What steps his Department is taking to support defence jobs across the UK.
What steps his Department is taking to support defence jobs across the UK.
Good afternoon, Mr Speaker. Since our last questions, I have been delighted to welcome to the Government Front Bench my hon. Friend the Member for Aldershot (Leo Docherty) as our Veterans Minister and my hon. Friend the Member for Havant (Alan Mak) as our Defence Whip. I also welcome the hon. Members for Portsmouth South (Stephen Morgan) and for Islwyn (Chris Evans) to their new Front-Bench posts. I look forward to debating with them over the next few months—and years, hopefully The Ministry of Defence spent £20.3 billion with UK industry and commerce in 2019-20, safeguarding and supporting jobs throughout the United Kingdom. Our defence and security industrial strategy sets out several initiatives to support a thriving UK defence sector, including implementing the social value model within defence procurement.
The Boxer mechanised infantry vehicle programme is creating and securing jobs in my Colne Valley constituency. Will the Secretary of State please make sure that companies across Yorkshire continue to have the opportunity to join the UK defence supply chains to help to level up regional economies?
Yes, I can tell my hon. Friend that it is incredibly important that we can do that. Boxer, for example, will play a crucial part in the Army’s heavy brigade combat teams. We have been clear that we expect over 60% of the contract’s value to be delivered in the UK with suppliers such as the one in my hon. Friend’s constituency. As part of our defence and security industrial strategy, we will pilot a revised industrial participation policy to promote UK supply chain opportunities to companies bidding for MOD contracts.
I am particularly interested in the smaller companies getting in on the ground. In line with the Government’s commitment both to levelling up and to strengthening our sovereign capabilities, will my right hon. Friend assure me that innovative UK companies such as Kromek in Sedgefield will be fully considered in the next radiation detection equipment procurement?
Yes, my hon. Friend makes an important point about small and medium-sized companies and their role in the supply chain; I see it as part of my job as Defence Secretary sometimes to protect them from the big primes and make sure that their voice is heard. As for the competition that he mentions, I obviously cannot pre-empt the results of the contract, but all bids will be properly considered. I know Kromek by reputation and congratulate my hon. Friend on being a champion of it.
I call the shadow Secretary of State.
The Prime Minister said back in November that the current four-year funding for defence would create “10,000 jobs every year”. Six months on, how many new defence jobs have been created?
I went recently to Telford to launch the Challenger 3 contract, which will grow to a significant number of jobs—nearly 200 to 300 from that alone. The Boxer coming on stream, which my hon. Friend the Member for Colne Valley (Jason McCartney) mentioned, will produce up to another 400 to 600 jobs. The Type 31 contract up in Rosyth is now moving apace, with the buildings now in place and the steel-cutting due; that will also unlock, and is delivering, hundreds of new jobs. Across the board, as we have said, there will be thousands of new jobs because of the increase in funding that we have received The right hon. Member for Wentworth and Dearne (John Healey) often comes to the House to say that we are cutting defence and tries to focus on the resource departmental expenditure limit, even though that itself is not a cut. With the capital departmental expenditure limit, the significant increase for capital spending will go on our equipment programme: vast amounts will be made in the United Kingdom, which means more jobs in their thousands.
The Secretary of State will need a better answer than that, because it is down to him to deliver the Prime Minister’s “10,000 jobs every year”, yet since he has been Defence Secretary, the black hole in the budget has grown to £17 billion, only three of the MOD’s 30 major military projects are on time and on budget, and he has agreed to a real funding cut in revenue spending over the next four years. What is he doing to fix what has been the long-running Achilles heel of the MOD: delivery, delivery, delivery?
The £17 billion that the right hon. Member refers to is the sum that was identified by the National Audit Office before the defence settlement. So what have I done? I have got a £24 billion defence settlement over the next four years. I am sure the right hon. Member, having previously worked in the Treasury, can do the maths. He will see that that is the first thing I have done, and it is something I do not think anyone else has achieved since the cold war. It is the highest settlement since the cold war. But he is right to highlight the concerns on major projects. Major projects are always the Achilles heel for the Ministry of Defence, and it is important that we keep an eye on this in full and drive through, ensuring that we deliver efficiencies, but also ensuring that we cross every t and dot every i. The reason that he knows they are the Achilles heel is that in 2010 the NAO report identified that his Government at the time also had a major black hole in the equipment programme, which grew at one stage to £3 billion in a single year.
What steps he is taking to improve climate security.
Climate change worsens poverty and economic stability, and poses a significant risk to global security. In our climate change and sustainability strategic approach, which I launched in March, we have laid out the extensive steps that we are taking to mitigate climate change and to address its implications.
I thank the Minister for that answer. Refugee organisations say that 30 million new displacements last year were caused by floods, storms and wildfires. Acts of nature such as these triggered three times more displacements than violent conflicts did last year, and the number of those internally displaced worldwide hit the highest levels on record, yet this Government have chosen to slash foreign aid to some of the world’s most vulnerable to climate-based threats, making a complete mockery of the United Kingdom’s leadership role ahead of COP26. So what assessment has the Ministry of Defence made of the cuts to foreign aid, and how does it plan to address the rising threat of climate change to our own national security in the face of increasing instability across the world?
I can reassure the hon. Gentleman that the threat from climate change is indeed one of the major priorities of my colleagues in the Foreign, Development and Commonwealth Office. It is also a priority of ours. As I have said, the document we published back in March sets out how we are planning for the increase in the HADR, or humanitarian assistance and disaster relief, and MACA, or military assistance to civilian authorities, roles that the armed forces are going to have to take on. I know we are all proud to see the work of our armed forces as they rise to those challenges and help some of the poorest people in the world to meet the challenges of their daily lives. We will continue to support them in doing so.
I, too, welcome the new Minister for Defence People and Veterans, the hon. Member for Aldershot (Leo Docherty), to his place on the Government Front Bench. I also thank the outgoing Minister, the hon. Member for Plymouth, Moor View (Johnny Mercer), for all the work he did at the veterans office Climate change is altering the threat picture across the globe, and not for the better. It is happening in our own back yard and on our own doorstep in the high north and in the Arctic, where we have seen a build-up of military tension because of Russia’s actions. Russia has, of course, just taken over the rotating chairmanship of the Arctic Council. Can the Minister outline to the House exactly what the Ministry of Defence is doing with regard to the threat picture in the Arctic and the high north, and explain to the House why that area of the world should get less attention than the Indo-Pacific tilt?
I thank the hon. Gentleman for his question, and I know that, being the person he is, he will have read the Command Paper in depth. He will have seen the copious references to the high north strategy and to our joint expeditionary force partners—it is good to see Iceland coming on board with that. We are acutely aware of the need to have a forward understanding and presence and to work with our allies in the high north. The First Sea Lord and ourselves have mentioned on many occasions the impact of changing ice presence in the far north and how we need to rise to that threat. We are always alive to these threats and we are always working to ensure that we are prepared for them, but I would also gently remind the hon. Gentleman that, ultimately, our defence is a combination of all the assets we have, including our commitment to a strategic nuclear deterrent.
The Minister rightly mentions the defence Command Paper, which comes on the back of the integrated review. As my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Steven Bonnar) has just outlined, there is a lack of joined-up Government thinking on that. If the Government were serious about the impact that climate change is having on the threat picture, the foreign aid budget would not be getting cut and, yes, greater attention would be paid to the high north and the Arctic, so can the Minister just answer a simple question? What does the Ministry of Defence specifically want to get out of COP26?
COP26 is an entire-Government piece of work, and we are working with all nations around the Earth to get a whole load of deliverables out of COP26, as the hon. Gentleman well knows. Our commitment in terms of defence to meeting and addressing the needs of climate change was, I am pleased to say, recognised on President Biden’s Earth Day earlier this year, which my right hon. Friend addressed, where the US Defence Secretary referred to the UK as having “raised the bar” in terms of Defence’s work in this country on climate change. We are alert to the need, and I would recommend to the hon. Gentleman the document we published earlier this year on our climate change and sustainability strategic approach. He will find a lot of his thinking in that document.
What his timetable is for the withdrawal of UK forces from Afghanistan.
NATO Foreign and Defence Ministers confirmed on 14 April that an orderly and co-ordinated withdrawal of NATO forces would start on 1 May, and we have met that timeline. The withdrawal of Resolute Support Mission forces from Afghanistan will be complete within a few months. The UK’s Operation Toral forms part of the RSM and, as such, we will draw it down in line with what our NATO allies and partners are doing.
After the withdrawal, what assistance will we afford the Afghan security forces?
The Afghan forces have been fully responsible for the security of Afghanistan since 2015, and I want to place on record my admiration for their remarkable resilience and courage in meeting the challenges they face. The UK has an enduring commitment to Afghanistan. We plan to continue to provide financial sustainment support until at least 2024. It is in all our interests that the state of Afghanistan transitions through the peace deal as the state we envisage it to be, and I will explore all options, whether from inside the country or outside it, to continue to support those forces one way or the other.
I call the Chair of the Defence Committee, Tobias Ellwood.
Thank you very much, Mr Speaker. Let me begin by wishing the Queen Elizabeth aircraft carrier battle group all the very best on her maiden voyage. Operation Telic, the 2003 invasion of Iraq, cost the taxpayer £8 billion and the lives of 179 UK military personnel, and there was a full independent inquiry. Operation Herrick, the invasion of Afghanistan, cost the taxpayer £28 billion and resulted in some 450 UK military deaths, but to date the Government have not announced an inquiry. We now withdraw from Afghanistan just as the Taliban are on the ascent and another civil war looms. That cannot be the exit strategy that we ever envisaged, and we must understand what went wrong. For example, why did Donald Rumsfeld exclude the Taliban from the first peace talks in December 2001? If we do not understand and learn from the strategic errors of the past, this House will be hesitant to vote in favour of deploying our hard power in the future. Please, let us have that inquiry.
I hear my right hon. Friend’s requests—I know he has recently written a letter to the Prime Minister making that request. First, there is a stark difference between Iraq and Afghanistan; the article 5 triggering of that deployment and the causes behind it were not in doubt. Secondly, as our former Speaker would have said, part of my right hon. Friend’s salvation is in his own hands: as Chairman of the Select Committee on Defence, he obviously has significant capabilities and powers to bring forward an inquiry, if that is what he wishes. At present, the Government are reflecting on his letter and do not think there is a need for the same type of inquiry that we saw into what happened in Iraq. Of course, we do learn lessons; there have been a considerable amount of internal looks by military professionals at what is going on On Donald Rumsfeld and the United States Administration, that is a matter for the US Administration and not for me. I am not able to ask what lay behind their motives as to decisions they have made over the past 20 years and I cannot therefore venture into that space.
I call the Chair of the Intelligence and Security Committee, Dr Julian Lewis.
I hope we are not so naive as to believe that the Taliban will stick to any peace deal unless they recognise adverse consequences for breaking it. So will the Government take steps, in conjunction with the US and other NATO allies, to find a new strategy, possibly based on a strategic base in the region, to deter the Taliban and protect Afghanistan from a total Islamist takeover after our land forces have totally been withdrawn?
My right hon. Friend makes a very pertinent point and a very real suggestion. The US, in that peace agreement, chose not to make it conditions-based at the end. That was a regret for most of the NATO allies, as we thought that that was important. However, a lot of people have lost their lives in that conflict and sacrificed a lot, and I do not intend that to be for nothing. As I said, we will explore all options that we can to make sure that we protect not only Britain’s interests and citizens, but her allies We are also protected by international law in doing what we need to do to defend ourselves if a threat emanates from that country or any other around the globe, and we have the capabilities to do that. Allies will continue to talk, and our support for and funding to the Afghan Government will continue to at least 2024. The one thing I would say to the Taliban is that they will remember what happened the last time they played host to al-Qaeda.
What steps his Department is taking to promote British values and capabilities around the globe.
What steps his Department is taking to promote British values and capabilities around the globe.
As we shape the open international order of the future and promote our interests globally, we are investing an additional £24 billion in active and modernised armed forces. That will not only place defence at the heart of global Britain’s protection but project the UK as a force for good in the world—from our work to build democratic institutions to the building of capacity in our partners’ armed forces and the delivery of an expanded defence diplomatic network, alongside historic investment in research and development. Perhaps nothing better embodies our ambition than the deployment this weekend of the carrier strike group, which will be working on all those things over the next six months.
I welcome the maiden voyage of the UK carrier strike group, which set off this weekend. It is NATO’s first fifth-generation carrier strike capability and will join a number of NATO exercises along the route. Will the Minister outline how that demonstrates the Prime Minister’s commitment to Britain remaining NATO’s key European ally? How will it advance our collective security in the Euro-Atlantic region?
In the past few weeks the carrier strike group has participated in Exercise Strike Warrior and in the next few weeks it will participate in Exercise Steadfast Defender, but that is not the totality of the Royal Navy effort in the Euro-Atlantic in the next few weeks. Indeed, the littoral response group north is sailing for the Baltic, where she will participate over the next few weeks in Baltops. This is not a flash in the pan: the Royal Navy and the rest of our armed forces are committed all year round to showing that Euro-Atlantic security is the absolute bedrock of the United Kingdom’s security.
I welcome what the Minister has said and wish well all the sailors, soldiers and air personnel who have set sail as part of the carrier strike group’s maiden deployment. Does my hon. Friend agree that the deployment, which will visit more than 40 countries and undertake more than 70 engagements, will deliver our ambition to increase our interoperability and burden-sharing with our allies around the world?
Over the weekend my right hon. Friends the Prime Minister and the Secretary of State for Defence visited the carrier strike group, as did Her Majesty the Queen on Saturday, and I know that the carrier strike group personnel will be further delighted by the good wishes sent by so many in the House today. Over the next six months they will fly the nation’s flag in all corners of the world and I am sure they will do so with great style and skill. My right hon. Friend is absolutely right to highlight the deployment as the embodiment of so much of what is in the defence Command Paper. Over the next few years we all look forward to this being not the first but the latest in a sequence of events of similar importance that project global Britain around the world.
I welcome shadow Minister Chris Evans to the Front Bench.
Thank you, Mr Speaker Cuts to armed forces numbers will affect Britain’s influence around the globe. The former Defence Minister, the hon. Member for Plymouth, Moor View (Johnny Mercer), appeared before the Defence Committee on 11 May and said that “no one” could explain the rationale for the size of the defence cuts. Does the Minister agree with his former colleague?
No. As the carrier strike group sets sail and the littoral response group sets out for the Baltic, as our soldiers in Mali and Afghanistan show what great jobs they have been doing there, and as our Air Force continues to contribute to NATO air-policing missions, alongside the fantastic work it does to support the rest of our deployments around the world, I can see a rapidly transforming set of armed forces that are better equipped and better able to meet the needs of the United Kingdom by responding to threats when they emerge upstream, rather than sitting in the United Kingdom contingent for the fight when it eventually comes.
What steps his Department is taking to strengthen the British Army in Wales after the covid-19 outbreak.
The Army has organised and conducted more than 74,000 tests, 11,000 ambulance responses and almost 70,000 covid vaccine inoculations in Wales over the past year. As we build on our close relationship with Welsh society, we remain committed to relocating a major regular Army unit to Wales, and the Ministry of Defence continues to examine the options to locate a second major unit to Wales as well.
The Welsh element of Operation Rescript, the Army’s response to the covid-19 outbreak, was stood up from Brecon barracks, as the Minister has described. From there, in conjunction with a large family of defence partners, Brigadier Andrew Dawes has overseen more than 1,200 service personnel across the three services who have been working tirelessly in support of the NHS in Wales. I particularly want to thank the members of the RAF who joined us at the vaccination centres in Builth Wells and Bronllys. Does the Minister agree that this recent activity serves to underline the operational importance of the barracks and further weakens the case to close it in 2027?
Brecon and, indeed, the 160th Welsh Brigade are fortunate to have such an outstanding local representative making their case in Parliament. My hon. Friend is absolutely right to pay tribute to all the amazing work that they have done in supporting the covid response in Wales. I know that, as a result of all her hard work campaigning on this matter, she was delighted to hear confirmation from my hon. Friend the Minister for Defence Procurement that the brigade HQ will remain in Brecon The Ministry of Defence is committed to continuing to ensure that regular Army units are retained in Wales, alongside what is a fantastic and well-used training estate, including that in and around Brecon, and I know that her constituents can have every confidence that she will continue to make that case should we ever forget it.
What steps he is taking to ensure that the armed forces are provided with equipment that is (a) up-to-date and (b) high quality.
This Government will spend more than £85 billion on equipment and support over the next four years to ensure that the men and women of the armed forces have modern equipment that they need to meet the threat. That includes a commitment of at least £6.6 billion to invest in research and development to develop the capabilities of the future.
Surely the Minister is aware that only last month the Defence Committee said that, in a conflict with a country such as Russia, our forces would be obsolete and outgunned, because their armed vehicle capability is just not up to scratch. As a Member of Parliament who represents some fine engineering companies in the defence sector, such as David Brown and many others, may I ask what is going wrong with our defence capability at the same time as this Government are cutting our armed forces down to the bare minimum of 82,000 personnel?
What is going on is a massive enhancement —an investment—of our armed forces, particularly in the Army. I refer to Ajax, which is well known to many people in this House; to the Challenger 3 announcement, to which my right hon. Friend referred; and, in particular, to Boxer. The hon. Gentleman will be delighted to hear that David Brown in his constituency won a multi-year power pack contract for the Boxer programme. We are putting in a huge amount of investment, which will help us to develop a highly credible armed force. That is what we are developing and continuing to invest in and he can be proud of what they can deliver.
In the light of the cancellation of Warrior and the delays and rising costs of Ajax, will the Minister now give a specific date on which our armed forces will finally receive the new generation of armoured vehicles?
I start by welcoming the hon. Gentleman to his place. He, like me, is a historian and will know that there have been debates about how quickly defence equipment will arrive since the days of Hywel Dda buying body armour and Alfred the Great putting the original order in for offshore patrol vessels. It is always an issue of contention when things will arrive—when they will get delivered. He can be very assured by the nature of the contracts that we have awarded and by their delivery. Ajax is still in its demonstration phase, but we have the original 14 vehicles with us, and work is ongoing. Challenger 3 is committed to be joining us in the Army’s line up. We are doing our best to advance Boxer and it is already well on track, with contracts awarded throughout the United Kingdom. That is a combination that will get us skilled jobs into the UK, while, at the same time, giving our armed forces the capabilities that they need to meet the threats of the future.
What discussions he has had with Cabinet colleagues on ensuring that veterans discharged from the British Army on medical grounds are given priority medical treatment by the NHS.
I want to ensure a gold standard of care for veterans. I pay tribute to the national health service for its excellent range of bespoke services that are available to veterans as a priority.
I welcome my hon. Friend to his place. My constituent Mark Roberts was discharged from the Royal Tank Regiment in 2015 on medical grounds. Despite his service to our country, he was on the NHS waiting list for dental treatment for three years. May I ask my hon. Friend to see what more can be done to ensure that our veterans get access to the medical treatment that they deserve?
I thank my hon. Friend for the terrific work that he does to represent the interests of veterans in his constituency. I am concerned to hear the details about Mr Roberts. If my hon. Friend forwards me the details, I will pursue that case with urgency.
What steps his Department is taking to protect veterans from vexatious legal claims.
What steps his Department is taking to protect veterans from vexatious legal claims.
What steps his Department is taking to protect veterans from vexatious legal claims.
What steps his Department is taking to protect veterans from vexatious legal claims.
On 29 April 2021, we delivered the Overseas Operations (Service Personnel and Veterans) Act 2021, which is a landmark piece of legislation that will mean that our armed forces in the future can deploy with confidence when they are going around the world to do their duty.
I am grateful to my hon. Friend and the Secretary of State for delivering this important piece of legislation, and to his predecessor, my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), for his important contribution. Will my hon. Friend the Minister outline what work has been done to communicate important changes contained in the Act to servicemen and women and veterans, including those in Hastings and Rye?
I am grateful for the work that my hon. Friend does in Hastings and Rye to represent the interests of veterans. It falls on us all to sing from the rooftops about this landmark Act. We will be communicating it through every channel available to us, and we will look at whether we can include it in pre-deployment training.
I congratulate my hon. Friend on the Overseas Operations (Service Personnel and Veterans) Act, which has provided huge relief to both veterans and serving personnel in my South Derbyshire constituency. Will he reassure me that, on top of improving the treatment of service personnel throughout the criminal and civil claims process, the Ministry of Defence is also improving its own internal investigations process?
My hon. Friend is right to raise investigations, which are a critically important component of the service justice system. It is in the interests of serving personnel that we have a rigorous and transparent system. That is why the Secretary of State has tasked Justice Richard Henriques to conduct a thorough review of our approach to investigations. We much look forward to him reporting in the autumn.
I believe that support for our veterans continues to improve under this Government, but, as the Minister knows, there are two pressing issues that require immediate resolution: Northern Ireland legacy; and the statutory guidance for the Armed Forces Bill. Will he please assure me that both are forthcoming?
First, let me say how grateful I am for the work that my hon. Friend does in supporting veterans, particularly with the all-party parliamentary group on veterans and with other activities; it is appreciated. The statutory guidance will be published shortly. We are cognisant that the Armed Forces Bill needs to have teeth, and that statutory guidance will be part of our approach. When it comes to Northern Ireland, we have a shared interest in ensuring that this is dealt with. The Government will in due course bring forward a package that delivers for veterans, victims and their families.
I welcome the fact that the Overseas Operations (Service Personnel and Veterans) Act will provide vital protections to those who put their lives on the line to defend our country and will introduce a new high bar for criminal prosecutions, but will my hon. Friend assure me that when members of the armed forces or our veterans do face prosecution, they will receive comprehensive support from the Ministry of Defence? Will he also join me on a visit to the Don War Memorial Museum & Veterans Hub to see the incredible work of Julie Cooper in celebrating and supporting our veterans?
I am pleased to confirm that that support is available, and it is only right that it should be. Who could resist an invitation to Teesside? I would be delighted to visit the Don War Memorial Museum with my hon. Friend, and to learn about the magnificent military heritage of which Teesside can be rightly proud.
What steps his Department is taking to ensure that the armed forces are supported by world-class technological capabilities.
What steps his Department is taking to ensure that the armed forces are supported by world-class technological capabilities.
To ensure that our armed forces are able to meet current and future threats, we are investing over £6.6 billion in defence research and development over the next four years. Defence will accelerate the use of the next generation technologies through focused investment on demonstrators and early prototypes, aggressively pursuing game-changing capabilities at pace. This includes areas such as directed energy and hypersonic weapons, forms of drones, artificial intelligence and automation.
Does my hon. Friend agree that it is vital that our British troops have the best equipment in the world, that when that is produced here in Britain by small manufacturers like CQC in my constituency, the procurement process should be fair and transparent, and that where possible we should be buying British and supporting British jobs in places like Barnstaple?
I absolutely agree that we need the best equipment. My hon. Friend has been a great advocate for CQC in her constituency. I am delighted that it recently secured an order for 27,000 operational travel bags for the British Army. Small and medium-sized enterprises perform an invaluable role in supporting defence and now account for over 21% of expenditure. I will publish a revised SME action plan later this year.
In common with my hon. Friend the Member for North Devon (Selaine Saxby), I welcome the support for SMEs in my constituency. We rightly prioritise our onshore industrial defence capabilities. However, in order to ensure that we remain at the forefront of technological advancements, can my hon. Friend assure me that we will not limit our ability to also work collaboratively with our friends and allies in developing new capabilities and responses to what are increasingly complex and ever-changing threats?
Absolutely not. I can reassure my hon. Friend that, as he recognises, international programmes are hugely important to defence and we will continue to engage with our friends and allies. To name but two, Boxer and FCAS—the future combat air system—are international collaborations, and they are bringing thousands of skilled jobs to the west midlands, to the north-west and throughout the UK.
What estimate he has made of the cost of the UK nuclear warhead replacement project.
Transition to the mark 4A warhead is ongoing to ensure that we continue to have a safe, secure and available stockpile until the replacement warhead is available by the end of the 2030s. The replacement warhead is in its early preliminary phases and will come after the transition to the upgraded mark 4A warhead. It is too early, therefore, to provide a cost estimate at this stage.
On 15 March, in response to a written question by the right hon. Member for Ludlow (Philip Dunne), the Government confirmed that the UK replacement warhead for the Trident nuclear missile will be designed, developed and manufactured in the UK. Will the Secretary of State clarify whether this replacement nuclear warhead will use up any funds that would otherwise go towards conventional defence projects?
If the hon. Lady had listened to the previous answer, she would know that the current funding is being spent on transitioning to the mark 4A upgrade of the existing warhead scheme. We are engaged in the design and the process to get to the replacement warhead in nearly 20 years. Just like the rest of the nuclear deterrent budget, it is part of the overall budget. It was agreed in 2015 as part of the £31 billion for the Dreadnought programme. We continue to spend that, and I expect there to be a budget line to continue with the deterrent. As long as this Parliament votes, as it did in 2016, for that deterrent to exist, there will be a budget for it.
What steps he has taken to improve the transition of armed forces personnel into employment.
What steps he has taken to improve the transition of armed forces personnel into employment.
What steps he has taken to improve the transition of armed forces personnel into employment.
What steps he has taken to improve the transition of armed forces personnel into employment.
In 2019-20, 84% of service leavers were employed within six months of leaving—higher than the UK employment rate of 76%. We support people transitioning out of the armed forces with the Career Transition Partnership and Defence Transition Services. We have also introduced a national insurance holiday for employers and veterans and a guaranteed entry scheme for veterans seeking to join the civil service. Veterans’ employment is a huge success. They bring energy, loyalty and commitment to the workplace, and that is something we should celebrate.
In the Jarrow constituency there are many talented and dedicated people who leave the armed forces every year and find it difficult to transition into civilian life and employment. Despite employment not being covered by the Government’s Armed Forces Bill, will the Minister outline what steps he is taking to work specifically with local charities and local authorities to ensure that the talent and the skills of our ex-service personnel are utilised in civilian life?
When it comes to local authorities, we will, when the Armed Forces Bill becomes the Armed Forces Act, issue statutory guidance to ensure that no veteran is at disadvantage. I hope that all local authorities will take that on board and deliver for our veterans in the local community.
Getting a decent job is key to a successful transition to civilian life, but the Armed Forces Bill, as my hon. Friend the Member for Jarrow (Kate Osborne) said, does not include responsibility for employment or transition. Service charities have said that the Bill is too narrowly focused, so why will the Minister not widen the scope of the Bill to ensure that all the promises of the covenant are delivered by it?
When it comes to transition, it starts two years before someone actually leaves the armed forces and lasts for two years after they leave. The support that the MOD provides to service leavers lasts for two years, but we must bear in mind that overwhelmingly the vast majority find gainful employment within six months.
For my constituents in Liverpool, West Derby who have dedicated themselves to working in the armed forces, the transition to civilian life and employment can be incredibly difficult for them and their families. Having a final posting located far from where they plan to resettle can also have a detrimental impact on the whole process. Can the Minister please outline what steps his Department is taking to address this issue and the impact it is having on the wellbeing and outcomes for those affected?
Family life is at the heart of service, and service families are an integral part of the defence community. We want flexibility and choice when it comes to the choices that families make, and that is why we are bringing forward our families strategy, which will include things like wraparound childcare and a range of other initiatives to help ensure that there is choice and flexibility for service families.
Cobseo, the Confederation of Service Charities has noted that there was only one mention of self-employment or business ownership in the 2020 armed forces covenant annual report. With the pandemic making it more likely that veterans will have to explore self-employment as a viable career option, what action will the Minister take to ensure that he supports self-employment within the veteran community?
We support service personnel transitioning out and seeking to start their own businesses and be self-employed through the career transition partnership, which is a hugely successful initiative. We recognise that veterans bring some of the key skills to successful self-employment: initiative, discipline and the tendency to work extremely hard. I think overall the support offered by the career transition partnership is a very positive story.
I welcome shadow Minister Stephanie Peacock to her place.
A survey by the Soldiers, Sailors, Airmen and Families Association has suggested that almost half of recruiters would worry about hiring a service leaver because of concerns around negative mental health. While the Government’s proposed national insurance relief for businesses that hire veterans is welcome, it does not tackle the root cause of the problem. What are the Government doing to address the misconceptions employers may have about veterans?
I welcome the hon. Lady to her place, and I wish her well in her new appointment. The key thing we can all do is to not talk down our veterans, but instead talk them up. Overwhelmingly, there is a mismatch, and a misconception among the public about whether service damages veterans. Service does not damage veterans. Overwhelmingly, veterans leave as better people with terrifically useful transferable skills. That is why overwhelmingly the vast majority get gainful employment six months after leaving. The story of veteran employment is something of which we should be hugely proud.
What steps his Department is taking to support the families of armed forces personnel.
Service families are an integral part of the armed forces community. We want people in the armed forces to be able to sustain a family, but also a military career. I am grateful to my hon. Friend the Member for South West Bedfordshire (Andrew Selous) for his critically important report “Living in our Shoes”. We look forward to taking the recommendations from his report into our armed forces families strategy as part of our efforts to ensure that defence people can sustain family life.
I thank my hon. Friend for that answer. I think the Armed Forces Bill will be very helpful in ensuring that families receive the same level of consideration from public bodies wherever they live, but may I focus on education? Moving schools when moving postings is a regular part of service family life that can have a disruptive impact on a child’s education. As my hon. Friend takes forward his work, can I ask him to place a particular focus on education for service families’ children?
My hon. Friend makes a very important point. I am pleased to report that there are now changes to the school admissions code in place that will allow flexibility. This will allow service children to join a school during the school year, and I am delighted to be able to report that. As I have already mentioned, that, in tandem with wraparound childcare and the future accommodation model, demonstrates that we are committed to our forces families.
If he will make a statement on his departmental responsibilities.
Can I also place on record my welcome to the hon. Member for Barnsley East (Stephanie Peacock)? I meant no disrespect in not welcoming her at the beginning In the integrated review, we highlighted the increasing prevalence of unconventional threats from state actors and the importance of redoubling our efforts to defend democratic institutions and values. Reports of the diverting of a civilian aircraft in Belarus are deeply concerning, and it potentially violates international civilian aviation rules. We condemn the actions of the Belarusian authorities, and we are working with allies and partners to develop a co-ordinated and unified response. My right hon. Friend the Foreign Secretary will set out further details later The Government will introduce a legacy package that will deliver on the commitments to Northern Ireland veterans, giving them the protection they deserve, as part of a wider package to address legacy issues in Northern Ireland. It is the MOD’s policy, where veterans face allegations arising out of activities related to their duties, that they receive full independent legal support and representation for as long as necessary at public expense.
Legislating to tackle vexatious claims and put our brave armed forces personnel first was a manifesto commitment of this Government, and a landmark piece of legislation that I was proud to support. Does my right hon. Friend agree with me that legislation needs to be brought forward to protect our Northern Ireland veterans and address the legacy of the troubles?
Mr Speaker, I will get the hang of Topical Question 1 one day. I hope the answer will be better the second time around The Government are committed to bringing forward measures. Those measures were mentioned in the Queen’s Speech, and we will obviously publish them as soon as possible. As a former Northern Ireland veteran myself, I know it is incredibly important that we recognise that many of those veterans served with distinction and bravery, and upheld the law to their highest ability. It is deeply regrettable that we see many of them brought to trial—or under investigation, rather than trial—for vexatious reasons, and we are committed to make sure that that does not happen.
May I, from the Opposition Benches, strongly endorse the concern and condemnation the Defence Secretary has expressed over the actions of the Belarus authorities? May I also say that we strongly support the work of Operation Tangham, but in the light of recent press stories, can I ask the Defence Secretary for his assurance that if he takes any decision to commit combat troops to Somalia, he will report such a decision to this House first? May I ask about the Army’s fighting vehicles? The Defence Secretary wrote off over £1 billion of taxpayers’ money in March when he scrapped the Warrior. Weekend reports say that the MOD has also paid out £3.2 billion for the Ajax, and so far received only a dozen delivered, and those without turrets. A figure of £4 billion is the total size of the Government’s levelling-up fund over the next four years. Given that the Secretary of State has conceded this afternoon that delivery is the MOD’s Achilles heel, will he accept that Parliament now needs a system of special measures for the MOD so that British forces and the British taxpayer get much better value from his Department?
I think the right hon. Member is looking at the special measure. The reason I am here as the Secretary of State for Defence is to get the record level of investment that will put right not only five years or 10 years, but 20 years of mismanagement of these programmes. Sometimes that means taking tough decisions, and the Warrior will be retired when it runs out in 2025; it is not just going to be cancelled as such. It was also important to make sure that we invested in parts of the land capability that I thought, and indeed that officers thought, were the right thing for the future of the Army—the Boxer armoured vehicle. For that investment, not only do we get a factory in Telford and hundreds of jobs, but we get one of the very best wheeled armed vehicles in the world. For his £3.3 billion on Ajax, he will get over 500 vehicles when they are delivered, and much of that money has already been committed. He will also get a factory in Wales, which I am sure he is pleased about. In both projects, we will get the intellectual property, so that when we export those vehicles around the world, not only will British defence profit, but so too will the people of the United Kingdom through their jobs.
Let me say to the Secretary of State and the shadow Secretary of State that topicals are meant to be short and punchy, not lengthy debates. Can they both get it right for next time? I now come to Mr Metcalfe, who will definitely get it right.
Thank you Mr Speaker. I welcome the recent deployment of Royal Navy offshore patrol vessels to Jersey, to conduct maritime security patrols. Does my right hon. Friend agree that that quick response demonstrates the importance of having our Royal Navy vessels more continuously deployed at sea?
I certainly do. Offshore patrol vessels are an extraordinarily versatile platform. Batch 1 OPVs, which are mostly responsible for homeland defence, are at high readiness and are called out for all sorts of reasons, from Jersey, to escorting vessels from other nations through our waters. Batch 2 OPVs, a precursor to the arrival of the Type 31, already operate in the south Atlantic, the Mediterranean and the Caribbean. They will soon be joined by further vessels in the Indo-Pacific, demonstrating the forward presence concept, which will have huge utility in the years ahead.
With UK forces leaving Afghanistan, it is all the more important that we do all we can to stand up for those Afghan interpreters, and others, who put their lives on the line for our troops. I have Afghan interpreters in my constituency who have not seen their wives and children for years, due to ongoing issues with the MOD resettlement scheme. Will the Minister admit that that is an issue, and work with the Home Office to sort it out?
Yes, it is an issue, and the Home Secretary and I have worked closely over the past year. We have already changed some of the reasons, to ensure that we bring back more, and in light of the withdrawal, we are working incredibly hard together to see what more we can do. We owe those people a debt, and it is the right and decent thing to stand by as many of them as possible. I feel that personally, and it is deeply important for what we stand for and our values in world. I hope we will have more to announce and speak about later.
I am pleased to hear what the Department is doing to support defence jobs. Does the Minister agree that promoting the use of world-class UK-made steel in MOD projects would be an excellent support to jobs in Scunthorpe?
Although defence represents a small element of total demand, UK steel has made a significant contribution to it, including the Queen Elizabeth aircraft carrier. Although this is generally a decision for defence primes, we ensure that information is shared as part of our processes, and we encourage the resourcing of UK steel wherever possible.
During the 2019 election, The Prime Minister promised that he would not cut the armed service “in any form”, yet the integrated review funds another 10,000 fewer in our armed forces by 2025. We can have an interesting discussion about whether or not force strength is the best use of that money, but does it fundamentally undermine confidence in our democracy when the Government seek election promising to protect the size of our armed forces, knowing full well that they have no intention of doing any such thing?
The Government always go into elections dealing with the threat as they see it. The threat has changed, and it is incredibly important that we do the right thing in responding to that threat. It is the duty of Government members to ensure that if the facts on the battlefield change, so do we. The hon. Gentleman would, quite rightly, be the first to stand up if we did not equip our people properly and they were put at risk. We all remember what happened last time. It was called the Snatch Land Rover fiasco, and many brave men died defending that ridiculous policy, because of his Government’s choices.
I welcome my right hon. Friend’s recent announcement that the Ministry of Defence will procure 148 Challenger 3 tanks, which will be the UK’s first digitised tanks. Will he outline how those new armoured vehicles will help to deliver the modern, adaptable and expeditionary fighting force that he set out in the defence Command Paper in March, and will he keep me in mind should they need test-driving?
I will bear that offer in mind. It is a great decision for UK industry, especially for the west midlands, and a great decision for the British Army. The ability to deploy world-class tanks provides policy choice for policymakers against a range of threats in our uncertain world and state of the art Challenger 3s will be a vital asset.
The world-class Cranfield University is committed to assisting the goals set out in the integrated review regarding sustaining strategic advantage through science and technology. How do the Government propose to capitalise on their science and technology resource investment if the large-scale complex and secure facilities and equipment have not been invested in, so are not in place to conduct the research?
I am not certain if I would agree with the premise of the question. I agree with the hon. Gentleman that it is incredibly important. We will be investing over £6.6 billion in research and development over the next four years. We have, through the frontline commands and through defence science and technology, extensive contacts with our universities. They work with us closely. We have really profitable joint workings with them and, indeed, with smaller companies through the defence and security accelerator and the innovation schemes to pull fundamental research on to the frontline. I think we do have the processes in place, and I look forward to that money being well spent in the four years ahead.
Over the past year or so, my office has been inundated with concerns from residents about low-flying military aircraft all over North Norfolk. Let me be the first person to understand that we need military training to keep us safe, but would the Minister perhaps meet me to discuss further how we can allay those concerns and work out a communication plan for my residents?
I am glad my hon. Friend used the phrase he did. I think we are all aware, and his constituents will be aware, that we need to keep our brave air crews safe from harm as they go out every day to keep us safe, and that they get to that level of proficiency through training. I am sure he will accept that and so will his constituents. However, we always want to do that causing the minimum amount of inconvenience and disturbance. I will willingly meet my hon. Friend to discuss the issue.
  Can the Secretary of State say how many infantry battalions have less than 70% fully deployable soldiers?
I can write to the hon. Gentleman in detail if he would like. Does he mean deployable or does he mean trade trained strength, because there are a number of different measures? Most soldiers who are trade trained are deployable unless they are on a course. I can give him the exact percentages, but we measure them mainly in trade trained; whether they are trained, whether they are in depot or whether they are in their battalion doing active duty.
I welcome recent reports that the RAF contributed to an important 10-day operation in April, clearing Daesh terrorists from the Makhmur mountain region, which is a Daesh stronghold in northern Iraq. With approximately 10,000 Daesh terrorists still at large across Syria, will my right hon. Friend confirm that the UK remains committed to Operation Shader?
The Government are committed to Operation Shader and will continue to be so. The threat of ISIS has not gone away. Indeed, throughout her deployment, the carrier will also potentially take part in operations to support it. It is very important that we continue to degrade ISIS capability, because of its destabilising effect in Iraq and the threat it poses directly to us.
  I congratulate the new Veterans Minister on his promotion to the Ministry of Defence. In doing so, may I ask him to resolve an issue that I was told six months ago would be sorted out, which is the roll-out of the veterans’ ID card? This has been rolled out to personnel leaving the armed forces, but not to existing veterans. It was announced by his predecessor-but-two. His predecessor told me it would be resolved in due course. Six months on, it would be good if veterans in my Ogmore constituency and across the UK had an answer.
I recognise that this is an important issue. This is taking too long, so I look forward to reporting back to the hon. Gentleman with an update on progress.
The fifth Astute class nuclear submarine was delivered a month ago after many delays and ballooning costs over the last half decade. Given those delays, will the Secretary of State clarify if he still believes that these submarines can be delivered by the MOD by the current deadline of 2026? Can he give us assurances that there will be no further increase in cost?
We will continue with the Astute programme. As the hon. Lady points out, there were some delays in some of that programme. We will continue to manage the programme. The Astute submarines will be delivered by BAE Systems in Barrow-in-Furness. I visit regularly to make sure we try to keep it on track.
I call Richard Holden. Not here. We will go to Richard Thomson.
  Over the past two years, there have been 443 nuclear site event reports at the Faslane nuclear base, which is located just 25 miles from the centre of Scotland’s largest city, yet Capita, which provides specialist firefighting services on site, plans to reduce the number of firefighters by 15%, a move that has been branded as“an accident waiting to happen”by the Unite trade union. Will Ministers intervene to reverse these cuts, given the obvious security and safety concerns that this reduction raises?
Just to reassure the hon. Gentleman, there were extensive discussions with the Scottish Fire and Rescue Service before the decision was made. It was only made after a great many exercises to judge the effectiveness of the new system and after it was signed off by the Defence and Fire Rescue Service HQ and the commander of Her Majesty’s naval base on the Clyde. It reflects better fire prevention systems, and I am pleased to say that we also have new firefighting vehicles coming in later in the year. The decision to move from a six-person, 24/7 shift to a five-person, 24/7 shift was taken only after that level of engagement.
I am suspending the House for three minutes to enable the necessary arrangements to be made for the next business.
(Urgent Question): To ask the Secretary of State for Foreign, Commonwealth and Development Affairs if he will make a statement on what measures he has taken to respond to the interception of a civilian aircraft by a Belarusian fighter and the detention of a journalist.
I thank my hon. Friend for his question. Yesterday afternoon, a Ryanair flight from Athens to Vilnius was forced to land in Minsk. There were more than 100 passengers on board, including the prominent independent Belarusian journalist Roman Protasevich. The Belarusian authorities claim that this was in relation to an alleged bomb threat, but we have seen no evidence to support that claim. What we have seen is that Belarus scrambled a MiG fighter, forced the plane to divert to Minsk and then used the emergency landing as an opportunity to arrest a prominent journalist We understand that Mr Protasevich was detained on spurious charges, including involvement in riots, organisation of actions that violate public order and incitement of hatred and discord. The UK calls for his immediate release and the release of all other political prisoners in Belarus. We are urgently seeking full details of precisely what took place in relation to flight FR4978, but the scenario as reported is a shocking assault on civil aviation and on international law. It represents a danger to civilian flights everywhere, and it is an egregious and extraordinary departure from the international law and international practice that guides international civil aviation under the Chicago convention The international community as a whole has a shared interest and a joint stake in ensuring that civilian aircraft can fly safely and without harassment. That is why we are calling for the council of the International Civil Aviation Organization to convene urgently to address thoroughly and rigorously this incident. The regime in Minsk must provide a full explanation for what appears to be a serious violation of international law. Mr Lukashenko’s regime must be held to account for such reckless and dangerous behaviour For our part, we have summoned the Belarusian ambassador, and the Minister for European Neighbourhood and the Americas is conveying our condemnation of these acts as we speak. We are working with our international partners to explore every potential diplomatic option at ICAO, the UN Security Council, the Organisation for Security and Co-operation in Europe and the G7. Beyond the diplomatic track, we are actively considering and co-ordinating with our allies on further sanctions on those responsible for this outlandish conduct To ensure the safety of air passengers, I have also worked with the Transport Secretary to issue a notice to all UK airlines to cease overflights of Belarusian airspace and to suspend the operating permit of the Belarusian airline BELAVIA with immediate effect. That is, of course, the only airline that flies regularly between the UK and Belarus. But in order to be sure, and as a precautionary measure, the UK Civil Aviation Authority will be instructed not to issue any further ad hoc permits to any other carriers flying between the UK and Belarus. We continue to support civil society and media freedoms in Belarus. We provided more than £1 million in 2020, and in this financial year we are providing an additional £1.8 million. I know the whole House will join me in condemning unequivocally this reprehensible action under the Lukashenko regime. The UK will stand firm in protecting freedom of the media, upholding international law and maintaining the safety of international civil aviation.
Thank you very much, Mr Speaker, for granting this urgent question I welcome very much my right hon. Friend’s statement. What he has described, quite correctly, as an outlandish attack is the first time we have seen air piracy in Europe for many years. This attack was a hijacking that turned into a kidnapping, and is a serious violation of the human rights not just of Roman Protasevich, who has been held by the Belarusian authorities, but of every passenger and member of the crew on that airliner. This is a direct threat not just to those who may be dissidents to regimes such as Belarus, but to all of us who are at risk of overflying such a state I welcome enormously my right hon. Friend’s decision to suspend travel to Belarus and stop overflights. He is absolutely right to do so, and he joins the Chairs of the Foreign Affairs Committees of Canada, the Czech Republic, Estonia, the European Union, France, Germany, Ireland, Latvia, Lithuania, Poland, Spain and the United States in calling for that. Will he go one step further and call for a suspension of the Nord Stream 2 pipeline and the Yamal energy pipeline, which flows through Belarus? That is where the money that supports that tyrannous regime comes from. Will he also join European partners and friends, and NATO allies such as the United States, in reinforcing that this was an attack not just on a civilian airliner flying between two EU capitals, but on one flying between two NATO capitals? That includes us, and it is vital to the security of the UK people that we stand strongly against it. Otherwise, everyone flying to Thailand, Australia and many other destinations will have to wonder not only what they may have done to offend a regime they are flying over but what somebody else on the aircraft—somebody they have never met before—has done. Any of these regimes could be inspired, like Lukashenko’s, to force a civilian aircraft out of the sky with threats of violence.
I thank my hon. Friend for his question and for his support for the actions that we have taken today. He is absolutely right about the threat posed to all of us as users of civil aviation and, indeed, to the international community at large, not least given that the ICAO regime is one of the most well-supported international instruments dealing with a common good that we have in the international community. He is right about the ICAO, and the UK has led the calls for an urgent meeting of the council I welcome my hon. Friend’s action among parliamentarians around the world. He rightly raised overflights, and he will have seen and noted the decisions that we have taken today. He also raised sanctions, and we will urgently consider further possibilities with our partners. The right thing to do is to co-ordinate to maximise our approach. He will know that we have already imposed targeted sanctions on 99 individuals and entities since the election in August 2020 and we very much led the way at that time. He also mentioned Nord Stream and other possibilities. We will consider and consult with our partners and see what further action they are willing to take Finally, I agree with much of my hon. Friend’s characterisation: on the face of it, the Lukashenko regime engaged in a particularly calculating and cynical ploy to force a civilian flight to land under the threat of a MiG fighter and under the hoax of a bomb alert, behaviour that is as dangerous as it is deceitful, and a flagrant violation of international law.
After yesterday’s acts of modern piracy, it is clear that Lukashenko must now be recognised as an international threat—a danger not just to his own people but to the citizens of other countries. For a state to hijack a civilian airliner flying between two NATO allies in order to arrest a journalist is an assault on the freedom of the air and on freedom of speech. Unless the consequences are swift, robust and co-ordinated, it will create an extraordinarily dangerous precedent that will put journalists, dissidents and activists from the UK or anywhere else at risk every time they board a plane. I therefore very much welcome what the Foreign Secretary said today and, in particular, that he has summoned the ambassador and demanded the release of Roman Protasevich and other political prisoners. Those in the Belarusian pro-democracy movement are owed our solidarity and support as they fight for the right to determine their own future through free and fair elections I was pleased to hear the Foreign Secretary’s response when the hon. Member for Tonbridge and Malling (Tom Tugendhat) asked about working with allies in NATO and the EU and through ICAO to ban flights through Belarusian airspace, to suspend Belarus from ICAO and, in particular, to block BELAVIA from operating in and out of the UK and to suspend direct flights I was interested to hear the Foreign Secretary say he was considering how best to ramp up economic pressure on the regime. In the space of 12 months, the Lukashenko regime has stolen an election, employed brutal repression against its own people and hijacked a civilian airliner, yet fewer Belarusian entities are sanctioned now than were in 2012. Will the Foreign Secretary now bring forward sanctions against state-owned enterprises, some of which continue to have UK subsidiaries, such as BNK (UK)? What steps will he take to stop the Belarusian Government using the London stock exchange to raise finance and sustain Lukashenko’s grip on power? Will he ensure that the UK is no longer a soft touch for corrupt elites from Belarus or elsewhere seeking to store their funds and assets, and will he consider targeted sanctions against individuals such as Mikhail Gutseriyev Given the apparent presence of Belarusian KGB agents on the flight, will the Foreign Secretary tell us what assessment he has made of the threat to Belarusians in exile and what can be done to disrupt any Belarusian agents who may be operating in the UK, Europe and NATO allied countries Some of these things are easy, and others are much more difficult, but all of them are necessary to stand up for our values and to defend our national interest. If the Foreign Secretary chooses to take a stand on this matter, he can count on our support.
I thank the hon. Lady for her support for the measures that we have taken today. It is important that, so far as possible, subject to all the scrutiny, accountability and challenge expected, we show a united front in the face of such appalling acts by appalling regimes, of which the Lukashenko regime is one. I agree with her characterisation, as I did with that of my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat). The Lukashenko regime has done something that threatens not only the Belarusian people but attacks a common good, most notably by endangering a key tenet of the international system of civil aviation. That threat accrues to us all, and we must stand up against it The hon. Lady mentions sanctions. I am not sure that her numbers were quite right. For clarity, we have sanctioned 99 individuals and entities. That mix includes those sanctioned under the country-specific sanctions regime and the extra individuals that we sanctioned as a result of the global human rights sanctions regime that I introduced. On top of that, she will know that we have extended the Magnitsky sanctions regime to cover corruption and embezzlement and improprieties of that nature. She mentioned a couple of names. She will understand that we are evidence-based, but if she has evidence or thinks that there are individuals who should be designated, I encourage her to let us have that information Finally, the hon. Lady raises an important point. Clearly, there is now a threat not just to dissidents and journalists in Belarus who have the temerity to stand up to the regime, but to those who do so around the world. Through our global Media Freedom Coalition, in which we work very closely with the Canadians, and a whole range of other mechanisms internationally, it is important that we stand up for those freedoms and those individuals wherever they may be.
The outrageous kidnapping of Mr Pratasevich has rightly received unqualified condemnation from across the House, but he is only the most recent in a despicably long list of opposition politicians and journalists who have been arrested or disappeared as part of Alexander Lukashenko’s latest appalling crackdown on legitimate opposition. Will my right hon. Friend tell the House what action he and the Government are taking to secure the release of all political prisoners in Belarus?
I know, because of my hon. Friend’s background, how particularly personal it is for him when he sees journalists arrested, detained or otherwise mistreated around the world. I agree with much of what he suggests, as I made clear in my opening answer. We are pouring in millions of pounds to support civil society and journalists in Belarus. From day one we have called for the release of all political prisoners. We did that when we first triggered the Moscow mechanism as part of the OSCE, and we continue to engage with leading democratic figures, including Mrs Tikhanovskaya.
I warmly congratulate the Chair of the Foreign Affairs Committee on bringing this urgent issue to the House, and I warmly welcome the Foreign Secretary’s announcements about the overfly and the flights of Belavia. There has been a clear breach of articles 3 and 4 of the Chicago convention, and it is almost unimaginable that we have seen over the weekend a state hijacking of a civilian aircraft going between two EU and NATO capitals. This cannot stand We must work with our international allies. The Foreign Secretary will be aware that the European Council is meeting this evening. Will he commit to engaging with it and to mirror its agreed response, which obviously has not happened yet? Will he express further solidarity by giving practical aid to Belarusian activists, journalists and agitators and by making it easier for these brave individuals to claim asylum in the UK? What assessment has his Department made of Russian involvement in this action? It seems inconceivable that this could have been a unilateral act by Minsk. There was surely some Russian involvement. Will there be consequences for the Russian state as well as the Belarusian state when things are decided?
I thank the hon. Gentleman for his support for the statement and the measures. He referred to breaches of the Chicago convention, and I agree that they are striking and shocking. He also asked what co-ordination we are engaged in with our EU partners. Notwithstanding our departure from the EU, this is a very good example of the key foreign policy issues on which we will want to co-ordinate very carefully with it. We have done that before. He will recall that, after the rigged election, we led the way, but co-ordinated closely with our European partners, when we imposed Magnitsky sanctions Finally, the hon. Gentleman asked about Russian involvement. We do not have any clear details on that. I will be careful what I say at this point. As he says, it is difficult to believe that this kind of action could have been taken without at least the acquiescence of the authorities in Moscow, but, as I say, that is unclear as yet.
I welcome my right hon. Friend’s statement because the events yesterday, as others have said, were effectively the state hijacking of a commercial passenger plane. This is just another episode in Lukashenko’s campaign to silence opposition to his regime, both within and beyond the Belarusian borders. There is no room for such behaviour anywhere in the world, let alone in Europe My right hon. Friend has set out the immediate action that he is taking, but what is he doing to support a peaceful transition to a democratically elected head of state in Belarus? When will he meet Svetlana Tikhanovskaya, the opposition leader in Belarus?
I commend my right hon. Friend for raising the issue so tenaciously, as she always does. I have had positive discussion with opposition leader Svetlana Tikhanovskaya, whom I spoke to in February. The Europe Minister, my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), has also spoken to her. We will continue that engagement, which is very important. We make the case for free and fair elections as soon as possible according to international standards. We certainly support, as we did at the outset, not just the Moscow mechanism, but the implementation of Professor Benedek’s recommendations on the need for elections and his findings in relation to human rights abuses. My right hon. Friend asks the key question, which is how we can go from sanctions supporting civil society to encouraging some form of democratic transition. I have to say that the Lukashenko regime looks very dug in. It has the protective umbrella from Moscow and I think that what we saw over the weekend was a symptom and a sign of it. I think it incumbent on the international community to keep up the very robust pressure as far as we can, increase it wherever we can and use every mechanism at our disposal. The key difference from what we have seen previously is that the actions of the Lukashenko regime are targeted not just at its own people, but at attacking an international common good that is reflected in the Chicago convention. That gives us at least the ability, with our allies, to work to apply pressure in that forum. We will continue to do that.
It is not surprising that the Lukashenko regime operates with a belief in its impunity, but this state piracy is most definitely a new step that requires a response that is seen to be proportionate. In that context, could the Foreign Secretary return to the question of the Belarus state’s use of subsidiary companies operating in the United Kingdom and whether we can apply pressure on them to prevent the state from having access to resources that come through this country of ours? In doing so, can we co-ordinate with our European Union allies? That is something that the Belarusian opposition most certainly wants to see: tough action against a leader who has lost all credibility and legitimacy.
I totally agree with the hon. Gentleman’s instincts. I am not sure that it is correct that there are businesses taking advantage, but I reassure him that amid the panoply of measures that we are now considering, we will look very carefully at what further pressure we can apply. That will include any further tightening of restrictions on access to the UK or other financial markets for what we see passing through London.
Today I issued a media statement on behalf of the entire UK delegation to the Council of Europe condemning the actions of the Belarusian Government and of President Lukashenko. We call for the immediate release of Raman Pratasevich and all political prisoners in the country. Some of us have already befriended such prisoners to provide them with hope and comfort. Is it not time to consider that an international warrant should be issued for the arrest of President Lukashenko on charges of terrorism?
To mount a case of that nature, we would need quite specific and clear evidence; of course, that is for the Crown Prosecution Service and other law enforcement authorities to consider. I commend my hon. Friend: among the international bodies that we must press to hold the Lukashenko regime to account, I did not mention the Council of Europe, but although Belarus is not a party to it, it is an important European forum for us to apply pressure among the wider European international community. I commend him and the UK delegation for all the work that they are doing.
May I begin by joining those who are welcoming the Foreign Secretary’s statement and the actions taken so far? From the violent crackdowns on protestors last summer, to the terrible repression of journalists, which of course has now escalated to state-sponsored air piracy that has put civilians at risk, it is clear that the Belarusian authorities have no regard for democracy, human rights or the rule of law. They act with impunity because they know Russia has their back. Although we would all love to believe that this will be the last we hear of this, we all know that that is unlikely. The UK hosts the G7 soon, which is an opportunity to raise the issue of the events in Belarus and co-ordinate further international action, so will the Foreign Secretary consider putting Belarus on the agenda of the G7?
We are already doing it, but the hon. Lady is right to say that the G7, amid the other forums, is where something like this should be considered, not least because of the attack on the international system, via the Chicago convention, and ICAO.
This is not just a state-sponsored hijack of a civilian aircraft going between two NATO capitals; we know from the Belarus media that it was ordered by Lukashenko himself. This is an international crime that requires the strongest response, and although I welcome the stopping of overflight and a UK lead on this, increasingly both Belarus and Russia do not care what the international community thinks. Therefore, all our allies need to act in synchrony, including some of the weakest links, or tyrannies all over the world will see that air passengers are increasingly put at risk.
I agree with my right hon. Friend’s instincts. I was in Estonia and then Oslo recently, precisely because of the importance among our Nordic and Baltic partners—key NATO allies—of strengthening and reinforcing the stance they take in relation both to Russia and to the emanation of those threats that we have seen in Ukraine and now in Belarus.
I welcome this statement on what was clearly an act of piracy by an illegitimate Government that puts them firmly in the rogue nations bracket. Does the Foreign Secretary share my concern that this now becomes a tactic that these rogue nations may use again, unless there is a firm response? No air crew could ignore a threat of a bomb or some other threat to their aircraft, and would have to divert to the nearest airfield. This is putting at risk not only this flight, but potentially many more and the safety of their passengers, unless we can come down much harder on the perpetrators.
The hon. Gentleman is absolutely right, which is why we have taken the actions we need to take in relation to flights to and from the UK, and why we have called for an urgent meeting of the ICAO Council to address these issues in the most appropriate forum. However, let us face it: this also represents a threat to international security. That is why we have raised the issue in the United Nations Security Council.
I welcome the Foreign Secretary’s statement and thank my hon. Friend the Member for Henley (John Howell) for the excellent work he is doing in the Council of Europe. Does the Foreign Secretary agree that Lukashenko must accept that his recent actions are a step too far and that the only way forward for Belarus is for the dictator to halt his campaign of oppression, release political prisoners and hold free and fair elections with international observers?
My hon. Friend is absolutely right; I agree with that list. Ultimately, it is difficult to see how Belarus, under the Lukashenko regime, can take any steps out of its pariah status unless those things happen, including free and fair elections, which would inevitably lead to a change of leadership.
The European Federation of Journalists has called this kidnapping from a civilian airline an “act of air piracy and state terrorism.” It is difficult to disagree. As we know, basic freedoms and human rights are being eroded in Belarus, where 29 journalists are now detained. Along with having the most robust and effective sanctions targeting this rogue regime, what action will the Foreign Secretary be taking to investigate the possible involvement of other states in this criminal incident?
The right hon. Lady is absolutely right that sanctions are a part of the strategic approach, but not the only aspect that we need to look at. We will, of course, look carefully at the involvement of anyone else, although gleaning evidential standards of information is often very difficult. As I mentioned before, we are supporting civil society in Belarus with an additional £1.5 million programme of support over the next two years. In March this year, we allocated a further almost £2 million of support for the media in Belarus. We need to use every lever at our disposal not just to put pressure on the regime, but to try to glean the answers to some of the questions that she rightly raises.
May I underline what the Chair of the Foreign Affairs Committee said about the dangers of the Nord Stream 2 pipeline in this context? When adopting this aerial adaptation from the Putin playbook of how to deal with dissidents, Lukashenko was clearly expecting an outcry, but already we are hearing suggestions that we must not be too harsh against Belarus, otherwise we will be driving him further into the Russian embrace. Will the Foreign Secretary ensure that no such argument of appeasement will be accepted by him and his fellow Ministers?
I can give my right hon. Friend exactly that assurance. The fact is that Lukashenko is already ensconced in the embrace of Moscow. The question is how we can prise the leadership away from that. It must be a mixture of the pressure for which my right hon. Friend and the Chair of the Foreign Affairs Committee rightly call, and a willingness to have the door of diplomacy left ajar should more pragmatic voices within that regime be willing to take positive steps forward. Ultimately, those steps must end in free and fair elections; that is what the OSCE investigations have called for and that is what the UK will stand for.
We can all agree that the most robust international response to this shocking act of aviation piracy is essential, otherwise Lukashenko’s methods could embolden other despots in the view that democratic nations lack the will to back up their outrage with meaningful action. As well as the co-ordinated international action against Belarus that the Secretary of State has spoken about today, what other support does he think can be offered to protect and assist human rights defenders in Belarus?
The hon. Lady asks a timely question. In reality, we have a number of levers, but let us not pretend that they are a silver bullet. We have provided and are continuing to provide support for civil society, media freedoms and media organisations. We apply the Magnitsky human rights sanctions, so there is pressure, and we hold to account those who persecute protestors, political figures or journalists. We raise the matter in every international forum we can—from the Human Rights Council to the United Nations Security Council—and we will use our presidency of the G7 to keep the flame of freedom burning for those poor souls who are in detention, whether they are journalists or political figures.
I congratulate my constituency neighbour, the Chair the Foreign Affairs Committee, on securing this urgent question. I welcome the Foreign Secretary’s very swift statements on how to respond to this hijacking, but I want to push him a little bit further. I am anxious that the tactics used recently will encourage other curious countries. What confidence can the Foreign Secretary give to journalists, activists or other individuals who are sanctioned for spurious reasons, in case their lives may now be under threat; what work can be done to strengthen western allies to ensure that their safety is met With your indulgence, Mr Speaker—piracy has been mentioned a few times and as the previous Maritime Minister, I cannot let this point go. Does the Foreign Secretary agree that the tactics that have played out may encourage countries such as China, which claims sovereignty over the whole South China sea? A third of the world’s maritime trade crosses through those waters, and if China could claim the right to intercept any ship or any plane crossing over the South China sea—
Order. I allowed the hon. Lady a little latitude, but I think it is a bit much to take complete control of the debate; we want short questions.
My hon. Friend is understandably worried about the wider international implications of this action. One of the things we discussed at the G7 meeting of Foreign Ministers was the importance not only of addressing these issues country by country but of the thematic protection of the international order. I have already mentioned the coalition for media freedom; on top of that we discussed support for the other Canadian-inspired initiative to counter the arbitrary detention of nationals or, indeed, dual nationals abroad—I am thinking in relation to Iran, but also more generally. On top of that, I hope the House knows that in March we launched the international accountability platform on Belarus to collect, verify and store evidence of human rights violations. That initiative was led by Britain, Denmark and Germany, a total of 20 states support it and we have provided money for it. That allows us to gather the evidence not just to call out abuses but, as some have mentioned, to pave the way for prosecutions when that is feasible in due course.
Does the Foreign Secretary recognise the criticism by many in the Belarusian diaspora that the response to last year’s stolen elections was too soft? Will he get tough by imposing sanctions on Belarusian individuals and companies, including the UK arm of the state oil company, BNK UK Ltd?
I think we all want to stand up for the same issue. I have spoken to a range of the key figures and that is not the feedback we have had, at least in terms of the UK response. We engaged very swiftly—before the EU, in fact—after the rigged election and imposed sanctions on 99 individuals in total, if we include not only the Belarusian regime but the Magnitsky sanctions that we imposed. I take the hon. Lady’s broader point. It is a question not of tit-for-tat but of making sure that we exercise every potential due diligence to stand up and hold to account those who violate people’s human rights and—I think this was the hon. Lady’s point—making sure that we seal every crack so that there is no possibility of businesses linked to the regime making money in this country.
There is no doubt that Belarus is now a rogue state. Lukashenko is a criminal, and I hope that eventually he will spend many years in prison. I celebrate the phenomenal courage of the politicians, activists, ordinary members of the public and, of course, journalists, who have made sacrifices that none of us in the UK would ever even dream of having to make. I have a terrible fear that every time we discuss these authoritarian regimes and issue another statement, we are basically throwing another snowball into a river. When are we actually going to take serious measures to make sure that these things do not go unpunished?
I have campaigned on these issues with the hon. Gentleman for many years and he is always an eloquent, powerful, tenacious and articulate advocate. I am not quite sure what action we could take that he thought we should take, but I am open to all suggestions, in a spirit of openness, and we need to marshal all our resources. One issue that I have not mentioned is that we are one of the largest shareholders in the European Bank for Reconstruction and Development and—I say this for completeness—we fully support its announcement that it will no longer support Belarusian sovereign funds. I accept the argument that we need to look at every possible lever, but, as the hon. Gentleman alluded to and implied, that is not easy when a regime is as dug in as the Lukashenko regime so clearly is.
I thank my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) for securing the urgent question and the Foreign Secretary for his statement on this very serious attack on civil liberties and the free press. I welcome the sanctions that have already been imposed on the illegitimate Belarusian regime through the Government’s newly established global human rights scheme. Does my right hon. Friend agree that standing up for our values by imposing sanctions on human rights abusers such as Lukashenko must be a key part of global Britain’s new foreign policy approach?
It not only should be but is, as set out in the integrated review. We stand up for our values—the values of open trade and open societies, including human rights and democracy—and that means holding to account those who perpetrate violations, and standing up and keeping the flame of freedom alive for those poor souls who are languishing in jails, whether in Belarus or elsewhere around the world.
There is no doubt that this was an act of air piracy designed to abduct a critic of the tyrannical Belarusian regime, and there is no doubt that the regime has been emboldened by the Russian regime’s law-breaking exercises around the world. It is important that the Secretary of State take every action, with every possible body, whether it is the EU, the G7, financial institutions or private investors—anyone who can hurt this regime—to send a message to it, and to any who would seek to copy it, that this behaviour will not be tolerated and there will be financial, personal and political consequences.
I share the right hon. Gentleman’s disgust and outrage. The Lukashenko regime is slipping further and further into pariah status. We will take every measure we can, whether at a diplomatic level, through sanctions or more broadly, to stand up for the values of human rights, particularly freedom of civil aviation, but also crucially to send a message around the world to others that this kind of behaviour will not be tolerated.
The kidnapping of Roman Protasevich is the worst example of what has been a systematic campaign by the Belarusian Government against journalists. Last year there were 480 detentions of journalists, who spent more than 1,200 days behind bars, and at least 62 cases of physical violence against them. Does my right hon. Friend agree that we need to send a strong message to Belarus and other repressive regimes that this is an attack on democracy and legitimate free speech that will not be tolerated?
I totally agree with my hon. Friend. We raised precisely this kind of systematic attack at the G7 Foreign Ministers meeting, and we will continue to do so.
While we have a long-standing position of challenging the results of Lukashenko’s fraudulent election win last year, we have to be honest and say that this case is a departure from these entrenched disagreements and represents a direct attack on the citizens of our EU allies and on international law. Given that plain reality, it is right that sanctions up to and including the freezing of Belarusian state funds are effected, but what new measures will the Government consider for granting asylum to those supressed by the Lukashenko regime?
Asylum has been raised already. The criteria in the asylum regime are reflective of international law and are fit for purpose. The evidence of this regime’s despicable actions means that those who want to apply for asylum in this country are able to do so and will get the fair hearing and due process that our system allows.
The Foreign Secretary is quite right to call for the International Civil Aviation Organisation to take action. Given that its aim is to sit at the centre of a system of safety and security standards for its 193 members and given that Belarus is a member, will he call for ICAO to look at Belarus’s continued membership of such an esteemed international organisations?
I certainly agree that ICAO must discharge its duties. This is a dramatic but seminal moment for it to stand up for the values that we are all trying to safeguard in relation to civil aviation. We will look very closely with our partners at the mechanisms and levers available to us within ICAO and will take as rigorous and robust an approach as we can.
The SDLP and I condemn in the strongest possible terms the actions of the Belarusian Government and echo what others have said about the importance of sanctions and of holding Lukashenko and his Russian protectors to account. This is the latest attack in recent years on journalistic freedom, including the horrific murder of Jamal Khashoggi, the imprisonment of Nazanin Zaghari-Ratcliffe on entirely trumped-up charges and, closer to home, intimidation of journalists here in Northern Ireland by paramilitaries. What action are the Secretary of State and his Department taking to co-operate with other countries committed to a free press to uphold the rights of journalists and to challenge attacks on freedom of speech and journalistic integrity?
The hon. Lady raises a great point, which is that in order to exert positive influence we have to co-ordinate with our allies, so we need to broaden the group of like-minded countries willing to take that action. She can see the evidence of the initiatives we are engaged in, through the media freedom coalition, which advises states on how to strengthen legislation to protect journalists, and the financial support we give to journalists who find themselves detained. More broadly, one of the things we discussed at the most recent G7 Foreign Ministers meeting was the arbitrary detention mechanism, which effectively says that when one or other of us in that mechanism finds one of our nationals or dual nationals arbitrarily detained, we all démarche and take action to try to secure their release.
Western flights continue to transit over this unpredictable airspace; I hope that the Foreign Secretary will make it clear that that needs to stop. For a European state to fake a terrorist threat shows how our international standards are being challenged. Other authoritarian states will be watching how the west responds—how resolute we are and how unified we are in our response. He listed a whole bunch of international organisations that will no doubt condemn what has happened, but will it affect Belarus’s behaviour? Will it change Lukashenko’s attitude? We need to make sure that we think bigger picture and recognise that a quarter of Belarus’s trade looks towards the west. I encourage the Foreign Secretary to make the changes that will affect Belarus’s behaviour in the longer term.
I thank my right hon. Friend, the Chair of the Defence Committee. I agree that we need to use every lever. I am not quite sure which specific one he thinks would be the decisive extra measure to bring Lukashenko to his senses, but I am very interested in continuing to talk to him about that. The reality is that Lukashenko becomes more and more reliant on Russia—I take the point that was made about that. We must not allow that to be a reason to ease up on the pressure, but we have to be realistic about how dug in Lukashenko is. We have ruled out nothing going forward. The most important thing is that we try to carry a broader group of international partners, and the reason that that is particular germane in this case is that the International Civil Aviation Organization and the Chicago convention represent an international public good.
I am delighted to hear the Foreign Secretary say that the Government will take a very tough response to this act of air piracy. Does the Foreign Secretary detect any sense of reticence from his counterparts in other countries in their response and any suggestion from them that we should take a softer approach to win round the Belarussian regime?
I thank the hon. Gentleman for his support. There will always be different views across the European family and I would be a bit reluctant about advertising that to Minsk or Moscow, for obvious reasons. What I would say is that we are in the business of supporting some of the most vulnerable of our European partners. That is why I was out in Estonia to talk to the Baltic three and I went to Oslo to talk to the Nordic five. I invited all of them back to the UK, to be hosted at Chevening, because I think that the support that we provide to that periphery of the European neighbourhood is absolutely crucial to supporting fellow NATO and European allies and to the message that we send not just to Minsk and Moscow, but around the world, as hon. Members have said.
I am grateful to the Chair of the Foreign Affairs Committee, my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), for applying for this urgent question and to you, Mr Speaker, for granting it. It has been clear that both sides of the House are united behind the actions that the Foreign Secretary has taken already on behalf of the British Government. May I say to him that in order to make sure that this does not happen again, as a result of the Belarussian Government or anyone else, the price paid by that Government must be sufficiently high? Also, what work is under way to look at other countries—the sorts of countries that might be tempted to do such things—to see whether there is any pre-emptive action that we might need to take to make sure that British people flying around the world are kept safe and that no others are put at risk by that sort of behaviour from this state or any other?
My right hon. Friend raises a very important point. First, we will use all the sanctions—all the levers—that we have at our disposal. We are conscious, as we have discussed and as others have said, of the extent of increasing reliance on Russia, but that cannot be a reason for us not to take the action we take. This is unique; I cannot remember as far back as the ’70s there being a1an analogous case. It is very rare. Sometimes actions are taken more through cock-up than conspiracy—sometimes very tragically when aircraft are shot down—but I cannot think of a precedent for this kind of rather calculated and conniving approach, with the MiG jet and the bomb hoax. My right hon. Friend is right to reinforce, as others have done, the deterrent effect of how we respond to this specific, isolated incident.
I welcome the very robust political and diplomatic stance that the Government are taking, but this case is more than that. This is a potential human tragedy as well, with Roman Protasevich now in detention and possibly ultimately facing the death penalty. I know, having campaigned in different parts of the world, that consular and embassy staff are very effective in the way in which they deploy their resources in supporting people campaigning against the use of the death penalty. Can the Foreign Secretary give me some assurance that everything that can be done to keep this case in the public eye will be done, within the confines of their role in country?
I thank the right hon. Gentleman, and I totally agree with him. We must do everything we can to signal that, as outrageous it is what they have already done, it would be a further step into pariah status if the death penalty were to be applied. I thank him for what he said about consular officers. They relate to and provide services to British nationals and dual nationals abroad, but none the less, the broader point he makes about diplomatically keeping the pressure on and doing everything we can to avoid the death penalty is very important in this debate.
I congratulate my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), the Chair of the Foreign Affairs Committee, and my right hon. Friend the Member for New Forest East (Dr Lewis) on mentioning the Nord Stream 2 pipeline. Bearing in mind that Lukashenko does not do anything without the authority of Moscow, their comments are particularly relevant to this debate. May I ask the Foreign Secretary what additional steps he is going to take against President Lukashenko? We already know that certain sanctions are in place against him and his cronies. Is there anything else that the Foreign Secretary can do specifically about additional British sanctions on this dictator?
Yes, we will look at the panoply of sanctions on individuals. On sectoral sanctions, we will co-ordinate with our partners as to whether those are appropriate. We will take action in ICAO in the way that we have described, because of the importance of securing civil aviation, but we will also raise this issue in the United Nations Security Council because of the threat it poses more broadly to international peace and stability.
As an aircraft engineer and student of international relations, I am perhaps especially outraged by this brazen assault on international norms and the deliberate endangering of an aircraft by means of military force. For Lukashenko to have deployed the apparatus of the state to effect an act of vengeful piracy against flight FR4978 rides roughshod over the international system and cannot, as the Secretary of State has outlined, go unchallenged. Will he therefore commit the UK, and underline the UK’s role within an international coalition, to effecting the utmost in sanctions, including the freezing of assets against the Lukashenko regime? Does he agree that if the international community is now looking on aghast at a step change in delinquency by a state actor, should not people who are thinking of mirroring that also look on aghast at the consequences that the international community puts out?
The hon. Gentleman is right about the action we take and the deterrent effect it has. He mentioned asset freezes; asset freezes in relation to 99 individuals and entities are already in place, but we will, as I have already said, look right across the full range to see what further action we should take and look to work very closely with our international allies about which options to take forward.
Order. I am suspending the House for the necessary arrangements to be made.
To ask the Secretary of State for Digital, Culture, Media and Sport if he will make a statement on the findings of Lord Dyson’s report into the BBC.
Lord Dyson’s report makes shocking reading. It details not just an appalling failure to uphold basic journalistic standards but an unwillingness to investigate complaints and to discover the truth. That these failures occurred at our national broadcaster is an even greater source of shame. The new leadership at the BBC deserve credit for setting up an independent inquiry and for accepting its findings in full. However, the reputation of the BBC—its most precious asset—has been badly tarnished, and it is right that the BBC board and wider leadership now consider urgently how confidence and trust in the corporation can be restored It is not for the Government to interfere in editorial decisions, but it is the job of Government to ensure that there is a strong and robust system of governance at the BBC with effective external oversight. It was to deliver that that we made fundamental changes when the BBC’s charter was renewed in 2015-16. Since then, the BBC Trust has been replaced by a more powerful board with an external regulator, Ofcom, responsible for overseeing the BBC’s content and being the ultimate adjudicator of complaints. We also made provision at that time for a mid-term review by the Government to ensure that the new governance arrangements were working effectively. That review is due next year but work on it will start now. In particular, we will wish to be satisfied that the failures that have been identified could not have occurred if the new governance arrangements had been in place. The BBC board has also announced today its own review, led by the senior independent director and two non-executive members, of the BBC’s editorial guidelines and standards committee. That review will examine editorial oversight, the robustness and independence of whistleblowing processes, and the wider culture within the BBC. It will take independent expert advice and will report by September In an era of fake news and disinformation, the need for public service broadcasting and trusted journalism has never been stronger. The BBC has been, and should be, a beacon setting standards to which others can aspire, but it has fallen short so badly and has damaged its reputation both here and across the world. The BBC now needs urgently to demonstrate that these failings have been addressed and that this can never happen again.
Lord Dyson’s report was utterly damning. Put simply, Mr Bashir has obtained fame and fortune by instituting document forgery and callously scaring a mentally vulnerable woman—not a mistake, as he claims in The Sunday Times, but something with more than a whiff of criminality about it. The BBC then covered this up, blackballing whistleblowers and ensuring that its own reporters did not report on Bashir. But it did not stop there. The BBC rehired Bashir, who it knew was a liar, promoted him, and, extraordinarily for the BBC, allowed him to moonlight for its main commercial rival. Mr Munro, head of news gathering, greeted Bashir’s return by citing his excellent “track record in enterprising journalism”. My sources suggest that Mr Bashir was not interviewed, but simply appointed—hardly a highly competitive process Does the Minister agree that Dyson leaves still more unanswered questions? Who precisely was involved in the 25-year cover-up and instituted the action against whistleblowers? Was Bashir rehired, in essence, so that he would keep his mouth shut? Did Lord Hall make the decision to rehire Bashir, or was that in fact Mr Munro Finally, the BBC has announced a review into some of those matters, and into how robust its current practices are. Does the Minister agree that a good starting point would be to ensure that the investigating panel is diverse? As yet, no women are included, which is ironic considering that the victim of Mr Bashir was a woman. Should whistleblowers be compensated, and the matter of BBC culture be considered, including the “us and them” between management and reporters, and the kowtowing to so-called “talent”, at the expense of the BBC’s own editorial guidelines? Does the Minister share my alarm that Mr Davie has recently removed the sole voice for editorial policy on the BBC’s executive committee? What does he see as the long-term implications for the BBC charter.
I congratulate my hon. Friend on his urgent question. He maintains the fine tradition of the Digital, Culture, Media and Sport Committee asking probing and incisive questions. The questions he raises are valid. The process by which Martin Bashir was recruited to return to the BBC, and his subsequent resignation a couple of weeks ago, are matters that the director-general is investigating urgently, and I expect him to provide a fuller account of exactly what happened shortly. I know my hon. Friend will want to examine the BBC on that question, and indeed on the other valid questions that he raised about the composition of the panel, its diversity, and the protection in place for whistleblowing. Those important questions need to be addressed, and I am sure that my hon. Friend and the Committee will do that.
I thank the hon. Member for Solihull (Julian Knight) for securing this urgent question, and the Minister for his response. I also echo the many expressions of deep concern about the actions of Martin Bashir 25 years ago, and the deception he used to secure the interview with Diana, Princess of Wales. The understandable hurt and pain expressed by Princes William and Harry has been deeply moving. The methods used by Mr Bashir were unethical and wrong, and clearly he should not have been re-employed by the BBC in 2016. The internal inquiry by the BBC into the interview was wholly inadequate It was right that Lord Dyson conducted this inquiry, and his findings are stark. The fact that the interview was obtained 25 years ago does not minimise the damage caused, and it is right that the BBC director-general has given an unequivocal apology. The onus is now on him to explain whether he considers that changes to the governance of the BBC in those 25 years mean that something like this could not happen again. I welcome the announcement of the review by the BBC board, its terms of reference, and the timescale to which it will report However, in among some of the commentary on the BBC that we have heard over the past few days, we must remember that the BBC is bigger than just Martin Bashir. It is bigger than “Panorama”, bigger than other programmes, and even bigger than the current affairs department. The BBC is one of the most trusted sources of news in the world, at a time when trusted sources are more important than ever before. The Secretary of State said in The Times today that he would not be having a knee-jerk reaction to this incident, and I welcome that commitment. The new director-general, and the chair of the BBC, whose appointments were welcomed by the Government, have been in post for less than a year. They need to be given time to make the reforms they have promised. The mid-term review is an important chance to take stock, but we must be clear exactly what problems any governance reforms will solve, and keep the issue of funding the BBC separate from its editorial control.
I thank the hon. Lady, and I agree with very much—indeed, almost everything—she said. On the governance of the BBC, as I said earlier, fundamental changes were made a few years ago, which we believe would have meant that somebody who wished to blow the whistle in the way that took place would have been listened to, and they would have had recourse to Ofcom if they were dissatisfied with the BBC. We must be absolutely sure that the new governance arrangements work properly, and there may well be need for further editorial oversight. That is what the BBC’s review is designed to reveal. However, I share her view about the importance of trust in the BBC. The mid-term review will be carefully conducted; we will not rush into any changes. Finally, I can confirm to the hon. Lady that the question of funding of the BBC is a separate one and that the licence fee—while it will be subject to debate, I have no doubt, in the coming years—is in place until the end of this charter in 2027.
May I say to my right hon. Friend that he acted properly, in 2015, when he appointed Sir David Clementi to review the BBC? The Government were right to accept Sir David Clementi’s recommendations, which came only a few months later, putting right the absurd arrangements made in 2007 that left the BBC without a chair and led to all kinds of confusion May I also say to my right hon. Friend that the BBC is a beacon? Things did go wrong—by Martin Bashir, the double reviewing of what he had done and in his further reappointment back to the BBC; that is incontrovertible. But what should also be clear to the Government is that if we start attacking the BBC, we will throw out much more than we have, and if the choice is between the state broadcasting corporation—the BBC—or the United States, people in this country would rightly choose the BBC.
I must thank my hon. Friend for his words. He is absolutely right that the previous governance arrangements were deeply flawed, and Sir David Clementi, who conducted the review and then went on to become chair of the BBC, put in place a much stronger governance system, with both a stronger internal management board and external oversight, and we do believe that that would have been much more effective if it had been in place when some of the events we are debating took place. I also absolutely agree with my hon. Friend about the importance of the BBC. We have just heard a statement from my right hon Friend the Foreign Secretary about a country where public service broadcasting is not free, fair or independent. The BBC is a beacon of those things, and we are determined to strengthen it and to restore trust in it across the world.
The BBC has questions to answer about its cover-up culture. Why did Director-General Tony Hall bring back Martin Bashir only five years ago as religion correspondent, given that he knew he had lied over the process used to secure the Princess Diana documentary? Who else was involved in the recruitment? Was Lord Hall warned that he would be dismissed if Lord Dyson’s conclusions were as critical of his behaviour as they were? What effect, if any, will Lord Hall’s behaviour have on his retirement package? Why was Martin Bashir allowed to resign rather than be sacked? The treatment of Matt Wiessler has been unforgivably cruel. Will the BBC now offer him an apology and a financial settlement? Whistleblowers should never again be punished, as happened to those on “Panorama” who say that their careers were blighted under Lord Hall after asking uncomfortable questions. Regaining trust will now need to be a top priority. The BBC board should be strengthened with independently-minded members with journalistic experience. The ongoing cover-up culture at the BBC is long standing and must now be addressed.
The hon. Gentleman speaks with experience, as a former employee of the BBC, and he raises extremely valid questions. As I say, the BBC is conducting an urgent investigation into the circumstances of the employment of Martin Bashir, but if questions remain following that, I have no doubt that the hon. Gentleman, as a member of the Select Committee, will not be reticent in putting them to the BBC.
Will my right hon. Friend make it clear that both the BBC and Ofcom must understand that, following next year’s mid-term review, the Government propose to vary the charter and to make the guidelines, impartiality rules and complaints procedures subject to parliamentary approval, without any so-called independent editorial standards board, which is the same old BBC dodge of waiting until things die down and then carrying on as before that we witnessed after the Jimmy Savile affair in relation to whistleblowing, when it committed to deal with it, and it did not?
I do not want to pre-empt either the BBC’s review of editorial oversight or the mid-term review, which we are only just beginning to work on, but my hon. Friend makes some extremely valid points. We placed impartiality in the first line of the BBC’s public purposes at the time of charter renewal, and we will wish to be satisfied that the BBC is delivering that, but I know that the new chair and the director-general take that very seriously.
All over the world, people are appalled by the dishonesty and cruelty of the way Martin Bashir secured his interview with a very vulnerable Princess Diana 25 years ago. It is right that the BBC itself reviews again its editorial practices and how Martin Bashir came to be employed, but does the Minister appreciate that it remains a very valued national institution, both here and overseas? There is concern that long-standing enemies of the BBC are using the Bashir scandal to attack, defund and potentially dismantle our national broadcaster.
I absolutely assure the right hon. Lady that there is no question of dismantling or defunding the BBC. It is a priceless national asset, and one of the most serious consequences of the revelations of the past week is that its reputation and trust in it have been badly damaged. It is essential that it retains its position as the most trusted and reliable broadcaster in the world, and there is work to be done to restore that reputation.
The BBC has seen a string of public scandals, from Jimmy Savile to the treatment of Lord McAlpine, Sir Cliff Richard and many others. All have stemmed from a drive to secure sensationalist media headlines, along with groupthink and a “we know best” approach. The BBC’s capacity to scrutinise, investigate and report on itself is in tatters, which is particularly worrying considering its huge resource, how it seeks to dominate the news space and its lack of transparency. Does my right hon. Friend agree that reform is needed, not only in the specific areas that Lord Dyson has pointed to, but of its culture, transparency and whether its dominance is undermining news plurality?
I agree with my right hon. Friend. He is entirely right that this is not a one-off incident. There have been dreadful failings by the BBC in its journalism in recent years, and he mentioned three of them. I would say that all of those happened before the new charter was put in place, but we need to assess the effectiveness of the charter to ensure it is properly working, and that is something that we will start work on straightaway.
David Plowright, the chair and managing director of Granada Television in its great days, used to say regularly that he needed the BBC to keep the commercial sector honest. If the BBC cannot keep itself honest, we are in real trouble. Does the Minister agree that the changes at the BBC need to go beyond governance, structure and procedure, into a deep cultural change? How would he go about supporting that change?
I very much agree with the hon. Gentleman. Indeed, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) made the same point immediately before him. It is right that the BBC investigates the precise circumstances that led to Martin Bashir’s interview and the subsequent failure to investigate properly the complaints, but it goes wider than that. It is a question of culture. We are determined that the BBC should be properly reflective of the diversity of sex, race, thought and geography. In the future, it must not just be made up of people who pat themselves on the back and turn a blind eye when accusations are made. Fundamental reform is needed, but I am assured that the new management recognises that and is determined to address it.
When are we going to have the guts to stop the BBC criminalising people for non-payment of the licence fee, which is no better than the poll tax?
I understand my right hon. Friend’s strength of feeling. As he will know, we have now twice examined whether non-payment of the licence fee should be decriminalised, but this has revealed that if we decriminalise, there is a risk that the alternative enforcement mechanisms would lead to more distress for people who are perhaps not in a position to pay, with the possibility of bailiffs arriving and even greater fines. So we need to look at this very carefully. As we have said, we have not ruled out decriminalisation, but we are balancing that against the consequences of the alternatives, and that is something that the Government will continue to examine.
As the House is aware, I am a Scottish politician. During the 2014 Scottish independence referendum, the BBC came under strong and sustained attack from the then First Minister, Mr Alex Salmond, a gentleman who now broadcasts on Russian television and refuses to acknowledge the enormity of the crime that was committed in Salisbury. I wonder, does the Minister agree that in the long term the editorial independence of the BBC and its protection from undue interference by politicians are paramount?
I do agree with the hon. Gentleman. The independence of the BBC is absolutely central to its reputation for objectivity and reliability, and indeed it contrasts strongly with the channel that he also mentioned, RT, which has none of those things. We are absolutely committed to maintaining and indeed strengthening the independence, objectivity and fairness of the BBC.
My constituents in Stourbridge value the importance of public service broadcasting and a free press, as do I. Does my right hon. Friend agree that the BBC needs to improve its culture with a new emphasis on accuracy, impartiality and diversity of opinion, to ensure that the failures highlighted by Lord Dyson’s report can never happen again?
I do agree with my hon. Friend. She is absolutely right to say that it is those qualities of accuracy, impartiality and fairness that are admired around the world as being as being represented by the BBC. That is why the revelations in the Dyson report are so damaging, because they cast doubt on those things. I can assure her that not just the Government but, I believe, the BBC are absolutely conscious of that and determined to put it right.
I welcome, in general, the tone that the Minister has adopted today in response to this. He said in his statement that “the need for public service broadcasting and trusted journalism has never been stronger.” He is absolutely right about that. That was also the conclusion of our Select Committee, the Digital, Culture, Media and Sport Committee, when we recently reported on the future of public service broadcasting. This is an example of an era of journalism that was infected with a poisonous culture which unfortunately, in this case, spread to the BBC, which should have been displaying different kinds of values in its journalism. I just want to read a short quote from the National Union of Journalists parliamentary group, which said in its statement: “It’s important for us also to reiterate that the BBC is not its management, past”—
Order. Is the hon. Gentleman coming to a question?
I am, Madam Deputy Speaker.
Pretty quickly, please.
With your indulgence, Madam Deputy Speaker, and I apologise “It’s important for us to also reiterate that the BBC is not its management, past or present. The BBC and the values and principles of public service broadcasting it personifies is in fact our members, and all its staff, who do the work that makes the corporation an entity that is valued at home and throughout the world.” Does the Minister agree with that statement?
I do agree with that statement. There is no question but that the challenge posed by fake news and disinformation, which are circulating at a level we have never previously seen, makes it all the more important that there are trustworthy, reliable places where one can go without questioning the validity of what is being reported, and the BBC represents that above all else. I read with great interest the Select Committee report that the hon. Gentleman referred to, and in large part the Government completely agree with it, certainly, the importance of public service broadcasting —that has never been less, as was powerfully set out by His Royal Highness Prince William in his comments about this episode.
I was very struck by Matty Syed’s comment in The Sunday Times yesterday about “institutional narcissism” in the BBC. Although that might be slightly provocative, does my right hon. Friend believe that the current leadership of the BBC has a real sense of the cultural change that many believe is necessary to retain trust in the BBC, particularly in news and current affairs, and indeed the capacity to achieve that change?
There is no question but that even before Lord Dyson’s report was published there was a widespread feeling that the culture in the BBC needed to change—that it was made up too much of people of the same mindset and the same background and from the same part of the world. That is something that I believe the new leadership—under the recently appointed chair, Richard Sharp, and the director-general—are aware of and intend to address.
I am very grateful for this urgent question. In its response to Lord Dyson’s report, the BBC board has said that it will review and assess “the robustness and independence of whistleblowing processes” How important does the Secretary of State consider independence on whistleblowing, including the protection of whistleblowers, to be?
I regard it as absolutely essential in not just the BBC but all public bodies. We need to make sure that, in future, if somebody blows the whistle and exposes malpractice in the BBC, the consequence is that somebody else gets fired, not that they do.
Does my right hon. Friend agree that part of the problem in the culture of the BBC is that people often confuse the need to be accountable with a threat to the independence of their editorial judgment and that they therefore avoid that accountability? Does the board now accept that until a permanent and completely independent body oversees editorial policy, complaints procedures and whistleblowing—like a kind of accident investigation body—we will not see that change of culture, because people will go back to their established custom, which is to deny accountability?
My hon. Friend is right that we need to see much stronger oversight of the editorial decision-making process in the BBC. The BBC board covers a vast range of different aspects of the BBC’s activities—its strategy, its budget and so on—and there is a case for greater oversight, particularly of journalistic and editorial decisions. Quite how that is brought about is something that the review that the BBC has put in place is examining urgently. I understand that that review will publish a report by September, and we will obviously want to look at it very carefully.
Thank you for calling me, Madam Deputy Speaker: “Trust is the foundation of the BBC.” So says its values—except if you are trying to cover up a serial sex offender scandal such as that involving Jimmy Savile, do over a respected journalist such as Carrie Gracie or lie and cheat to get your exclusive interview with a princess As Lord Dyson’s report states, “the investigation conducted by Lord Hall…was flawed and woefully ineffective” To add insult, a 2018 report found that Scottish fee payers subsidise broadcasting in the rest of the UK by £100 million a year. Is it not about time that Scotland stopped having to subsidise such ineptitude by those at the top of the BBC and that the Government acted to ensure that everyone in the UK is fairly treated and represented by the BBC?
The BBC is the British Broadcasting Corporation. It reports on activities across the United Kingdom. It is paid for by every person resident in the United Kingdom who has a television. Impartiality and fairness apply as much in its reporting of domestic politics as they do internationally. There are questions to be answered, as I agreed earlier, and the hon. Lady is correct. However, I do believe that the British Broadcasting Corporation should remain a beacon of impartiality for all residents of the United Kingdom.
May I take my right hon. Friend back to the one bit of the Dyson report that has left us with a serious question? It relates to the behaviour of the then chairman and of Mr Bashir. Fraud is defined as a deception intended to result in financial or personal gain by false representation. There is no question from the report but that Mr Bashir made false representation to prey on a vulnerable woman to get her to do something that she would otherwise not have done. Furthermore, it refers to the fact, but does not conclude anything from it, that Mr Hall and others therefore covered up that process; again, I think that opens them up to the idea of fraud. Has my right hon. Friend decided to refer those people to the Director of Public Prosecutions?
The questions surrounding the employment of Martin Bashir are being urgently investigated by the corporation, as I said, and I expect a statement to be made very shortly. On whether any criminal offences have been committed, I understand that a request has gone to the Metropolitan police to examine the evidence that has been revealed and reach a judgment on it; it is a matter for the police to determine.
It is clear that shameful journalistic practices took place and that the investigations into them were, at best, profoundly inadequate. Does my right hon. Friend agree not only that the BBC needs to clean up its act in quite a considerable way, but that this lamentable episode should not be used as an excuse to severely damage or destroy an institution that is hugely valued by tens of millions of people in this country and millions more around the world?
I entirely share my right hon. Friend’s admiration for the BBC, which at its best is the finest broadcaster in the world. That is what makes these revelations so painful: that an institution that we all admire should be found capable of such appalling failings. I absolutely agree with my right hon. Friend; our intention is to restore trust in the BBC, certainly not in any way to diminish it as one of our great national assets.
I am sure that many people will have been disgusted by the behaviour of Martin Bashir and those senior figures who failed to address his actions, but does the Secretary of State agree that demands for the present Government to act against today’s BBC over events that occurred more than a quarter of a century ago could look a little ridiculous?
I am sure that I speak for the Secretary of State in saying that it is not a question of punishing the BBC—particularly for events that happened a long time ago, as the hon. Gentleman says—but it is essential that we learn the lessons from what happened then. As I said, we have already put significant changes in place since those episodes occurred, but we need to be absolutely certain that the current governance arrangements are effective and that these appalling incidents could not have happened if they had been in place.
Now then: the findings of the Dyson report come as no surprise to many residents in Ashfield who have lost all confidence in the BBC. I personally have ripped up my TV licence, and it will not get another penny from me ever, because in my opinion the once great BBC is rotten. My constituents should not have to pay for a service if they do not use it. Does my right hon. Friend agree that one way to make the BBC behave in future is to make it a subscription service?
My hon. Friend is absolutely right that one of the great challenges that the BBC faces is to reconnect with the people he represents. There is a widespread feeling that the BBC is too metropolitan-centred and has lost touch with the views of a large part of the British population; I think that the BBC itself recognises that. With regard to subscription, the licence fee is in place until 2027 when the current charter expires, but there is bound to be a debate about the future funding. Moving fully to a subscription model would require quite significant changes to the way in which people receive their television, but I have no doubt that that is a debate that has already started and will continue.
At its heart, the Dyson report speaks to the missing values of integrity, honesty and the value of truth at the BBC. Following the biased coverage of the 2014 independence referendum, this crisis in trust is but a taste of what audiences in Scotland have known for years. The BBC brand is broken in Scotland and broadcasting must therefore be devolved, or at the very least must see the introduction of a new funding model, where all money raised in Scotland is spent in Scotland. Many will be bewildered by today’s handwringing over integrity and impartiality, when the broadcaster saw no issue in giving space to the Scottish leader of the UK Independence party in 2016, yet refused any place for my party in the 2021 debates, despite being led by a former First Minister, two sitting MPs and numerous councillors across Scotland. Why are the UK Government so quick to act when public trust has been broken now, but have been silent on the collapse in trust among viewers in Scotland for years? As a net contributor to the BBC, with a £43 million annual shortfall between income and spending in Scotland, how do the UK Government plan to plug the hole left propping up programming elsewhere upon Scotland’s independence?
The BBC is committed to impartiality in its coverage of all political events, including the referendum in Scotland and the current political debate. It is very important that the independence of the BBC is defended and that it resists political pressure from political parties in Scotland, be it the SNP or indeed some new offshoot from it.
With the mid-point review of the BBC charter imminent, does the Minister agree with many of my constituents across Hyndburn and Haslingden that everything must be on the table for discussion, including its governance structures? Can he clarify that the scope of any future inquiries will cover the wider culture at the BBC?
The mid-term review is about the governance of the BBC and the new arrangements which were put in place. It will certainly incorporate a consideration of the culture to ensure that the BBC, in its present form, is delivering on its public purposes. It is a mid-term review of the existing charter. There will be an opportunity for a more fundamental examination of every aspect of the BBC, including its funding, when we come to the renewal of the charter, but that is still not until 2027.
Can the Minister explain which elements of the BBC’s governance structure he thinks need to be reviewed in the light of Lord Dyson’s report? Does he agree that in considering the Dyson report we should all remember the BBC’s contribution to the UK’s economy, culture, democracy and soft power abroad?
As I said, the Government very much hope that the new governance arrangements now in place are sufficient, but the purpose of the mid-term review is to assess that and see whether any further changes need to be made. With regard to the contribution of the BBC to the economy of this country and to democratic debate, I entirely share the hon. Gentleman’s view that the BBC plays a central part in both.
I must declare an interest: I worked for BBC South Today and BBC Radio Solent for nine very happy years, where I witnessed the highest standards and was never influenced—ever—on how I was to report, other than fairly, in a balanced way and accurately. It seems to me that the problem is at the national level with senior management. Can my right hon. Friend tell the House how to ensure that senior management at the top of the BBC are, in future, independent and meet the all very high standards we want them to meet?
I am pleased to hear what my hon. Friend says about the high standards that pertained when he was working for the BBC. Obviously, that is something we hope will represent the BBC’s values in future. In terms of the leadership and management, the review which has been conducted by the BBC into the specific lessons to be learned from Lord Dyson’s report will feed into the wider reform agenda, which I think the board is determined to pursue. There is no question that there is a problem with culture at the BBC which goes beyond just the failings identified by Lord Dyson. I can assure my hon. Friend that that is something the leadership of the BBC does now recognise and is working hard to address.
The hurt and anger felt by Princes William and Harry and other members of the royal family is palpable and painful. I am so glad that there has been an unequivocal apology from the BBC and the launch of the lessons learned report on account of the diabolical journalistic practices endured by Princess Diana in 1995, but, of course, the BBC is so much more than a single programme; it is a treasured institution that has contributed immensely to our nation over the last century. So does the Minister agree that it is very distasteful to see a feeding frenzy, especially from those with a severe dislike of the BBC? Does he also agree that it is the pinnacle of irony for the Prime Minister to be talking about being immensely concerned about journalism standards, given that he himself was sacked by The Times for inventing a quote?
The hon. Gentleman was doing fine until the end. This is a more serious matter. I certainly agree with him about the distress that has been caused to the royal family, which has been very powerfully expressed by His Royal Highness Prince William. That is something that the BBC recognises, which is why it is acting to address it. I can only repeat what I have said already: the trust in the BBC is one of its greatest assets and the BBC now has to work hard to restore that.
How can someone who supports Brexit, believes in the Union and loves England be persuaded that the BBC’s view of public service broadcasting will in future be fair to their views? In future, will the BBC allow the majority on these issues more voice and less denigration?
I can answer my right hon. Friend by saying that I am one of the people he has described precisely, in all three of those measures, and I, too, have occasionally been concerned at what appeared to be a lack of impartiality in the BBC on some of those issues. That is something that has been, I think, felt by a large number of people. It is the job of the BBC—as I say, it is the first public purpose of the BBC—to deliver impartiality. I know that that is something that the leadership of the BBC which is now in place is absolutely committed to, but it will be examining ways in which that can be strengthened where necessary.
While Ministers toy with taking greater personal control of the BBC, true democratic reform remains out of reach. So, rather than stifling journalistic freedom, will the Minister consider devolving broadcasting powers to the devolved nations to ensure democratic, local regulation of BBC services?
The Government have no intention of imposing greater control over the leadership of the BBC. The BBC is independent and we are committed to respecting and strengthening that independence, When it comes to the question of governmental responsibility, it is not a devolved matter; the BBC is a national broadcaster covering the whole of the United Kingdom, so we believe that it is right that it remains the responsibility of the UK Government as a whole.
I chair the all-party parliamentary group on the BBC and I say in that regard that this has not been a good chapter for the BBC’s fine history and it is important that it learns the lessons. I welcome the Minister’s very balanced tone. No one has done more in this place to try to reform the BBC and move it to that better place. Will he describe a little more about the review process that will apply the conditions that exist now with regard to governance, versus what would have occurred beforehand? Who will perform that role? Will it be his Department, his officials, or will he bring somebody in to assist in that regard?
As my hon. Friend knows, the mid-term review was not actually due to take place until next year; it was written into the charter that it should be in 2022. We would almost certainly have started thinking about the issues to be considered and the questions needing to be addressed in any case, but this issue has made that more urgent, and the Secretary of State has it made clear that we are starting work on it now. Precisely how the mid-term review will operate and whether we will invite external submissions is not yet determined, but I will certainly try to ensure that my hon. Friend is the first to know when we have further announcements to make.
Some have sought to defend the BBC by saying that the disgraceful Martin Bashir incident was 25 years ago, and indeed it was. However, since 1995, we have had the Jimmy Savile cover-up; the disgraceful incident regarding the surveillance of the search of the Cliff Richard home; the political partisanship of Emily Maitlis on “Newsnight”; and recently—in the past week or so—we heard about a BBC Palestinian expert on the BBC who, before she was employed by the BBC, tweeted that Israel is more Nazi than Hitler. The mid-term review surely offers the opportunity for radical, fundamental change at the BBC.
I can tell the hon. Gentleman that a lot of the incidents he mentioned took place before the new governance arrangements were in place, but we obviously need to consider whether there are lessons to be learned from those incidents for our mid-term review. If that journalist’s tweets regarding Israel and Palestine are shown to be genuine, it is my view that anybody who can express such opinions should not be employed by the BBC.
In order that arrangements can be made for the next business, I will now briefly suspend the House for three minutes.
(Urgent Question): To ask the Secretary of State for the Home Department when she will publish the report of the independent panel into the death of Daniel Morgan.
Daniel Morgan’s murder in 1987 was a tragedy compounded over decades by the absence of a successful conviction in the case. Our thoughts remain with Mr Morgan’s family. They have had to wait an incredibly long time for answers and it is essential that they get them. As the House will be aware, the Daniel Morgan independent panel was set up in 2013 by the then Home Secretary. The panel was commissioned to leave no stone unturned and the review has taken eight years The terms of the review set out that the independent panel will present its final report to the Home Secretary, who will make arrangements for its publication to Parliament. The chair of the panel has informed the Government that the report is now complete and that she has undertaken all her required checks. This is an important milestone. Once the panel provides the Home Secretary with the report, my right hon. Friend will make arrangements to lay the report in Parliament, as is her duty according to the terms of reference. The Home Office has asked the chair of the panel to agree a process for sharing the report with the Department in order to proceed with its publication Finally, I return to Mr Morgan and his family. After 34 years of heartbreak, it is the sincere hope and expectation of the Home Secretary, and indeed all of us, that Mr Morgan’s family will receive answers to the many questions that surround the terrible circumstances of his death through the publication of this report.
I am sorry, but it was not a tragedy; it was a crime. Daniel was axed to death in a car park on 10 March 1987—34 years ago—and thanks to corruption in the police and interference by News UK, the family have had no justice. That shames all of us. The Government have already cancelled the Leveson 2 inquiry, which was promised to Daniel’s family as a means of investigating that corruption, but now the Home Secretary has blocked publication of the independent panel report, saying that she wants to review it. She has no power in law to do that. It is not covered by the Inquiries Act 2005. Her own terms of reference allow her only to make arrangements for its publication to Parliament Daniel’s brother Alastair told me, “This has only added to our pain”. He urges the Home Secretary speedily to reconsider her position and to put an end to this unnecessary situation, so will the Minister agree a date with the independent panel and Daniel’s family today for publication this week, and will she undertake to publish the report in full—without deletion, amendment or redaction—because people are worried that she is not going to do that It is not difficult to see why powerful people with very close friends at News International might want to delay or even prevent this publication, so has the Home Secretary, or any of her advisers or officials, had any formal or informal discussion or correspondence on this matter with News UK, with Rebekah Brooks or with Rupert Murdoch? Will she publish the minutes of her and her Department’s meetings with representatives of News UK over the past 12 months? If not, will not people conclude that the cover-up is still going on, and that the Conservative party is not the party of law and order, but the party of the cover-up?
I thank the hon. Gentleman for his questions and for bringing this urgent question to the House, because he has set out some of the reasons why this case is so very important. Indeed, we note that this review, which was directed by the then Home Secretary in good faith eight years ago, has taken as long as it has to work through the evidence The allegation that publication has been blocked is not correct. One cannot block the publication of a report if one has not yet received it. The Home Office has not received the report. As I said in response to the urgent question, the Home Office is working with the chair of the panel to agree a date for publication. [Interruption.] There is some chuntering from a sedentary position In terms of the contents of the report, I spoke only this afternoon to the Home Secretary about this matter. There is a very real wish—on both sides of the House, I think—to see this report published and to see answers for the family. As I say, she will be looking at this report. [Interruption.]
Order. We simply must not have shouting at the Minister from the Front Bench. It is simply not polite.
Thank you, Madam Deputy Speaker. The reason the process for publication has been set out as it has is that it is in the report’s terms of reference from 2013, with paragraph 6 stating: “The Independent Panel will present its final Report to the Home Secretary who will make arrangements for its publication to Parliament.” The Home Secretary will be entering into that agreement in good faith and the report will be published I know there has been a question about redaction, editing and so on—that will not happen. The only caveat —I say this because I am aware of my duties at the Dispatch Box—is that, as the hon. Gentleman knows, the Home Secretary, like any other Home Secretary, has responsibilities, both in terms of national security and the Human Rights Act—
Oh!
The hon. Gentleman dismisses national security with a wave of the hand, but these are the responsibilities any Home Secretary must abide by. That is the only caveat. Once those duties have been discharged, this report will be published. Again, we welcome the report and we look forward to receiving it from the panel when it is passed to the Home Office, and then the report will be published.
I thank my hon. Friend for updating the House on the current position. Clearly, all of our thoughts are with the family and friends of the late Daniel Morgan, who was savagely murdered. They have had to wait an extended period for justice to be served. Will she therefore give us a timetable for when the Home Secretary will lay the report before the House, so that Members of the House can ask appropriate questions about this inquiry, and about not only why it has taken so long, but its findings?
The slight difficulty I have in setting out a timetable is that because we have not yet received the report, we do not know how long it is, the issues raised therein and so on. The Home Secretary is clear that after 34 years the family, understandably, wants this report and wants to see its conclusions, so the Home Office will be working expeditiously to lay this report before Parliament, as set out in the terms of reference of the panel review.
I congratulate my hon. Friend the Member for Rhondda (Chris Bryant) on securing this urgent question, and I should say that a member of Daniel Morgan’s family is a constituent of mine. It is the family who should be uppermost in our minds today, and they have said: “This unwarranted and very belated interference by the Home Secretary amounts to a kick in the teeth” It is 34 years since Daniel Morgan’s horrific murder and we have had five failed police investigations, a collapsed trial, an inquest, but no justice for the family and no answers. The independent panel was set up in 2013 to find answers, and the expected publication date was 17 May, yet we have more delay. There is no doubt that the report considers profound issues of corruption and trust in institutions, but the Minister will be aware of the panel’s strong condemnation of the intervention of the Home Secretary, on the basis that it is “unnecessary and is not consistent with the panel's independence” The justification given is to check on human rights compliance and to ensure national security is not compromised, but the independent panel itself said that a “senior specialist Metropolitan Police team” carried out a security check—-it has been done already—so can the Minister explain why a further security check is necessary In addition, the panel’s terms of reference make it clear that the Home Secretary’s role is limited to receiving the report, laying it before Parliament and responding to the findings. Can the Minister explain how this intervention and supposed check by the Home Secretary is consistent with those terms of reference? How will the Home Secretary be working with the family and the panel to address these very serious concerns? When will they actually agree a date finally for publication of an unredacted report, rather than prolonging the agony that the Morgan family have been going through?
The right hon. Gentleman eloquently set out the terrible experiences of the family over the past three decades and more. It is precisely because of the trauma that they have suffered over the years that the review was commissioned. I know that the right hon. Gentleman joins us in wanting to ensure that the panel report is as thorough as possible and that it is now published. There is no disagreement at all between him and the Government on that. We want to publish the report but we have not yet received it. The Home Secretary will make arrangements for that in line with the terms of the review—that is what we want to happen. The Home Office is very much in conversation with the panel to get the report and make the arrangements. When that has happened, the report will be published.
Given the outrageous history of corruption, injustice and delay in this case, the requests by Daniel Morgan’s family are surely entirely reasonable, so will the Home Secretary meet the family? Will she agree that the timetable for the publication of the report should be very short indeed? In particular, the presence of a suitably experienced solicitor and QC on the panel means there should be almost nothing that the Home Office could possibly have any concerns about. Why was the panel first told that the delay was down to the elections and the period of mourning for the Duke of Edinburgh and the consequential backlogs in respect of documents being laid before Parliament On the issue of trying to build confidence in these processes, why cannot there be an independent body that can adjudicate on such issues? Will the Minister acknowledge that perceived ties and links between the Home Secretary and news organisations is all the more reason for such an independent process to exist in this case? May we have full disclosure of all the meetings and correspondence between the Home Office and news organisations under investigation by the panel? Finally, if the panel points to the need for Leveson 2 to be revived with far greater powers than the current panel enjoys, will that happen, and if not, why not?
Sadly, the hon. Gentleman asks me to speculate about a document that the Home Office has not yet received. We cannot publish the report until it has been received. If I may, I wish to correct one point that the right hon. Member for Torfaen (Nick Thomas-Symonds) also made in his contribution. The panel may well have conducted its own checks, and quite rightly so—it is bound to do so—but the Home Secretary, of course, has her own responsibilities that she cannot transfer to anyone else. That applies to every Home Secretary In relation to national security concerns, I hope Members will understand that the Home Secretary has access to information that very few people in this country have access to. She must discharge her duties in accordance with her wider responsibilities as Home Secretary. I underline again the fact that the Home Secretary, the Home Office and the Government want this report to be published. We want the review’s findings to be in the open so that some of the questions that have been posed over the years are answered. We hope there will be some sense of justice for those most closely related to Mr Morgan.
The failure ever to prosecute anyone for the terrible murder of Daniel Morgan and the continued allegations in respect of police corruption and media collusion make this an immensely important report. I do not know whether the Minister understands that the way she is talking about the report—reviews by the Home Secretary and the Home Secretary having access to additional information she has to review the report against—serves only to increase distrust and unease in what is already, clearly, a distrustful process that should never have become so. To restore trust for the panel and, crucially, for the family, will the Minister commit that the report will be published before Parliament rises for the Whitsun recess, if the Home Office receives the report this week?
The right hon. Lady sets out the seriousness of the situation, and I do appreciate that, as I hope was apparent from my earlier comments, but I make the point again that I cannot commit to a publication date if the Home Office has not yet received the report. Please, give us the report and we can then publish it.
Daniel Morgan Jr., Daniel Morgan’s son, lives in my constituency, and I spoke to him this morning. I met Daniel at an advice surgery back in 2019, when he came to see me to ask if I could write to the then Home Secretary about the delay to the inquiry. The then Home Secretary, the right hon. Member for Bromsgrove (Sajid Javid), wrote to me in 2019. He shared the concern that the inquiry was taking a long time, as one would imagine, and said to me: “As it fulfils this important work the Panel’s investigation is rightfully independent of Government, but the Panel must deliver its findings to Parliament and to the Morgan family as soon as possible I am certain that you will understand that it would be improper for a Minister to seek to influence any decisions made by the independent Panel.” My constituent has been waiting 34 years since the death of his father to see any kind of justice, so why does this Home Secretary not agree with the former Home Secretary that it would be improper for a Minister to seek to influence any decisions made by the independent panel, and will she publish any advice from officials explaining why her powers have changed? Will she meet my constituent?
I thank the hon. Lady for bringing forward the very human aspect of this. I know that we are talking about a report and a review process, but at the heart of this has been the family. In fairness, if one looks at the written ministerial statement issued by the then Home Secretary when the review was announced, one sees that it was made clear that the family must be at the heart of the process. The review has taken eight years, and as my right hon. Friend the Member for Bromsgrove (Sajid Javid), the previous Home Secretary, set out to the hon. Lady, we could not—would not—interfere with the conduct of that review. That is why, in a way, we are in the position we are in. The panel has its report; it has, we have been told, now finalised the report; under the terms, we will receive the report and then publish it. The only caveat is in relation to national security considerations—for which, in fairness, the Home Secretary has responsibility in a whole host of regards. However, that is the only caveat, so the report will be published. We look forward to receiving it from the panel, and I hope it will give answers to the hon. Lady’s constituent and to others.
It is well established that there were significant failings and delays in investigating both the murder of Daniel Morgan and the subsequent claims of corruption and malpractice. As others have said, this is clearly damaging to the family of Daniel Morgan and also others involved in investigations. They include one of my constituents, who has raised serious allegations about the Metropolitan police’s conduct, about which I have written to the Secretary of State on more than one occasion, and to which, frankly, I have received not hugely helpful responses. Now it seems that the Home Office is willing to delay justice and further erode trust in the police service by preventing the truth of these failings from becoming public. Looking forward, will the Minister explain exactly what action she will commit to on behalf of the Home Office to ensure that future investigations are carried out independently, rigorously and timeously, in order to prevent further injustice?
I imagine the chair of the panel will say that her review has been conducted independently, rigorously and timeously. The Home Secretary cannot publish a report until she receives it, and that is the situation we are in. We all want answers. These are incredibly important issues that have been raised during the course of the review. A great deal of time has elapsed since the horrific murder of Mr Morgan, and the report I hope will answer some of the questions that have been posed in relation to that.
I have a long-term interest in this case through a campaigning lawyer, Mr Glyn Maddocks, who works with me as co-chair of the all-party parliamentary group on miscarriages of justice, along with my co-chair the hon. Member for Reigate (Crispin Blunt). This case was brought to me many years. I have even visited the Golden Lion car park, where this horrible murder took place, but the puzzle today is this. I have a lot of time for this Minister, but it should have been the Home Secretary here today. It is with some puzzlement that we hear that the report is finished after eight years rather than one. It was a report set up by a former Home Secretary, who then became Prime Minister. We were all told that this expensive inquiry would come out last weekend, but immediately we were told that it cannot be seen because of national security. Either they have seen it and decided there is a problem with national security, or they have not seen it. The fact of the matter is that justice must be done in this case, and we need to see the report. Can the Minister give us the date? When can we see it, because we want it now?
I thank the hon. Gentleman for his kind remarks. Again I reiterate, because I understand the concern, that there is no question of the report being blocked, edited or changed in the ways that people are concerned about. As I said, it will be published. The only caveat is that if there are matters in there that relate to national security, and those are duties that any Home Secretary must abide by, but she and everyone else wants this report to be published and for those questions to be answered. In terms of the date, again, I make this point: we cannot publish something if we do not yet have it.
I cannot help thinking that if things had been the other way around, and Sun journalists had lied to procure an interview with the late Princess of Wales, and the BBC were alleged to be involved in covering up the reason for a brutal murder on the streets of London, the action on the Government Benches to this and the previous item of business might have been very different. Can the Minister give an assurance that as soon as what should be an extremely quick check on national security and other concerns has been carried out by the Home Secretary, Parliament will see the report before anyone else? In particular, can she give an assurance that there will be no opportunity for Maxwellisation, which would allow those who were rightly criticised in the report to get their story into the press before the report is made public and made available to Members of Parliament?
I am not going to draw analogies between the facts of this terrible, terrible case and the headlines and facts that have emerged in relation to Princess Diana. I think both cases and both people deserve their own moment. The previous urgent question concerned the late princess. This UQ concerns Mr Morgan, so I will confine myself to him. In terms of the process, at the risk of repeating myself, the report has been prepared by the panel. The panel has taken eight years to gather evidence. One can only imagine—I am speculating, because I have not seen it—what the product will be after eight years’ worth of work. That is why, in accordance with the terms of the inquiry, the Home Secretary will make arrangements for it to be laid in Parliament. Of course that means that Parliament will see it In relation to the Maxwellisation process, I do not know the process that the panel has gone through, but the Home Secretary has a duty under section 6 of the Human Rights Act 1998 in relation to threats to life, but that is the only consideration that will be in her mind—that, and national security. We have no interest in editing this report—none whatever. We want the truth to come out.
Five police investigations failed to find the person or persons responsible for Daniel’s murder, but they did find evidence of police corruption. Police officers and News UK reporters are alleged to have corrupted these investigations in the 1980s, the 1990s, and the years after 2000. Throughout these 34 years, Daniel’s brother, Alastair Morgan, has led the campaign for justice for Daniel. The Daniel Morgan independent panel was promised access to Metropolitan Police Service files, but not to any material held by News UK. Given News UK employees’ alleged involvement in the cover-up of Daniel’s murder, will the Home Office now re-establish the Leveson part 2 inquiry, which has the necessary power to investigate News UK, or do the Government intend to allow potentially guilty parties in relation to this case to go free?
I want to bring the hon. Lady’s attention back to this urgent question, which is about the report that the panel has drawn up following eight years of research and investigation. We want the report to be published and the truth to come out. When we receive the report, we will, in accordance with the terms of the inquiry, publish it and make arrangements for it to be laid before Parliament. There is nothing further that I can add to that because we have not yet received the report. We await it, along with everyone else, and look forward to the panel providing us with it.
On a point of order, Madam Deputy Speaker. I know that I should not comment on what has just happened, because that would be to keep the debate going—I have got a genuine point of order coming—but I would briefly point out that national security can be used to cover anything, even a mention of the Metropolitan police My serious point of order—I hope the Minister listens to it—is that there are, I think, at least eight named day written parliamentary questions on the Order Paper for answer tomorrow. The Home Office has been particularly bad at replying on the named day to named day parliamentary questions of late, and it would be enormously helpful to re-establishing trust if the Minister could ensure that they are all answered tomorrow. I do not know whether you have any means, Madam Deputy Speaker, of relaying that information to the Minister.
The hon. Gentleman is, of course, very clever in his making of a real point of order and seeking to continue the argument that has just taken place during his urgent question. I will ignore the part of his point of order that was not a point of order, and answer him quite simply by saying that I have relayed the points that he has made to the Minister by means of raising my eyebrows, and the Minister, by means of nodding her head in a most ladylike and professional fashion, has shown me that she has heard the point of order The serious part of the hon. Gentleman’s point of order is that when questions are submitted for a named day, the Department to which they are submitted ought to pay attention to that and not merely to ignore it. Mr Speaker has said many times over these last few months that many questions are taking too long to be answered. I have every confidence that the hon. Gentleman’s questions will be answered on the correct day and that, if they are not, he will raise the matter again, and whoever is in the Chair will look upon the matter with great seriousness I now very briefly suspend the House, this time for only two minutes, in order that arrangements can be made for the next item of business.
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following: New clause 6—Review of impact on corporation tax revenues of global minimum rate of corporation tax— ‘The Chancellor of the Exchequer must within six months of Royal Assent lay before the House of Commons an assessment of the effect on corporation tax revenues in 2022 and 2023 of a global minimum corporation tax rate set at 21%.’ This new clause would require the Government to publish an assessment of the revenue effect of a global minimum corporation tax rate of 21%. New clause 12—Review of impact of Act on investment— ‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the effects of the changes on— (a) business investment, (b) employment, (c) productivity, (d) GDP growth, and (e) poverty (3) A review under this section must consider the following scenarios— (a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax, and (b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax (4) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a report on the effect of the changes in the Act on investment, comparing scenarios in which (a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax and (b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax on various economic indicators. New clause 22—Eligibility for tax reliefs— ‘(1) For the purposes of Clauses 9 to 14 and 109 to 111 no tax reliefs shall apply to companies registered or with subsidiary companies registered in countries or jurisdictions listed in the EU list of non-cooperative jurisdictions for tax purposes (2) The Secretary of State shall also have the power to list additional jurisdictions or countries as non-cooperative jurisdictions for the purposes of subsection (1) that he/she perceives to be non-cooperative jurisdictions for tax purposes.’ This new clause would stop companies registered, or with subsidiary companies registered, in tax havens from benefiting from the UK Government tax reliefs in this Bill. Amendment 1, in clause 9, page 4, line 2, at end insert “provided that any such company which has more than £1 million in qualifying expenditure must also make a climate-related financial disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures within the 2021/22 tax year.” This amendment would, in respect of companies with qualifying expenditure of over £1 million, add a condition relating to climate-related financial disclosure to the conditions that must be met in order for expenditure to qualify for super-deductions. Amendment 29, page 4, line 2, at end insert “provided that any such company must also not be liable to the digital services tax” Amendment 30, page 4, line 2, at end insert “provided that any such company which has more than £1 million in qualifying expenditure must also— (i) adhere to International Labour Organisation convention 98 on the right to organise and collective bargaining, and (ii) be certified or be in the process of being certified by the Living Wage Foundation as a living wage employer.” Government amendment 2 Amendment 31, page 5, line 15, at end insert— “(11) Expenditure shall not be qualifying expenditure under this section if it is incurred by a company which has at any time been involved in arrangements giving rise to a liability for diverted profits tax, or which would give rise to such a liability but for the effect of section 83 of Finance Act 2015 (12) For the purposes of subsection (11), involvement in arrangements shall include being connected within the meaning of section 1122 Corporation Tax Act 2010 to any company involved in such arrangements.” This amendment would bar multinationals with a history of corporate tax avoidance from accessing super-deductions.
The vaccine has given us all hope, but we know that the health crisis from covid is far from over, and the impact on jobs, businesses and the economy resulting from the pandemic will be with us for a long time to come. People across our country and British businesses that have been struggling want to be able to get back on their feet. This Bill should have offered them the support they need to do so, but instead the Government chose to make half of all people in the UK pay more income tax, and its headline measure for businesses, quickly and with good reason, earned the nickname, “the Amazon tax cut”. This Amazon tax cut was proudly announced by the Chancellor as the new super deduction—a £25 billion tax cut that he has said represents the biggest two-year business tax cut in modern British history. What he was less keen to make clear is that this tax cut is not targeted at British businesses that have been struggling in the outbreak, but stands to benefit some of the biggest multinational tech firms that have done very well indeed over the past year or so As we have heard during previous debates on the Bill, small and medium-sized businesses can already benefit from the annual investment allowance. That allowance, extended by clause 15, offers a 100% tax break on investment up to £1 million, and we know that it will benefit almost all businesses already. The Financial Secretary to the Treasury has said exactly that. He stated very clearly in a written ministerial statement on 12 November last year that the annual investment allowance: “Simplifies taxes for the 99% of businesses investing up to £1 million on plant and machinery assets each year.” We pushed the Government on this matter in Committee of the Whole House, when the Financial Secretary claimed: “The super deduction benefits all businesses that are in a position to take advantage of the eligible deduction it provides”.—[Official Report, 19 April 2021; Vol. 692, c. 764.] He will know, however, that the 99% of businesses already benefiting from the annual investment allowance will benefit only marginally from the new super deduction The real winners of the super deduction were identified in Committee of the Whole House by my right hon. Friend the Member for Barking (Dame Margaret Hodge), who made the powerful argument that it will most benefit “the companies with oven-ready capital investment plans, benefiting from the increased demand that they have enjoyed over the last torrid year—companies such as…the notorious tax avoider Amazon.”—[Official Report, 19 April 2021; Vol. 692, c. 751.] As that phrase reminds us, Amazon already avoids paying much corporation tax in the UK at all by shifting profits to low-tax countries overseas—I will return to that point shortly—but it is depressing that, through his super deduction, the Chancellor is finishing the job Amazon started and wiping out the last little bit of tax it pays in this country As the House may remember, we asked the Government to look again at this matter in Committee of the whole House. Our amendment at that stage would have explicitly prevented the biggest tech firms from taking advantage of the Chancellor’s tax break, as well as other big firms that do not support workers’ rights and the living wage. At the time, the Financial Secretary to the Treasury objected to our amendment on the basis that it sought to “restrict the relief only to certain companies”—[Official Report, 19 April 2021; Vol. 692, c. 742] and that it imposed “burdensome conditions” on companies that want to benefit from it. That latter phrase told us plenty about the Government’s views on people’s rights at work. The conditions the Minister saw as “burdensome” are the rights to organise and to be paid a living wage. When even basic rights at work and a living wage are seen as burdensome, it is perhaps no wonder that this Government broke their promise to include an employment Bill in the Queen’s Speech earlier this month It is clear that we will need to push Ministers over workers’ rights on future days—from banning the shameful practice of fire and rehire to ending exploitation by rogue umbrella companies—as cross-party amendments tabled to this Bill by right hon. and right hon. Members seek to achieve. Today, we have made it very straightforward for the Government, through amendment 29, to focus specifically on preventing the very biggest tech firms—those companies liable to pay the digital services tax—from benefiting from the super deduction. This should be easy. Only a very small number of very large multinational firms that have done very well over the past year are liable for the digital services tax. The detail of that tax means that businesses are liable only when a group’s worldwide revenues from digital activities—such as providing social media platforms, search engines or online marketplaces—are more than £500 million, and when more than £25 million of these revenues are derived from UK users The vote on this amendment will come down to the very simple question of how Members of this House believe public money should be spent. As the Bill stands, the Government’s biggest business tax cut in modern British history will finish the job Amazon started, wiping out the last bit of tax it had to pay on the few parts of its business the profits of which it has been unable to shift overseas. A vote in favour of our amendment 29 would stop Amazon and a small number of similar firms benefiting from a giveaway of public money—public money that could be better spent for so many purposes, including to support British businesses that have been struggling throughout the past year. I urge Conservative Members to consider how they vote on amendment 29 Before we come to that vote, I will turn to our new clause 23, through which we seek to push the Government finally to back President Biden’s plans for a global minimum corporation tax rate. I have explained how the Government’s super deduction will wipe out Amazon’s remaining tax bill in the UK, and how the amount it was due to pay in the first place was paltry compared with what it should be paying. Despite its business success in the UK, profit shifting to Luxembourg meant Amazon’s corporation tax contribution in the UK in 2019 was less than 0.1% of its turnover. People are fed up with large multinational companies avoiding their tax. It goes against the fairness that must be at the heart of our tax system, and in this year of all years, when so many British businesses are struggling to get back on their feet while Amazon’s business booms, it is clearer than ever that change is long overdue We have heard brazen claims from the Government about their work to combat international tax avoidance. In the debate in Committee of the whole House on this Bill, the Minister went so far as to claim that the Government have “led the international charge” in a number of ways, yet since the Biden Administration announced their proposals for a global minimum corporate tax rate, we have seen that, not for the first time, actions from the Government fail to match their words, with the UK now the only G7 country not to back the US plan. This is a once-in-a-generation opportunity to grasp the international agreement on the global taxation of large multinationals that has evaded our country and others for so long, yet rather than stepping up, our Government are stepping away.
The hon. Gentleman advances the extraordinary claim that the UK is the only country among the G7 not to have backed the Biden plan. Will he put in the Library the evidence for that claim?
I am very happy to put in the Library references to comments from the other G7 countries indicating their support, but what I ask the Financial Secretary to do is put in writing the support from the UK Government for the plans proposed by President Biden, which he should be able to do today. He should act, because the British people want the Government to act. He need only look at polling carried out at the end of April by Yonder, formerly Populus, which showed overwhelming public support for action to tackle global corporate tax avoidance: three quarters of respondents thought that “The UK should play a leading role.” The polling also showed that less than a third of people “trust Rishi Sunak and Boris Johnson to tackle global tax avoidance” The public are right to be sceptical, because the Government have shunned ample opportunities to come out in favour of President Biden’s plans; indeed, since we began debating the Bill, I have put them to the Financial Secretary and his colleagues three times. On Second Reading, I urged the Exchequer Secretary “to confirm to the House that she and the Chancellor back plans for a global minimum corporate tax rate and that they will do all they can to make this a reality.”—[Official Report, 13 April 2021; Vol. 692, c. 197.] She did not respond. In case his colleague’s lack of response was simply an oversight, I asked the Financial Secretary in Committee of the whole House “to confirm whether the Chancellor backs plans for a global minimum corporate tax rate”—[Official Report, 20 April 2021; Vol. 692, c. 897.] He refused to do so, saying only that the Government “welcome the renewed commitment that the US Administration have made in this area”.—[Official Report, 20 April 2021; Vol. 692, c. 914.] In a debate the following week, I put the question to him again, as simply and directly as possible: “does the Chancellor back the plans proposed by the US President?”—[Official Report, 28 April 2021; Vol. 693, c. 415.] The Financial Secretary replied: “I do not think it is appropriate for Ministers to comment on tax policy in flight”.—[Official Report, 28 April 2021; Vol. 693, c. 418.] It is very hard to conclude anything from that pattern of responses other than that the Government are not backing these proposals to succeed We know that much of the discussion around President Biden’s plans and the proposals formulated in recent years by the OECD and G20, with which his plans largely align, has centred on the so-called pillars 1 and 2 of any agreement. In broad terms, pillar 1 relates to where profits are taxed, while pillar 2 relates to a global minimum corporate tax rate. Both are important to developing a fairer tax system, both feature in President Biden’s proposals, and the Opposition want to see progress on each We have been trying to understand why the Government are so reluctant to get behind President Biden’s plans. There was a suggestion in the Financial Times last week that what the UK wants is more movement on where large multinationals pay taxes—pillar 1—before it will agree to support the President’s global minimum corporate tax rate, pillar 2. The paper quoted a UK Treasury official: “The core UK proposition is that we’ve got to solve the digital tax issue…It’s not primarily about a minimum tax”. To quote the chief executive of Tax Justice Network, that argument is “absolute nonsense”. Many commentators have joined him in taking a very sceptical view of what the UK claims its position to be; they point out that President Biden’s plans include steps to make progress on pillar 1, and that although any estimates are necessarily rough, pillar 1 would bring in only a few per cent. of the estimated £14 billion that a global minimum corporate tax rate at 21% under pillar 2 would raise A report by Bloomberg, however, implied that the real reason behind the Government’s position may be cynically to disguise their real agenda: a desire to keep alive the possibility of a race to the bottom in the future. That would be such a damaging and short-sighted approach. People are fed up with the race to the bottom. We thought that even the Chancellor had had a conversion when he admitted to the BBC’s “Today” programme around the time of the Budget that years of Conservative economic policy had failed, telling the BBC that “there was an idea” that corporation tax cuts “could help spur investment, and what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that our businesses are doing as a result of those corporation tax decreases.” After years of people being frustrated with tax avoidance by the biggest multinational companies, the new global deal finally within reach would be a game changer. It would raise billions of pounds a year for investment in our British public services and industry, it would stop British businesses being undercut by large multinational firms that shift their profits overseas, and it would change the behaviour of Governments around the world by calling time on the race to the bottom with tax rates. That is why a global minimum corporate tax rate is so important This is a once-in-a-generation opportunity. It would be a shameful failure for our Government, at the G7 meeting that we are hosting in Cornwall next month, to fail to lead on securing a global deal. It is crucial that we show support and help to build momentum behind the Biden Administration’s ambitious plans.
The House has become familiar with having a time limit for every item of business, but I hope that we can manage to consider this stage of the Bill without a time limit. I appeal to Members who are taking part to have consideration for other Members, and not to speak for too long. How long is too long? More than five minutes is too long, but if somebody takes five and a half minutes because they are making some important points, that would be fine. If the occasional person take interventions and it comes to six and a half minutes, that would be fine. But if people take longer than is necessary, I will have to impose a time limit, which makes for a less good debate. Let us try to behave like parliamentarians and not take too long. That puts a tremendous amount of pressure on Stephen Hammond.
Thank you, Madam Deputy Speaker. I am sure the House will benefit from your strictures towards my speech, and I welcome the opportunity to make a short contribution on the amendments. As the hon. Member for Ealing North (James Murray) rightly says, the OECD-Biden proposals are an attempt to ensure a multinational, legal framework to ensure that multinational countries pay tax in the countries from which they derive that revenue. Unlike him, I think any sensible look at history will show that this Government have led the way on this since 2010. There can be no suggestion that they have not led the way on ensuring that multinationals should not be able to shift profits to avoid taxation. They have tried to lead the arguments on securing, over many years, a multinational, multilateral agreement on where revenues and profits are derived and how those are taxed. Across the House, we ought to recognise that the Government have been trying to achieve that and that they support it. It has been true since 2010. One of the former Chancellors, George Osborne, led the way on the matter. The OECD proposals, as the hon. Gentleman put it, are in two pillars, as we all recognise. Pillar one rightly seeks to address the matter of base erosion, as the UK Government have done historically and continue to do. Pillar two, however—I think he failed to recognise this point—would go well beyond what is normally considered to be within the ability of national states, in terms of using the flexibility of fiscal policy to ensure that investment and incentives are properly rewarded within their economies, and may well have some perverse effects on a number of multinational industries, such as the insurance industry. Given your strictures, Madam Deputy Speaker, I shall not give my long peroration on that matter However, the key point is that there is a difference between what the Government have been trying to achieve—a multilateral, multinational agreement on the need for a combined approach, which I have no doubt that the Prime Minister and the Chancellor will wish to speak about at the G7—and a legal, minimum international tax rate. It is right that Governments still retain the ability to set fiscal measures according to their economic circumstances. Therefore, I wholeheartedly support—as the Government do—the international agreed approach to ensure that we tax multinational companies on where they derive their revenues and profits The problem with new clause 23 is that it talks about a review of the impact of the global minimum tax, but in reality, it is superfluous, because many of the consequences of setting a tax rate of 21% can easily and readily be calculated. The OECD discussions on the precise nature of the agreement are still under review. Therefore, speculating about how that might assess and impact on different economies could hinder the global efforts to achieve that aim Finally, as I am sure the Financial Secretary will wish to assure the House, the Government have already agreed that as, when and if there is a global agreement on minimum taxation, they will—when they are a party to that—ensure that the Office for Budget Responsibility assesses the impact for the UK economy and globally. So while this new clause is an interesting amusement for the House tonight, it is superfluous and I wholeheartedly encourage the Government not to accept it The hon. Gentleman spoke a bit about the need for investment and for addressing the historical UK underperformance in that area. We all agree with that. As we seek economic recovery post-pandemic and, in the longer term, as we build a cleaner, greener and stronger economy, clearly, the problem of underinvestment has to be addressed on a long-term, sustainable basis. However, it is clear that what the Chancellor has done, with what is popularly known as a super deduction, is likely to bring forward investment in the economy at just the time it is needed. There is an element of saying that, of course, we want to concentrate that on any number of small businesses that may not benefit from investment relief and this may or may not be at the margin, but it may or may not be at the margin that it has the greatest impact. I think the super deduction, which the Opposition seek to criticise, will do exactly that. They want the OBR to assess the impact in other areas of the Finance Bill, but the OBR has already made an assessment of this particular measure in the Bill, which is that it will derive at least 10% extra investment in the UK economy. At this stage of our economic recovery, that seems to me to be fundamentally important, so I hope that the Government will push ahead with the super deduction, as they are doing in this Finance Bill, and even consider it on a longer-term basis as well, because it is hugely important that we address the under-investment in both physical and human capital. Therefore, Government amendment 2 to clause 9, which will allow leased buildings to qualify for that super deduction, seems to be eminently sensible Given your stricture, Madam Deputy Speaker, although I could share with the House another 15 minutes of brilliance, I shall now sit down.
I will also bear in mind what you have said, Madam Deputy Speaker, and keep my comments fairly brief I wish to start with the words of the US Treasury Secretary, Janet Yellen. She said: “Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids…It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.” That is something that this Government ought to be getting behind, as it makes absolute sense. It is exciting to see that the Biden plan for a global minimum corporation tax rate is gathering pace. It is reported that the G7 is close to a deal, perhaps paving the way for an OECD deal later on in the year. The action is described in the Financial Times as “the largest shake-up in corporate taxation for a century.” As the shadow Minister set out, the Government have been ducking questions on this and ducking responsibility. It feels to me at the moment that an agreement will take place in spite of the UK Government’s hesitancy—less global leadership, more like pulling teeth. Why would the UK Government be in favour of the types of profit shifting that this international co-operation is trying to stamp out? Why would they let our businesses be undercut? Why would they forgo valuable tax revenues Our new clause 12 is asking the UK Government to prepare a report on an OECD agreement, which seems very much like the direction of travel, as it would cover 135 countries and the largest corporations in the world. It is important that the UK Government fully understand the impact of such an agreement on each and every part of these islands: on business investment, employment productivity, GDP growth and poverty. The impact of not reaching a deal has been included in new clause 12, too, as it is important that we can fully understand the impact should the UK pursue some kind of crazy isolationist stance against this global growing consensus The SNP has great sympathy with new clause 22 and amendment 31. Those using tax havens and with a history of corporate tax avoidance should not seek to obtain benefit from schemes intended to support businesses that already pay their fair share. I ask Treasury Ministers what safeguards they intend to put in place if they do not accept these sensible and logical amendments I am glad that, in Government amendment 2, there is some recognition of the issues facing those who have background plant and machinery in leased properties, allowing them to qualify for the super deduction. I remain hugely frustrated that there is yet to be any wider support and any wider recognition of the many businesses both involved in leasing and those that lease machinery themselves. I seek assurances from Ministers that they will continue to hold the door open on this issue and to look at it, because there are so many companies that would benefit from the super deduction if it were not for the fact that they have always leased machinery. They contribute hugely to the productivity of this country and there should be some recognition of that within the Government’s proposals.
I wish to speak to amendment 31, which stands in my name and in the names of hon. and right hon. Members from across the House. I shall try to keep my comments brief, too. I will go back to first principles and try to convince Ministers that what we propose is simply fair, just and practical Eighty-five per cent. of the British public pay their tax without question through the pay-as-you-earn system. For many of those hard-working taxpayers really struggling to keep their families going, particularly after the pandemic, it is simply unconscionable to watch the big corporations that have made so much money during the pandemic—the Googles and the Amazons—continue to create financial structures that have no other purpose than to help them avoid paying corporation tax. Shifting their profits simply to avoid tax is not only unfair but utterly immoral.
I have to say that my right hon. Friend the Member for Barking (Dame Margaret Hodge) has eloquently put forward the case for these proposals, both those from the Opposition Front Bench, which I fully support, and her own, but I think she has been too kind to the Government. Like her, I have sat for over two decades listening to the sophistry from Conservative Ministers explaining the various complications of doing anything to tackle tax avoidance, and they have been dragged kicking and screaming to take what little action there has been. I have also sat here year on year while they argued that cuts in corporation tax were the way to increase investment. Now, at least, they have admitted that they were wrong on that However, instead of cutting corporations’ taxes by cutting corporation tax, they are now simply doing it through the super deductions. These are super tax deductions to super tax avoiders. We can name them: Amazon, Vodafone, Virgin, Starbucks and many others. I sat in the Chamber when the global crash happened over a decade ago, and we discovered the intricate corporate structures that the banks used to avoid their taxes—the shell companies based in tax havens from the Channel Islands to the Caribbean. Barclays bank had more than 100 subsidiary companies located in the Cayman Islands alone. As these corporations became increasingly financialised, they became increasingly unprincipled about paying their dues to society I have tabled a simple amendment saying that super deductions should not go to companies that are failing to fulfil their duty as taxpayers in our country and that are using tax havens. The reason is simple: these corporations benefit from the workers they employ, and the taxes are needed to pay for their education and training. It is ironic that we are also often using our tax system to subsidise the low pay that these corporations pay their employees. They also benefit from the infrastructure. That is why they should be paying their way within our country itself In this struggle over the last 20 years or so, it is worth paying tribute to those who have campaigned so hard: my right hon. Friend the Member for Barking and all those activists, academics and journalists. I pay tribute to groups in the UK such as: Tax Justice Network; UK Uncut, which took direct action; Tax Justice UK; and those journalists and researchers who helped to expose the Panama papers and the Paradise papers. One of those journalists was the Maltese investigative journalist Daphne Caruana Galizia. She was assassinated in 2017 for the work she did to expose tax avoidance and money laundering My new clause 22 is very straightforward: no company should be eligible for the tax reliefs in the Bill if they are located, or have subsidiary companies located, in tax haven jurisdictions. The most authoritative list of tax havens or secrecy jurisdictions is the European Union’s blacklist of non-co-operative jurisdictions for tax purposes. That should be the basis of our approach. We are outside the EU now, so we must go further. Subsection (2) gives the Secretary of State powers to list additional jurisdictions that do not co-operate in disclosing information to Her Majesty’s Revenue and Customs. In this way at least we can ensure that we are not, in effect, acting as subsidisers for tax avoiders or laundering tax reliefs into their coffers. It is a simple amendment. I support the Labour Front Bench amendments and the other amendments that would have a similar effect, but I have had enough. I am sick to death of sitting here listening to excuses from Ministers about failing to act when so much needs to be paid through a fair taxation system. So many of our constituents are having to endure continuing austerity because of the lack of tax revenues. They are living in poverty, unfortunately, as a result of the failure to have a fair taxation system that redistributes wealth in our country.
I rise with great enthusiasm for the proposals set out by the Government, in particular on the super deduction. We heard from my hon. Friend the Member for Wimbledon (Stephen Hammond) about the benefits that super deduction will bring to tax receipts eventually and to growth in the immediate term for our national finances I want to talk quickly about a benefit that will be felt locally in Devizes. I spoke today to the boss of Wadworth brewers, the brewers behind the legendary 6X and Bishop’s Tipple, with which you will be familiar, Madam Deputy Speaker. They are not tax avoiders, as the right hon. Member for Hayes and Harlington (John McDonnell) just described them; they are local employers who drive growth and employment in my constituency. They will use the super deduction to invest in more buildings, more jobs, more brewing and more beer in Wiltshire, and I am absolutely delighted to welcome the proposal on their behalf There is a real problem that the super deduction proposal seeks to address, which is that, sadly, low corporation tax has not driven the sort of private sector investment we need. I therefore support the rise in corporation tax, which will be imposed on profits on the biggest firms. We live in a topsy-turvy world where we see Joe Biden proposing 15% corporation tax, the Labour party proposing 21%, and my Conservative Government proposing 25%. I recognise the value of that, however: we have to pay the bills of the pandemic somehow and I appreciate that this is the right way. We will still have the lowest corporation tax in the G7. That will make us, with the super deduction and the other measures that have been set out, the best country in the world in which to invest and to bring a business Let me finish by stating my support for the world-leading efforts the Government are making to ensure that big tech pays its fair share of tax. We have just heard from the right hon. Member for Barking (Dame Margaret Hodge) that she thinks we should back Biden. I think we should back Britain. We should back what this country and this Government are doing to lead the debate on fair taxation. The key challenge for us is to ensure that the tax that is gathered through whatever global agreement we can make is paid in the right places; it would be a bit of a shame if we achieve a global minimum tax that was all paid in California. I welcome what the Government are doing, and I look forward to the Minister’s response and to the announcements that I hope will be forthcoming ahead of the Cornwall summit. I absolutely back everything the Government are doing through this Bill.
Again in this place, we are talking about the challenges that have been created by the coronavirus—the challenges to our businesses, to individuals and to those who have been excluded from Government support—and the taxation that will have to be used to try to rebuild. In the Finance Bill that the Government have laid before us, I believe that they have missed important opportunities to do that for the benefit of all our constituents. I would echo what the hon. Member for Ealing North (James Murray) said when laying out new clause 23 and when speaking about Biden’s proposals. We have to look at this crisis in a way that we have never approached any crisis before, and on a scale that we have never done with any crisis before. We have to look for measures that will be enacted on a scale that we have never seen before I would also like to express my support for the amendments tabled to address and, indeed, stop the malpractice that is rife. These include an amendment tabled following the inquiry by the all-party parliamentary loan charge group into how contracting should work, to stamp out the malpractice and mis-selling to public and private sector freelance and locum workers by unregulated umbrella companies. Those practices have created a climate where tax avoidance schemes are rife and are being mis-sold These amendments follow the powerful report by the loan charge APPG, as I have said. BBC Radio 4 has estimated the cost to the Treasury—£1 billion a year in lost tax revenue—and The Guardian has reported that the hidden cost of umbrella companies in the UK may actually be more than £4.5 billion a year. These are some of the opportunities that I believe the Government are missing There are also specific amendments before us tonight about measures that would require the Chancellor to review separately the effectiveness of furlough and the self-employment income support scheme, the impact of the Finance Bill on small businesses and the impact of the Bill on transitioning to zero-carbon domestic flights by 2030. All of these, I believe, are opportunities that the Government are failing to take The coronavirus has caused the worst economic crisis in three centuries and brought real hardship to our constituents up and down the country in all lines of work. The furlough scheme and SEISS have helped countless people so far, and millions continue to depend on them, but the Government need to think again and review their decision to end the schemes in September. They need to think about extending them into next year. We have all been glad to see cases dropping and restrictions being eased thanks to the vaccine and the NHS, but unfortunately this does not mean that the crisis is behind us Covid has left businesses saddled with debt and more vulnerable than ever, especially small businesses, and many are worried that they will not make it through the year. Their employees are rightly worried about their future. As experts warn us about the potential dangers of the new Indian variant, there are worries that the final step of the reopening road map might need to be delayed, or that we might not have seen the last of social distancing For all those reasons, it is essential to give workers, self-employed people and small businesses certainty about the future and keep job support in place at least until the end of the year. Even at this late stage, the Chancellor must correct the injustice against the 3 million excluded, who have spent more than a year with no help at all, by finally bringing them under the umbrella of Government support. I would also like the Chancellor to review the impact of the Bill specifically on small businesses and whether it will offer them adequate help with their debt, rent arrears, solvency and ability to employ people. Small businesses are, as countless Prime Ministers have said, the backbone of our economy and the heart of our local communities. They create the jobs that we all rely on, with 16.8 million people working in small businesses and accounting for six out of 10 private sector jobs. Local shops, cafés, pubs, restaurants, hairdressers and florists all serve our communities and bring life to our town centres and high streets. If allowed not just to survive but to thrive, they can be the engines for growth and jobs in the months and years to come. At the moment, they are struggling under record amounts of debt and months of rent arrears; the collective debt burden is more than £100 billion. According to the Federation of Small Businesses, something like a quarter of a million of its members could close by the end of this year. On top of that, they have been badly hit by the terrible EU trade deal. That is why the Chancellor must adopt a revenue compensation scheme that could help those struggling with their finances and fixed expenses to stay afloat. At the very least, the Government should be undertaking a review to assess the state of UK small businesses and offer the necessary support off the back of that Opportunities are also being lost to transition to a zero-carbon economy by 2030. These are all opportunities with which this challenge of many lifetimes has presented us, and which we should seize in order to help individuals, businesses, families and communities up and down the country to recover. The opportunity was there with this Finance Bill, but I do not believe that the Government have grasped it in the way that they should. I ask them to reconsider and accept the amendments.
I, too, will abide by your strictures, Madam Deputy Speaker, to keep my speech as short as possible When I was an economics correspondent a very, very long time ago, tax competition between countries was all the rage. There was a sort of mainstream consensus that it was a good thing because it helped give countries an incentive to be an attractive place to do business, but in the last couple of decades it has become clear how easy it is for international companies to run circles around national rules and reduce their tax bills by shifting profits to low-tax jurisdictions, and we end up with this outrageous, unconscionable position of some of the world’s largest companies paying some of the smallest corporation tax rates. That causes anger across the UK and on both sides of this House; we are all aligned in the objective of ensuring that big companies pay a fair share of tax This Government have been doing an awful lot, as the hon. Member for Ealing North (James Murray) recognised, to try to tackle this issue both within the UK and internationally, including through measures such as the diverted profits tax, the digital services tax and changes on tax to subsidiaries. When I was chief executive of the British Bankers Association, I was involved with a lot of the implementation of those rules We need to take measures internationally as well; this is an international problem, so ideally we need an international solution. The difficulty, though, is getting an agreement between a large number of different countries. Normally these sorts of discussions go through the OECD, which is so big that it is difficult to get agreement and progress is absolutely glacial. That is why, on things such as the digital services tax, the UK has opted to act unilaterally before an international agreement can be agreed. I very much welcome the fact that the initiative is now being led by the G7, because we are far more likely to get agreement from seven major countries, and then to expand that out to the G20 and then to the OECD As we have heard tonight, particularly from my hon. Friend the Member for Wimbledon (Stephen Hammond), these are complex negotiations. There are two interlinked pillars at the OECD: the scope of the tax and the level of the tax if there is a global minimum rate of corporation tax. As my hon. Friend the Member for Devizes (Danny Kruger) said, there is no point in agreeing a global level of corporation tax if all we are doing is taxing companies in California; the two parts of the negotiations are intertwined. I very much welcome the fact that Government are involved in these negotiations. I completely respect that they may wish to negotiate more in private than in public, as that is often the best way; I know that their intentions are absolutely right That brings me to new clause 23. It is the wrong review at the wrong time. The new clause asks the Government to review the corporation tax set at 21%, but, as the hon. Member for Ealing North said, it actually looks like Joe Biden and the US are now looking at 15%, so this proposal is already out of date and it has not even been voted on yet. It is also at the wrong time because what we do not want to do in the middle of an international negotiation is tie our hands, display all our cards and show what we are doing. It could create a dynamic in the negotiations that would actually set back the UK’s ambition to ensure that companies pay a fair rate of tax. I therefore fully support the Government in rejecting the new clause. I also fully support them on reaching a strong global agreement to ensure that the world’s biggest companies pay their fair share of tax I hope that that was less than five minutes.
Definite brownie points for the hon. Gentleman.
It is great to follow so many passionate and powerful speeches from my own side of the House in this debate. I am perplexed at the situation Ministers have got themselves into, seemingly exposed by the US President on their real agenda on taxation. In the last year, the pandemic has not just shone a light on the deep inequalities in our society; it has driven and deepened those inequalities like never before. Millions of people have been plunged into insecurity while a small number of the very richest have seen their fortunes surge, with 24 new billionaires in the last year, despite everything else that has been going on. Key workers have put their health and lives on the line for the benefit of others to ensure that their neighbours were fed, people were treated when they were sick and society kept moving, while some bosses at companies such as British Gas and British Airways used the pandemic cynically to drive down pay and terms and conditions through shameful fire and rehire tactics, and all the while the Government have stood by and done nothing. While millions were excluded from Government support and then ignored, if you knew Ministers or had donated to the Tory party, there were billions of pounds of public money in lucrative contracts, handed out without competition or transparency So if the Finance Bill was an opportunity to fix a rigged system that was failing communities up and down the country, the track record of this Government tells you that they are incapable of taking that opportunity. The decades-long race to the bottom on corporation tax may finally be coming to an end with the proposal to raise the headline rate in 2023, but alongside it measures in this Bill will do more harm than good when it comes to fair taxation and plugging the hole in the nation’s finances. As we have heard, the super deduction is a £25 billion giveaway to big business. TaxWatch calls it “The Amazon Tax-Cut” because it could entirely wipe out the UK corporate tax bill of Amazon UK Services Ltd. The Times reports that it will allow companies to write off investments in swimming pools, interior decoration and Jacuzzis against their tax bills Ministers just are not serious about making tech giants pay their fair share of tax. In fact, Ministers are now rowing back on key commitments they made to tax transparency. Since 2016, the UK has had the power to lift the lid on multinational company accounts through country-by-country reporting, but it is clear that the Government have reversed their original commitment to do so. Instead Ministers are now actively blocking the OECD from publishing the data at an international level, signalling what the Tax Justice Network called a dangerous “regression into tax havenry” The UK has been moving in the wrong direction, backing secrecy over transparency, tax havens over progressive taxation and multinational corporations over small and medium-sized UK businesses. That is an agenda that no doubt delighted President Trump, but the election of President Biden now means that the US has done an about turn, and it is time Ministers caught up The US is now leading on international tax reforms that the UK has been sabotaging for years—tax reforms that would stop multinationals hiding profits overseas and establish a global minimum tax rate of up to 21%. These are reforms that would raise billions from tech giants and stop Amazon, Apple, Google, Alphabet and Facebook from shifting their profits from the country they were made in to tax havens. While every other G7 country has responded positively to President Biden’s plan, the UK Government continue to block the best opportunity in a generation to curb corporate tax abuse The Government, no doubt emboldened by the Trump regime, have been on the wrong side of tax transparency and tax reform for a number of years, but the pandemic has exposed the grave cost of an economic system that prioritises the interests of corporate giants over people and local communities, because wealth does not trickle down—it never has. Rather, it is sucked up, away from those who do the work and who contribute to society, and towards those who set the rules, reap the rewards and, all too often, avoid paying their fair share. That should change now.
It is a pleasure to speak on Report of the Finance Bill. Over the past 14 months, the Government’s main concern has been to protect the UK from the worst impacts of the global pandemic. We have seen a comprehensive public health response to slow the spread of coronavirus, and more recently to deliver mass vaccinations on an unprecedented scale, but the Government have also delivered a comprehensive financial response to secure jobs and livelihoods, and to protect the economy. This response has been hugely successful and the most recent Office for Budget Responsibility forecast suggests that the UK economy will recover six months earlier than previously thought. However, essential though this financial response has been, it has cost the taxpayer £407 billion, the majority of which has been debt. This year, we have borrowed a staggering 17% of GDP As we emerge from the pandemic, it is imperative that we begin to plan how that debt will be repaid and the deficit reduced. One of the tools at our disposal is to raise levels of taxation, and it is right that any increases should fall on the broadest shoulders. While many small and medium-sized enterprises in my constituency have struggled this year, some of the UK’s biggest businesses have made significant profits. It is only large, often international, companies with profits of over a quarter of a million pounds a year that will be required to pay the highest rate of corporation tax, as stipulated by clause 6 It is not only the UK that is reconsidering business taxation. Current global efforts to update corporation tax frameworks in response to modern challenges are ongoing, and we have seen reports today of those international negotiations and the positive steps that are being taken to address the current practice by some multinational companies of shifting profits to low-tax jurisdictions. I absolutely support the efforts to end that practice, but I oppose new clause 23, which would compel the Government to publish, within six months of enactment, a review of the impact on corporation taxation revenues of a global minimum rate. Since those matters are still subject to international negotiation, any assessments mandated by the new clause would be purely speculative and a complete waste of resources Taxation is not a penalty and should not be an ideology. It is a tool—a mechanism that we can use to ensure that the state can afford to pay for the infrastructure and services that citizens expect. Taxation levels must balance the requirements of those services with the rights of individuals and businesses to have as much agency as possible over their own financial resources. There is no absolute right or wrong level of taxation. Tax rates should change with the times and challenges we face The Opposition have spent the past year calling for more taxpayers’ money to be spent on supporting businesses, welfare and health, and they have often rightly framed that demand in moral terms, highlighting the impact of the pandemic on those who have been hardest hit. But all resources are limited, even the state’s. Just as public spending has a moral dimension, so does public debt. It is morally wrong to leave difficult decisions for future generations, rack up eye-watering interest payments for our children and grandchildren, and risk the security of our economy. That is why we must have a plan for reducing our debts. Increasing corporation tax for the largest businesses is an important part of that. I said that taxation policy is a tool—a mechanism for raising money—but it can also be a catalyst for growth and investment. With the introduction of the super deduction and freeports, which will be discussed when we debate the next group of amendments, I am confident that, unamended, this Finance Bill will kick-start our recovery and help businesses across the country to build back better.
I remember when the pandemic first hit and the Chancellor said that we would all be in it together. Well, the reality has not turned out that way. It has been the story of the many and the few. For the many, it has meant food bank use rocketing—it is up 33% on a year ago. Universal credit claimants have doubled in my constituency and child poverty now affects more than one in three children in Coventry South—nearly 7,000 kids in my constituency alone—and nearly 4.5 million across the country While the majority have struggled with falling wages, unemployment and rents that they cannot afford, for a wealthy few it has been a bonanza. Last week The Sunday Times rich list revealed a record growth in UK billionaires, of whom there are now 171 in total. Their wealth stands at £600 billion—up nearly 25%. Amazon, which this year has raked in record revenues of £38 billion across Europe, paid nothing in corporation tax. This is not just a broken economic model—it is not just unfair and unequal—it is rigged. It is redistribution, but not in the way that we might traditionally understand: it is taking from the many and giving it to the few. That is what is happening when we see that food bank use is up 35% and billionaire wealth is up 25%. This Conservative Government not only refuse to tackle that but aid and abet it There is nothing in the Bill to tackle the tax loophole that means that income earned through wealth, owned overwhelmingly by the rich, is taxed at a lower rate than income earned through work. There is nothing in the Bill to fairly tax the obscene profit that companies such as Amazon have made during the pandemic, with the Government refusing to embrace a windfall tax. There is nothing in the Bill to provide the necessary investment in Her Majesty’s Revenue and Customs to tackle tax avoidance and evasion by the super-rich and big businesses. Instead, the Government are standing by as the tax gap stands in excess of £35 billion What is in the Bill is £15 billion more in annual cuts to Government Departments and a super deduction tax cut in capital spending that the rich are already reported to be using to purchase jacuzzis. To top it all off, there is the Tory Government’s refusal to embrace plans to tackle global tax avoidance. The plans put forward by the US could prevent the likes of Amazon, Google and Facebook from dodging tax and refusing to pay their fair share, and end the race to the bottom on corporate tax rates. Even at a moderate rate of 21%, such a measure could raise £13.5 billion for the UK Treasury, according to Tax Justice UK We should not really be surprised by the Government as they are on the side of big business and the super-rich. For a decade they have been cutting taxes while cutting the budgets of schools and hospitals throughout the country. They are also funded by a third of UK billionaires and, of course, they are led by the super-rich, too—not just an old Etonian Prime Minister who complains that his £150,000 salary is not enough, but a Chancellor who went from an elite private school to Oxford to investment banking, before becoming the wealthiest Member of Parliament in this House and using his power to cut the services of the working class Instead of this rigged and rotten system, we could make the super-rich pay their fair share to fund our public services and end poverty for all. That is the least the Government should be doing, so they should back the plan for a global minimum corporation tax. They should also back my proposed new clause, which would shine a light on the scandal of tax dodging. Instead of entrenching inequality, the Government could be building an economy for all.
I rise to speak in favour of new clause 12, which was tabled in my name and those of my Scottish National party colleagues We have previously welcomed the planned future increase to the corporation tax rate and we also very much welcome, as have other speakers in the debate, the news reported today in the Financial Times that the G7 nations, or at least some of them, seem to be close to an agreement on minimum rates of corporate taxation. Like other speakers, I take this opportunity to praise and put on the record my admiration for the Biden Administration for having brought the situation about. It is imperative that the UK Government rise to the moment and seize the opportunity to embrace the emerging consensus on global taxation and ending the race to the bottom on corporate tax rates. For a global minimum tax rate for companies will reduce the opportunities for companies to minimise their tax liabilities by funnelling revenues through other jurisdictions. That will help to ensure that more tax gets paid in the jurisdictions where those revenues have been earned. In the process, that helps to uphold living standards and ensure that a fair contribution is paid to the common good by our corporate citizens for the public goods they consume New clause 12 follows our efforts at previous stages of the Bill’s progress in trying to oblige the Government to review the impact of the proposed corporation tax changes on all parts of the UK in respect of investment, employment, productivity, GDP growth and poverty, and to compare the difference between actual and forecast outcomes in the event of a deal with other OECD countries on a minimum level of corporation tax, such as I have mentioned, and in the event that such a deal cannot be reached. I also find much to support in new clause 22, as well as amendments 30 and 31 Frankly, it should be taken as a given that any company qualifying for tax reliefs should be domiciled in the tax jurisdiction offering those reliefs. It should have an exemplary history when it comes to paying taxes that are due on its activities in that jurisdiction and an exemplary record of behaviour towards its employees, in terms of recognising the right to organise their labour and paying a living wage for that labour To conclude, in difficult times or in better times, there is nothing that sticks in the collective craw more than large corporate entities that seek to take almost as much from society as they give in return, and which pay much less than they are able and often end up paying proportionately far less than many of their smaller competitors. I am very happy to support these amendments.
In March, the Government had the opportunity to set out a plan to build a fairer, healthier, greener Britain. Instead, the Chancellor has chosen to continue down the path of further inequality and insecurity by writing off the tax liabilities of huge multinationals such as Amazon and Google. These big tech firms have made huge profits during the pandemic, and now the Government are enabling them to hide their money from the very people who have sustained them The Chancellor’s super deduction incentive is not the innovative idea that he might like to portray it as. The Government’s plan to rapidly increase corporation tax after many years of cutting it means that the super deduction is an incentive to prevent businesses from pushing investment to the end of the period. It will make no difference to investment in the long run. All it does is change when businesses will decide to invest, rather than encouraging them to invest more. The super deduction is not targeted at British businesses that have been struggling. It is targeted at multinationals such as Amazon and Google, which will be able to use it to write off their entire remaining UK tax bill The Treasury will lose tens of billions through this tax cut, which makes even more confusing its argument that it has not been possible to find the smaller sums required to give our NHS workers a well-deserved pay rise. It is essential that the income from wealth is taxed at the same level as income from work, and that multinationals such as Amazon are forced to redistribute their huge profits into our communities by paying their fair share of tax. Multinationals paying their tax does not just result in more spending on our public services; it also means that British firms that pay tax here will not be undercut by companies such as Amazon, which can shift profits overseas to take advantage of very low rates of corporation tax elsewhere The online shopping boom that sprung from the covid lockdowns has led to Amazon creating more than 1,300 jobs in Gateshead. While job creation in my constituency is welcome, shocking employment practices have been reported at Amazon fulfilment centres in the UK and across the globe. Do the Government really believe that all large corporations should be entitled to tax breaks, regardless of how well or how badly they treat their employees? I join Unite the union in demanding that workers at Amazon have the right to join a trade union without fear of reprisal Nothing angers the British public more than multinationals such as Amazon and Google and others paying ultra-low levels of tax. If the Government were serious about their levelling-up agenda, I am sure they would be happy to support new clause 22, which would prevent subsidiary companies registered in tax havens from benefiting from UK tax relief, and new clause 31, which would prevent multinational corporations with a history of corporate tax avoidance from benefiting from the super deductions in the Bill.
When we look at our world today—a world in which half of global wealth belongs to the richest 1%, a world in which large corporations possess more financial power than many post-colonial countries, and a world in which British Amazon warehouse workers earn in eight weeks what the company’s chief executive makes in one second—it is clear that we need to radically reassess how we tax large corporations It is therefore shameful, as my hon. Friend the Member for Ealing North (James Murray) made clear, that the British Government are the only G7 Government not to support US President Biden’s plans to halt the race to the bottom on corporation tax. However, I do not believe that even these plans for a global minimum rate of corporation tax for large multinationals go nearly far enough. We should be much, much bolder than the 15% or 20% threshold that is being discussed. After all, we are talking about corporations that have made super profits out of this pandemic and are paying low wages to our workers. The fact that our Government are not even willing to engage with this most basic of proposals reveals how unserious they are about reining in the rampantly unequal power of large corporations We know that tech giants currently pay a negligible amount of tax. A report by Fair Tax Mark found that for the Silicon six of Facebook, Apple, Amazon, Netflix, Google and Microsoft, the gap between the expected headline rates of tax and the actual tax paid between 2010 and 2019 was $123 billion. This is as unsustainable as it is unjust It is important to bear in mind that billionaires exist when and where workers are exploited, as has been cruelly demonstrated by the testimony of Amazon workers who have bravely and painfully disclosed the conditions under which they are forced to work. Rather than blocking international efforts to address this crisis, the Government must properly tax large corporations and invest to build a radically fairer country. That means not only rejoining the international plan led by President Biden but making the case that the minimum threshold be increased. It is important to remember that in the period post world war two, the top rate of corporation tax was actually as high as 52% for large companies—this, after all, was introduced by a Conservative Chancellor—but in the 1980s it was reduced to 30%. Since 2010, the Conservatives have cut corporation tax from 28% to 19%—by more than most among relatively rich countries. This shows that they would rather raise funds by squeezing the British people than reduce the corporate profits of wealthy shareholders The super deduction is wasteful and open to abuse. Are we going to see, as has been reported by The Times and others, tax breaks handed out for investing in swimming pools and jacuzzis as opposed to targeting support at British businesses that have been struggling during the pandemic, or even as opposed to targeting investment to end child poverty? Currently one in two children in my constituency are living in poverty—that is 42% of children who could be saved. Child poverty is a political choice, and this Bill is the proof of that. Are we going to see this measure as opposed to targeting investment to end the starvation wage that workers in Leicester’s garment industry receive while making clothes to fund the super-bonuses of retail brands such as Boohoo and others? Quite simply, the super deduction will allow multinationals such as Amazon to write off their tax liabilities As we recover from the coronavirus, we must learn the lessons from the 2008 financial crash. The 99%—the many—must never again be forced to bail out the super-rich. The Government must recognise that in our country of deep and unequal wealth, the ultra-rich and large corporations should be asked to contribute their fair share. Corporation tax is a tax on profits, not people. Cutting it means more profits in the pockets of wealthy shareholders and less in those of nurses and other essential frontline workers. To enable much-needed investment, an increased tax on company profits is necessary and long overdue, and it should be raised above the Government’s 25% limit, which is still the lowest of the G7 countries. Above all, it is vital that we enter the debate around taxing the super, ultra-rich and large corporations with much more ambition, as it is one of the most powerful weapons in the Government’s arsenal to combat the rampant inequality that defines our era.
I am grateful for the opportunity to highlight a number of issues during the Report stage of the Finance Bill. I am always pleased to see the Minister in his place and I hope that I can put forward some points to which he will be able to reply I want to refer to clause 6, in part 1. I have spoken on this issue on numerous occasions, and I am thankful for the clarification the Government have sought to provide. However, I am still left disappointed at the rationale as regards corporation tax. The hon. Member for Leicester East (Claudia Webbe) referred to this as well. The measure sets the charge for the main rate of corporation tax at 19% for the financial years beginning 1 April 2022 and 1 April 2023. These changes mean that from 1 April 2023 the main rate of corporation tax for non-ring-fenced profits will be increased to 25%, applying to profits over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less, so they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £350,000 will pay tax at the main rate, reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. The impact assessment that the Government have produced highlights the issue that I want to speak about. It states that there is no impact on families, but goes on to say: “However, if businesses struggle or are unable to pay increased Corporation Tax, this could impact on their family formation, stability or breakdown. To support, HMRC can provide a Time To Pay arrangement.” The issue is clear, at least in my mind and, I suspect, in the mind of many others: businesses have already struggled. While rates and wages may have been paid, and we are grateful for those schemes, the fact is that many small businesses have still had to pay out rent for equipment that they were precluded from using to make a profit, so their income was massively affected and many people’s personal savings were totally wiped out. They then took out a coronavirus business interruption loan to help them to make it through. We are beginning to come to the other side—thank the Lord for that—where they are seeking to rebuild, but instead of a meaningful reduction, there is merely a stay of execution with corporation tax That will affect many businesses and, by extension, many homes and families. It seems that it could well mean the end of many of our small businesses; while that is sad on a personal level, it is devastating on an economic level. We must remember that small and medium-sized businesses are the backbone of our economy. The Financial Secretary and his Conservative Government have been committed to helping small businesses. All those small and medium-sized businesses are the backbone of the whole United Kingdom—they certainly are in my constituency of Strangford I repeat what I have said before in this Chamber: there is no point in carrying businesses thus far, only to allow them to flounder now before any repayment is made. The Government have admitted that there will be a reduced incentive to incorporate businesses that would usually seek to take this step. All this has an effect on the long-term income to our economy. I know that the Government want a stronger economy; we all do, and I believe that we need some help Northern Ireland is well placed to be a central hub for business. We have much to offer, yet people can go south of the border to lower corporation tax and greater incentives. Along with my colleagues in the Democratic Unionist party, I have often argued for a reduction in corporation tax to attract businesses to Northern Ireland. I believe that the corporation tax rate repels investors, so I urge the Financial Secretary to look at the issue again. I understand that historically he has wanted a UK-wide rate of corporation tax. However, I want a UK-wide customs market, and that is not the case—ask the local small grocer who cannot even get in dog treats to sell because of the Northern Ireland protocol. There are differences made by this insidious protocol that affect our corporations and small businesses alike. It is clear that if the Financial Secretary insists on one size fits all, it must be applied in every aspect of manufacture, delivery and retail The Northern Ireland Assembly is establishing a working group on the consequences of creating our own corporation tax band and its effect on our block grant; maybe the Financial Secretary could highlight where those discussions have taken us so far. I believe that there is an opportunity for him to step in and do the right thing for the UK with a view to the long term. That is what I am requesting, even at this very late stage The UK is stronger together. I believe that the United Kingdom of Great Britain and Northern Ireland will always be stronger together. That has become the mantra of our Government, and I agree with it, but it needs to be more than words: action must follow the words and show our strengths. I believe that a reasonable rate of corporation tax across the board is a step to strengthen the Union, not cause more division.
I am grateful to all Members who have taken part in this debate. Let me pick up on several issues that have been raised, starting with the super deduction. You will be aware, Madam Deputy Speaker, as I think some Opposition Members are not, that it has been described by the CBI as “a real catalyst for firms”, while the British Chambers of Commerce said: “We particularly welcome the massive ‘super deduction’ investment incentive.” They are absolutely right. It is a terrible shame that the Labour party has decided to try to tarnish the super deduction, a measure from which many capital-intensive businesses around this country will benefit, especially in the north, the north-west, the north-east and the midlands. As my hon. Friend the Member for Devizes (Danny Kruger) rightly picked up, it is a measure that benefits local businesses up and down the UK. He picked Wadworth, a well-known brewer, and rightly so, but there are many, many other businesses for which that is also true. He was absolutely right to highlight that Let me come on to questions of wider taxation, if I may. There seems to be an astonishing level of ignorance among Members on the Opposition Benches. They seemed to be unaware that the tax gap—the difference between the amount of tax actually collected and the amount of tax that could potentially be collected—is at its lowest rate in our recorded history, at 4.7%. It may be of some interest if I point out to them—they can reflect on this—that in 2005-06 under the Labour Government it was 7.5%, so it has fallen dramatically, I am pleased to say. Tax that was not being collected by the Labour Government at that time is now being collected by the Conservative Government of the present day, and a very good thing that is too. That is a record on which they should spend some time pondering. The fact of the matter is that this Government have always made it plain that they will be very tough—as tough as they can be—in order to collect the tax that is due and to make sure that corporations and individuals pay it wherever they are due to.
I thank so many Members for their contributions to this debate, which has focused on the importance of fairness in the tax system, supporting British businesses and the need for the Government to step up and help to strike a global deal to stop tax avoidance We heard from my right hon. Friend the Member for Barking (Dame Margaret Hodge), who spoke with great experience about how the UK should be a prominent voice leading the charge to support President Biden’s proposals. She said that deliberately allowing tax-avoiding large multinationals to benefit from the super deductions is unbelievably foolish. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke about the unfairness of certain firms getting a super deduction. We also heard passionate contributions from my hon. Friends the Members for Liverpool, Walton (Dan Carden), for Coventry South (Zarah Sultana), for Jarrow (Kate Osborne) and for Leicester East (Claudia Webbe) about their and the public’s disbelief that the UK appears to be blocking the best opportunity in a generation to strike a deal on global tax avoidance, especially with the UK hosting the G7 summit in June We also heard from Conservative Members. The hon. Member for South Cambridgeshire (Anthony Browne) seemed rather eager to welcome the fall from 21% to 15% as a minimum, rather than wanting to help the US Treasury, which has publicly said that “15% is a floor” and that we “should continue to be ambitious and push that rate higher.” The hon. Member for Devizes (Danny Kruger) spoke about backing Biden and backing Britain. That is what our approach seeks to do. His Ministers are backing Bermuda. Unfortunately, the Minister gave no reassurance in his speech that the Government are committed to taking a lead on this once-in-a-generation opportunity for a global deal on tax avoidance by a few large multinational firms that undermine British businesses and fail to pay their fair share. We were hoping that, today, the Government might finally indicate their support for President Biden’s plans, but instead we heard more of the same nonsensical justification for inaction. Through the vote on our new clause, we will push them to review and be transparent about the impact that a global minimum corporate tax rate no lower than 21% would have We were also hoping that the Minister might have indicated his support for our very simple amendment that would stop Amazon and a few other tech giants from benefiting from the tax break that the Chancellor announced at the Budget. He and his colleagues failed to address that point, so we will seek a vote on that amendment to see if any Conservative Back Benchers feel uneasy at their Ministers effectively finishing the job that Amazon started, wiping out the last bit of tax that Amazon would have to pay on the few parts of their business whose profits they have been unable to shift overseas This debate has exposed the failure of this Bill and this Government to be on the side of the British people and of British businesses trying to get back on their feet. Ministers have resisted stepping up to the challenge of stopping a few large multinational firms that are not paying their fair share of tax. We urge any Government Members who are uncomfortable with the position that their Government are taking to join us in voting for new clause 23 and amendment 29 Question put¸ That the clause be read a Second time.
I beg to move, That the clause be read a Second time.
With this it will be convenient to consider the following: Amendment 24, page 63, line 9, leave out clause 109 This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK. Amendment 25, page 63, line 31, leave out clause 110 This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK. Amendment 26, page 64, line 1, leave out clause 111 This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK.
I rise to speak to new clause 25, tabled in my name, and those of the Leader of the Opposition and my hon. Friends. The new clause sets out a number of tests that we believe the Government must apply to each and every freeport created in the UK. Before I come to the detail of those tests, I will make a couple of brief points about the Government’s intentions behind freeports. As I said in Committee, Labour wants every area to succeed, whether or not it has a freeport. We want good new jobs to be created right across the country, and our great British industries to be protected and supported. We want to see the UK at the forefront of new green manufacturing and technology, and we want a genuine re-distribution of power and opportunity to places that have been denied that for so long The Government clearly believe that freeports are a silver bullet for solving regional inequalities, and I simply remind them that they have been in power for 11 years now. Let me repeat that: 11 years. They must own the choices they have made, such as abolishing regional development agencies, cutting local authority funding, and pulling opportunities away from young people in some of the most deprived regions of the UK. Just recently, they scrapped the industrial strategy altogether. We need a proper plan that creates jobs and opportunities for everyone, regardless of where they live I will now turn to the new clause, and to the tests against which we believe our freeports should be judged if they are to succeed. First, freeports must create jobs, not simply move them from elsewhere. Too often, attempts at regional rebalancing have simply shuffled jobs around rather than creating them in the places that need them. We must end the scandal of people being forced to move to the other end of the country to find a decent job. Our test will be this: if someone lives near a freeport, will new opportunities be opened to them that did not exist before? Conversely, if an area does not have a freeport, can we be confident that it will not lose jobs as a result of this policy? Of course, any new jobs must be secure and well paid, with trade union rights—the kind of jobs we have not seen anywhere near enough of over the last decade Secondly, freeports must deliver improvements in training and skills for local residents. As we begin to recover from the pandemic, the need for re-training will become even more acute. We need a genuine skills guarantee for everyone, and freeports must play their part in that. Labour will be looking to see how companies operating in freeports work with their local communities to provide skills and training opportunities. Rather than a race to the bottom, freeports should be helping to boost skills and open opportunities Thirdly, freeports must produce tangible transport and infrastructure improvements beyond the port itself. Too many places still lack basic transport infrastructure, and too many people still find it difficult to get around. The investment that the Government are making in freeports must go towards boosting connectivity for everyone in those areas. We want every community to benefit from affordable and reliable public transport.
We were having a little difficulty getting hold of the speaker at No. 2 on the list, so I will call Richard Thomson and then come back to David Simmonds.
I rise to support new clause 25. It is a pleasure to follow the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) and I would like to echo much of what she said We have had freeports before in the UK, as recently as 2012, and our EU partners still have them, with 72 free zones across the EU territory. Some contributors in these debates have taken an excessively, I think, dim view of freeports. I would like to take a more balanced view, but I still think we are absolutely right to proceed cautiously, and that is why I am happy to support new clause 25. Given the incentives on business rates that are on offer, the potential national insurance exemptions and the exemptions on customs duties, it is absolutely vital to make sure that the economic activity attracted to freeports is not simply being displaced from elsewhere, and that the activity is new, adding value and resulting in economic output that is greater than would otherwise have been the case Therefore, when we are measuring that impact, it is important to make sure that the Government do not get to mark their own exam paper by choosing their measures of success after the fact. That is why it is important to be able to report back on job creation, skills and productivity, the impact on tax revenues, the levels of financial criminal activity that have resulted around a development and the details of the resourcing needed to ensure compliance with the law, and also to understand the extent to which the mix of industries that will have grown up around a freeport development match those sought in the original bids The Scottish Government have sought to build on the freeport model with a green port version of it that embraces all the potential benefits of freeports, while ensuring that the principles of fair work are enshrined at their heart—the principles of fair work and fair pay through a real living wage—and putting environmental concerns to the fore, through placing carbon reduction at the heart of these developments. These proposals for green ports from the Scottish Government already have widespread buy-in from business, industry and investors in Scotland. The Scottish Government stand ready, armed with the fresh mandate they received from the Scottish people earlier this month, to press ahead as soon as the UK Government are willing to do so. At the conclusion of the Committee stage, the Minister gave—I hope he will not mind me describing it in this way—a somewhat editorialised account of the development of freeports and green ports in Scotland. We could back and forth roundabout that, but I would much rather move forward, just as the Scottish Government would. I hope the Minister would like to do that, too, and will commit to working as quickly as possible with the Scottish Government to bring green ports to fruition in Scotland.
My constituency is not one of those that has the prospect of playing host to a freeport, or indeed being very close to one, but it is a subject of interest to my constituents for a number of reasons. I want to set out briefly what those are and why it is so important that the Government are pressing ahead in this direction My constituents are part of outer London, a part of the country which for many years and many generations has had an enormous economic pull factor, including for people like me. I grew up in the south Wales valleys. Following the disappearance of a lot of the heavy industry that was there, and despite a huge amount of effort by the Westminster Government and significant investment by what was then the European Economic Community to develop things such as roads, it is a place that has taken a very long time to see a significant financial and economic regeneration. While I remain sceptical, as many in the House are, about the tax situation of freeports in general, it seems very clear that they are a fantastic opportunity to play a big part in the economic regeneration and levelling up of parts of our country that have really struggled As a Conservative politician, it seems to me clear that a policy that is about ensuring people have access to work, a policy that is part of a wider agenda of raising people’s earnings and addressing things from child poverty to health inequalities, which still blight some parts of our country, and a policy that is very much about setting the principles of what we want to see as our economy develops, rather than taking a laissez-faire approach—we want to see the wealth not simply created, but spread and shared—is absolutely the right way forward. Freeports can be a significant part of achieving that It is absolutely right, as we have heard from a number of Members, that we have a balanced approach to the use of freeports. I think the port of Tilbury was the last of the UK freeports, but they are in common use around the world, The feedback is clearly very mixed about their economic impact. However, it is very consistent that they act as a draw, as a focus for a local economy, that helps to contribute to creating jobs and opportunities. As a country, we need to do that in places that have simply not had the opportunity for that in the recent past My constituents, who have significant concerns, for example, about the pressure on land to be released for housing to provide homes for the people who are currently being drawn in large numbers into our capital—contributing to significant housing waiting lists and significantly rising house prices, sometimes meaning that the children of people who have grown up and live locally are simply not able to settle in that area—see a direct benefit, too, to the whole country having the opportunity of economic levelling up. I therefore see this as a direct benefit to my constituents. It is important to the medium to long-term future of our country, and it is absolutely an inherent and appropriate part of the regeneration and levelling up strategy that we have for the whole of the United Kingdom. I absolutely 100% support this direction of travel and I commend it to the House.
It is a pleasure to contribute to today’s debate on freeports, to voice my continued support for this commitment and to speak against the adoption of new clause 25. For me, new clause 25 typifies the stark contrast that exists between the sides of this House when it comes to delivering for the British people, with the Conservative side supporting a Government focused on delivery and the other side persistent in pursuing yet more division and delay As colleagues have already said, freeports will be central to the levelling-up agenda, attracting new businesses and jobs, creating opportunity and investment across areas of Britain. This policy is key to regenerating communities across the UK and I hope that may include my own constituency of Bridgend. Following the closure of the Ford factory in Bridgend, the establishment of a freeport in the Port Talbot and Bridgend area could mean a great deal to my constituents and the whole of south Wales, with the creation of up to 15,000 jobs. It is for those reasons that my constituents would expect me to back the Government tonight I am sure Opposition Members do not want to delay the investment associated with the measures in clauses 109 to 111. By implementing them, we will help to unlock employment in areas previously left behind and allow them the opportunity to prosper. The additional reporting requirements for freeports outlined in new clause 25 would impose unnecessary onerous processes, with little to no benefit over and above what has already been put in place; they would just cause further delay In Wales, as we know from oral questions to the Secretary of State for Wales in this House last week, the Welsh Labour Government have dragged their feet time and again and have refused to collaborate on this issue with Ministers here. The result is that, although bids have been received and locations have been identified in England, we still do not know what support, if any, a freeport in Wales will get from the Welsh Government We were elected to deliver and to get on with the job of making a success of post-Brexit Britain. Clauses 109 to 111 achieve just that. I will therefore be supporting the Government this evening.
Speaker no. 5 has withdrawn, so we go straight to Andrew Jones.
That was slightly unexpected, Madam Deputy Speaker. Thank you very much indeed The competition for having a freeport from colleagues around the House before the decisions showed how widely welcomed this policy was. We saw colleagues’ delight when their areas were successful. It is clear that freeports are part of a broader levelling-up agenda, which is at the heart of the Government’s policy and has significant public approval. When knocking on the doors of Hartlepool, I found support for initiatives to boost the economy of that area. I do not represent a freeport area in Harrogate and Knaresborough, but there is clear support, and it is therefore surprising that the Labour party is not more aligned behind it A well-designed freeport policy can boost trade. The key to that is the alignment of local bodies, whether the ports or the businesses, with local authorities to grow opportunity. Of course, all that is underpinned by tax reliefs and tax incentives. It is most important that we get tax reliefs on buildings and plant purchase right. If the policy does not deliver, we will have wasted public money and we will have seen the displacement of economic activity, rather than incremental economic activity. Even more significant, of course, would be the missed opportunity. The areas that are receiving freeports are those that have not had the chance that other parts of the country have had over the past decades. I know that my right hon. Friend the Minister knows that The Labour party has said measures are necessary before it can even consider supporting the policy, but there are already measures in place to monitor, collect and review data. The Treasury always monitors and reviews its policies. I have seen that from my own experience, but it is a truth that we all know. Therefore, new clause 25 addresses a concern that is, frankly, already solved; it is not necessary. On transparency, costings will be published at the next fiscal event—in other words, in the usual way. On data collection for freeports, we will be collecting data on reliefs, monitoring effectiveness and so on. The main question now is not about monitoring; it is about how those running the freeports can make them bigger, seize the opportunities and maximise the chances available As this health crisis morphs into an economic one, the focus is moving to recovering livelihoods as well as saving lives. All the levers that can drive growth must be pulled and freeports are clearly a part of that. It was very good to see the proposals in the Finance Bill. I will be supporting them strongly this evening.
I am glad you are sitting down, Madam Deputy Speaker, because I do not want to shock you. I want to see if we can try something different tonight. Let us try and undertake some rational policy making. Let us try and base policy on evidence, shall we I have tabled a number of amendments—Nos. 24, 25 and 26—as a humble seeker after truth, basically, because I do not think the Government have made the case for freeports. I also think that the risks of this policy are huge. It could accelerate tax avoidance in this country on a massive scale and cause economic damage to the neighbouring areas of freeports. We are shovelling huge tax giveaways to corporations and developers for, as far as I can see, literally no return to society In its analysis of the Chancellor’s Budget, the Office for Budget Responsibility said of freeports: “Further details have been announced in the Budget but came too late to be incorporated into our forecast.” The OBR have therefore not made a comment—we await it. Freeports were not assessed by the OBR. However, it is not just the OBR that does not know the answer about the effects of freeports; neither do the Government. My hon. Friend the Member for Oxford East (Anneliese Dodds) asked the Treasury on 16 March what estimates it had made of the total annual cost of tax reliefs granted to the freeports. The Chief Secretary to the Treasury replied on 22 March to say—rarely have I seen this from a ministerial response—that “it is not appropriate to comment on estimates at this stage.” This is in the middle of policy making! He continued: “they will therefore be scored at a future fiscal event.” Therefore, what we are being asked to do tonight is sign off a blank cheque that will be filled in at a later date This is just irrational. Shoddy policy making on this scale is becoming all too familiar with this Government, but this is a bit of a shocker. It is just not good enough, so it would be really useful if tonight the Minister took us through the answers to a few simple questions. What are the annual costs of the proposed tax reliefs when the freeports are set up? What is the estimate of increased economic growth that will come from them? What is the estimate of increased job creation stimulated by the freeports? What is the estimate of increased tax revenues to the Exchequer as a result of this policy? And, to reinforce that, where is the evidence? If there are answers to those questions, where have they come from? Have they been independently assessed We are asking questions about the future, but we should look back, because this is not a new policy. Those of us who have been in the House a while—and that does not take long—can recognise this as a rebranding of the enterprise zones policy that the Conservative party wheeled out in the 1980s under Michael Heseltine and also in the last decade, when George Osborne fronted it up. Let me remind the House what the Public Accounts Committee said in May 2014. Its report was pretty damning about George Osborne’s enterprise zones, describing them as “particularly underwhelming”. The Committee criticised the Government for over-optimistic claims about job creation. The job numbers did not materialise—it is as simple as that. The Centre for Cities think-tank found that the jobs that were created were “overwhelmingly low skilled” and therefore low paid Enterprise zones were not just a disaster; they raised people’s hopes and shattered them in many areas around the country, and in many ways led to some of the disillusionment with politics and Government overall. Tax breaks for corporations in underinvested areas just does not make an industrial strategy. My view is that the Government should be investing, but in a planned upgrading of the infrastructure of this country, not making areas fight for scraps in this form of pork barrel politics The Conservatives’ strategy of tax breaks for developers and big business as a way of stimulating growth failed in the 1980s and again in the 2010s, and it risks failing again in the 2020s. The Government are asking us all to take a leap in the dark, and having twice before witnessed that leap in the dark, I think the result will be the same—it will be failure. I know that a number of Members, including some Ministers, have said it will be different because of Brexit and claim that being outside the EU gives greater freedoms than were available to enterprise zones, but if that is the case, why can they not quantify them and put that evidence in front of the House, in some form of rational policy making? The UK Trade Policy Observatory, based at the University of Sussex, has pointed out that as UK import tariffs are already low, any further tariff reduction would “have next to no benefits” I am pleased that Labour’s Front-Bench team is behind new clause 25, which my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare) moved eloquently, as it is welcome. If passed, it would at least have the effect of creating a robust framework for the House to assess the success or failure of freeports policy, but surely no Members of this House who consider themselves to be serious, rational policy makers can vote for something like this proposal, which is so lacking in any evidential base.
It is a pleasure to follow the right hon. Member for Hayes and Harlington (John McDonnell), although he will forgive me for not taking any economic advice from him. He talks about economic assessment with no sense of self-awareness that he was the man responsible for the 2019 Labour party manifesto. I believe I am the first Member to speak who shall represent a freeport area, so, on behalf of the people of Teesside, may I say thank you to the Government for designating us a freeport zone I wish to speak against new clause 25, which would only delay the implementation of our new freeport policy. I direct Members to my recently updated entry in the Register of Members’ Financial Interests, as a member of the new—currently shadow—Teesside freeport board. If we consider the intentions behind new clause 25, we will see that they are ones that Teessiders know all too well. Labour never wanted our new freeports, despite them being in places such as Redcar and Cleveland, Middlesbrough and Hartlepool, places that Labour used to say it cared about. True to form, new clause 25 is the Labour party in desperation to see our freeport policy fail, so that it can simply say, “I told you so.” The same attitudes were shown in Labour’s position on the EU referendum, and the people of Teesside have already shown them how they feel about that. Our new freeport in Teesside will create 18,000 jobs over the next five years, and since the freeport designation in the Chancellor’s Budget, we have already seen the announcement of more than 2,000 jobs coming to Teesside, with GE picking Teesside as the destination for its new wind turbine blade manufacturing, supporting the Government’s plan for a green industrial revolution. Adding more bureaucracy, form filling and complications through new clause 25 would only delay those new jobs and prevent us from getting on with the task at hand, which is the transformation of Teesside In Redcar and Cleveland we are proud of our area’s industrial heritage and the vital role the steelworks and foundries have played in the past, providing those raw materials to build the railways, ships and bridges that were once the envy of the world, and in many cases still are. The fires in our furnaces were the beating heart of the industrial revolution, and now with hydrogen, wind power and carbon capture all promised and planned within our freeport zone, it will be Teesside’s innovation and technology that leads our green industrial revolution When Labour lost Hartlepool, the front page of The Northern Echo held a column from a former Labour MP saying that Labour needs to listen. Well, now would be a good time to start, but instead, here we are again, with the public supporting our freeport policy and Labour voting against it. Labour Members may not want any election advice from me, but I have some for them anyway: stop dwelling on problems and start looking to the potential and to solutions. Stop standing in the way of our freeport policy and work with us to make it a success. Stop talking Teesside down and start helping us to turn it around, and vote against new clause 25 tonight.
It is a privilege to follow my hon. Friend the Member for Redcar (Jacob Young). Like him, I shall take this opportunity to make a few brief remarks in support of freeports, although, as hon. Members would expect, they will be in support of a freeport in Wales, and north Wales in particular. In doing so, I shall speak against new clause 25 Freeports and free economic zones are a common feature of international trade, with dozens utilised by our closest allies. Not only have they propelled many of the world’s previously impoverished nations to prosperity, but there are well-established international frameworks for their operation. Indeed, the OECD code of conduct for clean free trade zones is an example, to which this Government have already pledged compliance The measures set out in new clause 25 are simply unnecessary, and the additional costs, such as the paperwork proposed, will only reduce the attractiveness of Britain’s ports. Let us make no mistake: the ultimate bearer of extra costs will be not multinational business, but the workers of this country who will miss out on prosperity from export-driven work Wales occupies a vital position in UK trade. If we consider just the Republic of Ireland, we will see that in 2019, two thirds of goods carried from the Republic of Ireland came via Wales, and four fifths of goods carried to the Republic of Ireland went via Wales. I also note that Holyhead is on the international trade routes that link Dublin to Moscow, such is the strategic importance of the location and role of Wales—particularly of north Wales. It is essential, therefore, that we create an environment there that is attractive to investment and private finance. According to the British Venture Capital Association, Wales has one of the lowest average investments from venture capital in the UK, accounting for just 3.3% of all funding over the period 2016 to 2018 A freeport offers a structured environment for investment. Whether linked with the advanced manufacturing cluster of north-east Wales—Wales’s hottest economic growth spot—or the green energy projects and innovation found on Ynys Môn, or the leading telecoms research at the University College of North Wales, the structured reliefs and incentives of a freeport offer businesses and investors a clear and attractive proposition and are a clear demonstration of the Government’s commitment to the area This Finance Bill makes clear the Government’s aim of growth, development and levelling up for Wales. It also presents an exciting opportunity for co-operation and collaboration with the Welsh Government. With their assistance on, for example, the additional reliefs possible for the planning laws within their control, there is an opportunity not only to deliver a freeport in Wales, but to create one of the most attractive freeport models for investment in the UK. In conclusion, our United Kingdom is an island nation and a trading nation, and our prosperity has always come from across the seas. Freeports are an essential step towards stronger trade and exports in a global Britain, and this Finance Bill will deliver that. In Wales, we know that, although we are outward-looking, our strength comes from within. For centuries, we have exported our goods and resources around the globe. North Wales slate has roofed the world, and copper from the Great Orme in Aberconwy was used to forge bronze-age implements used in areas ranging from Brittany to the Baltic A freeport in Wales—in north Wales—is an opportunity to ensure our connection to a global economy, to bring investment and growth that will bring jobs, and to secure our tradition of global export for another generation. I shall be voting against new clause 25.
I thank all Members who have commented or spoken in this debate on freeports. As the House will know, freeports are a very important part of the Government’s policy to level up the British economy and to bring investment, trade and jobs to parts of the country that in many cases have not had the economic vibrancy that we as a nation would have wished. They symbolise and reinforce the opportunities provided by this country’s status as an outward-looking trading nation, open to the world.
I thank all Members who have spoken for their contributions. In particular, I thank my right hon. Friend the Member for Hayes and Harlington (John McDonnell), who raised a number of concerns—including on tax avoidance and the potential damage to nearby areas—about how freeports will operate The Government Members who spoke in the debate are obviously more optimistic about the potential impacts of freeports on the communities that they represent. In respect of the comment made by the hon. Member for Redcar (Jacob Young), let me say that no one is talking Teesside down. I am very clear that we want to make sure that everyone will succeed, whether or not they have a freeport in their area. Why is that a bad thing We believe that our new clause and the tests it contains set out a reasonable way to assess the impact of freeports on their local areas and the country as a whole. We on the Opposition Benches are ambitious for our country, but we need to see clear evidence that freeports are going to be effective in meeting the challenges that we face. I therefore call on Members to support our new clause, because it is the right thing to do Question put, That the clause be read a Second time.
I beg to move, That the clause be read a Second time.
With this it will be convenient to consider the following: New clause 1—Equality impact analysis— ‘(1) The Chancellor of the Exchequer must review the equality impact of sections 87 to 89 and schedule 16 and 17 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the impact of those sections on— (a) households at different levels of income, (b) people with protected characteristics (within the meaning of the Equality Act 2010), (c) the Treasury’s compliance with the public sector equality duty under section 149 of the Equality Act 2010, and (d) equality in England, Northern Ireland and in different regions of England (3) A review under this section must provide a separate analysis in relation to each of the following matters— (a) the temporary period for reduced rates on residential property, (b) increased rates for non-resident transactions, and (c) relief from higher rate charge for certain housing co-operatives etc (4) In this section “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause requires the Chancellor of the Exchequer to carry out and publish a review of the effects of sections 87 to 89 and schedules 16 and 17 of the Bill on equality in relation to households with different levels of income, people with protected characteristics, the Treasury’s public sector equality duty and on a geographical basis. New clause 24—Review of impact of 2% non-resident surcharge— ‘(1) The Chancellor of the Exchequer must review the impact of section 88 and schedule 16 of this Act on tax revenues, residential property prices, affordability of residential property, and the volume of property purchases by non-residents, and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter (2) The review under this section must include an assessment of what those impacts would have been if the provisions in the Draft Registration of Overseas Entities Bill had been in force.’ This new clause would require the Government to report on the effect of the 2% stamp duty land tax non-resident surcharge on tax revenues, property prices and affordability, and the volume of property purchases by non-residents, and also to assess what the impacts would have been if the Draft Registration of Overseas Entities Bill were in force. Government amendments 4 to 6 Government new clauses 17 to 20 New clause 3—Review into the effects of replacement of LIBOR— ‘(1) The Chancellor of the Exchequer must undertake a review within six months of the passing of this Act of the effects of sections 128 and 129 (2) This review must consider— (a) the implications for tax revenue, (b) effects on financial stability, and (c) effects on businesses that use LIBOR as a benchmark, including businesses offering supply chain finance.’ This new clause would require a review into the effects of the provisions of the Bill about replacing LIBOR. New clause 4—Assessment of environmental impact of Act— ‘(1) The Chancellor of the Exchequer must review the effectiveness of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act. (2) A review under this section must assess the effects of the provisions on— (a) the achievement of the Government’s targets to reduce carbon emissions, and (b) the United Kingdom’s progress towards net-zero emissions.’ New clause 5—Equality impact analyses of provisions of this Act— ‘(1) The Chancellor of the Exchequer must review the equality impact of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the impact of those provisions on— (a) households at different levels of income, (b) people with protected characteristics (within the meaning of the Equality Act 2010), (c) the Government’s compliance with the public sector equality duty under section 149 of the Equality Act 2010, and (d) equality in different parts of the United Kingdom and different regions of England (3) A review under this section must include a separate analysis of each section of the Act, and must also consider the cumulative impact of the Act as a whole.’ New clause 7—Analysis of effectiveness of provisions of this Act on tax avoidance and evasion— (1) The Chancellor of the Exchequer must review the effectiveness of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must— (a) assess the effects of the provisions in reducing levels of artificial tax avoidance, (b) assess the effects of the provisions in combating tax evasion and money laundering, and (c) estimate the role of the provisions of this Act in reducing the tax gap in each tax year from 2021 to 2024.’ New clause 8—Review of public health and poverty effects— ‘(1) The Chancellor of the Exchequer must review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider— (a) the effects of the provisions of this Act on the levels of relative and absolute poverty in the UK, (b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act, (c) the effects of the provisions of this Act on life expectancy and healthy life expectancy in the UK, and (d) the implications for the public finances of the public health effects of the provisions of this Act.’ New clause 9—Review of changes to coronavirus support payments etc— ‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made to coronavirus support payments etc by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the effects of the provisions on— (a) business investment, (b) employment, (c) productivity, (d) GDP growth, and (e) poverty (3) A review under this section must consider the following scenarios— (a) the coronavirus job retention scheme and the self-employment income support scheme are continued until 30th September 2021, and (b) the coronavirus job retention scheme and self- employment income support scheme are continued until 31st December 2021 (4) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a report comparing the effect of (a) the coronavirus job retention scheme and the self-employment income support scheme being continued until 30 September 2021 and (b) the coronavirus job retention scheme and self-employment income support scheme being continued until 31 December 2021 on various economic indicators. New clause 10—Review of changes to VAT— ‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made to VAT by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the effects of the provisions on— (a) business investment, (b) employment, (c) productivity, (d) GDP growth, and (e) poverty (3) A review under this section must consider the following scenarios— (a) the extension of temporary 5% reduced rate for hospitality and tourism sectors is continued until 30th September 2021, and (b) the extension of temporary 5% reduced rate for hospitality and tourism sectors is continued until 31st December 2021 (4) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a review comparing (a) the extension of temporary 5% reduced rate for hospitality and tourism sectors being continued until 30 September 2021 and (b) the extension of temporary 5% reduced rate for hospitality and tourism sectors being continued until 31 December on various economic indicators. New clause 11—Review of effect on tax revenues— ‘(1) The Chancellor of the Exchequer must review the effects on tax revenues of the provisions of this Act, and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must— (a) consider the expected change in corporation and income tax paid attributable to the provisions, and (b) make an estimate of any change attributable to the provisions in the difference between the amount of tax required to be paid to the Commissioners and the amount paid (3) The reference to tax required to be paid in subsection 2(b) includes taxes payable by the owners and employees of Scottish limited partnerships.’ This new clause would require a report on the impact of the provisions of the Bill on narrowing the tax gap, assessing the impact of: (a) the expected change in corporation and income tax paid attributable to the provisions and (b) any change, attributable to the provisions, in the difference between the amount of tax required to be paid to the Commissioners and the amount paid. In particular, this includes taxes payable by the owners and employees of Scottish limited partnerships. New clause 13—Review of impact on GDP— ‘(1) The Chancellor of the Exchequer must review the impact in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must compare estimated GDP in each of the next five years under the following scenarios— (a) these provisions are enacted, (b) these provisions are not enacted, and (c) the UK fiscal stimulus package, as a percentage of GDP, mirrors that of the United States (3) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a report on the impact on GDP of the provisions in the Bill, comparing them with the impact of copying the level of fiscal intervention in the US. New clause 14—Report on Part 2— ‘(1) The Secretary of State shall, before 1 April 2023, publish a report on the impact of the provisions in Part 2 of this Act (2) The report in subsection (1) shall include consideration of the impact on— (a) the rate of plastic recycling in the UK generally, (b) the rate of PET plastic recycling in the UK, (c) the rate of Polypropylene plastic recycling in the UK, and (d) the rate of HDPE plastic recycling in the UK (3) The report in subsection (1) shall include consideration of the impact on— (a) the volume of plastic used in the UK, (b) the volume of PET plastic used in the UK, (c) the volume of Polypropylene plastic used in the UK, and (d) the volume of HDPE plastic used in the UK (4) The report in subsection (1) shall include consideration of the impact on— (a) the volume of plastic stockpiling in the UK, (b) the volume of PET plastic stockpiling in the UK, (c) the volume of Polypropylene plastic stockpiling in the UK, and (d) the volume of HDPE plastic stockpiling in the UK (5) The report in subsection (1) shall consider whether— (a) £200/tonne provides an economic incentive to change the content of packaging for those types of plastic specified in subsection (2), (b) the economic incentive in subsection (5)(a) remains in the event of lower than average oil prices, and (c) a tax escalator might be more efficacious.’ This new clause would require a review of the efficacy of the proposed plastic packaging tax, with respect to whether the proposals will (a) increase use of certain plastics and (b) provide an incentive to recycle in the event of lower than average oil prices. New clause 15—Review of impact on climate emissions— ‘(1) The Chancellor of the Exchequer must review the impact on climate emissions in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the effects of the provisions of the Act on progress towards the Government’s climate emissions targets (3) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a report on the effects of the Bill on progress towards the UK Government’s climate emissions targets. New clause 16—Review of impact of section 104— ‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by section 104 and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider the effects of the provisions on the volume of gambling, including— (a) the number of people who take part in gambling, (b) the amount of money spent on gambling, and (c) the gross gaming yield (3) In this section— “parts of the United Kingdom” means— (a) England, (b) Scotland, (c) Wales, and (d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.’ This new clause would require a report on the effects of section 104 on the volume of gambling. New clause 21—Impact of Act on human and ecological health and wellbeing— ‘The Chancellor of the Exchequer must review the impact of the provisions of this Act on human and ecological health and wellbeing, including the wellbeing of future generations, and lay a report of that review before both Houses of Parliament within six months of the passing of this Act.’ This new clause would require the Chancellor of the Exchequer to review the impact of the Finance Bill on human and ecological health and wellbeing, including the wellbeing of future generations. New clause 26—Review of coronavirus job support schemes— ‘(1) The Chancellor of the Exchequer must lay before Parliament within three months of the passing of this Act a report on the impact of sections 31 to 33 of this Act. (2) The report must consider the effects of the following two scenarios— (a) the coronavirus job retention scheme and the self-employment income support scheme are continued until 30th September 2021, and (b) the coronavirus job retention scheme and self- employment income support scheme are continued until 31st December 2021, and the following categories of workers are made eligible for the schemes— (i) limited company directors, (ii) self-employed workers earning more than 50% of their income from employment, and (iii) self-employed workers with profits over £50,000 (3) A review under this section must consider the effects of the provisions on— (a) employment, (b) GDP growth, (c) personal debt, and (d) poverty.’ New clause 27—Review of effect on small businesses— ‘(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review considering the effects of this Act on small businesses that have been subject to restrictions on trading as a result of the pandemic (2) The review must consider the following issues— (a) debt, (b) rent arrears, (c) solvency, and (d) the ability of small businesses to employ individuals.’ New clause 28—Review of effect on carbon emissions— ‘The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review on the effect of the provisions of the Act on— (a) a transition towards zero-carbon domestic flights by 2030, (b) any reduction in the share of the UK’s carbon emissions coming from international flight travel, and (c) the number of individuals booking more than three international flights a year.’ New clause 29—Review of effect on supply chain and other workers— ‘(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review considering the effects of the provisions of this Act on the following categories of— (a) workers, employees and self-employed individuals in the supply chain sector, (b) employees on zero-hours contracts and agency workers, and (c) office workers in different income deciles that have worked remotely since March 2020 (2) The review must include an assessment with regard to— (a) employment income, and (b) socioeconomic inequalities.’ New clause 31—Review of section 21— ‘(1) The Chancellor of the Exchequer must review the impact of section 21 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act (2) A review under this section must consider— (a) the impact of section 21 on levels of tax avoidance, (b) the impact of section 21 on levels of tax avoidance if section 61O of ITEPA 2003 were amended to prohibit the operation of umbrella companies, and (c) the impact of section 21 on levels of tax avoidance if section 61O of ITEPA 2003 were amended to mean that an umbrella company would not be an intermediary but would still be able to operate, provided that the following conditions were met— (i) the worker had no material interest in the umbrella company; (ii) the umbrella company received the monies from the agency and used the entire amount to process as earnings, including the total cost of employment, less a transparent intermediary margin; (iii) at the end of the engagement, any outstanding holiday pay was paid; (iv) all employment rights, including agency workers’ rights, were maintained; and (v) no payment was given to any other party.’ Amendment 23, page 2, line 15, leave out clause 5 This amendment would ensure that the thresholds for the personal allowance and for the higher rate of income tax rise in line with inflation as per the Income Tax Act 2007. Amendment 27, in clause 15, page 9, line 16, at end insert— “(3) The Chancellor of the Exchequer must, no later than 5 April 2022, lay before the House of Commons a report— (a) analysing the fiscal and economic effects of Government relief under the annual investment allowance scheme and the changes in those effects which it estimates will occur as a result of the provisions of this section, in respect of— (i) each NUTS 1 statistical region of England and England as a whole, (ii) Scotland, (iii) Wales, and (iv) Northern Ireland, and (b) assessing how the annual investment allowance scheme is furthering efforts to mitigate climate change, and any differences in the benefit of this funding in respect of— (i) each NUTS 1 statistical region of England and England as a whole, (ii) Scotland, (iii) Wales, and (iv) Northern Ireland.” This amendment would require the Chancellor of the Exchequer to analyse the impact of changes proposed in Clause 15 in terms of impact on the economy and geographical reach and to assess the impact of the investment allowance scheme on efforts to mitigate climate change. Amendment 28, in clause 19, page 13, line 12, at end insert— “(3) The Chancellor of the Exchequer must, no later than 5 April 2022, lay before the House of Commons a report— (a) analysing the fiscal and economic effects of Government relief in relation to R&D tax credits for SMEs and the changes in those effects which it estimates will occur as a result of the provisions of this section and schedules 3 and 4, in respect of— (i) each NUTS 1 statistical region of England and England as a whole, (ii) Scotland, (iii) Wales, and (iv) Northern Ireland, and (b) assessing how R&D tax credits for SMEs are furthering efforts to mitigate climate change, and any differences in the benefit of this funding in respect of— (i) each NUTS 1 statistical region of England and England as a whole, (ii) Scotland, (iii) Wales, and (iv) Northern Ireland.” This amendment would require the Chancellor of the Exchequer to analyse the impact of changes proposed in Clause 19 in terms of impact on the economy and geographical reach and to assess the impact of R&D tax credits on efforts to mitigate climate change. Amendment 32, in clause 21, page 13, line 33, after “(1B)” insert “or (1C)” Amendment 33, page 14, line 9, at end insert— “(1C) This subsection is satisfied where— (a) the worker has no material interest in the intermediary, (b) the worker— (i) has received, (ii) has rights which entitle, or which in any circumstances would entitle, the worker to receive, or (iii) expects to receive, a chain payment from the intermediary (c) If any of the conditions A, B or C in this subsection apply, then this exempts the person within the chain from being an intermediary (d) Condition A is that the services are supplied by or through a third person (“the agency”) where all income received and receivable for those services wholly constitutes employment income subject to Chapter 7 of Part 2 of ITEPA 2003 (e) Condition B is that the worker is employed under a contract of employment within the meaning of section 230(2) of the Employment Rights Act 1996 and is ordinarily or habitually employed by the intermediary prior to being engaged by the Client, either directly or via an agency, and has been engaged by the Client on a secondment basis (f) Condition C is that all of the following apply— (i) the worker is employed by the intermediary under a contract of employment within the meaning of section 230(2) of the Employment Rights Act 1996, (ii) the worker, if engaged via an agency, has not given notice of an agreement with the intermediary that paragraphs (1) to (8) of regulation 32(9) of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 shall not apply, (iii) all income received and receivable by the worker wholly constitutes employment income from the intermediary, (iv) the total of the payment elements paid to the worker during the entire engagement are equal to or greater than the sums of chain payments made to the intermediary during the engagement, (v) the intermediary is not in breach of Section 54 of the Pensions Act 2008, and (vi) the intermediary is not in breach of Paragraph 3A of Schedule 1 of the Social Security Contributions and Benefits Act 1992 (g) A “payment element” means any of the following— (i) secondary Class 1 National Insurance Contributions, as defined by section 6 of the Contributions and Benefits Act, (ii) apprenticeship Levy as defined by Part 6, section 98, of the Finance Act 2016, (iii) pension contributions, which shall mean contributions paid into registered pension schemes by their employers that are subject to the exemption provided by Section 308 of ITEPA 2003, (iv) intermediary margin, which shall mean a fixed fee deducted from the chain payment, the amount of which has been declared to the contractor prior to becoming an employee, (v) holiday pay, which means any amounts paid to the worker under the Working Time Regulations 1998 either during or upon termination of the engagement, (vi) net employment income, which shall mean employment income paid to the worker after deduction of Income Tax under PAYE, Class 1 primary National Insurance Contributions, and Student Loans deductions, (vii) allowable expenses, which shall mean any reimbursement of expenses to the worker by the intermediary permitted as per Chapter 2 of Part 5 of ITEPA 2003 (h) In (1C)(g) “secondment” shall mean the provision of any worker by means of a resource augmentation service or temporary transfer of an official or worker to another position or employment away from their primary job with the Intermediary (i) Where the fee-payer, defined in 61N(2), has been provided with information from the intermediary that gives them reasonable belief that any of the Conditions A to C are met, then section 61N(5) does not apply, and the client cannot become the fee-payer under 61NA subsections (3) and (4) (j) The amendments made by this subsection (1C) have effect in relation to deemed direct payments treated as made on or after 6 April 2022.” Amendment 34, page 14, line 9, at end insert— “(1C) This subsection is satisfied where— (a) the worker has no material interest in the intermediary, (b) the worker— (i) has received, (ii) has rights which entitle, or which in any circumstances would entitle, the worker to receive, or (iii) expects to receive, a chain payment from the intermediary (c) If any of the conditions A, B or C in this subsection apply, then this exempts the person within the chain from being an intermediary (d) Condition A is that the services are supplied by or through a third person (“the agency”) where all income received and receivable for those services wholly constitutes employment income subject to Chapter 7 of Part 2 of ITEPA 2003 (e) Condition B is that the worker is employed under a contract of employment within the meaning of section 230(2) of the Employment Rights Act 1996 and is ordinarily or habitually employed by the intermediary prior to being engaged by the Client, either directly or via an agency, and has been engaged by the Client on a secondment basis (f) In (1C)(e) “secondment” shall mean the provision of any worker by means of a resource augmentation service or temporary transfer of an official or worker to another position or employment away from their primary job with the Intermediary (g) Where the fee-payer, defined in 61N(2), has been provided with information from the intermediary that gives them reasonable belief that either of the Conditions A to B are met, then section 61N(5) does not apply, and the client cannot become the fee-payer under 61NA subsections (3) and (4) (h) The amendments made by this subsection (1C) have effect in relation to deemed direct payments treated as made on or after 6 April 2022.” Government new schedule 1 Government amendment 3 Government amendments 7 to 22.
I rise to speak to new clauses 2 and 24, tabled by the Leader of the Opposition, other hon. and right hon. Friends and myself New clause 2 draws attention to the announcement made by the Chancellor in 2019, when he was Chief Secretary to the Treasury, on implementing a non-resident stamp duty surcharge at 3%. As hon. Members will have noted, the Finance Bill introduces a non-resident surcharge at 2% rather than 3%. In Committee, I asked the Minister why the Government had watered down that commitment; I do not believe I have received an answer. We believe that this means that the Government will lose out on about £52 million a year in revenue, which they said they would have spent on tackling homelessness and rough sleeping. Perhaps the Minister could use his closing speech to clear up any confusion. Why have the Government moved from a 3% to 2% non-resident surcharge, and what assessment has been made of the impact on tax revenues and the housing market I turn to new clause 24. In Committee of the whole House, my hon. Friend the Member for Ealing North (James Murray) asked the Financial Secretary to the Treasury to explain whether the Government will meet their own deadline of introducing legislation to set up a register of overseas entities by 2021. The Minister’s response was that “the Government plan to introduce the Bill in due course.”—[Official Report, 20 April 2021; Vol. 692, c. 914.] Since that debate in Committee of the whole House, we have had the Queen’s Speech—the Government’s opportunity to lay out their legislative plans for the year ahead. I listened carefully to that speech and read the accompanying notes, but I heard no mention of the registration of overseas entities Bill It is now more than five years since David Cameron first announced proposals to introduce a beneficial ownership register for UK property owned by overseas companies and legal entities. Since then, we have had more announcements, consultations and draft Bills, but still no indication from the Government of when they intend to introduce this vital piece of legislation. The failure to include it in this year’s Queen’s Speech means that it is now beyond doubt that the Government will miss their 2021 deadline It is worth considering what that means more broadly. First, let us look at the scale of the problem. In 2014, the National Crime Agency received around 14,000 reports of transactions that were believed to involve illicit activity. By 2020, that had risen to over 62,000 reports. Of course, the true scale of the problem is extremely hard to quantify, given the lengths that individuals and organisations go to hide their illegal activities In 2019, Transparency International UK said: “The London property market is highly vulnerable to corrupt wealth flowing into it.” Its analysis found that since 2008, £100 billion of properties have been bought in London alone by overseas companies in secrecy jurisdictions and high-risk corruption countries—both indicators for illicit wealth. In 2017, it identified that 160 properties worth over £4 billion were purchased by high-corruption risk individuals. The tidal wave of dirty money is poisoning the housing market for ordinary people. There is growing evidence that the purchase of UK property to launder illicit finance from abroad has a direct impact on housing prices. As Transparency International UK—among others—has shown, attempts to clamp down on corruption around the world have led to a rise in property prices here as illicit finance flows into the UK market to avoid detection in its home country This is not just about luxury properties. There is a ripple effect, where activity at the top causes a rise in prices throughout the market. As demand outstrips supply in high-value areas, buyers look out to more affordable places. This leads to a cycle of rising housing prices—my hon. Friends know this story very well. Illicit finance also distorts the supply of housing as developers increasingly focus on luxury property targeted at international investors, who have no intention of living in the properties. So dirty money, from crime and corruption abroad, is pricing people out of their local communities in cities across the country This has a direct effect on the housing crisis. The Government know this, of course. They have committed to act and set up a register of beneficial ownership for UK property owned by overseas entities. This would let the disinfectant of sunlight into the murky world of high-end property bought by shell companies and overseas bodies. As the Government stated: “It is intended to act as a deterrent to those who would seek to hide and launder the proceeds of bribery, corruption and organised crime in land in the UK.” The fact the Government are aware of the problem but are still failing to act is inexplicable Our new clause 24 requires the Government to review how the Registration of Overseas Entities Bill could work alongside the non-resident surcharge to mitigate the housing crisis. But what we really need is for the Government to introduce this Bill as soon as possible and begin the process of implementing this important legislation. I will end by paying tribute to the Members from across the House who have campaigned on this issue relentlessly. I know they will share our disappointment that the Government are still not taking the action that we all agree is needed. I urge the Government to correct this wrong and get on with doing what they have committed to do.
I rise to speak to amendments 32 to 34 and new clause 31 tabled in my name and those of other right hon. and hon. Members. The Government’s historic IR35 policy has dated from long before this Minister was in his office. Far from rationalising the collection of tax from contractors, it has created and has now unwittingly extended a wild west of umbrella companies that operate without regulation and where malpractice is rife. This malpractice has seen contractors forced to operate through non-compliant umbrella companies that maximise their profits by using sleight-of-hand tactics. This includes: misrepresenting tax thresholds; skimming off pension contributions and other payments such as the apprenticeship levy; forcing contractors to opt out of their rights as agency workers; and withholding billions in holiday pay that is legally due The Government policy to date has triggered the increased proliferation of mini umbrella companies. BBC Radio 4’s “File on 4” found that 48,000 of these companies had been created in the past five years. The fact that policies in this area are flawed is proven beyond doubt by the fact that HMRC is having to de-register 22,000 of these umbrella companies. The frauds involved here cost the taxpayer hundreds of millions of pounds every year in lost tax, but as well as that, the boom of these non-compliant companies means that legitimate umbrella firms are being run out of business by them. The illegitimate umbrella companies making most of their profits through appropriating funds through tax scams, withholding holiday pay, skimming from the apprenticeship levy and the like are driving those honest firms out of business. There exist comparison websites for contractors to see which umbrella company they can do best with, and of course the ones that look best to them are the ones that make them money through illegitimate mechanisms.
Does the right hon. Gentleman agree that some well overdue changes to Companies House’s approach would be very welcome, and that the Government are taking an awful long time to get round to it?
I have a lot of sympathy with what the hon. Lady says. There are many ways to attack the issue; I will mention one or two, including my proposals to build in some changes to that effect. There are many ways to make sure that these scams cannot happen, but we need to undertake some of them. To pick an example that I was not going to cite, we understand that something like 40,000 Filipino employees have been taken on as cheap frontmen for these companies as directors. Those sorts of things do not serve our economy or the contractors well.
Is there not also a responsibility on the Government as a client to insert in the contracts with their main contractors a clause stating that if such practices are found within their supply chain, they will not be considered for future contracts? The Government could do that quite rapidly, quite apart from HMRC catching up with what is going on.
The right hon. Gentleman is right. The first phase of IR35 was about contractors for Government, so the whole wild west that I have described was actually created for public services To come back to my point about illegitimate contractors forcing the legitimate ones out of business, it is quite understandable that ordinary contractors will be attracted to a scheme that seems to offer them the best terms, yet they will be unaware that in doing so they risk unwittingly entering unintentional tax avoidance schemes. That is one of the problems that troubles me most These contractors, remember, are not fat cats, big bankers or city slickers. They are hard-working, decent people such as locum nurses and supply teachers—contractors whose work is vital. To take up the right hon. Gentleman’s point, the FT reported that NHS locum workers returning during the height of the pandemic were targeted by firms mis-selling these schemes. Ordinary and comparatively low-paid workers do not have the advantage of expensive tax advisers. They cannot be expected to navigate the minefield of extremely complex tax law if we allow these predators to play unfettered within it.
Does not the situation get even worse once these tax avoidance schemes have been identified and shown to be illegal? It is very often the people who were conned into operating with umbrella companies who are penalised, while the umbrella companies walk away with no investigation and there is no means of holding them to account.
That is entirely right. Indeed, one of the flaws that HMRC exhibits is that although it very often has real-time information on the issues, it acts only much later. That doubles or quadruples the problem for the ordinary person who is effectively a victim of these schemes, who suddenly finds years later that they have vast sums to meet—and, indeed, the shame of being held up as a tax avoider, if not evader. The Government should take action to clean up this wild west, for example by providing guidance and templates for the preferred model of working. This is not so difficult. Why cannot we lay out a template for ordinary contractors and legitimate umbrella companies that says, “This is how you should do it, and this is what we expect”? Failing that, my amendments give the Government and Parliament three clear and simple options Ideally, the Government will take note and enact new clause 31. It would review—it does not require law to do this—the whole operation of umbrella companies and off-payroll working. For me, that is the de minimis position. My preferred option is that the Government should introduce regulation into this problematic sector to clear up some of the most egregious aspects, including mis-selling and malpractice. They should require—this deals with the Companies Act point to some extent, but it is the simplest way of doing it—umbrella companies to meet five strict requirements: they should pay all holiday pay due; maintain all employment rights; ban kickbacks to third parties; end the skimming off of excess profits through sleight-of-hand tactics; and, finally, ensure that the worker himself has no material interest in the umbrella company. That would not deal with the propriety issues of the Companies Act, but it would deal with the main, most socially damaging aspects of the wild west we have now.
I rise to speak to new clauses 9, 10, 11, 13, 14, 15 and 16, which are in my name and those of my colleagues. It is certainly a very large grouping of amendments, and I will not speak to all of them, you will be glad to hear, Mr Deputy Speaker, but I will highlight a couple of them First, I want to speak about the very large amendments and new schedules concerning Northern Ireland and VAT. It concerns me greatly that we are looking at this huge new swathe within the Finance Bill that has not been considered at any other point in the Bill’s passage and that we have been given very limited time to delve into it at very short notice. That speaks to some of the complexity that Brexit has imposed on Northern Ireland. There needed to be a great deal more scrutiny of the measures prior to now, and the Government should not be bringing forward huge swathes of new schedules at this very late stage of the Bill I am very keen on new clauses 4, 5, 8 and 21, because Finance Bill scrutiny is limited after we have passed the Bill. We do not really think very much about the environmental impact, the equalities impact, the public health impact or the impact on poverty, and we do not think very much about the significant impact on the environment of the measures in the Bill. We do not do enough within Finance Bills to understand the full impact of the measures we have, and I would support a full range of other mechanisms to do so, which I will come back to on Third Reading I want to touch on the worthy amendments that those on the Labour Front Bench have tabled. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) talked knowledgably about the issues around financial crime. Some of the evidence we heard in the Treasury Committee during our inquiry highlighted the fact that that is a hugely under-investigated and under-prosecuted crime. There is still very little progress by the Government in closing loopholes in Scottish limited partnerships or in other areas. As she pointed out, we had pre-legislative scrutiny of the draft Registration of Overseas Entities Bill in the Joint Committee with the Lords. Now the Bill has disappeared, but the problem has not. There are still huge numbers of people using the UK, within the property sector in particular, to launder dirty money. The Government are not acting on it. The longer it goes on without action, the more we have to ask who is benefiting if the Government are choosing not to act On our new clause 9, I was in a meeting earlier with representatives of Lloyds Banking Group where Philip Grant, one of its representatives, made an excellent point about the asymmetric economy that we are currently in. There are some who can restart their businesses and some who cannot yet get restarted. Some of those will not be restarted for quite some time yet to the point where they do not know if they will be able to break even. The economy has not restarted and opened up for everybody. Many sectors of the economy will not be back to normal for quite some time Our new clause 9 calls for a report on the extension of the self-employment income support scheme and the coronavirus job retention scheme until September and until the end of the year respectively. For those who are watching and are unfamiliar with Finance Bills, if they are wondering why we keep talking about reports and reviews, the rules of Finance Bills are such that we cannot just ask for the extension in a simple way. We are not allowed to do that—it is part of the restrictions that these Bills have—so we ask for reports. However, we do very much see merit in asking for action rather than just reports Some sectors have been able to modify and their staff are working as they were before the coronavirus pandemic, while some are working partly or entirely from home. Yet, as we all know, there are other sectors that are still waiting—culture, hospitality, conferences, events, weddings, tourism and travel. Employers who may already be carrying a significant burden of debt and arrears without having their cashflow back to normal still have to pay more of their employees’ wages, eventually tapering off to nothing at all coming from a Government contribution. Many businesses may decide that it is just too much of a cost and that they cannot continue to employ those people or cannot continue with their business. We know that the scheduled end of the schemes last year caused job losses. The Treasury must not make the same mistakes again, and at least carrying out such a report would help us to understand the consequences of the UK Government’s actions in this area We are not out of the woods yet with this pandemic, and it is vital that the UK Government take all the steps they can to strengthen support rather than pulling it. We in the SNP cannot forget, although the UK Government clearly have, about the millions of people excluded from support schemes altogether. It is unjustifiable that the year has come and gone with so many people left without a single penny piece in Government support, many in sectors that have not yet come back and may not for some time Further to this, we call again in our new clause 10 for a review of the extension of the 5% reduced rate for hospitality and tourism. This was a call that we made before the Chancellor announced it last year. The VAT rate for tourism has been too high for too long, and this year, when we are being strongly encouraged to holiday at home, it makes absolute sense to extend this provision, which many people have not had sufficient opportunity to benefit from. The provision would also cover events, including funfairs, which have had a very tough year, with many traditional fairs up and down the country being cancelled. Maintaining the VAT reduction could help to provide a much-needed stimulus to an events, tourism and hospitality sector that is crying out for such a boost. I am sure that if we had this power in the Scottish Parliament we would be using it, so I encourage the Minister to act or to devolve the power and let us get on with the job On our new clause 13 on stimulus, we agree with the principle of boosting it like Biden. One of the mistakes of the crash is that it was used to set us on a course of austerity. This has had a huge and devastating impact on all our constituents. We need to know from the UK Government what will be the impact of future austerity plans they might have compared with investment. While this Government have the levers in their hands, they should be clear about the impact that their action or inaction will have Our new clause 14 returns to some of the issues that we have with the technicalities of the plastic packaging tax. We are trying to be helpful to the UK Government in this regard. I genuinely hope, against previous experience, that they will at least listen to these concerns and make provisions that will maximise both the recyclate and the tax take. Not all plastics are equal, and the Government should recognise that in the provisions they put forward. Some lend themselves more to being recycled and can be brought to 100% reusable content, and some are very far away from that. We should not treat them all the same On our new clause 16, we have been concerned for some time about problem gambling, and my hon. Friend the Member for Inverclyde (Ronnie Cowan) has campaigned doggedly on the issue, along with the all-party parliamentary group for gambling related harm. It would therefore be useful to understand the impact of clause 104 on the volume of gambling and whether further fiscal measures are required to tackle the harm that is done to people. I would like to touch on some of the amendments tabled by the right hon. Member for Haltemprice and Howden (Mr Davis) on the loan charge and related issues. The loan charge continues to be a running sore for many, and I ask the UK Government to consider the merits of the amendments and what more can be done to support people. Stopping the malpractice of umbrella companies would be another step forward in closing loopholes and protecting those who may be tempted to sign up to, or coerced into signing up to, such schemes in the future. Those promoting such schemes always seem to be a step ahead, and the Government should not let them get further steps ahead and become a dot on the horizon There are many amendments in the group that I would like to speak to, and many have significant merit and should be considered by the Government. The flaws in this process mean that many of them will not even be considered or voted on tonight, but I urge the Government to take up those that they can.
I rise to support the amendments standing in the names of my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), myself and my colleagues Let me start by making it very clear, as my right hon. Friend—wherever he is—did so well earlier, that we have a problem here, and I am surprised that the Government do not really want to recognise it and are avoiding it. The unacceptable practices of umbrella companies have now become very clear. Contractors are being forced into schemes and are being forced by recruitment agencies to use umbrella companies, which they may not wish to do and may be concerned about. Opting out of the conduct of employment regulations is often mandatory, which removes the rights contractors had as agency workers. We are seeing kickbacks, problems over holiday pay and the skimming of the assignment rate. We are also seeing mini umbrella companies, which some contractors sign up to, believing them to be compliant, only to then discover that they are employed by a company with a different name and owned by a director in, say, the Philippines—my right hon. Friend mentioned “File on 4”, which has raised this issue The problem is that the worse the level of malpractice, the greater the rewards and kickbacks for the agencies, reducing the revenue for the Treasury. I have huge respect for my right hon. Friend the Financial Secretary, who is on the Treasury Bench and who will respond to all of this, and I am sure he and his colleagues in the Treasury are alert to this issue and understand that it is a major problem, but I cannot quite understand why we are not using this Finance Bill to start putting some of this right.
Has it not been a systemic problem with the Inland Revenue that these schemes have been cropping up for decades, and that it takes years to deal with them? They are spreading like wildfire, and they are spreading even faster now with social media—it used to be through the pubs and clubs. Ministers need to be on the Inland Revenue’s back saying, “Why are you not dealing with these problems?” There is a timing issue in this.
I agree with the right hon. Gentleman. The point I am trying to make to my right hon. Friend the Financial Secretary and others on the Treasury Bench is a fairly gentle one: this is something that we can rectify, and we have the capacity to rectify it. We should think of what will happen if it goes much further. We should think of the loan charge and the huge human problems that were caused by that and the attempt by the Treasury to use retrospective legislation to grab money back. Who got hammered in all that? Not the organisations that were doing these things, but the individuals who were led to believe they were in the right set-up. It is always going to be them who get hammered. I thought the purpose of Government was to protect the vulnerable and deal with those who are abusing them.
It really is enormously frustrating for those of us who, time and again, have made representations to Treasury Ministers on behalf of victims of the loan charge, only to be knocked back by ripostes relating to tax avoidance schemes, that now, when people who have suffered from the loan charge are urging colleagues on this side of the House and no doubt on the other side as well to take steps to ensure that people are not trapped in these schemes in the future, the Government do not want to give them that added layer of protection, so they seem to be wanting to hit them in both directions.
I am grateful to my right hon. Friend. I will not risk repeating what he has said, but it is the reality. I was one of those who gave evidence to the review of the loan charge set-up because it was quite clear that it was causing huge problems for many decent people in my constituency. I am sure it was the same for Members on all sides of the House; I do not for one moment pretend that it was a problem for my constituents alone I recommend to my right hon. Friend the Financial Secretary some of the amendments and new clauses that we have been speaking about. I will not go through all of them, but I do want to make this point. Amendment 33, which allows an umbrella not to be an intermediary and still operate, provides strict conditions. My right hon. Friend the Member for Haltemprice and Howden laid out those five conditions, which are critical. I recommend those to the Financial Secretary; I am not going to repeat them, because we would just go on doing that all night I want to deal with amendment 34 in a bit more detail. The important thing about amendment 34 is that, in reality, all inside-IR35 workers could easily be paid via a recruitment agency payroll—that is the key bit here—and umbrella companies are of benefit to recruiters, not to workers. Under the original drafting of the off-payroll rules, an umbrella company could classify as a payment intermediary, so payment would have to be made to the umbrella net of tax, reducing an incentive to exist. The behavioural effect will mean agencies will put workers on payroll if they are not outside IR35. The key thing is that this would give the sector a year to re-gear and provide its service as agencies in a payroll payment bureau-type manner, instead of the Government taking other decisive action, including banning certain practices and statutory regulation. I am trying to be reasonable about this to the Government. I do think that this is really important. I am going to conclude on this. Overall, if we look at the purpose of the amendments and new clauses in this area, I think they set out what the problem is. The people who will get hurt by all of this in the end, when the Treasury finally decides to do something about it, will be the people who were the victims of this, not those who set these schemes up There are five points here that are critical: the whole purpose is to stop overnight aggressive tax avoidance schemes introduced and encouraged by some unscrupulous agencies; stop overnight the exploitation of contractors, forced into schemes that adopt malpractice to skim moneys from contractors; stop overnight the kickbacks being used that encourage malpractice; provide sunset clauses to ensure that the sector has until 6 April 2022 to prepare for the changes; and make agencies and clients liable for any malpractice, thereby removing the incentives to encourage it These are very simple, basic points. We are not asking for a revolution; we are asking for sense. I know exactly where this is going because in 29 years I have seen this time and again—do not move; later on, blame somebody else; and back comes the Treasury to say, “We’ll now get that money back”. I think the loan charge—I come back to this—is the biggest example of where, when things goes wrong, it is those who have suffered who end up paying the penalty, not those who skimmed off the top and are now living somewhere outside the reach of Her Majesty’s Treasury. I simply say to the Financial Secretary, with all due deference: please, please give consideration to this and at least have a proper review so that we may engage with this in due course and settle it.
First, I draw Members’ attention to my entry in the Register of Members’ Financial Interests I rise to support my colleagues on the Front Bench and new clause 24 about the surcharge on overseas buyers: the extra stamp duty that is charged. Although we are seeing a 2% uplift, it is not what was originally promised, and even that, I would say, is still not enough to prevent people from speculating, particularly in my constituency and elsewhere in London, on the expensive London housing market and overheating that housing market I came across this level of investment in my early days in this place—I have now been here for 16 years—when I discovered that whole blocks of new developments were being bought up overnight. I could not work out who was doing it. I then managed to inveigle my way on to the distribution lists of some of the estate agents, which were advertising the properties in Hong Kong and Dubai, and they sold over a weekend These were not homes for local people. They were often bought up by finance companies overseas and sold on. The original reason for the extra stamp duty surcharge was to try to curtail that to some extent, but I do not think it is enough. Foreign investors are buying homes, which are becoming commodities; they are advertised with yield—it is simply about increasing the rent. As the shadow Minister, my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare), highlighted, at least £53 million and counting in revenue has been lost from the Exchequer at a time when we need it more than ever. The excuse is often that developers need the money because they cannot operate without that cash-flow model. I think they would adapt pretty quickly. In my constituency, there are blocks that local people have kept their eye on, wanting to try to buy, only to find they have already been sold en masse overseas. A stamp duty increase would help a little bit The stamp duty holiday has been helpful to many people, but all that contributes to fuelling demand for housing while the Government are not increasing supply. Those rising house prices put homeownership out of reach of so many of my constituents and people up and down the country. It is having a major dampening impact on people’s lives and livelihoods and on the economy in the long term. It does nothing for private renters and nothing for those in desperate need of affordable housing We are now able to go out and do our normal roving surgeries on doorsteps, and I will give some examples of people I have met in the last week alone. Faisal works in the NHS. He has three children in a two-bedroom council flat, and he has been bidding to move to a bigger property for 10 years, but such is the demand in my constituency that someone in housing need does not get to move. If they are homeless, they now get stuck in a hostel room for years, whereas only five or so years ago it was for about six months. Jane—not her real name—and her husband live with two large teenage boys in a two-bedroom flat. I have known her for some years, having seen her at surgeries. I happened to be on her doorstep the other day, and she made sure that I saw how big her boys have become. She has been coming to see me since they were toddlers, yet she still cannot get rehoused. This is no criticism of Hackney Council, which is doing a fantastic job of trying to build, and is building, affordable social housing, but it cannot keep pace with the demand. In the last week alone, two women I knocked on the doors of were sharing beds with their 12 and 13-year-old sons respectively One of the saddest cases is an NHS porter I met less than 10 days ago who shares a room in a private rented home with his 16-year-old daughter. He works. He could not qualify for affordable housing even if he wanted to, because he has no recourse to public funds, despite propping up our NHS in one of the most challenging years in its history. He is doing all the right things—working, trying to be a good father—but he cannot afford private rents. That is not surprising: it is at least £1,500 a month to rent a two-bedroom flat in my constituency; £750,000 to buy a two-bedroom flat; and rent for a three-bedroom house is not much shy of £3,500 a month We need to increase stamp duty immediately, while monitoring its effect, and we should increase it further for overseas purchasers. We should not have a housing market that has led to homes being owned by finance vehicles or absentee landlords who have no interest in it being a home but simply see it as an investment. Homes should be homes. Investment is all very well, but this is really damaging the future prospects of children in my constituency, some of whom will never have not only their own bedroom but maybe even their own bed between now and when they hopefully earn enough money to leave home, although frankly we are a long way off their earning enough money to buy a £750,000 flat. The Government really need to step up. They talk about levelling up, but that is certainly not happening for many people in my constituency.
I am grateful, Mr Deputy Speaker, for the opportunity to speak in this debate. There are many amendments in this group to commend, and they have been powerfully set out by colleagues who have spoken before me, most recently the hon. Member for Hackney South and Shoreditch (Meg Hillier), but I want focus on new clause 21, which would require the Chancellor of the Exchequer to review the impact of the Finance Bill on human and ecological health and wellbeing, including the wellbeing of future generations. I am very grateful to colleagues for their support New clause 21 reflects the urgency of shifting to an economic system fit for the 21st century—a modern economic system, designed to serve people and planet for the long term, rather than one that prioritises economic growth at all costs and short-term profit. We have seen where that has got us. In the words of a report by leading economists for the OECD, “the dominant patterns of economic growth…have generated ‘significant harms’ over recent decades—including rising inequality and catastrophic environmental degradation.” This new clause is about how we tell whether the provisions in the Finance Bill are genuinely building back better. It is about what the most important measures of economic success are for making such judgments. It makes the case that the health and wellbeing of people and nature should be our top priority. At the very least, the Treasury should be assessing all its policies against those benchmarks New clause 21 also highlights the need for the Treasury to fully consider the impacts of fiscal measures on future generations. It thereby complements the aims of the Wellbeing of Future Generations Bill, which the noble Lord Bird introduced last week as a private Member’s Bill in the other place. At the moment, the Treasury continues to put short-term economic and political gain ahead of the long-term health of our biosphere. That is an utter betrayal of future generations and is unforgivably wasteful from a public spending point of view If we are serious about levelling up, building back better or indeed about climate leadership, we have to switch to long-term preventive spending, and we need to do it fast. I want briefly to offer some further evidence of why we should be assessing each and every provision of the Finance Bill for their impact on human and ecological health and wellbeing. The case for new clause 21 is made splendidly by the Treasury’s own Dasgupta review of the economics of biodiversity, which calls for “an urgent and transformative change in how we think, act and measure economic success to protect and enhance our prosperity and the natural world.” Then there is Public Health England’s recent programme of work, called “Inclusive and sustainable economies: leaving no one behind”, which states: “Never has the interdependence between health and the economy been closer, or the need for a fairer and more inclusive economic system been clearer.” It explains how poor areas and populations are at risk of becoming still poorer, and how that will hold them back. Therefore, as we aim to build back better, we also need to build back fairer and more sustainably. Crucially, “This means addressing the most fundamental of determinants—the economy which creates jobs and wealth—and protecting the environmental sustainability of future generations by doing this within the means of our planet.” A new report, “Rebuilding prosperity” from the University College London Institute for Global Prosperity sets out proposals for a new way of thinking about what the economy does for people, and a new way of collaborative decision making to secure livelihoods and shared prosperity for people everywhere. Zara Mohammed, head of the Muslim Council of Britain, has recently written about the lessons from the pandemic and the importance of not going back to so-called normal. She says: “We must build a society based on the principles of social justice; reduce inequalities of income and wealth; and build a wellbeing economy that puts achievement of health and wellbeing at the centre of its strategy.” The OECD report that I mentioned echoes that approach and makes an unequivocal call for Governments to change the way the economy works in the wake of the covid-19 pandemic. It says that we need a paradigm shift in the way developed countries approach economic policy, so that instead of focusing on gross domestic product, we prioritise environmental sustainability, improving wellbeing, reducing inequality and strengthening economic resilience Finally, the UN climate science report from earlier this year, “Ten new insights in climate science 2020”, very clearly sets out the stakes: “A COVID-19 recovery strategy based on growth first and sustainability second is likely to fail the Paris Agreement.” We cannot judge whether this Finance Bill puts us on course for a fair and green recovery if our main measures of success are things such as GDP growth and labour productivity. There are plenty of alternatives that recognise the priority that should be given to human and ecological health and wellbeing as the goal of economic policy. The Dasgupta report, for example, proposes inclusive wealth instead of GDP. The New Zealand Treasury, famous for the world’s first wellbeing budget, uses a living standards framework, operationalised for budgetary and spending decisions across Government. Other countries in the Wellbeing Economy Governments alliance are embracing similar alternatives, and the Carnegie UK Trust proposes what its call GWE: gross domestic wellbeing Robust alternatives do exist. None of them is perfect, but none is anywhere near as flawed as using GDP growth as our main measure of economic success. The time for the Treasury to change is now. The UK, through the G7 and COP26, should be leading the world towards a wellbeing economy. One modest step should be adopting new clause 21, which recognises, as the Treasury’s Dasgupta review states: “The solution starts with understanding and accepting a simple truth: our economies are embedded within Nature, not external to it.” To conclude, we must, in Professor Dasgupta’s words: “Change our measures of economic success to guide us on a more sustainable path”.
It is always a pleasure to follow the hon. Member for Brighton, Pavilion (Caroline Lucas), who brings a different perspective—or, as she might word it, a paradigm shift—to some of our debates, which is a positive thing. However, it is quite clear from all that the Government have said that improving our environment for future generations is at the heart of Government policy. However, I am not going to comment on that. I am going to comment on the Finance Bill measures on which I have, I think, received more correspondence than on any other—namely, the stamp duty measures. In advance of the Budget, the correspondence was to ask for an extension to the stamp duty cut, and after the Budget it was to welcome it. If we pass the stamp duty measures—which obviously we are going to—we will have had a stamp duty cut in place for over a year, and we have definitely seen a boost in housing transactions. In March, there were over 173,000 transactions. I have taken that number from the non-adjusted monthly data published by HMRC, and it is the highest monthly total in its report, which details monthly levels right back to 2005. The £500,000 nil rate band until the end of June has therefore proved effective. My concern is that it has perhaps proved so effective that the market is in danger of overheating. We are seeing quite a bit of inflation, which obviously would need monitoring The introduction of a 2% non-resident surcharge will potentially have a positive impact on house price inflation. It would obviously not apply to those who come here to live and work, but would have a slight revenue-raising implication. The Opposition’s new clause 2 calls for the policy to be evaluated at different levels of surcharge. As I said earlier, all Treasury policies are evaluated regularly—I know that from my time there—and we also have the general commitment to transparency. I therefore do not believe that the new clause is necessary To focus on housing, it is simply too hard for people in many parts of our country to get on to the property ladder. I welcome the 95% mortgage guarantee scheme, which came into effect last month. However, we need to remember that it is not just one side of the argument that will move things forward, and we are obviously also seeing significant house building. It is the combination of boosting supply and facilitating demand that makes it easier for people to start on home ownership. Judging by my inbox, that remains what people want, although I recognise the point made by the hon. Member for Hackney South and Shoreditch (Meg Hillier) about the need for a greater supply of social housing as well. She made her points very powerfully I would like to make a couple of comments about the speeches from my right hon. Friends the Members for Haltemprice and Howden (Mr Davis) and for Chingford and Woodford Green (Sir Iain Duncan Smith) on umbrella companies and IR35. It has been right to address off-payroll employment, which is not good for either the employee, when that is what they truly are, or the employer. It is also worth remembering that we should separate disguised employment from when contractors are truly adding value. They provide flexibility in our workforce for many companies and they bring expertise when it is needed and experience from solving problems in other businesses. That flexibility has been an ingredient in our economic growth Nevertheless, the points that my right hon. Friends made about umbrella companies were important. There are problems to solve, particularly in respect of the difference between the originators of the schemes and those who sign up to them in good faith. Although I have no doubt that we have problems to solve, I am not sure that the issue of umbrella companies should be dealt with in a Finance Bill—it is perhaps more of an unemployment issue than a finance one—but I look forward to hearing more on that from the Government in due course and, as my right hon. Friends said, that “in due course” should be sooner rather than later There are, of course, lots of other matters in the Bill, as we should expect, but I wish to comment on the issue of housing. I support the measures to promote home ownership, which has been falling for the past few years yet is an aspiration for so many. I am pleased to see that efforts are being made to turn that trend around.
I wish to speak to new clause 8, which was tabled in my name and the names of my colleagues. The new clause seeks to compel the Chancellor to assess the impact of this legislation on poverty, inequalities and, subsequently, our health Under the new clause, the Chancellor would be required to “review the public health and poverty effects of the provisions of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.” The review would have to consider: “(a) the effects of the provisions of this Act on the levels of relative and absolute poverty in the UK; (b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act; (c) the effects of the provisions of this Act on life expectancy and healthy life expectancy in the UK; (d) the implications for the public finances of the public health effects of the provisions of this Act.” You will recall, Mr Deputy Speaker, that in February last year Professor Sir Michael Marmot published his review of health equity in England 10 years on from his initial study. His review revealed that instead of narrowing, health inequalities—including how long we are going to live and how long we are going to live in good health—have got worse. Most significantly, his analysis showed that unlike the majority of other high-income countries, our life expectancy was flatlining. For the poorest 10% of the country it was actually declining, and women were particularly badly affected. He showed that place matters: health-wise, living in a deprived area in the north-east was worse than living in an equivalently deprived area in London Sir Michael also emphasised that it is predominantly the socioeconomic conditions to which people are exposed that determine their health status and how long they will live. By analysing the abundant evidence available, he attributed the shorter lives of people who live in poorer areas such as my Oldham constituency here in the north-west to the disproportionate Government cuts to their local public services, support and income since 2010 Shortly after Sir Michael published the report, covid hit. As the recent National Audit Office report outlined, it was always a question of when, not if, there was going to be a pandemic. Like many of us, Sir Michael has tried to point out the Government’s hubris not only in their pandemic management but in understanding why we have such a high and unequal covid death toll—the highest death toll in Europe and the fifth highest in the world In his covid review last December, Sir Michael summarised the four key pre-pandemic factors that have driven the high and unequal covid death toll. First, there were pre-existing and widening inequalities in social and economic conditions, particularly in power, money and resources. These inequalities in life have led to inequalities in health. Secondly, our governance and political culture was divisive, not just before but during the pandemic. Thirdly, there has been Government austerity over the past 10 plus years, including cuts in social security and local authority budgets. Finally, we had pre-existing and declining poor health Sir Michael has made a number of recommendations to build back fairer, including the need to recognise that our economy and health are linked. The improvement of our health and wellbeing must be a priority for the Government and an outcome of our economic policy, as others have said. New clause 8 is a practical means to ensure that that happens.
It is a pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), with whom I agree on the importance of the Government ascertaining how measures in this Bill may have a differential impact on different areas of the country, depending on different socioeconomic and health conditions I rise to speak to probing amendments 27 and 28, which stand in my name. They would encourage the Government to bring much-needed transparency and strategic thinking to the reliefs proposed by clauses 15 and 19. The amendments reflect Plaid Cymru’s constructive approach to this Bill and our priorities of building Wales’s economy and delivering on our net zero commitments Mr Deputy Speaker, you will be pleased to hear that I have no intention of detaining the House for very long this evening and so simply wish to reiterate some of the points I made in Committee. Before doing so, I wish to commend the amendments tabled by the right hon. Member for Haltemprice and Howden (Mr Davis) and the speech by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) on IR35 and umbrella companies. I very much hope that the Government will take them into consideration with some urgency Amendments 27 and 28 would require the Government to analyse the impact of changes to the annual investment allowance and research and development tax credits on the UK economy, their geographical reach and their impact on efforts to mitigate climate change. The amendments reflect a concern not only that existing tax reliefs are being used wastefully, but that we need to better support the levelling-up agenda and the decarbonisation of our economy so that we can achieve our legally binding net zero targets. I say that in the full knowledge that many other hon. Members have made these points far more eloquently than I could this evening. I particularly wish to commend the amendments standing in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas), which would go some way to ensuring that any measures in this Bill would have decarbonisation and our net zero commitments very much at the heart of their endeavours More generally, the UK Government have a lacklustre record on the use of reliefs. Both the National Audit Office and the Public Accounts Committee have raised serious concerns in that regard, with the latter concluding that the Government do not fully know their cost and have failed to conduct due diligence to establish value for money, with some 204 reliefs currently uncosted. When we consider that estimates for the 158 reliefs that have been costed suggest that they could cost the taxpayer as much as £159 billion a year, we as parliamentarians are not only justified but duty bound to establish precisely how those reliefs will contribute to levelling up and decarbonisation efforts. I commend the hon. Member for Hackney South and Shoreditch (Meg Hillier) and the work of her Committee, which greatly enhances the quality of our scrutiny in this place With those words, I hope that the Government will urgently take on board our amendments, and those tabled by the Members to whom I have referred, to improve the transparency and effectiveness of tax reliefs to furthering what I think are common goals of levelling up and tackling the net zero agenda.
I wish to speak to new clause 29, which stands in my name. The pandemic has introduced new ways of working right across our economy and we may need some time before we understand the full impact of these changes and the extent to which they represent permanent changes to how we work. Many of us, MPs included, have been fortunate enough to be able to utilise technology to continue our usual work and receive our full salary for it. Estimates put about 25% of the workforce in this category. I am one of many who hope that some of the changes we have been forced to adopt will be embedded in our normal ways of working as we move out of lockdown. On a national basis, it is possible that the use of digital meeting software may reduce the need for travel, both commuting and longer distance. It will also help workplaces become more accessible for those who have experienced obstacles, such as those with disabilities or those with caring responsibilities. But embedding emergency responses into everyday practice represents threats as well as opportunities, especially to workers. This new clause would require the Government to review the effects of this Finance Bill on certain categories of workers and to report to Parliament The workers I am particularly concerned about are those employed on precarious contracts, particularly in the distribution sector. One of the impacts of the stay-at-home order has been an enormous increase in online shopping and home delivery, with a corresponding increase in delivery vans on our roads. The impact that that is having on local congestion is a debate for another day, but tonight I want to draw attention to the contracts under which many of the drivers are working.
I rise to speak briefly in support of Labour’s new clause 24. We are often told, are we not, that the boldest measures are the safest. Unfortunately, the Government seem to have done a bit of a U-turn, or failed to be bold, going from a promised 3% to 2% on their non-residence surcharge. That is a hugely missed opportunity. It could really have helped the London property market, holding to account the wealthy as opposed to so many of those who struggle to get on to the property ladder I also want to talk about the register of overseas entities. First, I echo the words of my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who talked so movingly about those in housing need in her constituency. That is something that many of us in London see, day in, day out, in our surgeries. In my case, I think of particular companies that, after properties are built, purchase a number of different apartments, selling them, for example, to the far east. Even people who have saved and saved cannot afford to purchase an apartment in that block, as opposed to those who buy an apartment to hold as an investment, even keeping it empty at a time when we have such desperate housing need. The Treasury should consider clamping down on this practice On the wider point that this measure could address if it were not so shy, consideration should be made of the cost of assets and the fact that the huge inflation of assets does not help savers or the young. There are so many young people in desperately insecure employment who will never get on to the housing ladder unless we start to address this terrible situation. We also know that with low interest rates it is almost impossible to save the amount of deposit that is needed. The Help to Buy scheme, which in some parts of the country has worked quite well, has not worked particularly well in many of our neighbourhoods. It simply has not been able to touch the sides of what is needed The second point I want to make on the amendment on the register of overseas entities is, once again, how disappointing it has been that we have failed to hold to account those abroad who seek, for various reasons, to hide their financial interests in the UK. We look at this in the context of the Sunday Times rich list from last Sunday, where we see 24 new billionaires in the UK while 4.3 million children in the UK are living in poverty. That desperately needs to be addressed, yet it is five years since David Cameron first promised, when he appointed his anti-corruption tsar, to actually do something about corruption and overseas finance. Instead we have this go-slow, whether on having proper credentials for registering businesses at Companies House, on some of the measures in the Bill or on going from 3% to 2%. Who stands to benefit from that? It is not our constituents; it is people abroad who clearly have some kind ear of the Government. That desperately needs to be addressed Having read Catherine Belton’s book “Putin’s People”, I hope the Minister is able dispel my fear regarding its allegation that £1 million has gone to the Tory party from Mr Temerko, who is a very wealthy Ukrainian businessman. That money is tied to a corrupt regime where the courts will do the bidding of the Government in Russia. That money is tied up. We should not be beholden to these people; we should be standing up to them I also want, while I am talking about the register of overseas entities, to comment briefly on the terrible situation with Belarus in the last 24 hours. The Treasury needs to be much more campaigning. I know that working for the Treasury is all dry facts and figures, but look at how important its work has been in saving our economy and saving our workers. Well, let us now look at how revolutionary it could be in holding to account some of the corrupt regimes that have their money tied up in London’s economy. Will the Minister look at whether he can work with the Foreign, Commonwealth and Development Office to bring forward sanctions against state-owned enterprises—some of which continue to have UK subsidiaries, such as BNK UK, which is the UK arm of the Belarusian state oil company—and outline how the Government can plan to stop the Belarusian Government from using the London stock exchange to raise money and sustain Mr Lukashenko’s grip on power? Furthermore, how can the Treasury, working together with the Foreign Office, examine the evidence for further sanctions against individuals who support and help to sustain the regime, such as Mr Mikhail Gutseriyev, who was mentioned today in the urgent question? I hope that the Treasury will work together with the FCDO to right this wrong Finally, a statistic to finish these few words. Despite the sanctions imposed last year by the Foreign Secretary, with which I agree, there are fewer Belarusian entities sanctioned now than in 2012. Only seven entities are currently designated, compared with 32 under EU sanctions in 2012. In the space of 12 months, this dangerous regime has stolen an election, employed brutal repression against its own people and hijacked a civilian airliner. I feel as though our economy is facilitating that, and we simply cannot let that pass. I beg that with the mention of the overseas register, the Treasury will work hand in glove with the FCDO to bring these people to book, and to establish a genuine and committed economy that, at its heart, cares about human rights.
We are at a stage in the Bill’s progress that is almost like a wash-up. We are trying to make last-minute appeals to the Government for action on a number of key issues, and all the appeals to the Government so far by the right hon. Members for Haltemprice and Howden (Mr Davis) and for Chingford and Woodford Green (Sir Iain Duncan Smith), my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Richmond Park (Sarah Olney) and others are on worthy causes that should be addressed, as are the amendments from the Labour Front Benchers We must remember the context of the Government’s surcharge policy. It was to spike the approach that the Labour party was making about a levy on overseas ownership, on exactly the grounds laid out by my hon. Friend the Member for Hackney South and Shoreditch about the desperate need for housing and to prevent housing from being used continuously as an investment asset for profit, rather than to put roofs over the heads of our families. I wholeheartedly support and welcome all those appeals, but even if with my Catholic upbringing I believe in the powers of conversion, I somehow doubt we have been able to convert the Minister to a sufficient level for him to accept the amendments. I hope to be surprised, but I doubt it I tabled amendment 23 not in the hope of converting the Conservative Government, but to enable me to express justifiable anger about the Government’s approach. The Government are attempting to legislate for a real-terms pay cut that will affect millions of low-paid workers through the freeze in the tax threshold. Those include many of my constituents who have had to make ends meet on 80% of their wages for much of last year. Yesterday—this has already been referred to—it was galling to see the other side of the coin. The Sunday Times rich list showed that during the pandemic more billionaires have been created in the UK than at any time in the past 33 years. The levelling-up policy that appeared last year was the levelling up of millionaires into billionaires. The Chancellor should have used the occasion of the Budget and this Bill to level up capital gains tax to income tax rates, for example. It cannot be right that we tax work more than we tax income from wealth. Ahead of the Budget it was rumoured that the Chancellor was considering equalising capital gains tax and income tax. That would have been a much fairer way of raising revenue than increasing taxes for people on low and average wages, which the Government’s proposals on tax thresholds will do Child poverty has been mentioned, and in my constituency 42% of children are growing up in poverty—a figure that has sadly increased each year since 2015. Child poverty is often a consequence of low pay. The majority of children living in poverty in my constituency live in working households. We should be doing everything we can not just to protect but to boost the incomes of the low paid, not drag them into taxation or increase the taxes on them. The Bill will cut the income of someone working full time on the minimum wage. We know that 2 million workers rely on universal credit to top up their low pay, yet in a few months, the Government are going to cut universal credit by £20 a week Poverty has been rising in this country, and whether it is the £20 cut to universal credit, the stealth tax in the Bill, or this year’s paltry increase in the minimum wage, the Government’s actions will increase poverty still further, and increase suffering as a result. My amendment would ensure that the tax thresholds for the personal allowance and the higher rate were kept in line with inflation, as per the Income Tax Act 2007. I tabled it because I wanted to draw attention not to Labour party policy but to Conservative party policy, because in the last general election the Conservative manifesto pledged: “We promise not to raise the rates of income tax” The manifesto continued: “This is a tax guarantee that will protect the incomes of hard-working families across the next Parliament.” I just hope that Conservative Members will have the good grace at least to acknowledge that clause 5 of the Bill breaches that pledge, and that incomes are not protected. More of people’s incomes will be hit by income tax, and that is especially harsh on the millions of public sector workers who now face from this Government a pay freeze, a 5% rise in council tax and now this stealth tax rise on their income tax.
I am grateful to all of those who have spoken in this debate. As the right hon. Member for Hayes and Harlington (John McDonnell) has just said, this has been something of a wash-up debate. It is fair to say that it is a bit of an omnibus group of measures pulled together, with many different clauses and issues on which colleagues have wanted to speak. That has made it wide-ranging, but if I may, I am going to focus on some of the key themes from across the various discussions we have had Let me start with the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) and the question of the non-resident surcharge, which was also highlighted by the hon. Member for Hackney South and Shoreditch (Meg Hillier). They may or may not be aware that in 2019 the Government carried out a public consultation on whether there should be a 1% non-resident surcharge, and decided on the basis of that consultation that the surcharge should be levied at 2%. That is twice as high as was originally contemplated in the consultation. That also should be seen in the context of the additional tax that people pay on second and third properties, many of which will fall into the scope of this measure. That is an important factor to bear in mind The hon. Member for Brighton, Pavilion (Caroline Lucas) revisited some of her key themes as regards the climate and environmental policy. I think that there is a misunderstanding at some very deep level of what the Government are doing, which includes: the Environment Bill; the 10-point plan that the Prime Minister has laid out; the net zero work that the hon. Lady highlighted, which was commissioned within and by the Treasury from a very eminent independent economist; and our work through the new UK Infrastructure Bank, which focuses on green policies and levelling up and for which I was pleased to visit new potential office sites in Leeds only on Thursday. It all amounts to a tremendous emphasis, particularly in the net zero review, on the long-term future of creating a sustainable and productive green economy in this country. It is very important to focus on that The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) talked about health inequalities. I remind her that the Government have made an enormous investment in the NHS, over and above the extraordinary interventions supporting the fabric of our society over the past 12 months. We will also have in place a new office for health promotion, designed to support better health and wellbeing across the country The hon. Member for Ceredigion (Ben Lake) called for greater transparency in relation to reliefs. I have a great deal of personal sympathy with his position; he is absolutely right about the importance of focusing on reliefs. To take a particular example that I know is of great interest to him, he will be aware that we have under way a review of R&D tax reliefs, an important part of policy The hon. Member for Hornsey and Wood Green (Catherine West) highlighted the situation in Belarus, which is not directly a matter for the Treasury or the Bill, but is obviously a topic of great importance and interest for all Members of this House, as today’s urgent question highlighted All those points are important to put on the record. I also want to pick up on the important speeches made by my right hon. Friends the Members for Haltemprice and Howden (Mr Davis) and for Chingford and Woodford Green (Sir Iain Duncan Smith) My right hon. Friend the Member for Haltemprice and Howden focused on the prevalence of umbrella companies. It is important to say that there are legitimate reasons why an agency or an individual might wish to use an umbrella company. To contemplate a series of measures that might include a ban on umbrella companies would be a tremendous burden on the legitimate umbrella companies; my right hon. Friend mentioned that that was not his preferred option. It is important to point out that such companies can perform useful payroll functions for agencies, provide choice for individuals and have multiple engagements. Notably, the Low Incomes Tax Reform Group pointed out recently: “For freelance contractors who cannot work for their clients on a sole trader or limited company basis…the option to be able to work through an umbrella can be very valuable.” There is value to umbrella companies, but that is not to say that there is not also abuse. The Government are very focused on that: my right hon. Friend mentioned some of the measures that HMRC is taking to combat umbrella companies that are disobeying the rules or trading fraudulently, and we are committed to extending the remit of the Employment Agency Standards Inspectorate to support best practice in the area.
I think the Financial Secretary ought to face up to the reality, which is that many of the people under these companies are not what we would describe in any normal parlance as contractors: they are people working on Test and Trace in their thousands, for example, who should be employed directly either by Serco or by the agency that they work for. There are also great numbers of people in the health service under these companies; they should be employed either by an agency or by the health service. That is where the scandal is, and that is what he really ought to be dealing with—and very promptly.
It is a very dynamic marketplace, as the right hon. Gentleman will be aware. There are many different aspects to it with which the Government are seeking to engage. One thing that is quite important that I do not think he or others have noticed is that the changes to IR35 that the Government have made have in some quarters been widely welcomed. Let me give an example—it may not be the widest possible welcome, but it is quite noticeable—from the off-payroll advisory firm Qdos, which said: “In recent months the tide has turned, with thousands of businesses now aware of the fact that IR35 reform is manageable”, as it was manageable in the public sector some years before. It is important to recognise that that is also the case.
I have to challenge the Minister on IR35. He is speaking as though it is somehow all fine. It has decimated sections of the tech and IT industry in my constituency, where groups of people came together to deliver short contracts and were actually paying as much tax as the Exchequer was getting from them. I can provide figures if he would like to take this up further, but let us not pretend that it is all fine.
There is no suggestion on my part that it is all fine. One cannot make meaningful change to a market that is not performing as one would like and expect everything to be perfectly fine within weeks of the implementation of the measure. The point that I am making is that there are important players in the industry that recognise that—in the quote that I have given—“thousands of businesses” are “now aware… that IR35 reform is manageable”, and so it is As the hon. Lady will well know, under the previous arrangements there were people who were performing like employees—often working side by side with them—but not paying that tax, and it was important that they did so. If she doubts that, she might want to reflect on the question of what the tax revenue raised from those organisations is used for. The answer is that it is used to support the NHS, our public services and all the other things that the Government are trying to do to get this country through a difficult moment in our history.
The Minister accepts that there are now some significant abuses in the way that many—not all—umbrella companies operate. Do we need action by the Treasury to deal with this issue, or is he content that it will just resolve itself as things stand?
No, the Government have been clear that there needs to be an extension of the employment agency standards inspectorate in this area, and there may well be operational measures that HMRC needs to continue to undertake. My right hon. Friend will be aware that the Bill contains very considerable additional measures designed elsewhere in the tax system to curb the promotion of tax avoidance schemes, to improve the disclosure of those schemes and to combat organisations that would attempt to derive an unfair advantage of the kind that he has described, so we are absolutely not unaware of the importance of ensuring that people across the board pay appropriate levels of tax It is also worth saying that none of this really falls within the context of a Finance Bill, let alone the one that we have laid out in front of us. It is also worth saying that HMRC has used real time information in ways that were contemplated and discussed earlier in the debate in order to try to be more forward-leaning in this area. We recognise the concern and HMRC is highly active in it, but in many cases these umbrella companies do have a legitimate function, and it is important to recognise that I think that is it—thank you very much.
Once again, I thank all Members who have spoken. This has been a varied and wide-ranging debate, with Members focusing on different aspects of the Bill My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) spoke about the impact of overseas buyers buying properties in her community in bulk. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) spoke about the impact that dirty money is having on her local area and how other countries, such as the USA, are using sanctions to target corrupt individuals. Both are excellent champions for their constituents, who are too often at the sharp end of the housing crisis.
Will the hon. Lady give way?
I am afraid that we have to make haste My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) spoke passionately about the impact of the Bill on poverty and public health. She is absolutely right to draw attention to the Government’s failure in this area. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke about the measures in the Bill that are hurting the lowest earners in our society. He has always been a champion for the lowest paid Other hon. Members, including the right hon. Member for Haltemprice and Howden (Mr Davis), spoke about the exploitation of workers through umbrella companies. As my hon. Friend the Member for Ealing North (James Murray) said earlier, we are extremely concerned about the Government’s approach to workers’ rights, including their broken promise to include an employment Bill in the Queen’s Speech. We also share Members’ concerns about people being forced into umbrella companies and losing rights as a result. I urge the Government to look carefully at this issue I thank the Minister for his answer to my question on the non-resident stamp duty surcharge. I am aware of the consultation in 2019 to seek views on the decision on 1%, which led to the 2% stamp duty surcharge. I also point out that the Chancellor made an announcement in that same year, when he was Chief Secretary to the Treasury, in relation to implementing a non-resident stamp duty surcharge at 3%, so this commitment has been watered down I am sure that we will return to this issue during future debates and I thank Members for the points they have raised today. I will end by returning to the issue of the register of overseas ownership. As I said earlier, the Government’s failure to introduce this legislation is extremely disappointing. We will push new clause 24 on this issue to a vote, but I beg to ask leave to withdraw the clause Clause, by leave, withdrawn. New Clause 24 Review of impact of 2% non-resident surcharge ‘(1) The Chancellor of the Exchequer must review the impact of section 88 and schedule 16 of this Act on tax revenues, residential property prices, affordability of residential property, and the volume of property purchases by non-residents, and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter (2) The review under this section must include an assessment of what those impacts would have been if the provisions in the Draft Registration of Overseas Entities Bill had been in force.’—(Abena Oppong-Asare.) Brought up, and read the First time. Question put, That the clause be read a Second time.
I beg to move, That the Bill be now read the Third time I thank right hon. and hon. Members who have contributed to the robust but, I would say, good-natured debate throughout this Finance Bill’s passage over the past two months. It has been a speedy but thoroughly effective process. Before I get into the bulk of my speech, I know that the right hon. Member for East Antrim (Sammy Wilson) wants to put a question to me, so let me recognise him.
I thank the Minister for giving way. I tried to catch his eye earlier on; I do not think that he is deliberately avoiding me, but I did not get the chance to talk to him. New schedule 1 refers to VAT on distance selling. It covers 55 pages and was introduced tonight without much chance of consideration. It will affect businesses with a threshold of sales of £8,818, which will require them to register and to do special accounting. What assessment has been made of the likely impact of that on small businesses in Northern Ireland that sell goods into the EU?
I rather regret it, having invited the intervention. No, of course, to engage with this, I would not have recognised the right hon. Gentleman if I had not wanted to take the intervention and I certainly was not avoiding him earlier in the debate. He is right to point out that these provisions have been put into the Bill for the first time. I am pleased to say that they have been given proper consideration in the detail that has been put up, which he alluded to. There is a new measure relating to the distance selling threshold, which will affect a small number of businesses in Northern Ireland. By and large, this put into law, in relation to Northern Ireland, a set of measures that has already been adopted elsewhere in the United Kingdom, in recognition of commitments that we made to the EU as part of the process of striking our new trade arrangements. That is that, but if he wishes to have further conversation on that, I would of course be delighted to do so This Finance Bill comes at a crucial juncture for our economy and our public finances as the UK recovers from what is—we must never forget this—the greatest economic and social crisis since world war two and the greatest economic recession in 300 years. It delivers on the measures announced in the Chancellor’s Budget to protect jobs and livelihoods and to provide additional support to help people and businesses through the pandemic; to begin the process of fixing the public finances; and to lay the foundations of a resilient future economy. This Bill delivers on all those commitments, and I commend it to the House.
People and businesses across our country need the Government to support them as they begin to get back on their feet after all the damage to people’s lives and livelihoods that the covid outbreak has brought. Six weeks ago, when we began to consider this Bill, it was clear that its provisions and those in the Budget that preceded it failed to provide that support We opposed the Bill on Second Reading, because far from helping people to get back on their feet, it would force half of all people in the country, including those earning only just enough to pay tax at all, to pay more from next year by freezing income tax personal allowances. That hit to household finances came alongside an immediate sharp council tax rise, a cut in universal credit later this year and a shameful real-terms pay cut for NHS workers after their unparalleled service over the last year and more. The sense of unfairness was made even more acute as the Bill, at the same time as hitting household finances, gave an immediate tax cut to some of the biggest multinational tech firms, which have done so well over the last year Throughout the Committee stage of the Bill, we tried to right some of these wrongs. We voted to reject the Bill’s plans to make all income tax payers pay more from next year, and we voted to stop the tech giants from benefiting from the Chancellor’s tax cut. We did not succeed in making changes to the Bill, despite giving Government Members today, in as straightforward a way as possible, another chance to exclude tech giants from their tax cut Throughout the debates on this Bill, we have also seen the Government reject opportunities to support decent, well-paid jobs, to end tax avoidance by large multinational firms and to back British businesses that have been struggling throughout the outbreak. It was telling that the Minister described workers’ rights and the prospect of paying a living wage as “burdensome conditions” when we suggested that they should be basic conditions of large companies taking the Government’s tax break As I said earlier today, it is no wonder that the promised employment Bill was absent from the Queen’s Speech earlier this month. The decision to drop it proves that the Government have no plan to tackle low pay or improve protections for working people. My colleagues and I will push the Government to honour their promises on workers’ rights and to go further, from banning the practice of fire and rehire, which has been deployed so shamefully during covid, to ending exploitation by rogue umbrella companies, as cross-party amendments tabled by right hon. and hon. Members earlier today sought to do It is also deeply frustrating and disappointing that, before today, Ministers had failed on three occasions since we began discussing the Bill to take up opportunities to back President Biden’s plans for a global minimum corporate tax rate. Today, they refused again, and they voted against our new clause, which would have required them to be transparent about the impact that a global minimum corporate tax rate on large multinationals would have in the UK. Britain should be taking a leading role in striking this global deal. It would bring in billions of pounds of tax every year, which could be invested in British public services and industry. It would level the playing field for British businesses that are currently undercut by a few large multinationals that shift profits overseas. It would also show the world that Britain believes in playing fair when we host the G7 summit next month The Government should have used the Bill to help people get back on their feet as we begin to emerge from covid. They should have been supporting British businesses that have been struggling throughout the outbreak. They should have begun building a country that lets neither workers be treated badly, nor a few large multinationals avoid paying their tax. Our tax system must have fairness at its heart, yet this Government are making households right across the country pay more tax, while letting Amazon pay no tax at all and leaving British businesses to be undercut by large multinational firms that shift their profits to tax havens overseas. That is not what our country needs. Those are not the actions of a Government who can claim to be on the side of the British people, and this is not a Bill that we can support.
I want to begin, as others have done, with a few thank yous. I thank the Minister for so politely rejecting all our amendments. I thank those on the Opposition Benches for the good spirit in which they conducted themselves during the Bill. I thank our research team in Westminster—Scott Taylor and Jonathan Kiehlmann—and Mhairi Love in my office. I thank my hon. Friends the Members for Glenrothes (Peter Grant) and for Gordon (Richard Thomson), and I thank the Clerks of the Committee, Chris Stanton and Joanna Dodd, for their patience. I want to pay particular thanks to George Crozier, the head of external relations for the Chartered Institute of Taxation, the Association of Taxation Technicians and the Low Incomes Tax Reform Group, for being a continual source of support and advice, and for his patience in explaining many of the tax measures to those of us who are not as well versed in the tax system as he is This Bill fell short in a number of ways. The Government are always keen to talk about the power of the Union, but it is the power of the Union not to extend support schemes, not to cover the excluded, not to keep the universal credit uplift going, not to extend the VAT reduction to hospitality and tourism, not to provide the support and stimulus that this country so dearly needs, rather than further austerity coming down the road, and not to tackle the scourge of dirty money in our country—the ongoing scandal of tax avoidance and evasion. Instead, we would like to see more of Scotland’s priorities delivered by a Parliament closer to home—priorities to build a sustainable green recovery, to provide a much needed stimulus and to give us the full range of levers over our economy so that we can make a real difference to the lives of the people we are proud to have working and living in Scotland, wherever in the world they have come from. All of these things require Scotland to have the full power of independence, which is why I hope it will not be too much longer before we have all those controls in the Parliament in Scotland Question put, That the Bill be now read the Third time.
I very much welcome the opportunity that this Adjournment debate presents to raise a matter of great importance to my constituents—the Aylesbury spur of East West Rail. No, Mr Deputy Speaker, your ears have not deceived you: this is indeed a Member of Parliament from Buckinghamshire calling for a rail line in his constituency. I recognise that this may come as something of a shock to the Minister and perhaps even more so to the officials in his Department. But given the Transport Department’s sterling record in telling my constituents that a behemoth of a railway in their local area is absolutely essential to the future of the country, I rise in a mood of cautious optimism that they will similarly be able to sing the praises of a far more modest proposal that truly will be appreciated by the people of Aylesbury and the surrounding area I am no Dickens and this is no tale of two cities, but it is a tale of two railways. There is the big, bad, scary one: the one that destroys ancient woodlands, that has an insatiable appetite to gobble up billions of pounds of taxpayers’ cash, and that will make it harder, not easier, for us to be carbon neutral by 2050. Then there is the smaller, gentler, friendlier one: the one that will connect towns striving to succeed in the post-pandemic world, that can play a key role in an integrated local transport system with buses, cycling and walking, and that can support the next generation’s heartfelt desires for a greener, more sustainable future. We could call the bad one HS2 and we could call the good one the Aylesbury spur The Aylesbury spur is part of phase 2 of the excellent plan to restore the old Varsity line on which steam trains used to power between the two ancient university cities of Oxford and Cambridge. That line fell victim to the Beeching axe in the late 1960s. Even then, many thought the decision made little sense. There was therefore a good deal of enthusiasm when proposals were made for the new East West Rail line, complete with an integral Aylesbury spur Aylesbury has historically had a bit of bad luck with the railways. The town was once very well connected. The Metropolitan Railway used to call at Aylesbury, but by 1963 the service was curtailed to Amersham. The Great Central Railway used to carry high-speed express trains through Aylesbury, including the Master Cutler, named in homage to my university city of Sheffield and its Company of Cutlers. These services too were removed by 1968, leaving just one direct rail link, to London. So, in Aylesbury we have lost rail connections over the years. I respectfully suggest that it is now time to reverse that trend, and indeed that the Aylesbury spur is crucial to the success of the town in the future Aylesbury is almost unrecognisable from the traditional market town where I was born half a century ago. Even as the millennium approached, large estates such as Fairford Leys and Berryfields were but fields; now they are thriving communities enabling people from near and far to purchase their own property. In the past 10 years alone, nearly 10,000 homes have been built in Aylesbury Vale, with a concomitant increase in population of more than 10%. However, all this development has come at an enormous cost. It is no exaggeration to say that it has created a nightmare situation for residents. Infrastructure in the town is at breaking point, and the traffic is unequivocally the No. 1 concern. In fact, The Bucks Herald reported last year that Aylesbury has the eighth worst traffic congestion in the country. It was the only town in the top, or perhaps I should say bottom, 10; everywhere else was a city. Like many other residents in my constituency, I have whiled away the hours sitting in queuing traffic on the Tring Road, the Bicester Road or the Wendover Road trying to get from one side of the town to the other. This is all the more frustrating when we know that nearly 50% of the traffic that comes to the town does not actually stop there, but is passing through on its way somewhere else, in the meantime creating an absolute bottleneck However, worse is to come for our creaking road network, because the house building has not finished yet—far from it. Aylesbury Vale is expected to accommodate a further 32,000 homes by 2033, with 16,000 of them in and around Aylesbury itself. To have any chance of coping with the huge increase in population this entails, the town needs rapid, significant and sustained investment in infrastructure. The East West Rail Aylesbury spur would go a long way to plugging the gap Unfortunately, when funding was granted last year for the construction of phase 2 of East West Rail, to the great consternation of local residents and businesses, it did not extend down to my constituency, but only covered the line between Bicester and Bletchley. This is despite the inclusion of the Aylesbury spur in the Department for Transport’s own document making the case for phase 2 of East West Rail. Indeed, specific reference is made to the town in the text. Let me be clear: the Aylesbury spur is not described as a possible later addition, and it is not a dotted line on the diagram showing the route; it is a clear and integral part of the plan. There is even a very attractive photo of Aylesbury town centre on the East West Rail website, yet suddenly Aylesbury has been excluded from the funding announcement, prompting fears that the money will never come and that the spur will be left to wither and die Why this should be was all rather a mystery, because the business case for phase 2 of East West Rail, including the Aylesbury spur, has always been crystal clear. It has a benefit-cost ratio of between 1.3 and 2.4, depending on assumptions made about economic and housing growth in the Oxford-Cambridge arc. The spatial framework for the arc, which the Government have very recently published, would lead one to assume that the BCR is likely to be in the upper half of the range, but in order not to be accused of gilding a lily, let me use the bottom of the range—the figure of 1.3, which is the baseline of the Department for Transport’s national trip end model Let us now consider the rail line that has already been given the go-ahead and is under construction, HS2—the bad guy in this story. The full business case published in April last year gives a benefit-cost ratio of 1.2 for the two phases currently given parliamentary approval. That figure of 1.2 is, in other words, lower than the lowest point for East West Rail, but that HS2 figure is not the bottom of its range. It is a figure that includes what are known as wider economic benefits, defined as “monetised elements where the evidence is developing”. I think in layman’s language that means, “where we don’t really know yet”. To put it simply, the business case for this phase of East West Rail is stronger than the business case for this phase of HS2 In addition to the economic benefit, by the Department for Transport’s own admission, the Aylesbury spur would enable my constituents to experience high-speed travel for themselves, rather than just watching trains zip across their beautiful landscape. The strategic case for phase 2 of East West Rail states that the current journey time by rail from Aylesbury to Milton Keynes—a distance of 20 miles as the crow flies—is nearly two and a half hours. It requires two changes and a trip on the London underground. However, with the construction of the Aylesbury spur, that journey time would be slashed to a dizzying 38 minutes. A reduction of 75% in travel time is surely in itself a compelling argument While I hope I have made a strong case for East West Rail’s Aylesbury spur, I recognise that there may still be a degree of confusion about why we could possibly want yet more devastation of countryside or disruption to our communities, given our experience with HS2. The answer is simple: the Aylesbury spur would not require such devastation or disruption. That is because the Aylesbury spur is not a brand-new line. This little spur does not need Florence the tunnel boring machine to growl its way beneath the Chilterns, and it will not necessitate ancient woodlands being ripped up or countless farmers to be deprived of their land, yet left waiting years for compensation. In fact, most of the track for the Aylesbury spur is already laid, and currently used for freight. It requires relatively minor adjustments to be converted for passenger use, the addition of some passing tracks, and to be joined with the rest of the EWR line near Calvert. While I am certainly no engineer, this does seem to be well within our country’s capabilities In fact, far from replicating the environmental disaster that is HS2, the Aylesbury spur of East West Rail provides another important opportunity to help us in our goal to reach net zero by 2050. This is a commitment that is already being embraced in Aylesbury, most particularly with our designs for a garden town. It has bold ambitions, with sustainable transport at its heart. Our current trial of e-scooters demonstrates our enthusiasm for new and innovative modes of transport. What is more, the Aylesbury spur could drastically reduce the pollution suffered by residents living along the town’s busiest roads. For while Aylesbury Vale generally has good air quality, there are two locations where concentrations of nitrogen dioxide exceed what are known as the objective levels. Unsurprisingly, both are on the arterial routes close to the town centre Providing a feasible alternative to travel by rail would enable residents and commuters to leave their cars at home—but not just residents and commuters, Mr Deputy Speaker, because we are just beginning English Tourism Week 2021. I want to see far more tourists coming to visit Aylesbury: to experience the heritage of our historic old town; to enjoy the marvellous performances by our local Unbound theatre company at the Queens Park Arts Centre; to see the uniquely painted Tudor walls in our fine museum; to eat, drink and dance in the restaurants, the bars and the clubs that are springing back to life post pandemic; to walk by the canal and wonder at the beauty of the Chiltern hills on a tricycle tour. Aylesbury is bursting with attractions and it is frankly selfish to keep them for ourselves. The Aylesbury spur would enable so many thousands more people to come from across the country to share in all that we have to offer I submit that it is absolutely right and reasonable for my constituents to say to the Government that if we must have all the disruption of HS2 and if we must endure new housing construction, then the least consolation would be to give us the railway that we do want, and indeed thought that we were going to get. It has support from residents, with a petition still collecting signatures. It is championed by Buckinghamshire Council, which has itself contributed millions of pounds to funding the scheme’s development. It is backed by Buckinghamshire’s local enterprise partnership and by Bucks Business First The station is there, most of the track is there, and the passengers are poised. Only last week, the Transport Secretary himself told this House that rail will shape our future. He said: “No other form of transport can bind the nation so effectively and help us to level up our country, bringing new jobs and investment…as we build back from covid.”—[Official Report, 20 May 2021; Vol. 695, c. 888.] I could not agree more, and, in Aylesbury, we want to be part of that bright new future. It would be odd indeed if, at a time when the Government have pledged to expand the rail network, not shrink it, the planned Aylesbury spur disappeared from the iron web of Great British Railways Aylesbury is the proud county town of Buckinghamshire, but our pride is worn lightly. We are humble in our request of Government. I began with a reference to Dickens, I end with one to Rev. W. Awdry: we have no need for the slightly arrogant big blue express engine, Gordon, hurtling across our countryside with a degree of disdain, for us a simple but enthusiastic Thomas the tank engine on a modest spur will suffice I respectfully ask the Minister to put a smile on the faces of my constituents and approve funding for the Aylesbury spur, and, in so doing, help level up our town. Make Aylesbury an even better place to live, work, visit and invest.
Greg Smith has sought and received permission to make a short contribution from the mover of the motion, Rob Butler, and the Minister responding, Chris Heaton-Harris, and I have been informed as per the rules.
I congratulate my hon. Friend and constituency neighbour the Member for Aylesbury (Rob Butler) on securing this debate. He has made the case for the Aylesbury spur incredibly eloquently, and I wish to add just a few very brief comments to support the case that he has made As my hon. Friend said, this is the railway that we do want in Buckinghamshire. Within the county of Buckinghamshire, the existing approved stretch of East West Rail is currently entirely in my constituency as it arrives from Oxfordshire and departs into Milton Keynes. But the Aylesbury spur is vital as it adds a level of connectivity to Buckinghamshire that is truly game changing. A massive part of the appeal of East West Rail to my constituents in the first place was not just connecting, via a new station in Winslow, Bicester to Bletchley, but having that vital link with the Chiltern line in the town of Aylesbury and access to the key services and attractions in around that town, not least Stoke Mandeville Hospital As my hon. Friend said, given the suffering we have faced in Buckinghamshire from the railway we do not want, HS2, and the significant disruption East West Rail has itself brought on the main line during that construction phase, it can be only fair and equitable for the full East West Rail connectivity to be delivered. As he outlined, the spur is on a line that is already in existence and being used for aggregate deliveries and freight The spur is the key to unlocking the full potential of this east-west connection, which is why, despite those disruptive and frustrating impacts building East West Rail has caused—the subject dominates so much of my time and I am grateful that the Minister has engaged with it in trying to help resolve things—I truly welcome the boost it will bring to the north of Buckinghamshire. It will reduce congestion and pollution, create new job opportunities and allow for that decisive step towards enhancing economic prosperity, particularly for our rural communities. My constituents need to know that their patience will be worth it and that they will reap the full benefits of restoring this vital link between some of the fastest-growing areas of the south-east. We have waited long enough. We really need the Aylesbury spur to be delivered.
I congratulate my hon. Friends the Members for Aylesbury (Rob Butler) and for Buckingham (Greg Smith). My hon. Friend the Member for Aylesbury has made a compelling case for the spur and has done well to secure this debate on transport in his constituency. He made an informative speech on the potential for East West Rail to serve Aylesbury in the future and outlined the fantastic attractions that exist in his county town and constituency. Obviously, he is a strong advocate for a place he truly loves. I thank him for his kind words about the East West Rail project. I feel lucky in this instance that I am the sponsor Minister for a railway that people want, rather than for one that others do not I have listened carefully to my hon. Friend’s representations about the importance of East West Rail to his constituency and will try to address many of them now. As he knows, in January the Government demonstrated their commitment to supporting national and regional connectivity by announcing £760 million of funding to deliver the next stage of East West Rail between Bicester and Bletchley, reinstating direct rail services for the first time since the 1960s. This funding highlights the crucial underpinning role that East West Rail will play in supporting Government ambitions for the Oxford-Cambridge arc. It is part of our nationwide commitment to build back vital connections and unlock access to jobs, education and housing Alongside this important step forward, the design, development and delivery of this and future stages of East West Rail was changed. Instead of delivering East West Rail in sections—western and central—it will be delivered in “connection stages”. Connection stage 1 represents delivery of the scheme up to Bletchley and Milton Keynes. Connection stage 2 will take it further east, from Bletchley to Bedford. Connection stage 3 will deliver a brand new railway between Bedford and Cambridge. I understand my hon. Friend’s concerns and those of his constituents that the proposed spur connecting Aylesbury and Milton Keynes, which previously formed part of the western section, is not included as part of the three main connection stages. That does not mean that the Aylesbury spur will not go ahead by any means, but it is important that a strong economic case can be made for proceeding with that element of the East West Rail scheme, and that a reliable rail service can be introduced without jeopardising existing services As we level up our economy, I look to my hon. Friend to marshal the support and resources of organisations in his constituency. The Government’s response to the covid-19 pandemic has placed a great strain on finances, and led to many difficult decisions having to be made on the prioritisation of resources that meet the levelling-up agenda. Through partnership funding and regional commitment, I believe that a much stronger case can be made to deliver East West Rail services to Aylesbury. To match that regional commitment, the Secretary of State for Transport and I have instructed our officials in the Department to include financial provision for the design and delivery of the Aylesbury spur as part of the comprehensive spending review that will take place later this year As my hon. Friend will appreciate, there will be many competing demands from a wide variety of schemes as part of that process, and boosting the available funding through local contributions will make the Aylesbury spur an even more attractive proposition. As Rail Minister, I will continue to ensure that East West Rail works hard with its stakeholders to drive down costs and make the strongest possible case for the scheme to be delivered in full If we can work together to find a way to deliver the East West Rail Aylesbury spur, that will build on the investment already made by this Government in my hon. Friend’s constituency. That includes funding for the Stocklake and Aylesbury eastern link roads to support crucial housing development in the area, and £170 million has been awarded to Aylesbury’s housing infrastructure fund bid. Aylesbury has also benefited from the rural mobility fund. That demonstrates the Government’s commitment to investing in Buckinghamshire through both infrastructure and public transport and supporting those growth ambitions. As my hon. Friend may be aware, East West Rail is currently undertaking a non-statutory consultation on the future direction of the scheme, and I urge him and his constituents to respond to that I hope that I have kept the door open as far as I possibly can, without treading on the toes of my Treasury colleagues. I hope to work with my hon. Friend on completing the Aylesbury spur as we move forward in this Parliament Question put and agreed to.