Finance (No. 2) Bill — House of Commons, 2016-04-11
Topic: Macroeconomics
George Kerevan (Scottish National Party, Centre-left): I realise that the hour is late and I will try not to try your patience, Mr Speaker, or indeed that of the House. In an earlier life I was a journalist, and my editor thought it would be a good idea if I became a restaurant critic. It strikes me that some of the rules for identifying bad restaurants can be applied to this Bill. The way to detect a potentially bad restaurant is to look at the length of the menu. A very, very long menu means there are lots of stale, mouldy ingredients in the back room or in the fridge, needing to be reheated. The Finance Bill before us has 580 pages and comes in two volumes that have to be stapled together. If we reflect on the scale of it, we find stale ideas, hasty ideas, ideas on the back of an envelope and ideas put together at the last minute. Conservative Members have made a good fist of trying to find good things within the 580 pages. There are some good small issues worth taking up. The change in the laws governing transfer payments on intellectual capital and branding, for example, is very good and should have been done a long while ago. There are some good things, but the sum total does not add up to very much This Chancellor has given us 14 Budgets, if we include the December statements and emergency Budgets, with 14 ancillary Finance Bills, yet we have got nowhere near the simplification that we require, for which Conservative Members have also called. Why is that? Quite simply, the Chancellor has just one view in mind. It is not to improve productivity, improve the current account balance or improve this and that; it is simply to end up with a budget surplus in the year 2020 The Financial Secretary made an attempt earlier to provide some intellectual coherence to the Chancellor’s work, and I commend him for that. He told us that what underlies intellectually the 580 pages is the promotion of savings. My hon. Friends and I will vote against the Bill because the last thing it does is promote savings. The Bill is anti-savings, because trying to run a permanent budget surplus itself undermines the whole rationale for savings When the Exchequer Secretary sums up, will he address some of these questions? If there is to be a budget surplus in 2020, more will be taken out of the economy in tax than will be put back in. If we run a permanent surplus, Government bonds and Government securities, which are the lifeblood of insurance companies and of safe investments, will inevitably not be issued. They will be taken away. If we add to that a running down of the special assets programme and quantitative easing, we will take even more Government securities out of the economy. I do not know what people are supposed to invest their savings in. The Minister might say that they should invest in shares, but we know that the whole point of quantitative easing is to keep share prices up artificially. When in the first couple of months of this calendar year there was a fear across the world that quantitative easing was being turned off, share prices went down. They have come back up again in the last four or six weeks only because Europe in particular has turned back on the quantitative easing tap I warn Ministers that if we go to a period of permanent budget surplus, share prices will be going down, not up. Where, then, in the end are people going to invest their savings, which the Chancellor wants to encourage in his 580 pages? The only place I can think they will be saving is abroad. I think there will be a big demand for foreign-based investment trusts. I cannot see anywhere else that the money will go. The Chancellor and his Ministers should think on that I would like the Minister to address another problem with running a permanent budget surplus. If we do so and ally it to our current account deficit, it means taking huge amounts out of the economy. We then have to borrow to put the money back in to make the national accounts balance. The OBR statement that went with the Budget suggested that if we are running a permanent budget surplus by 2020, the deficit that has to be filled will be about 4.5% of GDP a year. That will have to be borrowed. Ultimately, it means that consumers are borrowing. The very act of running a budget surplus forces consumers to borrow more The hon. Member for Leeds West (Rachel Reeves) made the point earlier that at this very moment the savings ratio is back at historically low levels. That is already happening before we even get to the budget surplus. If the numbers are telling us that savings are collapsing, how can we be told that this is a Budget for savings? It is not, which is why we have to oppose it If the Chancellor had used the Bill to tell us that pension tax relief would be reformed dramatically, and that a significant amount of relief would be given to lower earners and young people, I might have believed that he was serious about savings, but that is the very measure that he took out of the Budget a fortnight before this 580-page blockbuster arrived on the desk. He had to stand back and change the Budget entirely. A Chancellor does not run the country by changing a Budget a fortnight before presenting it The best summing up of what is happening in those 580 pages, and how it will be delivered, has just come in the form of the 2015 annual civil service survey. Each year, we ask civil servants throughout the Government what they think of the way in which the Government and the civil service are being run. According to the survey, only 25% of HMRC staff have confidence in HMRC’s senior management. There is rot within the delivery system, and there is rot within the mechanism for collecting the taxes. The Finance Bill, if we pass it, will not increase savings, and will not deliver what we are told that it will. It is 580 pages of nonsense.