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(3) A copy of the report in subsections (1) and (2) shall be laid before Parliament.’.
Cathy Jamieson: It is a pleasure to be here this afternoon to continue what have been interesting debates, as they always are on Finance Bills. I notice that the hon. Member for Peterborough (Mr Jackson) is no longer in his place, but I thought I ought to declare my interest, given his comments to my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) about tofu-eating, Guardian-reading, sandal-wearing people. If I say nothing other than that I am a vegan, perhaps Members will see that those comments would have been more aptly aimed at me rather than my hon. Friend, who I am assured is not a tofu eater.
The new clause and amendment build on points that the Opposition have made before, both on previous Finance Bills and in various other debates. New clause 5 would require the Chancellor to review and report on the feasibility of reintroducing a bank payroll tax, otherwise known as a bank bonus tax, and on whether the additional revenue could be used to fund a job guarantee scheme for people in long-term unemployment, along the lines that we have proposed. The new clause and amendment are reasonable and relatively straightforward, and there is no hidden agenda behind them. The Exchequer Secretary will know from previous Finance Bills and other debates that I always make reasonable suggestions, and I wish to explain why we believe that the new clause is the right approach at this time.
To put the matter into context, nearly 1 million young people are unemployed, and the time is right to do something about that by repeating the tax on bank bonuses to fund a compulsory jobs guarantee for every young person who has been out of work for more than 12 months. We have been clear that they would have to take that job, or they would lose benefits. The bank bonus tax would help to fund the first year of such a guarantee. As I have said, there are a large number of long-term unemployed people, and the guarantee would help to ensure that not just young people but those over 25 who had been out of work for two years or more got back into work. I will come on to why that is so important, but we believe that the bank bonus tax, coupled with our plan to change pension tax relief, would ensure an annual revenue stream to fund that policy throughout the next Parliament.
I was expecting that Government Members might raise a particular query at this stage, but I will save them the trouble of intervening by saying, for the avoidance of any doubt, that the compulsory jobs guarantee is the only policy that we intend to be funded by the bank bonus tax and the proposed changes to pension tax relief.
Let me give the context of the previous bankers bonus tax—the bankers’ payroll tax, as it was called at the time. Despite comments that Government Members often make, it is generally acknowledged that the banking system survived the financial crash in 2007-08 largely due to the significant support that it received from the taxpayer. Even today, according to the New Economics Foundation, the banks deemed too big to fail continue to receive pretty generous taxpayer support. Barclays, the Royal Bank of Scotland, HSBC and Lloyds enjoyed
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combined savings of £37.7 billion in 2012, because the financial markets deemed them to big to fail. Arguably, that has left some smaller banks and new competitors at a disadvantage, because they cannot enjoy the subsidised borrowing rates of the big four. Notwithstanding the changes that have been made, about which I will say more, the banking system arguably remains too concentrated and potentially risky. The reality—the Minister and others will be well aware of it—is that, if there is another problem in any of the banks, or another financial crisis, taxpayers would bear the costs of the bail-out.
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Given the level of taxpayer support received by the banks in the previous financial crisis, it was clear that the imposition of some form of taxation was both necessary and justifiable in order to see a return for the taxpayer. The 2009 bank payroll tax—the bankers’ bonus tax—was intended to do that. It was intended to secure something back for the taxpayer, but it was also intended to be a signal to prompt behavioural change in the banks.
When the then Chancellor announced the payroll tax in his pre-Budget statement in December 2009, he made it clear that it was a special, one-off levy of 50% on any individual discretionary bonus of more than £25,000. The legislation to introduce it was included in the Finance Act 2010, and agreed with cross-party support, including, as I understand it, from the then shadow Chancellor, albeit grudgingly—perhaps an hon. Member will correct me on that. Initially, it was estimated that the tax would generate revenues of just over £500 million but, in fact, it raised £3.5 billion. That funding was used for a range of measures, including helping the unemployed get back to work.
Hon. Members might ask why we now need another bankers bonus tax. It is worth recalling that the Labour Government introduced a voluntary code of conduct for the banks. A number signed up very quickly, but others took longer to come to the conclusion that they ought to do something. We have since had separate banking commissions, and the recent Financial Services (Banking Reform) Act 2013, which was debated at some length. It is fair to say we reached agreement on some points, but the Opposition believe that the Government, at various stages, continued to duck the radical banking reform that was needed. We were disappointed when the Government did not initially back a number of Opposition amendments in the Commons, but some changes were made in another place.
It is also fair to say that, despite some of those changes and the positive noises that have been made—like other hon. Members, I meet many people from the banks in the work undertaken in Committee and the Chamber—the evidence, certainly as far as members of the public are concerned, suggests that the banks have not entirely changed their ways as we might have hoped. That has a number of implications for their credibility. Many people even in the banking world accept that. They accept that they have some considerable way to go to show the public that they have learned their lessons and changed their approach to reward and remuneration—they know they have much more to do.
Without wishing simply to list the problems, it is salutary to remember recent scandals and the implications of them for people, including the mis-selling of interest
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rate swaps, which affected small businesses. Small businesses thought they were doing the right thing in trying to mitigate risks such as fluctuations in foreign exchange rates, but the largest banks have had to put aside more than £3 billion to provide against compensation claims by customers, which shows how serious that was.
Mr John Redwood (Wokingham) (Con): Will the hon. Lady remind hon. Members how much she wants to raise from the tax in the first full year? What impact would it have on banks’ capacity to lend?
Cathy Jamieson: I will come to that. In discussions I have had with banks they say that they want to lend and have the resources to do so, but some of the schemes have not necessarily encouraged people to come forward and have not been as successful as they might have wished. I have also heard the criticism from some banks, not all, that perhaps another levy or a different approach to the bankers bonus tax would have implications for capitalisation of the banks and so on. However, when we look at the scale of some of the bonus pots, it is difficult to make the argument that the money will not be there. The money appears to be there in some instances for excessive remuneration and bonuses, rather than other schemes.
Compensation costs for the mis-selling of payment protection insurance—the PPI scandal—have now reached £22 billion, an astonishing sum, with Lloyds alone incurring compensation costs not far short of £10 billion. Significant fines have been imposed on Barclays, RBS, Lloyds and Deutsche Bank for attempts to rig LIBOR, doing huge damage to the banks’ credibility and showing how important it is to change the culture and behaviour. That change has been much talked about, but has yet to be delivered entirely.
I am not trying to bash the bankers, as it is sometimes portrayed. I well understand the difficulties faced by front-line staff in the banks—the people in the lower tiers of the management system. They operated in and had to comply with the prevailing culture, and were set particular targets and given sales incentives. When we look back at that approach, we can begin to pinpoint the move away from the notion that the bank was there to look after people’s money, both individual depositors and local businesses, towards the retail culture, in which the emphasis was on selling and making profits without, in some instances, due care and attention to fiscal responsibilities and duties to the customer. I hope that changes brought about by recent legislation will see an end to that culture. Many of the banks are talking about that, and it will understandably take time, but we need the nudges, the pressures and the reminders, not just from the regulators, but through public opinion. Unless a watchful eye is kept on the banks, the change in culture will not necessarily succeed.
Despite having racked up billions of pounds in fines, several of the big banks still proposed significantly higher bonuses for 2013—the latest year for which figures are available—than for the previous year. They went up 10% to £2.4 billion at Barclays; up 8% at Lloyds to £395 million; and up 6% at HSBC to £2.3 billion. RBS, which is 81% owned by the taxpayer, has also announced a bonus pool of £588 million this year. I know that some of the banks claim that their overall bonus pool is coming down, but for the ordinary person
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in the street the figures are more than they would ever hope to win in a lottery in their wildest dreams, never mind expect to earn in the course of a year. They also find it astonishing that the banks might seek to breach the EU cap on bankers bonuses. It is difficult to understand why people who are paid in excess of £1 million, and have a range of other benefits, seek bonuses of twice their annual salary.
Bob Stewart: One consequence of bonus payments is that the Treasury, presumably, gets 40% of them, which is a bonus for the Exchequer. Or have I got that wrong?
Cathy Jamieson: I will come on to that point, and on to corporation tax, when I speak in more detail about why we want a review of the bank levy. I hope Government Members understand why we think it is important to have a review and to consider the implications. I started by saying that we are taking a relatively mild-mannered approach, with no demand, as is sometimes made, for something to happen immediately. We are saying, “Let’s look at the figures, let’s look at the implications, let’s look at what can be done in the round, and let’s have the Government do that work and bring it back for further discussion.”
To go back to the hon. Gentleman’s point, the figures compiled by the Labour party suggest that the cut to the 50p tax rate saw an estimated 2,714 bankers who earn more than £800,000 share a £98.5 million windfall—an average tax cut of £36,300 each. I just make that point in relation to the notion that the Treasury will somehow get the yield from that.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Would my hon. Friend like to comment on why the gap—which I do not think, from their policies, Government Members understand—between the top and the bottom matters? Overwhelming evidence shows how harmful it is to society that the gap between rich and poor is increasing.
Cathy Jamieson: My hon. Friend makes an important point and it is important to recognise it. I made the point that this is not about bashing the bankers per se. The front-line staff who operate call centres and other places have not seen their living standards rise as quickly as they might have wished. Those on the minimum wage or the living wage, who aspire to improved employment opportunities if they were available; those on zero-hours contracts; those who work part time but would prefer to work full time; young people taking any job, even if it is a stop-gap until they find one that suits their qualifications and aspirations—they are the ones who find it most difficult to understand why the banks have not changed their culture. It appears to them that in some instances people were being rewarded not for success but for failure, and that they could not aspire to have their own success in their own jobs rewarded. It is also fair to say that in some ways the financial services sector was slightly better protected from the wage freezes and so on than manufacturing and other sectors in industry. I absolutely understand my hon. Friend’s point.
No Government Members are seeking to intervene at this point, so I can only assume that they heard what my hon. Friend said and agree that this is a very important point in considering how to take things forward. As she
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suggested, ordinary people, particularly young people, are still dealing with the legacy of the financial chaos caused by the banks, and with the cost of living crisis that has been made worse by the policies of this Government. To return to her point, real wages—I will say it again, even though I know it has been repeated on numerous occasions in the course of these debates—have fallen by £1,600 since 2010. That is a huge amount of money for those on the lowest incomes. That may not have an impact on those who received the average tax cut of £36,300, but it certainly has an impact on ordinary people who are trying to do the best for their families.
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It is worth repeating the figures from the Institute for Fiscal Studies. Families will be £974 a year worse off by the time of the next election, which will be a real problem for people who are doing their best to look after their children, keep a roof over their heads, maintain a decent standard of living, and ensure that their kids have the same things as their schoolmates and other friends. These people are not necessarily leading lavish lifestyles; they are simply trying to get by without getting into debt. Some are even trying to put aside a small amount of savings for a rainy day, but many who have done that are now finding that it has not just rained but poured, that their savings are gone, and that they are literally living from one week to the next. I do not need to repeat everything that has already been said about those who are struggling most and are resorting to payday lenders, and the increasing number of people who are using credit cards to pay their utility bills and buy household items that all of us here take for granted.
David Mowat (Warrington South) (Con): There is a perfectly good case to be made for reducing the difference between high and low salaries, and the hon. Lady is making it. What I do not understand about Labour’s policy is that it seems to be concerned with variable pay but not with fixed pay. Labour Members appear to be quite sanguine about a pay level of £2 million a year, but not about a pay level that consists of a £1 million basic salary and a £1 million bonus. That strikes me as rather odd.
Cathy Jamieson: I think that a separate debate could be had about pay levels overall, but for the purposes of the debate on new clause 5, we are focusing specifically on the question of bonus payments. It has been argued that if we follow this line the banks will find an increasing number of ways of paying bonuses, such as deferring them, and we have not said that is necessarily a bad thing. However, for the purpose of longer-term economic stability, it is surely better for people not to be rewarded for failure, but to be held to account over a longer period.
David Mowat: Of course that is right, but if we are trying to reward people for success, it seems logical to assume that variable pay provides a better and more valuable way of doing that than very high fixed pay. I do not understand why the Labour party is so relaxed about very high fixed pay but wishes to tax variable pay, which can be associated—I agree that this is not always the case—with success or failure.
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Cathy Jamieson: When the last Labour Government introduced a bank bonus tax, one of the issues that we considered was behavioural change, but that behavioural change has not come about in the way that we might have expected.
Let me return to our proposal that these funds should be used to return 900,000 long-term unemployed young people to work. The rate of long-term unemployment has almost doubled since 2010. Government Members talk of the number of jobs that have been created for people in their constituencies, but the fact is that in most constituencies young people are out of work for extended periods—in some instances, for more than a year. A year in the life of a young person can make all the difference to the extent to which that young person will succeed in later life. We all know that if young people do not have an opportunity to enter education, employment or training when they leave school, that can have significant implications for their earning capacity and ability to look after themselves and their families in later years, and indeed can have a number of long-term implications for the state.
Mrs Glindon: The cuts in the bank levy and corporation tax over the last three years have cost the country nearly £3 billion. Given what that £3 billion could have done for the young people my hon. Friend is describing, it is a disgrace that it was not collected.
Cathy Jamieson: I am sure that, like me, my hon. Friend meets young people every day who are desperate to get into employment, and understands absolutely what additional funding would do to help that happen. Like many other Members, I organised a jobs and employment fair in my constituency recently, and it was humbling to see the number of young people standing outside the hall queuing up before it opened in the morning in the hope of obtaining an interview and the opportunity to put themselves forward to the employers who were there either for an apprenticeship or even for part-time work—anything to get them off the dole queues. If we look at what we could do through this bankers bonus tax to support those young people, I think it is clear that is well worth introducing.
Unlike the Government, we are not willing to sit back and do nothing while ordinary people are struggling with the cost of living crisis. That is why we are calling on the Chancellor to publish a report on the feasibility of reintroducing the bank payroll tax and using the proceeds generated to fund what we have called a compulsory jobs guarantee.
It is important to stress a point I made earlier: under the scheme we are proposing every young person out of work for more than 12 months would be guaranteed a job, and they would take that up or they would lose benefits. So there is both the carrot and the stick, because we think that is important.
Guy Opperman (Hexham) (Con): I have been listening to the hon. Lady’s argument and so I took the trouble to check the JSA claimant levels for her constituency: the number of 18 to 24-year-old JSA claimants is down 20.7% and claims of duration of over 12 months—the long term—are down 12.1%. Surely that disproves her argument that the figures are going up:
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Cathy Jamieson: I note that the hon. Gentleman did not quote the long-term youth unemployment rate for my constituency. He is looking at the overall long-term unemployment rates, and in my constituency, which I have lived in for most of my life, I have seen what has happened in relation to people who have been unable to secure permanent full-time employment. I have seen the young people who have been unable to get the apprenticeships they so desperately want. I also know, from work I did in the past—I did have a life before I came into the hallowed halls of this place—with young vulnerable people, the importance of trying to support them into employment. I know, too, that many young people right across the UK are in the same situation: they are desperate to get into employment; they need the help to get there; they need us to be on their side. I therefore cannot for the life of me understand why those on the Government Benches would want to vote against bringing forward a report to look at this in more detail.
Cathy Jamieson: Perhaps the hon. Gentleman can explain to me why he does not support the idea of bringing forward this report.
Guy Opperman: Does the hon. Lady not accept that things like traineeships, which are the greatest passport into apprenticeships and jobs, are the true best way in which to train up our young men and women so they can then obtain the jobs and apprenticeships she is so laudably seeking?
Cathy Jamieson: I have no difficulty with the idea of getting young people into any form of education, employment, traineeship and so on, but we have to ensure that that is available to the young people who are out of work for a lengthy period as a priority, because we know that the longer young people are away from the jobs market, the more difficult it is for them to get back in, and I do not see that the hon. Gentleman’s point is in any way incompatible with the idea of bringing forward a report to look in more detail at how this could work and how the funding would be used.
Debbie Abrahams: I should like to make a quick point about the evidence that links entry-type jobs to future career progression. That evidence is weak, so my hon. Friend is right to say that a sustained approach needs to be taken. Is she also aware that a Prince’s Trust report on long-term youth unemployment shows that one in five young people who are long-term unemployed feel that they have nothing worth living for? Long-term unemployment has a direct effect on finances, but it also affects how young people view themselves in society. The implications of that are—
The Temporary Chair (Martin Caton): Order. This is an extremely long intervention.
Cathy Jamieson:
My hon. Friend was making a valuable point. I am well aware of the excellent work being done by the Prince’s Trust. Many young people who felt that they had very little hope have been given hope through their involvement in that work. It has given them confidence, skills, training and, in many cases, an opportunity to get
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their first job, so that they can start earning and contributing to society. That should be our aim for all our young people.
I therefore hope that the Government will agree to our proposal for a report. We believe that the scheme would cost about £1.9 billion. As I have said, the cost would be met in the first year by the tax on bonuses and by the reduction in the rate of tax relief available to those earning more than £150,000 a year. Those measures should generate more than £2.5 billion, and the annual revenue generated by the changes to pensions tax relief would fund the jobs guarantee throughout the next Parliament.
We have consistently argued for the reintroduction of the bankers bonus tax, to ensure that the banks fulfil their obligation to the taxpayer by supporting jobs and growth in the economy. That is why we are calling on the Government again today to stand up for the taxpayer, and for those people who are desperate to get into work, including young people and the long-term unemployed. We are calling on the Government to send a clear signal to the banks by supporting us today.
Amendment 1 to clause 112 relates to the bank levy. This, too, involves a request for a report. In this instance, we are requesting that the Chancellor, prior to implementing any further reforms to the bank levy, should lay before Parliament a report that considers the impact on the total tax receipts paid to the Exchequer since 2010 by UK banks, building societies, foreign banks and relevant non-banking groups. We want the report to pay particular attention to receipts generated from corporation tax, the bank levy and the bank payroll tax.
It is important to set this proposal in context. In the recent Budget, a consultation was announced on the proposed changes to the bank levy. We are concerned that those changes could lead to the bigger banks paying less as a result of the introduction of a band-based system in which the tax of an individual bank would be capped at an upper limit of £375 million. I know that the Government have said that this measure would be cost neutral, but we are not convinced that it would be of benefit. We have made it clear in the past that, when we are in government, we will put in place a bank levy and use the additional funds raised to expand free child care for working parents of three and four-year-olds from 15 to 25 hours a week. Perhaps that is a debate for another day, however. I shall focus on the bank levy.
We have made it clear all along that a bank levy is not a bad idea in itself. As my hon. Friend the Member for Nottingham East (Chris Leslie) has argued in Committee and on the Floor of the House, however, the proposal was unambitious and has been poorly implemented. When the Chancellor announced its introduction in May 2010, he confidently asserted that it would generate more than £2 billion of annual revenues. That is the assertion he has made on several occasions and it has been enthusiastically backed by the Prime Minister.
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In evidence to the Treasury Committee on the 2010 Budget, the Chancellor said:
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“When it is fully operational the bank levy is going to raise £2.5 billion and we made it clear that we are targeting a revenue sum rather than a particular rate because we think that is an appropriate contribution that balances fairness with the competitiveness of the UK banking sector.”
In Prime Minister’s questions on 12 January 2011, the Prime Minister said:
“The bank levy will raise £2.5 billion each year once it is fully up and running…we will raise £9 billion compared with his £2.3 billion. Even the shadow Chancellor can work out that 9 is bigger than 2.3.”—[Official Report, 12 January 2011; Vol. 521, c. 280.]
Let me remind the House that in its first two years the levy generated just £1.6 billion a year, which was well below the £3.6 billion generated by Labour’s bankers’ bonus tax and considerably below the £2.5 billion annual target the Government set. [Interruption.] I am not sure whether the Minister wishes to intervene. He seemed to be saying something from a sedentary position.
Mr Gauke: I just make the point that one has to examine the net yield from the bankers’ payroll tax, taking into account the revenue that is lost because there are lower receipts for income tax and national insurance contributions. Just to be clear, the number is £2.3 billion.
Cathy Jamieson: Yes, I hear what the Minister is saying and I shall deal with some of that in a moment, because I am concerned to ensure that we get all the sums right and reach figures that everyone would agree on. Again, that is one reason we want this report brought forward, because we are now being told that the levy will generate £2.3 billion in 2013-14, £2.7 billion in 2014-15 and £2.9 billion in each of the following three years. I would give way to him again if he were able to give the details, but perhaps it would be more appropriate if he did so his response later, as it may take time to get them. We do not have the detailed figures, the evidence or the workings to show how those figures are arrived at and whether things are on course to deliver them. That is why it is important to get the report we are calling for today.
Let me say something about the problems with the levy as we see them. As I have said and as my hon. Friend the Member for Nottingham East has in previous contributions, the Government’s levy lacks ambition. The argument is that the initial levy was set at a relatively low rate, both by international standards and when measured against the scale of the taxpayer subsidies received by the sector during the financial crisis and thereafter. In discussion of the Finance Bill in May 2011, he said:
“The bank levy is a sensible idea in theory, and we broadly support it. However, the yield suggested in the Bill—only £2.6 billion—is not just small but pathetic by international standards”.—[Official Report, 3 May 2011; Vol. 527, c. 482.]
I will happily give way to the Minister if he wants to comment on the international standards, but again, perhaps he will do so when he winds up.
One other problem with the levy is that its two objectives can be seen as a bit of a paradox or even somewhat contradictory. By setting the levy as a tax on bank liabilities in excess of £20 billion and charging a lower rate for more secure long-term liabilities, the
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Chancellor was actively encouraging the banks to reduce their exposure by moving towards more stable forms of funding.
Mr Jim Cunningham (Coventry South) (Lab): My hon. Friend has just touched on the central point about the levy: that the Government never had the will to take on the bankers in the first place, as we see if we compare what happened in this country with what happened in the United States. That is why they cannot wholeheartedly support a proper levy on the banks; it is a token levy.
Cathy Jamieson: My hon. Friend makes an interesting point. I suspect that if I were to stray into a long debate on what happened in the US versus what happened here, I would see—yes, I do see—Mr Bone’s eye upon me to ensure that I did not yield to that particular temptation. However, I say to my hon. Friend that that could usefully form the subject of another debate at some point, but he makes an interesting point about the will to take on the banks. I want to choose my language carefully because I want to avoid getting into that whole thing of our being seen as aggressively pursuing the banks. I recognise that there are some in the banking sector who understand how badly they got it wrong and who want to see change, but the scale of the problem has not been universally accepted, and nor has the degree of culture change that is required. The Minister has heard Opposition Members talk about that issue many times when discussing other legislation.
Returning to the initial imposition of the levy, the Chancellor also wanted to generate more than £2 billion in annual revenues. One problem was that, as was pointed out earlier, the more the banks changed their behaviour and remodelled their balance sheets, the less money the levy generated. Was the Chancellor unable or unwilling to decide whether he wanted behavioural change or a targeted revenue sum? Was it possible to do both? Some evidence suggests that it was not, because it has not brought in the amount of revenue that he intended.
Not content with devising a levy the dual aims of which are somewhat contradictory, the Chancellor also proceeded to cut corporation tax annually, arguably handing the banks a tax break. In order to ensure that the banks do not benefit from the tax break, the Chancellor has had to increase the levy every time he cut corporation tax. We have consistently raised doubts about the levy’s ability to raise sufficient funds, especially in the context of the cuts to corporation tax. During consideration on Report of the 2011 Finance Bill, my hon. Friend the Member for Nottingham East said:
“The sector will have a tax cut of £100 million in 2011-12, £200 million in 2012-13, £300 million in 2013-14, and £400 million in 2014-15. That is a £1 billion corporation tax cut over this Parliament.”
“The Treasury ought to supplement its very modest bank levy plan with the bank bonus tax because it is only fair that those who played such a central role in the global economic downturn make a greater contribution to help to secure the economic recovery by supporting jobs and growth.”—[Official Report, 5 July 2011; Vol. 530, c. 1383.]
I would have thought that that sentiment—that those involved in making some of the decisions that caused the problems have a responsibility to do what they can to secure economic recovery and a change in culture—would
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be shared by everyone in all parts of the House. A combination of two factors—contradictory objectives and corporation tax cuts—means that the levy has increased on no fewer than seven occasions. It is important for me to lay this out so that the House understands the time scale for what happened with the levy, because it adds weight to our call for a report to consider that in more detail.
Back in February 2011, it was confirmed that the rate would be higher than originally proposed. That was change number one. In March 2011, at the Budget, the levy was increased to offset the effect of the 1% cut in corporation tax and by the autumn statement in November 2011—autumn was already beginning to be stretched as far as we thought possible, although of course, autumn is now in December as far as the Government are concerned—the rates were increased to ensure that tax would raise at least £2.5 billion a year. I think that was a tacit admission that the initial rate was perhaps somewhat timid. In March 2012, at the next Budget, the levy was increased again to offset the 1% cut in corporation tax.
In the next autumn statement, when the autumn had been stretched as far as possible into the first week in December, the levy was increased again to offset the 1% reduction in corporation tax. At the March 2013 Budget, the levy was increased again—guess why: to offset the 1% reduction in corporation tax. In December 2013, again at the autumn statement, in what appeared almost to be a desperate attempt to get somewhere near the £2.5 billion target, the Chancellor increased the levy again and broadened the tax base in an apparent attempt to mitigate the impact of the very behavioural change that the tax is supposed to encourage.
Jenny Chapman: Has my hon. Friend done the calculation? I am doing it as she speaks and it sounds as though the Government have raised about £3 billion less than they wanted to from the combined measures.
Cathy Jamieson: My hon. Friend makes a valuable point. I stress that we have proposed today that this report should be undertaken and brought to the House so that hon. Members can be fully informed about what has happened, what has been successful, what has not worked and how we can best look to the future. My hon. Friend might well be interested to know that I was about to say that, following the Chancellor’s latest projections for the bank levy, a contributor to the Tax Journal stated that the continued difficulty in raising the expected yield
“should become a lesson in the problems of saddling a new tax aimed at managing behaviour with a fixed revenue target”.
It seems to me and my right hon. and hon. Friends that the Chancellor has not fully learned the lessons, because he is now consulting on wholesale changes to the levy that would lead to the introduction of a band-based system under which the tax of individual banks would be capped at an upper limit of £375 million. As I said earlier, although the Government claim that that will be cost neutral, there is speculation already that it might lead to a tax cut for the banks that pay the larger share of the levy. That issue was raised in a report in The Daily Telegraph that said:
“Last year, Barclays paid £504 million in levy charges, while HSBC paid £544 million, the most of any bank. Under the draft proposals, Barclays’ bill would have been £129 million lower and HSBC’s would have been £169 million less.”
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We are struggling to understand whether that is really what the Government intend. Why do they intend to do things in that way? If we do not see the figures or the working and if we do not understand the overall impact of what the Government are trying to do, the only conclusion we can draw is that this is essentially a secret tax cut for some of the big banks that has been hidden away in the Budget. I look forward to hearing what the Minister has to say about that and why it is not sensible to publish the report that we have reasonably requested. Confidence in the banking system and financial services has not been fully restored, and people in the real world will want to know why it is a priority to give such a tax cut to some of the biggest banks, at a time when working people are worse off and banks are still paying massive bonuses—indeed, in some instances, bigger bonuses than in previous years.
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The bank levy has raised billions less than was originally promised. Perhaps the Minister can come clean and explain the impact that the banding will have on the levy revenues from bigger banks in future. Can he guarantee that the proposed changes will not amount to a tax cut for the big banks or, indeed, lead to an overall reduction in tax revenues? We have made it clear that we would increase the bank levy to raise an additional £800 million a year. As I have said, we want that to fund an expansion of free child care places for working parents of three and four-year-olds to 25 hours a week.
When Labour introduced a bankers’ bonus tax, the right hon. Member for Tatton (Mr Osborne), who was then shadow Chancellor, argued:
“The real test of this new tax will be whether it curbs bank bonuses instead of curbing bank lending.”—[Official Report, 9 December 2009; Vol. 502, c. 373.]
While our bankers’ bonus tax met that test, the Chancellor’s bank levy has failed on his own terms, because bank bonuses have escalated, and bank lending to businesses has remained stagnant, despite the need for lending out there, particularly to small and medium-sized enterprises. We have called on the Government to review the bank levy, but they have refused to do so. Given the consistent failure of the levy to raise the projected amounts, it would appear not only that the Government have miscalculated its behavioural impact, but they have failed accurately to predict the impact on the banks of their cuts to corporation tax. I said that there have been seven increases in the levy—every time there was a change in the autumn statement or the Budget, there was a cut in corporation tax. Again, we could have an argument as to whether that was the right thing to do. That does not relate to the new clause per se, but there was hasty scrabbling around to try to mitigate the impact of the measure, and the overall picture was not explained. As far as we can see, the Government have not got their sums right, and we would like to see their workings. It is reasonable to ask the Government to support the amendments and introduce a full and comprehensive review of all taxes levied on the banking sector. The failure of the bank levy to bring in the expected revenue means that effectively, the banks have received a tax cut, despite what the Minister will doubtless claim to the contrary.
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Our amendments would shed welcome light on bank taxes with a view to ensuring that banks do not benefit from any further unintended cuts. I hope the Minister will regard as fair and reasonable our requests for information and reports, so that we can take a genuine look at what has happened with the bank levy and examine the figures in detail in the House. I hope he will look similarly at the request for the report on the bankers’ bonus tax. I accept that we have asked for these things before, and the Government have not seen fit to agree to them, but it is always worth continuing to make the point calmly and reasonably in the hope that they will understand it and respond. I hope they will see fit to do that this time, because that would show that they are willing to recognise that people in the real world want trust in the banks to be restored, and would ensure that the banks are treated fairly and treat the taxpayer fairly. That is why we want to see that comprehensive review. As always, I look forward to the Minister’s response and I hope he will agree to produce the two reports we have reasonably requested
Debbie Abrahams: It is a pleasure to serve under your chairmanship, Mr Bone. It is a pleasure, too, to follow my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I shall spend a few minutes building on the economic context that she described. Unfortunately, we have seen too much self-congratulation at the glimmers of economic recovery that the country is finally seeing, after three years of a flatlining economy. We need to look at the full picture. This is the worst recovery in 100 years.
The gross domestic product in quarter 4 of 2013 was 0.7%. That is 1.3% below the pre-recession peak in 2008. We would need to grow 1.6% each quarter up to the general election just to reach where we were at the end of 2010. Since 2010, we have had growth of 3.8%, compared with the US, where growth has been 8.4%. UK productivity is the second lowest in the G7 and 20% lower than the G7 average—the widest gap since 1992. Exports were down 4% in the last quarter of 2013 and the trade deficit in December 2013 stood at £7.7 billion. As we know, the Government will have borrowed £190 billion more than planned in 2015. Public borrowing in 2015 will be £75 billion. We know about the promises in 2010 that the deficit would be cleared.
We have been speaking about the implications of the fragile recovery for employment and unemployment. The Government are keen to mention absolute numbers, but the employment rate is still below pre-recession levels and most of the jobs created since 2010 tend to be insecure, part-time and low paid. The proportion of short-term contracts has increased by 20 times to 1.65 million, of which 655,000 are involuntary. The increase in temporary jobs accounts for more than half of the rise in employment. Nearly one in five—that is, 1.46 million people—work part-time because they cannot get full-time work. That is the highest level of underemployment since 1992. Four out of five new jobs are paid below the living wage. Another key issue is the geographical spread of these new jobs. Since 2010, 79% of them have been in London, with only 10% in the nine urban centres outside London. It is hardly a recovery for the whole country, is it?
My hon. Friend spoke in depth about unemployment. I am concerned that the true levels of unemployment
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are hidden. We have seen a sudden increase in self-employment, which, as I know from my role on the Work and Pensions Committee, has been pushed in jobcentres. There has been a 4% rise in self-employment in the last quarter, and a huge rise in inappropriate and punitive sanctions attached to social security payments since the benefit sanctions regime was introduced at the end of 2012. Members may not be aware that 5% of jobseeker’s allowance claimants are sanctioned every month for at least a month. Half of them do not even know they can appeal against that, let alone that they have to keep signing on to remain on the unemployment register. Five per cent. of 1.17 million JSA claimants equates to 58,500 people; we can get the picture from that.
A constituent came to see me who was a special needs teacher who had been made redundant in his late 50s. It had been suggested to him that he become a bingo caller, but he had to travel 70 miles to do that. There is real deskilling of a skilled work force, along with graduates undertaking non-graduate-level jobs. My hon. Friend mentioned the 900,000 young people who are long-term unemployed. A recent report talked about a hidden talent pool of young people. A total of 2.46 million—two in five—young people are unemployed, inactive, underemployed, in a voluntary job, in a Government scheme, or a graduate in a non-graduate role. It may be described as hidden talent, but I would call it a waste of talent.
As I have said before, the impact on these young people cannot be measured only in financial terms. The long-term implications for their future are very significant. A recent report by the Prince’s Trust showed that one in 10, or 100,000, unemployed young people believe they have nothing to live for, and that increases to one in five of those who have been long-term—
Alison McGovern (Wirral South) (Lab): My hon. Friend is a respected member of the Work and Pensions Committee, so is she aware, as I am, that the DWP published its own report on the future jobs fund showing that it did tackle some of the crisis of self-respect and self-esteem that she is talking about?
Debbie Abrahams: My hon. Friend makes an excellent point. Yes, we need to be very clear about the interventions and programmes that can make a meaningful difference. I am sure that what we are suggesting in place of the youth contract, which is clearly ineffective, would fit the bill.
The report said that one in five young people who were long-term unemployed felt that they had nothing worth living for, and one in three felt suicidal. There is a moral imperative to act, not just an economic one. We cannot continue like this—it is completely unfair on the lives of these young people, in particular.
All this is happening at the same time as the top rate of tax has been cut for people on incomes of more than £150,000. As we have heard, bank bonuses are increasing again. Top-to-bottom pay ratios for the FTSE 100 stand at 300:1. We look at this in the context of the average family really struggling, with wages down by £1,600. The IFS has shown that since 2010 the average family has lost income of £974 a year.
The recent Oxfam report, “A Tale of Two Britains”, highlighted the growing gap between rich and poor, whereby the five richest families in the UK are wealthier
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than the bottom 20%, equating to 12.6 million people. Rafts of reports from the Equality Trust and others describe this situation. That gap matters, because overwhelming evidence shows that society as a whole benefits from more equality through better life expectancy, mental health, social mobility and educational attainment, and reduced crime—everybody gains. There is international evidence to support the existence of all these benefits.
I launched an Oldham fairness commission last year, to tackle inequality in my constituency. The commissioners are looking at inequalities in education, employment and income. We find it unacceptable that, in this day and age, someone who is white, able bodied and male is more likely to be in work than someone else with the same qualifications, and that a third of the jobs available in Oldham are paid below a living wage. That is not the way in which to achieve a sustainable economic recovery.
5.30 pm
If we address inequalities and the gap between the rich and the poor, our economy will benefit. Overwhelming evidence from the International Monetary Fund and Nobel prize-winning economists such as Joseph Stiglitz shows that inequality causes financial instability, undermines productivity and retards growth.
New clause 5, which seeks to publish the receipts from the existing bank levy scheme, would help to show exactly how much we are contributing to narrowing the gap between the rich and the poor. We believe that it will show, yet again, the Government’s lack of commitment. They are not just indifferent; they are propping up the status quo.
Our jobs guarantee will give hope and opportunity to young people and those aged 25 and over who have been unemployed for more than two years, whom this Government have clearly abandoned. We will work for a one-nation Britain, not the two Britains we are enduring under this Government.
The Temporary Chair (Mr Peter Bone): Order. It would be helpful if the Minister was on his feet no later than 5.50 pm.
Alison McGovern: I want to discuss the relationship between how the banks and bank bonuses are taxed and young people. I think that anyone who has just listened to the speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) would agree that the two issues are intimately connected, even if they did not believe that to be the case in the past.
Levels of inequality in our global economy are unsustainable, but Members need not take just my word for that. It is not just me who thinks that inequality is a significant problem: no less than Christine Lagarde of the IMF has said that inequality is a huge challenge and a risk for the world’s future. If even the IMF, which is not known for taking lefty positions, is able to conclude that we must tackle inequality, I think that this House should be able to accept the challenge and seek to find ways to address the significant inequality in our own country.
The top of the economy in the financial services sector is fragile in terms of income distribution. Let me make a few remarks about the banks. The hon. Member for Warrington South (David Mowat), who, unfortunately,
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is no longer in his place, commented earlier on the issue of fixed versus variable income, which I will turn to later. Surely anybody who is trying to learn the lessons of 2008 would say that the financial services sector still has an unsustainable bonus culture and perhaps that is true of other parts of the economy as well.
Would not anybody who worries about that risk conclude that banks and the financial services sector rely on an implicit state guarantee, given what had to be done to ensure the economy kept working and people could still take cash out of ATMs? Would not anybody conclude that we must take very seriously the contribution to taxation that banks are expected to make, given the Government’s reliance on the financial services sector? I certainly think that that is the only obvious conclusion to draw from the global financial meltdown and the serious failures of the past. Banks cannot be allowed just to make their own decisions; we must take very seriously both the regulatory framework around the financial services sector and the contribution that the sector is expected to make to the Exchequer.
The corporation tax cut benefited a whole range of companies in the financial services sector, but small and medium-sized enterprises—especially those in my constituency that are struggling with, and wanting action on, business rates—find it hard to take or to understand why the Government have not looked more seriously at what banks are expected to pay to the Exchequer. I think the Exchequer Secretary said earlier that, by his calculation, the bank levy has brought in a net £2.3 billion.
Mr Gauke: That is the payroll tax.
Alison McGovern: For the purposes of Hansard, I thank the Minister for correcting me from a sedentary position. In any event, it is really evident that the bank levy is not good enough. We heard repeated claims about how much it would bring in, but it has failed to reach those levels. The public do not understand why that is, and they want us to take very seriously the position of the financial services sector, given the impact that we all felt and that people are still feeling from the events post-2008.
Bank bonuses are the best representation of the culture that led to the economic meltdown in 2008. A great deal of work on the culture has been done by Members of this House—I am thinking of my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) and others who served on the Banking Commission—and we do that work no service if we give up the idea of a bank bonus tax.
The problem with bank bonuses is the clear connection between the fact that compensation balloons so greatly, and depends on a big bonus at a certain point in the year, and extraordinary risk-taking. A kind of groupthink develops in an organisation, with people forgetting their responsibilities to those outside it. The insider culture accepts reimbursements that are far and away above anything that people in society ordinarily expect. We in this House, if nowhere else in our community, should understand the danger of such groupthink. Have we not all seen it at times, and do we not all want to end it? Therefore, we should not give up the idea of a bank bonus tax.
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I remind hon. Members of Martin Wheatley’s recent comments:
“Incentives are used ideally to reward ‘good’ performance. However, as we saw with the mis-selling scandals which have had such a profound impact on financial services…a poorly designed inducement can result in consumers ultimately being worse off.”
Even if we were not worried about the impact on the Exchequer of the bank bonus culture—given the responsibility to ensure that the financial system can continue to do business no matter what—we should absolutely be concerned about the impact on consumers. In the past, consumers of financial services often had a poor deal. The mis-selling of endowments and, more recently, payment protection insurance caused massive problems for families in our country. We cannot allow a culture to persist in which there are incentives that, as Martin Wheatley said, may result in consumers ultimately being worse off, as that would be very dangerous. That is why our amendment probes the issue and seeks to find a way to consider whether more could be done, which is important.
Although I am the first to say that simply bashing one part of our economy—financial services—is not the approach we should take, far from it, it does not mean that inequality is not a serious issue. I do not think that the inequalities in the financial services sector will pass by the people who earn the minimum wage cleaning a local bank branch and who are worried about whether that branch will be there for much longer or those who, if they are lucky, earn the London living wage from working in security or in other ways supporting banks in the City of London. We must address that inequality for people who work in banking and in the financial services sector.
Finally, I will follow up on the remarks on young people made so ably by my hon. Friend the Member for Oldham East and Saddleworth. We cannot lose sight of the difference between a jobs guarantee and work experience. We learned that lesson in the 1980s, when youth training scheme-style programmes were a revolving door for young people, who went in and out of businesses with no proper jobs. That was not fair then, and it certainly is not fair now. The future jobs fund worked with organisations such as Age Concern and other good third-sector organisations in my constituency to provide work opportunities that often led not only to growth in a young person’s skills, talents, self-esteem and self-respect but to growth in the organisations themselves.
I point Members in the direction of a report by the International Labour Organisation from as long ago as 2010 that compared a range of interventions for young people without work. The report said that the last Labour Government had a huge amount of which to be proud, such as the new deal for young people, the future jobs fund and the efforts to get people into work. I believe absolutely that we cannot offer young people only interminable work experience in which they turn up to the jobcentre week after week to be sent on CV writing courses or to gain work experience that does not get them a proper foot in the door. We need a true jobs guarantee so that people know that, however difficult the circumstances in which they find themselves, the situation will come to an end. We need to offer young people that guarantee, and of course we would expect
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them to take it up without much choice—
[
Interruption.
]
If Members wish to intervene, they are welcome to do so.
We still have insufficient numbers of apprenticeships, and we have genuine worries about the quality of some apprenticeship programmes. I am sorry if I repeat this so often that I bore Members—I try not to bore Members—but the issue is vastly important. The prevalence of zero-hours contracts in our society affects young people more than anyone else. Young people are much more likely to have less experience, which means that they cannot get a proper full-time, permanent job with the hours that they want. Of course students might want flexible hours that they can take up when they want, but that is not the case for many young people across the country who feel that they have no alternative but to accept a zero-hours contract.
I am afraid that Conservative Members have swallowed the Treasury’s rhetoric about the number of jobs that have been created and the claimant count, without learning the lessons of their economic policies of the past. Of course the claimant count will fall if there is a sanctions regime that makes going to the jobcentre so difficult and unhelpful that people will do anything not to claim.
5.45 pm
I worry about the people who are totally disengaged from the system and about those who are engaged in the system, but who feel so unsupported that they are compelled to take jobs that are insecure and that do not provide the hours that they want. Since I started the zero-hours contract campaign, countless people have got in touch with me to say that they have taken a job on the basis that there would be 30 or 40 hours a week, but that it turned out there were 10 or 12 hours a week. That under-employment is showing itself in the difficulties that small businesses are facing on high streets up and down the country.
I could talk at length about the insufficiencies of the Work programme. It causes problems to have such huge contracts and not to tailor the programme properly to the local area. Again, there are lessons to be learned from the past. We need to work with other organisations. For example, before the Work programme, the football clubs in my area had good working relationships with the local jobcentre and had schemes that were really working to get people’s confidence up, get them the right skills and get them into jobs. The Work programme swept all those arrangements away. We have seen no evidence of the claim that Ministers made before the Work programme started that small, specialist organisations would still be involved in back-to-work programmes. That has not happened in the way they said it would. That is a big problem, given how unemployment clusters.
We must look at what is going on in our country. The north-east is suffering desperately from unemployment and under-employment. A careful, tailored approach is needed. That could be led by jobcentres if they were freed from the ministerial diktats from the centre and were able to use their expertise to work with young people to get them into the labour market with proper jobs, thereby starting the endogenous growth in our economy that we so desperately need.
We must not lose sight of the plight of young people when there are, on the face of it, better growth figures.
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I am extraordinarily happy that we have better growth figures. They will create momentum and help get investment into our country, which is good. However, in the end, economic growth is good only if it means that young people have a real chance in our country. I believe that only Labour’s jobs proposal for young people will resolve the terrible situation that we face.
Mr Gauke: It is a great pleasure to serve under your chairmanship, Mr Bone, and to respond to this debate. It is always a pleasure to hear the hon. Member for Wirral South (Alison McGovern) speak. I am tempted to respond to her characterisation of the labour market, which almost suggested that we had lost 1.3 million people from employment over the past four years, rather than increased employment by 1.3 million people, but in the interests of time, I will focus on the bank levy.
Clause 112 increases the rate of the bank levy that was set for 1 January 2014 to 0.156%, which will help to ensure that future bank levy receipts meet the Government targets. I also want to highlight the changes that we are making to the bank levy’s design following an operational review in 2013, which we will cover when we debate clause 113 and schedule 22 later in Committee. The changes will help to simplify the bank levy’s design and ensure that it continues to complement improvements in the regulatory regime.
I wish briefly to provide hon. Members with some background. In the June 2010 Budget, the Government introduced a permanent tax on banks’ balance sheet equity and liabilities, which took effect from 1 January 2011. It is designed to ensure that the banking sector makes a fair contribution that reflects its risks to the UK financial system and the wider economy. Alongside wider regulatory reform, the bank levy also provides incentives for banks to move towards more stable funding profiles, reducing the likelihood of liquidity shocks, which can trigger and propagate systemic banking crises. The Government believe that those overarching policy objectives remain appropriate, and the changes being made in clauses 112 and 113 and schedule 22 are in line with that.
In 2010, the Government set a target of £2.5 billion for annual bank levy receipts. We have since increased that target to offset the benefit of corporation tax cuts to the banking sector since the levy’s introduction. Bank levy receipts have fallen short of the targets to date, largely as a consequence of greater than anticipated deleveraging in the sector in response to regulation and the bank levy’s behavioural incentives. However, the Government have remained clear that the target for bank levy receipts is unchanged.
The banking sector needs to make a fair contribution that appropriately reflects its historical costs and future risks to the UK taxpayer. That is why the rate of the bank levy has increased from 0.075% in 2011 to 0.142% in January 2014, and why the changes being made in clause 112, which were announced in the 2013 autumn statement, will further increase the rate to 0.156%, which will be treated as having applied from January 2014. Based on those changes, the independent Office for Budget Responsibility forecasts that the bank levy will raise £2.9 billion a year from 2015-16, more than £8 billion in total over the Parliament and close to £20 billion in total by 2018-19.
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When the bank levy was introduced, the Government announced that they would review its design in 2013 to ensure that it was operating efficiently. In line with that commitment, a formal consultation was published in July 2013. It considered changes to the levy’s detailed design to make it simpler, fairer and more aligned with recent regulatory developments. The consultation ran for 12 weeks and the views put forward helped to inform a number of changes to the bank levy’s design, which the Government announced in the autumn statement. They included the exclusion from the bank levy charge of protected deposits, which we limited to amounts insured under a deposit protection scheme, with effect from January 2015.
Also from January 2015, all derivative contracts will be treated as having a short-term maturity, the relief that banks receive for their high-quality liquid assets will be restricted to the rate applicable to long-term liabilities, and the bank levy definition of tier 1 capital will be aligned with the new capital requirements directive. Specific liabilities arising from the central clearing of derivatives will be excluded from the bank levy charge, which will be treated as having applied from January 2014. Those changes will simplify the levy’s application and help to ensure that it continues to apply consistently to banks of different size, activity and domicile. They will also strengthen the behavioural incentives for banks to move towards more stable funding profiles and more closely align the bank levy with recent developments in the regulatory regime.
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) touched upon the redesign of the bank levy. There is no intention to reduce the revenue raised by the bank levy. We are considering allocating banks to different bands on the basis of their balance sheet, equity and liabilities. Each band would correspond with a unique and predetermined charge for the year, paid by every bank falling within that band. We consider that that might provide a more predictable and sustainable model for the bank levy, but we are welcoming views on that as part of our consultation. The changes being considered would have no impact on the forecast yield from the bank levy, and the underlying tax base would remain unchanged and continue to provide incentives for banks to move towards more stable funding.
Mr Gauke: I will give way, but I have very little time left.
Cathy Jamieson: I thank the Minister for giving way—I appreciate it given the limit on his time. Will he confirm that his proposal will mean that some of the bigger banks will pay less in bank levy than they have paid previously?
Mr Gauke: The Government are consulting on how the measure will operate. The intention is for it to be revenue neutral. Assuming it has some effect, revenue neutral will mean that some banks will pay more and some will pay less. Which ones those will be depends on the precise design, which depends on the consultation.
Amendment 1 was described with customary reasonableness by the hon. Member for Kilmarnock and Loudoun but I will give the customary response,
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which is that the Government do not consider that there is much to be achieved by accepting it. It would add little to the Bill. HMRC already publishes each year statistics on PAYE, the bank levy, corporation tax and bank payroll tax receipts from the banking sector, although they are not broken down by different groups of banks. The most recent publication—from August 2013—showed that the relevant tax receipts from the banking sector were £21.7 billion in 2012-13.
In the time available, I want to make a point about the bankers payroll tax. In September 2010, the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor of the Exchequer, said
“it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and…will find all sorts of imaginative ways of avoiding it in the future”.
An attempt to repeat that tax would be a mistake.
I fear that, because of the time available, I do not have time to do justice to Opposition new clause 5. I have set out the reasons why the Government believe it is right to introduce a balance sheet tax as opposed to a tax on bankers bonuses. We see no reason to change that approach. The future jobs fund failed to create sustainable employment. Almost 50% of participants claimed benefits again within eight months of starting a future jobs fund job. This Government are doing much more. We have delivered more than 1.6 million apprenticeship starts so far this Parliament and are making it cheaper to employ young people.
In order to give the hon. Member for Kilmarnock and Loudoun a moment or so to speak at the end, I shall conclude. The changes made by clauses 112 and 113, and schedule 22, will help to ensure that future bank levy receipts meet Government targets while providing a simpler and fairer basis on which the tax applies. I therefore hope that clause 112 stands part of the Bill and urge the hon. Lady not to press amendment 1 and new clause 5 to a Division.
Cathy Jamieson: It was a pleasure to hear the valuable contributions of my hon. Friends the Members for Wirral South (Alison McGovern) and for Oldham East and Saddleworth (Debbie Abrahams) on the impact of the Government’s policies on ordinary people.
The Minister referred to my characteristic reasonableness and gave a characteristic response. I will give him the characteristic response from the Opposition—despite his best efforts, I will press the new clause and the amendment to a Division. Both reports are reasonable requests and would be important. I realise that he had a relatively short period in which to respond, but it is disappointing that he does not see fit to produce such reports. He referred to a number of statistics and figures produced by HMRC, and we know of other places where statistics are produced, such as the Office for Budget Responsibility. It would be useful to have all those reports put together in a report for the House to consider.
As I have said, I intend to press new clause 5 and amendment 1 to a Division. I hope that, even at this late stage, the Minister will reconsider his opinion, but I doubt it. I am sure that the Government will give their characteristic response once again.
Question put, That the clause be read a Second time.
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The House divided:
Ayes 219, Noes 293.
Division No. 251]
[
5.59 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Ashworth, Jonathan
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Barron, rh Kevin
Bayley, Hugh
Begg, Dame Anne
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
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
Byrne, rh Mr Liam
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Champion, Sarah
Chapman, Jenny
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cunningham, Alex
Cunningham, Mr Jim
Curran, Margaret
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
Dodds, rh Mr Nigel
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
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
Flynn, Paul
Fovargue, Yvonne
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hillier, Meg
Hilling, Julie
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Llwyd, rh Mr Elfyn
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McDonnell, Dr Alasdair
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Owen, Albert
Paisley, Ian
Perkins, Toby
Phillipson, Bridget
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Robertson, Angus
Robertson, John
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Shuker, Gavin
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
Turner, Karl
Twigg, Derek
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Woodcock, John
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Nic Dakin
and
Phil Wilson
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Andrew, Stuart
Bacon, Mr Richard
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, 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
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cable, rh Vince
Cairns, Alun
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Clark, rh Greg
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, Glyn
Davies, Philip
Davis, rh Mr David
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
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Glen, John
Goldsmith, Zac
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Loughton, Tim
Lumley, Karen
Macleod, Mary
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Mills, Nigel
Milton, Anne
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
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
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, rh Sir Richard
Patel, Priti
Paterson, rh Mr Owen
Penning, rh Mike
Penrose, John
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, rh Hugh
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
Shepherd, Sir Richard
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Stanley, rh Sir John
Stevenson, John
Stewart, Bob
Stewart, Iain
Stride, Mel
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Tellers for the Noes:
Mark Hunter
and
Claire Perry
Question accordingly negatived.
9 Apr 2014 : Column 352
9 Apr 2014 : Column 353
9 Apr 2014 : Column 354
6.13 pm
Proceedings interrupted (Programme Order, 1 April). The Chair put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).
Bank levy: rates from 1 January 2014
Amendment proposed: 1, in clause 112, page 94, line 1, at beginning insert—
‘(1) Before bringing forward any further reform of the bank levy rates system, the Chancellor shall lay before Parliament a report considering the impact on the total receipts paid to the Exchequer since 2010 by—
9 Apr 2014 : Column 355
(c) foreign banking groups; and
(d) relevant non-banking groups.
(2) The report will pay particular attention to receipts from—
(3) A copy of the report in subsections (1) and (2) shall be laid before Parliament.’.—(Cathy Jamieson.)
Question put, That the amendment be made.
The Committee divided:
Ayes 217, Noes 286.
Division No. 252]
[
6.13 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Ashworth, Jonathan
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Barron, rh Kevin
Bayley, Hugh
Begg, Dame Anne
Benn, rh Hilary
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blenkinsop, Tom
Blomfield, Paul
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Byrne, rh Mr Liam
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Champion, Sarah
Chapman, Jenny
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cunningham, Alex
Cunningham, Mr Jim
Curran, Margaret
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
Dodds, rh Mr Nigel
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
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
Flynn, Paul
Fovargue, Yvonne
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Heyes, David
Hillier, Meg
Hilling, Julie
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Llwyd, rh Mr Elfyn
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mahmood, Shabana
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McDonnell, Dr Alasdair
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Owen, Albert
Paisley, Ian
Perkins, Toby
Phillipson, Bridget
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Robertson, Angus
Robertson, John
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
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
Turner, Karl
Twigg, Derek
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Woodcock, John
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Phil Wilson
and
Seema Malhotra
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Andrew, Stuart
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, 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
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cable, rh Vince
Cairns, Alun
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Clark, rh Greg
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, Glyn
Davies, Philip
Davis, rh Mr David
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
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Featherstone, Lynne
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Glen, John
Goldsmith, Zac
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hurd, Mr Nick
James, Margot
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Loughton, Tim
Lumley, Karen
Macleod, Mary
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Mills, Nigel
Milton, Anne
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
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
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, rh Sir Richard
Patel, Priti
Paterson, rh Mr Owen
Penning, rh Mike
Penrose, John
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, rh Hugh
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Sharma, Alok
Shelbrooke, Alec
Shepherd, Sir Richard
Simmonds, Mark
Simpson, Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Stanley, rh Sir John
Stevenson, John
Stewart, Bob
Stewart, Iain
Stride, Mel
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Tellers for the Noes:
Claire Perry
and
Mark Hunter
Question accordingly negatived.
9 Apr 2014 : Column 356
9 Apr 2014 : Column 357
9 Apr 2014 : Column 358
Clause 112 ordered to stand part of the Bill.
Air passenger duty: Wales
‘(1) Schedule (Air Passenger Duty: Wales) has effect.’.—(Jonathan Edwards.)
Brought up, and read the First time.
9 Apr 2014 : Column 359
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I beg to move, That the clause be read a Second time.
The Temporary Chair (Mr Peter Bone): With this it will be convenient to discuss the following:
New clause 6—Air passenger duty: Scotland
‘(1) The Scotland Act 1998, Schedule 5, section A1 (exceptions) is amended as follows.
“(1) Air Passenger Duty on all flights that are—
(a) originating from an airport or aerodrome in Scotland; and
(b) not part of a connecting flight from—
(i) a domestic UK airport or aerodrome; or
(ii) a territory specified in Part 1 of Schedule 5A of the Finance Act 1994.”.’.
New clause 7—Rates of air passenger duty (Scotland)
‘After section 30A of the Finance Act 1994 there is inserted—
(1) This section applies to the carriage of a chargeable passenger if—
(a) the carriage begins on or after the relevant day; and
(b) the only flight, or the first flight, of the passenger’s journey begins at an airport or aerodrome in Scotland.
(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate set by an Act of the Scottish Parliament for the purposes of this paragraph.
(3) The rate of £0 may be set for the purposes of paragraph (2).
(4) Any rate set must not exceed the rate which would apply if this section were not in force.
(5) “The relevant day” means the day appointed as such by an order.
(6) Section 42(4) and (5) does not apply to any order under subsection (5).
(7) An “Act of the Scottish Parliament” means an Act passed under section 28 of the Scotland Act 1998.”.’.
New schedule 1—‘Air Passenger duty: Wales
Part 1
Rates of Duty from 1 April 2014
1 Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as follows.After subsection (4D) insert—
“(4DA) Subsection (4D) applies if—
(a) the passenger’s journey is a relevant Wales journey; and
(b) apart from subsection (4DB), subsection (2) would not apply to the journey.
(4DB) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be).
(4DC) A passenger’s journey is a “relevant Wales journey”—
(a) in the case of a journey which has only one flight, if the flight begins in Wales; and
(b) in any other case, if the first flight of the journey—
(ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.”.
The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2014.
9 Apr 2014 : Column 360
Part 2
Devolution of Wales long haul rates of duty
2 Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.
3 (1) Section 30 (rates of duty) is amended as follows.
(2) After subsection (1) insert—
“(1B) Subsection (1) does not apply to the carriage of a chargeable passenger to which section 30B below (Wales long haul rates of duty) applies.”.
(3) Omit subsections (4DA) to (4DC) (as inserted by paragraph 1 above).
(4) The amendments made by this paragraph have effect in relation to the carriage of passengers beginning on or after the relevant day as defined in section 30B of FA 1994 (as inserted by paragraph 4 below).
4 After section 30A insert—30B Wales long haul rates of duty
“(1) This section applies to the carriage of a chargeable passenger if—
(a) the carriage begins on or after the relevant day;
(b) the only flight, or the first flight, of the passenger’s journey begins at a place in Wales;
(c) the passenger’s journey does not end at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A; and
(d) if the passenger’s journey has more than one flight, the first flight is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.
(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate determined as follows.
(3) If the passenger’s journey ends at a place in a territory specified in Part 2 of Schedule 5A—
(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and
(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(4) If the passenger’s journey ends at a place in a territory specified in Part 3 of Schedule 5A—
(c) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and
(d) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(5) If the passenger’s journey ends at any other place—
(e) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph; and
(f) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.
(6) The rate of £0 may be set for the purposes of any paragraph.
(7) The same rate may be set for the purposes of two or more paragraphs.
(8) Subsections (5) to (7) and (10) to (12) of section 30 apply for the purposes of this section as they apply for the purposes of that section.
9 Apr 2014 : Column 361
(9) “The relevant day” means the day appointed as such by an order.
(10) Section 42(4) and (5) do not apply to an order under subsection (9).
(11) A Bill containing provision authorised by this section may not be passed by the National Assembly for Wales except in pursuance of a recommendation which—
(g) is made by the Minister of Finance; and
(h) is signified to the Assembly by the Minister or on the Minister’s behalf.
(12) “Passed”, in relation to a Bill, means passed at the final stage (at which the Bill can be passed or rejected but not amended).
(13) Duty paid to the Commissioners in respect of the carriage of chargeable passengers to which this section applies must be paid by the Commissioners into the Consolidated Fund of Wales.”.
5 (1) Section 33 (registration of aircraft operators) is amended as follows.
(2) After subsection (2A) insert—
“(2B) If the Commissioners decide to keep a register under section 33B below, an operator of a chargeable aircraft does not become liable to be registered under this section just because the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.”.
(3) In subsection (3)(b) after “applies”, insert “or, if the Commissioners have decided to keep a register under section 33B below, that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers apart from the carriage of chargeable passengers to which section 30B above applies.
(4) In subsection (7) after “section 33A”, insert “or section 33B below”.
6 After section 33A insert—
33B (1) The Commissioners may under this section keep a register of aircraft operators.
(2) If the Commissioners decided to keep a register under this section, the operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.
(3) A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time—
(a) that he no longer operates any chargeable aircraft; or
(b) that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers to which section 30B above applies.
(4) A person who is not registered under this section and has not given notice under this subsection shall, if he becomes liable to be registered under this section at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time.
(5) Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.”.
7 In section 34 (fiscal representatives) in subsection (5)—
(a) in paragraph (a) after “33A”, insert “or 33B”.
8 After section 41B insert—41C Wales long haul rates of duty: disclosure of information
“(1) An officer of Revenue and Customs may disclose to the Secretary of State, the Treasury or the Department of Finance in Wales any information for purposes connected with the setting of rates under section 30B above, including (in particular) to enable the setting of rates under that section to be taken into account for the purposes of section 118 of the Government of Wales Act 2006 (payments by Secretary of State into Welsh Consolidated Fund).
(2) Information disclosed under subsection (1) above may not be further disclosed without the consent of the Commissioners (which may be general or specific).
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(3) In section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) references to section 18(1) of that Act are to be read as including a reference to subsection (2) above.”.
9 In section 44 of CRCA 2005 (payment into Consolidated Fund) after subsection (2)(cb) insert—
(cc) sums required by section 30A(15) of the Finance Act 1994 (air passenger duty: Wales long haul rates of duty) to be paid into the Consolidated Fund of Wales,”.
10 In column 2 of the Table in paragraph 1 of Schedule 41 to FA 2008 (penalties for failure to notify), in the entry relating to air passenger duty, after “33A(4)”, insert “or 33B(4)”.11 The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2014.12 The rate of duty in force under section (30B) shall not be greater than the rate which would be in force if the section had not been enacted.’.
Jonathan Edwards: Diolch yn fawr iawn, Mr Bone. It is an honour to serve under the chairmanship of the best slow left-arm bowler in the Westminster cricket team.
It is with pleasure that I rise to support new clause 2 and new schedule 1, and I will be pushing for a vote at the appropriate time. The UK Government commission on devolution in Wales, headed by Paul Silk, published the first phase of its report in November 2012, which concentrated solely on fiscal powers. Some 18 months later we are still waiting for an essential part of the cross-party Silk commission recommendations to come to fruition: the devolution of responsibility for long-haul air passenger duty. The original cross-party report recommended that responsibility for APD be transferred to Wales at the earliest opportunity and that the Finance Bill was the appropriate vehicle for doing that. The commission had the 2013 Finance Bill in mind, following the precedent set during the 2012 Finance Bill when APD was devolved to Northern Ireland.
It therefore comes as no surprise that I am here yet again attempting to transfer APD to Wales, as was agreed by all the parties in the commission. I will seek to divide the House and to hold other parties to what their representatives on the commission said and, perhaps more importantly, what their representatives in the National Assembly say back in Wales. I would of course be ecstatic if by some divine intervention their masters here in London listened to them for once and voted in favour of the policies they advocate—I do not hold my breath in much hope.
I will go on to speak about the discrepancies between what the Unionist parties say in Wales and how they vote here on devolving APD. First, let me inform the House a little about the background to the UK Government commission’s recommendation to devolve APD as part of a comprehensive package of financial powers and about the stage we are at now. In short, the cross-party Silk commission recommended that powers over stamp duty land tax, the aggregates levy, long-haul APD, landfill tax and business rates be devolved in their entirety. It also advocated a sharing arrangement for income tax, with Wales having the ability to vary each individual income tax band and rate.
After having been made to wait for more than a year by the London Government to grace us with a response to the commission which they themselves set up, we find
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ourselves already having debated the Second Reading of the Wales Bill in this Chamber. We expect it to be confirmed tomorrow morning that the whole House will return to consider the Committee stage of that Bill after the Easter recess. Yet the Wales Bill has some glaring omissions. It seems like a long time ago now when, last autumn, the Prime Minister and Deputy Prime Minister swept into the Senedd building in Cardiff, to flashing camera lights and an adoring paparazzi, in order to announce new financial powers for Wales. Very few questioned what exactly was being proposed. Only later did it emerge that the Westminster Government were prepared to accept the cross-party commission recommendations only in part and that they would be ignoring some. That is despite the fact that they had representation on the commission in the form of a commissioner representing the Conservative party and a commissioner representing the Liberal Democrats.
In essence, the Government have cherry-picked the commission’s recommendations, even though they were agreed on as a comprehensive package of reforms. It is therefore greatly disappointing that the Westminster Government have decided to ignore the will of the people of Wales, who believe that Wales should have greater power over its own affairs, according to successive polls, not least the ones conducted by the commission while it gathered evidence as part of its reports. Those polls represent some of the most detailed research undertaken on attitudes towards devolution since we first had our own devolved legislature in 1999.
Hywel Williams (Arfon) (PC): Is all that not doubly disappointing given that our representative on the Silk commission was prepared to compromise in order to get a unanimous report? We gave ground and support to the recommendations of the Silk commission, but the Government are cherry-picking.
Jonathan Edwards: My hon. Friend makes a very important point and of course he is right. As I will go on to say, the Silk commission was a huge compromise for Plaid Cymru, yet we find ourselves the only party represented here in Westminster, and the only party represented in the National Assembly in Cardiff, trying to preserve the integrity of the Silk commission. That is a vital point which the people of Wales will realise in good time.
The devolution of air passenger duty was an important element of the package recommended by the Silk commission. It was therefore a slap in the face for Wales when it was omitted from the Wales Bill, which is currently progressing through this House. Both my colleagues and I have spoken several times about that Bill so I will not go into it too much further, save to say that my party and I have been dismayed by the attempts of both the Government and the Labour party to put narrow party self interest ahead of the Welsh national interest and to lay down road blocks in terms of the Silk commission.
The Government have sought to water down the financial powers recommended by the commission by constraining them through a lockstep.
6.30 pm
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP):
I note the hon. Gentleman’s points about the Silk commission and about how the principal parties
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reneged on it. That also happened in Scotland with the Calman commission, which was set up by the Conservatives, Liberals and the friends of Labour, who then reneged on the Calman proposal to devolve ADP to Scotland.
Jonathan Edwards: That is an interesting point. I am sure that the people of Scotland are watching these developments intently, as they will be voting in a referendum on independence in September. The issue is, can they trust anything that the no campaign says in advance of that referendum? I am sure that that will become a growing theme as we approach the closing stages. I wish the hon. Gentleman and his colleagues well in the forthcoming months.
As I was saying, the Government have sought to water down the financial powers recommended by the commission by constraining them through a lockstep, essentially making it impossible to vary income tax in Wales. Meanwhile, the Labour party says that it will block any income tax powers via its Government in Cardiff unless the Barnett formula—the way in which Wales is funded—is reformed. That is despite having 13 years to do so while it was in government.
Labour also now supports the lockstep principle, despite the protestations of the First Minister. There is of course the added twist that the bands can only be moved upwards, which is why I have labelled Labour’s policy “lockstep plus”.
Needless to say, the agreement that was the Silk commission’s recommendations fell far short of what Plaid Cymru was advocating as a party, to which my hon. Friend the Member for Arfon (Hywel Williams) alluded earlier. We wanted a more comprehensive list of job-creating and economy-boosting powers including VAT, corporation tax, resource taxes and capital gains tax. However, in the interests of compromise, we settled on the final recommendations.
The Silk commission argued that should corporation tax be devolved to Northern Ireland, Wales should not be left behind. I follow with interest the unanimous support in Northern Ireland, among all parties, pressure groups and interest groups, for the devolution of corporation tax—[Interruption.] Exactly, that is a very interesting point: the Unionists in Northern Ireland want corporation tax and a whole range of job-creating powers for their devolved Government, yet we have unionists representing Welsh constituencies trying to block any move towards further powers for our country.
The Silk commission argued that should corporation tax be devolved to Northern Ireland, Wales should not be left behind. The fiscal powers recommended by Paul Silk and his team in the commission’s report are still desperately needed for the sake of the Welsh economy. The ability to vary some taxes and to borrow for investment would enable us in Wales better to deliver job-creating and economy-boosting measures and policies to help turn around the continuing bad performance of the economy.
It was also interesting to hear the Secretary of State sing the praises of the lockstep income tax provision of the Wales Bill in a TV interview. He said that it could be used to vary rates and would put Wales at a competitive advantage, but that the devolution of long-haul air passenger duty would put Bristol airport at a competitive
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disadvantage. That incoherence shows that the cherry-picking of the Silk recommendations falls apart unless they are introduced as a comprehensive and whole package.
Long-haul APD was devolved to Northern Ireland in last year’s Finance Bill, and the Silk commission has recommended the devolution of long-haul APD to Wales. It is clear therefore that today’s debate is the appropriate legislative vehicle to move this issue forward. Although I failed to do so last year, I live in hope that I might succeed today, but given that all the Labour MPs have disappeared home—AWOL again when the interests of Wales are under discussion—I am not holding my breath.
Mr Nigel Dodds (Belfast North) (DUP): I have a lot of sympathy for what the hon. Gentleman is putting forward. He has mentioned Northern Ireland in relation to corporation tax and APD. Does he recognise though that one big argument in relation to Northern Ireland is the fact that we have a neighbour to our south, another EU member state, which competes directly with Northern Ireland? We also have a land border, and the corporation tax and APD rates down south are much less than they are in Northern Ireland, so there is a unique case in Northern Ireland—but I am not for one minute setting aside the merits of his case
Jonathan Edwards: As usual, the right hon. Gentleman makes a reasoned argument. Northern Ireland has a land border with the Republic, of course, but we would argue that we have a sea border. I normally find myself making the case for equality with Scotland in this place, but in this instance I am calling for equality with Northern Ireland. What is good enough for Northern Ireland is certainly good enough for Wales.
Just over a year ago, the Labour Welsh Government acquired the national airport of Wales, located just outside Cardiff near Barry in the Vale of Glamorgan. The ability to attract long-haul flights to the airport would significantly improve its competitiveness. It has more than 1.5 million people within its catchment area, and long-haul flights could attract people from even further afield given that that is the only airport in Wales or the west of England with a runway large enough to accommodate transatlantic aircraft. The development of the airport could act as a spur to growth in the south Wales economy, bringing in greater foreign direct investment through better business links, which would in turn bring jobs and growth. Quite frankly, I am amazed that the Labour party has not proposed its own amendment to the Finance Bill and that only goes to show that the First Minister has absolutely no influence over his bosses down here in London or, at least, over Labour MPs based in Wales.
In response to the UK Government’s proposals for the Wales Bill last November, the Labour First Minister said that he was “disappointed” that air passenger duty on long-haul flights would not be devolved. I am not surprised, given that his Government had brought the airport under public ownership only a year earlier. In a lecture at the London School of Economics, the First Minister said:
“Air passenger duty is another tax that should, in my view be devolved. While London struggles with where to build additional
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airport capacity, we in Wales face a very different problem. Our national airport in Cardiff has not enjoyed the growth in passenger numbers and destinations that we need to help drive economic growth. Devolution of air passenger duty would give us a useful tool to incentivise the growth of Cardiff airport and other smaller facilities, such as Anglesey in north Wales. APD has already been devolved to Northern Ireland for long-haul flights; at a minimum, I believe Wales should have parity.”
The First Minister makes my case for me, but where are his MPs? Where are they? It is just a shame that he could not get his MPs to the Committee to vote when he has the opportunity to do what he keeps preaching to the people of Wales in the Western Mail and on the BBC.
MPs representing Welsh constituencies who fail to vote in favour of devolving air passenger duty do not only ignore the economic needs of Wales, the First Minister of Wales and the overwhelming majority of Welsh public opinion.
Mr MacNeil: I am intrigued by the behaviour of Welsh Labour MPs. Does the hon. Gentleman think that Welsh Labour MPs hold their First Minister, Mr Carwyn Jones, in contempt deliberately or accidentally?
Jonathan Edwards: The key point is that if the First Minister cannot persuade his own MPs and those on his own Front Bench in Westminster to propose policies that he is promising to the people of Wales, why should the people of Wales listen to a single word he says to them in the media? It is a test of his credibility and authority and, based on tonight’s and last year’s evidence, I would argue that the First Minister has no credibility or authority whatsoever.
Hywel Williams: Does my hon. Friend agree that the First Minister has form on this matter? He will recall that we proposed a new clause to the Water Bill to implement the Labour Administration in Cardiff’s policy on borders and the control of water. Of course, the Labour Benches were entirely empty and, as he has mentioned, Labour failed to vote on that matter, too. Labour is entirely bogus.
Jonathan Edwards: Once again, I am grateful for that intervention. That is one in a long list of political issues on which the First Minister and his Cabinet members say one thing in Cardiff while Welsh Labour MPs operate completely differently down here. The proof of the pudding will, of course, be the Westminster Labour party manifesto. We will see what influence the First Minister has over that, but the manner in which he has been completely bullied by the shadow Secretary of State, who now supports a lockstep on income tax powers, seems to show that the balance of power is quite firmly here in London.
Bob Stewart: The hon. Gentleman has referred to Cardiff airport. Is there another airport in Wales to which air passenger duty applies?
Jonathan Edwards: Cardiff is the only international airport. We are talking about APD relief on long-haul flights, and it would apply primarily to Cardiff, but I imagine that the Welsh Government would have ambitions to redevelop other airports in Wales—[Interruption.] If they had the ambition, they would want to improve those airports.
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As I was saying, public opinion clearly supports the devolution of the tax to Wales. Only yesterday, the Western Mail published the results of a survey that showed that 78% of respondents supported the devolution of APD. On this, as with so many other issues, the powers that be in Westminster are at odds with what the people of Wales demand. In response to that poll, the Welsh Labour Government said:
“We will continue to put forward the strong case for it”—
“to be devolved in the hope the UK Government will eventually listen to us and the overwhelming majority of the Welsh public who support this move, as reflected in this poll”.
A day after the poll, we have an opportunity in the Finance Bill to achieve that objective, but where is the Labour party?
I am glad that, since Cardiff airport has been brought into public ownership, new management has driven up passenger numbers by 9%. That is a crucial point—the national airport of Wales is publicly owned. I agree with that, as the airport is an essential part of Welsh national infrastructure, but Labour MPs from Wales are not here to ensure that something that is publicly owned by the people of Wales has the best chance of succeeding in the long term.
The devolution of APD could help to ensure the long-term future of the airport and draw passengers away from congested airports in the south-east of England—something I am sure many MPs and their constituents in and around the south-east of England would welcome. I therefore look forward, perhaps somewhat over-excitedly, to some of those MPs joining us in the Aye Lobby. I am similarly amazed that the Secretary of State for Wales is not pushing for the devolution of APD at the highest level, as it would provide us with the ability to develop the Welsh economy, which should be one of his core objectives.
The hon. Member for Vale of Glamorgan (Alun Cairns) is not in his usual place, which is slightly strange, considering that the airport is in his constituency. The livelihood of many of his constituents depends on the vitality of the airport, as well as the aircraft engineering industry that has grown around it, and they will be dismayed to learn that their MP does not support measures that could give the airport a competitive advantage. I should like to make reference in passing to the difficulties that engineering companies operating from the St Athan airbase, which is close to the international airport, face as a result of the management of that airfield by the Ministry of Defence.
The new clause effectively seeks to give Wales an essential tool to support and provide jobs locally in south Wales and the wider Welsh economy. The financial powers recommended by the Commission on Devolution in Wales are needed as soon as possible as a spur to jobs and growth in Wales. The Westminster Government, in the Wales Bill, have cherry-picked the recommendations and omitted the devolution of APD as well as other proposals. The powers included in the Bill may not be implemented until well into the second half of the decade, provided that no more roadblocks are put in place by other parties. Every month that passes without the devolution of those powers, the Welsh economy languishes even longer at the bottom of the economic league table of the nations and regions of the UK, with job and economic prospects diminished, hopes and dreams dashed, and lives stalled.
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Plaid Cymru has made jobs and the economy its absolute priority, which is why we have again tabled an amendment on air passenger duty. We want to create a modern and prosperous Wales and, unlike our political opponents, we have little faith in London government of whatever colour achieving that ambition. That is why we want Wales to have the tools to get on with the job without delay. Diolch yn fawr.
Henry Smith (Crawley) (Con): It is a pleasure to serve under your chairmanship, Mr Bone. I have the privilege and honour of being the Member of Parliament representing Gatwick airport, so aviation is important to my constituents. Aviation is extremely important to the whole of the United Kingdom, as an island trading nation. Many companies located in my constituency are aviation companies, such as Virgin Atlantic, easyJet and TUI Travel, or international companies that have chosen to base themselves close to a major international airport. Therefore, the issue of taxation on aviation concerns not only Wales, Scotland and England, but my constituency in particular.
I would prefer to see us abolishing air passenger duty altogether. We have one of the highest rates of air passenger duty anywhere in the world. I believe that only Chad charges more. Compared with our European competitors, the amount we charge is considerably more. One of our nearby competitors, the Netherlands, used to charge a form of APD but abolished it because of the cost to its economy. Just over a year ago a PricewaterhouseCoopers report concluded that although air passenger duty brings in about £3 billion to the Exchequer, it is estimated to cost the British economy some £16 billion.
I congratulate the Government on their move to reduce the burden of APD, as announced by my right hon. Friend the Chancellor of the Exchequer in his Budget a few weeks ago. It is a great step on the way to reforming and, I hope, one day abolishing this duty. It is a tax that we, as an island trading nation, can ill afford. Reducing bands C and D into band B for flights to capitals more than 4,000 miles from the UK will help many people who want to take well deserved, well earned long-haul holidays. It will also help the diaspora communities, particularly those travelling to the West Indies, India, Pakistan, Australia and New Zealand. Perhaps most importantly for us as an exporting and trading nation, it will help reduce the cost to business of trading with emerging economies such as China.
David Rutley (Macclesfield) (Con): My hon. Friend is making a characteristically powerful speech. I agree that exporters are vitally important. Lord Livingston recently pointed out that mid-sized businesses in particular in the UK are underperforming, as are small businesses, compared to other European businesses. Does my hon. Friend think the changes to APD will help those small and medium-sized enterprises that want to get out and do more exporting?
Henry Smith:
Indeed. The simplification of the upper bands of APD, as announced in the Budget, will help small and medium-sized companies in particular to export. I pay tribute to UK Trade & Investment under this Government, which has been making a fantastic effort to give SMEs the tools to maximise exports. The
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simplification of APD is of great help to small and medium-sized companies not only in England, but in Wales and Scotland.
My remarks are brief this evening. I congratulate the Government on a Budget that is good for business and good for individuals, with the income tax threshold being raised, corporation tax being lowered, fuel duty being frozen and the simplification of APD. I put in a bid once again for the abolition of APD in the future, but I recognise that it is only this Government who are tackling our economic problems in a fiscally responsible way. Charging APD on a Great Britain-wide basis is the most appropriate approach; I would not support the regionalisation of APD. Let us focus on getting APD ultimately abolished, but welcome the simplification that is good for individuals and for business in this country as a whole.
Mr MacNeil: I rise to speak in support of new clauses 6 and 7, in my name and the names of my Scottish National party colleagues, and I intend to press new clause 7 to a vote.
Unfortunately, air passenger duty has become yet another of the Westminster Government’s damaging interventions in the Scottish economy. It is a tax whose time has passed, if indeed it was ever fitting for Scotland, and it is at best only a demand management tool for Heathrow, needed because of the dithering and prevarication at Westminster about doing anything there. As London lost its advantage in sea-going transport to Rotterdam for reasons of dithering and prevarication, it seems that it is now losing its advantage at Heathrow as well, as the world No. 1 slot goes to Dubai. If Schiphol sorts out a few minor irritants for travellers, it will do to Heathrow what Rotterdam did to the docks.
Since 2007, APD has increased markedly: by between 160% and a staggering 360%. This tax—this demand management tool for Heathrow—is definitely damaging the Scottish economy. I object to it not because Westminster wants to slap it on to flyers owing to its dithering and prevarication—it should be free to tax and spend as it wants, regardless of the stupidity and myopia of its actions—but because of what it is doing to Scotland. The damage is obvious. PricewaterhouseCoopers says that its reduction would increase tax receipts in other areas, especially VAT, and create jobs. In short, Westminster is costing us jobs, certainly jobs in Scotland, through this tax.
Let us have a quick glance at tables that compare APD in the UK with that in some other countries in Europe. According to the Airport Operators Association, the next highest rate on short-haul economy flights is that of Austria, which charges a hefty €8. This sum increases markedly—by 100%—in the UK, which charges €16. On the medium-haul rate, Germany is the leader with €23, but that is trebled, and more, in the UK, where it is €89. On long-haul, Germany, again, leads with €42, but the UK is well out in front with €113—double to treble the rate in other countries. On the maximum-rate charge, France manages to pick up the crown with €47, but steaming out in front, yet again, is the UK with €226. While this demand management tool might be good enough for Heathrow, it is certainly not good for Scotland. It is a gate-keeper tax. I compare it to a high
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street shop that demands a fee of shoppers before they come into the shop and then wonders why sales have gone down.
There are many ways to approach this, and I think I am going to have to resort to poetry to advance my case. Given the Government’s intransigence, I wonder whether this may be the last untried key to unlocking their obstinacy. I turn to Mary Howitt’s poem of 1829—nearly 200 years ago. It is salient to this issue, because despite its being written before the Wright brothers and the first manned flight, it does make reference to a form of aviation. It is “The Spider and the Fly”:
“‘Will you walk into my parlour?’ said the Spider to the Fly,
‘’Tis the prettiest little parlour that ever you did spy’”.
Scotland, as we know, is one of the prettiest parlours; it is famed for its scenery. Indeed, the website TripAdvisor has named Lewis and Harris, the main island in the north of my constituency, as Europe’s No. 1 island to visit, and fifth in the world overall. Indeed, I would encourage anybody watching this debate or reading it later in Hansard to go to Google Earth and have a look at the scenery. Whether it is the beaches of Harris at Luskentyre, or Uig of the Lewis chessmen fame on the west side, or over at Gress and Tolsta or Port of Ness in the far north, they will see what TripAdvisor is talking about. Anybody visiting will find fine hotels in Tarbert, Harris or Stornoway, Lewis, and many bed and breakfasts, dotted throughout the islands. Stornoway is probably one of the best-connected towns in all of Scotland, with direct daily flights to Scotland’s principal cities of Aberdeen, Inverness, Glasgow and Edinburgh, and sometimes several times daily. There is more. Other islands to the south include North Uist, Benbecula, South Uist, and of course my own native Barra.
But despite our advantages, with standing stones older than Stonehenge and a visitor record going back to the Greeks in 325 BC, the London Government’s attitude is, “Walk into my parlour if you like. We’re not too bothered if you do or you don’t, but if you do we’ll have our highwayman mask on and we’re out to charge you a king’s ransom”—and this is just to reach Scotland in the first place.
That is a pity, because those who do discover the beauty of Scotland and especially its islands—from Islay to Unst in Shetland—find, rather like the fly at the end of Mary Howitt’s poem, that those who go up the winding stair can ne’er come down again. Similarly, those from overseas who discover Scotland are very likely to return. The damage is huge. It is not quite cataclysmic, but it is big. We are not quite in the territory of Lord George Robertson, who killed the word “cataclysmic” stone dead after he took a flight recently to make a speech in the United States of America. I am sure he is well aware of how much APD he paid.
Moving on to more serious voices on this issue than that of Lord George Robertson, a range of industry figures have lined up against this self-defeating tax. Amanda McMillan, the respected managing director of Glasgow airport, has said:
“Aviation plays a critical role in supporting the growth of the UK economy and this role is even more profound in Scotland given the country’s location on the periphery of Europe. Travelling by air is not a luxury but an essential element of business and family life, yet we continue to have the highest levels of taxation in the EU. It was extremely disappointing, therefore, that despite
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repeated representations to the UK Government the Chancellor in his Autumn statement opted to further increase levels of APD. APD is already proving a significant barrier to attracting new routes and unless there is a fundamental re-think, I have no doubt that Scotland’s domestic and international connectivity will suffer. Thankfully, there is broad cross party support in Scotland for action on APD and we welcome any moves which would address the issue and stimulate further growth.”
I hope to see evidence of that broad cross-party consensus in Scotland when we press the new clause to a vote tonight—or is it similar to the hollow words of Labour in Wales?
Gordon Dewar, chief executive of Edinburgh airport, has said of the White Paper:
“We welcome this policy from the Scottish Government and we would like to see APD not only halved but abolished completely. We’ve had a successful year at Edinburgh Airport but it is clear from our discussions with our airlines that Scotland could be far better connected without the iniquitous yoke of APD. It puts our country and importantly our vital tourism industry at risk. People and airlines will go elsewhere. We reiterate our call for governments to support our economy and abolish this unfair tax.”
The managing director of Aberdeen airport, Carol Benzie, has said:
“What is becoming increasingly clear are the implications of this tax on UK businesses. Put simply APD adds to the burden of running a successful company. 65% of our passengers in Aberdeen are travelling in a professional capacity and ultimately the responsibility for paying APD in each and every one of these cases is being passed back to their employer. Firms in Aberdeen are connected globally with links in emerging and existing markets. These businesses are paying APD twice if they chose to use a hub airport in the UK, and are taking their business elsewhere in increasing numbers to avoid this tax.”
Commenting on the Irish Government’s decision to abolish air travel tax, which came into force on 1 April, Scottish Transport Minister Keith Brown, a former veteran of the Falklands war, said:
“Scrapping Air Travel Tax in Ireland has had an immediate impact and shows what could be achieved in Scotland if we had control over Air Passenger Duty…After the Irish Government outlined its plans to abolish the tax last year, Ryanair stated that it will deliver an additional 1 million passengers to and from Ireland as a direct result of that decision, with 20 new routes into Dublin, Shannon and Cork launching this summer.”
When I spoke about this last year I warned that the UK Government had been ignoring the industry, the people and the Scottish Government for far too long and that it was no wonder that support for independence was growing. We now know that support for independence has grown far more in the past year than I could have imagined. Are the UK Government going to continue with their intransigence? A year on, what do we have? The gap in the polls has closed, tightening to 6% within the margin of error, which is almost a swing, and the head of British Airways, Willie Walsh, and Ryanair’s Michael O’Leary are supportive of Scottish independence because they see the opportunities. I am sure that Members of this place will be supportive of independence after the event, but why do they have to be so slow and so late to the party? Michael O’Leary and Willie Walsh are right on the money, as we will see on 18 September.
The Scottish Government, in their White Paper on the best-planned independence process of any country in the world, aim to reduce APD by 50% within the first term of an independent Parliament, and to abolish it completely when circumstances allow, with a proposal
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for a straight reduction in bands. Independence is gaining support because of such straightforward, common-sense approaches.