Finance Bill — House of Commons, 2021-05-24
Topic: Macroeconomics
Abena Oppong-Asare (Labour, Centre-left): I rise to speak to new clauses 2 and 24, tabled by the Leader of the Opposition, other hon. and right hon. Friends and myself New clause 2 draws attention to the announcement made by the Chancellor in 2019, when he was Chief Secretary to the Treasury, on implementing a non-resident stamp duty surcharge at 3%. As hon. Members will have noted, the Finance Bill introduces a non-resident surcharge at 2% rather than 3%. In Committee, I asked the Minister why the Government had watered down that commitment; I do not believe I have received an answer. We believe that this means that the Government will lose out on about £52 million a year in revenue, which they said they would have spent on tackling homelessness and rough sleeping. Perhaps the Minister could use his closing speech to clear up any confusion. Why have the Government moved from a 3% to 2% non-resident surcharge, and what assessment has been made of the impact on tax revenues and the housing market I turn to new clause 24. In Committee of the whole House, my hon. Friend the Member for Ealing North (James Murray) asked the Financial Secretary to the Treasury to explain whether the Government will meet their own deadline of introducing legislation to set up a register of overseas entities by 2021. The Minister’s response was that "the Government plan to introduce the Bill in due course."—[Official Report, 20 April 2021; Vol. 692, c. 914.] Since that debate in Committee of the whole House, we have had the Queen’s Speech—the Government’s opportunity to lay out their legislative plans for the year ahead. I listened carefully to that speech and read the accompanying notes, but I heard no mention of the registration of overseas entities Bill It is now more than five years since David Cameron first announced proposals to introduce a beneficial ownership register for UK property owned by overseas companies and legal entities. Since then, we have had more announcements, consultations and draft Bills, but still no indication from the Government of when they intend to introduce this vital piece of legislation. The failure to include it in this year’s Queen’s Speech means that it is now beyond doubt that the Government will miss their 2021 deadline It is worth considering what that means more broadly. First, let us look at the scale of the problem. In 2014, the National Crime Agency received around 14,000 reports of transactions that were believed to involve illicit activity. By 2020, that had risen to over 62,000 reports. Of course, the true scale of the problem is extremely hard to quantify, given the lengths that individuals and organisations go to hide their illegal activities In 2019, Transparency International UK said: "The London property market is highly vulnerable to corrupt wealth flowing into it." Its analysis found that since 2008, £100 billion of properties have been bought in London alone by overseas companies in secrecy jurisdictions and high-risk corruption countries—both indicators for illicit wealth. In 2017, it identified that 160 properties worth over £4 billion were purchased by high-corruption risk individuals. The tidal wave of dirty money is poisoning the housing market for ordinary people. There is growing evidence that the purchase of UK property to launder illicit finance from abroad has a direct impact on housing prices. As Transparency International UK—among others—has shown, attempts to clamp down on corruption around the world have led to a rise in property prices here as illicit finance flows into the UK market to avoid detection in its home country This is not just about luxury properties. There is a ripple effect, where activity at the top causes a rise in prices throughout the market. As demand outstrips supply in high-value areas, buyers look out to more affordable places. This leads to a cycle of rising housing prices—my hon. Friends know this story very well. Illicit finance also distorts the supply of housing as developers increasingly focus on luxury property targeted at international investors, who have no intention of living in the properties. So dirty money, from crime and corruption abroad, is pricing people out of their local communities in cities across the country This has a direct effect on the housing crisis. The Government know this, of course. They have committed to act and set up a register of beneficial ownership for UK property owned by overseas entities. This would let the disinfectant of sunlight into the murky world of high-end property bought by shell companies and overseas bodies. As the Government stated: "It is intended to act as a deterrent to those who would seek to hide and launder the proceeds of bribery, corruption and organised crime in land in the UK." The fact the Government are aware of the problem but are still failing to act is inexplicable Our new clause 24 requires the Government to review how the Registration of Overseas Entities Bill could work alongside the non-resident surcharge to mitigate the housing crisis. But what we really need is for the Government to introduce this Bill as soon as possible and begin the process of implementing this important legislation. I will end by paying tribute to the Members from across the House who have campaigned on this issue relentlessly. I know they will share our disappointment that the Government are still not taking the action that we all agree is needed. I urge the Government to correct this wrong and get on with doing what they have committed to do.