS. Over 40,000 staff, and more than half of NHS trusts across England, now use this service, which enables a lone worker to signal covertly for help from the emergency services if they find themselves in a dangerous situation. The service also provides a
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system control centre, which enables listening to, and recording of, incidents in case evidence is later needed as part of a prosecution.
I wholeheartedly share the hon. Gentleman’s concern about violence against health care staff. We should always do everything we can to prevent it, and when we cannot prevent it, we should seek the strongest sanctions against those responsible.
I hope that the hon. Gentleman and the House are reassured by my account of the work we are undertaking, and by the Government’s and my own personal commitment to tackling this completely unacceptable problem.
I thank the hon. Gentleman. He rightly holds this subject very close to his heart. The Government share his concern, and we are determined to do all we can to minimise the cowardly, dastardly and disgusting attacks on people who do so much to help the frail, the vulnerable and the sick in this country.