1. What preparations her Department is making for the UN world humanitarian summit.
2. What preparations her Department is making for the UN world humanitarian summit.
Our country has bold ambitions for the world humanitarian summit, which comes at a critical time given that there are currently more displaced people globally than at any time since the second world war. We are working with a range of partners, including UN agencies, Governments, non-governmental organisations and the private sector, to ensure that the summit delivers transformative change to crisis response.
Child protection has been desperately underfunded in global humanitarian efforts. One in 10 children now lives in conflict-affected areas, and UNICEF warns that at least 3 million children are caught up in emergencies and need psychosocial help. Will the Prime Minister be part of the UK delegation, and will he commit to making child protection one of the UK’s key priorities at the summit?
We have not finalised the UK delegation yet, but I can assure the hon. Gentleman that the issue of child protection has been very much at the core of all our humanitarian responses, not least, most recently, in Syria. The UK worked with UNICEF to put in place so-called safe zones in many of the refugee camps to enable children to be reunited with their families if they had got lost.
What discussions does the Secretary of State expect to take place at the summit on support for those fleeing violence and persecution? Will she support efforts at the summit to ensure that lower and middle-income countries hosting refugees and displaced people have long-term, predictable financing, and that refugees themselves have the right to work and contribute to the society and economy to which they move?
The hon. Gentleman asks a very pertinent question. The Syria conference in London tomorrow will look at this very issue of respecting the fact that refugees are, on average, a refugee for 17 years. We need to go beyond providing traditional lifesaving support to meet such broader needs—not just jobs, as he says, but getting children into schools. The Syria conference tomorrow is a key moment not just to respond to that crisis, but, more broadly, to show a new model of responding to protracted humanitarian crises around the world. I hope we can then take that forward at the world humanitarian summit.
Given that many humanitarian crises are caused by conflict, will my right hon. Friend make sure that the UK delegation presses the United Nations at the humanitarian summit to be more effective in conflict resolution and prevention, thus solving a lot of the problems that many women and children in our world are facing?
My hon. Friend is absolutely right. In fact, when I had the privilege of chairing the UN Security Council last October, the issue we talked about was the need for the international community and the Security Council itself to look at fragile countries before conflict hits and perhaps to have better early warning systems, whether on human rights or any other area, to highlight where we need to do work in advance to keep peace and stability, rather than having the costly after-effects of responding to war.
What work is my right hon. Friend doing to ensure that humanitarian aid is joined up with longer-term development aid?
The world humanitarian summit is a key opportunity for us to knit these agendas together clearly. At the moment, I would describe the humanitarian system as a hospital that only has an accident and emergency department. From the start of such crises, we need not only to think ahead about how we can deal with the day-to-day challenges that refugees and people affected face, but to begin to build in long-term solutions so that they can get their lives back on track. That is why the issues of jobs in particular, getting children into schools and helping host communities—the communities that host the refugees—to cope are so important.
Where is Mr Hendry? The fella has just asked a question and has beetled out of the Chamber. We are still having exchanges on that question. I know the hon. Gentleman is a new Member, but he must learn that a Member must not ask a question and then leave. There are continuing exchanges on the matter, and I am sure the hon. Gentleman is at least as interested in the opinions of others as he is in his own. It is quite extraordinary behaviour.
May I press the Secretary of State to advocate a presumption of denial of arms exports to countries of concern as a UK innovation that could help to save lives around the world?
As the right hon. Gentleman knows, we have one of the strictest arms control regimes in the world. We should make sure that those processes are working effectively. My Department provides leadership in ensuring that when crises hit, the UK plays a leading role in making sure that the affected people have the adequate, long-term support they need. That is important because, as the humanitarian high-level panel said, 125 million people in the world now live through humanitarian support. That is the equivalent of a country, but they do not have a Head of State at the UN speaking up for them. That is why the rest of us need to work as hard as we can to make sure not only that they are listened to but that their needs are met.
The Secretary of State will be aware that the biggest humanitarian crisis we face is the refugee crisis. The House respects the work that the Government have done on the Syria conference and investing in the camps, but what about the refugees, particularly child refugees, who are not in the camps? We heard this week that for the first time since the crisis began women and children make up the majority of the refugees who are travelling to Greece. How many child refugees who are not in the camps do the Government propose to take?
On the broader issue, the hon. Lady will know that the UK and UNICEF set up the “No Lost Generation” initiative, which has enabled half the children affected by the Syrian crisis to be in school. More broadly, on the relocation scheme we have put in place, this is the right way to help vulnerable refugees to relocate out of the region if they need to. We are working with UN agencies to identify the most vulnerable people and are talking to them about how that can be extended to unaccompanied children. The good news is that because of the hard work of agencies such as UNICEF, which are funded by the UK, the overwhelming number of children—more than 85%—who arrive in countries such as Jordan and Lebanon unaccompanied are reunited with their families.
3. What steps her Department is taking to improve energy access in Africa.
Two-thirds of Africa does not have access to electricity. The Department for International Development wants to play a leading role in changing that, including through the Energy Africa campaign, which will accelerate the market for transformative household solar systems and so contribute to the global goal of universal access by 2030.
Will the Minister outline for the House what opportunity he sees for British entrepreneurs and companies to help the Department achieve its ambition of ending fuel poverty in Africa?
One of the things we are most excited about in the Energy Africa campaign is that some of the most effective leadership on the continent is coming from companies that are British, that were set up by British people or that are backed by British people, such as Azuri Technologies and M-KOPA. DFID’s commitment to ongoing research through the Mission Innovation initiative, which is worth about £100 million, will create opportunities for many British companies to be involved in that important research.
Will the Minister confirm whether discussions are taking place with African nation states to ensure that solar energy becomes a high priority in those states, so that we can assist them in providing the much-needed energy supplies to their residents?
I certainly can confirm that. I have had a number of bilateral meetings with African Ministers and have signed up seven countries to the Energy Africa campaign, which is all about accelerating their citizens’ access to household solar systems. In my experience—I have seen this in Ethiopia—such systems can transform the prospects of a family. It is a high priority for those countries and for us.
Will the Minister broaden his horizons? This country has so much expertise in our universities and our big energy and waste companies. There are also a lot of social enterprises that know about this stuff. Will he bring them together and give us the opportunity to help people in Africa to set up these things for themselves?
I am absolutely with the hon. Gentleman on this, as on so many things. There is a huge amount of expertise in this country that we can, should and want to connect to leaders in African countries. Those leaders know that making it easier for their citizens and businesses to access energy is fundamental to development. It is a top priority for us.
DFID’s inclusive growth diagnostic identifies energy access as a major blockage to inclusive growth, and the research by the Catholic Agency for Overseas Development on small businesses in developing countries identifies a lack of access to reliable electricity as one of the top 10 barriers to development. I welcome DFID’s support for household solar power, but how does it plan to expand that—for example, through clean cooking technology—and what steps is it taking to prioritise clean energy across the board in developing countries, rather than carbon-intensive and fossil fuel generation, to ensure that we do not undermine the climate change targets?
Yes, I mentioned the Energy Africa campaign, and that and the household solar system is just one piece of DFID’s offer to Africa, which totals more than £1.5 billion of investment. A contribution to the African renewable energy partnership of around 2GW will connect about 20 million people through that initiative alone. The DFID offer is broader than just the household solar system, and it encompasses a wide range of renewable technologies.
4. What recent assessment she has made of the humanitarian situation in Yemen.
Eighty per cent. of Yemen’s population are in need of humanitarian aid, and 7.6 million people face severe food shortages. Some 320,000 children under the age of five are severely malnourished, there are 2.5 million displaced people, and there were 8,000 civilian casualties last year. Yemen must be one of the least eligible places to be.
I thank the Minister for setting out the worrying situation in Yemen. There are other problem areas of the world, such as Syria, but Yemen is one of the world’s hidden problems. What can the Government do to enable NGOs to at least get food aid and clean water into Yemen to those who are so desperately in need?
We started by doubling our aid last year, and last week the Secretary of State announced that that aid would increase by a further £10 million to £85 million. In September, she led a side event at the UN General Assembly, at which she secured from other donors a further £85 million. We are working on the UN verification and inspection mechanism to ensure that more food and shipping get into Yemen.
That additional aid is welcome, but at the same time we are supplying arms to one side in the conflict. Is it time that this country supported an international, independent inquiry into concerns about the abuses of international humanitarian law, and in the meantime suspended all arms sales to Saudi Arabia?
We have supported the UN Human Rights Council resolution that requires the Government of Yemen to investigate those matters, with the support of the UN.
Is DFID’s good work in Yemen being undermined by UK arms sales to Saudi Arabia?
What undermines UK aid, and what makes that aid ever more necessary yet harder to deliver, is the violent and unlawful removal of the Government of Yemen. Only a peace process to restore that will end the suffering.
If we are concerned about arms exports to Saudi Arabia, which fuel the conflict in Yemen, why are the Government not pressing ahead with setting up the cross-party quadripartite committee on arms exports, so that Parliament can control that better?
As the Prime Minister pointed out, we have the most stringent and robust arms export regulations in the world. We have supported the UN Human Rights Council resolution, and we are committed to the investigation of every abuse or abrogation of international law.
The Minister will be aware that Saferworld, Oxfam, UNICEF, and Save the Children take the position that DFID’s work in Yemen is being undermined by UK arms sales. How can the Minister continue to insist that a UK-replenished Saudi arsenal being dropped on Yemen is not an impediment to development?
As I said to my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), the undermining of our ability to deliver aid is a consequence of warfare. That warfare arises because of the violent removal of the lawful Government of Yemen, not because we have sold arms to the Saudis.
5. What steps she is taking to promote female economic empowerment in the poorest countries.
No country can develop while half its population is locked out of that process, which is why I have placed improving the prospects for girls and women around the world at the heart of DFID’s work. I am honoured to have been appointed recently by the UN Secretary General to the new UN high-level panel on women’s economic empowerment, joining leaders of the World Bank, the IMF, the private sector and civil society to drive that agenda forward.
Does my right hon. Friend agree that there needs to be a particular focus in the poorest countries on rural development and agriculture? It is women who produce most of the food and who are responsible for its security. Does she agree that if we can improve the productivity of women and empower them, we can reduce poverty and see growth in the countries that need it?
My hon. and learned Friend is absolutely right. Agriculture is a key economic sector of most of those countries. A recent McKinsey report states that the achievement of gender parity at a regional level, so that each country matches the best progress of the best country in its region, would add 11% of global GDP by 2025—a huge economic lever for all of us to pull.
The Zika virus crossed the Pacific and went from French Polynesia to Brazil in May last year. Since then, 4,000 children have been born with microcephaly. What analysis has the Secretary of State made of the risks to the poorest women and girls in the world if the virus crosses the Atlantic from Brazil to sub-Saharan Africa? Will she promise to keep a very close eye on that and use all British scientific knowledge to ensure that it does not happen?
The hon. Lady is absolutely right. We had an urgent question earlier this week and the Under-Secretary of State for International Development, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), set out the research that we are now kicking off. She will also be pleased to hear that Chris Whitty, the DFID chief scientist who led our work on Ebola and helped us to shape our response to it, is currently in Brazil talking to the authorities there to ensure we manage the various risks she sets out.
Will the Secretary of State commend the work of Tearfund in Bangladesh among women in rural areas, which helps them with business start-ups and works with the Bangladesh Government to provide mobile phone banking to cut out the middle man?
My right hon. Friend mentions a number of very innovative pieces of work. I commend Tearfund for its work. Healthy economies need everybody to be able to be a part of them. That is why women’s economic empowerment matters so much.
What efforts is the Secretary of State making to ensure that other donor countries, the EU, the UN and the World Bank integrate gender into their humanitarian efforts?
The fact that we now have global goal 5 on gender equality means that, for the very first time, this is formally on the world’s to-do list. The world humanitarian summit is a key moment where we can make sure the vulnerabilities of girls and women in particular are properly pulled into the humanitarian system in terms of a response on the ground. The hon. Gentleman will be aware that two years ago the UK held a conference on this very topic to drive that forward.
6. What support her Department has given to organisations investigating alleged breaches of human rights and international law in Yemen.
DFID funds a number of organisations in Yemen to deliver aid, some of which have reported alleged breaches of human rights and international law.
The Government have so far approved £5,600 million of arms sales to Saudi Arabia, which several independent reports have connected to the bombing of civilian targets in Yemen. Given that figure and the independent reports, does the Minister believe that £75 million of aid delivered by the UK Government to Yemen represents a balanced approach to the conflict?
Actually, it is £85 million—£85 million of life-saving aid. Warfare makes it more difficult to deliver that aid and that warfare is a consequence of the violent removal of the lawful Government of Yemen—not anything the United Kingdom has done.
May I invite the Minister to reiterate that point? The greatest breach of international law in Yemen has been the removal of a legitimate Government by force. Although it is very, very easy to focus only on the Kingdom of Saudi Arabia and blame it, it is that initial use of force which has caused this problem and must be seen in the context of the solutions we now want to see around the negotiating table.
My right hon. Friend is absolutely right. I pay tribute to his work as the Prime Minister’s special representative, and to the enormous amount he has done to bring peace and prosperity to Yemen.
T1. If she will make a statement on her departmental responsibilities.
Two weeks ago at the World Economic Forum, alongside the UN Secretary-General and the president of the World Bank, we launched the UN’s high-level panel on women’s economic empowerment. Last week, I joined my right hon. Friend the Chancellor and Bill Gates to set out our new commitments on malaria, which will save lives and build a safer, healthier world. Finally, tomorrow, the UK will co-host the Syria conference, bringing together world leaders to resource the life-saving humanitarian support, create jobs and provide an education for millions of people and children whose lives have been torn apart by this devastating civil war. All this—women’s economic empowerment, the steady eradication of malaria, supporting Syrian refugees to stay where they want to in their home region—is firmly in the UK’s national interest.
If the refugee crisis in Syria is not to become a permanent exodus, its people must be given hope of a better future. Can my right hon. Friend say what hope she is giving for greater job opportunities in the region?
We hope that we will be able to take a big step forward by announcing agreements with both Jordan and Lebanon that, in return for their taking political steps forward on enabling Syrian refugees to work legally, we will be able to mobilise international finance to create jobs in those countries—not just for Syrian refugees, but for host communities, too. That will be in everyone’s interest.
Malawi is the poorest country on the planet, yet our 1955 tax treaty between the UK and Malawi severely limits the country’s ability to raise taxes on UK companies based there. Will the Secretary of State commit to looking at this issue of the treaty and to making it fit for the 21st century?
This issue of domestic resource mobilisation and taxes is something that we have very much ramped up in DFID’s work over the last few years. I set up a joint unit with Her Majesty’s Revenue and Customs that sees HMRC officials working with countries to help drive their tax revenues up. We will continue that support, particularly in Africa, over the coming months.
T6. DFID does a brilliant job in Pakistan on education and health. Will the Minister meet the excellent UK charity, the Noor Foundation, which helps 1,000 people in Pakistan every year with kidney dialysis?
We would be delighted to have this group coming to visit us at DFID. As my hon. Friend sets out, we have a big programme with Pakistan, which is steadily enabling that country to make sure that its people are educated and healthy—two of the strongest foundations for aid independence in the longer term.
T2. In response to an earlier question, the Secretary of State said that she is working to protect Syrian children in refugee camps in the region, yet she is aware of the Europol report that 10,000 children of Syrian extraction registered in Europe have disappeared and are at risk of sexual and other criminal exploitation. What is she doing to protect them?
The right hon. Lady will be pleased to hear that we work directly with the United Nations High Commissioner for Refugees on improving registration, so that we do not lose people, including children, who have arrived. Then, of course, we have done a huge amount of work with the Red Cross to make sure that people have access to some of the basics they need when they make it over to Europe. She can be proud of the work the UK is doing, but the bulk of it is, of course, in the region itself, which is overwhelmingly where people and refugees want to stay—close to home.
T8. Following the new Parliament in Myanmar, what plans do the UK Government have in place to help that country move forward and develop?
The elections are an important step towards greater democracy and provide a chance to support inclusive growth in Burma. We are supporting improvements in the business climate, including in the financial sector, and we are helping to increase agricultural productivity, to diversify livelihoods and encourage more private sector investment in infrastructure.
T3. What are the Government doing to help end the blockade of Gaza?
The hon. Gentleman raises an important point. Having a viable economy in Gaza is one of the best ways to enable people living there to face many of their challenges effectively. In the meantime, the UK provides key support to the United Nations Relief and Works Agency and more directly with the Palestinian Authority. It is critical for those blockades to be removed in the end, so that we can restore a normal situation that would enable the Gaza strip to get back on its feet.
T10. Does the Secretary of State agree that, as the civil war in Syria continues, we should not only be using our aid budget to support refugees, but should be urging countries in the region to issue work permits so that refugees can rebuild their lives there rather than making the perilous journey to Europe?
My hon. Friend is absolutely right. People deserve the dignity of work wherever they are, and that goes for refugees. I have met people who were in the middle of studying for economics degrees and then suddenly found themselves living in camps in Lebanon or Jordan. Those people want to support themselves. If we can take a big step forward tomorrow in enabling them to work legally, we shall not only be helping countries such as Jordan and Lebanon, but helping the refugees who are currently in those countries.
Q1. If he will list his official engagements for Wednesday 3 February.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
Is that it? Is that the best that the Prime Minister can do? There is nothing for British pensioners and nothing for British workers, and, as both the Office for Budget Responsibility and the Treasury have confirmed, the Prime Minister’s long-term economic plan relies on more than a million new migrants entering this country before 2020. Has he got the bottle to confirm that inconvenient truth?
I will tell the hon. Gentleman what we are doing for pensioners, and that is putting a triple lock on pensions. Never again will they get the 75p rise that they got from Labour; their pensions now rise either in relation to prices or wages, or by 2.5%. I will tell the hon. Gentleman what we are doing for people who want to work hard in Britain, and that is creating the 2.3 million more jobs that have been created since I became Prime Minister. But yes, of course I believe that we will succeed more as a country if we get a good deal in Europe and stay in a reformed Europe. That will be good for jobs, good for investment, and good for growth, and that is what I am fighting for.
Q2. People in my constituency are rightly proud of their contribution to the defence of our country, whether through the skill and readiness of the Fleet Air Arm at Yeovilton or through the local high-tech industry that makes and maintains helicopters and equipment for our ships, submarines and aircraft and those who bravely serve in them. At a time of increasing security challenges and responsibilities and a worrying lack of commitment to defence in many European countries, I welcome the leadership that the Government have shown in committing themselves to spending 2% of GDP on defence. Will my right hon. Friend meet me to discuss my ideas for building on our local capabilities?
My hon. Friend is absolutely right. Yeovil makes a huge contribution to the defence of our country, not least through AgustaWestland, which is a great British business. We are committed to spending £178 billion on defence equipment over the next decade, which we are only able to do because we have a strong economy. We have also committed ourselves to that 2%, and we will make sure that the money is well spent so that we have the right equipment for our brave armed forces.
Tomorrow is world cancer day. Cancer is a disease that almost every family in the country has been affected by in one way or another: 2.5 million people in the country have cancer, and Members on both sides of the House have received cancer treatment or are receiving it at the present time. A thousand people a day are diagnosed with cancer, and they go through a trauma as soon as they are diagnosed. In the last year, however, there has been a 36% increase in the number of people waiting more than six weeks for vital diagnostic tests. Can the Prime Minister do something to bring that down?
First, I completely agree with the right hon. Gentleman that the fight against cancer is one of the great fights of our time, and it is one that we are determined to win. On treating cancer in our country, we are putting an extra £19 billion into our NHS, and specifically—he is absolutely right to say that everyone in the House and every family in the country will know someone affected by cancer—we are treating more patients. I will give him the figures. Compared with 2010, over 645,000 more patients with suspected cancers have been seen, which is a 71% increase, and almost 40,000 more patients have been treated for cancer, which is an increase of 17%. We have more doctors, more nurses and more cancer specialists, but we need to continue with the fight against cancer.
Early diagnosis is absolutely essential to dealing with cancer, as we all know from personal experience. The Government’s independent cancer taskforce reported last year: “We currently have a serious shortage of radiologists in England” We need more of them, so will the Prime Minister explain why we are cutting by 5% the number of training places available for therapeutic radiographers?
We need more radiologists, and we are getting them, because we are putting more money into the NHS. He is absolutely right, however, that waiting times—[Interruption.] A minute ago the hon. Member for Wallasey (Ms Eagle) was shouting about waiting times, so I will answer the question about waiting times. There are three key targets on waiting times. The first is that, on 93% of occasions, people should be seen by a specialist within two weeks of an urgent GP referral; the figure is currently 94.7%. We also need to make sure that the first treatment comes within 31 days of diagnosis—that is extremely important—and on that there is a 96% standard; we are meeting that by 97.7%. I accept, however, on the first treatment being within 62 days, the standard is 85%, but we are at 83.5%, so we need to improve our performance On training, we are increasing the number of training places in our NHS. We discussed nurses last week. We are opening up nurse training by training an extra 10,000 nurses, but the crucial point is that the money is in our NHS—£19 billion more—because we have a strong economy. That money would never be there if we followed the right hon. Gentleman’s crazy economic plans.
The Prime Minister did not answer my specific question about therapeutic radiographers. Without an improvement in the numbers available, there will be a problem over treatment. That must be obvious to absolutely everybody The cancer taskforce also asked for “a radical upgrade in prevention and public health” Programmes such as on stopping smoking and anti-obesity are essential to stop the spread of cancer and to help people live better lives so they do not develop cancer at all. If we cut £200 million from the public health budget, as the Prime Minister proposes, surely it will lead to an increase in cancer, with all the trauma that goes with it and a greater cost to the rest of the community. Will he explain why he is making this cut?
First, there are actually 1,800 more diagnostic radiographers than when I became Prime Minister in 2010. That is a 15% increase. The reason for the increase is that we said we would put more money into the NHS—a real-terms increase—which we were told by the then shadow Health Secretary was irresponsible. We ignored Labour, and we put money into the health service, and as a result, there has been a 15% increase in the number of diagnostic radiographers On the rest of the cancer plan, the money is being invested, but there is a key difference between England and Wales—the right hon. Gentleman can help with this—which is that there is a Labour Government in Wales. Whereas we have a cancer drugs fund, Wales does not. He needs to sort that out with that Labour Administration. As for public health, under this Government, real advances have been made, including with smoking rules for the backs of cars and plain-paper packaging and ring-fencing public health budgets—all done under the Conservatives, not Labour.
The Prime Minister is responsible for the health service in England—Wales is a devolved matter—but he must be aware that cancer survival rates are improving better in Wales than in any other part of the UK My question was about the cuts in public health budgets and the effect on cancer care. Will the Prime Minister tell us the last time the NHS target for starting cancer treatment within the 62 days required was actually met?
As I have said to the right hon. Gentleman, of the three big targets, we are meeting the specialist within two weeks target and we are meeting the target for the first treatment within 31 days of diagnosis. We are currently falling short of the 62 days target, something I said in the answer to question two, but he has not got round to it until question five. I think the cogs need to turn a little faster The right hon. Gentleman cannot wash his hands of the situation in Wales. Labour runs Wales, and what has Labour done in Wales? Labour has cut the NHS in Wales. What Labour’s great plan is is now emerging: it wants to cut the NHS in Wales and put up income tax on hard-working people in Scotland. That is right. What are Labour going to do to radiographers in Scotland? Put up their taxes. What are they going to do nurses in Scotland? Put up their taxes. What are they going to do to dentists in Scotland? Put up their taxes. We now know Labour’s plan: higher taxes for more welfare. They have learned nothing in the last decade.
The last time the two-month target was met was 19 months ago. The Prime Minister must be aware of that, and I am pleased if he is taking action to make sure that does not continue or get any worse I want to turn to another issue that affects cancer patients: the recently deleted provisions in the Welfare Reform and Work Bill that would have taken £30 per week from employment and support allowance claimants in the work-related activity group. Martin contacted me this week. He says—[Interruption.] Okay, it is very funny for many Conservative Members, but it is not funny for Martin. Martin says he has a close friend who has breast cancer who “is obviously too unwell to work and cuts will put her into hardship at a time when she is most vulnerable.” There are 3,200 people with cancer hit by this cut to ESA. Will the Prime Minister now confirm that when that matter returns to the Commons, he will ensure the Lords position is upheld and people like her do not suffer the cut he wanted to make in the first place?
Let me explain the situation to the right hon. Gentleman and the House. As everybody knows, there are two sorts of employment and support allowance: there is the work-related activity group who are able to train for some work, and then there is the support group who go on getting employment and support allowance indefinitely. That is the situation, and what we have said is that in future the work-related activity group should be paid at the same rate as jobseekers allowance, but that is for future claimants, not existing claimants, who continue to be paid at the same rate. Of course if someone has cancer and cannot work they should be in the support group. We have had this issue looked at again and again, and if someone cannot work they go on getting the welfare payments they need. That is what a compassionate Conservative Government do But I have to come back to the right hon. Gentleman because he cannot wash his hands of the situation in Wales. Hip operations in England have 75 day waiting times on average; in Wales it is 197 days. Diagnosis of pneumonia takes two weeks longer, and treatment of cataracts and hernias and heart operations take two months longer than in England. Labour are running Wales; he is responsible for Labour. Pick up the phone, tell them to stop cutting our NHS.
It is very interesting that the Prime Minister did not answer the question I put, which is whether he will proceed with a cut in ESA to 3,200 people with cancer at the present time. I hope he thinks seriously about this and does not proceed with this proposal. He will find that Macmillan Cancer Support, Rethink Mental Illness and Parkinson’s UK are all united in opposing this cut because of the effect it will have on people with a range of serious conditions. The Prime Minister used to say that “those with the broadest shoulders should bear a greater load”. Can it be right that cancer patients and those with disabilities on £102 per week really are those with the broadest shoulders who should bear this cut? Please Prime Minister, think again and don’t try and reverse the decision of the House of Lords on this important matter.
The people with the broadest shoulders are the highest earners in this country, and they are paying a higher share of tax than they ever did under Labour. That money is paying for our NHS and for our welfare system. I answered the right hon. Gentleman’s question very directly: if you are an existing claimant on employment and support allowance, your welfare is not changing, but in future, we should help those people who are able to get back to work to do so. That is what a compassionate country does, but it is quite clear what Labour’s policy is: cut the NHS in Wales and put up taxes in Scotland to pay for more welfare. That is not the approach that this country needs.
Q3. My right hon. Friend will of course know that the west country is becoming ever more the envy and the engine room of the rest of the country, with dozens of companies moving from the dark recesses of London to the bright sunlight of the west, so will he keep supporting what people are now calling Somerset’s silicon gorge by maintaining investment in our roads, our rail and of course our digital infrastructure?
I am certainly keen to support silicon gorge. For a moment, I thought my hon. Friend had said “silicon George”; I was a bit worried about that. It is absolutely essential that we have a balanced economy, and that means a strong economy in the west of our country as well as in the south and the north. We are investing in vital transport infrastructure, not least the vital roads to the west country, and improving rail links as well, as I saw for myself yesterday in Chippenham. We also need to ensure that broadband roll-out is really effective across the country, and there needs to be a big focus on getting to that last 10% of homes in so many rural areas. It is absolutely crucial to make sure that they are not left out.
The timing of the forthcoming European Union referendum is extremely important. Today, the First Ministers of Scotland, Wales and Northern Ireland have jointly called for a commitment by the UK Government not to hold the EU referendum in June as it would clash with elections to the devolved legislatures. Will the Prime Minister give that commitment today?
First, there is no agreement and so no date has yet been fixed for the referendum. We have discussed this a lot in this House of Commons and we legislated to ensure that we would not hold the referendum at the same time as the Scottish or Welsh elections. The former First Minister of Scotland—the right hon. Member for Gordon (Alex Salmond), who is not in his place today—has said that it would be wrong to hold the referendum within six weeks of those elections, and I can guarantee that that will not happen.
The First Ministers of Scotland, Wales and Northern Ireland have written today saying that they believe that holding a referendum in June “risks confusing issues when clarity is required” and they call on the Prime Minister to “defer the EU referendum at least until later in the year” Why will the Prime Minister not respect the electorates and the Governments of Scotland, Wales and Northern Ireland and give that commitment today?
First, I do respect the former First Minister of Scotland, who said that six weeks was what was necessary. I also respect the electorates of England, Scotland, Wales and Northern Ireland on the basis that I think people are perfectly capable of making up their minds in a local election, a Scottish parliamentary election or a Welsh Assembly election and then, a period of some weeks afterwards, making up their minds all over again on the vital question of the European Union. So, no date has been fixed, and there must be a six-week gap. Frankly, I think that the right hon. Gentleman is looking for something to complain about. This House has voted for a referendum, and it would be pretty odd if, having voted for a referendum, we then spent ages debating about not having one.
Q4. The Prime Minister will be alarmed to hear that a shop in Gillingham selling illicit tobacco was making £25,000—[Interruption.]
Order. There is excessive chuntering from a sedentary position from a number of Scottish National party Members, who wanted an orderly hearing for their leader. The hon. Member for Gillingham and Rainham (Rehman Chishti) is entitled to be heard, and I appeal to him to start his question again. Let’s hear it.
Thank you, Mr Speaker. The Prime Minister will be alarmed to hear that a shop in Gillingham selling illicit tobacco was making £25,000 a week, destroying the local economy and damaging people’s health. Nationally, this trade is costing the economy £2 billion a year. Will the Government look at increasing the statutory maximum penalty for this offence to bring it in line with that of supplying class C drugs?
I will certainly look at the issue my hon. Friend raises. As far as I can see, Her Majesty’s Revenue and Customs, working very closely with Border Force, has been highly effective at reducing this tax gap of people selling illegal tobacco and has closed off about £1.3 billion of the tax gap since 2000. They do have a wide range of sanctions to deal with illicit sales, including seizure, penalties and criminal prosecutions—they prosecuted almost 800 different people in the past two years. So I think the powers are there, but I will have a check to see whether more is needed.
Q6. My constituent works for the Department for Work and Pensions and he tells me that the Government are correct when they deny that staff have targets set for sanctioning benefits—they are not called “targets”; they are called “aspirations”. With the roll-out of in-work benefit sanctions, how many of the Prime Minister’s own low-paid DWP colleagues does he think my constituent should aspire to sanction this year?
What I say to the hon. Lady is that sanctions in a benefits system are important. We want a benefits system that is there for people who cannot find a job and need support, but it not should not be a lifestyle choice and if people can work, they should work. That is why we have a sanctions system, and I believe that the sanctions system is fairly applied.
Q5. May I share my right hon. Friend’s disappointment that despite all his hard work, the European Union is forcing him to abandon our manifesto pledge to change the benefits system for migrants? Will he confirm that, sadly, the only way in which we are going to be able to regain control over our own borders is by leaving the European Union?
I have great respect for my hon. Friend, but we do not agree on this one. We said in our manifesto that anyone coming to Britain from the EU searching for work should not get unemployment benefit, and we have fulfilled that promise. We said that if within six months they do not have a job, they should go home—we have fulfilled that promise. We said that people should not be able to come here and send British child benefit back to their families, and we have secured that they will only get child benefit at a local rate. And we said no more “something for nothing”; the idea that someone could come here and claim immediately from our in-work benefits system without paying in was not right. I said we would secure a four-year gap and we have. People said that would be impossible, but that is what we have put in place. It is a negotiation, but these are good proposals that I think will have the backing of the British people, because they mean no more something for nothing, and that is a vital value for Britain.
Q8. More than 2,500 people are directly employed by the ceramics industry in Stoke-on-Trent North and Kidsgrove. These and tens of thousands of other British manufacturing jobs are at risk if China is granted market economy status. The Prime Minister is very happy to sell off the family silver, but can he guarantee that he will not sell off the family crockery?
We want to support industry in the potteries, and that is why we are helping manufacturing with research and development tax credits and with apprenticeship schemes; we are helping with a whole range of measures, not least the energy-intensive industry measures, which are very important for the constituency the hon. Lady represents. That is what we want to see. The issue with market economy status is a separate one, as I have said before. Even if China gets that status, it cannot dump steel products or other things into European markets, and it can be fined. What we should be doing is making sure that we are driving open markets for us to sell to China. The Chinese are the ones with a massive growth in the middle class taking place—hundreds of millions of people are joining that—and there are many great products made in Stoke that should be sold in China.
Q7. Isle of Wight Council can balance the books this year but fears it will be unable to do so next year. Would my right hon. Friend confirm the Government’s willingness to work with the council in the coming months to help it to access existing sources of finance or find new ways to address the island’s unique circumstances?
We are very happy to work with the authorities on the Isle of Wight. I think that I am right in saying that the spending power will increase slightly in the next year. As it is a relatively flat cash settlement overall over the five-year period, this local government settlement allows councils to use their reserves and also to sell unwanted property and use the money directly to provide services to bridge that period. Although I am happy to look at the circumstances of the Isle of Wight, I do believe that it is a fair settlement.
Q9. The Prime Minister has told us today that more money is going into the NHS, but let me tell him that my local hospital trust is spending £1.5 million a week on interest payments alone to Innisfree for its private finance initiative deal. [Interruption.] Wait for it. The Prime Minister eventually saw sense about the need to deal with the damage that high-cost credit was doing to individuals, but when will he deal with these legal loan sharks of the public sector?
Sometimes it takes a long time to unwind the damage done by a Labour Government. The hon. Lady is absolutely right. One of the first things that we did in Government was to launch a review of Labour’s PFI and begin an initiative to extract savings and give better value for money for all of the projects, including Barts. In her own health economy, there are more GPs in the NHS, and next year, because we are putting more money into the NHS, the NHS Waltham Forest clinical commissioning group will get a cash increase of 3.7%.
Q10. A lone parent in my constituency has described as “appalling” her experience of the Child Maintenance Group. She talked of a lack of communication, being passed from pillar to post, a failure to act on evidence and not progressing with enforcement. Will the Prime Minister arrange for the Secretary of State to meet my constituents to discuss the particular issues around the enforcement of child maintenance when non-resident parents are gaming the system and depriving children of the support to which they are entitled?
I am happy to help arrange that meeting. I know that many of us in our own constituency surgeries hear about the behaviour of the non-resident parent and how they give everyone the runaround and do not fulfil their duties by helping to pay for the children for whom they are responsible. As she knows, we introduced a new statutory child maintenance service for parents who are unable to make a family-based arrangement. It should be bringing speedier processing of applications, simpler calculations and faster enforcement action, but I will ensure that she has the meeting that she needs to straighten out that case.
Will the Prime Minister comment on recent events in Northern Ireland regarding the investigations into Stakeknife, the alleged informer? Will he ensure that there are equal investigations into the Enniskillen bomb, the Teebane bomb and other major atrocities by terrorist organisations?
I will look carefully at what the hon. Gentleman says. We must ensure that we look at all of these things in a fair and reasonable way, and perhaps I will write to him about the issue.
Q11. A total of £38 billion a year is currently spent on pensions tax relief, with three quarters of that going to higher-rate taxpayers who need it the least. Does the Prime Minister agree that it will be a huge boost to social justice in this country if pensions tax relief was reformed to a single flat rate, which will benefit millions of hard-working Britons?
I know that my hon. Friend speaks on this issue with considerable expertise because of the career that he had before coming to this House, and that he brings a lot of knowledge about this sector. He is right that there are great costs related to pension tax relief, which is why the Chancellor published a consultation last summer to see whether the system should be reformed. As the saying goes, taxes are a matter for the Chancellor and his Budget.
I welcome the Government’s announcement last week, as far as it went, of further support for child refugees. A nine-year-old girl who lives in my constituency has recently asked me what we are doing to help refugee children. Of course what a child refugee needs the most is a home. When will we offer a home to 3,000 unaccompanied refugee children in Europe?
First of all, let me tell the hon. Lady what we have done so far. Obviously, she knows about the 20,000 relocation scheme, under which we got 1,000 people in by Christmas, including many vulnerable children. That is going well. Fewer people are aware of the fact that, through our normal asylum processes, we took around 2,500 unaccompanied children last year. Kent social services are looking after about 1,000 children and facing great pressures. Another point that people do not always recognise is that if unaccompanied children in Europe claim asylum in the country they are in, and if they have direct family in Britain, under the Dublin regulations they can come to Britain. We think that is the right approach—taking some more people from the region, but being very cautious because all the evidence shows that even an orphan child may well have some broader family that they are connected to and it is better to keep the child with them.
Q12. Given the security threats faced by this country, whose policies are most dangerous—those in Scotland who want to scrap our nuclear deterrent completely, or those in the Labour party who want to keep Trident submarines without nuclear missiles?
It is hard to choose between the wrong or the bizarre. You can take your pick. Labour’s latest plan is to use Trident submarines to transport military personnel around the world. It is the most expensive Uber service that anyone has ever thought of. You do wonder what on earth they will think of next.
The Prime Minister may be aware of the case of my constituent, Lisa Brown, whose family were notified by Spanish police authorities on 10 November 2015 that she was being treated as a missing person, though she could have been missing since 6 November. Lisa’s mother Catherine, her sister Helen and brother Craig have visited Spain several times since and have met Spanish authorities and UK consular staff. Although the Spanish authorities state that they are actively working on this case, there have been various pieces of misinformation in the Spanish media which we know not to have been helpful. May I call upon the Prime Minister to seek assurances on behalf of Lisa’s family from the Spanish authorities here in London and in Madrid, as well as the Foreign and Commonwealth Office, that everything possible is being done to ensure that Lisa’s family can get the answers they so desperately need?
I will certainly look into this case and, after the hon. Gentleman has raised it so clearly, make sure that the Europe Minister meets him to try to make sure everything possible is done for Lisa’s family.
Q13. Further to the question from the hon. Member for Walthamstow (Stella Creasy), Sherwood Forest Hospitals Trust is also wrestling with a disastrous PFI signed under the Labour Government. Luckily, there is light at the end of the tunnel as Nottingham and Derby trusts look to take over Sherwood Forest hospitals, but can the Prime Minister assist them in any way in solving this enormous mess left by the Labour Government?
PFI contracts are extremely difficult to solve because, of course, they were entered into and signed. My understanding is that Monitor and the Care Quality Commission are clear that Sherwood needs a long-term partnership, and I understand that, as my hon. Friend says, the trust plans to announce its preferred partner in mid-February. That, hopefully, will help it to support the services we need, and but I will look carefully, and make sure the Health Secretary looks carefully, at the suggestion my hon. Friend makes.
Following the shocking official report into the murder here in London of Alexander Litvinenko, when will the Prime Minister and his Chancellor take some meaningful action to tackle the dirty Russian money and property here in London that helps to sustain the Putin regime?
The report was shocking, although as the Home Secretary said at the time, this confirmed what the Labour Government understood to have happened. None the less, when one reads the report all over again, what happened is deeply shocking. That is why we have taken action in the form of asset freezes and the other measures described by the Home Secretary. On the problem of so-called hot money coming into London, I made a speech recently explaining that we are doing more than other countries in respect of transparency and beneficial ownership—who owns what in terms of companies, and we are going to do the same with property. That is one of the best ways not just to make sure that we do not have illegal Russian money, but to make sure that corrupt money stolen from African taxpayers and other continents does not end up in London.
Q14. When I first came to this House, I spoke of the great stain upon this nation when it comes to our care of our armed forces veterans and the need to do our duty towards those who have done our bidding. Here is a sentence from an email I received at the weekend: “I have not had any letter or any warning. I was told after al-Sweady that was it and not to think about it anymore, but now I dread the post every day.” My right hon. Friend the Prime Minister has already intervened to tighten up the historical allegations process, and for that I think him, but will he pledge to look even more closely at the support we are giving, so that what we want to deliver and what is actually delivered are the same thing?
I am very happy to look at that specifically. On al-Sweady, I have been very clear about what went wrong and how unacceptable it was. Let me repeat that we will continue to provide our fullest support to those going through investigations, including by providing legal advice. Also, we will crack down on any legal firm that we find has abused the system. Because we now have the military covenant written into law, and a covenant group that meets under the excellent chairmanship of my right hon. Friend the Member for West Dorset (Mr Letwin), we have an opportunity not only to raise these issues, but to try properly to tackle them in a systematic way.
The dumping of Chinese steel is crippling the British steel industry. The granting of market economy status to China would dramatically reduce the scope for taking anti-dumping measures. Why, then, is the Prime Minister supporting market economy status for China? Is it because he puts cosying up to Beijing ahead of protecting British industry?
I put helping British industry first. That is why we have cut taxes for British industry. That is why we are cutting energy bills for British industry, helping with apprenticeships, busting open markets abroad so that British industries can succeed and, crucially for the steel industry, why we are investing in our infrastructure and trying to ensure that there is a real forward order book for British steel. I think that the hon. Gentleman is wrong and that we should take these two issues separately. If there is illegal dumping, we will support action in the European Union, and that can be done in spite of the status that a country has; we have actually put those sorts of burdens on America before today. I do not think it is right to connect the two issues in the way he does.
Q15. Mental health issues take many forms. Services for those suffering from eating disorders are often overlooked, yet they cause intolerable distress and suffering. As health devolution in Manchester gathers pace, does the Prime Minister agree that it is an important opportunity to secure better mental health service provision, particularly for children and young adults in Cheadle?
My hon. Friend is absolutely right. I see no reason why the devolution of resources to Greater Manchester under this landmark deal will disadvantage mental health. If anything, it will probably lead to even greater priority being given to mental health, as people can see the connections between mental health and holding back opportunity for so many people. We are investing more in children’s mental health and giving greater focus, particularly on eating disorders, as tragically we are seeing a real growth in this problem. The money is there and the devolution should help.
With permission, Mr Speaker, I would like to make a statement on progress with our renegotiation. The House has now had the chance to study the documents published by the European Council yesterday. I believe that this is an important milestone in the process of reform, renegotiation and referendum that we set out in our manifesto, and which this Government are delivering. We have now legislated for that referendum and we are holding that renegotiation Let me set out the problems that we are trying to fix and the progress we have made. First, we do not want to have our country bound up in an ever closer political union in Europe. We are a proud and independent nation, with proud, independent, democratic institutions that have served us well over the centuries. For us, Europe is about working together to advance our shared prosperity and security; it is not about being sucked into some kind of European superstate—not now, not ever The draft texts set out in full the special status accorded to the UK and clearly carves us out of further political integration. They actually go further to make it clear that EU countries do not even have to aim for a common destination. This is a formal recognition of the flexible Europe that Britain has long been arguing for In keeping Britain out of ever closer union, I also wanted to strengthen the role of this House and all national Parliaments, so we now have a proposal in the texts that if Brussels comes up with legislation that we do not want, we can get together with other Parliaments and block it with a red card We have also proposed a new mechanism to finally enforce the principle of subsidiarity—a principle dear to this House—which states that, as far as possible, powers should sit here in this Parliament, not in Brussels. So every year the European Union has got to go through the powers they exercise and work out which are no longer needed and should be returned to nation states Secondly, I said that we wanted to make Europe more competitive and deal with the rule-making and the bureaucracy that can cost jobs here in Britain and, indeed, across the European Union. We asked for commitments on all the areas central to European competitiveness. We want international trade deals signed, the single market completed and regulation stripped back. All of these things are covered in the draft texts. There is a new proposal for specific targets to reduce the burdens on business in key sectors. This will particularly help small and medium-sized businesses. There is a new mechanism to drive these targets through and cut the level of red tape year on year Thirdly, we are absolutely clear that Britain is going to keep the pound—in my view, forever. But we need to be just as clear that we can keep the pound in a European Union that will be fair to our currency. Put simply, the EU must not become a euro-only club; if it does, it would not be a club for us. So we called for a series of principles to protect the single market for Britain. We said there must be no discrimination against the pound, no disadvantage for businesses that use our currency, wherever they are located in the EU, and no option for Britain ever again to be forced to bail out eurozone countries. All of these principles are reflected in the draft text, which is legally binding. And again there is a mechanism. Britain has the ability to act to uphold these principles and protect our interests We should be clear: British jobs depend on being able to trade on a level playing field within the European single market, whether in financial services or cars or anything else. So this plan, if agreed, will provide the strongest possible protection for Britain from discrimination and unfair rules and practices. For instance, never again could the EU try its so-called location policy—that the settling of complex trades in euros must only take place in eurozone countries. These principles would outlaw that sort of proposal. Now, these are protections we could not have if Britain were outside the European Union Fourthly, we want to deal with the pressures of immigration, which have become too great. Of course, we need to do more to control migration from outside the European Union. We are doing that, and we will be announcing more measures on that front, but we need to control migration from within the EU too. The draft texts represent the strongest package we have ever had on tackling the abuse of free movement and closing down the back-door routes to Britain. It includes greater freedoms for Britain to act against fraud and prevent those who pose a genuine and serious threat from coming to this country. It includes a new law to overturn a decision by the European Court which has allowed thousands of illegal migrants to marry other EU nationals and acquire the right to stay in our country. It has been a source of perpetual frustration that we cannot impose our own immigration rules on third-country nationals coming from the European Union, but now, after the hard work of the Home Secretary, we have a proposal to put that right There are also new proposals to reduce the pull factor that our benefits system exerts across Europe by allowing instant access to welfare from the day someone arrives. People said that Europe would not even recognise that we had this problem, but the text explicitly recognises that welfare systems can act as an unnatural draw to come to this country Our manifesto set out four objectives to solve this problem; I mentioned these at Prime Minister’s questions. We had already delivered on two of them within months of the general election. Already, EU migrants will no longer be able to claim universal credit—the new unemployment benefit—while looking for work. And if those coming from the EU have not found work within six months, they can now be required to leave In these texts, we have secured proposals for the other two areas. If someone comes from another country in Europe, leaving their family at home, they will have their child benefit paid at the local rate, not at the generous British rate. And crucially, we have made progress on reducing the draw of our generous in-work benefits. People said that it would be impossible to end the idea of something for nothing and that a four-year restriction on benefits was completely out of the question, but that is now what is in the text—an emergency brake that will mean people coming to Britain from within the EU will have to wait four years until they have full access to our benefits. The European Commission has said very clearly that Britain qualifies already to use this mechanism, so, with the necessary legislation, we would be able to implement it shortly after the referendum Finally, let me be absolutely clear about the legal status of these changes that are now on offer. People said we would never get something that was legally binding—but this plan, if agreed, will be exactly that. These changes will be binding in international law, and will be deposited at the UN. They cannot be changed without the unanimous agreement of every EU country—and that includes Britain. So when I said I wanted change that is legally binding and irreversible, that is what I have got. And, in key areas, treaty change is envisaged in these documents I believe we are making real progress in all four areas—but the process is far from over. There are details that are still to be pinned down and intense negotiations to try and agree the deal with 27 other countries. It will require hard work, determination and patience to see it through. But I do believe that with these draft texts, and with all the work that we have done with our European partners, Britain is getting closer to the decision point. It is, of course, right that this House should debate these issues in detail. So in addition to this statement, and of course a statement following the Council later this month, the Government will also make time for a full day’s debate on the Floor of the House As we approach this choice, let me be clear about two things. First, I am not arguing, and I will never argue, that Britain could not survive outside the European Union. We are the fifth largest economy in the world and the biggest defence player in Europe, with one of the most of extensive and influential diplomatic networks on the planet. The question is not could Britain succeed outside the European Union; it is how will we be most successful? How will Britain be most prosperous? How will we create the most jobs? How will we have the most influence on the rules that shape the global economy and affect us? How we will be most secure? I have always said that the best answers to those questions can be found within a reformed European Union. But let me say again that if we cannot secure these changes, I rule nothing out Secondly, even if we secured these changes, you will never hear me say that this organisation is now fixed—far from it. There will be many things that remain to be reformed, and Britain would continue to lead the way. We would continue to make sure that Europe works for the countries of Europe, for the businesses of Europe, for the peoples of Europe and, crucially, for the British people who want to work, have security, get on, and make the most of their lives So if we stay, Britain will be in there keeping a lid on the budget, protecting our rebate, stripping away unnecessary regulation and seeing through the commitments we have secured in this renegotiation, ensuring that Britain truly can have the best of both worlds: in the parts of Europe that work for us, and out of those that do not; in the single market; free to travel around Europe; and part of an organisation where co-operation on security and trade can make Britain and its partners safer and more prosperous, but with guarantees that we will never be part of the euro, never be part of Schengen, never be part of a European army, never be forced to bail out the eurozone with our taxpayers’ money, and never be part of a European superstate That is the prize on offer—a clear path that can lead to a fresh settlement for Britain in a reformed European Union: a settlement that will offer the best future for jobs, security and strength for our country; a settlement which, as our manifesto promised nearly a year ago, will offer families in our country security at every stage of their lives. That is what we are fighting for, and I commend this statement to the House.
I am grateful to the Prime Minister for sending me a copy of the statement 45 minutes ago—an hour ago; I am sorry—and I am pleased that he has now decided to finally update the House. However, it is a bit unfortunate that despite his trumpeting of the sovereignty of national Parliaments in his EU negotiations, the Prime Minister did not think to come and update our own Parliament first. I hope he had a good day in Chippenham yesterday, but I note that he spent a lot of time answering questions from journalists when it would surely have been more respectful to this House to come here first and answer questions from Members But in truth—in reality—this negotiation is a Tory party drama that is being played out in front of us, as we see at the moment. The Labour party is committed to keeping Britain in the European Union because we believe it is the best—[Interruption] Don’t get too excited; let me tell you the rest of it: because we believe it is the best framework for European trade and co-operation in the 21st century, and in the best interests of people in this country. We believe that the Prime Minister has been negotiating the wrong goals in the wrong way for the wrong reasons For all the sound and fury, the Prime Minister has ended up exactly where he knew he would be: making the case to remain in Europe, which was what he always intended, despite a renegotiation spectacle choreographed for television cameras over the whole continent. As his own Back Benchers keep telling us, the proposals from the European Council are simply tinkering around the edges. They have little impact on what the EU delivers for workers in Britain or British businesses We welcome the proposals for a majority of national Parliaments to have a veto over Commission legislation, even if it is heavily qualified. It seems the Prime Minister has finally moved towards the Labour party’s view on this issue, and we welcome that Protecting non-eurozone states is necessary, but we cannot let the proposals hamper efforts to regulate the financial sector, including bankers’ bonuses. The crucial detail of the emergency brake on workers’ benefits for EU migrants is entirely absent. When is that information going to be made available? In any case, what the Prime Minister calls the strongest package ever on the abuse of free movement does not actually begin to tackle the real problems around the impact of migration on jobs, wages and communities. Those demand action to support public services in areas of high population growth, and regulation to prevent the subsidising of low pay and the grotesque exploitation of migrant workers by some unscrupulous employers. It is the same with competitiveness. Is the Prime Minister really out to strengthen genuinely competitive markets, or is this proposal really a fig leaf for increasing pressure to privatise our public services and the reduction of consumer standards, environmental protections or workers’ rights That is why Labour will continue to oppose the threats to services and rights from the Transatlantic Trade and Investment Partnership negotiations. We need reform to ensure all European Governments have the right to intervene to protect publicly owned industries and services. This side of the House is delighted that the Prime Minister has been forced to back down on his hopes to water down workers’ rights. However, we want to see workers’ rights further protected and extended within the European Union. We need a strengthening of workers’ rights in a really social Europe, and we want to see democratic reform to make the European Union’s decision making more accountable to its people. We must drive economic reform to put jobs and sustainable growth at the centre of European policy and work with partners in Europe to bring tax avoidance under control, so that we can get a far better deal than the Chancellor managed with Google last week However, to keep and extend these employment protections, we need to remain within the European Union, or leave the field for the Conservative party to make a bonfire of workers’ rights. The Prime Minister says that he has secured Britain’s exclusion from Schengen, a European army and a European superstate. The Prime Minister is living in never-never land. We have never argued for those things, and we do not intend to. We need to work with our allies in Europe to achieve the more progressive reforms that its people need—to build a more democratic Europe that delivers jobs, prosperity and security for all its people. We must do that together. That is why, when the referendum is finally held, we will be campaigning to remain a member I end by asking a question to the Prime Minister. Does he now agree that once this smoke-and-mirrors sideshow of a deal is done, we will get on with it and end the uncertainty, and the referendum will indeed be held on 23 June 2016?
I thank the right hon. Gentleman for his questions. First of all, on the issue of making a statement today rather than yesterday, I felt that yesterday I was in possession of all the documents, but I did not think that every Member of the House would be, so I thought it better to give hon. Members a day to read the documents and have the debate today. It gave me the added advantage of being able to visit Chippenham, which, of course, is the town of the right hon. Gentleman’s birth. I was able to thank the people of Chippenham for putting him on earth and delivering him safely to this place The right hon. Gentleman criticises the issues that we put on the table: getting out of ever closer union, waiting times for welfare and guarantees for fairness between ins and outs. I know that he did not read the Labour manifesto, but I did, and actually all those things were in the Labour manifesto. Labour wanted a two-year welfare wait rather than a four-year welfare wait, but many of the other elements of our negotiation were supported by Labour, so Labour Members can feel they have a mandate for backing these measures The right hon. Gentleman asked about the detail on the emergency migration brake, because there are gaps in the text. He is absolutely right about that; we need to secure the best possible outcome at the February Council. He asked about the danger of the exploitation of migrant workers, and that is an area where I think he and I agree. That is why we have boosted the Gangmasters Licensing Authority, and we have put in place better co-ordination between it and the National Crime Agency. We are making sure that there are more investigations and more prosecutions TTIP is an area where we profoundly disagree. Other socialist Governments in Europe take my view, which is that TTIP will be good for jobs, good for growth and good for businesses. I am not sure that I ought to advise the right hon. Gentleman to spend more time with trade unions, but if he spends time with trade unions in Sweden and some other countries in northern Europe, he may find that they, too, support TTIP, because they want jobs for their members In the end, I would say to the right hon. Gentleman and to all Members across the House that this is an important moment for our country. Yes, there will be areas of disagreement between the Conservatives and Labour, but we are involved in trying to get the very best negotiation for Britain. The European Parliament plays a part in that, and the Party of European Socialists plays a part in that. I urge all hon. Members, if you want to have no more something for nothing, if you want to get Britain out of ever closer union, if you want fairness between those in the euro and those out of the euro, and if you want a more competitive and successful Europe, let us fight this together. [Interruption.]
Feelings are obviously getting roused on this subject The Prime Minister has achieved more on the big issues in this negotiation than I ever expected—and, I suspect, more than the hard-line Eurosceptics ever expected, which is why they are denouncing it so fiercely—but, as he says, he still has to deliver it. Does he accept that he will have great difficulty in persuading Governments in central and eastern Europe, in particular, to accept that their citizens lawfully working here alongside English people in key sectors such as the health service and the construction industry should have lower take-home pay in the first few years than their English workmates If the Prime Minister has to offer something in exchange for that, could he perhaps consider underlining our NATO commitment to those countries, as their biggest concern is future military adventures by Putin’s Russia? To underline our role as one of the leading military contributors, if not the leading military contributor, through NATO to the European alliance would be a very good offer to make—by deploying more troops, perhaps—in order to get what is a difficult concession for our partners in those countries to make.
I am grateful to my right hon. and learned Friend, who has huge experience of European negotiations—both treaty negotiations and ongoing negotiations in the Council of Ministers—for what he says. He is absolutely right that these are difficult issues. My argument is that while we have the free movement of people that many British people take advantage of, we do not have harmonised welfare and benefit systems, and nor should we The second point I make to my colleagues in Europe is that when countries in Europe have problems that they believe affect their key national interests, we have got to be flexible enough to deal with them. I think that that is what this agreement is showing. The advantage of the proposals put forward is that they will have the support of the European Commission. I think that that will reassure some of the states in Europe that have misgivings My right hon. and learned Friend is absolutely right that we can also reassure those states about our investment in their security, because I think that is a very important issue. With, as it were, Putin to our east and ISIL to our south, this is a moment where we need to make sure we are working together.
We in the Scottish National party warmly welcome the opportunity to make the positive case for the European Union. It really matters that we are part of the world’s largest single market; it really matters that we can help to determine the rules and laws that apply to us; and it really matters that we have a social Europe with rights and protections for citizens and for workers. First off, will the Prime Minister therefore commit to a positive campaign to remain in the European Union, and not resort to the negative tactics of “Project Fear” On the Prime Minister’s negotiations, may I suggest that he stops pretending to have won some major victory? He has not even secured the treaty change he promised and much else besides. What is at stake is much bigger than his recent discussions; it is about whether or not we remain in the EU. That is what the debate across the UK will be about in the run-up to the referendum The timing of the referendum really matters to the electorates and the Governments of Scotland, Wales and Northern Ireland, as well as of London, where there are elections in May. This morning, the First Minister of Scotland, Nicola Sturgeon, the Labour First Minister of Wales, Carwyn Jones, the First Minister of Northern Ireland, Arlene Foster—[Interruption.] I think the First Ministers of Northern Ireland, Wales and Scotland deserve a little bit more respect than the baying from the Tory side of the House. They and the Deputy First Minister of Northern Ireland, Martin McGuinness, have written to the Prime Minister today. I think that right hon. and hon. Members should listen to what they say: “We believe that holding a referendum as early as June will mean that a significant part of the referendum campaign will necessarily run in parallel with those elections and risks confusing issues at a moment when clarity is required… We believe that the European Referendum is of vital importance to the future of the whole United Kingdom and the debate leading up to it should, therefore, be free of other campaigning distraction. We believe it would be better for you”— the Prime Minister— “to commit to deferring the EU referendum at least until later in the year.” Will the Prime Minister take this opportunity to confirm that he will be respectful of the views of the Governments of Scotland, Wales and Northern Ireland and defer the referendum beyond June Finally, may I take the opportunity yet again to ask the Prime Minister to answer this question, which he has singularly failed to do thus far? Will he confirm that there are still no safeguards in place that would stop Scotland being taken out of the EU against the will of the Scottish electorate?
First, let me say that, yes, when this campaign comes—of course, we will first need an agreement, a recommended position from the British Government and all the rest of it—it should of course be a positive campaign. In terms of what the right hon. Gentleman says about treaty change and whether this is legally binding, as I explained, it is legally binding and it does envisage treaty change In terms of timing, as I explained at Prime Minister’s questions, it is a matter for the House. The House debated it and the House ruled out coinciding with the Scottish, Welsh and London elections, but the House did not rule out holding a referendum at another time. Specifically, the former First Minister, the right hon. Member for Gordon (Alex Salmond), said that six weeks was the appropriate gap. Obviously, we have to wait to see whether an agreement is reached, but where I disagree with the right hon. Member for Moray (Angus Robertson) is that I do not believe that somehow this is confusing the issues: I think people are perfectly capable, six or more weeks after one set of elections, to consider another election. I note that the Leader of the Opposition, whose party is in control of Wales, was actually pressing me to hold the referendum on 23 June. There is obviously a range of opinions out there. I think the best thing to do is to get the deal done and then hold a referendum.
This is all about voters’ trust. Why has my right hon. Friend, in order to stay in, bypassed so many promises and principles? Our national Parliament is the root of our democracy, as he said at Bloomberg, not a majority of red cards in other Parliaments. He said that we would have full-on treaty change, not the arrangements that have been announced to us today. We were promised a fundamental change in our relationship with the EU. We were promised that we would deal with the excessive immigrant numbers, but that has been whittled down to an issue about in-work benefits controlled by the European Court of Justice. Above all, we were told and promised that this entire package would be both legally binding and irreversible, but now it will be stitched up by a political decision by the European Council, not by a guaranteed treaty change at the right time. I have to say to the Prime Minister that this is a wholly inappropriate way of dealing with this matter.
I have great respect for my hon. Friend, but I have to say that, on the issue of whether it is legally binding, I really do believe he is wrong. If this document is agreed, it would be an international law decision and, as an international law decision, the European Court of Justice has to take it into account. I would make the point to him, because he follows these things very closely, that Denmark negotiated the same sort of legal opt-outs and, 23 years on, they clearly stand and are legally binding. Those are the facts My hon. Friend asks whether we are meeting what we set out in the promises we made. We made very clear promises in our manifesto: get Britain out of ever closer union—that is a promise that we kept; make sure we restrict immigrants’ welfare benefits—that is a promise that we are keeping; real fairness between euro-ins and euro-outs—that is a promise that we are keeping. In every area—more competitiveness, making sure subsidiarity means something—we have met the promises that we have set out I understand that there will be those who say, “We didn’t ask for enough”, or, “We need more reform.” I believe these are the reforms that go to the heart of the concerns of the British people. People feel that this organisation is too much of a political union; it is too bureaucratic; it is not fair for non-euro countries; and we want more control of immigration. Those four things are largely delivered through this negotiation I would just say this to colleagues from all parts of the House. I have sat on the Benches on this side and that side and I have heard about the Maastricht treaty, about the Lisbon treaty, about the Nice treaty and about the Amsterdam treaty, but I have never seen a Prime Minister standing at this Dispatch Box with a unilaterally achieved declaration of bringing powers back to our country. That is what we have got. That is what is within our grasp.
Will the Prime Minister join me in welcoming the launch today of Environmentalists for Europe, which is co-chaired by Stanley Johnson, the father of the hon. Member for Uxbridge and South Ruislip (Boris Johnson)? Will he also welcome the splendid article last week setting out the importance for science and technology of remaining in the European Union, which was penned by his Minister for Universities and Science, who is the brother of the hon. Member for Uxbridge and South Ruislip? Will he have a word with his hon. Friend to tell him about the importance of family solidarity and of joining the swelling ranks of Johnsons for Europe?
Very good. The right hon. Gentleman is absolutely right that we cannot have too many Johnsons agreeing with each other. There is also Rachel Johnson, the columnist: we will have to go after her and make sure of that. He makes a very important point about grants for universities and schools. We all complain, rightly, about the European budget. That is why it is so important that we have got it under control: it has to fall every year. In the budget negotiations, we did safeguard the money that British universities actually benefit from on a disproportionate basis. As for completing the happy family pack of the Johnsons, we may have to wait a bit longer.
Order. I would call the hon. Member for Uxbridge and South Ruislip (Boris Johnson) to ask a question if he were standing, but he isn’t, so I won’t. You cannot have it all. I call John Redwood.
As we are driven in the EU vehicle towards ever closer union and political union, how does it help to try to fit a couple of emergency brakes that lie within the control of the EU, not us? Is not the only way to get control of our borders, our tax revenues and our welfare system to leave, be a good European and let them get on with their political union?
I do not agree with that, because what we are actually doing is making sure that it is very clear that Britain is carved out of ever closer union. I think that is a real advance. Indeed, it is something that my right hon. Friend and other colleagues have been asking for, quite rightly, and which I have always believed is right. Our view about Europe is that we are not there for political union; we are there for co-operation, we are there for trade and we are there for working together on the things that matter Of course, these documents can change—this is all in draft—but one of the issues about ever closer union is that the European Union has actually gone further than I thought it would. I think colleagues will find it interesting that it has said “the references to an ever closer union…do not offer a basis for extending the scope of any provision of the Treaties or of EU secondary legislation. They should not be used either to support an extensive interpretation of the competences of the Union or of the powers of its institutions as set out in the Treaties.” That has never been said before in those ways. For those of us who care about ever closer union and about getting out of ever closer union, this actually goes a long way to achieving, in many ways, more than what we asked for.
The European continent is seeing the largest flows of people and refugees since the end of world war two. The Balkans are becoming ever more volatile and our NATO partner Turkey is not behaving as helpfully as it could. Have any of the negotiations that the Prime Minister has been involved in increased the security of the European continent or the security of the United Kingdom?
I would argue that they have done both. When it comes to the security of the continent, we recognise that Europe’s external border, although it is not our external border because we are not in Schengen, matters. That is why we have sent more representatives to help the European Asylum Support Office than any other country and why we are happy to do even more, working with the Greeks and the Turks There is an important change in this deal that will increase the security of Britain. First, because we are not in Schengen, we do not have to let foreign nationals who come to other European countries into Britain, and long may that be the case. The key changes that the Home Secretary and I have managed to secure about protecting our immigration system from fraudsters, sham marriages, criminals and people who get married to European nationals to try to get into our country have become even more important. We are going to secure those, if this goes ahead, from within the EU.
Since you have been so kind as to call me, Mr Speaker, perhaps I may ask the Prime Minister how the changes resulting from the negotiation will restrict the volume of legislation coming from Brussels and change the treaties so as to assert the sovereignty of this House of Commons and these Houses of Parliament.
Let me take those issues in turn, because my hon. Friend is absolutely right to raise them. First, asserting the sovereignty of this House is something that we did by introducing the European Union Act 2011. I am keen to do even more to put it beyond doubt that this House of Commons is sovereign. We will look to do that at the same time as concluding the negotiations On what we are doing to restrict the flow of legislation from Brussels, for the first time ever in this deal, there is a commitment that Europe has to examine all its competences every year and work out what should be returned to nation states—subsidiarity in action, rather than in words. There is also the proposal to cut Brussels regulation through the bureaucracy cutting targets. That has never been there before I would argue that, looking across this deal, one can see that we have welfare powers coming back, we have immigration powers coming back, which I have just spoken about, and we have bail-out powers coming back. Of course, on the massive return of power that we achieved in the last Parliament with the justice and home affairs opt-out—the biggest return of power from Brussels to Britain since we joined the EU—we have absolutely nailed that down in these discussions to make sure that they cannot get around it. Those were all key objectives. I am not saying that this deal is perfect. I am not saying that the European Union will be perfect after this deal—it certainly won’t be—but will the British position be better and stronger? Yes, it will.
Since assuming office in 2010, the Prime Minister has, to his credit, tried on occasion to limit the increases in the contributions made by the United Kingdom to the European Union budget, with varying degrees of success. Given that the UK pays £9 billion or more net into the EU every single year, will he tell us how much our contribution will go down in net terms each year as a result of this agreement?
We have already done the European budget agreement. For the first time, the seven-year financial perspective shows that the budget over the next seven years will be lower than over the last seven years, so there is a real-terms cut—something no one thought it would be possible to achieve. The exact amount of money we give depends on the growth and success of our economy. One consequence of our strong growth and the difficult times in the eurozone is that a little more has been contributed, but the overall financial perspective is coming down, which is good news for Britain.
My right hon. Friend has, I believe, achieved a quite remarkable result because of the legally binding nature of the document that he will bring back if it is accepted by the European Council. In that context, he will know that one of the principal problems that has bedevilled the United Kingdom’s relationship with the European Union has been the capricious interpretation of the treaties, sometimes to circumvent what the United Kingdom has believed to be its true treaty obligations. In view of the remarkable specificity of this document, does he agree that it will be a very powerful tool in preventing that from happening in future?
My right hon. and learned Friend makes a very important point. If we stand back for a moment and ask ourselves how it is that powers have been taken from this House to Brussels, we see that it has really happened in two ways. First, successive treaties have passed competences from Britain to Brussels. That cannot happen anymore because we legislated in the last Parliament for the referendum lock, so if any Prime Minister—me or any subsequent Prime Minister—tried to sign up to another treaty to pass powers to Brussels, they could not do so because there would be a referendum. The second way in which powers get passed is through the judgments of the European Court of Justice. That is why what has been secured on ever closer union is important. It says in terms, if we get the deal agreed, that that clause cannot be used to drive a ratchet of competences going from Britain to Brussels. The two routes to further integration, where Britain is concerned, have been effectively blocked off.
Will the Prime Minister confirm that nothing in the renegotiation waters down the important security co-operation at the EU level, such as intelligence sharing, joint investigations and the European arrest warrant? When a deal is done finally, will he join Opposition Members in making the strong case that our membership of the EU helps to bring criminals to justice and keep Britain safe?
I want the deal to be done and the security argument is an important one. When my right hon. Friend the Minister for Europe was answering questions yesterday, he was asked whether it is consistent to say, as we do in the document, that national security is a national competence and to argue that Europe is important for security. I believe that it is. It is very important that we are clear that the core competences such as policing and our intelligence services are for this House and our Government to decide on, but of course there are ways in which we can co-operate in Europe to make ourselves safer, such as making sure that we know when criminals are crossing borders and making sure that we exchange passenger name records and the rest to keep us safe. That is why, when we opted out of the justice and home affairs powers, repatriating about 100 powers to Britain, we stayed in the ones that really matter in respect of keeping us safe. It is important to demonstrate that we are both maintaining national security as a national competence and working with our partners to keep our people safe.
First, may I say through you, Mr Speaker, to the Leader of the Opposition that I would prefer what he describes as the “drama” of the Conservative party to the tragedy of his Labour party any day Whether or not an emergency brake kicks in is ultimately the decision of the European Union, not the UK. The level of immigration at which it kicks in is ultimately a decision for the EU, not the UK. Even the level of benefits sent abroad is ultimately a decision for the EU, not the UK. Is it not clear that we are not sovereign in those areas of policy and do not have independent control over them? Ultimately, is not the decision in the referendum whether we want our own laws and our own borders to be determined here by ourselves or overseas by someone else?
I have great respect for my right hon. Friend. He explained very clearly on the radio this morning that he would be for leaving the EU, even without the renegotiation. He was very honest and frank about that. In terms of dramas and tragedies, I am sure that he will join me in echoing the old insurance advert by saying that we should not turn a drama into a crisis On the emergency brake, the European Commission has been absolutely clear in the documents that it “considers that the kind of information provided to it by the United Kingdom shows the type of exceptional situation that the proposed safeguard mechanism is intended to cover exists in the United Kingdom today.” Of course, I am all for maximising the sovereignty of this House and our Government, and our ability to do things, but we have said that we want there to be no more something for nothing, that we want a welfare brake and that we want to be able to deny benefits to people in full before they have been here for four years. This paper says that that can happen as soon as the legislation allows.
May I reassure the Prime Minister that, in my estimation, most of us in Northern Ireland agree with him that we would be much more successful in the European Union than out of it? I urge him to hold the referendum later than June, so that all the aspects can be fully discussed and debated. When all the negotiations are completed, if there is a positive “stay in” result in the referendum, can he see the UK taking a much more positive and engaged role in the structures and organs of the European Union?
Were there to be an agreement in February, I do not think that a four-month period before a referendum would be too short. I think four months is a good amount of time to get across the key arguments, facts and figures, and for both sides to make their points. That will be equally important in Northern Ireland, and I give the hon. Gentleman a guarantee that if there is an agreement, I will personally spend time in Northern Ireland, making the points that I think are most important. As for the role of the EU in helping to bring about the successful transformation of Northern Ireland, there have been positive moves in terms of grants, and structural and other funds, to help build the strong economy in Northern Ireland that we need.
As a former Secretary of State for Social Security, may I ask my right hon. Friend to clarify the status of the agreement on migrants’ benefits? The EU has no competence over benefits rules in member states, unless they conflict with the freedom of movement clause in the treaty. If the proposed changes do not conflict with the treaty, we could have introduced them immediately without using up our negotiating clout on this issue. If the changes do conflict with the treaty, they will be struck down by the EU Court, unless the treaty is changed first.
The view is that this emergency brake can be brought in under the existing treaties, but only with legislation through the European Parliament. On an accelerated timetable, the leader of one of the major parties said that that could take one, two or three months. That is what makes it clear that we can act in this way not just legally, but—crucially in my view and, I think, in that of the British public— quickly.
When the Prime Minister meets various EU leaders over the next few months, will he make it clear to them that the result of the referendum is to be decided by the British people, and that they should not try to interfere in any way with the British people’s views? Will he particularly say to the Irish Taoiseach that it was not at all helpful, and indeed it was very uncomplimentary to the people of Northern Ireland, for him to imply that if the people of the United Kingdom decide to leave the European Union, that would threaten the peace process?
I absolutely agree that this decision is for the British people, and the British people alone, and they certainly do not want to hear lectures from other people about that. It is because this affects Britain’s relations with the rest of the world, and other issues, that there may well be people who want to make a positive contribution, and that is a matter for them. I think that the peace process is secure and we must keep going with it, and I believe that the Taoiseach is a friend of the United Kingdom. He spoke up very strongly for Britain at the European Council, and I think he was quite influential in trying to build good will, and saying that we in the European Union should recognise that if a country has a national interest at stake and needs things fixed, we must be a flexible enough organisation, because otherwise we will not be able to sort those things out.
The Prime Minister has said that if we vote to leave the EU, he would want to continue as Prime Minister—a combination that I would fully support. He certainly fancies himself as a negotiator. Given that we have a net contribution each year to the European Union of £19 billion and a trade deficit with the EU of £62 billion, and that if we were to leave we would be the single biggest export market of the European Union, does he think he has the ability to negotiate a free trade agreement from outside the EU, without handing over £19 billion a year?
I have great respect for my hon. Friend, who I think wanted to leave the EU whatever came out of these negotiations, and I am sure he will make his arguments powerfully. Obviously, we must consider all the issues, and once the debate starts, people will want to look at all the alternatives. Would Britain be better off in a customs union arrangement such as that with Turkey? Would we be better off in a free trade agreement, such as that with Canada? Would we be better off in a situation such as the one the EU has with Norway and Iceland? I have started talking about some of those alternatives. I think the Norway example is not a strong one, because Norway contributes more per head to the EU than we do, and it has to take all the legislation passed in Brussels. I am sure that that will be an important part of the debate to come.
Does it surprise the Prime Minister that, so far at least, he does not seem to have persuaded any of the critics on the Conservative Benches about the virtues of his negotiations? He may have persuaded the Home Secretary, for reasons that we understand, but apparently he has not persuaded any of the other critics.
Maybe the hon. Gentleman can help me out—I don’t know. This is a very important issue for our country, but in the end it will not be decided in this Chamber. We will all have to reach our own conclusions, and if hon. Members passionately believe in their hearts that Britain is better off outside the EU, they should vote that way. If they think, even on balance, that Britain is better off in the EU, they should go with what they think. Members should not take a view because of what their constituency association might say or because they are worried about a boundary review, or because they think it might be advantageous this way or that way. People should do what is in their heart—if you think it is right for Britain, then do that.
Since no one else has done this so far after nearly an hour, and since my mum always said that I should say thank you, may I thank the Prime Minister for giving us a choice in the first place? One question to ask about the referendum is what is the point in having an emergency brake on our car if the backseat driver—namely the European Commission—has the power to tell us when and for how long we should put our foot on the brake pedal?
This is rather a different situation; we are being told in advance that because of the pressures we face, this is a brake we can use, and that we can do so relatively rapidly after a referendum, and I think it would make a difference. The facts are these: 40% of EU migrants coming to Britain access the in-work benefits system, and the average payment per family is £6,000. Don’t tell me that £6,000 is not quite a major financial inducement. I think that more than 10,000 people are getting over £10,000 a year, and because people get instant access to our benefits system, it is an unnatural pull and draw to our country. One thing that we should do to fix immigration into our country is change that system, and that is what we are going to agree.
Will the Prime Minister acknowledge that the referendum will be won or lost on bigger issues than this renegotiation, not least on a judgment that the greatest challenges facing us are better solved when countries work together? In that vein, may I invite him again to join me in welcoming the establishment of Environmentalists for Europe, which recognises that cross-border problems require cross-border solutions, and highlights the crucial role that the EU plays in protecting wildlife and nature in this country?
Where there are genuine cross-border problems we must work across borders to try to ensure a strong solution. I think that the key issues are prosperity and security, but within security comes environmental security, and at the Paris accord Britain was able to play a strong role. Through our example of getting carbon emissions down, and by having a strong plan for the future, we encouraged other countries in Europe to do the same. That leveraged in—sorry, terrible jargon: that brought about a better deal from the rest of the world.
Much has been said about the Conservative party manifesto that the Prime Minister and Conservative Members fought the election on, and I have an electronic copy of it in front of me now. Should the Prime Minister succeed in his negotiations, he will achieve not only the letter of what we promised, but also the spirit. Perhaps most importantly, he will give the British people a chance to vote for a reformed Europe, or to vote for the uncertainty of leaving.
I am very grateful to my right hon. Friend. We are delivering the manifesto in fact and in spirit, not least by doing something that many people thought we would never deliver on, which is to hold that referendum. I remember sitting on the Opposition Benches when Tony Blair stood here and said, “Let battle commence; let the referendum on the constitutional treaty begin”. The fact that that referendum was never held in many ways poisoned a lot of the debate in Britain. That is why the manifesto is so clear about the referendum and about the renegotiation aims Some people will say that a better approach is to go in, kick over the table, walk out the door and say, “I’m not gonna come back in unless you give me a list of impossible demands”, but that was never the plan we set out. The plan we set out was to address specifically the biggest concerns of the British people about competitiveness, an ever closer union, fairness, and migration, and if we can complete this negotiation, that is what I believe it will do.
I congratulate the Prime Minister on his progress in tackling what I think voters for all parties see as unfairness in the freedom of movement—not to work, but in some cases freedom of movement to claim benefits here in the UK. If we left the European Union, would it put at risk our co-operation with the French authorities in Calais to protect UK borders?
I am very grateful to the right hon. Lady for what she says. She raises an important point about Calais. There is no doubt in my mind that the agreement we have is incredibly beneficial. I think it works well for both countries. For Britain, being able to have our border controls in France and deal with people there is something we should be very proud of. We should do everything we can to sustain it. It is part of the European co-operation we have.
Given the difficulty of getting any change to our EU membership approved by the other 27 countries, what we have got is as good as anyone, I think, might have expected and more. I congratulate the Prime Minister on his achievement. Will my right hon. Friend confirm that once the European Council have made its decision, he will respect the views of those Ministers who might publicly express the opinion that the United Kingdom should now leave the EU, and that the careers of those Ministers in this Government will not be jeopardised or threatened as a consequence?
I can certainly give my hon. Friend that assurance. We are still in the process of negotiation. The manifesto we all stood on said that we wanted to get the best possible deal for Britain and that we would all work on that together. That is exactly what we are doing. If the deal is agreed—whether in February or perhaps later, if it takes more time—there will then be a meeting of the Cabinet to decide whether we can take a recommended position to the British people. If that position is to recommend we stay in a reformed European Union then, yes, at that point Ministers, who, as I have said, have long-standing views and want to campaign in another direction, will be able to do that. The Government will still have a position. This is not a free-for-all. It will be a clear Government position from which Ministers can depart. Yes, as I have said, they should not suffer disadvantage because they want to take that view.
The Prime Minister has now listened to the views of the EU President and the other 27 Heads of State in the European Union about his proposals. In the spirit of his very own one nation respect agenda, will he also now listen to the views of the Heads of Government in the devolved Parliaments of the United Kingdom, who are unilateral in their belief that his preferred referendum timetable, in scheduling a vote for the end of June, is disrespectful and wrong?
In terms of the respect agenda, my right hon. Friend the Europe Minister has had a number of conversations with the heads of the devolved Administrations and I think that is absolutely right. On the referendum date, I do not think we should get ahead of ourselves. We need an agreement first, but I really do not believe that a four-month period, and a good six weeks or more between one set of elections and another, is in any way disrespectful. I have great respect for the electorates of our countries. They are able to separate these issues and make a decision.
I commend my right hon. Friend for sticking to his commitment to offer the British people a choice on this matter. I also support very much what he has just said about maximising the sovereignty of this Parliament. Does he not agree that the proposals to require the United Kingdom to secure the support of many continental Parliaments to block any EU directive that this Parliament opposes do not constitute the fundamental reform he seeks?
I argue that the red card proposal for national Parliaments is something new—it did not previously exist. Of course, it will take a lot of co-ordination between Parliaments, but where I think it is so much more powerful than the previous proposals, of yellow cards and what have you, is that it would be an absolute block. If we could get the right number of Parliaments together over an issue, the Council and the Commission would not go ahead with it. I think it goes alongside the subsidiarity test that takes place every year, getting Britain out of ever closer union, and reaffirming the sovereignty of Parliament as we have done and will do again. It is one more measure that demonstrates we believe in national Parliaments.
There is a much broader case for continued UK membership of the EU beyond the four items in the Prime Minister’s negotiation based on jobs, our economic interest, our collective security and our place in the world. Does the Prime Minister accept that if we voted to leave the European Union but then found ourselves still having to accept all the rules of the single market, that would be to swap our position as a rule maker for that of being a rule taker? That is not control and that is not the right future for a great country such as the United Kingdom.
As ever, the right hon. Gentleman speaks very clearly and powerfully. Of course he is right. Much bigger arguments are going to take place over the coming months and I am not over-claiming about the four areas where we have made progress. I merely say that they relate to four of the things that most concern the British people about Europe and that we are some way down the road of fixing them. The point he makes about being a rule maker not a rule taker is absolutely vital. Britain is a major industrial economy with a huge car industry, a huge aerospace industry and a very important financial services industry. We need to make sure we are around the table making the rules, otherwise there is a danger that we are not just a rule taker but that the rules are made against us. That is what we need to avoid.
Among the other important measures successfully negotiated by my right hon. Friend the Prime Minister, I welcome in particular the recognition of the Union’s need to become more competitive and explore the untapped potential of the single market, and indeed to press on with vital trade negotiations with the United States and other key partners. Will my right hon. Friend confirm that when the negotiations are, I hope, happily concluded, our national debate must move on to the real questions of this referendum relating to the safety, economic security and prosperity of the United Kingdom, and the role we are to play in the world in the decades to come?
My right hon. Friend is absolutely right. We will be holding the debate at a time of great uncertainty and insecurity in our world. We have Russia, with its destabilisation of Ukraine to our east. We have the horrors of Daesh to our south. This is a time when we need to be working closely with our neighbours and friends to make sure we can deliver greater security for our people. It is, of course, true to say that a cornerstone of our security is NATO, our “Five Eyes” partnership and our special relationship with the United States. They are vital. In the modern world, however, border information, passenger name records, criminal record information systems, sharing information about terrorism and fighting together against Islamist extremists—not just in Syria and Iraq, but, tragically, in our own countries all across the European Union—are very important issues.
I wish the Prime Minister and the British negotiating team well for what remains of this process. Will he acknowledge that all the major threats and challenges Britain faces, from international terrorism to climate change, demand that we work closely and collaboratively with our close neighbours, and that we do not relegate ourselves to a position of isolation and impotence?
My judgment in all of this is that I want things that increase the power and the ability of Britain to fix problems and to deal with our own security, stability and prosperity. What matters is this: are we more able to deal with these things? One thing Europe needs to get right is to get rid of the pettifogging bureaucracy on the small things that infuriate people but do not actually make a difference, and to focus instead on security, prosperity and jobs—that is the focus.
Order. A very large number of right hon. and hon. Members are still seeking to catch my eye. Legendarily, the Prime Minister, on several occasions, has been here for long periods to respond to questions, but there is now a premium on brevity that will be demonstrated, I am sure, by the hon. Member for Harwich and North Essex (Mr Jenkin).
May I point out to my right hon. Friend that the former director general of the legal service of the Council of Ministers, Jean-Claude Piris, has said: “There is no possibility to make a promise that would be legally binding to change the treaty later” In fact, he then used a word which one might describe as male bovine excrement. Can the Prime Minister give a single example of where the European Court of Justice has ruled against the treaties in favour of an international agreement, such as the one he is proposing?
As I said to my hon. Friend the Member for Stone (Sir William Cash), Denmark negotiated the same sort of legal opt-outs—and, 23 years on, they still stand and are legally binding.
On 21 July 2005, two weeks after four suicide bombers had murdered 52 people on London’s transport network, Hussain Osman tried but failed to blow himself up on a Hammersmith and City tube line. He fled to Italy and was speedily extradited to face justice in this country—in a matter of weeks rather than the years that a bilateral extradition process would have taken. Can the Prime Minister reassure me and all hon. Members that nothing he does in the renegotiation process will put the functioning of the European arrest warrant at risk?
I certainly can give the hon. Lady that reassurance. The House debated this issue. We opted out of much of justice and home affairs but we specifically chose to opt back into the European arrest warrant because it has proved very valuable, not least in the case that the hon. Lady mentions and other cases, in ensuring that terrorist suspects and serious criminals can be returned straight away to Britain. If we stay in a reformed European Union, those arrangements will continue. It is more a question for those who want to leave to say how they will put back in place something as powerful as what we have.
I very much admire the tenacity, the courage and the skill with which my right hon. Friend is defending—nay, polishing—this deal, but what happened to our 2010 manifesto commitments on the charter of fundamental rights and social and employment law?
We have put in place, as I and my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles), the former Communities and Local Government Secretary have said, all the things that we put in the manifesto—the manifesto on which my hon. Friend and I stood at the last election. The social chapter no longer exists; it is now merely part of the single market legislation. We have secured, for the first time, an annual reduction in legislation, which can of course include the sort of the legislation that my hon. Friend mentions.
In the words of John Kenneth Galbraith: “All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.” Once the EU negotiations are complete, will the Prime Minister confront people’s anxiety, demonstrate strong leadership and unequivocally come out in favour of our EU membership?
I have been very clear. If we can achieve this negotiation, I will work very hard to convince people that Britain should stay in a reformed European Union. That would be very much in our national interest. I am not an expert on JK Galbraith, but when people have serious concerns—as people in this country do about the levels of immigration—it is right to try to act to address them, which is part of what this is about.
I welcome the Prime Minister’s substantial progress towards an agreement that would allow us to stay in the EU, but does he agree that one of the most important aspects of such an agreement is that it is legally binding and provides a lot more clarity about Britain’s role within the EU—in terms of the new dispensation, and of existing treaties? That makes it extremely powerful from a legal point of view as it can be revoked only if we agree. It therefore has embedded force to it.
We have heard from the former Attorney General and the former Solicitor General, who have great legal expertise. The point that they make is right: this agreement will be legally binding on member states as a matter of international law. First, of course, it has to be agreed, but once it has been agreed, my hon. and learned Friend is absolutely right that it would be irreversible because it could be amended or revoked only if all member states, Britain included, decided to reverse it. Therein lies its irreversibility.
I want us to stay in the European Union, but the Prime Minister indicated that he would use the renegotiation to seek to address the unfairness in the European sugar market, which currently affects cane sugar refiners such as Tate & Lyle in my constituency. Has the right hon. Gentleman made any progress on that specific issue?
I will have to write to the right hon. Gentleman about that issue.
The Commission might agree that we meet the requirements to have a break, but that is its decision. It might not agree in a few years’ time. Every step of these negotiations relies, unfortunately, on somebody else giving us permission to make decisions for this country, as with the thousands of harmonised directives that we struggle with—day in, day out—in respect of which businesses have to ask the permission of other countries. This is not what the British public want, Prime Minister.
Let me deal first with the harmonised directives. We now have this test for subsidiarity—we had only fine words in previous treaties because there was never a mechanism to go with them—so the European Council and the European Commission are going to have to look at all these competences and return to member states those that are no longer necessary. That seems to represent important progress in the area my hon. Friend mentions. On migration, the European Commission has said that Britain qualifies now. Where my hon. Friend is right is that although we know that what is proposed is the ability to stop someone getting full access to benefits for four years, we need to fill in the detail on how long such a mechanism will last and how many times it can be renewed.
In the Welsh general election, how will the Prime Minister’s Conservative colleagues argue for the economic stability that Wales so sorely needs when it might be overthrown by his referendum just six weeks later?
British people, including people in Wales, voted for a Government who would deliver economic stability while putting this great question about Britain’s future in front of the British people. As I have said before, public opinion in Wales, England, Scotland and Northern Ireland is all, to a greater or lesser extent, in favour of holding a referendum. I think this is the right policy for the whole of the United Kingdom.
My right hon. Friend has talked about what is going to happen with the European Court of Justice. Does he recall that under the Lisbon treaty there is a requirement for the European Union to join the European convention on human rights. That has not been implemented because the European Court of Justice has said that it is incompatible with the EU treaties. Does this not show that, ultimately, although something might need to be taken into account, there is no need for compliance?
Let me say two things to my hon. Friend. First, I do not believe that the EU should join the European convention on human rights. I do not think that is the right step forward, and that has been the British Government’s position. Secondly, we are committed in our manifesto to change Britain’s position with respect to the European Court of Human Rights by having our own British Bill of Rights. We shall be coming up with proposals for that shortly.
British workers benefit from employment rights guaranteed at the EU level. Will the Prime Minister assure us that his renegotiation does not affect important employment rights, including rights to paid leave, equal rights for part-time workers and fair pay for agency workers?
All these rules are no longer in a social chapter, but are part of single market legislation. We now have the opportunity to make sure that single market legislation is proportionate and that it is on something that needs to be done at the European level rather than the national level. That is an ongoing conversation, as it should be under the rules set out here.
Does my right hon. Friend agree that of all the documents issued yesterday, the most significant words are in Donald Tusk’s letter to members of the Council, particularly where he says that “in light of the United Kingdom’s special situation under the Treaties, it is not committed to further political integration.” Is that not precisely what the majority of the British people have always wanted—to be in Europe, but not run by Europe, to revive an old phrase. Is that not precisely what my right hon. Friend has achieved?
I thought the letter was interesting in that regard. The truth is that Britain’s membership of this organisation is different from that of other countries. As the document sets out, we are not in the euro, we are not participating in Schengen, we keep our own border controls, we choose whether to participate in measures of freedom, security and justice. We opted out of the justice and home affairs area, and now we are opted out, as it were, of ever closer union. Our membership is different, and we need to make that case strongly as we go forward.
Given that the south of Ireland is by far Northern Ireland’s biggest export market, will the Prime Minister tell us what assessment he has made of the impact that leaving the European Union would have on the land border in Ireland? Can he tell us whether continued free movement in Ireland can be guaranteed, and has he assessed the damage that a customs border could cause to Northern Ireland’s economic security?
Those are important questions. I think I am right in saying that the amendments to the European Referendum Bill—now the 2015 Act—that were agreed in the House of Lords and were then, I think, accepted here require the Government to produce a series of documents concerning the reform proposals, the alternatives to membership, and the obligations and rights that attach to membership of the European Union. I think that, through a process involving those documents, we should address a very important question that clearly affects one part of the United Kingdom quite intensely.
In 2014-15, 183,000 economic migrants came from the European Union, none of whom would have been deterred by anything we have heard so far. Ever closer union may be taken out of the preamble, but it remains in the essential text of all the treaties. On protecting the “euro-outs”, all that will happen is that there will be a discussion—and there are plenty of discussions in the European Union—and, on competitiveness, that has been part of the European Union’s own ambition since the Lisbon agenda of 1999 The thin gruel has been further watered down. My right hon. Friend has a fortnight, I think, in which to salvage his reputation as a negotiator.
My hon. Friend is extremely articulate and always speaks very powerfully, but let me take two of the points that he has made and explain why I think that, actually, he has got this wrong First, the principles that will be legally binding in terms of how currencies other than the euro are treated constitute a real advance. They mean, for instance, that never again can the European Union suggest that the clearance of euros is possible only in eurozone countries, which would have been disastrous for our financial services industry. I have secured that. The European Union cannot even promote that again, which is extremely important, because if we were not in the European Union, we would not have that protection at all. The EU could change the rule just like that. I do not think my hon. Friend understands the power of the principles of no discrimination, no disadvantage, and no cost, which mean that we cannot be forced to bail out eurozone countries as we nearly were last summer. Those are powerful principles On ever closer union, I encourage my hon. Friend to look at page 9 of section C of one of the documents, which states that “the references to an ever closer union…do not offer a basis for extending the scope of any provision of the Treaties” As I have said, as far as I can remember—I was advising a Minister at the time of the Maastricht debates, and I sat through Lisbon and Nice and Amsterdam and the rest—the principle has never been set out in that way. This means that ever closer union cannot be used to drive a process of integration. If we in the House have the protection that we must have a referendum if any Minister ever suggests that we sign up to another treaty that passes power—protection one—and we have this too, we are well on our way to saying that our different sort of membership of the EU is not only safeguarded but is being extended, because not only are we out of the euro and out of Schengen, but we are out of ever closer union too.
Once the workshop of the world, Birmingham in the west midlands is now the industrial heartland of Britain. Key to that success is inward investment, including investment by Jaguar Land Rover in the 3,000-strong Jaguar factory in my constituency, and key to inward investment is continuing membership of the European Union. Does the Prime Minister agree that it is strongly in the best interests of midlands workers that we remain part of Europe?
Provided that we secure the agreement that we need, yes, of course I do. We are seeing an industrial renaissance in the west midlands, much of it involving the automotive industry. I have had a number of meetings with car manufacturers in recent days: I saw representatives of Toyota and Ford yesterday, I have had conversations with Jaguar Land Rover and others, and I was with BMW representatives in Germany recently. They have all made the point that Britain is a great centre for the manufacture of cars, and of engines in particular. That is relevant to the issue of the standards set in Europe and our being a rule maker and not a rule taker, which is very important for our auto industry.
Following the Prime Minister’s response to my recent parliamentary question, I have taken his advice and cleared the diary for a debate in the Chamber tomorrow on parliamentary sovereignty. Given the importance of sovereignty to the EU negotiations, will he join us for that debate, and, perhaps, respond to it on behalf of the Government?
I am very sorry, but I have not been able to clear my own diary. Tomorrow is the Syria conference. In fact, many people will arrive tonight—more than 30 Presidents and Prime Ministers, I believe. The aim is to raise twice as much for the Syria refugee appeal this year as we did last year. However, I know that my hon. Friend is keen to have a word, and I will make sure that we fix that up.
As 14,000 jobs in Oldham are dependent on Europe, I am very much in favour of staying in. However, although the Prime Minister said in his statement that the emergency brake would apply immediately after the EU referendum, it was reported yesterday that the process would take at least 18 months. Will the Prime Minister make clear which is the case, and tell us whether he will report on any other transitional arrangements relating to other measures?
What I said was that because this measure does not rely on changes in the treaty but will be in European legislation, it can enter into force relatively shortly after the referendum. It will require some legislation, but, as I said earlier, the leader of one of the biggest parties in the European Parliament said that it could be a matter of months, because the process can be accelerated. It just goes to show how much we need to bind everyone into the agreement that we hope to achieve in the coming weeks, so that the Parliament can pass the legislation as swiftly as possible.
Does my right hon. Friend agree that one of the biggest concerns about the direction of travel in the European Union is that countries within it, the eurozone members, wish to integrate more deeply in order to protect their currency? We have our own currency, but an incredibly important part of my right hon. Friend’s negotiation ambition was that we should be protected from any discriminatory measure that might result from those countries’ ability to integrate more closely. Is that not why this proposed package is indeed significant? Is it not the case that it does protect us, and that not only are there now two different speeds, but we have a different destination from our European partners, which puts us in a relatively advantageous position?
Let me make two points. First, I think that the reference to a different destination is significant. People have often talked about Europe moving at different speeds, but for the first time it is being said that we may not all be trying to achieve the same ends, and I think that that is very important The “euro ins-outs” section is probably the most technical and, in some ways the most impenetrable, but it contains some simple principles, such as the non-discrimination and no-cost principles that I mentioned to my hon. Friend the Member for North East Somerset (Mr Rees-Mogg). There is also the very important concept that, should we need to take action in the form of financial supervision to secure our own financial stability, nothing should get in the way of such action. That, I think, is a very important clarification for the good of our country.
More than 80% of businesses in my constituency want to stay in the EU. More than 50% of the jobs are linked to trade with the EU. Our membership is vital to jobs, prosperity and security, and that is why Labour Members are united in campaigning to stay in Europe. Do we not need to end the uncertainty, have the referendum as soon as possible, and campaign to stay in the EU?
Obviously I am keen to end the uncertainty, but I am not in any hurry if we cannot get the right deal. I think we have set out very clearly what needs to be done, and I think it is possible for that to be agreed in February, but if it takes longer we shall have to be patient, because getting this right really matters.
A week or so ago, 2,500 people turned up in Kettering for the first GO conference. GO—Grassroots Out—is an organisation whose aim is to get us out of the EU. We had cross-party speakers at the Kettering conference, and we shall be holding another in Manchester What has not been mentioned by commentators—I received an e-mail from the Prime Minister about this yesterday—is the fact that he rules nothing out. This is a process, and he may not get what he wants. I understand that he will not be able to come to Manchester because he is still involved in the negotiations, but if he does not get what he wants, could he come to our GO conference on 19 February, and would it be possible for me to drop off a tie for him at Downing Street?
My hon. Friend is always very generous with his time, with his advice, and now with his clothing as well. The tie has arrived, and I feel that the blazer is soon to follow I do not think that I shall be able to come on 19 February—I hope that I shall still be in the thick of negotiations—but I will of course report the results to the House.
It is a very garish item, I am bound to say, but who am I to object to that? [Hon. Members: “Would you like one?”] I have suddenly been afflicted by a loss of hearing.
I hope my tie is not too garish for you, Mr Speaker When the Prime Minister visits Northern Ireland, which I would welcome, will he visit the devastated fishing villages, the families angered by EU Court rulings on terrorists, the manufacturers smothered in red tape and the haulage companies whose employees run the gauntlet at Calais every week because of the EU’s chaotic immigration policy? Will he explain to them how his red card will prevent further destructive EU legislation, given that it requires him in 12 weeks to get 50% of Parliaments across the EU to oppose proposals backed by their own Governments?
I will want to address all those issues when I go to Northern Ireland. Already the reform of the common fisheries policy has led to some improvement, but there is more to be done. On the rules that manufacturers face, I have set out how we will cut bureaucracy. The documents also address directly the problem between the Republic of Ireland and Northern Ireland of sham marriages and people trying to get round our immigration controls, but we now need to carry them into force.
The Prime Minister is trying his best to renegotiate our position, but would he not agree that the reforms, as they stand, do nothing to make the immigration system in this country fairer to people, regardless of where in the world they come from?
I think they do make it fairer. As I explained in the statement, it has for years been frustrating that we cannot apply some of the rules for British citizens marrying foreign nationals to EU citizens marrying foreign nationals. The agreement opens the way to ensuring that we can. All sorts of sham marriages, fraudsters, criminals and others who have been getting round our immigration controls will no longer be able to do so.
The Sunday Times has reported that, as part of the negotiations and his plan to restore the sovereignty of Parliament, the Prime Minister is seeking to deny UK citizens access to the fundamental rights guaranteed by the EU charter. Does he appreciate that, as stated in the well-known case of MacCormick v. Lord Advocate, the doctrine of the sovereignty of Parliament is a distinctively English principle? In Scotland, the people are sovereign, and they do not want their human rights protections reduced.
People in our country had fundamental rights long before the EU charter of fundamental rights was even thought of, so we do not need these documents in force in Britain. We have our own Parliament and our own rights, and soon we will have our own British Bill of Rights.
Constituents and families will be thinking about what the future holds. All four tranches of the agreement are important to all our constituents, but the most significant is the protection for non-euro countries. Will the Prime Minister assure the House that he will look at the detail—the devil is in the detail—to make sure that there are no loopholes and that, as the eurozone countries integrate, we are protected and not discriminated against?
I will certainly do that. It will be a complex negotiation. The eurozone counties want the ability to integrate further and to know that we are not trying to block the action they need to take, but clearly we want to make sure that we, as members of the single market, are not disadvantaged.
I am sure the Prime Minister will welcome today’s news that the largest offshore wind farm in the world is to be built off the east Yorkshire coast by DONG Energy and Siemens. This will create up to 2,000 jobs in the Humber estuary and result in £6 billion of investment. Does this not show that, whatever the debate and frustrations around the right terms, it is in our country’s economic interest to be part of, and engaged in, the EU as a leading player?
I am delighted with that news, because the Government have given great support to Siemens and DONG Energy. We have—I think—the biggest offshore wind market in the world, because we have provided the regulatory certainty the industry needed. In the east of England, that has achieved not just one big factory, but the industrial regeneration of all the related industries. Irrespective of the outcome of the referendum, we have to make Britain the best place in the world to invest and grow a business. When the arguments come, I am sure many of those who want us to stay in a reformed EU will argue it will make us even more attractive, but we should wait until the starting gun is fired.
The scope and scale of the reform package reflect the key interests of a wide range of people in the Chamber. Does the Prime Minister agree that the important thing now is to make sure the details are legally binding and absolutely right and, above all, to sketch out the economic case for staying in the EU—not least the fact that more than half of our foreign direct investment comes from the EU?
My hon. Friend is right. The next few weeks will be about trying to secure this deal and nail down the details. If that is successful, there will then be the bigger arguments he refers to.
I suspect there will always be issues that divide the Prime Minister and me, but, on this, is not what matters the national interest and what he described as the greater prize? Is not one of the benefits of a document that is legally binding and ratified by the British people in a referendum that it will be the British people who decide? Had he gone for treaty change, could it not have been scuppered by referendums in France, Netherlands, Ireland and other EU member states whose publics might come to a different view from that of the British public?
I am grateful to the hon. Gentleman for his comments. Clearly, if agreed, this will be a legally binding arrangement, for the reasons I have given, but we are aiming in it for treaty change—on those things that need to change—the next time the treaties are altered. He makes a good point though: the more we can bring this together in one place and explain what it is about, the better the British people will see the force of the arguments.
Does the Prime Minister accept that if the UK left the EU, we could regain our seat at the World Trade Organisation, thereby regaining our voice and influence on this crucial body for global trade, which we lost when we became a member of the EU?
My hon. Friend is absolutely right that, outside the EU, one option would be to take our seat at the WTO. The only problem is that the WTO has not signed many trade agreements in recent years. Those have tended to be bilateral agreements, such as the EU agreement with Canada, which we hope is about to come in, and that with Korea. Of course, Britain could, independently, sign trade agreements, but we have to weigh up how much influence Britain has as a member of the EU—a market of 500 million people—when negotiating the biggest and best trade deals with the fastest-growing countries in the world.
I call Brendan O’Hara. No. He was here.
The German Government and the European car lobby see the renegotiation as an opportunity to water down new proposals on emissions standards and type approval. Does the Prime Minister accept that that would be unacceptable to British drivers, and will he ensure that it will not be a bargaining chip in the renegotiation?
There is no connection between this renegotiation and those directives. The only one I can see is the one I made earlier: for the good of our car industry and our consumers, Britain needs to be in the room when these decisions are made.
The Prime Minister has set out the many things that remain to be reformed, but if this grudging and threadbare deal is the best the EU is prepared to concede, what serious hope is there of meaningful renegotiation if or when we are tied in long term under a referendum?
I would make two points to my hon. Friend. First, this is not coming at the time of a more general treaty change; it is a one-off. We are the first Government, and I am the first Prime Minister, I can think of who from a standing start have achieved a unilateral agreement for the good of their country inside the EU. I do not think it is threadbare; as others have said, it is very solid. I am sure that treaty changes will be coming down the track—the process of reform is never fully completed—but there is no danger, once the agreement is signed and, I hope, confirmed in a referendum, of Europe running away with a whole lot of other plans for Britain, because we have the referendum lock. Nothing can happen to Britain without a referendum in this country. That was such an important piece of legislation back in 2010, but I think sometimes we forget about it.
The Liberal Democrats believe in the UK being in Europe, but we also believe in the EU being reformed, so I congratulate the Prime Minister and his team and wish them well in the remaining negotiations. When he is leading the campaign to stay in, will he remind the British public of the mutual defence clause and that, frankly, in this unstable world now would be an absurd time to turn our backs on our nearest neighbours and allies?
I thank the hon. Gentleman for his good wishes for the final stages of this renegotiation. This will be a big argument in the campaign. Like many on this side of the House, I have always seen NATO as the cornerstone of our defence, but as I said earlier, in the modern networked world the work we do, for instance in the Mediterranean to try and stop people leaving Libya and making the perilous journey to Italy, could be a NATO operation but right now it is a European operation in which Britain is playing a leading part. Being a member of networks where we can work together for our security is important.
Small and medium-sized enterprises are the absolute lifeblood of our economy and small business owners in Romsey and Southampton North are looking at the targets for regulation reduction with optimism, but what they are really seeking is a reassurance from my right hon. Friend that these are stretch targets and our real goal has to be to go beyond them and make sure there is a real-terms reduction in the amount of bureaucracy small businesses face.
My hon. Friend is absolutely right. What has been achieved so far is something like an 80% reduction in the number of proposals coming forward, but of course what we want to achieve is a reduction in the existing base of regulation and legislation where it is unnecessary, and that, again for the first time, is what we have secured targets towards.
Can the Prime Minister confirm that British women’s rights at work specifically around paid maternity leave, equal pay and anti-discrimination laws will remain firmly in place and will not be affected by any deal? For the same British women, may I ask for an update on how far his negotiations have got on the tampon tax?
First, I can give the hon. Lady that reassurance in terms of those guarantees and also the action we have taken domestically on things like shared parental leave, which I am very proud of and makes Britain a more family-friendly country. The tampon tax issue is difficult because of the VAT rules in Europe so I have nothing to add to what I have said before about that, but I totally agree about the desirability of trying to get it fixed.
May I join other colleagues in thanking the Prime Minister for all his work in negotiating a better deal for Britain in the EU? I agree with him that these reforms are a substantial and fundamental change to our relationship with the EU, but what assessment has he made of the impact of these reforms on the car manufacturing worker or the student who is looking at their Erasmus placement next year, as well as those who share similar concerns to those of a pensioner constituent of mine who contacted me yesterday and said, “What is the impact on my grandchild if we leave the EU?”
My hon. Friend is absolutely right. Inevitably these negotiations focus on important ideas and concepts of sovereignty and non-discrimination and deregulation and the rest, but we have to make sure this is a debate that is about consumers and how we are affected in terms of freedom to travel, freedom to study, the price of flights, the availability of roaming charges, and how we are affected, as my hon. Friend said, as pensioners and car workers and young people looking for university places. Hopefully, all the debate will engage with, and bring out, those issues.
The Prime Minister has outlined the action he has taken in UK-EU negotiations, but what is missing from his statement is any reference whatever to the fishing sectors, which are choked with bureaucracy and unable to fish fully the seas around the United Kingdom of Great Britain and Northern Ireland. Farmers have to wade through red tape just to farm. The fishing sectors and the farmers have a simple solution: have the referendum as soon as possible and let us rid ourselves of the outrageous and top-heavy EU and just say no to Europe. Can the Prime Minister tell us, and the fishermen and the farmers, today when the referendum will take place?
I cannot give a date for the referendum because we do not yet have an agreement in place. I would say that in recent years there have been quite significant improvements in the common fisheries policy, not least in dealing with the appalling situation of discards. As for farmers, let the debate begin; let’s hear from farmers and farmers’ representatives about what they think about the support they get, the actions we have taken to try to simplify the bureaucracy with fewer inspections and the rest. I look forward to hearing from all farmers and their representatives.
I thank the Prime Minister for a very good negotiation. This report is fantastic, but may I draw my right hon. Friend’s attention to section B? Does my right hon. Friend welcome Mr Tusk’s comments on competitiveness, which commit to “lowering administrative burdens and compliance costs on economic operators, especially small and medium enterprises, and repealing unnecessary legislation” That is what so many companies complain about. This is very welcome to all businesses, particularly those in Portsmouth who want to invest in Europe, and it is exactly the reason why we should be staying in this market which has over 500 million people.
I thank my hon. Friend for her remarks. Of course section B is important, but it is also worth looking at the draft European Council declaration on competitiveness which adds to section B and brings out some more details.
Obviously any referendum debate will centre on the bigger picture, the longer-term challenge and deeper interests, but as well as the issues raised by my hon. Friend the Member for South Down (Ms Ritchie), will the right hon. Gentleman address whether the package he has come up with to do with the changes in relation to child benefit will automatically extend to cross-border workers in a constituency like mine, where EU precepts apply?
I will look very carefully at that issue, but I seem to recall from conversations I had with the Taoiseach that there are particular arrangements for the common travel area. But I will come back to the hon. Gentleman on this.
The legal certainty that the Prime Minister referred to and the protections in the economic governance section of the document are very important to maintain the status of London as an international business and financial centre, but does my right hon. Friend agree that one of the risks to that position that would remain if this agreement were not successful would be the uncertainty of leaving a market which we can grow, improve and strengthen, and having then to try to get back into the market from the outside with uncertain cost, time and terms?
My hon. Friend, with his constituency, is right to talk about the importance of financial services and the City of London. We have 40% of Europe’s financial services here in the UK. The current arrangements work quite well because people can passport their way through to establish themselves in any European country, so those arguing for alternatives will have to answer some quite difficult questions about how exactly we put those sorts of protections in place.
Can the Prime Minister confirm he is now in receipt of a letter from my right hon. Friend the Member for Gordon (Alex Salmond) that makes it clear he does not believe six weeks is a long enough gap between national elections and the EU referendum? Clearly the misrepresentation that has happened is not intentional—we all accept that—but in order to set the matter straight, may I suggest that the Prime Minister and his colleagues are equally enthusiastic about circulating the actual views of the former First Minister, in particular his suggestion that the real reason the Prime Minister wants a June referendum is that a short campaign is designed to minimise the extent of the obvious divisions within the Conservative party?
First, I do not think four months is a short period of time. I think by the end of four months people might be heartily sick of the whole subject. But I notice that the thumbscrews and the other instruments of torture available to the current First Minister have clearly been applied to the former First Minister as we have seen a miraculous conversion—once six weeks was enough; now six weeks is not enough. I wonder what she did to him.
May I, too, thank the Prime Minister for giving the country the chance of a referendum? Does he agree that he, I and this Government are nothing more than tenants whose duty while we serve is to protect our island inheritance—our democracy, sovereignty and freedom—and that we have no right whatsoever to sell it all, let alone cheaply, to a bureaucratic and unaccountable institution like the EU?
We are tenants; my hon. Friend is absolutely right. That is why I think after 40 years of the British people not having a say when Europe has changed so much, it is right to give the British people a say again, and what I wanted to do was give them the very best possible chance to have a say—not between the status quo today and leaving altogether, but with an improved settlement and plan for Britain by which they can choose to stay in or get out.
Order. [Interruption.] I call Mr Tom Elliott—and he should not be diverted by the hon. Member for East Antrim (Sammy Wilson), who is sitting next to him.
Thank you very much, Mr Speaker. I will not be diverted, and I have no ties to offer either. One of the major drawbacks of the European Union for businesses is red tape and bureaucracy. I note that yesterday’s document stated that unnecessary legislation would be repealed. When will the public and our businesses be able to see which legislation is likely to be repealed?
As the document sets out, this will be an annual process. What is different about this is that, instead of just words about deregulation, two mechanisms are being put in place: one to enforce subsidiarity so that whole competences can be returned to member states, and one for burden-reduction targets. Those two things are new.
We on this side of the House want what is best for Britain when it comes to jobs and security. I have one vote, and I believe that there are aspects of the EU that need serious scrutiny and reform. My constituents share those thoughts. This party has provided this opportunity for a much-needed referendum and the reality of reform, and we can look at this and examine what is before us. Does the Prime Minister agree that voters want an open argument on this matter, rather than open warfare?
People want an open argument; they also want unbiased statistics and clear independent advice. So as well as there being an in campaign and an out campaign, once the deal is agreed—
Two outs.
Well, several out campaigns, as the hon. Gentleman says. Once the deal is agreed, we also need to ensure that independent organisations, businesses, non-governmental organisations and any others who think that they would be affected are encouraged to come forward and give their views.
The Prime Minister talks about strengthening all the national Parliaments. Will he tell us, in the spirit of seeing subsidiarity in action, what exactly that will mean for the Scottish Parliament?
We are currently giving the Scottish Parliament the immense responsibility of being able to raise its own taxes. We are still negotiating that, but it is probably the biggest act of British subsidiarity that we have had for many years, and I would urge the SNP to pick up the baton and run with it.
On the topic of in-work benefits, the Prime Minister has already said that the emergency brake is in the hands of the Commission. Does he agree that it would greatly help the “in” case if, over the next two or three weeks, he could get a slightly stronger commitment to apply that handbrake for a period into the future and not just initially? Secondly, on that topic, what would happen if we were to vote to stay in but the European Parliament did not subsequently ratify these measures?
On my hon. Friend’s latter point, the European Parliament is a party to these negotiations and I have had a number of meetings with it. If he looks at the draft declaration of the European Commission on the safeguard mechanism, it is very clear that we are justified in triggering the mechanism straight away. On his other point, he is absolutely right to say that we need to secure in the negotiations the best possible agreement on all the other aspects of the operation of this mechanism: how long it lasts for, how many times it can be renewed, and all the rest of it.
There were approximately 500 days between the announcement and the date of the Scottish independence referendum, which is roughly the same length of time between today and 23 June 2017. There are 30,000 British citizens living in European countries and claiming benefits, so how will this draft, permanent, still-to-be-negotiated, legally binding package affect them?
I can let the House into a little secret. The reason why there were 500 days between the announcement of the Scottish referendum and the referendum itself is that I was so determined that there was going to be one question and one question only that I granted the former First Minister, the right hon. Member for Gordon (Alex Salmond), the right to name the date. He wanted to make sure that the referendum took place after as long as possible, after the anniversary of Bannockburn, after everything—everything he could throw in. I have to say that, from my point of view, the result was still very clear.
Benefits as a pull factor for migration might have been blunted somewhat by these proposals but they have not been eliminated. Arguably the bigger pull factor for migration is our successful economy and job creation in the UK. Will the Prime Minister tell us what the draft proposals will do to enable the UK to control immigration from within the European Union in the long term, beyond the four years of the emergency brake?
On the long-term approach, we are dealing with the abuses of free movement with a more comprehensive package than ever before to deal with the fraudsters, the criminals and the sham marriages. We have the emergency brake which will deliver a four-year welfare brake, which I think is significant. Frankly, I am sure that the eurozone economies will start to recover over time; that has been one of the issues. In the long term, we need to do better at controlling immigration from outside the EU but we also need a welfare policy and a training policy inside our own country, which we increasingly have, to train up the people in this country to do the jobs that our strong economy is providing.
As one of the top five economies in the world, Britain has to have a world view, and we need friends and allies not just in one continent but in six. I agree with the Prime Minister that this should be a question not just about whether we could manage outside the European Union but about where we would be better off. With that in mind, what feedback has he had on his negotiations from our allies in the Commonwealth and from Britain’s wider networks around the world?
The advice has been pretty comprehensive from all of them: they value their individual relationship with Britain, but they think we are better off inside a reformed European Union. The Prime Ministers of New Zealand, Australia and Canada, the American President and others are all pretty clear about this—not simply because they think we are better off, but because they think the influence we bring to bear on the European Union is positive from their point of view.
The SNP, in rummaging for an argument, referred to a 1953 case, the case of MacCormick, and to obiter comments—that is, comments made in passing. May I remind the Prime Minister that he among EU leaders has unique up-to-date experience of tough negotiations that led to a referendum agreement, which in turn led to 55% of the Scottish electorate voting to keep the sovereign United Kingdom together? He should take comfort from that success, because those 55% will be voting, just like the English, the Welsh and the Northern Irish, to listen to the British Premier about what is in Britain’s best interests.
I am grateful to my hon. Friend. What these two referendums have in common is that, as a country, we should be confronting and dealing with these big issues. Does Scotland want to stay within the United Kingdom? Does the United Kingdom want to stay within a reformed Europe?
Just as important as the result will be the legitimacy of that result, and a high turnout will be essential. What can the Prime Minister do to engage with trade, industry and businesses to encourage them to discuss with their employees the implications of the outcome, whichever way the debate goes?
I will certainly do everything I can, in the event of a successful negotiation, to encourage engagement at all levels. I would also encourage businesses, charities and other organisations to ensure that they feel they can come forward. There are some in the business community who feel that that they will have to go through all sorts of corporate governance concerns, but I would advise them to get on with that process so that if they think they have important arguments to put forward to their workforce, their customers or their shareholders, they are able to do so.
A key question for many is whether the UK will be able to say no to European migrants when we need to. This draft Council statement spells out clearly that we will be able to do so on the grounds of public policy, public health and public security, which include legitimate goals such as reducing unemployment or the suspicion of marriages of convenience. Will my right hon. Friend confirm that this is a considerable step forward for our own immigration and security interests?
My hon. Friend makes an important point. If we read section D of the main document, we see that it is quite refreshing about the number of instances in which the control of migration and the limitation of free movement will be possible. That document bears careful reading.
I welcome the Prime Minister’s statements so far. I particularly welcome the fact that, for the first time in my lifetime, a Prime Minister is doing a deal in Europe and coming back to this country to give all the British people a chance to have a say on it, rather than just Members of Parliament. Can he reassure me that, even if people do vote to remain in the European Union on the basis of this deal, we will still have a vision that Europe should be doing less and doing it better?
I absolutely agree with that; the idea of Europe only where necessary but nation states wherever possible is absolutely right. There will be people who say, “Maybe we have addressed some issues of concern to the British people but there is more to be done.” Let me say again that that is a perfectly acceptable view, but I would argue that the “more to be done” should be done from inside the EU, rather than by us slamming the door and trying to do it from outside.
It is now clear from the renegotiations that Britain can improve its position within Europe by continuing to benefit from influence over a market of 500 million people, while maintaining our borders and preventing abuse of free movement. Is the Prime Minister as encouraged as I am by the very positive support that has come from business across the piece?
It is important that business raises its voice, particularly as regards jobs and investment. We need to demonstrate that this negotiation and this outcome can actually lead to a strong and more secure economy, for the sake not just of business, but of people who want security.
I congratulate my right hon. Friend on his statement. Is he aware that 90% of FTSE 100 chairmen would vote to remain in the European Union? Does he think that that is because they are part of some so-called “project fear”? Alternatively, is it because they run our very largest companies in the real world and know that a vote to leave is a vote for huge economic uncertainty and that a vote to remain, with the protections we will have on the single market and our currency, is a vote for our economy to go from strength to strength?
It is important that we hear the voice of business, both large and small, and I encourage all businesses to speak out because they have an important contribution to make to the debate. The more that people can give concrete examples of how access to this market and to the rules of this market matter, the better.
I thank the Prime Minister for his efforts to secure the best deal available. Today’s newspaper reports suggest that the changes needed to introduce an emergency brake would require approval from the European Parliament. Has he had an opportunity to assess levels of support among MEPs for these changes?
My hon. Friend is right in what he says. Obviously, it is a great advance that the European Commission has said that Britain qualifies for this brake, and if it existed now it would be brought in straightaway. As for the advice I have about the position of the European Parliament, I mentioned earlier that the head of the largest group in the European Parliament thinks this could be sorted out in a matter of months and is supportive of the approach.
The German captain of the ship that is the European Union has deliberately steered it into a migration iceberg with all the watertight doors open. Rather than just rearranging the deckchairs, would it not be better to direct the British people to the available lifeboat while the band is still playing and before the inevitable happens?
The analogy was getting quite complicated, but I do not agree with that. If we were not outside Schengen, my hon. Friend would have a very fair point, but we are in a situation where we are able to have the best of both worlds. Let us keep our borders and let us not let in foreign nationals who do not have a right to be here—that is strengthened by this agreement—but let us keep the free movement, so that British people can live and work in other European countries. That is the best of both worlds.
I wish to press my right hon. Friend a little further about the emergency brake, which sounded so hopeful some weeks ago. My hon. Friend the Member for Gainsborough (Sir Edward Leigh) talked about backseat drivers, but the concept of 28 feet reaching for the pedal, all wanting an influence, really means that when a hazard is seen, indecision will mean that an accident will surely happen. Does my right hon. Friend agree that it is far better to have independent control of the brake, the clutch, the accelerator and, indeed, the steering wheel?
First, the European Commission’s statement is very clear, saying that it “considers that the kind of information provided to it by the United Kingdom shows the…exceptional situation…exists in the United Kingdom today.” That would enable us to pull this brake to make sure that people could not get instant access to our welfare benefits. But there is another consideration that those thinking that we would be better off outside the European Union have to think about: when most of those countries outside the EU that want a close relationship with it ask for free access to the single market, the first demand is that there should also be the free movement of people. That is the case with Norway, for example. This is a deal from within and in many ways, even on this issue, it would be better than a deal from without.
In his statement, the Prime Minister outlines the work we have done to tackle migration from outside the EU. What conversations has he had with other European leaders about what they are doing to tackle the migrant crisis? Many of my constituents are very worried about the future implications of migration, particularly given that we are seeing such unsustainable levels of people coming into the UK at the moment.
My hon. Friend asks a crucial question that needs to have a full and proper answer. The arrival of these people on to the European continent does concern people. What I say is that, first, we do not have to allow into our country foreign nationals resident in other states. That is why we keep our border controls Let us consider, for example, the situation in Germany. Getting German citizenship can take as long as 10 years and it is the product of a lot of work, tests and everything else. We must therefore, first, keep our Schengen no-borders agreement and, secondly, continue to exclude people if they are not European Union citizens and they do not have a visa. Thirdly, I should say that the changes here that mean that we can crack down on the fraudsters, criminals and sham marriages, and on those who are trying to get round our immigration controls, put us in a much better place to deal with the pressures of the future.
It has been a long wait, Mr Speaker, but the voice of the Humber will not be silenced, as the Prime Minister said last week. He rightly said in his opening remarks that the British people are proud of their democratic institutions. Let me suggest to him that when they see British Ministers having to go cap in hand to Brussels to determine who receive benefits or who is allowed into the country, that pride is somewhat diminished. May I urge him further, in his final negotiations, to remain robust and achieve even more? Although he will not persuade me, he may persuade a few doubting people in Cleethorpes to vote to stay.
I am sure the voice of the Humber could help me with that, if he really wanted to. Britain is a member of a number of international organisations, some of which involve our having obligations towards them. We have ceded some of our sovereignty and our obligations to NATO, yet we do not see that as a cap in hand issue; we see it as a cornerstone of our security. What I am trying to secure here with Europe is that we are in the things we want to be in and we are out of the things we do not want to be in. If that is the case, we are not weaker, less powerful or less sovereign as a result; we are more able to get things done for the people who put us here.
rose—
Order. No, no, I am always very keen to hear from the hon. Member for Gravesham (Mr Holloway), but he only toddled into the Chamber some considerable way into the statement, as his puckish grin testifies. We will hear from him on a subsequent occasion. Perhaps we can just thank the Prime Minister for his patience and his courtesy. [Hon. Members: “Hear, hear!”] I would like to thank all colleagues for taking part. There will be many opportunities further to debate these important matters, but let us give thanks where they are due.
I beg to move, That leave be given to bring in a Bill to impose certain duties upon Her Majesty’s Government to ensure the accuracy, completeness and utility of electoral registers; to make provision for the sharing of data for the purposes of electoral registration; and for connected purposes As I am sure all hon. Members will agree, it is our job in this House to make sure that the citizens we represent can truly exercise their democratic rights, but, as we speak, British citizens in this country are being marginalised and excluded from the democratic process The problem is less about getting people to sign up and more about maintaining people’s registration. The people who are being excluded from the process are exactly the people we need to be prioritising. According to recent trends, we are witnessing further marginalisation of already marginalised groups, including those from poorer backgrounds, those who are disabled and those from ethnic minorities. Research published just yesterday showed that pensioners in the shires who own their own home have a 90% chance of being on the electoral register, whereas a young man from an ethnic minority background in private rented accommodation in a city has less than a 10% chance of being registered. Meanwhile, the Prime Minister has launched an important drive against “overt, unconscious or institutional” racial discrimination, in university admissions, the justice system and the police. However, the fact that people from ethnic minorities are far less likely to be registered to exercise their democratic rights undermines the Government’s commitment When it comes to electoral registration, the picture across the country is bleak. I celebrate the work of my hon. Friend the Member for Ashfield (Gloria De Piero), who has raised the issue of voters dropping off the register. Since the introduction of individual electoral registration, a staggering 800,000 people—1.8% nationwide—have dropped off the register. To put those figures into context, Liverpool has seen a drop in its eligible register of 14,000, Birmingham 17,000 and Lewisham 6,000, and those are all areas that have seen an increase in population The situation is even worse in areas where the population is transient, such as in university towns. Canterbury has seen a huge drop of 13% in those registered to vote. Cambridge has seen a drop of 11%, which means that its electorate is now smaller than it was in 2011. Those drops are the result of the absurdities of the current system. I ask Members to imagine what it would feel like if, every time they started a new job, they needed to apply for a new national insurance number and to prove to Her Majesty’s Revenue and Customs again and again that they were eligible to pay tax and NI. They would find the process cumbersome, costly and repetitive—just as the process of IER is In sum, these developments mean that British citizens, particularly those who are on the sidelines, are being disfranchised and denied their democratic rights. It also means that, as the pool of potential voters decreases, our political status quo becomes more limited. If the Government are serious about combating social exclusion, they urgently need to review that dire situation. Disfranchisement is marginalising the already marginalised Being on the electoral register is the closest thing that we have to a civic contract. Those who are not on the register will not have access to mainstream loans, and they might not be able to get a mortgage either. They also cannot serve on a jury and be part of our justice process. Most fundamentally of all, if a person is not on the electoral register, they cannot participate in the democratic process Our present system of electoral registration is fundamentally flawed, and it is not cheap, with IER roll-out costing at least £108 million, but it does not have to be that way. Automatic electoral registration provides the opportunity to reduce costs, improve administration, cut bureaucracy and enable everyone to access their right to enfranchisement The Bill is a statement of common sense, proposing a cheaper, simpler and more effective model. It places a responsibility on the state to do everything in its power to ensure that the electoral database is full and complete; imposes a duty on the Government and public bodies to work better together; and proposes to make the system truly convenient for the citizen by integrating national and local datasets, which will mean that an individual’s address details would be automatically updated according to trusted datasets. The trusted datasets would collate information at each point that a citizen interacts with the state—whether it is when they pay a tax, receive a benefit, use the NHS or claim a pension The walls between datasets used to be sacrosanct, but they are falling away more and more as the Government prioritise security and anti-fraud measures. For instance, the housing benefit Department already uses the electoral register to find households that are claiming the 25% single-persons council tax discount, but that have more than one voter registered there. That demonstrates the huge potential when Government Departments and public bodies communicate with one another These reforms would vastly improve registration, and have been tested elsewhere. A very similar model operates in Australia, with huge success. For instance, the state of Victoria has a population of 3.5 million people and a 95% accuracy in its registration process. It does that at extremely low cost, employing just five members of staff to maintain the rolling register. Rolling out this reform in the UK is timely for so many reasons Greater Manchester will submit to the Cabinet Office next week its plans to pioneer that system of automatic electoral registration, and its proposals for a pilot scheme. I sincerely hope that the Government will support those plans and introduce the primary legislation on data sharing that is needed to ensure that the pilot can go ahead I am sure that Members are aware that this is the week of Bite the Ballot’s national voter registration drive. Last year’s drive saw almost half a million people register to vote, making it the most successful voter registration campaign ever. I hope that the results this week will match that achievement. In the long run, though, voter registration should be the responsibility not of charities or non-governmental organisations, but of the state, which should do all it can to ensure that everyone, especially those who are most marginalised, can access their democratic rights I hope that Members will consider this a non-partisan issue and agree that it is in all our interests to get more people signed up. Then we can all get on with our job, as representatives of political parties, to try to persuade and enthuse voters that we are worthy of their vote. At a time when social exclusion is getting worse, voter turnout is declining and IER has caused registration to deplete, automatic voter registration has never been more important. Voting is the backbone of this House, and it is one of the most important interactions between the citizen and the democratic state. It is a fundamental symbol of engagement, as it signifies that you are not on the margins of society, but part of the majority. No longer can we accept a system that excludes and marginalises potential voters, not least because they are exactly the groups with which we need to engage to end social exclusion I do not think that it is controversial to argue that voting is not just for the elite; it is something that we should all be able to access. That is why, for the sake of our democracy and of social cohesion, I hope that the Government will support my suggestions, and make registering to vote more, not less, a way of life Question put and agreed to. Ordered, That Siobhain McDonagh, Ian Austin, Dawn Butler, Rosie Cooper, Jim Dowd, Jim Fitzpatrick, Mr George Howarth, Chris Leslie, Marie Rimmer, Joan Ryan, Mr Virendra Sharma and Ruth Smeeth present the Bill Siobhain McDonagh accordingly presented the Bill Bill read the First time; to be read a Second time on Friday 5 February, and to be printed (Bill 127 ).
I beg to move, That this House notes the agreement reached between HM Revenue and Customs and Google to pay £130 million in respect of taxes due over the period 2005 to 2015; and calls on the Government to publish the full details so that the British public can judge whether this is, as stated by the Chancellor of the Exchequer, a major success; and further calls for a swift international agreement to implement country-by-country reporting of company accounts I welcome the Minister who is responding to the debate. I truly sympathise with him as he has been placed in this situation by the Chancellor. I understand that the Chancellor is in Rome today. If it is true that he is associated with the current EU negotiations on the future of our relationship in Europe, may I say that it is unfortunate to say the least that securing a firm agreement on tax avoidance and evasion has not been a core issue in those negotiations so far. It could be a significant missed opportunity for this Government We have called this debate today because, over the past 12 days, we have witnessed the most supine capitulation to corporate interest by any British Government in the recent history of this country. Understandably, it has caused immense anger within our community among individual taxpayers, businesses small and large, independent commentators and people across the political spectrum. At a time when many of our constituents were filling in their tax returns and paying their taxes, they saw what the Government were allowing Google to get away with.
I will give way in due course, but may I remind Members that this is a time-limited debate and I wish to press on as quickly as I can? Of course Members will have the opportunity to engage On the Friday before last, Google announced late in the day by press release the company’s tax deal with HMRC. Google celebrated a deal comprising a payment of £130 million to HMRC in respect of taxes from 2005 to 2015. Astoundingly, in the early hours of the morning, the Chancellor was in an equally celebratory mood and tweeted that this was a “victory”—a major success.
I will give way in due course. Calm down The Google deal and the Chancellor’s exultation about it were immediately received with incredulity by independent tax analysts—understandably. The Chancellor and HMRC were all too keen to publicly parade the deal, but when challenged to release the detail of it, hid behind confidentiality conditions.
What assessment does the shadow Chancellor make of the Labour Government, who were in charge of taxation during part of that period?
I am grateful for the intervention. The hon. Gentleman probably knows that I was not the most enamoured of the Labour Government’s track record during that period, but it was a Labour Government who started this inquiry and the hon. Gentleman’s Government took six years to complete it. According to a recent estimate by the Financial Times, the measures introduced by the Labour Government will reap 10 times the amount of tax that this Government have secured.
Will not many of our constituents find it difficult to understand the fact that this information is largely in the public domain? We know the profits, assets and liabilities of Google in the United Kingdom because those finances are public. We also know how much tax is being paid. Does that not lead us to the conclusion that the tax rate is 2.77%, not 20%?
Let me come on to that point It did not take long for independent analysis to show what a derisory sum the Google tax payment was. The word “derisory” is not just my description, but the word used by the hon. Member for Uxbridge and South Ruislip (Boris Johnson), the Mayor of London, as well as many others. Google had a UK turnover of approximately £4 billion in 2014-15. If profits here were similar to those across the whole group, about a 25% return, that implies £1 billion-worth of profits. If the standard 20% corporation tax is levied, that implies a £200 million tax bill for the one year, not the £200 million paid by Google for the decade. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, independent assessors have estimated that the Google tax rate for the past decade was 3%.
Companies such as Simworx in my constituency are extremely successful at selling products around the world that are based on their intellectual property developed in the UK. Does the shadow Chancellor think the profits from that intellectual property should be taxed in the country where those products are sold, or here in Britain?
The economic activity definition has to be examined when profits are assessed. I will come on to that point because it is valid and reasonable.
Let me press on as we are time-limited It is no wonder that local small businesses and taxpayers in all our constituencies feel so strongly that the arrangement with Google is grotesquely unfair. They have not been allowed to ignore their tax demands for a decade, then negotiate a sweetheart deal at mates’ rates. It show who counts with this Government that, in the month when they let Google pay a paltry sum in back tax, they lose in court in their pursuit of disabled people over the issue of the bedroom tax, and then they decide to appeal the court decision so that they can persecute some of the most vulnerable and the poorest people in the land over a relatively insignificant sum. That demonstrates to us a bizarre, upside down and callous sense of justice and fairness.
Does the shadow Chancellor agree that what compounds the sense of unfairness that our constituents feel is that the tax gap has been estimated by many to be well over £100 billion, and at the same time this Government are cutting HMRC offices and at the weekend announced compulsory redundancies for tax collectors? How on earth can we narrow the tax gap when that is happening?
I will come to that in my recommendations for the future.
Under Labour, hedge fund managers were routinely paying a lower rate of tax than their cleaners because Labour was a soft touch on tax. Is not the hon. Gentleman’s argument just political opportunism on stilts?
I am not sure whether the hon. Gentleman was listening. I just answered that point by reference to my critique of the Labour Government. I convened the Tax Justice Network campaign meetings in this building, and I have campaigned for 18 years. The FT assessment is that the measures introduced by the Labour Government will reap 10 times as much as anything introduced by this Government Let me press on. Last Monday, to get some answers about the Google deal, I tabled an urgent question to the Chancellor, and I am grateful that Mr Speaker granted the question. Typically, the Chancellor failed to turn up and the Minister was left to defend this “victorious” deal. By that time, No. 10 was furiously distancing itself from the Chancellor. Within 72 hours the Google deal had gone from “a major success” to merely “a step forward”, according to No. 10. I see that this weekend the Business Secretary was describing the deal, with masterly understatement, as “not a glorious moment” Yesterday Ruth Davidson, the leader of the Scottish Conservatives, said: “It doesn’t feel fair. And in our hearts, I think we all know it isn’t fair.” I agree wholeheartedly During the urgent question discussion last Monday the Minister was specifically asked by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) whether he knew the rate of tax that Google was paying. He said bluntly, “No.” We heard the assertion that the HMRC calculation of back tax was on the basis of tax levied on profits as a result of an assessment of economic activity. That implies very little economic activity in Google UK. That argument wore a bit thin when it was pointed out that Google employs 2,300 staff in the UK on average earnings of £160,000, and is building a new headquarters in addition to the two it already has.
May I join the shadow Chancellor in demanding more transparency? I have been contacted by people in my constituency who are concerned that the Government are creating a loophole especially for Google and nobody else. We in the House and in this country deserve full transparency on this deal.
I will come on to the recommendations for future action, which cover my right hon. Friend’s point.
Will the hon. Gentleman give way?
In due course; let me press on a little further As last week wore on, there was a growing sense of outrage at the Google sweetheart deal. Many felt betrayed by the Chancellor. We supported the Chancellor on the introduction of the diverted profits tax legislation to tackle firms using complex profit-shifting schemes to avoid tax. It was referred to as “the Google tax”. We learned last week that Google will not be paying a penny under that legislation We also supported the Chancellor in seeking international agreements on tackling tax avoidance, but we discovered at the weekend that Conservative MEPs had been directed by the Chancellor on at least six occasions to vote against the very tax avoidance measures being introduced by the EU that the Chancellor told us he was supposedly promoting.
I know the shadow Chancellor seeks consensus when he can and I am listening to what he says. I have been doing some totting up and I reckon that there have been about 40 changes to tax law since this Government have been in office, which has led to about £12 billion being raised since 2010. For the record, does he welcome that?
Of course; I have welcomed that. I have just been saying that I have supported the Chancellor on each piece of legislation that he has introduced to tackle tax avoidance and tax evasion. This deal flies in the face of everything the hon. Gentleman and I have been supporting in the Chamber.
Last year Google funnelled £8 billion-worth of royalty payments to Bermuda. Does my hon. Friend believe that the British Government should be doing much more to crack down on tax havens, particularly those that are British overseas territories?
I will address the Bermuda question, so if my hon. Friend waits a few minutes she will hear just how shocking the situation really is The Chancellor appears to be missing an opportunity in the EU negotiations to secure a robust international agreement to tackle tax avoidance and tax evasion, which Members across the House have been calling for.
I am going to press on We all supported the changes to public procurement rules that enabled the Government to prevent public contracts from being awarded to companies found to be engaged in tax avoidance schemes. Staggeringly, it is understood that no company has been denied a public contract on those grounds and that, even though its tax affairs were under such lengthy investigation by HMRC, Google was awarded public contracts to supply services—who to?—to HMRC.
On the point about international agreements, the United Kingdom Government have been at the forefront of the base erosion and profit shifting initiative. Richard Murphy, who describes himself as the author of Corbynomics, told the Treasury Committee yesterday that he was “pleased and very surprised” by the progress the Government have made since 2010.
I support the Government in that action, but this deal flies in the face of that action and undermines the agreements that we are trying to make Over the weekend we also heard from Mr Jones, the Google whistleblower. In his view, HMRC ignored his exposure of Google’s tax avoidance methods. That evidence was received by the Treasury Committee on a cross-party basis We all accept that the existence of tax havens and the complexity of national tax systems present an ongoing challenge to national Governments. As a result, we have all supported the negotiation of international agreements on tax collection. The UK is a signatory to some of these. As the hon. Member for Croydon South (Chris Philp) said, the Government have agreed in successive steps to abide by the base erosion and profit shifting programme under the auspices of the OECD. We supported that.
Let me press on, because time is short At the end of last week, the UK joined 30 OECD partner countries in signing up to the multilateral competence co-operation agreement. We supported that. That is the kind of international co-operation, albeit limited, that will help close the loopholes and ultimately close down the tax havens. It is the kind of agreement that we have backed for years and that we support the Chancellor in undertaking, but last week, by allowing the special treatment of one company, the Government drove a coach and horses through the entire international approach. As the EU’s Competition Commissioner suggested, that could amount to unlawful state aid. The UK is now being depicted across Europe as a tax haven. It risks establishing a race to the bottom in which all countries seek to outbid each other to offer the lowest possible taxation. We have written to the Competition Commissioner to request a formal investigation of the deal.
Does the hon. Gentleman not accept that this Government have done more than the previous Labour Government to close those loopholes? He says that he did not agree with the previous Labour Government, so will he tell us what he did to oppose those measures and raise the matter when he was in Parliament?
I know that the hon. Lady was not here at the time, so perhaps she should check my voting record throughout my 18 years in this House. I do not want to keep on repeating this. I wanted both Governments to go further, but an independent assessment has shown that the legislation introduced by the previous Labour Government will drag in 10 times more in tax than the current Government’s legislation, and even then I wanted to go further. We should at least accept the independent assessment that has been made.
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I am going to press on, because time is short I have written to the Competition Commissioner to request a formal investigation of this deal. There was a visible flicker of life from the Chancellor a few days ago. In the pages of Monday’s Financial Times he let it be known that he might, after all, favour country-by-country reporting for multinational corporations. Tax experts and campaigners and I have long argued that this is a vital step towards transparency, and therefore towards fair collection. By revealing in their accounts in which tax jurisdiction their revenues were earned, a proper rate of tax can be applied to multinational companies. If the Chancellor now supports country-by-country reporting, I welcome that. However, the impression was given that even without international agreement the Government would act. Is this the case, or was it just a publicity stunt that has now been dropped My hon. Friend the Member for Leeds West (Rachel Reeves) referred to Bermuda. On the “Andrew Marr Show” on Sunday a senior Google representative revealed that the company has £30 billion of profits resting in Bermuda, a British overseas territory. This is in order to avoid US tax rates. We now know that the Chancellor has been lobbying the EU and instructing his MPs to vote against anti-avoidance measures against Bermuda. It is a disgrace It was also revealed last week that Government Ministers have met Google 25 times over the past 18 months. I note that the Prime Minister himself has spoken at Google’s conference not once, but twice. If Ministers are to meet anyone, my advice is that they go and meet the trade union representatives of HMRC staff. With almost half the workforce having been laid off, and with offices having been closed across the country, it is widely known that morale is at rock-bottom, especially with the loss of highly experienced and expert staff. [Interruption.] Madam Deputy Speaker, a reference has just been made to declaring an interest. I have no interest to declare. I think that was a reference to the Public and Commercial Services Union and part of its trade union group. It does not fund the Labour party or my constituency. There is no interest to be declared We cannot allow the Government to go on like this. Trust and confidence in our tax system is being undermined. Every pound in tax avoided by these large corporations is a pound taken from the pockets of honest taxpayers. It is also a pound not spent on our schools, our NHS and our police. We need a real tax reform agenda, based on the principle of complete openness and transparency. First, that means, as a start, the publication of the details of this deal in full, so that we and our constituents can judge whether it is fair enough. Secondly, we need real country-by-country reporting of a company’s activities, and not just a secret exchange of information between tax authorities, but full publication so that we can all judge.
The shadow Chancellor said that he would set out his ideas, and I had hoped that he would talk about a more revolutionary change to the methods of taxation. With the massed ranks of corporate lawyers put up against national tax jurisdictions, it is an uneven battle, so perhaps we need some more radical thinking altogether.
The hon. Gentleman has taken an interest in this matter over many years and has regularly been in debates with me in this Chamber. I fully agree that we need a more radical approach Let me complete the recommendations briefly, because I think that they will open up a much wider debate. Thirdly, we need an end to mates’ rates and sweetheart deals with major corporations. Tax law should be applied fairly whatever the size of the company. Fourthly, we need full transparency in the relationship between Ministers and companies, so I want to see publication of all the minutes of all such meetings. Fifthly, we need firmer action to curb the tax avoidance industry, so action should be taken against the advisers when the tax avoidance schemes they designed are found to be unlawful by tax tribunals and courts. The same advisers advise Her Majesty’s Treasury and help write our tax laws. That is unhealthy and unacceptable.
Will the hon. Gentleman give way?
I cannot give way, because I am concluding my speech Sixthly, we clearly need independent scrutiny of HMRC and the implementation of taxation policy overall. Let us now explore the establishment of a cross-party committee, along the lines of our Intelligence and Security Committee, to perform that role. Finally, we need an end to the counterproductive staffing cuts and office closures at HMRC For most of my time in Parliament, I have been campaigning for a fair tax system that secures tax justice. Of course companies such as Google make a significant contribution to research and development and through the employment they provide, and I welcome that, but we expect all companies to play fair when it comes to their tax responsibilities. I am unable to accept the Government’s amendment because it fails to support our key demand for openness and transparency. The amendment would remove Labour’s central demands for publication of the Google deal and the adoption of full public country-by-country reporting. If anything good is to come out of the sordid deal that the Government cut with Google, I urge Members of this House to use this opportunity to secure a just, fair, open and transparent system of taxation for our country and to start that process by backing our motion today.
I have to inform the House that Mr Speaker has selected the amendment in the name of the Prime Minister Before I call the Minister to move the amendment, I should tell the House that a great many people have indicated that they wish to catch my eye this afternoon. More than 20 hon. Members wish to speak, and this debate will last for considerably less than two hours. There will be a time limit of three minutes initially on Back-Bench speeches. [Interruption.] There is no point in people complaining about it—that is the amount of time there is. There will be three minutes and, even then, not everyone who wishes to be called to speak will be called to speak I say, very importantly, to the House that people who have intervened and taken part in the debate must remain in this Chamber for the whole of the debate—leaving for the odd five minutes is fine—because they are taking up time that other people, who have sat through the whole of the debate, will then not have. This is nothing to do with old-fashioned rules or conventions—it is simple courtesy by one Member of Parliament to another. I call Mr David Gauke to move the Government amendment.
I beg to move an amendment, to leave out from “House” in line 1 to end and add: “notes that the Government has taken action to promote international cooperation in relation to clamping down on tax avoidance by multinational companies, challenging the international tax rules which have not been updated since they were first developed in the 1920s, that multilateral cooperation at an international level has included the UK playing a leading role in the G20-OECD Base Erosion and Profit Shifting Project to review all international tax rules and increase tax transparency, and as part of that, the UK was the first country to commit to implementing the OECD country-by-country reporting model within domestic legislation, that the Government recognises the case for publishing country-by-country reports on a multilateral basis, that the Government has introduced more than 40 changes to tax law, that the various measures taken by the Government have included the introduction of a diverted profits tax aimed at targeting companies who use contrived arrangements to divert profits from the UK, stopping the use of offshore employment intermediaries to avoid employer National Insurance contributions, stopping companies from obtaining a tax advantage by entering into contrived arrangements to turn old tax losses or restricted use into more versatile in-year deductions, and requiring taxpayers who are using avoidance schemes that have been defeated through the courts to pay the tax in dispute with HM Revenue and Customs upfront, and that the Government is committed to going further, enabling HM Revenue and Customs to recover an additional £7.2 billion over the Parliament.” It is a great pleasure to move the Government’s amendment. There is much that we have heard from the Labour party today on this subject that is wrong, confused and, to put it kindly, oblivious to the record of the last Labour Government. However, before addressing those points, I hope to strike a note of consensus. Both sides of the House believe that all taxpayers should pay the taxes due under the law. Both sides believe that taxpayers should refrain from contrived behaviour to reduce their tax liabilities, and all taxpayers should be treated impartially. That is why the Government’s record is one of taking domestic and international action to tackle tax avoidance I will set out details of that action, but first I want to address another issue. The shadow Chancellor’s approach has generated more heat than light, and often reveals a complete misunderstanding of how the corporation tax system works. Let me take this opportunity to explain to the House how it does, in fact, work The independent Institute for Fiscal Studies, in a paper it published last week, puts it well: “The current tax rules are not designed to tax the profits from UK sales. They’re certainly not designed to tax either revenue or sales generated in the UK. They are instead designed to tax that part of a firm’s profit that arises from value created in the UK. That is the principle underlying all corporate tax regimes across the OECD.” I make that point because it is fundamental to understanding the tax we are entitled to receive from multinational companies. It is not a point that the shadow Chancellor appears to have grasped Let me give an example of why this matters, and it is similar to the point made by my hon. Friend the Member for Dudley South (Mike Wood). The UK is home to one of the most successful video games sectors in the world. Would it be fair for a firm to design a game here, develop it here and take the risks here, but to go on to sell it overseas and then have to pay corporation tax on all that activity in the country in which it makes the final sale, and not in the UK? The current international tax arrangements are clear that such profits are taxed in the UK—the place of economic activity—rather than in the place where the sales are made. That is the internationally agreed and internationally applied concept of corporation tax. That is the law that HMRC applies. Quoting numbers to do with revenues or profits from sales, as opposed to activities, demonstrates a lack of understanding of how the tax system works, or—and this is worse—an understanding of the way the tax system works, but the hope that those following these debates do not.
Is the Minister saying that Google employs 2,300 staff in this country on an average salary of £160,000, and they cannot be defined as involved in economic activity or as adding any value? What are they doing? Playing cards all the time? Are they not actually involved in economic activity—this sizable proportion of the Google workforce?
The point I am making is that the shadow Chancellor goes around quoting numbers based on profits from sales. To be fair, he went through the methodology carefully in the House today, but that methodology appears to be based on a complete misunderstanding of how the tax system works.
I do not misunderstand how the corporation tax system is applied, but without information from HMRC, and without publication of the deal, it is difficult to know exactly how much tax Google should be paying. That is why we are seeking answers. Also, there have been $8 billion of royalty payments to Bermuda. Does the hon. Gentleman really think that that is where the economic activity is and where the value is being added?
I will deal directly with the issue of transparency in a moment On the issue of how our international tax system works, I have explained that it is based on economic activity. However, I would be the first to say that that international tax system needs to be brought into the modern world. That is the very reason why the UK has led the way on the base erosion and profit-shifting process. We should also be aware that there are particular issues with the US tax system, which is failing to tax intellectual property developed in the US in the way that it should I gave the example of video games companies. However, I recognise that there are many cases that are much more complex, and where it is not so easy to identify where the economic activity takes place. There is an issue about where multinational companies allocate their profits and where they identify economic activity as taking place. There is a need to address that, which is why we need tax rules that genuinely reflect where economic activity takes place, to ensure that profits are aligned with it. However, that is a very different matter from making big claims about profits from sales and saying that those sales profits have to be taxed where the sales take place. That is the misunderstanding I wish to address.
The Minister is right, of course, that these issues are sometimes very complicated. However, sometimes there are loopholes that are exploited. Will he identify some of the loopholes closed by this Government that were opened by the previous Labour Government?
There is a whole host I could draw attention to, but in the interests of time, I will not run through that lengthy list. I have it here, and there are quite a number of cases—there are 40 I can identify straightaway—where there were loopholes, and we have tried to address that The diverted profits tax—I will come back to this again in detail in a moment—is designed to ensure that, where companies divert their profits away from the UK, and where the economic activity is happening in the UK, we get some of the tax yield.
The difficulty with the economic activity test the Minister talks about is that it is intrinsically judgmental, and that gives us many of the issues that we try to grapple with. The test came in in the 1920s, way before the internet. Might it not be a way forward to move more towards taxing sales and, if necessary, dividends, with less on corporation tax, which would take these judgments away?
The first point to make is that this is a debate on the operation of the tax law as it stands, not on how people might want it to be, and to be fair to HMRC, it can only collect the tax that is due under the law as it stands, not as how people might want it to be. On reform of this area, there is no reason why we should not debate these matters. However, with regard to a move towards taxing profits on the basis of sales—there is a perfectly respectable case for reform in that direction—I would be worried about the impact on, for example, the UK’s creative and scientific sectors. I have mentioned the video games sector, and one could also look at pharmaceuticals. There are a number of areas where the UK—businesses in our constituencies—would lose out in those circumstances, so I would be a little wary about it.
May I bring the Minister back to the fundamental point about transparency? It would make this debate much easier and more useful if he published the details of this deal in full so that we can be sure that we are not talking about mates’ rates and a special tax loophole for Google.
I will come on to transparency, but let me first return to this Government’s record on changing domestic law and leading the way in updating the international system This Government have led internationally on the G20 and OECD base erosion and profit-shifting project, making the international tax rules fit for the 21st century. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer, in particular, took on highly prominent roles in initiating those discussions and taking them forward through the G20 and the OECD. The outcome will be to level the playing field among businesses, give tax authorities more effective tools to tackle aggressive planning, and help us better align the location of taxable profits with the location of economic activities and value creation. This is a major step forward in addressing the underlying causes of aggressive tax avoidance We have been at the forefront of implementing this agenda, acting swiftly to change the rules on hybrid mismatches and country-by-country reporting. Because we consider it important not to rely solely on international rules, we have also legislated domestically to introduce a world-leading measure to address the contrived shifting of profit from this country—the diverted profits tax. The diverted profits tax targets companies that divert profits from the UK, principally those with substantial activities in the UK who are trying to avoid creating a UK permanent establishment. Under our rules, those companies either declare the correct amount of profits in the UK and pay the full amount of corporation tax on them, or risk being charged a higher amount of diverted profits tax at a rate of 25%. By the end of this Parliament, the diverted profits tax will raise an extra £1.3 billion, both directly and as a result of associated behavioural changes. The tax is already having that effect, and multinationals will pay more corporation tax as a result.
Of course, the diverted profits tax was referred to as the Google tax. My hon. Friend the shadow Chancellor has alleged that under the terms of the deal Google will not pay a penny. Is he right about that?
The purpose of the diverted profits tax, which came into effect in April, is to ensure that companies stop diverting their profits and pay corporation tax like everybody else. I repeat that I cannot talk about the Google case beyond information that is in the public domain, but if this tax is effective in driving companies to stop diverting their profits, it is a success.
The Minister refers to the Government’s record over the past Parliament and this one, but he has not mentioned the changes to the controlled foreign companies rules, which favoured a number of companies at the expense of the Exchequer and, in net terms, at the much greater expense of exchequers in developing countries.
The controlled foreign companies regime was driving business out of the UK, whereas now businesses are looking to locate their headquarters in the UK, and I am pleased about that.
The Minister is making a very important point about the diverted profits tax. It is important that Members on both sides of the House recognise that this extremely important development was brought in by this Government, and that it is not correct to say that Labour Members supported it, because at the time, a year ago, their position was that it was not wise to bring it in until the BEPS process was completed, which it still is not. Had we taken the advice of the then shadow Chancellor and shadow Chief Secretary, there would be no diverted profits tax, and the points made by Labour Members would be irrelevant.
I am grateful to my hon. Friend, who reminds the House of an important point. When we brought in the diverted profits tax, the intention was clearly to make sure that we got more money being paid in corporation tax. We want to stop companies diverting their profits out of the UK, and we are leading the way in bringing forward legislation on this Let me address the shadow Chancellor’s point about resources for HMRC. We have invested heavily in HMRC’s ability to strengthen its anti-evasion and compliance activity, including through extra funding and hiring professionals whose area of expertise is multinational companies. For example, contrary to the impression that he gave, the number of people working in HMRC’s large business directorate has gone up, since it was formed in 2014, from 2,000 to 2,600 people. We believe in competitive taxes—that is why we have cut our rate of corporation tax so that it is the lowest in the G7—but we also believe in making sure that those taxes are paid I turn to the issue of transparency raised by several hon. Members. Taxpayer confidentiality is a fundamentally important principle of our tax system, as in the tax systems of every other major economy. We hear complaints that HMRC is not disclosing full details of the settlement. HMRC is prevented by law from disclosing taxpayer information. The resolution of tax disputes, however, is subject to full external scrutiny by the independent National Audit Office, which has reviewed how tax inquiries are concluded by HMRC. In 2012, it appointed a retired High Court judge, Sir Andrew Park, to investigate HMRC’s large business settlement process. Sir Andrew concluded that all the settlements he scrutinised “were reasonable and the overall outcome for the Exchequer was good.” I do wish that those who are so keen to accuse HMRC and its staff of sweetheart deals were as keen to look at what happens where independent scrutiny occurs in order to see that in fact there are no sweetheart deals. HMRC introduced—
rose—
Let me just make this point. [Interruption.] I will give way to the hon. Lady.
I am grateful to the Minister, who is doing his best in a difficult situation. However, Ministers are not barred by law from publishing the minutes of meetings that they have, so could he now publish the minutes of all 25 meetings that Ministers have had with Google?
We have a very open and transparent arrangement for disclosure of meetings. I am very clear that when it comes to determining the tax liability of a company such as Google—or, indeed, any other taxpayer in this country—there is no ministerial involvement. HMRC is entirely operationally independent. There is no ministerial interference in such areas, and no suggestion that there would be. When it comes to determining the tax bill of any taxpayer, it is a matter of HMRC enforcing the law; it is not for ministerial involvement. HMRC introduced new governance arrangements for significant tax disputes in 2012 to provide even greater transparency, scrutiny and accountability. They included the appointment of a tax assurance commissioner to ensure that there is clear separation between those who negotiate and those who approve settlements. The tax assurance commissioner oversees the process and publishes an annual report on his work Let me be absolutely clear. There are no sweetheart deals, and there is no special treatment for large businesses. HMRC resolves disputes by agreement only if the business agrees to pay the full amount of tax, penalties and interest. Otherwise, it is a matter for the courts—an arena in which HMRC has a strong track record of fighting and winning.
I am grateful to the Minister for his assurance that there are no sweetheart deals, but if the process is so independent and Ministers are so far removed from it, how can he give us that assurance? Similarly, how was the Chancellor able to hail the deal as a major success?
We have in place strong governance. The NAO has looked in the past at settlements when accusations have been made of sweetheart deals, and those accusations have been dismissed. It is very clear that HMRC’s remit is to get the tax that is due under the law, and no one has ever produced a shred of evidence to suggest otherwise; they have merely displayed a prejudice against HMRC staff and a tendency to insult them.
I want to make a little progress, but let me give way to my hon. Friend the Member for Croydon South (Chris Philp).
Does the Minister agree that the reason why this announcement is welcome is that we collected £130 million of tax from Google, while Labour collected nothing?
It certainly appears that next to nothing was collected in that case.
Will the Minister give way?
I must press on. Tax avoidance is a global issue, which requires global solutions. Fruitful partnerships with other countries on the matter are part of the reason why the Government have been at the forefront of efforts to increase tax transparency. That appeared last year in the Conservative party manifesto, in which we pledged to “review the implementation of the new international country-by-country tax reporting rules and consider the case for making this information publicly available on a multilateral basis.” The Government are dedicated to increasing tax transparency, and we have already taken action. Just last week, the UK signed an agreement with 30 other tax administrations to share country-by-country reports from next year. We want such agreements so that information can be made public, as we spelled out in our manifesto. We will continue to lead any multilateral debates on tax transparency, as we have done in so many areas of international tax avoidance Reforming the international and domestic rules, investing in HMRC’s capacity and leading the way on global tax transparency—those actions were taken by this Government, but were sadly lacking during 13 years of Labour. The result of those actions has been £130 million to the Exchequer from Google, on top of the tax already paid. Under Labour, that sum was next to nothing. That is testament to the importance we have given to tackling the tax risks posed by multinational enterprises. Last month’s announcement represents an important result of our actions on the matter, and I assure hon. Members that we will continue to work hard on that agenda over the coming years, to give the Exchequer more money to fund the public services that we rely on. I urge the House to support the Government amendment.
This is, undoubtedly, an important debate for all the people outside the House who have commented on the subject, which is of great concern. We are talking about a complex matter, which may require, in the longer run, fundamental reform and international co-operation. There are no easy fixes. The deal with Google needs to be scrutinised, for the sake of all who are concerned that it might be described as a sweetheart deal. That is why I fully supported my hon. Friend the Member for Dundee East (Stewart Hosie) in taking the initiative and being the first person to write to the European Commission to seek an independent examination of the settlement. There is a lack of transparency in the deal, but these are difficult matters, and we may have to look at changing some of the rules in the longer run To many people, the recent agreement between Google and HMRC is very obscure and opaque, and gives the appearance of being very generous to a large multinational corporation. It contrasts sharply with the experience of many local SMEs. I would be astonished if I were the only Member of the House who has received comments from innumerable small businesses about what they perceive as the unfairness of the deal. I want to quote the views of two SMEs in my constituency. First: “It is galling that my business pays its taxes on time and in full, but huge corporations like Google do not and seem to be able to avoid doing so for years”, says Jim Cruickshank of Cruickshank Glaziers. Secondly: “It seems there are stringent rules for small domestic businesses but another much easier world for major companies. This often gives unfair competitive advantage to the large companies”, says Stewart Murray of the Farm Shop, Kirkcaldy. That is a concern of many of our domestic businesses. Because of the complexity of their tax affairs and of how they can operate, many of the largest corporations find that they have—in many cases, legitimately, in this system—a major competitive advantage over domestic businesses.
Does that not show how SMEs across the United Kingdom feel they have been treated? Their impression is that there is one tax law for them and another for large multinational companies. Does it not also provide a contrast between the British approach and the approach of some of our European colleagues to the very same issues? They are holding out for a much better deal for their taxpayers.
Many people throughout Britain will think that the hon. Gentleman has made a very fair point. That is why I have been arguing that we must have a proper investigation and why, perhaps in the longer run, we need to do something about greater transparency. It will be very difficult for us to bring a proper critique to bear if we do not get such clarification It must, of course, be admitted that this is not a new phenomenon. I first became aware of concerns about multinationals paying their fair share of UK taxes back in the early 1970s, when I briefly worked for the multinational IBM, and I am aware of concerns predating that. This has not been going on for just one or two years; Governments have not been able to resolve this issue satisfactorily for decades, which emphasises its complexity. The issue has been around for a long time, regardless of whether this country had a Labour or Tory Government and regardless of which parties formed Governments in many other countries I remember that the concerns back in the early 1970s were about what was called “transfer pricing”. For example, a company could buy a handle from a parent company in another country and charge an exorbitant fee for it, which allowed them easily to transfer profits from one area to another. I would be the first to admit that there have been moves to tighten up many such matters since the 1970s, but it remains a fundamental problem to this day. Corporation tax seems to be very susceptible to avoidance by multinational corporations because of the way in which they can, quite legally, operate.
The Public Accounts Committee found that HMRC as a whole had only 65 specialists in transfer pricing, which was about the same as each of the big four accounting firms. Does the hon. Gentleman welcome this Government’s introduction of more transfer pricing specialists in HMRC?
Order. May I say to hon. Members who wish to speak but are now making interventions that I assume they will not mind if they go to the bottom of the list because they have almost used up their time?
I thank the hon. Gentleman for his intervention, because I must admit I was not aware that only 65 staff were involved in transfer pricing. That seems to me to be remarkably few, given the challenges they face. I would welcome anything that can be done to strengthen their numbers Times have changed. Back in the 1970s, it was never envisaged that huge multinational corporations could quickly arise as a result of operating in the world of the internet. The tax system, which has been built up over many years—as the hon. Member for Warrington South (David Mowat) mentioned, part of it dates from the 1920s or thereabouts—is singularly unable to deal with some of the types of international corporations, such as Facebook and Google, that there are today The world has changed fast in other regards. I am old enough to remember being able to go into a café and just ask for a coffee.
Surely not!
I am. Nowadays, I am delighted to say that I know about cappuccinos and other things.
In your constituency?
Yes, throughout my constituency. There is wonderful cappuccino in Cowdenbeath, I have to say. The likes of Starbucks were not present years ago. The internationalisation of what seem to be simple products is a comparatively new phenomenon We must not lose sight of the fact that many more traditional players, not merely internet companies, are engaging in practices that may be legal, but create major challenges internationally. If I were to ask in a local pub quiz, which of course I rarely go to—
Because you’re drinking coffee!
Quite. If I were to ask, “What is the biggest charity in the world?”, many people would say the Gates Foundation, which The Economist has estimated is worth about $37 billion. Few would say that the answer is, as The Economist pointed out a few years ago, the Stichting INGKA Foundation—a charitable body whose aims include “the advancement of architecture and interior design” This charitable foundation owns INGKA Holding, which owns the IKEA group That set-up, which is admittedly much more complex than I have just described, operates and moves money across territories such as the Netherlands, Luxembourg, Switzerland and so on. The money is not even tracked within that foundation. The IKEA trademark is owned by another private company, Inter IKEA Systems. Just to operate IKEA’s stores, of which there are approximately 290 in the world, the charity has to make substantial yearly payments. Eventually, the trail is thought to lead back to the owning family. When there is such complexity—and it is even more complex than I have summarised—we can see the kind of international challenge there is. That is why I believe the current tax regimes to be ill-equipped to cope and why we need fundamental reform Let me give a glimpse of another tactic that is used—the offshoring of companies. There are approximately 19,000 businesses registered at a single address in the Cayman Islands. That must be a pretty big hoose, as we would say in Scotland.
Full of IKEA furniture!
Yes, full of IKEA furniture It has been claimed by Oxfam, although I have not checked this out, that 98 of the FTSE 100 companies have subsidiaries in tax havens. There is a wider ethical question to address. This is not merely about how international corporations may evade UK tax. Some countries are much more vulnerable than the UK. There are considerable concerns, as the hon. Member for Foyle (Mark Durkan) said, in the developing world. Some 30% of Africa’s wealth is held offshore. Research by the International Monetary Fund has found that developing countries lose $200 billion a year to tax avoidance—more than they get in all forms of foreign aid The UK needs to take a lead. Hopefully we will see that when the Prime Minister hosts the anti-corruption summit in May 2016, because the UK remains at the centre of a global network.
It is three years since the Prime Minister promised to clamp down on tax evasion and to publish the details of UK-based companies and people in the overseas territories. Does the hon. Gentleman agree that the Prime Minister should fulfil his obligation? This is a manifesto commitment that he has failed to fulfil.
I agree with the hon. Lady, and hopefully the Prime Minister will fulfil that obligation in the conference that he will chair shortly. We shall wait and see I shall conclude with one other example that is close to the heart of the Scottish people: our historical links with Malawi. This week, ActionAid launched a new campaign, calling for the UK to negotiate a fairer tax treaty with Malawi. Every constituency in Scotland has strong historical links with Malawi. The UK tax treaty with Malawi was signed in 1955 when Malawi was under British colonial rule, and it limits the ability of the Malawi Government to collect tax revenue from UK firms that operate there, thereby preventing that poor country from raising money that it desperately needs It is right to hold a thorough investigation into the Google settlement, and we should press for greater transparency. We should also press the UK to take an international lead in addressing the corrupt tax avoidance practices of the many, and not just the few. Getting our own house in order would be a fine start.
I shall do my best to make the most of the three minutes available to me. This is clearly a complicated area, and we seem to have two approaches on different sides of the House. The shadow Chancellor was passionate in his approach, and I recognise the strong feelings about this issue. The Minister’s approach was very measured and detailed. Unfortunately, the tax system must be approached in a methodical, detailed way—it cannot be emotional. I understand the strength of those emotions, and that people may feel that some large international companies do not pay their fair share. Unfortunately, however, we are blessed with a global taxation system agreement whereby companies pay tax not on the profit they make in the country but where they add the value and create the IP The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) spoke about Stewart from the Kirkcaldy farm shop, who clearly sells excellent produce. If he were to export his pork pies to Paris, he would expect to pay for the profit on that pork pie in Scotland and not in Paris, and in that way this country has benefited a great deal. My constituency contains Rolls-Royce, which is a fantastic international company that creates world-leading jet engines. It uses manufacturers and subsidiaries all over the world, but those dividends and the profit of that company should be paid to the UK taxpayer, and not to other countries The Minister referred to the video games industry, and Nottinghamshire is blessed with Boots, which created Nurofen, a world-leading drug. The IP for that drug remains in this country, as do the profits from it. I was fortunate enough to go to the cinema to see “Spectre”, the latest James Bond movie, which was created in Pinewood Studios in the UK. Tax on the profits from those movies should be paid in this country, not all over the world I gently say to the Opposition that, under their regime, no tax was claimed from Google. Sadly, I am rapidly running out of time, but we must recognise that it is more important to get some of those profits, rather than all of nothing if they are exported to other countries.
The most bizarre feature of the row over the past 10 days is that both Google and the Chancellor thought they had landed a public relations coup. Frankly, the arrogance of Google and the hopelessness of our Government take some beating. Just look at Google’s results announced this week. It now claims to be the world’s most valuable company. It claims with pride that it has cut its tax rate from 18% to 5%. If we look at Eric Schmidt’s own earnings—the man at the top is very proud of Google’s tax structure, saying “it’s just capitalism”—he was paid £76 million in 2014 alone. That is the equivalent of well over half of what Google paid the British public for all the money it has made out of the British public over 10 years.
Is my right hon. Friend concerned that the Google agreement could present a threat to future tax revenues by setting a very dangerous precedent?
I agree entirely. The Minister talks about the work done by the Public Accounts Committee. The law is not a complete ass. I do not believe that. When the National Audit Office looked at, I think, 10 cases—I will be corrected if I am wrong—it found three where HMRC had not abided by its own rules. Every time something like this happens, it damages British jobs and British businesses—nobody else. We have definite proof that a sweetheart deal was entered into with Goldman Sachs.
It was five cases, and in every single case Sir Andrew Park concluded that the amount collected was reasonable and the overall result for the Exchequer was good. Those are the facts.
No. With the greatest respect, those are not the facts. The judge looked at five cases. The NAO looked at 10 cases and found in three of them that HMRC had not abided by its own rules The reason the Chancellor and his team do not get it is the people they talk to about tax. A small army of tax professionals and multinational companies are the only people with whom they converse. I have to say to the Minister that there is a difference between good working relationships, which I applaud, and undue influence and preferential treatment, which I do not. Talking to stakeholders is a good thing. Being captured by stakeholders is a bad thing We just have to look at the evidence—and not just the 25 meetings held with Google. If we look at the Tax Professionals Forum, its members are KPMG, Ernst and Young, Grant Thornton and so on. There is nobody from any of the tax campaigning organisations. There is nobody from any of the charities and no academic with a different view. Ernst and Young made £250 million in recent years by advising Google, Apple, Facebook and Amazon Let us look at what the Minister has done. He appointed David Heaton from Baker Tilly to the Government’s advisory panel on the general anti-abuse rule, which was supposed to look at closing loopholes. That particular gentleman was captured on video describing “ways to keep the money out of the Chancellor’s grubby hands” Let us look at what happened to Dave Hartnett—within six months he was going to work at HSBC and within a year he was going to work at Deloitte. Let us look at Edward Troup, who is now our commissioner on taxation. He wrote in the Financial Times that “Taxation is legalised extortion.” This is a small bunch of people who all have the same interests I want to make two other brief points. The Government say they want companies to pay proper tax, but the Government are obsessed with tax competition. That means far from tackling tax havens and so on, they are trying to make the UK an alternative best tax haven in the world. We only have to look at three changes the Government brought through on the control of foreign company rules, Eurobonds and the infamous patent box tax relief to see that that is right We do not know whether the Google settlement is fair, because under the existing law—the Minister is right—we cannot see it. I personally do not accept that HMRC properly challenged Google on the evidence the Public Accounts Committee collected, which demonstrated that it engages in economic activity here in the UK. I personally do not think the whistleblowers were listened to properly. Google does sell here. It does complete sales here. It does research and development here. Its economic activity is here. What on earth is that massive complex in King’s Cross for if not to undertake economic activity I have to say to the Minister that he has lost the argument on transparency. He ought to cave in gracefully and open up the books of these multinational companies so we can restore confidence.
I draw hon. Members’ attention to the Register of Members’ Financial Interests and go beyond that by declaring that, prior to the 2015 general election, I worked for Google—often commented on as the most desirable company in the world to work for. However, I must make it very clear that I am not a spokesperson for Google. I did make it clear in my maiden speech that I wish to be an advocate for the internet and digital sectors in the UK. After all, at 12.4% of gross domestic product, that is the largest of any internet sector in the world—greater than that in Germany and France, and even double the size of that in the US However, the question of whether Google, or indeed any of these internet companies, pays its fair share of tax is a reasonable one. Google does many things. Deciding on tax law is not one of them. That is squarely the responsibility of this place; we make those decisions in here. If we want to change the laws, that is our responsibility Corporation tax, like income tax, is not a voluntary tax. You pay what you owe—no more, no less—according to the law. HMRC does a very good job of implementing that law under difficult circumstances, particularly for companies that are complex and deal internationally, where it is difficult to hold intangible products, where intellectual property and transfer pricing are involved, and where customers are served from multiple territories What we really need to do—the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) made some valid points—is update the international trade laws because these days, of course, international trade is as likely to be conducted by the push of a button as by being shipped in canisters and widgets from country A to country B. The reality is that some of our tax laws are as old as the 1920s While this Government are trying to make progress—indeed they have closed many loopholes—we have a lot more to do. Nothing should be taken out of consideration. We should carefully consider whether corporation tax in its current form is still fit for purpose. Comments about whether the practice of establishing intellectual property in international tax havens is valid or not are fair ones to investigate We must remember that Google was founded only in 1998, which makes it a teenager, and many other major internet companies are also teenagers. Teenagers make mistakes; they need guiding. It is up to us, in the role of a responsible parent, to make sure that we reset the ground rules on behaviour.
The Google tax debacle demonstrates that attempts to patch up the current international tax system are woefully inadequate. Despite the efforts of the OECD and its base erosion and profit shifting overhaul, it appears highly likely that corporate tax will continue to be an optional extra for most multinational companies The UK’s tax treaties—this is to do with Ireland as well in terms of Google—with developing countries allow UK firms to limit their tax payments, often in countries where the money is most needed to fund hard-pressed public services. The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) rightly mentioned Malawi earlier and I praise him for that According to the IMF, recent calculations have shown that developing countries are losing around $200 billion a year through tax avoidance by companies. The OECD has estimated that tax havens could be costing those developing countries three times the current global aid budget The value flowing out of countries from companies not paying their tax is huge: an estimated $l trillion a year. To put that into context, Africa is now a net creditor to the world in terms of the tax it loses from multinational companies operating in African countries’ jurisdictions. According to Oxfam, corporate tax avoidance in the form of trade mispricing by G7-based companies and investors cost Africa $6 billion in 2010—more than enough to improve the healthcare systems of the Ebola-affected countries of Sierra Leone, Liberia and Guinea Then there are the sins of omission. Anonymous shell companies in the British Virgin Islands were used to acquire mining concessions in the Democratic Republic of Congo for $275 million. They were then sold for $1.63 billion, costing the state $1.36 billion, or twice the combined health and education budget What is to be done? The Prime Minister is hosting an anti-corruption summit in May, and is inviting Heads of State from all over the world to London, but how can the UK lecture other countries on what they should be doing to tackle tax avoidance and tax corruption when the Crown dependencies and overseas territories in our own constitutional backyard are such notorious purveyors of secrecy? I put that case to the Minister on BBC Radio 5 Live just before the election We need to insist that multinationals publish their basic accounts in every country. We need to insist that they clean up their backyards, and ensure that British-linked tax havens—the Crown protectorates—cannot continue to act as conduits for tax dodging. We need to stop applying sticking plasters to broken OECD tax rules, and mandate the UN to develop a set of rules that ensure that big businesses pay their fair share of tax in every country in which they do business.
Will my hon. Friend give way?
I will.
I appreciate—
Order. The clock is on zero. I think it would be unfair to allow the hon. Gentleman to give way.
I will be brief The hon. Member for Wythenshawe and Sale East (Mike Kane) said that paying corporation tax was an optional extra. If he is right—and there are some good arguments for why he might be right—it is because of the unbridled complexity of the system. I used to carry a number in my head: I thought that the tax code was 11,000 pages long. However, when I went to a Public Accounts Committee tax conference organised by the right hon. Member for Barking (Dame Margaret Hodge)—the Dame Professor Lady right hon. Member for Barking—I discovered that it was 17,000 pages long, and I was told on the radio yesterday that the figure might now be nearer 20,000 If we made the Bible 10 times longer, we would not expect there to be less work for theologians. We need to sort this out. Complexity is not always avoidable in a mature economy, but there are steps that can be taken to make the code simpler. The Office of Tax Simplification examined 155 different tax reliefs and recommended that 47 should be abolished—43 actually were abolished—but over the same period, the Government of the day introduced 134 new reliefs. According to the Office of Tax Simplification, that produced a total of 1,140. Incidentally, HMRC had thought that there were only 398, which shows how extraordinarily complex the system has become That is the central problem, and it needs to be tackled. If a system that can only be dealt with by a high priestly caste is combined with a global economy, a country will get what we have got. It was this Government who introduced the idea of an Office of Tax Simplification, and it is this Government who are starting to do something about flattening and simplifying the tax system There is also the question of the cost of tax reliefs, which is sometimes much higher than HMRC expects. When the right hon. Member for Barking was the films Minister, for very good reasons she introduced a film tax credit. She was then horrified to discover that, using the law of the land, some very clever entrepreneurs and accountants were going around doing things which bore some relation to UK film activity, but perhaps too tangentially for the right hon. Lady’s taste. Much of what had been done was found by the courts to be within the law, and ended up costing HMRC, and taxpayers, hundreds of millions of pounds more than had been expected This Government are starting to tackle the problem. They have not made all the progress that they need to make, because this is a very big problem indeed, but at least they are starting to tackle it. The last Government did not collect the tax, but this Government are moving in the right direction, and I commend them for what they are doing.
I am highly enamoured of the record of the last Labour Government, and particularly enamoured of their Treasury policies I am grateful to my hon. Friend the Member for Hayes and Harlington (John McDonnell) for drawing attention to an assessment by the Financial Times of the comparative records of the Labour Government between 1997 and 2010 and subsequent Governments. The article, written by Vanessa Houlder in February last year, made three very important points to set the record straight. First, it stated that the current Chancellor “has raised much less income than the last Labour government from reforms to tackle corporate tax avoidance” The second point was referred to by my hon. Friend in his introductory remarks. The article stated: “Measures put in place by Labour during its 13 years in power to counter corporate tax avoidance are projected to raise ten times as much over the next four years as those introduced by the…coalition government.” Thirdly and importantly, the article stated that the coalition “eased laws aimed at stopping companies using tax havens, which had been repeatedly tightened under Labour.” That is the difference between the record of the Government when I was a Treasury Minister and the current Government. Labour in government did the heavy lifting on corporate tax avoidance. The new Government, when elected, had different priorities, as they were entitled to have, but they cannot claim to have maintained the progress Labour made, because they have not I welcome the Government’s seeming support for country-by-country reporting, but those close to the process find it difficult to recognise that the Government have led on it since 2010, as they have claimed. We certainly led on it prior to 2010. The original idea was devised, I think, by Richard Murphy, about whom we have heard a good deal more in the last couple of years, but it was first brought to me, when I occupied the Minister’s office, by Christian Aid. I pay tribute to its work on this. It came to see me in early 2009. We had a series of international meetings in Berlin, Paris and elsewhere in 2009, at which I put the issue on the agenda, and that culminated in the first joint meeting of the OECD tax and development committee in January 2010 in Paris. That kicked off the process that I am delighted the Government are now swinging behind. But Labour in government started this off and Labour is entitled to the credit for that.
It is rich to attack this Government for collecting tax. Big multinational corporations cannot carry on as they have been and must expect to pay more tax, and Google’s payment is an important step forward to address the long-standing problem of larger corporations not paying fair amounts of tax under the last Labour Government Any debate about that past tax in particular and about aggressive tax avoidance in general is in the context of what past law required should be collected. This debate should look ahead to whether and how our laws should change in order to collect more. The tax gap is reported to be £34 billion, or 6.4% of tax liabilities, according to the 2013-14 figure. What might £34 billion buy us? It is half the deficit Labour left us. Public sector net borrowing is about £73 billion this year. It is three times the pay bill for nurses. To break it down further with an international example: £1 billion is what we contributed to the Ross Fund in the global fight against malaria. What is that £34 billion made up of? Only one third is committed by large businesses; half is committed by small and medium-sized businesses; and the rest, I take it, is made up of individuals in error and out-and-out criminals in malice We need to look at fairness in two ways. First, is the law applied fairly? We rightly expect HMRC to collect as much as possible from every source, large and small, mistaken or malicious, under a fair application of existing law. Secondly, is the law itself fair? Does the law need to change further, and if so how, to ask for more tax? That is obviously an international question. I welcome the OECD’s work on base erosion and profit shifting—I look forward to scrutinising the results in the Finance Bill to come, because that is ready for implementation—and the Government’s leadership on a diverted profits tax. I look forward to hearing a summary of what they have brought in during its first year In summary, I want tough action to ensure that all companies pay their fair share of tax; I want more tax collected; I want the laws we have to be used; I want new laws to be reported upon carefully so that my constituents can be assured that we are collecting what we need; and I want Britain to continue to lead the world in the OECD’s implementation of a sensible set of multinational measures.
I am grateful for the opportunity to contribute to this important debate I was going to start this speech by going through the alphabet, naming different companies that did not pay their fair share of tax: Amazon, BP, Citigroup, Dell, eBay, Facebook, Google. I stopped at Google and went to the search engine of the same name and searched for the word “alphabet.” Most people would assume that I found information on the alphabet—A, B, C, D and so on—but no: what came up was “Alphabet Inc.” It turns out that the Google we all know and use has created a parent company, and it has called it Alphabet. Alphabet is a multinational conglomerate that was created last year. It is the parent company of Google and several other companies previously owned by, or tied to, Google. It is the world’s most valuable company, even wealthier than Apple. However, it does have something in common with Apple: the desire to not pay tax In a world that is becoming more and more connected, and as we seek to develop far-reaching global trade deals, we find that multinational corporations are moving their money and profits around the world. We should be under no illusion as to why they do this: it is to maximise their profits by reducing their tax liability So how do we make multinational companies pay their tax, when they invest so much in trying to dodge paying their taxes? Indeed, they use any system, loophole or avenue open to them to get out of their tax obligation. With this Chancellor they have even got someone on the inside helping them out. Frankly, it sends out the wrong message The Chancellor, often referred to as the octopus, with his tentacles reaching every part of Government, has declared his tax deal with Google a victory. He may be the octopus, but we are not his suckers. He should publish the details of the deal, show transparently what was agreed, deal with every loophole that comes forward and ensure we deal with the deficit by ensuring those who can pay do pay I join my colleagues today in demanding that the Government publish full details of the deal and implement country-by-country reporting of company accounts.
This is a timely debate and I am grateful for the opportunity to speak in it. It is important to remember what the previous Government did, because members of it are speaking, eloquently in many cases, in this debate. It is absolutely relevant, therefore, and gives us the context in which this debate has been called For 13 years Labour was in power and for at least the last five of those years these multinational companies—Amazon, Google, Apple—paid almost no corporation tax whatsoever. That was the immediate context. The right hon. Member for East Ham (Stephen Timms) suggested that that Government had a great record, but it was not great. These companies paid very little; this is the general context It is quite right for the shadow Chancellor to bring up this debate. I think he makes a reasonable point that ordinary people—our constituents—expect companies to pay their fair share, but I would observe that the very facts he points out about Google employing thousands of people at very high salaries shows, in a way, the success of Google. It shows the success of this Government in creating a business-friendly environment in which these companies can operate. In fact, every single one of those employees, who are paid an average of £160,000 a year, are contributing very significantly to the Treasury in the form of income tax and other taxes that they pay. That fact should be observed in this debate If we are looking at being able to tax multinational companies, we must consider the fact that, as my hon. Friend the Member for Sherwood (Mark Spencer) suggested, they are operating in lots of jurisdictions and, in many cases, if they are not internet companies they will probably be paying tax in only one country. There are lots of variations that we need to consider, and I do not think it is right for Opposition Members simply to try to make political capital in this sensitive and highly complicated debate As my hon. Friend the Member for South Norfolk (Mr Bacon) has said, the reason that companies avoid tax is the complexity of the system. There is a direct correlation between their propensity to avoid paying tax and the complexity of the tax system. Again, the last Labour Government had a pretty poor record on that. This is a complicated debate, and I object to the fact that Labour Members are trying to score political points in it.
The hon. Member for Spelthorne (Kwasi Kwarteng) might have commanded a little more respect if he had listened with respect to the views of my right hon. Friend the Member for Barking (Dame Margaret Hodge). This debate is about Google, but it is also about so much more. We know that Google is currently valued at $524 billion, and that its profits in 2015 alone were £11 billion, an increase of £1 billion in a year, based on revenues of more than £52 billion. The Daily Mail has reported that Google has more than 5,000 UK-based employees, which is about a 10th of its total worldwide workforce. That figure includes 279 of its European, middle eastern and African directors, compared with Dublin, where it has 79 such directors. As colleagues have said, Google is constructing a new headquarters worth £1 billion near King’s Cross, in addition to its five other offices in the UK I do not want to get into a blame game. I want us to get the way we recover tax in this country right, but I believe that certain factors did not help to ensure focus on this growing problem. The public finances were healthy up to 2008. In the year before the crash, the Treasury netted nearly 30% of its corporate tax receipts just from financial services. That figure had fallen to about 17% by 2009. Also, at that time, the online giants of today were largely below the radar. Many floated before they had made a penny profit. Let us look at the corporate giants of today. Twitter, which floated in 2013, was valued at $18 billion on the day of its flotation yet it had never made a profit up to that point and did not do so for another year or more. Likewise, when Google first floated in 2004, its valuation was $23 billion but it was not turning the kind of profits that we are talking about today. Google’s circumstances are somewhat different today, yet after six years and with all the benefits of hindsight, this Government have achieved a payment of only £130 million, and we do not know how much of that is interest or penalties. We have to do more on this We can add other household names to the list of companies that paid no corporation tax in 2014: Shell, Lloyds Banking Group, AstraZeneca, SAB Miller, Vodafone and British American Tobacco. Those six companies made a combined profit of £30 billion in 2014, yet they are notionally making no money in the UK.
Does my right hon. Friend agree that initiatives such as the Fair Tax Mark, which is a bit like the fair trade stamp, should encourage more companies to demonstrate publicly their tax liabilities and responsibilities, and that they should consider it a badge of pride that they are paying their full tax?
Absolutely. I think that there is cross-party support for more transparency Given that Google, HMRC and the Chancellor were quick to publicise the outcome of their negotiations, surely they should be open about how they arrived at the figure of £130 million. We need to know what sort of benchmark this is setting not only for Google but for other companies as well. The Government make the rules and HMRC enforces them, and it is about time that we had more openness. To be honest, if I worked for Google and I were advising it, I would say, “Volunteer to give the information, because this situation is not doing your company any good whatsoever.” This is important not only to reassure public opinion but to restore the confidence of those UK-based businesses that have much lower revenues than these giant corporations yet pay considerably more tax, including 20% corporation tax We cannot content ourselves with companies appearing to decide whether or not to pay any tax, as though it were discretionary or some kind of charitable payment to the UK. If the broadest shoulders are to bear their share of the burden for funding public services and our pension system, I am afraid that the Government will have to raise their game. We will support the Government on that. Our Labour motion might not receive a majority in the vote today, but this problem will not go away. I, for one, am looking forward to next week when, as a member of the Public Accounts Committee, I shall hear directly from Google and HMRC about what they have to say.
In preparing for this debate, I was keen to see some facts about the Government’s record, so I turned to a study published by the Oxford University Centre for Business Taxation, probably the most academically reputable institution in the area of corporation tax. The report it published in February of last year identifies 42 separate measures that the Government have taken since 2010 to clamp down on corporation tax avoidance and evasion. They are forecast to raise £34 billion. I strongly welcome the measures that the Financial Secretary and his colleagues have taken in this area, which include the diverted profits tax and the general anti-abuse rule. The Government have also increased capital gains tax from 18% to 26%, dealing with a loophole that was being widely exploited by some hedge funds to end up paying rates of tax below that of their cleaners. The Government’s record in this area does bear scrutiny. Indeed, Richard Murphy, who describes himself as the “father of Corbynomics” declared himself pleased and surprised at the progress made in this area since 2010, which includes the BEPS initiative, which the UK Government have been strongly pushing I noted with interest that the shadow Chancellor did not repeat a claim he has made in the past about £93 billion of what he has called “corporate welfare”, implying that there is some sort of evasion or avoidance going on. Richard Murphy said yesterday, before the Treasury Committee, that he would question whether that figure was correct, as it includes things such as capital allowances, and research and development tax credits, which of course support companies that are investing in productivity, a topic that we all care about very much On Google, I said in an intervention that this Government have collected £130 million of tax more than the last Labour Government, who collected precisely zero. As such, we are talking about a welcome step in the right direction. The 3% tax rate has been mentioned but, as some Conservative Members have pointed out, such an analysis completely ignores the fact that Google’s staff headcount and intellectual property reside disproportionately in the United States. Were we to adopt the approach being suggested, UK companies, particularly those in the music, pharmaceutical and other industries, would suffer greatly That is not to say that there is not more that can be done—more can be done. I particularly suggest to the Financial Secretary that we should look carefully at how things such as transfer pricing rules are applied. Two or three years ago, Starbucks successfully levied a 6% brand fee from an offshore jurisdiction into the UK which almost completely extinguished its UK profits. Any brand levy that results in a zero profit is, almost by definition, too high, so I ask him to give guidance to HMRC on that topic, but I support the Government’s initiatives and hope they go further.
I am grateful for the opportunity to speak in this debate. As someone who represents a constituency containing thousands of business, of all shapes and sizes, many of which feed into the national supply chain, I wish to say at the outset that I am very proud of the role that not just my constituency, but this country plays, with many of our leading industries leading the way globally. I want this country to be a good place to do business and to set up a business, and to continue to lead the world with competitive tax rates This debate is actually about fairness and transparency. To follow up something that the hon. Member for Croydon South (Chris Philp) said, the fact is that the Minister could not tell us last week what effective tax rate Google would be paying. I can tell him what the effective tax rate is for businesses in my constituency—what rate of corporation tax they will be paying—so why is it so difficult for Google, a multinational giant, to be transparent with the public about the rate of tax it is paying?
Just to be clear, the statutory rate is 20% and that applies to everybody. There are businesses that will have a lower effective rate, entirely lawfully and in accordance with the spirit of the law, because, for example, they make use of capital allowances or they might have losses that they are making use of. Someone having an effective rate below the statutory rate does not mean that they are conducting avoidance activity.
That is a fair point, but of course many tax experts have estimated that Google is paying an effective tax rate of 3%. If that is not the case, we need to see the numbers that give us that assurance. We do not doubt the difficulties here. In an increasingly globalised world, where intellectual property and the growth of internet companies makes this more important in the debate about tax, these are difficult issues to grasp, but there is no hint of fairness or transparency about this deal, and that is what we are seeking with this debate We would have more confidence if there had been consistent messages on this issue from both the Government and Google. On 23 January, the Tory Treasury Twitter account—not the most accurate of sources—claimed that the “Google tax bill is for years 2005-2011, almost all under Labour” Yet Google Ltd’s account for the period ended 30 June 2015 reported “a liability to HMRC of £130 million in respect of additional taxes and interest due for prior accounting periods and the current accounting period.” The Minister says that there has been no sweetheart deal, but, as I asked him earlier, how can he give us that assurance if he has not seen the deal and is as far removed from it as he says. The Chancellor said it was a “major success”. How can he laud it as a major success if he is not close enough to the deal? If it is such a major success, why did the Prime Minister in Downing Street run so far away from that claim? Why has the Financial Secretary to the Treasury not once in recent weeks stood by his Chancellor in saying that this deal is a major success? I believe that it is because he knows that it is nothing of the sort, and that this Government look deeply out of touch with the public Labour were accused of attacking HMRC staff. The fact is that HMRC has a responsibility to apply tax law. It has a duty to go for the full rate of tax due, but, as my right hon. Friend the Member for Barking (Dame Margaret Hodge) pointed out, it has not always applied that duty. I am sure that, following the work of the Treasury Committee and the Public Accounts Committee, we will find that the issue at HMRC is to do with resourcing and extra teams and whether there are the people and the capacity to pursue not just the current claims and outstanding tax, but the historical backlog that exists as well Also of concern is the fact that Google itself has made some rather odd claims. On the one hand, we see senior Google executives writing to the newspapers about how great the deal is and how they have stood by their obligations, while, on the other, they are committing to paying more tax in the future. What is the reality? Is it that Google is paying the tax liability that is due; that it has somehow got away with it and plans to pay more in the future; or that it sees tax as a means of charity towards the state and it is willing to prop up the Treasury coffers a bit more generously in the future? Whatever the reality, there is deep inconsistency in the messages from the Government and Google We should look at the comments recently made by the Mayor of London who went as far as to suggest that finance directors have a fiduciary duty to minimise tax exposure. That cannot possibly be the case. If the Mayor of London looked at the duties under the Companies Act 2006, he would see that they also have to make reference to “the likely consequences of any decisions in the long term…the company’s business relationships with suppliers, customers and others”— and— “the impact of the company’s operations on the community and the environment” There is a problem with the ethos of those on the Conservative Benches. Many of them see tax as a form of theft, whereas we see it as a civic responsibility and duty and as a means of creating a more civilised society. I want businesses in my constituency to pay their fair share of tax, and indeed they do. It is not unreasonable to expect a multinational company such as Google to do the same. The Government need to do much more to ensure that there is transparency for all such companies in all of the jurisdictions in which they operate.
First, let me draw the House’s attention to my entry in the Register of Members’ Financial Interests. A company in which I have an investment is, in a very small way, a competitor of Google’s. If it ever makes a profit, it will always pay—at least while I am involved—the correct rate of corporation tax, as most companies do. All of us on the Conservative Benches believe that that is absolutely right. None the less, this is a global problem In the 1960s, Zhou Enlai was asked about the consequences of the French revolution 200 years earlier, and he said that it was too early to tell. The same applies to globalisation. These are all global problems. In the US, the effective rate of corporation tax has halved in the past 60 years. Apple has £120 billion of assets invested offshore. It does not want to repatriate them as it will have to pay tax. The Opposition sound like a failed football manager turned TV pundit who lost all their games without scoring a goal and who now criticise the new manager for not winning by a big enough margin Of course, nobody on the Government Benches would countenance tax avoidance. The thin justification is that the arrangement is for shareholders. Only this week, James Anderson, a Google shareholder, said that Google should be paying the effective rate of corporation tax. That is absolutely right. Warren Buffett has gone on record many times saying that companies should pay the going rate of corporation tax. We need to look at the role of advisers. My experience in my business, when these things have come across our desk, is that such a policy has been rejected on the recommendation of tax advisers. Firms such as Ernst and Young, global corporations themselves, are responsible for much of that activity. I wonder whether they have public sector contracts and whether such organisations should be allowed access to public contracts in the light of those activities My hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) asked what we would be saying if we were the parents of Google. If I were the parent of Sergey Brin, I would say, “Pay your taxes.” The company talks about values. It cannot talk about integrity and not pay its fair share of taxes Perhaps we should give companies that do pay their taxes greater prominence and recognition through some kind of kitemark for paying fair levels of tax. Overall, we must rely on the integrity of companies to pay their taxes where they have built their businesses—on the back of British people.
I am pleased to have the opportunity to take part in this extremely important debate. Clearly, a number of things have gone wrong in the case of Google, but I shall focus on one aspect: the tax treatment of intellectual property. This is a growing part of the economy and we need to get it right I draw a distinction between two extremes—on the one hand, a large pharmaceutical company that does a great deal of research and development and employs a large number of people to make a new drug, and, on the other, a company such as Starbucks, which registers its name in Luxembourg, seemingly purely as a tax avoidance device. Between those extremes there is a continuum and Google is somewhere in the middle. It has done some mathematics to make some algorithms, but it also has a brand that is extremely powerful. We need to tighten up on this What happens at present is that a name is registered in a low tax domain. That separate company charges a fee to this country, where the work is done. That wipes out the entire tax treatment. That is ridiculous. One thing that is wrong is that the company seems to be able to set the price itself. The Revenue is not auditing it and asking whether that is reasonable. Obviously, maintaining a brand involves some costs, but small costs—perhaps to repaint some signs or to train its marketing people. Those costs cannot be compared to the cost of research and development.
Does the hon. Lady understand that an awful lot of the cost could be in intellectual property and in ideas held by people overseas? That is not necessarily as cheap as a lick of paint, as she suggests.
I was trying to distinguish between real intellectual property and intellectual property that is purely branding. Take the example of the BBC, which sells television programmes. The BBC can get more money for its television programmes than a small television production company, partly because it is called the BBC, even though the actual costs of making the television programme are the same The question we have to ask ourselves is whether, because of the high value of the brand, the company should pay less tax. I submit that that is a fundamental mistake, because the brand is an asset. What the company is getting in that situation is economic rent. The fact that it has a valuable asset is not a reason for it to pay less tax. That is absurd. If a company invests in a piece of machinery and makes a claim against its capital allowance, over time the amount that it can claim against tax decreases as it moves from the point at which the investment was made. In cases where the brand is the asset, companies are claiming more over time as they are selling more. I think that is an area where we could very usefully tighten up Perhaps this area of tax would be better handled if we had a few more economists looking at the underlying economics and fewer accountants, who seem very comfortable with the way the system works but are not driven by the desire that the rest of us have to make sure that these people pay their fair share.
Let me first declare that this morning I was elected chair of the all-party Public and Commercial Services Union group, succeeding the shadow Chancellor, who of course will be a hard act to follow. I will be referring to HMRC staff Such is the widespread scepticism and lack of public confidence following this deal that the term “to google it” now has a new meaning on the streets of the UK. No longer does it mean logging on to a computer and exploring a search engine; “to google it” now means something else. When members of the public grab their self-assessment forms, they might ask themselves, “Should I google it?” The Minister had four opportunities—four tests, in my view—to address that widespread scepticism and lack of public confidence. The issue is about the messages that this sends. First, there was no real answer on what methodology was used to make the calculation. More worryingly, although the Minister praised HMRC staff, he did not address why 120 compulsory redundancies were issued to HMRC staff on 28 January. Worse still, there has been no explanation for why the chief executive of HMRC has refused to meet the PCS to try to help mitigate those job losses. That is a message that will be sent to multinational companies. They will wonder why HMRC offices are closing in towns, in many of which it is the largest employer, and why there are staff reductions. They will wonder whether the UK Government are serious about dealing with tax avoidance and tax evasion.
Does my hon. Friend agree that taxes are the price we pay for a civilised society and that these multinational companies should be paying their taxes willingly?
I agree. In such debates we usually hear Government Members praise the self-appointed TaxPayers’ Alliance. Interestingly, it has not been mentioned today. I agree that taxes are the price we pay for a civilised society We heard nothing from the Minister about a financial transactions tax. I support such a tax, particularly a global financial transactions tax, which could bring in £250 billion for national Governments. Surely the UK Government could take a lead in introducing such a tax The Minister made no mention of tax havens in UK overseas territories such as the Cayman Islands, which my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) mentioned. Research by the Tax Justice Network rates the Cayman Islands as the second most significant tax haven in the world. Of the 279 banks registered there, only 19 are licensed to operate domestically; the other 260 are there to shuffle money from country to country. The Cayman Islands have a population of 56,000, but there are 100,000 registered companies. My hon. Friend mentioned Ugland house. As President Obama has said: “That’s either the biggest building or the biggest tax scam on record.” I believe it is the latter. Where is the action to tackle this? The Government made no mention of that. The Tax Justice Network has said that the UK and its dependent territories and Crown dependencies remain “by far the most important part of the global offshore system of tax havens and secrecy jurisdictions” The fact is that the widespread scepticism means that the public have no confidence in the Government’s handling of this affair or in their ability to deal with tax avoidance and tax evasion. That is why I will be supporting the motion today.
First, I apologise to the shadow Chancellor for missing the first 60 seconds or so of his speech It has been suggested that we are criticising the team manager for not winning by a big enough margin. If this was such an important victory, why is the team manager refusing all interviews, choosing instead to send the reserve team goalkeeper—not to do interviews about the game, but to talk about everything and anything apart from the great victory The Government have tabled an amendment that is four times as long as the motion they seek to amend, and it doesnae mention Google or the £130 million great victory anywhere. It is a strange victory indeed if the Government are trying to hide it under the biggest, deepest, darkest bushel they can find. It is to the Government’s eternal shame, and it exposes Parliament to ridicule and brings it into disrepute, that every time over the last week that Opposition Members—not only from Labour, but from other Opposition parties as well—have asked for a justification for this deal, every Minister has answered by batting the issue across to the Labour Benches, like the most expensive ping-pong ball in the history of sport I commend the shadow Chancellor for being prepared to acknowledge that the previous Labour Government’s actions might not stand up to much scrutiny on this issue. Labour’s downfall started when it got far too cosy with the big, anonymous multinational institutions. I suspect that quite a few people on the Labour Benches today would accept that with hindsight If all that the Government can say to defend their actions is that the previous Government were even worse, that sends the message to the people of these islands that the actions of both Governments are indefensible. A Government who try to defend the indefensible by saying that somebody else was more indefensible really are not delivering much for the people of these islands If we are to believe the selective information that Google has put out about how productive its 2,300 employees have been, the equivalent, taking a generous Back-Bench MP’s salary, would be for each of us to deliver less than 25p value added per year for each of our constituents. I doubt whether any of us would fancy the next election if that was all that we were delivering. It simply is not credible for a major successful multinational business to suggest that it employs so many people to deliver so little profit for its shareholders This is not just about the technicalities of what is admittedly very complex legislation; it is about Parliament holding HMRC and Google to account and about allowing the public to hold us to account. The clear message coming from the overwhelming majority of the 60 million-plus people represented in this Chamber today is that this Google deal stinks. It cannot possibly be justified, and it is interesting that the Government are not even attempting to defend it in the amendment.
The subject of tax avoidance and tax evasion is of real relevance to my constituents, for whom paying tax is not negotiable—unlike, it seems, for large corporations such as Google The rationale for public service cuts has been based on the notion that we, as a country, cannot afford to pay for public services in the way we have done—that we cannot afford to meet the basic needs of our citizens because of the debts facing the country It is important to note that the Government have been in office for nearly six years. During that time, the Chancellor and the Prime Minister have been able to take action on these issues. The limited progress that the Government have made is welcome, but the Google deal flies in the face of it. Their attempts to blame the previous Labour Government every time their record is questioned is wearing thin—even with their own supporters Issues of taxation and who pays are all the more pertinent when the Conservatives’ political choices mean that jobs are being lost and services closed, and that people are suffering as a result. The cuts agenda the Government have embarked on over the past 69 months has hit my constituents extremely hard. The cumulative cuts that the St Helens and Knowsley councils, which cover my constituency, have faced since the Government took office add up to a staggering £168 million. The £94 million cut from Knowsley’s budget is the highest of any council in the country, despite the area having some of the highest levels of deprivation and lowest incomes. That has meant unavoidable, savage cuts to services across the board, and that is clear to everyone in my constituency. However, the detail of why Google is paying only £130 million in tax is still shrouded in secrecy This is about a choice as to who pays what. The Government have made very clear who has no option but to pay and for whom the issue is negotiable. Local government is now meant to self-finance, with the phasing out of the block grant, and authorities are meant to generate business activity to get tax from it. So who is paying while Google does not? Many small, and large, businesses in my constituency pay their tax—they have no choice. The nature of their business means that they cannot physically move premises like some other businesses. They have no option to relocate their profits to other countries, as is convenient for others. If the Chancellor wishes local authorities to generate more of their own finances for themselves and rely less on central Government, how can he justify businesses that make a large contribution to local economies and which pay their taxes locally subsidising, in effect, the likes of Google and other multinationals?
I thank all right hon. and hon. Members who have made such excellent contributions to this debate, including my right hon. Friend the Member for Barking (Dame Margaret Hodge), who said that the Government have lost the argument on transparency. Other Members raised important issues about how we now seem to have one tax rule for large companies—multinationals—but another for small businesses in our country. We heard about the use of tax havens, transfer pricing, and the fact that the Tories cannot claim that they have continued Labour’s progress on this issue. I pay tribute to the work of those who have campaigned for tax justice, including Richard Murphy, Christian Aid and others, as well as the Co-operative movement, with its campaign for a fair tax mark that includes country-by-country reporting Over the past week, the Google tax settlement issue has shocked us all. The Chancellor cut a lonely figure when he tweeted that that tax deal was a “victory”. The tweet had scarcely had a chance of a retweet before Downing Street distanced itself and MPs in all parts of this House called the deal derisory. Questions then came thick and fast about how we could have reached a settlement that effectively implied a 3% tax rate. It was the moment when, as one journalist wrote, “Google lost the argument in the court of public opinion.” Yes, there is a lot to admire about Google. Millions rely on the access to knowledge and information that the Google search engine helps to put at our fingertips, and innovative products pushing at the frontier of our digital age have transformed our personal and working lives. However, we cannot tolerate this huge global business not playing fair when it comes to tax. We now know for a fact that Google has been short-changing us for more than a decade. Whatever else it has done, this settlement proves that fact The deal has left a series of questions in its wake. Do we know whether Google is paying its fair share of taxes, as it tells us? We do not know, because the deal is shrouded in secrecy, but there is lots to suggest that it is not. Only this week, we heard that Google’s parent company, Alphabet, is now the world’s most valuable company, with a valuation of $568 billion. In just four years, Google paid its chairman a total of £166 million—more than it paid in UK taxes for 10 years We support and celebrate success, but this is an issue of fairness. Many are therefore asking a second question—after his tweet, can we trust the judgment of the Chancellor on this issue? Can we trust the judgment of a man who describes what is effectively a 3% tax rate for the world’s most valuable company as a “victory”? In 2014 alone, Google UK made an estimated £1 billion profit; 20% tax on that alone would have been £200 million, enough for 4,000 police officers. Fairness in the tax system is important for us all, and this is not a victim-free zone. When global companies such as Google do not pay their fair share, businesses and families in the UK take a hit. We have all heard from businesses in our constituencies that wonder why there is one rule for large multinationals and another for them. British families lose out, too, because uncollected taxes mean revenue forgone, with bigger cuts to public services and lower levels of investment when we need it the most There is another reason for questioning the Chancellor’s judgment. How can people trust the judgment of a man who thinks it is right to undermine and demoralise his tax-collecting agency? It is a classic example of a false economy—short-term cuts that have long-term costs. Why has the inquiry, which was set up under the Labour Government in 2009, taken more than six years? Nobody knows, seemingly not even the Chancellor. If ever a situation showed a lack of political will, it is this one People’s trust in the Chancellor and in the fairness of the tax system has been undermined further by two recent reports. The Chancellor and 16 different Tory Ministers have had face-to-face talks with Google bosses over the last two years, but did any of them raise the issue of the company’s tax structures? Perhaps the Minister can tell us today People feel a growing sense of huge injustice when large multinationals can shift their profits so easily and avoid the taxes that they should be paying. Now we find out that, only last year, Tory MEPs were instructed on six occasions to vote against proposals to clamp down on multinationals that engage in aggressive tax avoidance. In addition, they have voted repeatedly against measures to tackle tax evasion The Chancellor has even failed to apply his Google tax to Google. Perhaps he can tell us whether the Google tax—the diverted profits tax—would have applied if a deal had not been reached. Things need to change, and we believe that the Chancellor has a duty to take steps to restore public confidence in how HMRC operates in cases such as this. He must now address widespread concerns about the lack of transparency surrounding the deal and show us how the deal was reached so that it can be scrutinised by Parliament and the public. Few can understand how HMRC accepted at face value Google UK’s claim that it, a company with more than 2,000 UK employees, does not have a permanent establishment in the country for corporation tax purposes Since last week, we have seen this deal unravel. Every step of the way, the Chancellor’s failure of judgment has been apparent. It is not the first time that the Chancellor has failed to stand up for people in Britain. He is hurting, not helping, British businesses and families. We need renewed focus and action on tax avoidance and tax evasion, and a real plan to close the UK tax gap. That is what Britain deserves and the British people expect. We need a plan that puts transparency and fairness first—a plan through which we work to reach international agreement on country-by-country reporting and drive forward its implementation. The deal, and the way in which it came about, must not be allowed to set a precedent. If the Chancellor will not act, Labour stands ready. I urge all hon. Members to vote with us in the Aye Lobby.
The budget deficit that we inherited from the previous Labour Government was £153 billion. That is equivalent to nearly £6,000 for every household in the country. When a Government inherit such a deficit, one of the first things that they go after is the money that is supposed to be coming in, but is not. As my hon. Friend the Financial Secretary set out comprehensively at the start of the debate, no Government have done more than we have to crack down on tax evasion and aggressive tax avoidance The Government crackdown, led by my right hon. Friends the Prime Minister and the Chancellor, has resulted in more than 40 changes to tax law to close loopholes that Labour left in place. Among those changes was the world-leading diverted profits tax, which stops multinational companies shifting their UK profits to other countries. That policy alone will bring in an extra £1.3 billion from multinational corporations by the end of the Parliament, some directly but some, more importantly, as a result of its deterrent behavioural impact. I believe that the Government can be proud of that record, but we need to continue to do more and we are doing so. Tax avoidance is a global problem and it calls for global solutions To be clear, corporation tax is not a tax on the sales that happen in this country, or even a tax on the profits that derive from the sales that happen in this country. The system that operates internationally is that profits should be allocated on the basis of what is called “economic activity” in each country. Economic activity is not just about sales, but about where research and development takes place, where the various stages of production take place and so on. In short, that was a simpler formula to work out in the 1920s, when the world tax system came into being, as the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), in his entertaining style, reminded us. Since then, there has been a move from manufactures to services, from the tangible to the intangible, and from the mechanical and the edible to the digital This Government have embarked on a programme to tighten the rules and the definitions. Domestically, we have acted to prevent companies trying to take advantage of ambiguities. Internationally, we are working to plug gaps and address loopholes.
Will the Minister give way?
I cannot give way because of the time. I apologise to the hon. Lady The Institute for Fiscal Studies has said that there is “literally nothing” that any one national Government can do unilaterally about some of the loopholes. That is why we are working together with our international partners. We led the debate on updating the international tax rules by initiating the G20-OECD base erosion and profit shifting projects during our presidency of the G8. We were the first country to take action to implement the G20-OECD recommendations to help us better to align the location of taxable profits with the location of economic activity. As part of the implementation of the recommendations, the UK last week signed an agreement with 30 other tax administrations to share country-by-country reports from next year. We now want agreements on making information public, as was spelled out in our manifesto. We will continue to lead any multilateral debates in this area We know that to achieve sustainable and long-term economic growth, to drive up productivity and to carry on creating jobs we need internationally competitive taxes. We are clear, however, that those taxes must be paid. In 2009-10, the tax gap—the difference between tax liabilities and the amount of tax collected—was 7.3%; last year, it had fallen to 6.4%. Over the last Parliament, HMRC secured more than £100 billion in compliance revenues. In the spending review, the Chancellor approved an additional £800 million of funding for HMRC to recover an additional £7.2 billion of taxes, which is a great deal for the British taxpayer Let me be clear: HMRC investigates tax impartially. No organisation or individual gets preferential treatment because of their size or because of their income. Let me remind hon. Members, including the right hon. Member for Barking (Dame Margaret Hodge), that during the tenure of the Labour party in government, the House of Commons reaffirmed and enshrined in law the long-standing principle of confidentiality through the Commissioners for Revenue and Customs Act 2005. The principle of taxpayer confidentiality means that HMRC cannot publish details of a settlement. That is a fundamental principle of the tax system of every major economy, including ours: there is no ministerial involvement in this country. The hon. Member for Ilford North (Wes Streeting) asked how we can know that there has not been a sweetheart deal. HMRC publishes online its litigation and settlement strategy, which makes it clear that the department cannot and will not settle for anything less than the full tax, interest and penalties payable under the law My time is very short, but I want to respond briefly to a couple of points made in the debate. The hon. Member for Glasgow South West (Chris Stephens) secured a debate in this place on the HMRC office estate. As he knows, the plan is to concentrate expertise in a number of regional centres, which will make interaction between the areas of expertise more straightforward and, indeed, improve career opportunities for many people. The number of HMRC staff dealing with large businesses is not going down; it is going up in line with the increased investment that, as I have mentioned, the Chancellor has committed to tackling evasion and avoidance The hon. Member for Wythenshawe and Sale East (Mike Kane) talked, rightly, about developing countries. It is right that we give extra support to countries that need it. In 2015-16, HMRC established a new tax experts team to support a number of developing countries. I would be happy to take him through more of the detail of that if we had the time We had excellent and informative speeches from, among others, my hon. Friends the Members for Sherwood (Mark Spencer), for Mid Worcestershire (Nigel Huddleston), for Norwich North (Chloe Smith), for South Norfolk (Mr Bacon) and for Thirsk and Malton (Kevin Hollinrake). My hon. Friends the Members for Spelthorne (Kwasi Kwarteng) and for Croydon South (Chris Philp) reminded us of the record of the last Labour Government, but I fear that the Opposition’s current plans are much worse. They claim that they want to make businesses pay more tax in the UK, but in truth their policies would drive companies away from this country, which would mean fewer jobs, lower wages and a weaker economy. This week, we have learned that they want to put taxes up not just for businesses, but for working people To achieve long-term economic growth, we need internationally competitive taxes, but our message has been clear: “If you operate in the UK, you pay tax in the UK, and whoever you are, the same UK law applies.” We will continue to strengthen the law, to close the loopholes and to invest in HMRC’s capacity through additional funding and extra powers. We will continue to lead the world in the fight against international tax avoidance to ensure that the UK has an internationally competitive but fair tax regime. I urge hon. Members to support the amendment and to reject the motion Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
I inform the House that Mr Speaker has selected the amendment in the name of the leader of the Scottish National party Before I call the shadow Secretary of State to move the motion, I remind the House that there are a lot of speakers and very little time, so there will be a three-minute limit on Back-Bench speeches, but still we might not get everybody in. With that in mind, if the Front Benchers could make their contributions more like bullet points than great oratorical flourishes, the House will be grateful.
I beg to move, That this House notes the ongoing negotiations between the Scottish and UK Governments in the Joint Exchequer Committee on a revised fiscal framework to accompany the Scotland Bill; regrets that, despite both Governments repeatedly stating that the negotiation of a revised fiscal framework would be concluded by autumn last year, no agreement has been reached; further regrets the complete lack of transparency with which negotiations have been conducted; notes that, until agreement is reached, the measures in the Scotland Bill will not be implemented and the substantial new powers it contains will not be deployed for the benefit of the Scottish people; believes that both the UK and Scottish Governments have a duty to ensure that the negotiation of a revised fiscal framework which is fair to Scotland is completed in time for the Scotland Bill to be approved by the Scottish Parliament prior to its dissolution, so that it can use its current and future powers for the benefit of the people of Scotland; and calls on the UK Government to publish all minutes and papers from the Joint Exchequer Committee negotiations, and to assure the House that every effort is being made to ensure that agreement on a revised fiscal framework is reached, and the Scotland Bill is passed, prior to the Scottish Parliament elections I am sorry that you do not want an oratorical flourish, Madam Deputy Speaker, because that is what I was preparing to give—but never mind; we will continue with the debate. I appreciate that this debate has been curtailed because of the previous debate, which was on an incredibly important issue, and because of the Prime Minister’s statement. We have to accept how the House works in such circumstances It is a pleasure to open this debate for the Opposition. At its core, this debate is about the transfer of new powers to Scotland under the Scotland Bill, which completed its passage through the House in November and is currently in the other place. It is worth briefly reflecting on the Bill, to put this debate about Scotland’s public finances and the fiscal framework into context. The Bill had its genesis in the vow and the Smith commission, the recommendations of which were agreed by all five major Scottish political parties. When passed, the Bill will transform the Scottish Parliament into one of the most powerful devolved Parliaments in the world Scotland will have control over all income tax, apart from non-savings and non-dividends income, which generated almost £11 billion in revenues in 2013-14. The Scottish Parliament will have the power to vary the rates and bands of income tax, to increase or decrease those revenues. This greatly enhances the powers devolved under the Scotland Act 2012, under which the Scottish Parliament controls just 10p in the pound. On that note, the Scottish Labour leader, Kezia Dugdale, announced yesterday that, faced with a choice of cutting into Scotland’s future or using the powers of the Scottish Parliament, we would use the latter to set the Scottish rate of income tax at 11p, rather than the 10p in the SNP Budget, to invest in that very future for Scotland and to protect the low-paid. We made that point in the debate in the Scottish Parliament today These new revenue-raising powers are accompanied by new spending powers, such as control over £2.5 billion of welfare spending. The Scottish Parliament will be able to top up existing UK benefits and, thanks to concerted pressure from Labour and our amendments, will have total autonomy to create new benefits in devolved areas. When these new powers are enacted, the Scottish Parliament will be able to make different choices to create a better Scotland.
Who in the hon. Gentleman’s party speaks for England to make sure that the settlement is fair to England as well as to Scotland?
The settlement has to be fair to the rest of the UK as well, including England, but I will come to that later.
We hear of cheers in the Scottish Parliament this afternoon when the Scottish Finance Minister tried to justify public expenditure cuts by the Tories. Is that not the final proof that the socialist credentials that the SNP claims have no foundation whatsoever?
I am grateful to my hon. Friend for that intervention, because what we have seen this afternoon in Scotland is a Scottish Labour party determined to use the current powers of the Scottish Parliament to try to do something different from Conservative austerity. The result of that is a Scottish Finance Minister and a Scottish Government just managing that Conservative austerity. As I said earlier, when faced with the choice of managing the Tory austerity or creating a different future for Scotland, we have chosen to create that different future I was explaining the principles behind the Scotland Bill. However, before the Scotland Bill can be enacted they must be underpinned by a new fiscal framework for Scotland. That runs alongside the legislative process, which is slightly different from what happened with the Scotland Act in 2012 It is crucial to state that the Smith commission stipulated that the Barnett formula would be retained as the mechanism for determining Scotland’s block grant. That is not in question in this debate. However, Scotland’s block grant will need to be adjusted to reflect both the new tax-raising powers and new expenditure responsibilities that are being devolved, and that is at the heart of today’s debate. Until that revised framework is agreed by the UK and Scottish Governments, the Scotland Bill cannot be enacted and the new powers and responsibilities it transfers cannot be implemented. We need a negotiated agreement in order to move on, otherwise the new powers will lie dormant and Scotland’s financial position in the future will remain very uncertain.
The hon. Gentleman mentioned the Barnett formula and the vow, and of course he is right that the Barnett formula will be retained, but he will also be aware that it is not based on relative need and therefore is not fair to England, and in particular to Wales. Will he therefore, as a member of a party of the left, support reform of the Barnett formula to make it more progressive for the whole island?
There is consensus across the entire Chamber that the Barnett formula should stay in place. It was in the vow signed by all the major party leaders who went into the general election. The Smith agreement has been signed by all five political parties, and that includes the maintenance of the Barnett formula. The hon. Gentleman, from the Conservative Back Benches, wants to renew and review the Barnett formula, which means only the Labour party in this Chamber will defend it. It would seem that the policy from the Conservative Back Benches is to do away with Barnett and that the Scottish National party wants full fiscal autonomy, which would also do away with the Barnett formula. We will defend the Barnett formula, because it is in the interests of our constituents to do so.
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I am happy to give way to the hon. Gentleman again, while bearing in mind that this debate is very much curtailed.
I do not want to do away with the Barnett formula. I would just like to see it revised so it is based on relative need, because that seems to me to be a very fair way forward.
The Barnett formula is based on that need. It was designed in the 1970s to take into account not only the contribution that Scotland makes to the United Kingdom but its public service requirements and geographical nature. It commands broad political consensus and I do not think we should break that. That would be a very difficult message to send out The message from today is that it is the job of the Scottish and UK Government Ministers to get a deal. We heard today that the Chief Secretary to the Treasury, who I am delighted is in his place, will be in Edinburgh for talks all day on Monday. The people of Scotland will expect nothing less than a final deal that is signed, sealed and delivered. We support the Scottish Government in their efforts to reach an agreement that is fair, equitable and consistent with the Smith agreement. Again that is not in question, but reach an agreement they must.
Surely before the Scottish referendum the Scottish people were promised these extra devolved powers and they will be extremely disappointed with all this shilly-shallying around and failure to come to an agreement after 18 months?
That is the crux of our calling for this Opposition day debate. I will come on very soon to the issues around timescales and what should have been delivered by now, but nobody will forgive us in Scotland, or indeed across the rest of the United Kingdom, for breaking the promise of getting these powers through so that the Scottish Parliament can choose a different course, if it so wishes, from the rest of the UK As I was saying, reach an agreement they must. I believe there is broad consensus on this point across the Chamber. Indeed the SNP chair of the Scottish Affairs Committee, the hon. Member for Perth and North Perthshire (Pete Wishart)—I am delighted he is in his place—has also said that he wants “assurances…that a deal will be reached in time.” We do not agree on very much, but we certainly agree on that particular point. Few people would understand if both Governments were to walk off the job before it was done and instead start a blame game I want to highlight two key issues in the debate. The first is the secretive nature of the negotiations and the consistent refusal of both Governments to publish any meaningful papers or minutes from the Joint Exchequer Committee meetings.
I thank my hon. Friend for giving way. I did not mean to interrupt his flow; he is making an important speech. The Communities and Local Government Committee has published an important report today, not about Scottish devolution but about English devolution, and it contains major criticisms of the lack of openness over deal negotiations. Does he share my concern that the Government seem to be operating in an underhand way in relation to these negotiations as well?
I agree with my hon. Friend. This seems to be very much the way in which this Government operate. We have just had a debate about taxation, and we have also discussed the devolution settlements that the Communities and Local Government Committee’s report mentions. It is important that we have transparency, because the only way to carry the public with us on the fundamental issue of devolution to local communities is to ensure that the arrangements are transparent, robust and democratic That brings me to my second concern in this Opposition day debate, which is the need to agree the framework so that the Scotland Bill can be passed in time for the Scottish parliamentary elections in May. For months now, the negotiations in the Joint Exchequer Committee have dragged on behind closed doors, shielded from public scrutiny. According to Scottish Government sources, agreement is as far off as it has ever been, while the tone of the Secretary of State suggests that he is straining every sinew to get a deal. There was always a danger that, away from the spotlight, the two Governments would fiddle and fixate and that the momentum to reach a deal would be lost. And so it has proved. This relates to the concern raised earlier by my hon. Friend the Member for Bishop Auckland (Helen Goodman) At first, agreement was going to be reached by last autumn. The Scottish Secretary consistently referred to an autumn deadline, as did the Chief Secretary to the Treasury and the Deputy First Minister in Scotland, but no agreement materialised. Then the deadline was moved to mid-February. In mid-December, the First Minister talked up the prospect of a Valentine’s day deal, but come January her deputy, Mr Swinney, struck a downbeat note emphasising the big gap between the two Governments. He also introduced an arbitrary deadline of 12 February for a deal on the fiscal framework. If negotiations were not concluded by then, he would not table a legislative consent motion prior to the Scottish Parliament’s dissolution before the elections in May. I have yet to find out why that is the case, because the Scottish Parliament does not dissolve until late March. If no agreement is reached, the Scotland Bill will effectively be kicked into the long grass. That would mean no new powers for the foreseeable future For all that, I remain confident that if the political will exists, a deal can be reached. To test that political will, however, we need to bring the negotiations out into the open and allow the public to see whether this is brinkmanship or a proper negotiation. From the very beginning, I have bemoaned the absence of transparency at the heart of these negotiations. It is simply unacceptable that the process of redrawing Scotland’s fiscal terrain is taking place behind closed doors in vapour-filled rooms.
Does my hon. Friend agree that a key reason for the deal to be done before the Scottish parliamentary elections is to give the Scottish electorate some confidence in the promises being made by the political parties on spending and taxation? Does he also agree that there is great interest in this matter across the rest of the United Kingdom because of the asymmetric nature of devolution? We want to see how Scotland uses these powers.
My hon. Friend is absolutely right. Without having the Scotland Bill on the statute book and available to be used from 1 April 2017, there will be obfuscation about what can go into party manifestos come May, and we will be having a constant debate about the constitution rather than about the transformation of Scotland. He is also right to suggest that this is not just about a fiscal framework for Scotland. It is important for these negotiations to run in parallel with the Scotland Bill, but they also have significant implications for the rest of the United Kingdom. The no detriment principle for Scotland works both ways; it is also a no detriment principle for the rest of the United Kingdom. That point is often lost in these discussions As I was saying, I have bemoaned from the very beginning the absence of transparency. It is simply unacceptable that the process of redrawing Scotland’s fiscal terrain is taking place behind closed doors. David Bell, the respected economist, has noted the secretive nature of these discussions. He said: “These discussions are taking place behind closed doors with little information publically available about the options being considered and the effects of these options.” Asked to offer his thoughts on these proceedings, Professor Muscatelli said: “I will be honest, it is difficult for anybody on the outside to see what exactly the stumbling block is” in these negotiations. Even the Chair of the Scottish Affairs Committee—this might be the second time we have agreed—said that the negotiations and the transparency at their heart are “not good enough”. I also warmly welcome the Scottish Affairs Committee’s in-depth inquiry on this issue, which it will publish soon I ask why both Governments refuse to publish papers and minutes, as requested. On 9 September, I wrote to the chairs of the Joint Exchequer Committee, John Swinney and the Chief Secretary to the Treasury, with the perfectly reasonable request to publish papers and minutes from the meetings, but they refused to do so. I also tabled written and oral questions to ask that we be kept updated on the progress of the negotiations and that substantial details of the discussions be placed in the public domain, but, once again, my request was rejected. Both Governments said that they would not provide a “running commentary” on the negotiations, while providing the very same running commentary through the media. Meanwhile people in Scotland are very much in the dark. That has allowed politicians on both sides to seek to exploit the secrecy, rather than getting on with finalising the deal.
Does that not also trouble my hon. Friend, because it goes back to the very principles of the Smith commission, pillar one of which explicitly said that one challenge faced in this new constitutional settlement was having much stronger, transparent parliamentary scrutiny of the work? It particularly identified the JEC. If we cannot get it right now, what hope do we have for the future?
That is a timely intervention, because when everyone talks about making sure that the Smith agreement is delivered in spirit and in substance, they tend to forget the bits of the substance that it is inconvenient for them to remember, and that is one such bit. The JEC has not been transparent. One key plank of the Smith agreement was intergovernmental relations, and without that transparency we cannot see whether intergovernmental relations are actually working. One key thing about the whole devolution project, be it in Scotland, Wales, Northern Ireland or in the discussions about England, is to make sure that all the components of that devolved body of the United Kingdom can work together in partnership Let me compare these negotiations with the fiscal framework negotiations that sat alongside the Scotland Act 2012. I have here the minutes of the first meeting from that process, which took place on 27 September 2011, and they are a dusty tomb of information, giving details of who attended, points that were discussed, things that were agreed and things that were to come back to be agreed. By contrast, let me give a flavour of the communiqués from this year. The one relating to the 1 February meeting states: “The Joint Exchequer Committee met in London today, chaired by John Swinney, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy. HM Treasury was represented by…Chief Secretary to the Treasury This was the eighth meeting of the JEC since the publication of the Smith Commission report…The Ministers continued their discussion… Both Ministers agreed to meet next week” The minutes on the 21 January meeting again introduce who was at the meeting, with their very long titles. They then state: “This was the seventh meeting of the JEC since the publication of the Smith Commission report. The Ministers continued their discussion on the indexation methodologies for the Block Grant Adjustments and also discussed the initial transfer of funding for new welfare powers… Both Ministers agreed to meet again shortly” They go on, running to less than a third of a page—a couple of paragraphs of minutes. I am not sure that having no details and no substance is acceptable It is not acceptable because the Scottish Government have threatened to veto the Bill if it is “not fair to Scotland.” The problem is that we do not know what, in their opinion, or in the UK Government’s opinion, is a fair deal for Scotland and what that looks like. We do not know in what way the current detail on offer from the UK Government is deficient on that test of fairness. It would appear that the main stumbling block is on the method used for the future indexation of the block grant. Of the methods being considered, the Scottish Government now favour the per capita index deduction. People can go to the Library to find out what that is—I will not explain it at this juncture. [Hon. Members: “Go on!”] I can go through the formula if Members want, and give a prize if they get the answer at the end. Less than a year ago, however, the Deputy First Minister told the Scottish Parliament’s Finance Committee that he favoured the indexed deduction, which takes into account population growth. There is clearly some confusion over which method is best for Scotland, which is why transparency of discussions is incredibly important.
I understand that the Labour party is feeling a bit sad, because, as it has not been successful enough to be in government in either country, it is not involved in these negotiations. Now that the shadow Secretary of State has the opportunity to have his say, can he please tell us what method of block grant adjustment Labour would favour?
Well, we do not know—[Laughter.] Let me answer the question! We have not seen the negotiations, but, as the leader of the Scottish Labour party has said, we prefer the per capita index reduction model, because it is important that we have that particular debate. It is strange that the intervention gave the impression that we are being locked out. It is not the Labour party that has been locked out of these discussions, but the Scottish people, which is why we called this debate. We want to shed some light on these very secret discussions I noticed that the hon. Lady did not say whether she supports doing something in Scotland with the powers that her party currently has, or whether she is willing just to manage Conservative austerity.
I thank my hon. Friend for giving way again. Does he agree that there are some amazing parallels between these negotiations and the Prime Minister’s EU negotiations, where we were kept totally in the dark all along and then we found out that there was nothing to see anyway?
Absolutely. I suspect that that is part of the problem that we have now I am conscious of the time, so let me quickly wrap up by paying some attention to the SNP amendment that has been selected in the name of the right hon. Member for Moray (Angus Robertson). I cannot quite fathom why the party has tried to amend what is a very uncontentious motion. I thought that we could work together on this important issue given that we share the same goals for a fair deal for Scotland. Our motion merely reflects the views that have also been expressed by the Chair of the Scottish Affairs Committee. I have no problem at all with the SNP amendment as it is written, but it is a wrecking amendment, as it would completely replace everything that we are asking for in our amendment. I wish that the SNP had tabled the amendment as an addendum, and we could have gone forward together in consensus. The purpose of this debate is to get transparency and to ensure that a fair deal is done, and I would have thought that SNP Members would have agreed with that. I welcome the fact that they are now defenders of the Barnett formula, as a few months ago they were voting in this Chamber with the Conservatives to scrap the Barnett formula in favour of full fiscal autonomy. It does pose the question of whether they are really interested at all in getting these particular issues resolved Let me finish by talking a little about the democratic deficit, which was the second plank at the heart of these negotiations. We must close that deficit. The Scotland Bill is much too important for us not to do that I will conclude by posing a few questions, which I hope can be answered by the Secretary of the State in his opening remarks, or by his colleague, the Chief Secretary to the Treasury, at the conclusion of this debate. The Chief Secretary to the Treasury announced today that he will be in Scotland for more talks on Monday. What are the Secretary of State’s aspirations for that meeting, and is a deal expected at those talks? Does the Secretary of State recognise 12 February as a final deadline, and what will happen if a deal is not reached by that date? Will negotiations continue regardless of dissolution and the Scottish parliamentary elections? Will the Secretary of State publish the final offers from both parties for transparency purposes so that the public can determine whether or not these were good deals for Scotland? Has consideration been given to agreeing a deal for a trial period thus allowing for assessment and adjustment Our motion urges both Governments to work together and to stay at the table until a deal is agreed. It also calls on the UK Government to publish all minutes and papers from the Joint Exchequer Committee, and I commend it to the House.
Order. I now have to announce the results of today’s two deferred Divisions. On the motion relating to social security regulations, the Ayes were 297 and the Noes were 73, so the Question was agreed. On the motion relating to the social security pensions Order, the Ayes were 301 and the Noes were 70, so the Question was agreed [The Division list is published at the end of today’s debates.]
Let me add my welcome to this debate this afternoon. A debate on Scottish public spending is important at any time, but it is particularly apposite today, as our colleagues at Holyrood are debating the latest draft Scottish Budget I am sure that we will be hearing a lot from SNP members about austerity, even as their counterparts in the Scottish Parliament vote through massive cuts to Scottish local government, while maintaining a council tax freeze which prevents councils from addressing their shortfalls and making use of the new Scottish rate of income tax. Public spending is about choices, and I am proud to be part of a Government who cut tax for over 2.3 million people in Scotland, reducing the tax paid by a typical taxpayer by £825 and taking 290,000 Scots out of paying any income tax at all.
Will the Secretary of State give way?
I have not started yet. I will give way to the hon. Gentleman in due course On the motion and the amendment, let me start by reminding the House what the Government are working on in relation to the fiscal framework. We are implementing the Smith commission—a cross-party agreement for the future of Scotland. I am determined to deliver the legislation required to implement the Smith agreement in full. That is why we are negotiating a new fiscal framework agreement for the Scottish Government. That is what the people of Scotland voted for—a stronger Scottish Parliament in a strong United Kingdom. They did not vote for independence. As the SNP’s former adviser Alex Bell has noted, “the SNP’s model . . . that it was possible to move from the UK to an independent Scotland and keep services at the same level, without either borrowing a lot more or raising taxes” is “broken” We base our position on the principles set out in the all-party Smith agreement. Smith stated that a fiscal framework needed to be agreed—that there should be no detriment at the initial point of devolution, that there should be appropriate indexation to adjust the block grant in future years, that this should be fair to taxpayers across the UK, and that we should address so called “spillover effects”. That means that the Scottish Parliament and Government will take on more economic responsibility and accountability.
The Secretary of State quoted the Smith agreement as stating that, at the point of devolution, there should be no detriment to the Scottish public finances, but does he agree that the key to that is ensuring that the fiscal agreement does not build in detriment in the coming years, which is the crux of the deal and the problem in reaching agreement?
The crux of the deal is to deliver a settlement that is fair to Scotland and fair to the United Kingdom. As the hon. Gentleman knows, a number of mechanisms have been set out that could achieve that and they are part of the ongoing negotiation.
Will the Secretary of State give me a little more information about what he considers to be fair? Will he explain the mechanisms that are being discussed?
If the hon. Lady is new to this debate, she will be able to find many detailed discussions about all the mechanisms. Under the new proposals, the Scottish Government would benefit from good decisions that they take which produce additional revenue for them, but they would bear some of the risk if they take decisions that lead to less revenue than had been anticipated. That is what I think is at the heart of fairness in the proposals being debated.
Following on from what my right hon. Friend has just said, does he therefore confirm that the per capita indexed deduction is not the right way forward?
I do not think even my hon. Friend would expect me to express a view because I am not going to negotiate the arrangement on the Floor of the House. I am happy to comment on a number of aspects of the negotiation, but the Deputy First Minister of Scotland has made it abundantly clear to the United Kingdom Government that it is he who is negotiating these arrangements on behalf of the Scottish Government, not MPs, not the First Minister and not members of the Scottish National party. I have confidence in his wish to reach an agreement and to conduct those negotiations, as we have done so far, on the basis that we committed to—that is, by not giving a detailed running commentary.
I give way to the Chair of the Scottish Affairs Committee.
We have heard from the Labour party that it does not know which index it favours in these negotiations, and I think that the Secretary of State is saying that he does not have a view about the indexation he prefers. Surely we need to know what both respective parties favour. We know what we want. What does he want?
The hon. Gentleman has just heard me set out the position. We are in an ongoing negotiation, and I remain optimistic that it will reach a positive conclusion. I must say that I do not recognise some media reports that say there is a gulf between the two Governments. I believe that we are both on the same page—one Government might be at the top of the page and the other might be at the bottom, but it is eminently possible for us both to move to the middle. That is what my colleagues the Chief Secretary to the Treasury and the Deputy First Minister will continue to do when they next meet. The Government are doing all we can to reach an agreement based on the Smith principles.
The Secretary of State is unwilling to state his position today, but surely he agrees with Professor Anton Muscatelli, and indeed with the Scottish Trades Union Congress, that these powers cannot come at any cost. He must commit today to a position on non-detriment to the Scottish budget.
What I commit to is a fair settlement for Scotland. The discussions are ongoing. I am confident that we will be able to achieve a fair settlement for Scotland. The hon. Member for Edinburgh South (Ian Murray) alluded to the fact that the Joint Exchequer Committee has met eight times, with constant engagement at official level. I have met John Swinney on numerous occasions during this period. Work at official level continues. Senior UK Government officials will meet Scottish Government officials in Edinburgh tomorrow. My right hon. Friend the Chief Secretary to the Treasury has today confirmed that he will be available all day on Monday for further discussions. We stand ready to agree a deal. Our door is open and our efforts continue.
The Minister is setting out the discussions that have taken place and are taking place. I take him back to the Smith principles, to which he alluded, which state that there should be “pro-active reporting to respective Parliaments of, for example, the conclusions of Joint Ministerial Committee, Joint Exchequer Committee and other inter-administration bilateral meetings established under the terms of this agreement.” Is he really telling us that refusing today’s request for the minutes meets that principle, because it does not sound like it, and we have had so little detail of so much work?
I am sure that the hon. Lady could find a lot more detail if she studied the Scottish press and looked through the various debates that have been conducted on the issue. We will report what happened in full. I do not recall important negotiations being reported in detail and on a daily basis in the House of Commons or elsewhere when Labour were in government. We do not intend to do that. We intend to reach an agreement that is fair for Scotland and fair for the rest of the United Kingdom. That is where our efforts are focused I remain an optimist. We are making progress, and I believe that we will reach an agreement. A deal can and will be reached if both sides want it. I know that the UK Government want a deal, and I believe the Scottish Government when they say that they want one too. The two Governments have agreed to speak again in the coming days. Although there are still some difficult issues to resolve, we remain confident that a deal can be reached that is fair to Scotland and fair to the rest of the UK, now and in the future.
I am grateful to the Secretary of State, who is doing a difficult task with great skill. Has a recent model been produced for how the income tax might work, because we have seen in previous debates that the forecasts for oil revenue were grossly exaggerated, and there is an unfortunate danger that with the collapse of the oil price will come the collapse of oil-related incomes in Scotland, which would have a bad impact on income tax receipts?
My right hon. Friend makes an important point, which speaks against those who argued just a few short months ago for full fiscal autonomy. It is quite interesting to look back at the amendment launched by the SNP in November to bring about full fiscal autonomy, which the Institute for Fiscal Studies predicted would create a £10 billion gap in Scotland’s finances. When the SNP asked for that full fiscal autonomy, it did not ask for what they now claim are the levers it needs to grow the Scottish population and offset the risk it is being asked to take on in relation to the Smith commission proposals The Government have been as open and transparent as possible in these negotiations, and each meeting has been notified to the House. Just this afternoon, the Chief Secretary appeared before the Scottish Affairs Committee. Last month, we responded in detail to the Economic Affairs Committee in the other place on fiscal devolution, having previously submitted written evidence to that Committee.
It is vital that these negotiations have the confidence of not just the Scottish people, but the people of the whole UK. Does the Secretary of State recognise that there is a significant risk of these negotiations suffering from the same problems as the negotiations over devolution in England, which the Communities and Local Government Committee report published today clearly states have lacked openness?
I do not recognise, for the reasons I have just set out, that those circumstances characterise the negotiations we have been conducting with the Scottish Government, and I make the case that a degree of privacy for negotiations of this type is required The hon. Member for Edinburgh South mentioned deadlines. I do not think in terms of self-imposed or arbitrary deadlines. Personally—keen though I am to have a warm and supportive relationship with the Scottish Government—I have never felt that the St Valentine’s day date had much relevance to this process. I am willing to continue working towards a deal for as long as that takes and for as long as we can. However, the usual channels have agreed to move the next day of Committee on the Scotland Bill in the other place to 22 February, as discussions on the framework continue to progress, to enable us to give their lordships as full an update as possible We have shown flexibility in the negotiations. While I cannot, as I have said, give a commentary to the House, Members will have seen via media reports that the UK Government have put compromise proposals on the table. That is a clear signal of our commitment to reach agreement and of our willingness to be as flexible as we can be, within the Smith principles Without commenting on the proposals, I would point out that the House will be aware of some of the tenets of those on the table. There are some suggestions that the Scottish Government should retain all income tax raised in Scotland, as well as a guaranteed share of the growth in income tax in England, Wales and Northern Ireland. Professor Muscatelli, who was referred to earlier, told the Scottish Parliament that such an approach would not meet the test of taxpayer fairness. This seems, once again, to be the Scottish Government wanting to have their cake and eat it—indeed, to have a slice of everyone else’s cake while they are at it. That might be understandable enough politics, and an understandable enough position to adopt at the start of a negotiation, but it cannot really be said to be a credible position Once the powers are devolved, Scotland “should retain the rewards of our success, as we will bear the risks.” —[Scottish Parliament Official Report, 16 December 2015; c. 23.] Those are not my words, but those of John Swinney. Mr Swinney has been very clear in the past about exactly what he meant by “risks”. He meant the risk that Scotland’s population might decline relative to the rest of the UK’s When asked at the Scottish Parliament’s Finance Committee by Malcolm Chisholm MSP if the Scottish Government would seek to be protected from the possibility that the rest of the UK’s population will expand more quickly than Scotland’s, John Swinney was very clear: “That is another of the wider range of risks that we take on as a consequence of gaining the responsibilities.” The Daily Record newspaper, sometimes brandished by SNP MPs, set this out clearly, finding it hard to see why “a tax-raising Scotland should benefit from a growth in tax receipts in England and Wales” and stating that “there is an undeniable logic” to opposing that view.
The Daily Record completely misunderstood how per capita indexed deduction works. Academics have been clear that the Barnett equivalent is per capita indexed deduction. If the Secretary of State supports anything other than PCID, he is attempting to undermine Barnett. Is he trying to scrap Barnett to appease his Back Benchers?
I respect the hon. Lady’s imagination, which, I am afraid, she still sometimes lets run riot. We are committed to the Barnett formula. We are committed to delivering an agreement that is fair to the people of Scotland and fair to the rest of the United Kingdom, and that is what these negotiations are about.
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The position set out in the Daily Record reflects the reality. If the population of the rest of the UK were to rise at a faster rate than Scotland’s, that would cause an increase in demand on public services such as schools and hospitals in the rest of the UK, which would need to be funded. How could it be fair that those services be denied the funding required to sustain them because part of the income tax growth was being transferred to the Scottish Parliament? What would people in Carlisle, Newcastle or Liverpool say if their local services were not able to keep up with demand because the Scottish budget was being increased?
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Let us imagine if the situation were reversed. Does anyone think for a minute that the Scottish Government would accept a deal in which a growth in Scottish income tax relative to the rest of the UK was clawed back by the Treasury in Whitehall, to the detriment of Scottish public services? Of course they would not, and quite rightly. I want Scotland to enjoy the benefits when good decisions are made at Holyrood. As John Swinney said, “If we take on a responsibility and make a success of it, we should bear the fruit of that; if we get it wrong, we must bear the consequences.”
I am grateful to the Secretary of State for giving way—I almost thought I had become invisible. We are having a very important debate. He talked about his responsibility to put the Scotland Bill through this House. Surely he has to see that the fiscal arrangements that are put in place are central to that. He must have a view on what is in Scotland’s best interest if we are to avoid detriment to Scotland. Is he really Scotland’s man in the Cabinet or the Cabinet’s man in Scotland?
The hon. Gentleman is not invisible, unlike some of his colleagues. He will find that I am very clear on my responsibility, which is to deliver the Scotland Bill and the powers that the people of Scotland voted for comprehensively in the referendum. The fiscal framework underpins that. It is to be based on the Smith principles of no detriment and fairness to taxpayers in Scotland and across the rest of the UK. That is what I am determined to achieve. Because my glass is half full, I have confidence in the Scottish Parliament to do what is right for Scotland—to pass a legislative consent motion to agree a fiscal framework. The powers contained in the Scotland Bill will present the Scottish Parliament elected in May with a great opportunity to show how devolution can really benefit the people of Scotland I want to say a couple of things about population risk. I do not accept the counsel of despair that says that Scotland needs a more lax immigration system if it is to address the issue of relative population growth. The Government rightly wish to see net immigration come down, and we are taking steps to achieve that, but I am afraid we do still have some way to go. The latest figures show that annual net migration stands at 336,000 and there were 636,000 migrants coming to the UK in the past year. Those are considerable numbers, and if Scotland is not getting a share of that migration, the Scottish Government have some serious questions to answer The levers that the Scottish Parliament has over health and education, among other things, can be used to make Scotland the attractive place to live and work that it should be. The powers contained in the Scotland Bill will give the Scottish Government even more levers to make Scotland even more attractive. If they use the new tax powers in the Bill cleverly, they can attract more taxpayers to Scotland to make a contribution, boost the population and increase the tax take. Of course, if they adopt the frankly ludicrous proposals put forward by the Scottish Labour party this week to increase the income tax bill for most Scottish taxpayers by 5%, they may not succeed in making Scotland a more attractive place to live and work Let me conclude as I began. We are negotiating in good faith to deliver on the Smith commission principles, and I am confident that a deal can be reached. I give an absolute undertaking to this House that I will do everything in my power to achieve a deal that is fair to Scotland and fair to the whole United Kingdom. I remain optimistic that we can get such a deal, and that our debates can move on to how those new powers and the existing powers of the Scottish Parliament can be used to improve the lives of the people of Scotland.
Order. I remind the House that this very short debate finishes at 7 pm, and that there will have to be two Front-Bench winding-up speeches, which I hope will be mercifully brief. Even so, there is very little time, a point of which I know the hon. Gentleman who is about to take the Floor will take note, although he is not subject to a time limit. I call Mr Stewart Hosie.
I beg to move an amendment, to leave out from “accompany the Scotland Bill” to end and add: “notes that the Smith Commission recommended that a fiscal framework be agreed between the UK and Scottish Governments on the basis that the Barnett Formula be maintained and that Scotland would be no worse or better off simply as a result of the transfer of additional powers; notes the clear statement by the Scottish Government that it will not recommend any fiscal framework to the Scottish Parliament that breaches the Smith Commission recommendations and which locks in a long-term financial disadvantage to Scotland; supports the efforts of the Scottish Government to secure a fair arrangement; and urges the UK Government to commit to the principle of no detriment so that a fair framework for the transfer of powers can be agreed and that the people of Scotland can benefit from the additional devolution of powers that they were promised by the UK Government following the referendum on Scottish independence in September 2014.” Before I turn to the amendment and the motion, I will make a comment or two about the Scottish Secretary’s entertaining contribution. He said that his glass was half full—unlike the Benches behind him. Before he makes jibes about invisible SNP MPs, who are here in rather considerable numbers, he might like to have a glance around him The motion is entitled “Public finances in Scotland”, although it is not about the public finances in Scotland. At best, it can be described as being about the fiscal agreement, although in truth it is about the negotiations around the fiscal agreement. There is no reference in the motion to the continuation of the Barnett formula, which is a key point of the negotiations, although it was referenced in the speech. Neither is there any reference in the motion to “no detriment”, an important principle from Smith around which the negotiations are taking place, although it was referenced in the speech That does not take away from the fact that the fiscal agreement is vital. As Lord Smith said, “it is fundamentally important to making Scotland’s new powers work…It is the final interlocking piece of the jigsaw.” We could not agree more.
Will the hon. Gentleman give way?
I will give way in a moment. The shadow Secretary of State laid out the context for potential new powers, and I will do the same for the current state of play of Scotland’s public finances, and the situation in which we are negotiating the fiscal agreement. The UK Government’s cuts to Scotland’s fiscal departmental expenditure limits between the start of the last Parliament and the end of this one will be almost £4 billion, which represents a 12.5% real-terms cut. Almost half of that—£1.5 billion—will be between now and the end of the Parliament. That is, to put it another way, a 4.2% cut to Scotland’s fiscal DEL Even on capital, notwithstanding the Government’s assertion that it is being increased, Scotland will see a reduction of £600 million between the start of 2010 and the end of the Parliament. That is before we even get to the possibility of in-year cuts to the Scottish block grant, as we have seen in the past, having a real, immediate and direct impact on budgets that the Scottish Parliament has already set and agreed.
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I am conscious of the time, but I will take an intervention from the hon. Member for Stockton North (Alex Cunningham).
The hon. Member for Perth and North Perthshire (Pete Wishart) said that the SNP knew what it wanted. If that is the case, will the hon. Member for Dundee East (Stewart Hosie) tell us what the SNP wants and where the Tory Government’s offer falls short?
I will certainly speak to our amendment and comment on the motion tabled by the hon. Gentleman’s Front Benchers. I may even touch on what I think would be the best possible outcome for Scotland. I hope that will make him happy The cuts I have described are vital to the context in which the fiscal agreement is being negotiated. The cuts are not driven by a fiscal agreement or by the Scottish Government, but by the UK Government’s fiscal charter. The fiscal charter is a requirement to run a budget surplus of enormous proportions—a £10 billion absolute surplus and a £40 billion current account surplus by the end of this Parliament. The framework is being negotiated in the context of this Government’s cutting £40 billion a year more than is required to run a balanced current budget. That means we are negotiating on it in the context of being in the middle of a decade of UK austerity The alternative is clear: a modest rise in public expenditure. That would still see the deficit fall, the debt as a share of GDP fall and borrowing come down. A modest 0.5% real terms increase in expenditure would release about £150 billion for spending and investment, and make the cuts we are seeing, which are partly driving the fiscal agreement discussion, absolutely redundant.
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I will take one more intervention at this point.
I would say this to the hon. Gentleman, whom I consider a friend. He is talking about percentage cuts to the Scottish budget, but he should look at areas, such as the north-east, that have had far bigger cuts proportionally. Unlike him, his party and his Government, people in those areas do not have the ability to raise taxes. Why have the Scottish Government not used the tax-raising powers they already have to fill some of the gap he is describing?
That question is important, and I will come on to the use of tax-raising powers. We often hear such an argument from members of the Labour party but let us be under no illusion, because it is wrong. The Scottish Government use their tax powers daily. A council tax freeze to protect families for eight years was the use of a tax-raising power. The small business bonus to protect 100,000 businesses, which now pay no or lower business rates, was a good use of a tax-raising power. The power to mitigate the entire effect of the bedroom tax was a good use of such a power. The idea that powers are not used is simply wrong.
Use them to raise money.
For the hon. Gentleman’s benefit, I will come on to the specific issue of raising tax in a just a moment Before I leave the context of the UK fiscal charter, let me say that we all recall the vote on 13 January 2015 on the implied £30 billion of cuts, when we made many of the same points we are making today. The great tragedy then and now is that the Labour party supported £30 billion of extra Tory pain and austerity.
Will the hon. Gentleman give way?
I will happily give way.
Let us just dispel this constant nonsense from the Scottish National party. The hon. Gentleman’s own First Minister said, when she launched the Scottish business partnership at Tynecastle stadium in June, that the framework on which there was a vote on 13 January 2015 gave Governments enough flexibility to do as they wished. It was very similar to the fiscal framework or charter that he promoted back in November. He refuses to use such powers; he would rather demolish and demoralise Scottish public services.
As the arguments are complicated, it is so much easier simply to quote in full from the 15 January issue of the new Labour leadership’s favourite newspaper, the Morning Star: “Labour MP Diane Abbott accused her party’s leaders yesterday of doing working people a ‘great disservice’ by backing Tory plans for permanent austerity.” The hon. Gentleman keeps getting it wrong The key thing is that Scotland’s budget has been cut and will continue to be cut by this Government, which makes the achievements of the Scottish Government all the more remarkable. That makes it all the more important not simply that we get any old fiscal agreement, but that we get it right. We must ensure that the Smith commission principle of “no detriment” is adhered to and that we do not embed unfairness in the system, so that we are not subject to possible additional cuts of about £350 million a year. We need to avoid that outcome so that we can continue to do good things and build on the progress we have seen in health spending, which is up to £12.3 billion this year and will be £13 billion next year, and in education.
May I bring the hon. Gentleman back to the fiscal framework? I am interested in the amendment that he has tabled, because it seems to quote from the Smith commission—particularly paragraph 95(3) on no detriment, which states that “the Scottish and UK Governments’ budgets should be no larger or smaller simply as a result of the initial transfer of tax and/or spending powers” The amendment carefully deletes some important parts of the Smith agreement. It states that “Scotland would be no worse or better off simply as a result of the transfer of additional powers” Why has he deleted the word “initial”, which is very important in respect of the transfer of powers, and any reference to fairness to the UK taxpayer?
For the sake of brevity. Let me be very clear that the negotiations that are under way are founded on a number of principles, including no detriment as a result of the devolution of further powers initially and no detriment as a result of the policy decisions of the UK Government or Scottish Government post-devolution. I would have thought that the Chief Secretary might have known that The whole point of getting this right is to avoid a potential cut of an additional £3.5 billion over a decade, so that the Scottish Government can continue their good work. We do not want those additional cuts to be made, because they would weaken our ability to internationalise the economy; hinder our support for businesses seeking to innovate and to do research and development; suck vital resources out of our plans to invest in education and infrastructure; and undermine all the work being done by the Scottish Government to deliver the fall in unemployment and the highest employment rates in the UK We understand the trajectory that Scotland’s public finances will take if the wrong block grant adjustment is chosen. As I say, it will perhaps mean the loss of £3.5 billion over a decade.
Given how the hon. Gentleman is speaking, it almost sounds as if the SNP MPs are having second thoughts about the new powers in the Scotland Bill. Is that because they are afraid of taking them on board?
No. The hon. Lady is absolutely wrong; we are not having second thoughts about the powers. We want the powers—indeed, we want more powers—but the agreement that is reached must deliver a Scotland Bill in line with the Smith commission principles, in particular that of no detriment We want to avoid a potential additional cut of £3.5 billion over a decade.
Will the hon. Gentleman give way?
Not at the moment What is remarkable is that the motion does not talk about public finances or the impact of getting the fiscal agreement wrong. It is almost exclusively focused on the process of negotiating a formula—a formula that, of course, must deliver no detriment, which was one of the key principles identified by Lord Smith. Although fairness for Scotland is recognised in the motion, many other drivers of Scotland’s public finances are not.
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Not at the moment There was a cursory passing reference to Labour’s plan, which was announced yesterday, to make Scotland the highest-tax part of the UK. That has a bearing on the public finances. It is a Labour plan to add to the tax burden of half a million Scottish pensioners. It is a plan to add to the tax burden of 2.2 million taxpayers. In essence, it is a plan to change the public finances by taxing Scots more to pay for Tory cuts. That is the weakness in Labour’s plan.
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No, I am conscious of time and it would not be fair to give way It is absolutely right that the negotiations are done privately. Imagine if there was a running commentary and slight snippets of information, out of context, became the fodder for a new “project fear” campaign run by Labour. We do not want that. We want a Labour party that, instead of sniping from the sidelines, is determined to support fair play, and a fair settlement that delivers on the principle of “no detriment”. Instead, we have this thin motion, combined with Labour MSPs who last week backed the Tories and refused to back the per capita index deduction block grant adjustment mechanism, which would deliver the “no detriment” principles that Labour signed up to in the Smith agreement In my view, that is economic and political madness from Labour, but it is not a surprise. After all, in advance of the fiscal agreement, before agreement is reached on an LCM, and before powers are transferred, the Labour party has spent many times over the modest cost of a reduction in air passenger duty—a policy that will create 4,000 jobs and put £200 million of economic activity into the economy—by committing to spend £650 million of Scotland’s public finances from a pot that does not yet even exist. No wonder Labour Members are more interested in talking about process than policy As the First Minister has said, the Scottish Government are negotiating the fiscal agreement in good faith, but they will not sign up to a deal that systematically cuts Scotland’s budget, regardless of anything that they, or any future Scottish Government, might do. That message has been reiterated many times by the Deputy First Minister, who said a few moments ago that the reason why we do not have a fiscal agreement right now is that there is no basis to be agreed that is consistent with the Smith commission, and we will not sign up to any document that is not consistent with the Smith commission report Let me conclude by being even clearer on behalf of my party: we will not agree to a fiscal agreement that abandons the principle of “no detriment” and embeds unfairness into the Scotland Bill. We will not support Labour tonight. This is a silly motion about publishing minutes that does not address the core substance of the fiscal agreement. We have tabled an amendment to that motion, and I commend it to the House.
Order. A three-minute time limit now applies.
It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie), but I cannot agree with him that the principles of per capita indexed deduction, which he and the Labour party support, are consistent with the Smith commission. That commission had two “no detriment” principles, and that system of indexation and deduction does not comply with both those principles. It will be difficult for the rest of the United Kingdom to accept any deal that is premised on such a biased indexation system Professor Gallagher stated in his article “Algebra and the Constitution” that, under per capita indexation, Scotland’s devolved tax yield would be increased each year by roughly the growth in the rest of the United Kingdom population, and that would be on top of Barnett. Although he concedes that that might be to Scotland’s advantage, he stated that “it hardly seems fair to the rest of the UK, which will carry the spending burden created by the new taxpayers” When I look again at the article by Professor Gallagher, I see that public expenditure per head on devolved services in Scotland is £1,400 per person higher than it is on average for the rest of the United Kingdom. It is 24% higher than in the rest of the UK. The proportion of spending is enormously higher. We—the English and the rest of the UK taxpayers—are contributing to that, and we have not heard much thanks for that from the Scottish National party this evening This is an important issue. When the Minister replies, will he tell the House who is representing the rest of the United Kingdom in these negotiations? The Joint Exchequer Committee contains somebody from the United Kingdom Government and from the Scottish Government, but there is nobody who represents the rest of the United Kingdom.
On 8 June 2015, the Financial Secretary said: “We have agreed to aim to finalise the fiscal framework by the autumn, alongside the passage of the Scotland Bill through Parliament.”—[Official Report, 8 June 2015; Vol. 596, c. 1012.] 1 believe he meant autumn 2015, not autumn 2016. Some would say even the latter is looking hopeful. The First Minister, on 14 December 2015, raised expectations of a Valentine’s day agreement, following a meeting with the Prime Minister. However, that is only 11 days away now and somehow I doubt there will be an agreement among the hearts and flowers Since July 2015, the Joint Exchequer Committee has met eight times. Press releases have been published after each meeting, giving a summary of the broad topics discussed but without going into any great detail. My hon. Friend the Member for Edinburgh South (Ian Murray), the shadow Secretary of State for Scotland, has consistently asked that greater details of those meetings be published in the interests of transparency and democratic accountability, yet both the Scottish and UK Governments have refused to publish papers and minutes from the meetings. The opacity of the negotiations has allowed both Governments to exploit them for political purposes. It is disappointing that the Joint Exchequer Committee appears to want to conduct business behind closed doors That is not just the opinion of the Labour party. Witnesses appearing before the House of Lords Committee on Economic Affairs were concerned about the lack of information on the progress of the fiscal framework. Some felt it possible for information to be provided, for instance on points of disagreement and on the timetable for conclusion. That is an important point: if points of disagreement were made available, everyone would be able to see the main sticking points I call on the SNP in this House to play its part in bringing forward the deal and to be open about the sticking points in negotiations with the Government. I have relatives in Scotland. They passed on to me SNP election literature that they received. It states: “The SNP will play a constructive role in Westminster and bring ideas forward in a positive spirit.” Now is the ideal opportunity for the SNP to fulfil its election promise to my relatives and to the people of Scotland, by supporting Scottish Labour MSPs who voted today to increase income tax to escape Tory cuts to Scotland’s public services.
I wish to speak for England. The current settlement between Scotland and England, as the constituents of many of my right hon. and hon. Friends know, is not fair. It is very important that the Government take full account of the needs of England, as well as being scrupulously careful to meet the promises they and the other leading parties made to each other during the Scottish referendum. Please do not make the settlement even less fair to England as a result of the changes going through with the transfer of tax revenues, particularly income tax, to the Scottish Parliament and Government It is extremely difficult to know what factors lie behind an increase or a diminution in revenues. Some of us study it and we feel we get somewhere near the truth by looking at historical patterns, but it is clear that sometimes when the tax rate is put up we receive less, rather than more, revenue. Models have to reflect those perverse effects, particularly on higher levels of tax. Sometimes a tax increase may in itself, if it is one of the lower tax rates, produce some increase in revenue, but then something else happens that actually reduces the revenue. Conversely, there can be windfall effects through no particular action by the Government Scotland has had a very good windfall effect, not just from oil revenues proper, but from income tax revenues as a result of the very high price of oil in recent years and the way that drove up a large number of incomes in the oil and oil service sector. Unfortunately, from Scotland’s point of view, that may now be reversing. The model we use to assess what the revenues are now and what they are likely to be in the future has to be able to capture that complexity. I fear that a lot of the models used in the past by both Governments have not captured that because there are rather extreme effects when there is a big change in the price of oil. That needs to be used to inform the debate about how the grant should adjust to the changes in tax revenue It appears from what the Scottish nationalists have been saying that, while they want the power to vary income tax, there are absolutely no circumstances in which they would ever do so. They would always wish to keep the income tax rate in Scotland absolutely in line with England’s. That seems to be their very clear position. We have not been able to draw out of them any circumstances in which they would do so, but that makes the modelling a bit easier, because many of the changes in revenue are not going to come from changes in tax rates—as I say, they do not want to do that. They will come from the economic effects of their other policies.
Like everyone in Scotland, we have an interest in these negotiations. I thank the Leader of the Opposition for bringing this debate to the Chamber, especially in view of the time pressures. It is important to conclude the negotiations quickly. As has been mentioned, the parties standing in the Holyrood elections will want to fashion their manifestos with the extra responsibilities in mind and lay their plans before the Scottish people in good time Labour’s leader in Scotland, Kezia Dugdale, has already started with her proposed tax increase, which would mean that basic rate taxpayers would pay 5% more tax than they do now, that being the effect of a 1% rise in the base rate. It is a brave strategy and I am sure we will watch her progress with interest We note from the motion that Labour wants all the negotiations out in the open. May I gently remind that party that the Smith commission was not the first to examine Scottish devolution? It followed the Calman commission, which resulted in the 2012 Act, and that followed the constitutional convention of the 1990s. Never were the negotiations over the fiscal model conducted in public. The Treasury statement of funding policy to the devolved Administrations, now in its seventh edition, was presented as a fait accompli. It was never fair to Scotland, and it became a hurdle that the Scottish Government had to clear in trying to deliver for Scotland The introduction of local income tax in Scotland was held back as a result of the refusal of the then Chancellor, now in the other place, to amend the funding policy to allow council tax benefit to be applied to a new tax system. Of course, Labour was in government both in London and Edinburgh at the time the funding policy was created, and the negotiations were in private. As we would expect, nothing was made public at that time. At least with the involvement of the SNP Scottish Government, we know that someone in there is standing up for Scotland, and we are hearing at least some of the details We understand Labour’s frustration—we all want to know what is going on—but it would be a foolish negotiator who gave away their entire position with the first round of tea. Time is running out, however, and if the deal is not done, the Scottish Government will be left with no choice but to take the issue back to the people. A deal that is not good for Scotland will not be acceptable either to the Scottish Government or to we who sit on these Benches casting a gimlet eye in the UK Government’s direction A couple of weeks will determine whether the coming Scottish Parliament election is fought in a spirit of good-spirited competition. The alternative will be a Scottish electorate once more setting their face against a UK Government who have forgotten that governing can be done only by consent. The ideal solution, of course, is independence, but we will have to wait a little while longer for that. In the meantime, we must have a system that can serve Scotland’s people well.
My remarks will be very brief. I take note of the comment just made on independence and the concern about the Labour income tax. My understanding in terms of what has happened to North sea oil is that independence would require income tax to go up by approximately 20p in the pound. The point I want to make, however, is that we are talking about two terms: “fairness”, which has been mentioned a lot, and “no detriment”, which has also been mentioned a lot. I am not at all sure, having heard the dialogue, that those two things are reconcilable My right hon. Friend the Member for Wokingham (John Redwood) said that we accept that the Barnett formula has been conceded and that it means that per capita expenditure in Scotland is 115% of that in England. That was what was agreed and it will presumably be the cornerstone of the agreement. However, it would not be right if, as a result of the agreement currently being negotiated, “no detriment” means that, whatever happens in Scotland and whatever decisions are made by the Scottish Government, the 115% ratio will stay the same indefinitely. I shall have a great deal of difficulty with that, as will my constituents. I should add that my constituents entirely agree with the concept of a Scottish Parliament. They agree that it is right for the people of Scotland to be able to choose their priorities, whether it is a question of prescriptions or tuition fees.
In all his years of learning, has the hon. Gentleman not grasped the fact that the Barnett formula is specifically designed to bring per capita levels of spending in every region and nation of the United Kingdom to the same level?
In all those years, I stayed away from the Barnett formula, but since the hon. Gentleman has raised the point, I will respond to it. No one who has seriously considered the Barnett formula thinks that it is an attempt to be a proxy for relative need; nor is it true that the Barnett squeeze to which the hon. Gentleman has just referred really happens. I note that no Welsh Members are present, but the Barnett formula has caused a massive problem in Wales It strikes me that the formula presented an opportunity to the Scottish national party to show how progressive and internationalist it was. It seems to me that a progressive party of the left, an internationalist party, would not say, “We in Scotland want every single penny that we can get.” The approach of such a party would take account of need in Wales, in England, in my constituency, and elsewhere I ask the Chief Secretary, in the negotiations that he is currently leading, to bear it in mind that, however we interpret the phrase “no detriment”, the ratio of increased expenditure in Scotland—the figure should be higher than it is in England on the basis of need, but not as much higher as it is now—should not be allowed to continue and be built on, no matter what decisions are made in respect of the relative economies over the next few years.
This is an important debate not just because it proposes a fiscal framework for Scotland, but because of the huge impact on my electors in North Durham The Secretary of State said that he wanted no detriment to Scotland and a fair deal for the rest of the United Kingdom, but we do not know that there will be a fair deal for the rest of the United Kingdom. The Secretary of State said, strangely, that the negotiations required “a degree of privacy”, but what we actually have is secrecy. He then used what I considered to be new terminology, although it has clearly been well practised by this Government: he said that one of the roles of the press was to leak. At the end of the day, however, my constituents and I have no way of influencing or scrutinising what happens in the negotiations.
Does the hon. Gentleman think that the current distribution of grant and other money between England and Scotland is fair?
No, I do not. Scottish Members were crying over Barnett, but my constituents would welcome the levels of expenditure that we see in Scotland. The main point is this, though. How can I, a Member of the House of Commons, scrutinise this deal if it is done behind closed doors, in a way that is clearly intended to satisfy the Scottish national party—[Interruption.] The point is that I will not have any opportunity to scrutinise that process The hon. Member for Dundee East (Stewart Hosie) trotted out, again, the argument about how badly Scotland had been treated. Let me gently say to him that he needs to look at the percentage of expenditure that the north-east of England has lost. The north-east is not a wealthy region; indeed, it is the poorest region in the United Kingdom, with the highest levels of unemployment, and its views should not be ignored The hon. Member for Christchurch (Mr Chope) asked who spoke for England, or the United Kingdom, in the negotiations. If the answer is the Conservatives, I have to say that they have been no friends of the north-east for many years, and we will get a very bad deal. The real test, however, relates to the powers that will be given to the Scottish Government. They already have the alternative of raising revenue, but they do not use it. Instead, they are aping the Conservatives with notions such as the freezing of council tax, which is not at all progressive in terms of redistribution The House should have the ability to look at how the deal will affect constituents in the rest of the UK. That said, I do not think we will need to bother, because it is quite clear what the Scottish nationalist party will do. It is going to string it out until May, cry foul and then use its victim mentality, which it has turned into an art form, to persuade the Scottish people that they are getting a raw deal from the rest of us. I do not think, therefore, that we will find ourselves in that position, which is sad, because it means we are not going to have a debate this May in Scotland about the use of the powers; instead, we are going to have the victim mentality. The SNP will blame the rest of us in the UK for the poor deal it has got, when, frankly, it does not give a damn about my constituents or any others in the UK.
As everybody in the House is aware, the vote in Scotland in 2014, despite the SNP’s thinking it gave the wrong answer, has resulted in the largest shift of power and fiscal responsibility our nations have ever seen. At the time, some of my constituents wanted a say in whether Scotland remained part of the UK, yet the system denied them that vote. I can understand why they wanted their say—on the whole, they felt we were better together My constituents did not cry about the fact that public spending per head in the east midlands was £8,219, as opposed to £10,275 per head—over £2,000 more—in Scotland, yet the SNP gripes about every little thing that does not fit its narrow agenda. Only the Conservatives, skilfully led by Ruth Davidson in Scotland, are standing up for the 2 million Scottish voters who overwhelmingly rejected independence at the ballot box. They want not another divisive independence debate, but a plan to tackle the everyday issues that affect them most, such as health, education and jobs. That is what this Government are delivering Everything done for Scotland by the UK Government, whether on the fiscal framework or the Scotland Bill more widely, is based on the Smith principles. If the powers in the Bill are used well by the Scottish Government, Scotland will do well. I disagree fundamentally with the SNP and its dogged determination to break up our country, but at least it fights for what it believes is best for the Scottish people. Sadly, that cannot be said for Labour, which clearly has no plan for Scotland, as shown by this debate It is all well and good debating how much of taxpayers’ money goes from one pot to another, but with devolution comes responsibility for the countries within the Union to make their own way in the world. Labour and the SNP both oppose Trident. If they got their way, thousands of jobs would be lost and it would have a major impact on the Scottish economy and Britain’s security Above all, I am concerned about British taxpayers, whether north or south of the border. I therefore urge my right hon. Friend the Chief Secretary, who is leading the negotiations on the fiscal framework, to ensure adequate protections in any agreement, so that future Scottish Governments cannot simply come back, cap in hand, to the UK Treasury because they have taken the wrong fiscal decisions.
It is not fashionable these days to describe oneself as British, but I am proud to be British. I was born to a Scottish mother, which is where I get my name Andrew, of Welsh parentage, which is where I get my surname Gwynne, and I am proud to be English, Mancunian and Dentonian The powers being extended to the Scottish Parliament and Government have far-reaching implications for the rest of the UK. I want the asymmetric nature of devolution evened out across the UK, and I want the Scottish Parliament within the UK to succeed using its fiscal and welfare powers, because that is exactly where the Greater Manchester Combined Authority and the Mayor of Greater Manchester want to take devolution in my city region. I call on the Government to press ahead with the deal. Let us challenge the Scottish Parliament to use those powers, and let us extend them to the rest of the UK.
May I start by thanking all Members who have made important contributions to the debate? I will mention just a few because of the brief time we have left. My hon. Friend the Member for Heywood and Middleton (Liz McInnes) spoke about how we need transparency to see if the agreement is fair, and challenged the SNP not just to manage Tory austerity but to do something about it. The right hon. Member for Wokingham (John Redwood) talked about how the position of the SNP is not to use tax powers, but it has given no indication of ever using them; indeed, the hon. Member for Edinburgh North and Leith (Deidre Brock) refused to say whether they would use new powers and seems to want local income tax.
I am afraid that, in the interests of time, I will have to proceed My hon. Friend the Member for North Durham (Mr Jones) said that there is a critical issue about the rest of the UK and the need to scrutinise the deal to make sure his constituents, too, are represented. While the hon. Member for Dundee East (Stewart Hosie) commented on the performance of the Secretary of State, he may want to work harder on getting his own facts right. He claimed that the Labour party has spent air passenger duty twice, and it is true: once on mitigating tax credit cuts, when Labour in the end no longer needed to use it for that, and then, secondly, reallocating it to supporting people to buy their first home As my hon. Friend the Member for Edinburgh South (Ian Murray) observed, the focus of today’s debate is the transfer of new powers to Scotland—powers that will transform the Scottish Parliament into one of the most powerful devolved Administrations in the world with the ability to make different choices to create a better Scotland. That is the essence of devolution: the chance to take a different path based on different circumstances; the chance to reject the short-term Tory cuts—false economies that will hurt Scotland. The new powers to be devolved to the Scottish Parliament will only enhance the range of choices on offer. The Scotland Bill that is due to transfer those powers was based on the recommendations of the Smith commission— recommendations which were agreed by all parties Of course, the Smith commission was based on the solemn promise made to the people of Scotland. The Scotland Bill was passed in this place and is currently being debated in the other place. The only sticking point—the only remaining obstacle—is agreement on the fiscal framework. Until that revised framework is agreed by the Conservative Government and the SNP Government, the Scotland Bill cannot be enacted, and without agreement, Scotland will never get the power and responsibility it has been promised. As Labour’s motion states, the lack of transparency from the Tories and the SNP continues to block progress The deadline for concluding the negotiations has consistently been pushed back, yet no one outside the two Governments knows the reasons why. We need a negotiated agreement in order to move on, otherwise the new powers will lie dormant; and we need an agreement before the Scottish Parliament rises for the Holyrood elections in May There has been a democratic deficit at the heart of the negotiations of Scotland’s revised fiscal framework. It is a deficit that must be closed, and that is the purpose of today’s debate. It is a deficit caused by the Tories in Westminster and the SNP in Holyrood, a deficit that is hurting, not helping, the people of Scotland—[Interruption.] An agreement has not been reached. Only when the Scotland Bill is enacted and the powers transferred can we truly move on from the constitutional wrangling that has come to dominate the political discourse in Scotland The questions that my hon. Friend the Member for Edinburgh South has asked remain unanswered, so I will reiterate them. The Chief Secretary to the Treasury announced today that he would be in Scotland—[Interruption.] I hope that he will have a chance to listen to me in a moment. He announced today that he would be in Scotland for more talks on Monday. What are his aspirations for that meeting? Perhaps he could share them with us today. Does he recognise 12 February as a final deadline? What will happen if that deadline is missed? Will the Secretary of State publish the final offers for both parties, for transparency purposes? Has consideration been given to agreeing a deal for a trial period, to allow for assessment and adjustment? I call upon the UK Government to publish all minutes and papers from the Joint Exchequer Committee negotiations and to assure the House that every effort is being made to ensure that an agreement on the revised fiscal framework will be reached and the Scotland Bill will be passed prior to the Scottish Parliament elections.
This Government are united in their belief in a successful and prosperous Scotland—a Scotland that is strengthened through being part of the United Kingdom and whose presence makes the United Kingdom itself stronger. It is clear to us that the Scottish people should have greater control over their affairs and that the Government in Edinburgh should be more accountable. The referendum of 2014 was a defining moment in Scotland’s history. The Scottish people’s voice was clear: they wanted to make Britain stronger and not to break Britain up. It is now right that we should deliver a fair and lasting settlement that works for Scotland and for the UK as a whole. The UK Government are committed to delivering the Smith agreement, which, let us remind ourselves, was agreed by all five parties in Scotland, including Labour and the Scottish National party. That commitment has driven every step of our work.
What assessment has the Chief Secretary to the Treasury made of Labour’s recently announced plans to put up income tax in Scotland? What impact does he think that would have on the Scottish economy?
I was amazed by Labour’s announcement in the Scottish Parliament yesterday about wanting to increase income tax. I think it would be a disaster for the Scottish economy and for the people of Scotland, so I wholly agree with my hon. Friend The Smith agreement was clear: the Scottish Government should bear the economic responsibility for their decisions; or, as the Scottish Deputy First Minister has put it: “If we take on a responsibility and make a success of it, we should bear the fruit of that; if we get it wrong, we must bear the consequences” I want to make three main points. Why are we doing this taxpayer devolution? The answer is to give Scotland one of the most powerful and accountable devolved Parliaments in the world. The stress there must be on the word “accountable”. Since 2010, the amount of taxes raised in Scotland and spent by the Scottish Government will have increased from around 10% to around 20% under the Scotland Act 2012, and to 40% under these proposals. These measures would also allow the Scottish Government the opportunity to grow their economy, to use new devolved powers and to see the fruits of their efforts.
The Chief Secretary to the Treasury is right to say that accountability is at the heart of this matter. That is why we must have a deal, and if we do not get one, we in this House and those in the Scottish Parliament need to be told the reason why. Without a deal, the people of Scotland face the prospect of going to the polls in May not knowing exactly what powers will be given to the Parliament.
I thank the right hon. Gentleman for that intervention, which leads me nicely on to the fact that the UK Government are absolutely committed to getting a deal. I announced earlier today, before the Scottish Affairs Committee, that I will be going to Edinburgh on Monday to continue the negotiations. I am hopeful that we will get—
claimed to move the closure (Standing Order No. 36). Question put forthwith, That the Question be now put Question agreed to. Question put accordingly, That the amendment be made.
I have a well-known interest to declare as a very part-time, or occasional, dentist. I am a member of a number of dental organisations that have applied considerable pressure on me to seek this debate On 27 May, the Minister will give the opening address and take questions at the British Dental Association’s annual conference in Manchester. There are 39,000 dentists and 63,000 dental care professionals in the United Kingdom, spread over the four nations, with the majority of them in England. They will wish to hear about the national health service and contracts, but as professionals their biggest concern will probably be child dental health. Perhaps the Minister’s reply could be secret practice for opening the meeting, bearing in mind that, I suspect, very few dentists will be watching us Dentists feel that their small branch of general health is seen as a “Cinderella” service and a sideline within the national health service. Increasingly, the biggest problem they face is child dental health in the form of caries. This disease is almost entirely preventable, but it is not being prevented. As the Minister is aware, the biggest single factor in dental caries is sugar. The raw statistics on child dental health are pitiful. Deciduous teeth, or baby teeth, are particularly susceptible to decay as they have thinner enamel compared with permanent dentition, and this obviously contributes to children having dental decay. Dental decay is the No. 1 reason for children aged five to nine being admitted to hospital in the United Kingdom.
In Northern Ireland, tooth decay among under-15s has fallen consistently since 2000, and specific education has been done by our health and education Departments to make that happen. The hon. Gentleman referred to those aged between five and 10 consuming sugar. Every child will eat their weight in sugar in a year. Does he agree that we need a tax on sugar, because if we address this at the early stages, we will go a long way towards addressing the problem of tooth decay?
I wish it were that simple. I personally believe that that would not make one iota of difference after a few months. One need only stand in the supermarket watching the kids pushing the mothers for sweets and the mothers feeding them to realise that, as I say, it will not make one iota of difference unless it is prohibited, in which case we would have other difficulties that I will not go into As I have said, the No. 1 reason for children aged five to nine being admitted to hospital in the United Kingdom is dental decay. The NHS spent £30 million on hospital-based extractions for children aged 18 and under in the year 2012-13. That is 900 children a week, who are being admitted primarily for tooth extraction—often under a general anaesthetic, which carries a slight risk in itself I am sure that the Minister is aware of the results of the 2013 child dental health survey. For the sake of those who have not read the statistics and who may glance tomorrow at the debate, I will touch on some of the figures. For example, 31% of five-year-olds had obvious decay in their primary teeth. That figure was higher in more deprived areas, where 41% of those eligible for free school meals had decayed primary teeth, in comparison with 29% of other children of the same age. Of five-year-olds who were eligible for free school meals, 21% had severe or extensive tooth decay, compared with only 11% of those who were not eligible By the age of 15, 46% of our children have tooth decay. Of the 15 year-olds, 59% of those eligible for free school meals had decay, compared with 43% of other children of the same age; 45% reported that their daily life had been affected by problems with their teeth and their mouth in the previous three months; and 28% reported being embarrassed to smile or laugh because of the condition of their teeth. Those are 15-year-olds, who are suddenly taking notice of the world and hoping to be taken notice of themselves.
I thank the hon. Gentleman for kindly taking an intervention, as we discussed beforehand; I also obtained the Minister’s permission to intervene. The hon. Gentleman knows more than anyone else in the House about the matter, and he is widely respected for what he does. He knows that I am the chair of a charity in Nottingham North that has three public health ideas, one of which is that every three-year-old should have the free NHS dental check. I am attempting to work with local dentists to make that happen, but without success; believe me, I have tried. Will the hon. Gentleman facilitate for me a meeting with the British Dental Association to discuss the matter? If I may, I will use this opportunity to ask the Minister to see me, at his convenience, to discuss how we can get dentists to help three-year-olds, who are entitled to that check.
I would be more than happy to do so, because that has to be one the key ways forward. Sadly, the problems are not new, and people are looking at them. One of the areas that I have discovered to be a considerable problem is the dental care of disabled children. I draw the Minister’s attention to a recent report entitled “Open wide”, published by an organisation called Contact a Family. In addition, I know from my local government days that dental care for children in care is exceedingly poor The situation is not new; it has gone on for decades. I am not sure whether it is getting worse, but it is certainly not getting any better. I first practised dentistry in this country on the NHS in east London. The state of our child patients’ dental health, compared with that which I left behind in New Zealand, was staggering. Every Thursday, I or the principal of the practice ran general anaesthetic sessions with an anaesthetist. Fortunately, it is forbidden to do so now. Those sessions were packed with patients, predominantly little children, who had to have all or most of their teeth out. It was appalling, but not as appalling as seeing those children in pain when they came in, having had sleepless nights as a result of dental decay I will touch on the issue of sweet things. I went to the local supermarket, where there were huge long racks of biscuits, cakes, sweets and sweet drinks. However, the racks of fruit, vegetables and meat were infinitely shorter. Most of the children I dealt with did not have toothbrushes, and most of the parents were unaware that their children had such damaged teeth because of their diet Prevention, with progressively increasing reductions to NHS costs, can be achieved. If one realises that the UK population eats about 700 grams of sugar a week—an average of 140 teaspoons of sugar a week—it is obvious that a reduction is a necessity. That intake is not spread evenly; it is higher in the north of the country and lower in the south-east. Teenagers, as we would expect, have the highest intake of all age groups, consuming some 50% more sugar, on average, than is recommended The Scottish Government have a recent programme called Childsmile, and more than 90,000 nursery school children currently take part in supervised tooth-brushing. The Scottish Government have also directed the distribution of fluoride toothpaste and toothbrushes in the first year of life at nursery and in the first year of primary school. They are having great success: they reckon that, because of the reduced dental care required, they have managed to save the health service £6 million between 2001 and 2009. Wales has a similar programme with similar benefits. In England, we do not have one If I may be so bold, I will suggest to the Minister some possible solutions. We need to invest in a national oral health programme, possibly like the one in Scotland. It should particularly target areas with problems of poor oral health. This should be done in nurseries and schools, with the backing of local authorities, which would need a small amount of funding from the Minister’s Department. It would not be too much of a burden on schools to run a check system to ensure that every child in a primary school has visited the dentist once a year. From what the hon. Member for Nottingham North (Mr Allen) said, dentists will obviously have to be persuaded, if not bullied or forced, into such a system Not just dental healthcare professionals, but all healthcare professionals, such as midwives, health visitors and pharmacists, should be given the opportunity and training to apply oral health education, including in relation to persuasion on fluoride. The tax on sugar has been mentioned, but I am sceptical about it. Other ways, such as education, will have to be used. Perhaps—just perhaps—we can persuade the producers of such products to tone down the sugar content Far and away the biggest—the proven and most successful—way of reducing tooth decay among children, and ultimately adults, is of course fluoride. Fluoride in toothpastes has made a remarkable change. However, that surface application is nowhere near as effective as the fluoridation of water supplies. With fluoridated water supplies, the fluoride builds up in teeth as they develop. As part of a health professional programme, use of oral fluoride for children should be promoted to parents and children until such time as the water supply in the area in which the children live is fluoridated We have very few fluoridated areas in England. The marked difference in the incidence of tooth decay in UK fluoridated areas, compared with those in almost identical neighbouring but non-fluoridated areas, is stark and obvious. In the United Kingdom, approximately 330,000 people have naturally occurring fluoride at the right level in their water supply. In addition, some 5.8 million people in different parts of the country are supplied with fluoridation. That is about 6 million out of a total population of about 64 million, which is about 10%. The percentage of fluoridated water supplies in the United States is 74%, in Canada 44% and in Australia 80%. I believe that the percentage in New Zealand is not far behind that of Australia I have just come back from the southern hemisphere, so perhaps I can use New Zealand as an example. Early in the last century, the New Zealand Government set up a programme to train dental nurses, or what in this country we call dental auxiliaries. They provided dental care and oral hygiene instruction for every child in primary school. Those services were provided in clinics within the grounds of the bigger schools. As hon. Members can imagine, every child in the country called such clinics “the murder house”. These young ladies turned around the dental health of the children of New Zealand. They were trained at three schools in the country, and they predominantly provided dental health care by restoring decayed teeth, whether permanent or deciduous. Since 1954, water supplies in New Zealand have increasingly been fluoridated, and I understand that the demand for treatment in schools for such children has diminished dramatically. There is now one school, not three, and the dental nurses spend about 50% of their time on oral education, not on drilling and filling teeth In England, the decision to fluoridate the water supply is, in essence, in the hands of elected councillors. However, I believe it is important that the Government, along with the dental profession, apply pressure on local authority wellbeing boards to implement fluoridation. These boards will need support, professional guidance and scientific advice. They will need to be aware that they will be harangued with misinformation and false scientific facts, and that scaremongering will abound I will conclude with an example from a debate in this House on fluoride and fluoridation under the last Labour Government. A Welsh MP claimed that fluoridated water induced brittle bone disease. In fact, research has proved that fluoride in the water supply infinitesimally increases the strength of bones. As I pointed out to the Welsh MP, the All Blacks had recently trampled through the fields of Wales and every one of them had almost certainly been brought up in a fluoridated area. The only broken bones were Welsh The extent of dental caries among children in England is sad and it is a disgrace. It has been a disgrace for decades. It is preventable and, if we prevent it, we can make considerable savings to our health service and save the pain and suffering of England’s children. Minister, it is in your hands.
It is a great pleasure to respond to my hon. Friend the Member for Mole Valley (Sir Paul Beresford) and his excellent speech. The House has been fortunate to benefit from his professional knowledge on a number of occasions. As a new Minister coming into office some nine months ago, I had an early meeting with him, from which I benefited hugely and continue to benefit. I am grateful for the way in which he put his case and for the heads-up in respect of what I might do and the speech that I might make to the British Dental Association in due course I am grateful that the usual suspects have been here to listen because of their interest in these matters, namely the hon. Members for Strangford (Jim Shannon) and for Nottingham North (Mr Allen). I thank my hon. Friend the Member for Battersea (Jane Ellison), who is the public health Minister, for being here, together with the Whip and the Parliamentary Private Secretary. I also saw the hon. Member for Dewsbury (Paula Sherriff), who has been to see me to talk about dental matters and who clearly cares very much about these issues I congratulate my hon. Friend the Member for Mole Valley on securing this very important debate about children’s dental health. Poor oral health in children and young people can affect their ability to sleep, eat, speak, play and socialise with other children. Other impacts include pain, infections, poor diet and impaired nutrition and growth. When children are not healthy, it affects their ability to learn, thrive and develop. To benefit fully from education, children need to enter school ready to learn and to be healthy, and they must be prepared emotionally, behaviourally and socially. Poor oral health may also result in children being absent from school to seek treatment or because they are in pain. Parents may also have to take time off work to take their children to the dentist. This is not simply a health issue; it impacts on children’s development and the economy It is a fact that the two main dental diseases, dental decay and gum disease, can be almost eliminated by the combination of good diet and correct tooth brushing, backed up by regular examination by a dentist. Despite that, as my hon. Friend has set out, their prevalence rates in England are still too high. Dental epidemiological surveys have been carried out for the past 30 years in England and give a helpful picture of the prevalence and trends in oral health. Public Health England is due to report on the most recent five-year-olds survey in the late spring There is a mixture of news, as the House might expect. The good news is that the data we have at present show that oral health in five-year-olds is better than it has ever been, with 72% of five-year-old children in England decay free. Between 2008 and 2012, the number of five-year-old children who showed signs of decay fell by approximately 10%. The mean number of decayed, missing or filled teeth was less than one, at 0.94. Indeed, the data suggest that, notwithstanding the All Blacks’ rugby success and their bone-crushing efforts on the field, oral health in children is currently better in England than in New Zealand. New Zealand’s data for children aged five in 2013 showed that the proportion who were disease free was 57.5% and that the mean number of decayed, missing or filled teeth was 1.88.
We have had a marked reduction in dental decay in children since the year 2000, as I said earlier in an intervention. With respect, Minister, I would say that we are doing some good work in Northern Ireland. The Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison) knows that I always say, “Let’s exchange ideas and information.” We are doing good work in Northern Ireland and we want to tell Ministers about it.
This is possibly the fourth or fifth invitation that I have received from my hon. Friend to come to see different things in Northern Ireland, and he is right about every one. He finds in me a willing ear, and we will make a visit because there are several different things to see. Where devolved Administrations and the Department can learn from each other, that matters, and I will certainly take up my hon. Friend’s offer In older children there are challenges when comparing different countries, because of how the surveys are carried out. The available data still show that we have among the lowest rates of dental decay in Europe, but despite that solid progress we must do more. There is disparity of experience between the majority of children who suffer little or no tooth decay, and the minority who suffer decay that is sometimes considerable and can start in early life. In this House, we know the children who I am talking about—it is a depressingly familiar case. We can picture those children as we speak, as my hon. Friend the Member for Mole Valley described in the sometimes horrific parts of what he told the House. The fact that we know that such decay affects children in particular circumstances makes us weep Public Health England’s 2013 dental survey of three-year-olds found that of the children in England whose parents gave consent for their participation in the survey, 12% had already experienced dental decay. On average, those children had three teeth that were decayed, missing or filled. Their primary, or baby, teeth will only have just developed at that age, so it is highly distressing for the child, parents, and dental teams who need to treat them. Dental decay is the top cause of childhood admissions to hospitals in seven to nine-year-olds. In 2013-14, the total number of children admitted to hospital for extraction of decayed teeth in England was 63,196. Of those, 10,001 were nought to four-year-olds, and so would start school with missing teeth From April 2016, a new oral health indicator will be published in the NHS outcome framework based on the extraction of teeth in hospital in children aged 10 and under. That indicator will allow us to monitor the level of extractions, with the aim of reducing the number of children who need to be referred for extractions in the medium term. Extractions are a symptom of poor oral health, and the key is to tackle the cause of that. Today I commit that my officials will work with NHS England, Public Health England and local authorities to identify ways to reach those children most in need, and to ensure that they are able and encouraged to access high-quality preventive advice and treatment The good news is that the transfer of public health responsibilities to local authorities provides new opportunities for the improvement of children’s oral health. Local authorities are now statutorily obliged to provide or commission oral health promotion programmes to improve the health of the local population, to an extent that they consider appropriate in their areas. In order to support local authorities in exercising those responsibilities, Public Health England published “Local Authorities improving oral health: commissioning better oral health for children” in 2014. That document gives local authorities the latest evidence on what works to improve children’s oral health The commitment of the hon. Member for Nottingham North to early intervention and the improvement of children’s chances is noteworthy and well recognised in this House and beyond, and of course he can come to see me. I would be happy to discuss with him what he wants to promote in Nottingham, which sounds just the sort of initiative we need Public Health England is also addressing oral health in children as a priority as part of its “Best Start in Life” programme. That includes working with and learning from others, such as the “Childsmile” initiative in Scotland, to which my hon. Friend the Member for Mole Valley referred. It is important that health visitors—I know that the Public Health Minister takes a particular interest in their work—midwives, and the wider early years workforce have access to evidence-based oral health improvement training to enable them to support families to improve oral health Public Health England and the Royal College of Surgeons Faculty of Dental Practice are working with the Royal College of Paediatrics and Child Health to review the dental content of the red book—the personal child health record—to provide the most up-to-date evidence-based advice and support for parents and carers. The National Institute for Health and Care Excellence has also produced recent oral health guidance that makes recommendations on undertaking oral health needs assessments, developing a local strategy on oral health, and delivering community-based interventions and activities for all age groups, including children. Community initiatives to improve oral health include supervised fluoride tooth-brushing schemes, fluoride varnish schemes and water fluoridation I agree with my hon. Friend that water fluoridation is an effective way of reducing dental decay. However, as the House knows, the matter is not in my hands. Decisions on water fluoridation are best taken locally and local authorities now have responsibility for making proposals regarding any new fluoridation schemes. I am personally in favour. I think I am the only Member in the Chamber who remembers Ivan Lawrence and the spectacular debates we had on fluoridation in the 1980s. He made one of the longest speeches ever. Fluoridation was bitterly and hard-fought-for and I do not think there is any prospect of pushing the matter through the House at present. I am perfectly convinced by the science and that is my personal view, but this is a matter that must be taken on locally Diet is also key to improving children’s teeth and Public Health England published “Sugar reduction: the evidence for action” in October 2015. Studies indicate that higher consumption of sugar and sugar-containing foods and drinks is associated with a greater risk of dental caries in children—no surprise there. Evidence from the report showed that a number of levers could be successful, although I agree with my hon. Friend that it is unlikely that a single action alone would be effective in reducing sugar intake The evidence suggests that a broad, structured approach involving restrictions on price promotions and marketing, product reformulation, portion size reduction and price increases on unhealthy products, implemented in parallel, is likely to have the biggest impact. Positive changes to the food environment, such as the public sector procuring, providing and selling healthier foods, as well as information and education, are also needed to help to support people in making healthier choices Dentists have a key role to play. “Delivering Better Oral Health” is an evidence-based guide to prevention in dental practice. It provides clear advice for dental teams on preventive care and interventions that could be delivered in dental practice and school settings. Regular fluoride varnish is now advised by Public Health England for all children at risk of tooth decay For instance, the evidence shows that twice yearly application of fluoride varnish to children’s teeth—more often for children at risk—can have a positive impact on reducing dental decay. In 2014-15, for children, courses of treatment that included a fluoride varnish increased by 24.6% on the previous year to 3.4 million. Fluoride varnishes now equate to 30.9% of all child treatments, compared with 25.2% last year. This is encouraging progress There are many measures that can and should be taken in order to reduce the prevalence of decay in children, but we recognise it is unlikely that we will be able to eradicate entirely the causes or the effects of poor oral health in children. This means that the continued provision of high quality NHS primary dental services will continue to be an important part of ensuring that every child in England enjoys as high a standard of oral health as possible. NHS England has a duty to commission services to improve the health of the population and reduce inequalities—this is surely an issue of inequality—and also a statutory duty to commission primary dental services to meet local need. NHS England is committed to improving commissioning of primary care dentistry within the overall vision of the “Five Year Forward View”.
The Prime Minister announced an excellent initiative on life chances less than two weeks ago. The cornerstone of that was improving parenting skills. Will the Minister’s Department ensure that feeding into that process there is, within the parenting programmes, stuff around health in general, but dental health in particular?
Yes. [Interruption.] Immediate information passed to me by the Minister with responsibility for public health indicates that that is a very positive initiative and we are indeed taking it up Overall, children’s access to NHS dentistry remains consistently high, with the number of children seen in the 24 months to September 2015 by an NHS dentist standing at 8 million, or 69.6% of the population. There are localised areas where children have access difficulties, but the more common problem is that the parents and carers of the children most at risk do not seek care until the child has developed some disease—this again emphasises the importance of health visitors and others in the process To help focus on prevention, the Government are committed to reforming the current system of primary care dentistry to improve access and oral health further. In line with the welcome improvements in oral health over the last 50 years, we need an approach in primary care dentistry that can provide a focus on prevention, while also incentivising treatment where needed That is why, following the piloting of the preventative clinical pathway, we are now prototyping a whole possible new system remunerated through a blend of quality, capitation and activity payments. The aim is to allow dentists to focus on prevention and, where appropriate, treatment, and how effective that could be for the children we are talking about. The new approach will be tested until at least 2017. We need to do a proper evaluation and, if successful, numbers will increase with a possibility of a national roll-out for 2018-19 I hope I have been able to demonstrate the seriousness with which the Government take this subject—a seriousness that I know is accepted by the whole House. It comes back to some fundamental issues of inequality in health that are, as I said, depressingly familiar and which we are all absolutely dedicated to removing. The concept of total clearance for a child—I suspect that none of us has had to contemplate that in our personal lives, but it affects some of our constituents—is something that brings us all up short. I am grateful to my hon. Friend the Member for Mole Valley for raising this subject for debate Question put and agreed to.