25 Mar 2015 : Column 1493
Fiona O'Donnell: The Chancellor fought incredibly hard in the EU to protect bankers bonuses, so can the Minister tell us what efforts the Government have made to have that rule changed?
Mr Gauke: This has been a long-standing issue. The experience of trying to bring in new zero rates has been very difficult. If an opportunity arose, any future Government would want to pursue that.
Let me make a couple of points. We need to make progress on a number of items of business this afternoon. On living standards, this Government have taken many steps to help with living standards in difficult circumstances, such as the increase in the personal allowance, the freezing of fuel duty and the freezing of council tax. With reference to the impact on small businesses, this Government have a proud record of helping small businesses in the current difficult circumstances, not least by introducing the employment allowance, which is a cut in the jobs tax, and introducing an exemption for under 21s starting in April, which is a cut in the jobs tax. The following year, there will be no jobs tax for apprentices under the age of 25. We have a record of reducing the jobs tax. That is not the position of Labour.
My party has set out how we will reduce the deficit in terms of departmental spending, welfare and tax evasion and tax avoidance. Our plans are clear. The same is not the case with the Opposition. There is a black hole in their finances. As a consequence, the risk of a big increase in tax from the Opposition is clear. Their tax of choice is employers national insurance contributions. That is the one that the British public should be frightened of. The Leader of the Opposition refused to rule it out earlier. I understand that a panicky press release was issued this afternoon, but the British public know very clearly what will happen under a Labour Government—borrowing and taxes will go up. Consequently, I urge the British people not to allow that to happen, and I urge the Committee to reject new clause 1 today.
Clause 66 accordingly ordered to stand part of the Bill.
Clause 67 ordered to stand part of the Bill.
Report on impact of value added tax
(1) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the impact of the increase in the standard rate of VAT which took effect from 4 January 2011.
(2) The report must estimate the impact of the increase in the standard rate of value added tax on—
(c) the fairness of the taxation system; and
(d) economic growth.—(Shabana Mahmood.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The
Committee
divided:
Ayes 231, Noes 305.
Division No. 184]
[
4.33 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Kevin
Bayley, Sir Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
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
Fitzpatrick, Jim
Flello, Robert
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hancock, Mr Mike
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, rh Fiona
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
McFadden, rh Mr Pat
McGovern, Jim
McGuire, rh Dame Anne
McInnes, Liz
McKechin, Ann
McKenzie, Mr Iain
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Ritchie, Ms Margaret
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
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
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Phil Wilson
and
Tom Blenkinsop
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Sir David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, rh Norman
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, rh Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Cash, Sir William
Chishti, Rehman
Chope, Mr Christopher
Clark, rh Greg
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Field, rh Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
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
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hammond, Stephen
Hancock, rh Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Sir Oliver
Heath, rh Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, rh Charles
Herbert, rh Nick
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
James, Margot
Javid, rh Sajid
Jenkin, Mr Bernard
Jenrick, Robert
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Leadsom, Andrea
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lopresti, Jack
Loughton, Tim
Luff, Sir Peter
Lumley, Karen
Macleod, Mary
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
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
Paice, rh Sir James
Paisley, Ian
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Sir Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Sharma, Alok
Shelbrooke, Alec
Shepherd, Sir Richard
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Sir Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, rh John
Timpson, Mr Edward
Tomlinson, Justin
Truss, rh Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Webb, rh Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williamson, Gavin
Willott, rh Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, rh Jeremy
Wright, Simon
Young, rh Sir George
Tellers for the Noes:
Mel Stride
and
Damian Hinds
Question accordingly negatived.
25 Mar 2015 : Column 1494
25 Mar 2015 : Column 1495
25 Mar 2015 : Column 1496
25 Mar 2015 : Column 1497
Charge and rates for 2015-16
Shabana Mahmood: I beg to move amendment 1, page 2, line 1, at end insert—
“(3) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the impact of setting the additional rate of income tax at 50 per cent.
25 Mar 2015 : Column 1498
(4) The report must estimate the impact of setting the additional rate for 2015-16 at 45 per cent and at 50 per cent on the amount of income tax currently paid by someone with a taxable income of—
The Temporary Chair (Sir Roger Gale): With this it will be convenient to discuss clause 1 stand part and clauses 2 to 5 stand part.
Shabana Mahmood: It is a pleasure to serve under your chairmanship, Sir Roger. Amendment 1 stands in my name and those of my right hon. Friend the Member for Morley and Outwood (Ed Balls), my hon. Friends the Members for Nottingham East (Chris Leslie) and for Kilmarnock and Loudoun (Cathy Jamieson), and the hon. Member for Brighton, Pavilion (Caroline Lucas). It calls on the Chancellor to produce within three months of the enactment of this Bill a report on the impact of setting the additional rate of income tax at 50%. The report must estimate the impact of setting the additional rate for 2015-16 at 45%—the current higher rate—and at 50% on the amount of income tax currently paid by people with a taxable income of £150,000 and £1 million a year.
As we all know, the 50p rate of tax for those earning more than £150,000 was reduced to 45p by this Government in 2012. That was hotly debated at the time and it has been hotly debated ever since. The Minister refers to a debate on the additional rate of tax as an annual event whenever we discuss a Finance Bill. Government Members may groan that the debate is rearing its head again, but I am, if nothing else, an optimistic person and I continue to hope that Government Members will be swayed by my arguments and be persuaded to accept our eminently sensible and reasonable amendment.
Gareth Johnson (Dartford) (Con) indicated dissent.
Shabana Mahmood: It is a little unfair of the hon. Gentleman to shake his head at such an early stage of my speech. He should at least give me a chance to develop my arguments.
Helen Goodman (Bishop Auckland) (Lab): Does my hon. Friend agree that one of the worst aspects is the massive loss to the Revenue? Am I right in recollecting that the projected annual revenue loss to the public purse in 2011 was some £3 billion?
Shabana Mahmood: My hon. Friend is absolutely right. The measure has a static cost of £3 billion a year, and behavioural changes also have an impact. That is the hot debate in which the Minister and I have been engaged ever since I have been in the shadow Treasury team.
Mr Gauke: The hon. Lady raises an interesting point about the static and behavioural effects. She will be aware that the shadow Chief Secretary to the Treasury said:
“We have a choice about a tax rate that would raise £3 billion”.—[Official Report, 5 November 2014; Vol. 587, c. 849.]
Does she believe that putting the 45p rate back to 50p would raise £3 billion for the Exchequer?
25 Mar 2015 : Column 1499
Shabana Mahmood: The Minister is tempting me to go further than I want to at this stage, because I am going to develop exactly those arguments about the costing, what the measure is likely to raise, and the inherent uncertainty in the Government’s work and the report that they produced. The Minister will be welcome to intervene once I have reached that point in my speech.
Ian Murray (Edinburgh South) (Lab): As always when it comes to talking about the 50p tax rate, my hon. Friend is incredibly persuasive. Does she not find it strange that the Government are projecting a £7 billion tax cut but refusing to raise tax in this way, so the only conclusion the public can come to is that they must be looking to break their promise and raise VAT?
Shabana Mahmood: My hon. Friend is both generous and correct. Members who were here for the last debate will know that Government Members utterly failed to meet the charge levelled at them, which was that the combination of their history on VAT and what they wish to achieve in the next Parliament means that a VAT rise is inevitable if the Conservative party is elected to government in a few weeks’ time.
We know that the Government’s decision to reduce the top rate of tax for those earning more than £150,000 is as much at the heart of the current political debate today and in the next few weeks as it was in 2012. The debate is about where we raise revenue from and who we ask to shoulder the burden to help bring down the deficit further.
Ian Swales: I know that the shadow Minister was not a key part of the previous Government, but does she believe that the right shoulders to bear the burden were those of people on minimum wage, who were paying £1,000 in tax? The highest rate of income tax was 40% for every single day but one that Labour sat on the Government Benches.
Shabana Mahmood: I was not a Member at that time, so I was not a part of that Government at all, but I am proud of the previous Government’s record over 13 years. The hon. Gentleman will know that we raised the top rate of tax to 50p in response to the global financial crisis, and that was the right thing to do—[Interruption.] He asked about the minimum wage and mentions it yet again from a sedentary position, but we were the Government who introduced the minimum wage in legislation. That was one of our proudest achievements, and my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) told me last week that the last all-night sitting of the House of Commons was when the Labour Government introduced the national minimum wage. Labour Members were in the House at eight in the morning to vote it through and they were absolutely right to do so.
Andrew Gwynne: My hon. Friend is absolutely right to recognise the importance of the national minimum wage to many people in this country. Of course, tax changes are one side of the equation, and the other has been the changes to tax credits, which benefited many people under the previous Government. Is it not the case that we have seen a £3 billion cut for the very richest with the cut in the 50p rate, at a time when average families are £1,100 worse off as a result of the tax and tax credit changes?
25 Mar 2015 : Column 1500
Shabana Mahmood: My hon. Friend is absolutely right. I was coming on to exactly that point. This is a question about living standards: what is happening to the poorest in our society and where the burden should ultimately rest for sorting out the nation’s finances after the global financial crisis.
At the Budget last week, the Chancellor would have had us believe that people are on average £900 better off as well as more secure as the result of his policies. I have to hand it to him—he has been highly innovative in using a new measure of living standards to try to back up his claim, but it includes income to universities and charities. I do not blame him for trying, but he knows the truth, as do Members and the public, which is that people say time and again that they are worse off. A poll of 5,000 consumers’ responses to the Budget showed that three quarters of people have seen no improvement in their living standards. A Populus poll before Christmas found that only one in seven adults said they were feeling the benefit of recent economic growth.
As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) has said, wages after inflation are down by £1,600, and the combined impact of tax and benefit changes has left families on average £1,127 a year worse off. That was the context in which it was decided to reduce the additional rate of tax to 45p, giving millionaires a tax cut worth an average of £100,000, which is a huge sum of money by any standards. As I have just said, wages are down by £1,600 a year, tax and benefit changes have left people £1,127 worse off, and, as we heard in the previous debate, higher VAT has left people £1,800 worse off over four years. For people at the bottom end of the income spectrum, such sums are the difference between being able to put food on the table and to put clothes on their children’s back or not, while the choices for those at the other end of the income spectrum, who are benefiting from a tax cut to the tune of £100,000, are probably about the poshness of the car on the forecourt of their home, not the basic necessities of life and of survival. That is the important point for struggling families across our country.
David Wright: Is my hon. Friend interested, as I am, in the line developed by the Liberal Democrats that the 50p rate was in place only at the end of the previous Labour Government for a very short time?
David Wright: Indeed. This is all about the choices made to bring down the deficit. We made a choice—a forward offer or plan—to use a higher top rate of income tax to bring down the deficit, and the Liberal Democrats decided to vote against that strategy.
Shabana Mahmood: My hon. Friend is absolutely right. The hon. Member for Redcar (Ian Swales) always takes part in Finance Bill debates, and he always makes one point in exactly the same way. I sometimes wish that he would listen to the answer he gets when he does so. The answer is that the top rate was increased as a specific response to get down the deficit after the global financial crisis. It was the fair and right thing to do then. It was unfair and wrong to decrease the rate from 50p to 45p, which he, as a member of one of the parties of government, supported. It will be right for the next Labour Government to raise it to 50p again.
25 Mar 2015 : Column 1501
Stewart Hosie (Dundee East) (SNP): The hon. Lady is absolutely right that that rate of tax should have gone up to 50p during the downturn and that it should not have been cut. She is equally right to compare the tax cut for millionaires with the poverty of ordinary people, so why did Labour Members sit on their hands when we had the one opportunity not to have a tax cut for millionaires?
Shabana Mahmood: One of the things about the annual debate on the 50p rate is that the usual suspects make the same points in exactly the same way. We have heard that point from several members of the hon. Gentleman’s party. I say to him what I have always said—that we have had a consistent approach to the top rate of tax. There has been no change to that, and we will put it up to 50p if we are elected in a few short weeks’ time.
5 pm
We can look at the difference between people at the top and bottom end of the income spectrum—the millionaires who have had a huge tax cut and are £100,000 a year better off, and the people who are struggling and £1,100 a year worse off. How must it feel to the ordinary taxpayer, and to hundreds of thousands of people working on zero-hours contracts, to be told that while they struggle on, a tiny number of people in our country will be given a tax cut that could buy a house in many parts of the country, including my own city? That is the stark reality of the choices that the Government have made.
The Government’s last Budget has told people what is coming. The spending cuts that the Chancellor has proposed for the next three years will be deeper than those in the past five years, and things will continue to be tight for many families. They want to know that the load is being shared fairly, but that one decision tells us that it is not.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): My hon. Friend is making a powerful case. Is not one example of how the burden is not being shared fairly the fact that, as we were reminded earlier today, there was one food bank in Scotland when Labour left office, but there are now 50? I am sure that example could be repeated throughout the entire country, and it emphasises the inequitable nature of the Government’s policies.
Shabana Mahmood: My hon. Friend is absolutely right. In fact, when I was talking about VAT in my constituency yesterday, I was struck by the number of people I met who were in work but using food banks. They are trying to do the right thing and working as hard as they possibly can, yet they still cannot put food on the table. How must it feel for them to find themselves in that situation and to know that under the current Government, a millionaire is better off to the tune of a hundred grand a year? I would say that it feels pretty rubbish, and that is what my constituents are telling me every day.
Lyn Brown:
I was on the phones canvassing the other week, and a man from a neighbouring constituency said that he felt the Government should be more Thatcherite
25 Mar 2015 : Column 1502
in their attitude towards taxes. I did not really know where to go with that, but I listened on. He said that it was because Margaret Thatcher had had a 60% tax rate for some years, only getting rid of it in 1988. He said that the current Government, who seem to idolise Margaret Thatcher, might take a leaf out of her book. He had been a Tory voter, but stopped being one simply because of the unfairness of the rate going down from 50p to 45p. I never thought that I would stand here urging Conservative Members to be more Thatcherite, but to represent such views fairly I think it is my duty.
Shabana Mahmood: My hon. Friend has acquitted herself of that duty in her usual brilliant way. We may not be able to persuade the Conservatives to be fully Thatcherite, but getting them part of the way there would be welcome. If they cannot bring themselves to support bringing back the 50p rate, which of course they will not, they should at least support our amendment. As I said, it comes down to a simple question: is the burden of deficit reduction and dealing with the fall-out from the global financial crisis being shared fairly across all parts of our society? The amendment is genuinely intended to shed some light on that.
Ian Murray: I am grateful to my hon. Friend for giving way again. She is always incredibly generous, especially in Committee debates on Finance Bills.
If the Government are correct in their assertions about tax take and behavioural change—that a 45p rate generates more than a 50p rate and is fairer—does my hon. Friend share my surprise that they object to bringing forward a report that would tell us exactly that?
Shabana Mahmood: That is exactly the point. If the Government have nothing to hide and nothing to fear from all the data being out there for us to interrogate, they should accept our amendment and get on with the review that we have called for. They should have got on with it when we first called for it, immediately after they made the change to the rate. Our amendment genuinely seeks to shine light on what has been happening to people’s incomes and the impact of changes to the top rate of tax. When the Government commissioned their report, the data were not extensive, and the report has been contentious from the minute it came off the printer. The reasons for that go to the thrust of what the Financial Secretary was asking me earlier, and I will come on to those points shortly.
As we have heard, the Labour Government introduced the 50p rate. It came into effect in 2010-11 and was a decision made after the financial crisis as we sought to get the deficit down. There was nothing in the coalition agreement about abolishing the 50p rate, but in 2011 HMRC was asked to look into it and the yields it produced. It did not take a genius to work out that the Chancellor was thinking about cutting the top rate of tax, and in 2012 with HMRC’s report, the Exchequer effected a 50% additional rate of income tax to back up the Chancellor cutting the rate to 45p.
Andrew Gwynne:
My hon. Friend talks about the work done by HMRC. Is that almost the same piece of work that the Labour amendment would require the Government to do, in that it would show an analysis of how much money the 45p rate is bringing in and how
25 Mar 2015 : Column 1503
much the 50p rate would bring in? It would also allow hon. Members to have a proper debate about the proportion of taxes that should go towards deficit reduction as opposed to spending cuts.
Shabana Mahmood: As ever, my hon. Friend is absolutely right, and it is precisely to get that additional data that we have tabled this and similar amendments ever since the change was made. Why would the Government go through the process of looking at yield and getting HMRC to produce a report in 2011? That is important, because everyone knew—both at the time and ever since—that there were not enough data to come to an accurate view about yield as the rate had not been in place long enough. To put it bluntly, the Chancellor probably felt that some people might not agree with his decision to give people earning more than £150,000 a massive tax cut, given the state of the rest of the economy and the crushing of people’s living standards on his watch. What he needed to back his decision was a report that said that the 50p rate hardly raised anything at all, which is precisely what the HMRC report said. After analysing a host of facts and figures, the report concluded that a cut that would, by the Government’s initial estimates, cost £3 billion— the so-called static cost, excluding all behavioural changes— would cost only £100 million.
The trouble with the report is that, as everyone acknowledges, there are too many uncertain variables to be anywhere near sure that the figure of £100 million is even close to reality. The report was based on only one year’s worth of data relating to 2010-11. That is a significant weakness, since we know that some incomes were taken earlier to avoid the extra tax. Further detail is now available, including for the tax years of 2011-12 and 2012-13 when the 50p rate was still in place. The writers of the 2011 report did not have those data available, so their report is therefore lacking. That could be remedied were the Government to accept our amendment.
The report attempts to quantify behavioural change. The scale of behavioural change is primarily based on an assessment of taxable income elasticity—basically the extent to which taxable income changes when the tax rate changes. The IFS says that there is a margin of error within calculations for the 2011 report, and that staying within that margin of error one could easily say, depending on taxable income elasticity, that cutting the rate of tax could cost the Exchequer £700 million or could raise £600 million. That gives an idea of the range of figures we are talking about and of how uncertain such projections are.
I return to my central point: more data are now available and could help to calculate a truer picture of the yield of a 50p tax rate as opposed to a rate of 45p. If Conservative Members are so certain that their position on the abolition of the 50p rate is true, why will they not agree to the scrutiny that the amendment suggests?
Mr Gauke: I come back again to what the hon. Lady’s colleague, the shadow Chief Secretary, said from the Opposition Dispatch Box, when he referred to the 50p rate as
“a tax rate that would raise £3 billion”.—[Official Report, 5 November 2014; Vol. 587, c. 849.]
Does she stand behind the statement that the 50p rate would raise £3 billion?
25 Mar 2015 : Column 1504
Shabana Mahmood: I was here for that debate and my hon. Friend the shadow Chief Secretary was recognising that the first thing we start with is the static costing. That is the only certain figure we have and that starts us off at £3 billion. We have, of course, to make an allowance for behavioural change and that will impact on the yield, but the calculation for how we get to understanding the behavioural change is the bone of contention between the Financial Secretary and me.
Mr Gauke: The hon. Lady is making a perfectly sensible point now, but it is a very different point to that made by the shadow Chief Secretary. He did not say, “The static cost is this, but then there is the behavioural cost” and so on. He said that it was
“a tax rate that would raise £3 billion”—[Official Report, 5 November 2014; Vol. 587, c. 849.]
It sounds to me that the hon. Lady does not agree with that. She is not claiming that it would raise £3 billion. Is my interpretation of what she is saying correct?
Shabana Mahmood: My interpretation of what the Minister is saying is that he is making a valiant attempt at trying to create something out of nothing. As I said, I was here for that debate and I remember that exchange very well. The Financial Secretary and my hon. Friend the shadow Chief Secretary had a bit of to-ing and fro-ing over the static costing, but the rest of the debate and everything my hon. Friend said was absolutely clear. It has always been our position that we start with the static costing and that is not in doubt: it is £3 billion. The question then is: what happens when we allow for the impact of behavioural change? My contention—it has always been our contention; it is exactly what the shadow Chief Secretary said in his remarks in that debate on that day—is that the extent of behavioural change, as envisaged in the 2011 report, was based on an uncertain set of figures and that we have much more data now to be able to get to a certain point.
Shabana Mahmood: I am not going to give way again, because I have very little time. The Minister can pick the point up again in debate and I am sure he will do so.
It is not sufficient for Government Members simply to point at the increased yield following the rate cut to 45p and deem that their point has been proved. Just as people brought forward their incomes before the rate was introduced, so people held off taking income until the rate was lowered. We know the increase in yield at 45p was due primarily to record bonuses, which were up 80% in the year after the rate was reduced. If the truth is what is sought, then rigorous analysis is what is required. The blunt truth, however, is that the truth is not what is being sought here by the Government. The decision was taken for ideological reasons. There is no other justification. The abolition of the 50p rate was nothing other than a huge tax cut for the very richest, while ordinary families continued to struggle, and struggle for longer.
There is growth in the economy and that is welcome, but it has been a long time coming. It is ordinary families who have ended up paying the price. That is why we have continued to press home the point about the top rate of tax. While ordinary families are paying the price, we have let the very wealthiest in our country
25 Mar 2015 : Column 1505
have a huge tax cut. That cannot be right. A top rate of tax at 50p will play an important role towards fair deficit reduction under the next Labour Government. If the Government have absolutely nothing to hide or fear in the facts and figures behind the cut from 50p to 45p, they should accept our amendment to clause 1.
Mr Gauke: It is a great pleasure to serve under your chairmanship, Sir Roger.
First, I shall say a word about the clauses in this group. Clause 1 provides the charge and sets the rates for income tax for 2015-16; clause 2 relates to limits and allowances; clause 3 sets the personal allowance for 2015-16 at £10,600; clause 4 relates to the basic rate limits; and clause 5 sets the personal allowance for 2016-17 at £10,800 and for 2017-18 at £11,000. That is a dramatic increase on the rate we inherited in 2010, when it was below £6,500, and makes good progress towards the target that my party and the Liberal Democrats have set of £12,500 by the end of the next Parliament.
5.15 pm
Income tax is the Government’s biggest revenue source, and the annual charge, legislated for in the Finance Bill, is essential for its continued collection. In 2015-16, there will be about 30 million income tax payers, and clause 1 states that they will pay income tax this year at the same rates as in 2014-15. The basic and higher rates remain at 20% and 40%, and the additional rate is 45%. On Monday, Labour voted against the Budget resolution renewing income tax, but thankfully it was defeated. It would have put a £150 billion hole in the public finances—reckless even for Labour. I can only hope it was a symbolic vote that they had no desire to win. It was perhaps more a protest vote than anything else.
Ian Murray: It would have been popular.
Mr Gauke: None the less, under this Chancellor and this Government, we will stick to the long-term economic plan and avoid populist giveaways that could damage the public finances.
I could spend some time on these clauses—they are a significant achievement for the Government and I am delighted we are making further progress on increasing the personal allowance—but I shall deal with amendment 1, tabled by the Opposition. It is the annual debate we have on these matters; it is familiar to me and, I suspect, to you, Sir Roger. It proposes that the Government publish a report reviewing the impact of setting the additional rate at 50% within three months of passing the Bill. In addition, it asks for an assessment of
“the impact of setting the additional rate for 2015-16 at 45 per cent and 50 per cent on the amount of income tax currently paid by someone with a taxable income of…£150,000…and…£1,000,000 per year.”
To be credible, such an analysis would need to take behavioural impacts into account, like the HMRC report on the additional rate published at Budget 2012. Simply looking at theoretical income tax liabilities when increasing taxes is not enough. For perhaps the first time in a long time in these debates, we might have made a bit of progress in trying to understand Labour’s position. The HMRC report concluded that the underlying yield from the introduction of the 50p rate was much lower than originally forecast owing to large behavioural effects.
25 Mar 2015 : Column 1506
It would be fair to say that when the 50p rate was introduced by the previous Government, they made allowances for behavioural effects. The question is whether it was sufficient.
When HMRC looked at this again, it was clear that the behavioural effect was greater than anticipated by the previous Government. Indeed, it is quite possible that it cost the Exchequer money. So let me take this opportunity to assure hon. Members once more that the Government already consider the impacts of any policy decisions taken, and they take the behavioural effects into account. The simple point is that the 50p rate was failing to raise the money anticipated.
Ian Swales: People find some of these behavioural effects hard to imagine. One of them, of course, was that under the previous Government somebody paying tax at that kind of rate could put £250,000 into a pension fund and save all the tax—£125,000. The maximum that can be saved now is £18,000.
Mr Gauke: My hon. Friend raises an important point. There are a number of behavioural effects. Sometimes when we have this debate, there is a tendency for Opposition Members to say, “Ah, behavioural effects. You are just talking about tax avoidance.” Tax avoidance can be an element, but it can also be behaviour that is clearly compliant both with the letter and the spirit of the tax system yet will reduce yield. Increasing contributions to pension schemes, for example, could result in a reduction in revenue. It could be that somebody decides to relocate out of the United Kingdom. It could be—an important point that gets to the heart of why we reduced the tax— that international businesses in deciding where to locate staff might conclude that the costs of doing so in the UK are greater than elsewhere, and that there are better climates and environments in which to locate highly paid staff.
Those are some of the behavioural impacts that are a consequence of having an uncompetitive rate of income tax. That is one of the challenges that Governments have to face. To be fair, the previous Labour Government, for the vast majority of their time in office—this point has already been made by my hon. Friend the Member for Redcar (Ian Swales)—did not increase the 40p income tax rate. Tony Blair was very clear that in his view increasing the rate above 40p would be a mistake. We have taken the view that it was right to reduce the rate down to 45p, but the important question remains of what is the purpose of having a high rate of income tax. Is it to raise revenue or is it simply about sending a signal? If it is to raise revenue, we have to ask ourselves how much it will raise.
This is why I return to the comments—I cited them accurately and in context earlier—made by the shadow Chief Secretary on 5 November:
“We have a choice about a tax rate”—
he is clearly talking about the 50p rate—
“that would raise £3 billion, and it is important that we take that opportunity to tackle our deficit, rather than giving that money away to those people who are already in an extremely privileged position.”—[Official Report, 5 November 2014; Vol. 587, c. 849.]
He is talking about raising £3 billion. I pressed the hon. Member for Birmingham, Ladywood (Shabana Mahmood) on two or three occasions because she was making a different argument. She was saying that the static cost is
25 Mar 2015 : Column 1507
£3 billion, and then it is a question of working out what the dynamic and behavioural effect will be so that we have a true and accurate position on how much this tax will raise. That is a perfectly reasonable point—it is not possible to disagree with the fact that there is a static number, but that is not terribly helpful in guiding us towards a sensible policy, because we have to know the behavioural effects. Let me be clear. The hon. Lady is clearly stepping away from the suggestion that this will raise £3 billion—
Mr Gauke: Given that the hon. Lady has said that, I will certainly give way to her. If she is not stepping away from how much this would raise, I would be interested to hear what she is saying and how much she thinks it would raise.
Shabana Mahmood: If the Minister was listening to my speech, he would know that I am asking for a report to give us a better idea of what this measure will raise—including all the data to hand from the additional years in which the rate was in place but not included in the 2011 HMRC report. All I can say to him on the figures is that the only certain figure we have is the £3 billion static cost. I accept that behavioural change will bring that down and decrease the yield, but neither he nor I can say, with hands on our holy books, that we know the exact number. That explains what I have asked for in the amendment. I believe this could be a revenue-raising measure to get the deficit down in a fairer way. The extent to which we can do that is the thrust of my amendment.
Mr Gauke: We are making further progress. The hon. Lady has now explicitly said that the 50p rate will not raise £3 billion. [Interruption.] She has explicitly said that, because she has accepted that there will be a behavioural effect that will bring the amount down. I do not know why she is complaining and chuntering, because she has just made the unarguable point that the amount raised will be less than the static cost. That is not the point that the shadow Chief Secretary was trying to make.
Labour politicians are generally very good at saying, “It is a £3 billion giveaway”, in an attempt to give the impression that it will be a £3 billion increase in revenue. I accept that the shadow Chief Secretary probably misspoke, and that when he said that the 50p rate would raise £3 billion, he was getting a little carried away. Labour politicians usually avoid saying, “It will raise £3 billion”, for the very good reason that that is a completely unsupportable position. To be fair to the hon. Member for Birmingham, Ladywood, she is not making that case today. However, I wish to point out that even the Labour party does not believe that the 50p rate will raise £3 billion, which it clearly will not.
Andrew Gwynne:
I appreciate that we are five and a half weeks from a general election, so we can exchange party-political knockabout. Having said that, I would politely say to the Minister that the point he is making—very eloquently, I must say, if I am being fair to him—is precisely the point made by my hon. Friend the Member
25 Mar 2015 : Column 1508
for Birmingham, Ladywood (Shabana Mahmood). There is a degree of uncertainty. Is that not exactly why he should support the amendment?
Mr Gauke: I accept that I can be carried away with party-political knockabout. I look to the hon. Gentleman as a statesman who rises above such lowly behaviour, and I shall always seek to emulate his balanced and considered approach to the House of Commons.
Ian Swales: I thank the Minister for giving way again. He is being very generous with his time.
As assessment has been made by an independent group, the Institute for Fiscal Studies, which came up with a figure of about £100 million. Labour Members have used the word “exact”. Does the Minister reject the idea that the amount can ever be estimated exactly, partly because of the behavioural factors to which he referred a few minutes ago?
Mr Gauke: That is a very good point, which leads me to the two quotations that I was about to give. Paul Johnson, the head of the IFS, said in a paper that was published on 27 January 2014:
“The best available estimate of what reversing the cut would raise is therefore about £100 million too.”
“the best evidence we have still suggests that raising the top rate of tax would raise little revenue and make, at best, a marginal contribution to reducing the budget deficit an incoming government would face after the next election.”
Mr Gauke: I am spoilt for choice, but ladies first.
Fiona O’Donnell: I thank the Minister for his generosity in giving way again. The Institute for Fiscal Studies has said that the Government’s plans for tax cuts by 2020 would cost £7.2 billion. Can he tell us where that money would come from?
Mr Gauke: We have a record of increasing the personal allowance. This is a very good time to make that point, as we are debating, among other things, clauses 1 to 5, under which the personal allowance will move up to £11,000 during the next few years. We have a record of being able to deliver big increases in the allowance, and that is what we will do.
Let me now press on. The economic recovery is well under way, and last year Britain grew faster than any other major advanced economy in the world. The Government will not consider any action that would put the United Kingdom’s recovery at risk. While the additional rate has been reduced to ensure that the UK remains internationally competitive, the Government’s policy is to repeatedly increase the tax contribution of the wealthy. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25.1% in 2010-11 to 27.3% in 2014-15, which means that they are expected to pay a greater share of income tax in 2014-15 than in any year under the last Government.
25 Mar 2015 : Column 1509
5.30 pm
I should add that the 50p rate was one of the most uncompetitive income tax rates in the G20 and it is about time the Opposition simply accepted that it did not work. The Government need to spend their resources effectively and efficiently, and the Treasury and HMRC have no plans to introduce rolling annual reports on the impact of changes in tax rates. Nevertheless the Government always keep tax rates under review and monitor receipts, and on this basis I do not believe the amendment is necessary, and I ask the hon. Lady to withdraw it.
Clause 1 allows the Government to collect income tax, something I am sure both sides will agree is essential, notwithstanding the votes on the Budget resolutions. Let me stress again that the impact of reducing the additional rate of income tax has been examined in great detail. The 50p rate was both ineffective at raising revenue and meant risking the recovery everyone in this country is working hard for. As a result the report proposed by the Opposition in amendment 1 is entirely unnecessary, and I move that clause 1 stand part of the Bill without the amendment.
Question put, That the amendment be made.
The
Committee
divided:
Ayes 230, Noes 309.
Division No. 185]
[
5.31 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Kevin
Bayley, Sir Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blomfield, Paul
Blunkett, rh Mr David
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Fitzpatrick, Jim
Flello, Robert
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Hepburn, Mr Stephen
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Lewell-Buck, Mrs Emma
Llwyd, rh Mr Elfyn
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, rh Fiona
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, Jim
McGuire, rh Dame Anne
McInnes, Liz
McKechin, Ann
McKenzie, Mr Iain
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Mitchell, Austin
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Robertson, Angus
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Stephen Doughty
and
Tom Blenkinsop
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Sir David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, rh Norman
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, rh Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Cash, Sir William
Chishti, Rehman
Chope, Mr Christopher
Clark, rh Greg
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Djanogly, Mr Jonathan
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Field, rh Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
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
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, rh Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Sir Oliver
Heath, rh Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, rh Charles
Herbert, rh Nick
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
James, Margot
Jenkin, Mr Bernard
Jenrick, Robert
Johnson, Gareth
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Leadsom, Andrea
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Loughton, Tim
Luff, Sir Peter
Lumley, Karen
Macleod, Mary
Maude, rh Mr Francis
May, rh Mrs Theresa
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Osborne, rh Mr George
Ottaway, rh Sir Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Sir Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Sir Richard
Simmonds, rh Mark
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Sir Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, rh John
Timpson, Mr Edward
Tomlinson, Justin
Truss, rh Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Webb, rh Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Stephen
Williamson, Gavin
Willott, rh Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, rh Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Damian Hinds
and
Mel Stride
Question accordingly negatived.
25 Mar 2015 : Column 1510
25 Mar 2015 : Column 1511
25 Mar 2015 : Column 1512
25 Mar 2015 : Column 1513
Clause 1 ordered to stand part of the Bill.
Clauses 2 to 5 ordered to stand part of the Bill.
Charge for financial year 2016
5.45 pm
Shabana Mahmood: I beg to move amendment 2, page 3, line 39, at end insert—
“(3) The Chancellor of the Exchequer shall undertake a review, within six months of the passing of this Act, of the impact of a cut of one per cent to the main rate of Corporation Tax for financial year 2016, with particular reference to—
(a) the impact on businesses with fewer than 50 employees;
(b) the impact on investment by businesses with fewer than 50 employees; and
(c) alternative tax measures, including non-domestic rates, which would have a greater benefit for businesses with fewer than 50 employees.
(4) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House.”.
The Temporary Chair (Sir Roger Gale): With this it will be convenient to discuss clause stand part.
Shabana Mahmood: The review proposed in amendment 2 would give us a better understanding of the factors that are helping small businesses to grow and those that are limiting their expansion. Most small and medium-sized businesses with a smaller number of employees tend to be run from premises that have a rateable value of below £50,000. I should say at the outset—the Minister and I have had this debate before—that Labour does not oppose the recent changes to the rate of corporation tax that have so far come into effect. That is in keeping with our party’s policy over the past 15 years. When Labour left office, Britain had the most competitive rate of corporation tax in the G7. The rate has been cut several times over the past few years. The small business rate for companies whose profits are less than £300,000 now stands at 20%, and the rate for companies earning more than that will be 21% from April—in just a few days.
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Andrew Gwynne: Is not a theme developing today: the extent to which tax cuts and spending cuts should contribute towards deficit reduction and, with regard to tax cuts, who should benefit? As with the debates on VAT and the 50p tax rate, we are arguing for greater consideration to be given to small businesses, because larger businesses have already benefited from corporation tax cuts.
Shabana Mahmood: My hon. Friend is right. This comes back to the impact of the choices being made—who is being prioritised and who is not, who is bearing the greater share of the burden and who is not. That is the material point.
We know that the Government’s impact assessment prepared for the 2014 Budget estimates that the cost to the Exchequer of the corporation tax cut would be some £400 million in 2015-16, £785 million in 2016-17 and £865 million the following year. In the 2015 Budget Red Book the estimates are revised upwards: for 2015-16 £550 million, for 2016-17 £1.045 billion, and for 2017-18 £1.1 billion. Those are not insignificant sums for a policy that affects a relatively small number of businesses. That is exactly my hon. Friend’s point.
The Government estimate that some 40,000 businesses pay the main rate of corporation tax and a further 41,000 businesses pay at the marginal relief rate. The Department for Business, Innovation and Skills estimates that the UK has some 5.2 million private sector businesses, the majority of which—3.9 million—are sole proprietorships, and 1 million have fewer than 10 employees. Clearly, if about 81,000 businesses benefit from the corporation tax cut, the opposite is also true—5.1 million businesses do not benefit in any way from that rate change.
The Government believe that a further cut in the corporation tax rate makes UK plc a more attractive place to invest and a more attractive destination for business to locate. The Minister and I have often debated the importance of the headline rate of corporation tax when that judgment call is made by businesses. It is important—a point that I have made on several occasions—but it is worth noting that on the former point it is far from clear that this is the case. We know that business investment fell from 8.2% of GDP in 2010 to 7.8% in 2013. That should not come as a big surprise.
Businesses tell us that they face a range of issues and that their decisions about where to locate and where to remain and invest are not based only on the headline rate of corporation tax. They take many other factors into account, such as infrastructure and the skills available in the labour market. Businesses often say that these factors are very important to their decision making, but they worry that under this Government those areas of policy have not gone in the right direction.
Ian Swales: This is one point on which I think we can agree. Does the hon. Lady share my worry that investment is threatened partly by the uncertainty about the UK’s place in Europe, and that evidence is growing that that is already having an impact?
Shabana Mahmood:
This might be the one time during a Finance Bill debate when the hon. Gentleman and I have been in complete agreement. The uncertainty caused by the Conservative party’s positioning over Europe
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and the Prime Minister giving in to the needs of his party, rather than the national interest, have caused a huge amount of uncertainty. In every conversation that I have had with businesses ever since the Prime Minister made his announcement, that has been the No. 1 issue that they have raised when talking about their future in our country, their future ability to invest in our country, and their future ability to employ more people in our country. It has caused a huge amount of consternation and uncertainty, and the Conservative part of the coalition has been wrong to put its party interest ahead of the national interest.
Our amendment seeks to put flesh on the bones of what is happening to corporation tax by assessing the impact on and the benefit to smaller companies with 50 or fewer employees, which make up the vast majority of private companies in our country. At a time when there are still difficult financial choices to make and a relatively limited number of ways to raise revenue and help support businesses to grow, the evidence suggests that now is the time to give much more support to smaller businesses, and to prioritise smaller businesses for some change in their circumstances, ahead of larger businesses, which have, with the support of all parts of the House, fared pretty well when it comes to cuts to the headline rate of corporation tax.
There is general agreement that small and medium-sized enterprises are the engine of growth in our country, employing more than half the private sector work force and contributing to 50% of UK GDP, but times remain tough and they face wide-ranging challenges. They struggle with high energy costs that do not seem to be getting much better despite wholesale price cuts of 20% in the past year, and with late payments and charges. According to the Government’s own figures, 44% of SMEs had a problem with late payments last year, with the average small business owed over £30,000—an astonishingly high figure.
Fiona O’Donnell: Does my hon. Friend agree that it is important that we assess what the larger corporations do with their extra income as compared with small businesses? Small businesses in my constituency are more likely to create jobs, while larger companies are more likely to give the money to their shareholders.
Shabana Mahmood: My hon. Friend makes an important and interesting point. This is not only about how we how we make choices that prioritise help for those who particularly need it—my case is that SMEs need particular help with business rates—but the impact of the choices we are making and whether they are leading to the change that we hope to see. My case—I know she will agree—is that additional support for SMEs will yield greater gains for UK plc.
This is not about pitting one type of business against another. Government Members have tried to argue that the rise in corporation tax from 20% to 21% that we advocate is an anti-business move, but every single penny of the money from that change will be spent on SMEs, and I defy them to try to imply that they are not true businesses.
Shabana Mahmood: If my hon. Friend wants to intervene, I will give way again.
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Fiona O’Donnell: I am grateful to my hon. Friend; I was enjoying her contribution so much that I was going to desist. Does she agree that in the Consumer Rights Bill the Government missed an opportunity to give small businesses consumer rights, and that is often leaving them open to abuses by larger organisations?
Shabana Mahmood: My hon. Friend is right. I am glad that she has put on record the interplay between the Consumer Rights Bill and small businesses. That was a missed opportunity. The Government should have taken the opportunities available to them during the passage of that Bill to offer a further boost to these struggling businesses—all 5.1 million of them. The vast majority of businesses in our country could have been supported.
Small businesses struggle not only with high energy costs, late payments and charges, but with access to finance. Every time we discuss these issues, the problem of access to finance comes up. I am afraid that the Government have failed to get a grip on this. Since 2010, lending has fallen by a colossal £56 billion. Even in the most recent quarter, net lending to small business fell by a further £1 billion. Research has shown that some 85% of small businesses are locked into the big five banks alone. It has also shown that most SMEs will approach only the larger banks when looking for finance, and that even then the rejection rate is about 50%.
Then there is the pressing issue of business rates. Business rates are levied on the estimated market rental cost of most non-residential properties, and currently based on 2008 rental values. In 2012-13, they raised £26.1 billion. Relief on business rates exists for low-value properties—those with a rateable value of below £6,000—which are subject to a 100% discount. Since April 2013, local authorities in England have been able to retain between a quarter and a half of the rates raised from new developments.
For many small businesses, business rates are a significant overhead that they need to factor in. More than one in 10 small businesses say that they spend more on business rates than on their rent. The only choice for many of those shops, workshops, start-ups and others that pay business rates is to pass the costs of the rates on to their customers.
6 pm
I come from a tradition of small business. My first job—I have to say that it was unpaid—was helping my parents to serve customers in the corner shop that was also our home. After school, at the weekend and in the holidays, I did the stocktake with my dad, went to the cash and carry and sorted out the VAT. I have a clear idea of the stresses and strains that people who run small businesses go through on a day-to-day basis, and what their families and young children go through as they help to try to keep things afloat.
My constituency covers Birmingham city centre, so hon. Members can imagine the number of retailers—both big and small—I hear from regularly. Many constituents often express the fear that the exponential growth of business rates might put them out of business. It is a concern for the people I meet. I sometimes hear those stories from people who set up businesses in the ’60s and ’70s. They have successfully survived the economic ups and downs since that time, only now to believe that they might finally be done in by the growth of the burden of business rates on small and medium-sized businesses.
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We should remember that the 2008 revaluation rate reflected an entirely different time of property prices. Small businesses are stuck paying rates at 2008 levels, which do not reflect the lower property values caused by the financial crisis. Research suggests that, in my west midlands region, the rateable value for retail units is 13% too high, for offices it is 19% too high, and for industrial units it is 16% too high. The latest research shows that the average business rate increase since 2010 has been £1,500.
We have had a lot of debate this afternoon about the relative value of such sums of money to different people and businesses, but I can say with complete confidence that that is a lot of money for a small business. It is easy to see why the word “critical” has been used in relation to the current business rates regime. When people are struggling to make ends meet in their business, when they are struggling to ensure that all their bills are paid, and when their status as a going concern is in doubt, £1,500 is a significant sum of money. It is a big overhead. It has made a huge difference to the ability of small and medium-sized businesses in our country to continue to grow, employ more people and succeed.
Business rates are central to the success of small businesses. That leads us to ask the Chancellor to assess and review alternative tax measures such as a change to
“non-domestic rates, which would have a greater benefit for businesses with fewer than 50 employees”.
Specifically, we believe that a cut in businesses rates for 1.5 million small businesses and then a freeze the following year would be enormously helpful, and would make a difference to the ability of businesses of that size to keep their heads above water and keep their businesses moving forward. The measure would be worth an average of £450 over two years to 1.5 million businesses, including shops, pubs and small start-ups. Some firms would benefit by up to £2,000.
As I have said, an initial cut and then a freeze in business rates in the first two years of the next Parliament would be paid for—it is another fully funded proposal for the Labour party manifesto on which we will seek election from the British people in a few weeks’ time. It will be paid for by not going ahead with the Government’s cut in corporation tax—it will happen in April; it is just a few days away—from 21% to 20% for the 80,000 largest firms in our country. We would spend all the money raised from not going ahead with that additional 1% cut in corporation tax on those 1.5 million small firms instead.
As I said in response to an earlier intervention, Government Members have mischaracterised our corporation tax proposals as anti-business. The Minister and I sometimes agree to a score draw when we debate, but his mischaracterisation of our proposal is just plain wrong. It is also unlike him to be uncharitable and unwilling to engage with the issue at hand. I hope he will pick up on that when he responds.
During a media appearance on “Daily Politics”, I put it to the Conservative party chairman that his party’s contention that our corporation tax proposals are anti-business only holds true if the Conservatives believe that 1.5 million small firms are not really businesses. He evaded that point and no Conservative Member has ever stood up to justify their characterisation of our corporation tax proposals as anti-business by saying that they believe that 1.5 million small businesses are
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not actually businesses. The Minister does not look like he is about to jump up and say, “Oh no, you’ve got us wrong.” That tells me pretty much all I need to know, which is that the Conservatives are happy to whip up anti-business fervour, but it is misguided and incorrect.
If we are elected in a few weeks’ time, every single penny of the money we raise by not going ahead with a corporation tax cut from 21% to 20% will be spent on small and medium-sized businesses. They need that help and they should be prioritised to receive it. That is the choice we will make to help small and medium-sized businesses.
We already have the lowest rate of corporation tax in Europe, but we also have the most expensive property tax. That is why it makes no sense for the Government to make it a priority to cut a tax that is already among the most competitive, but not help smaller firms with very large costs.
Seema Malhotra (Feltham and Heston) (Lab/Co-op): Does my hon. Friend agree that supporting small businesses, developing skills and apprenticeships and cutting tuition fees, which is what a Labour Government would do, would also benefit large corporations? We need broader measures that work in the interests of the whole economy.
Shabana Mahmood: My hon. Friend is absolutely right and her point takes us back to our earlier debate about the value of the headline rate of corporation tax and the policy environment that supports it.
Clearly, more needs to be done on the business rates regime. We back the announcement of a review of business rates. There are problems in the system. For example, a factory investing in a new piece of equipment will find that its bill will go up next year because property is now worth more, which could be a disincentive to invest. Although our corporate property tax system needs to be fundamentally rethought, small businesses need urgent and immediate relief. Our proposal for a cut in business rates in the first year of the next Parliament, followed by a freeze in the second year, will make a genuine difference. I hope that Government Members will today take the opportunity that they have failed to take previously, support our amendment and thereby show their support for small and medium-sized businesses.
Ian Swales: This might be my last contribution in this place, so I would like to say what a great privilege it has been to represent the people of Redcar for the past five years. I thank colleagues for making my time here such a vivid experience. I would struggle to apply the word “vivid” to the many Finance Bill Committees and finance debates I have taken part in, but overall I have had a terrific time.
I support the lower rate of corporation tax. When opponents of such things talk about lower tax rates, retaining profit is often described as some kind of evil, but what happens to that money? The characterisation is that it will probably end up in high pay for the people at the top, but companies with money have lots of choices and do lots of different things. They might pay more money to their shareholders, the vast majority of which are institutions such as public sector pension funds. They might invest the money or employ more people. They might spend the money on innovation or on building skills, and they might spend more money with SMEs, because all big companies have supply chains that involve small companies.
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Fiona O'Donnell: It is an honour to intervene in what might be the hon. Gentleman’s last speech in this place. Has he considered the impact on the rural economy, which suffered particularly harshly during the recession? The recovery there is very fragile and corporation tax cuts will not help rural communities. Does he not think that this could be the wrong cause?
Ian Swales: The economy of the country is an ecosystem. No company exists in isolation and each relates to other companies. One measure that we are not talking about this afternoon is the cut in fuel duty, which is enormously helpful to rural citizens and rural companies, so the Government have taken some steps, although that is probably not relevant to this debate.
Of course, we expect people to pay their share of corporation tax and to do it properly. I remember the head of the CBI saying towards the end of 2013 that he was confused about what Parliament wanted because there was so much noise about tax avoidance. It is not very confusing at all: we want businesses to account for their operations in the UK properly and to pay tax on the money they make in the UK. I do not think that that is complicated, but some businesses appear to think that it is.
I welcome the successive measures that the Government have taken on tax avoidance. They are not just about individual avoidance but about corporate avoidance, too. The Bill contains many provisions, but I shall mention just three: it stops contrived arrangements on carried forward tax reliefs; it restructures bank loss relief; and it puts limits on research and development tax credits to deal with certain items. Once again, the Government are looking in great detail at how companies sort out their tax and picking up anything that looks anomalous. I welcome that.
We can go a step further. Both the Chancellor and the Chief Secretary to the Treasury said last week that we are now consulting on new criminal measures to deal with companies that advise on or enable tax evasion. I am choosing my words carefully. Aggressive tax avoidance, which we often hear about, is more of a grey term, but tax evasion is very clear. If a company advises people on how to evade tax or enables that through the provision of accounts or processes, it is not just the person evading the tax who is criminal. We want those who help—I think aid and abet is the legal term—to be in the dock, too. That will further help to change the climate and the number of prosecutions necessary will be much less than the amount of activity that the provision prevents just by existing.
I welcome the consultation that has started, which is yet another step that would be helpful. We are talking about corporation tax and it is relevant to mention the diverted profits tax. As we know, a lot of corporations divert their profits or do not account properly for their operations in the UK. The diverted profits tax is a good step forward. It is quite limited in scope, but it will help to put the initial stakes in the ground for how we want to deal with things in the future.
There is more to do. I was pleased to hear the Minister talk in his opening remarks about the need to look further at internet companies, because we all know that they can position themselves anywhere. It is quite wrong to assume that the address of the server is where the business is. It is really where the customer is. In fact,
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the HMRC small print already says that, but it is quite difficult to implement. There is a lot more to be done for internet companies, not least because they are competing against bricks-and-mortar companies, particularly the small businesses that the shadow Minister has been very vocal on and quick to talk about. That is another step that needs to be taken.
6.15 pm
The shadow Minister was absolutely right that, when we ask businesses about their issues, they more often talk about business rates than about corporation tax. That applies not just to small and medium-sized businesses; the steel works in my constituency pays £10 million a year in business rates, which is five times the amount it would pay if it was based in the Netherlands. How do we know that? Because the same company ran a steel works in my constituency and one in the Netherlands for a long time, so they know the figures.
A huge, root-and-branch reform is required for business rates, partly to help bricks-and-mortar companies to compete against internet companies and partly to recognise the change in property values. The business rates of some shops on my local high street in Redcar are five times the amount that the landlord is seeking, so the whole decision about whether to take such premises is about business rates, not about rent.
John Robertson (Glasgow North West) (Lab): Does the hon. Gentleman think it right for a Government to take money from a city where a lot is paid in rates—with people from outside the area coming into it—and then spread it around the rest of the country?
Ian Swales: Another thing that the Government have done is to move towards localising business rates again. Certainly my part of the world, which had huge industrial sites such as the one I have mentioned, was pretty nonplussed when all that money was collected by a Government in the 1980s, taken to the centre and then doled out in different proportions. We need to move towards more localisation, not least to incentivise councils to drive economic development. I would argue that that has not been happening sufficiently in some parts of the country, and I live in one of them.
I understand the hon. Gentleman’s point, and there is also the issue about where people live, where they work and what services they use. The south-west has a particular issue when its population doubles every summer, because people may not make a contribution through taxes paid directly in the south-west, but they are using services there. There is another whole argument to be had about the location of rates versus how they are collected.
I will not detain the Committee long. The Government are on the right track with corporation tax. Let us put it this way: there is plenty of work for the next Parliament to do, and I shall watch with interest from afar.
Sheila Gilmore:
It is a great pleasure to follow the hon. Member for Redcar (Ian Swales), because we have served together on a number of Finance Bill Committees during the past five years. The debates on the details of a Finance Bill in Public Bill Committee are often better than those on the parts of the Bill taken on the Floor of the House. The theory is that the debates on the more important and bigger parts of the Bill are taken in the
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Chamber and then the Bill goes upstairs, but the Public Bill Committee often allows us to have quite fruitful debates on many of the issues.
One thing that has been very clear during this Government—perhaps this has always been the case, but it seems to be growing—is that all the political parties are falling over themselves to talk about the importance of small and medium-sized businesses, and we are all the friends of small business. Small businesses are probably very pleased to hear politicians talk so much about them, but then the issue becomes one of whether it is talk or action. It is very easy to praise small businesses, but such businesses, especially new ones, sometimes feel that the system is set against them.
One new business in my constituency involved two young women who set up a fitness studio. They went into premises on what was effectively a redevelopment area after our old hospital had been relocated. Largely because of the financial crash and the recession, the whole redevelopment took longer than expected, so the population to support new businesses had not arrived at the expected rate. Although they got a rent holiday for the first 18 months from the developer who was renting them their premises, which was welcome, they were struggling with business rates. Oddly, even though my local council said that it wanted to encourage economic development and had particularly encouraged the redevelopment of that site, it was not particularly forthcoming with help for a new business.
Those young women were not in the region of having to worry about corporation tax—that was not where their business was. They had to worry about the rates. It was touch and go, but I was pleased to see recently that they are still there and have managed to overcome their initial difficulties. Some of the other redevelopment is beginning to happen, so I hope that they will continue to be successful. However, we do not always join the dots either locally or nationally. Things such as rates are essential for a lot of small businesses, and we have to support such businesses to the greatest extent that we can.
I have some sympathy with the hon. Gentleman in his points about business rates being retained locally. We have to work through the conflict between that and redistribution to ensure that different areas of the country are assisted in developing. When I was on the council in Edinburgh, we often raised the issue. It was and still is an expanding city, and it generates a lot of business. We have big events that generate worldwide attention, and a lot of businesses feel that they bear the cost of all that without necessarily seeing the rates coming back to the city. It is all very well to say that we get rates in because we have events such as the festival and big tourist attractions, but sometimes it feels that the rates are not coming back. I understand the tension between that and looking at the region or country as a whole and trying to build wealth. It is not easy, but we have to incentivise businesses as far as possible to feel that keeping on growing is to their advantage as well as to wider advantage.
Politicians and political parties must not just pay lip service to the importance of small business. We must do specific things to assist, and that is what amendment 2, moved by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood), is intended to do.
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The hon. Member for Redcar probably has a different view of economics from mine, but he appeared to be of the view that if a company is making a profit, it will be ploughing it back in the right directions. I do not think that is necessarily always the case. Big businesses in particular should make a good contribution to our society, and we have to ensure that they do. I urge the House to support the amendment.
Fiona O’Donnell: It is a pleasure to see you back in the Chair, Mr Hood.
I wish to talk particularly about the rural economy and the opportunities that the Government might be missing, given the importance of small and medium-sized enterprises to rural economies. Given that this may be my last contribution in this Parliament, I also want to reflect briefly on the political situation in Scotland.
We have had more than one eclipse in Scotland in recent weeks. It seems to be a daily occurrence that Alex Salmond’s moon blocks out Nicola Sturgeon’s sun. At one time, the current leader of the Scottish National party—people might easily be confused as to who that is these days, but I remind them that it is Nicola Sturgeon—did a U-turn on the SNP’s proposal in its White Paper “Scotland’s Future” to reduce corporation tax by 3%. I welcome that, because I do not think it would have been a progressive move or have provided the right environment for the stability, job creation, employment rights and pay and conditions that we want in a fair, modern and successful Scotland. The Minister may wish to reflect on that and the debate that went on around the referendum, because the measure was not popular with working people or businesses—certainly not with SMEs that would not have seen any benefit.
The Financial Secretary said that he does not want to do anything to risk the recovery, but I urge him to think about what more his Government can do to aid recovery in rural areas. Most of the conversation and discourse I have heard from Government Members—for example in the Enterprise and Regulatory Reform Bill Committee—was about employment rights. The Minister seemed to think that the way to help small businesses was to erode workers’ rights, but I think that has the opposite effect because it can be more difficult for them to recruit staff.
Much as I admire the beautiful city of Edinburgh, our capital, I am concerned that so many people from my rural constituency commute there for work. At a time when the population of East Lothian is set to grow at the fastest rate of anywhere in Scotland, with 10,000 more homes, we need jobs in our own communities. We must look at the impact that the Budget will have on SMEs with 50 or more employees, and we are asking the Government to pause and reflect on what that impact might be.
We are losing many skills in local, rural and remote economies, especially in the construction industry—that relates to the point raised by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) about difficulties with lending. Small construction firms are finding it very difficult to access lending, which means that they are disadvantaged when it comes to procurement contracts. If they take on small housing developments in the community, the people working on the construction sites will often be local young men and women who are benefiting from an apprenticeship and learning skills, and they will be spending money in that local community.
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The healthy cycle of the rural economy is thus given new impetus and energy. Will the Minister at least reflect on that?
When small businesses fail, it does not make the headlines in the same way as when a large manufacturing company announces job losses. The news about Longannet, which is across the water from my constituency and where many of my constituents are employed, is deeply concerning. When a small business fails, it does not make the headlines in the same way, but for the rural economy and community it can be devastating. The village where I live in East Lothian, Pencaitland, has two village shops and a pub, and the thought that any of those could fold at any time would have a devastating impact on our community. At that point, community cohesion goes and the place becomes just a dormitory, somewhere people go to lay down their head at night, rather than the vibrant community we want.
We have heard much about devolution during this Parliament. When it comes to how we support and drive growth in the SME sector, we need to trust people at local authority and community level to make decisions about how businesses are supported, how they grow and create jobs and wealth, and how they provide sustainability. We must trust the people who know the area and the skill requirements to make those decisions. Talking about who gets to vote on what Bill does not have the same impact; it does not empower. It may take power away from individual MPs, but it does not empower communities, which is what devolution should be about.
I ask the Financial Secretary to consider the intervention I made on my hon. Friend the Member for Birmingham, Ladywood who spoke from the Opposition Front Bench. What evidence do the Government have that cutting corporation tax will create more jobs than supporting SMEs, particularly in the rural context?
I am very grateful to Members who have been sitting patiently and silently for allowing me to make this pitch on behalf of the rural economy. I look forward to hearing the Minister’s comments.
6.30 pm
Andrew Gwynne: It is always a pleasure to serve under your chairmanship, Mr Hood. It is also a pleasure to follow my hon. Friend the Member for East Lothian (Fiona O'Donnell), who I am almost certain will be back in the next Parliament to pursue these cases vigorously with the next Labour Government. I was tempted to speak by the Minister’s generosity in likening me to a future statesman. I appreciate that I have some way to go, although I have not handed him the Red Book across the Table, as I did to his Liberal Democrat counterpart on Thursday.
The debates we have had today really come down to one issue: balance and priorities. It is about the share we expect to take from tax or the share we expect to take from spending cuts to deal with deficit reduction in the next Parliament. As I said in an intervention on my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood), the issues are the same whether it is the VAT debate, the 50p debate or the debate we are now having on business rates and corporation tax.
25 Mar 2015 : Column 1524
John Robertson: The best way to get the tax contribution is to give people real jobs with real pay; then we will get the money in.
Andrew Gwynne: My hon. Friend is absolutely right, and that goes to the nub of the issue today. As my hon. Friend the Member for Birmingham, Ladywood eloquently set out from the Opposition Front Bench, the numbers are clear. In respect of corporation tax, we are talking about a very small number of large businesses operating across the country. The benefits of that tax cut will not necessarily be felt throughout the wider economy. I would argue—I know my hon. Friend makes the same argument—that targeting the same amount of money on a business rate cut for the first year and a freeze for the second year is much smarter, because it would affect 5.1 million small and medium-sized businesses and others. That is the right thing to do for the struggling high street.
I therefore urge the Minister to consider very seriously what the Labour Front-Bench team is asking for. We are not asking him to implement Labour party policy, as much as I would like him to, and we are not asking him to freeze business rates or to cut them. We are asking him to conduct a review so that we can have a proper debate on whether his approach of cutting corporation tax is the right one, or whether, as we argue and believe, cutting and then freezing business rates is a much smarter way of using the same amount of money, as it would create a bigger boost for the economies of towns, villages and cities across the country.
I want to add one note of caution. I am very supportive of the devolution agenda in England. As a Greater Manchester MP, Members would expect me to say that I very much support the efforts by the Greater Manchester combined authority and the 10 local authorities—eight are Labour, one is Conservative and one is Liberal Democrat controlled—and recognise the benefits of the conurbation working together. The Government’s announcement included the retention of additional business rates from growth, but I urge caution. I support the proposal, but we have to approach it on a conurbation, city region and county region basis. Growth areas in cities and counties are often located in particular geographical areas, whereas needs are spread across whole areas. With that, I urge the Minister to accept Labour’s amendment, which requires nothing more than a report that I think would back our plans 100%.
Mr Gauke: First, I pay tribute to my hon. Friend the Member for Redcar (Ian Swales), who spoke in this debate as he has done in so many Finance Bill debates over the past five years. He has always provided a voice of calmness and sanity. I have not agreed with everything he has said, but he has mostly made helpful contributions, and thoughtfulness is a consistent characteristic of those contributions.
The corporation tax rate is set in legislation a year in advance on an annual basis. Clause 6 sets the corporation tax rate and charge for the financial year beginning on 1 April 2016. The House will be aware that in 2013 legislation was passed cutting the main rate of corporation tax from 21% to 20% for the 2015 financial year. The cut will take effect in seven days and give the UK by far the lowest rate in the G7 and the joint lowest rate in the G20. The clause confirms that the rate will remain at 20% in 2016.
25 Mar 2015 : Column 1525
The Government have made it clear that we want a business tax regime that is competitive and fair, and since 2010 we have made clear strides towards that goal. The main rate of corporation tax was 28%. We have cut it by almost a third to make the UK more competitive and to support growth and investment. At the same time, we have taken significant measures to clamp down on tax avoidance, and on Second Reading we debated the diverted profits tax introduced by the Bill.
Low corporation taxes enable businesses to increase investment, take on new staff, increase wages or reduce prices. Overall, the corporation tax cuts we have delivered since 2010 will save businesses £10 billion a year from 2016. To give Members a sense of scale, that is the equivalent of giving businesses enough money to hire 270,000 new employees. Oxford university’s centre for business taxation estimates that our reduction in the corporate tax burden will increase business investment by £11 billion; and as well as supporting businesses already operating in the UK, lower rates of corporation tax make the UK more attractive to international businesses. Last year, UK Trade & Investment reported a record number of inward investment projects that led to the creation of 66,000 new jobs and safeguarded 45,000 more.
The corporation tax cuts and other reforms, such as the introduction of the patent box, have completely changed perceptions of the UK tax regime. Five years ago, businesses were leaving the UK because of our tax regime. That regime has now become an asset that attracts firms to the UK. In surveys, the UK is now regularly cited as one of the most competitive regimes in the world. The clause embeds the message that the UK is open for business by affirming that the UK rate will remain at the record low of 20% in 2016.
The Opposition amendment proposes a review of the impact of a 1% cut to the main rate of corporation tax for the financial year 2016. A great deal is already known about the impact of corporation tax policy. We know that lower rates encourage growth and investment, and that stable and simple taxes give businesses confidence to invest and expand. The clause refers only to a single rate because we have already legislated to unify the main rate and small profits rate of corporation tax and to scrap the complex marginal relief system for all companies, except those with ring-fenced profits.
These changes will take effect next week and give the UK for the first time a single headline rate of corporation tax and provide administrative savings for a huge number of businesses, particularly the nearly 50,000 companies that pay the marginal rate of corporation tax each year. The move was recommended by the Office of Tax Simplification, and I would like to take the opportunity to pay tribute to Michael Jack, John Whiting and the team for all the work they have done since we introduced the OTS at the start of this Parliament. The Institute for Fiscal Studies has also been supportive of our reforms. In a recent report, it said:
“The simplification of moving to a single rate of corporation tax…is a real achievement of the coalition government’s tax policy, and it is one that should not be reversed.”
The evidence on corporation tax is clear: low rates and a simple system support business and support growth. In our view, the proposed review would provide little benefit, so we are not minded to accept the amendment.
25 Mar 2015 : Column 1526
As far as business rates are concerned, the Government recognise that they represent a fixed cost for businesses. That is why during this Parliament we have continued to double the small business rate relief schemes, supporting 575,000 businesses, of which 385,000 pay no rates at all. We have capped the inflation-linked increase in the business rates multiplier at 2% for two years, and we have provided a £1,000 retail discount this year, rising to £1,500 next year for small shops, pubs, cafés and restaurants, supporting the high street.
Labour said it would cut business rates by 1% for lower-value properties in 2015-16. Under its plan, the smallest single properties would pay more. A property with a rateable value of £5,000 saves £1,165 under this Government compared with the Opposition’s proposals. The high street would also lose out. A shop with a rateable value of £30,000 saves £1,080 under this Government when compared with the original proposals. We have published terms of reference for a wide-ranging ambitious review of Budget business rates to report back to the Government. That is, of course, on top of what we have done on fuel duty, which helps small businesses, and the employment allowance, which does the same.
In conclusion, cutting corporation tax has been a central part of our economic strategy—a strategy that is working. In 2014, growth in the UK outstripped that of every other G7 country. Employment is at record levels, business investment is growing rapidly, and this clause ensures that the rate of corporation tax for 2016-17 will remain at 20%—an extremely competitive rate and a foundation of tax system designed to support growth and investment. Reversing the progress we have made would be a big mistake and send a terrible signal to businesses around the world. That is why I believe the clause should stand part of the Bill.
Question put, That the amendment be made.
The Committee divided:
Ayes 229, Noes 306.
Division No. 186]
[
6.42 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Kevin
Bayley, Sir Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
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
Fitzpatrick, Jim
Flello, Robert
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Lewis, Mr Ivan
Llwyd, rh Mr Elfyn
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, rh Fiona
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McDonnell, John
McFadden, rh Mr Pat
McGovern, Jim
McGuire, rh Dame Anne
McInnes, Liz
McKechin, Ann
McKenzie, Mr Iain
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Mitchell, Austin
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Robertson, John
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Tom Blenkinsop
and
Phil Wilson
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Sir David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, rh Norman
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, rh Annette
Browne, Mr Jeremy
Bruce, Fiona
Buckland, Mr Robert
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Cash, Sir William
Chishti, Rehman
Chope, Mr Christopher
Clark, rh Greg
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
Dinenage, Caroline
Djanogly, Mr Jonathan
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Field, rh Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
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
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Heald, Sir Oliver
Heath, rh Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, rh Charles
Herbert, rh Nick
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
James, Margot
Javid, rh Sajid
Jenkin, Mr Bernard
Jenrick, Robert
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Leadsom, Andrea
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Loughton, Tim
Luff, Sir Peter
Lumley, Karen
Macleod, Mary
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, rh Sir Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Sir Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, rh Mark
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Sir Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, rh John
Timpson, Mr Edward
Tomlinson, Justin
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Webb, rh Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Stephen
Williamson, Gavin
Willott, rh Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, rh Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Damian Hinds
and
Mel Stride
Question accordingly negatived.
25 Mar 2015 : Column 1527
25 Mar 2015 : Column 1528
25 Mar 2015 : Column 1529
25 Mar 2015 : Column 1530
Caroline Lucas (Brighton, Pavilion) (Green): On a point of order, Mr Hood. Can we look again at the way in which the business of this House is organised, because it brings our procedures into real disrepute when we have not had the chance even to look at a set of important amendments, much less to debate them. [Interruption.]
The Temporary Chair (Mr Jim Hood) Order. I ask Members for order to allow the hon. Lady to make her point of order.
Caroline Lucas: I was simply making the case that our procedures are brought into disrepute when we have not had the chance even to debate a huge number of amendments, much less to put them to the vote, including an important amendment that would have closed a tax-dodging loophole for private equity firms. Can we look again at the way in which the business of this House is organised, Mr Hood?
The Temporary Chair: I thank the hon. Lady for her point of order. She may want to take her point up with the Procedure Committee. Unfortunately, it is not a matter for me.
6.57 pm
Six hours having elapsed since the commencement of proceedings on the Finance (No. 2) Bill, the proceedings were interrupted (Order, 24 March).
The Chair put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D and Order, 24 March).
Clauses 6 to 65 and 68 to 127 ordered to stand part of the Bill.
25 Mar 2015 : Column 1531
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Question put forthwith (Order, 24 March), That the Bill be now read the Third time.
The House divided:
Ayes 307, Noes 226.
Division No. 187]
[
6.57 pm
AYES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Alexander, rh Danny
Amess, Sir David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, rh Norman
Baker, Steve
Baldry, rh Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Blackman, Bob
Blackwood, Nicola
Blunt, Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, rh Annette
Browne, Mr Jeremy
Bruce, Fiona
Buckland, Mr Robert
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Byles, Dan
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Cash, Sir William
Chishti, Rehman
Chope, Mr Christopher
Clark, rh Greg
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, rh Stephen
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
Dinenage, Caroline
Djanogly, Mr Jonathan
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Sir Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evans, Mr Nigel
Evennett, rh Mr David
Fabricant, Michael
Fallon, rh Michael
Field, rh Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, rh Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
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
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, rh Matthew
Hands, rh Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Heald, Sir Oliver
Heath, rh Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, rh Charles
Herbert, rh Nick
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Hopkins, Kris
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
James, Margot
Javid, rh Sajid
Jenkin, Mr Bernard
Jenrick, Robert
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kelly, Chris
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Leadsom, Andrea
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, rh Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lopresti, Jack
Loughton, Tim
Luff, Sir Peter
Lumley, Karen
Macleod, Mary
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, rh Esther
Menzies, Mark
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, rh Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, rh Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, rh Sir Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, rh Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Sir Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, rh Mark
Simpson, rh Mr Keith
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Sir Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Iain
Stewart, Rory
Streeter, Mr Gary
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Swire, rh Mr Hugo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, rh John
Timpson, Mr Edward
Tomlinson, Justin
Truss, rh Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Watkinson, Dame Angela
Weatherley, Mike
Webb, rh Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Stephen
Williamson, Gavin
Willott, rh Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, rh Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Ayes:
Damian Hinds
and
Mel Stride
NOES
Abbott, Ms Diane
Abrahams, Debbie
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Kevin
Bayley, Sir Hugh
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, rh Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coaker, Vernon
Coffey, Ann
Cooper, Rosie
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
De Piero, Gloria
Denham, rh Mr John
Docherty, Thomas
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
Fitzpatrick, Jim
Flello, Robert
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glindon, Mrs Mary
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Kane, Mike
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Lewis, Mr Ivan
Llwyd, rh Mr Elfyn
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, rh Fiona
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McCrea, Dr William
McDonagh, Siobhain
McDonald, Andy
McDonnell, John
McFadden, rh Mr Pat
McGovern, Jim
McGuire, rh Dame Anne
McInnes, Liz
McKechin, Ann
McKenzie, Mr Iain
Meale, Sir Alan
Mearns, Ian
Miller, Andrew
Mitchell, Austin
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Munn, Meg
Murphy, rh Mr Jim
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Robertson, John
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Wood, Mike
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Noes:
Phil Wilson
and
Tom Blenkinsop
Question accordingly agreed to.
25 Mar 2015 : Column 1532
25 Mar 2015 : Column 1533
25 Mar 2015 : Column 1534
Bill read the Third time and passed.
25 Mar 2015 : Column 1535
Ms Angela Eagle (Wallasey) (Lab): On a point of order, Mr Deputy Speaker. It has just come to my attention that the Government have tabled a motion for debate on the final day of this Parliament, with no notice whatever to myself as shadow Leader of the House. The motion proposes changes to the way in which the Speaker is elected—procedural matters in the House—with no consultation with Her Majesty’s loyal Opposition and no consultation with the Chair of the Procedure Committee, for debate in only one hour tomorrow. Is this in order? Do you believe that the procedures of this House should be bandied around by the Government in this way, and that we should have surprises delivered to us in this manner on the last day of the first ever fixed-term Parliament? The motion attempts to influence the results of the first thing that will happen in the next Parliament, with no chance for large numbers of Members who had no knowledge that this was happening to participate.
Mr Deputy Speaker (Mr Lindsay Hoyle): It is a business matter for the Government, as the shadow Leader of the House is well aware. Rightly or wrongly—whichever the House may decide—a business motion was agreed to yesterday, as I understand it, and as we know, business of the House is decided by the Government, not by the Chair, so it is not a matter for the Chair.
Kevin Brennan (Cardiff West) (Lab): Further to that point of order, Mr Deputy Speaker. Usually I am an assiduous attender, as you know, of business questions, but I was unable to attend last week. Was this announced then? If it was not, can you tell us when you and Mr Speaker were informed that the motion was to be tabled?
Mr Deputy Speaker: It was a business motion that was agreed yesterday, but not the terminology, I presume. Mr Speaker is not in the Chair so I do not know when he was told. I was told about five minutes ago when I came into the Chair. [Interruption.] No, that is correct. There is a business motion. [Interruption.] Mr Doughty, we are trying to deal with this. We have many other points of order on that matter.
Mr John Spellar (Warley) (Lab): Further to that point of order, Mr Deputy Speaker. We have had some slightly strange events on the Budget, with Ministers speaking from the Government Dispatch Box—from the Treasury Bench—but speaking for their parties. My understanding is that the Government speak from there—the Government Benches. May we be clear? Is the motion a Government motion, which has therefore been signed off by the coalition partners, or is it a motion from the Conservative party?