Finance (No. 2) Bill — House of Lords, 2022-02-22
Topic: Macroeconomics
Denis Tunnicliffe (Labour, Centre-left): My Lords, I am grateful to the Minister for introducing this Finance Bill, and to other noble Lords for the contributions they have made I am particularly grateful to the noble Lord, Lord Butler of Brockwell, for presenting the work of the Finance Bill Sub-Committee. While the sub-committee’s report focused on just two measures in the Bill, its observations were all too familiar: this is a Government who rush ahead, irrespective of evidence base and without regard to reputational impact The work of the Finance Bill Sub-Committee always creates an almost democratic dilemma. An enormous amount of effort goes into the presentation of these reports, and the depth they go into is really powerful, yet it has so little impact on what actually happens. Indeed, I am committing this sin by the fact that I am no longer going to talk about it, other than by talking about the general economic situation. Somehow or other, we must find a way of engaging these talents, especially as so much of the control of the financial services in the future is going to be generated by regulation which will not come before the House. However, the institutions involved in generating this regulation want engagement with parliamentarians and we must find a better way of making that happen This has been a very interesting debate, although it must be noted that the Finance Bill seems to attract less interest with each iteration. Today, we have had no Conservative Back-Bench speakers. I am sure there are many reasons, but perhaps one is a growing frustration with the Chancellor’s handling of the economy. If so, who could possibly blame them? The Prime Minister continues to insist that the UK has the strongest economic performance in the G7. This was true over the past year—for reasons I will come on to—but it is no longer the case. Indeed, if we look at the last quarter, the UK ranks fifth out of seven—much closer to the last place than the first. Just over a week ago, the Chancellor said that the fastest annual growth rate since the Second World War amounted to proof that the Treasury was "making the right calls at the right time." Based on their experience of the last two years, I am sure that many creative freelancers and hospitality businesses would vehemently disagree. Given the nature of his resignation, so would the noble Lord, Lord Agnew What Mr Johnson seems less keen to stress each week at Prime Minister’s Questions is that the UK experienced one of the largest contractions of any economy when GDP fell by 9.4% during 2020. Annual growth of 7.5% in 2021 may look flattering, but that headline hides several other pieces of bad news. In its latest release, the ONS revised down its initial estimate for Q3. It also noted that, when studying quarterly GDP figures, the economy remained 0.4% below its pre-pandemic level. Looking at monthly figures, it appears that the economy may now match its pre-pandemic level, but that achievement was marginal when considering that GDP fell by 0.2% in December. The Office for Budget Responsibility and other forecasters expect GDP growth to be sluggish in the coming years —just as it has been for the bulk of the last decade. The rate of quarterly growth which puts us fifth in the G7 is far more typical of this Government’s economic performance than the annual growth witnessed last year I do not want to labour the point, but in honour of the Deputy Chief Medical Officer, who will shortly move on from his role, there is room for a sporting analogy. The current political and economic situation in this country is akin to a football team on the brink of relegation. The manager, knowing that his job is on the line, is keen to talk up any minor victory. In this case, despite conceding an early, embarrassing own goal, a late equaliser is presented as the result of a tactical masterstroke. In truth, the team’s form remains unchanged; there is no sign of an upturn in its fortunes. The manager’s head is still very much on the chopping block and, despite their attempts to paint a positive picture, the supporters see right through it Budgets and Finance Bills are the ultimate expression of an Administration’s priorities. There are some items in this Finance Bill which make sense but, taken as a whole, it fails to address the many fundamental problems which are holding back the British economy. With the Chancellor’s recent economic statements having done little to help working families, there can be no surprise that this Bill does nothing to ease the mounting pressures of the cost of living crisis It also does nothing to make the tax system fairer. It facilitates tax reliefs for experimental freeports and lowers the banking surcharge at the same time as the tax burden is due to hit its highest level in 70 years. The hit to family finances comes alongside inflation that has hit 5.5%. Worryingly, it is expected to rise further still, far exceeding the predictions published late last year While the measure is not contained in this Bill, on energy prices, the Chancellor has offered only a glorified buy now, pay later scheme. Why, as we discussed during an earlier Oral Question, has he not imposed a windfall tax on the very energy companies which have recently announced billions in profits, share buybacks and dividend payments The Government may have capped rail fare increases but many household bills are due to go through the roof. Many essential costs, including broadband and phone subscriptions, will rise by 10% or more from April. Ordinary people are suffering, in some cases having to choose between heating and eating, at the same time that HMRC systematically fails to act on fraud and economic crime The Bill establishes an economic crime levy, which we welcome in principle, but monitoring and enforcement agencies have been warning central government for years that they are being outrun and outwitted by criminal gangs. The lack of action over many years means that criminals have been allowed to operate not one but several steps ahead of the bodies tasked with chasing them down. The levy may help address that in years to come, but in many senses the horses have already bolted The Commons Public Accounts Committee noted that HMRC has effectively written off £4 billion-worth of fraud. The Treasury continues to dispute that figure but cannot name a more accurate one. Can the Minister provide one today? The PAC has labelled the Government’s plans to recover money as "unambitious". It says that HMRC’s customer service has collapsed, and that there is a lack of concerted action to tackle tax avoidance. In the words of Dame Meg Hillier: "Every taxpayers’ pound lost to a fraudster will lead to honest ordinary people feeling the post-pandemic pinch harder and harder." It seems that the Chancellor’s Eat Out to Help Out scheme also attracted fraudulent claims, meaning that potentially it spread not only Covid but a perception that fleecing the taxpayer will come without punishment. This is all the more baffling as successive Conservative Administrations have talked tough on benefit fraud. While individuals clearly should not seek to exploit the social security system, many thousands have faced severe financial sanctions for innocent mistakes. Why is it one rule for benefits claimants and another for businesses and criminals The Prime Minister talks tough on fraud but is failing to act over Russia. He has recently warned that an escalation in Russian aggression against Ukraine could lead to steps to expose Russian beneficial ownership of firms in the UK. We have been waiting for—indeed, we were promised—public registers of beneficial ownership for years. However, at every opportunity, the Treasury has ducked the challenge. Why are the Government using this threat as a diplomatic tactic? Is it not in the public interest to address money laundering, regardless of the state of international affairs? Why has not a single unexplained wealth order been issued during Boris Johnson’s premiership? The Foreign Secretary recently identified these as the main tool in the fight against corruption. Have the Government thrown in the towel We will not oppose the Bill, but we do not see it as credible. It is yet another example of the Government’s failure to adequately address the cost of living crisis, economic crime and other pressing issues. It increasingly feels like the Chancellor is simply going through the motions, rather than steering the economy in the right direction. He may well be biding his time for a leadership bid, but that should not be so apparent to the rest of us. While he holds that great office of state, he has a responsibility to the people of this country. They are assiduous in paying their taxes and following the rules, and they elected this Government to spend that money wisely. It is hard to believe the Chancellor is living up to that duty when one looks at the Bill before us.