Clive Efford
MP for Eltham and Chislehurst · Labour · United Kingdom
“Thank you for allowing me to take part in this statement, Madam Deputy Speaker, given that I was not here at the beginning—I was carrying out my duties elsewhere in the House. I welcome the Secretary of State’s statement. What is she likely to do in my part of south-east London for technical and vocational places?”
“I rise to speak to amendment 97 in my name, which would remove clause 10 from the Bill. Clause 10 gives powers to the Secretary of State to vary the proportion of public and private provision of health services if they consider that to do so is in the interests of the health service.”
“Labour’s 2024 plan to make work pay set out a welcome desire to bring more essential services back into public control—something that is welcomed by health workers across the country, because so far the “biggest wave of insourcing in a generation”, as was promised, has felt more like a trickle when it comes to the NHS.”
“The explanatory notes for the Bill say that this new flexibility is necessary “where there may otherwise be a breakdown in provision of a health service.” Can we imagine a situation where the Secretary of State has concerns about a health service and that an approach to assist a local provider would be rebuffed?”
“There are ample powers to enable the Secretary of State to intervene and resolve breakdowns in the provision of a health service. On clause 10, we must balance what it adds in those situations against its potential misuse by an ideologically driven Government that are determined to privatise our NHS.”
“It was a pleasure to join my right hon. Friend at Greenwich council’s development of 435 council properties in my constituency for the launch of the social and affordable housing programme. Some 70,000 homes are planned, and that is welcome and overdue.”
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“The Secretary of State seems to misunderstand one thing. When patients go in to be treated by a GP, they expect to get the best possible treatment available. The Secretary of State said in an earlier answer that he would expect patients to have the knowledge of drugs to be able to determine whether a GP was supplying cheaper or better drugs. What local accountability will there be of GPs, what resources will be put into HealthWatch networks, what resources will be left available for local health improvement budgets, and what teeth will local authorities have to impose local health plans?”
“I am interested in the right hon. Gentleman’s train of thought, but will he clarify something? Is he saying that there is no such thing as avoidance of corporation tax, or is he saying that anything that comes about is just the result of a misunderstanding?”
“With amendment 11, my hon. Friend is trying to ensure that the House can hold the Government to account for what they do to fulfil what they say in the Red Book, and thereby ensure that the Government maximise the amount of corporation tax that is paid.”
“Indeed, paragraph 1.96 mentions the Government’s measures on corporation tax, which a later group of amendments tackles, and states the need to alter the rate of corporation tax to reduce the avoidance of payment. A practice has been created of people avoiding other forms of tax and paying capital gains tax at a lower rate to minimise the amount that they pay in tax. I therefore agree with the thrust of the point that the right hon. Member for Wokingham (Mr Redwood) made that there are times when we need to tweak the tax system to close down loopholes. In that sense, the tax system has historically been like turning a thermostat up and down. We introduce one set of regulations, that area overheats, the thermostat is turned down, another section of the tax system responds and people move in that direction to avoid paying tax.”
“I pay tribute to the hon. Member for Lincoln (Karl MᶜCartney), who made his maiden speech. Many of us remember his predecessor with great fondness, and we certainly notice the difference in appearance to which he referred. She was a popular Member here, as I suspect that she was in her constituency. I am sure that the hon. Gentleman will do an able job in his time as Member of Parliament for Lincoln. The thrust of the argument of my hon. Friend the Member for Hayes and Harlington (John McDonnell) is that the House should be able to scrutinise the Government’s actions on enforcement of corporation tax to avert some of the severe and harsh cuts elsewhere in public expenditure. The Red Book refers to the need to reduce all sorts of evasion.”
“The point, on which I believe we are all in agreement, is that everyone should pay the tax that they are due to pay. Amendment 11 proposes not that corporation tax should be raised or reduced, but that it should be paid, that the Government ought to take action to ensure that companies that are liable to pay it do so, and that the House should have the role of providing a check and balance to ensure that the Government are carrying out that function.”
“I could not agree more. If I were to start listing some of the harsher items in the Budget, such as the £1.9 billion that the Government are trying to take out of housing benefit or the overall £11 billion from the welfare budget, I would risk incurring your wrath, Mr Amess. I would also risk that if I were to point out some of the actions of the previous Government in relation to the medical tests that disability living allowance claimants were forced to go through. The coalition Government, supported by the Liberal Democrats, tell us that things will become even harsher for DLA claimants, so our discussion of minimising avoidance of corporation tax is absolutely relevant.”
“We need to ensure that action is taken so that they pay their fair share, because clearly, the increase in taxation—the VAT increase and other measures—and the cuts will hit the poorest in our communities first. That is why it is absolutely essential that we have discussions such as the one instigated by my hon. Friend the Member for Hayes and Harlington.”
“The hon. Gentleman makes a point that I could repeat. Cutbacks in Her Majesty’s Revenue and Customs staff make more distant the target of maximising the amount of tax taken. He may have joined me on the odd occasion when I voted against the previous Government, so we have been on the same side of such arguments from time to time. Some of us are sinners turned saints, and even as a loyal Labour Back Bencher, I might agree with elements of the criticisms of the previous Government. We have been given instruction in tautology on the question of avoidance and evasion, but we are quite clear that we are talking about people whose actions are not within the rules.”
“Member for Dundee East (Stewart Hosie) mentioned the cut in tax staff, and if we are going to see substantial cuts in staff, it will make it even more difficult for HMRC staff to perform their task on whatever tax they are pursuing, be it corporation tax or any other. The right hon. Member for Wokingham seemed to dismiss the issue of tax evasion, suggesting that we could pursue evaders until the cows came home, but they would never pay the tax so we would not be able to close the deficit by pursuing them. He then went on to talk about the difference between evasion and avoidance, rather than focusing on what we can do—as the people who scrutinise legislation—to ensure that the Government are delivering on their words in the Budget.”
“My hon. Friend’s intervention needs no comment from me, other than to say that it is an excellent example of the sort of practices that we need to bear down on. We pay a plethora of accountants and financial advisers to advise on how to invest our money wisely, and that is a legitimate area of activity. It is right that people may order their finances within the rules to maximise their income, but if that becomes exploitation or unfair in terms of what people are contributing, we have to act. That is where the amendments that we have tabled on capital gains tax, which we will discuss later, come in. The hon.”
“Friend the Member for Hayes and Harlington on his amendment, and I look forward to hearing what the Government have to say in response.”
“My point is that that was the sum total of the right hon. Gentleman’s contribution on that subject. He then elaborated on other issues. The point is that the thrust of the amendment is evasion—people working the system in a way that breaches the rules and means that they do not make the contributions that they should make. Those are the people we should bear down on. In my intervention in his speech, he accepted that there was such avoidance, and that those people should be dealt with. It is how we scrutinise that that we are discussing now. It is the function of this House to hold the Government to account, and the amendment asks for a report to Parliament on what exactly the Government are doing. I congratulate my hon.”
“I am grateful to my hon. Friend, because his probing is uncovering who is winning the arguments on the Government Benches. The Liberal Democrats went into the election calling for a 10% levy on banks, but the outcome is that what has been raised in the levy has more than been compensated for by the corporation tax cuts. We are seeing who is winning the arguments on the Government Benches on making the banks pay their fair share.”
“I apologise to the hon. Gentleman in advance for going back to what was said during the general election, but it is important in this context. The Liberal Democrats said that they were in favour of a banking levy, as he has just said, but they went further and said that it would be in addition to corporation tax. What we are debating is corporation tax that compensates the banks for the levy, cancelling it out. How can he possibly defend that position?”
“To correct the hon. Member for West Suffolk (Matthew Hancock), it is just not true to say that the banks are going to pay more. Deutsche Bank has said: “Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that is it should almost offset all of the banks tax. Overall a good outcome for the banks.” Similarly, HSBC said: “We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget”.”
“What account has been taken of the capital needs that will have to be met, such as essential repairs and improvements to electrics? If we do not have a debate, how can we get to the detail of what has produced this list?”
“May we have a debate in Government time on capital allocations following the Building Schools for the Future announcements, and possibly for two days, given how many hon. Members would wish to raise issues relating to their local schools? The list that was published yesterday still contains numerous errors in the Greenwich schools listed. A “Broadoak” school is listed as “Unaffected”—that is hardly surprising, given that it does not exist. The “University Technical College” is linked with Eltham Hill school, but Eltham Hill school is also listed separately. The Business Academy Bexley, which opened six years ago, the St Paul’s academy, which opened in January, and Charlton special school, which opened in September 2008, are also all on this list. What criteria were used to produce this list? It is arbitrary.”
“It is extraordinary how this list was produced and put before the House. Let us recall what happened on Monday: the Secretary of State was cuddling the list as if it contained secret information, and he slipped bits out only as they were forced from him in response to questions from Opposition Members. Therefore some of us on the Opposition Benches suspect that the Secretary of State knew that the list was not complete and that there were errors in it when he was delivering it in the House— [Interruption.]”
“I did say that some of us suspect that that is the case, Mr Speaker, and if you ask me to withdraw that, I will obviously do so, but I think there is something that needs to be investigated further in the way that the Secretary of State treated the House. [Interruption.]”
“In light of that answer, what are we to make of Sir Alan Budd’s resignation today? The right hon. Gentleman puts much store by the OBR’s reports, but did they not contribute to Sir Alan relinquishing his post? He said that this was the greatest challenge of his professional career. He must have an extremely exciting career that he can give up that post so quickly.”
“My hon. Friend has moved on from investment in the construction industry, but I wanted to point out that that industry accounts for 10% of our gross domestic product and public sector expenditure accounts for 40% of the activity in the construction industry. That shows up the regressive decisions made by the Government.”
“Does my hon. Friend find it as curious as I do that the figures leaked from the Treasury are produced by the same people who produced the figures for the OBR, and yet those figures conflict? Is she confused about that?”
“I am interested in my hon. Friend’s argument, particularly his comparison of the consultation that is about to take place with what happened in Canada. Will he confirm that the consultation in Canada took place on the basis that the Government would reinvest in the public sector after they had got through their budget deficit, whereas this Government are making an ideological change whereby they will cut back the state for ever? They are inviting people to take part in a consultation not to ascertain where we should take short-term measures, but to cut from the state services that people will never see again.”
“She said: “Many higher earners will be breathing a sigh of relief.” The Fair Investment Company, an independent financial advice company, made similar exaltations: “CGT has not been raised up to 50 per cent as speculated and the exemption allowance has not gone down to £2,500 like the Lib Dems proposed, so many higher-rate taxpayers will be breathing a sigh of relief”. We were told that the Lib Dems and the Tories want to raise £1 in tax for every £4 they cut in public expenditure, but where is the mandate for making those cuts? At the general election, the majority of the electorate voted for parties that opposed drastic cuts, including an increase in VAT and the proposed austerity Budget to cut public services.”
“The article discusses the impact of capital gains tax, stating: “Higher earners expecting to bear the brunt of the chancellor’s tax rises were breathing a collective sigh of relief yesterday, having been spared major increases to capital gains and income tax in the emergency Budget…Capital gains tax rates of 40 or 50 per cent and further restrictions to pension tax reliefs had been forecast by tax advisers in the weeks after the general election. When a smaller increase in CGT - just for higher-rate taxpayers - and a consultation on allowing pension contributions of £45,000 a year were announced, many were pleasantly surprised.” The director of RBC Wealth Management is quoted in the article.”
“I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin), and the hon. Members for North East Cambridgeshire (Stephen Barclay) and for Ipswich (Ben Gummer), on their maiden speeches. The description of the blood-red sunsets by the hon. Member for North East Cambridgeshire showed his passion for his constituency, and my hon. Friend spoke well of his predecessors and his love of his adopted town. The hon. Member for Ipswich, if I may say, spoke very little about his constituency for a maiden speech. It was none the less a maiden speech, and I congratulate him on it. Nothing sums up the Budget more than the Financial Times headline the morning after: “Well paid breathe collective sigh of relief”.”
“The hon. Gentleman misses the point. The point is what the Liberal Democrats said about capital gains tax before the election and what has happened afterwards. I cannot find any record of anybody saying, “Thank God we have the Liberal Democrats to water down this horrible Tory Budget.” No one is saying that— [ Interruption. ] As much as the Liberal Democrats try to dance on a pinhead over the VAT increases and how they have looked for an investigation into VAT so that they can all cuddle up at night and sleep well knowing that they have not made life awful for poor people—they claim that they have forced the Government into a review—what will they really do about it?”
“What we have heard in several debates is so much hand wringing that I have almost started to feel sorry for the Liberal Democrats. They must be in agony from all the crushed fingers they have from wringing their hands so tightly in trying to explain away the impact of the VAT increase.”
“They said that tax cuts would be paid for by “closing loopholes” and “increasing aviation pollution taxes”. They said their tax reform would be the most radical in a generation—any takers on the Conservative Benches for a radical change from the Liberal Democrats? I think not! Their manifesto also included a pledge “to put 600 more police on the capital’s streets and an extra £520 million a year in London schools.” Instead, however, we have seen a cut in Building Schools for the Future and in police numbers, and we are going to see a rise in unemployment as a result of their support for the Budget.”
“The Deputy Prime Minister—I remind the House that he was the leader of the Liberal Democrats in opposition—said during the election campaign: “The Conservatives have made a series of uncosted tax promises, tax bribes.” That was referring to Tory promises to recognise marriage in the tax system, limit the national insurance rise, freeze council tax, and raise inheritance tax thresholds. He continued: “The only way that they are going to deliver their tax promises is by dropping a tax bombshell, a VAT bombshell of £389 a year on every household in this country.” What changed his mind? Was it when the ministerial Prius turned up outside his house or was it before that? The Liberal Democrats launched their London election manifesto claiming that under them Londoners would save some £700 a year.”
“Well, I am sorry, but the hon. Lady will hear it again and again, because it happens to be true. During the general election the Prime Minister—he was Leader of the Opposition at the time—said to Jeremy Paxman on “Newsnight” on 23 April: “We have absolutely no plans to raise VAT. Our first budget is all about recognising we need to get spending under control rather than putting up tax”. In his closing remarks in the leaders’ debate, he said that he believed that the test of a good society is how it looks after the poorest and most vulnerable in difficult times. Well it did not take him long to fail that test. He promises good times ahead and a clean break. Who for? It is certainly not for the poorest in our communities.”
“My hon. Friend is right. That applies not just to individuals but to businesses. Many people are expressing concern about the impact of this emergency Budget. On 8 April, the Deputy Prime Minister said on Sky News: “We will not have to raise VAT to deliver our promises. The Conservatives will. Let me repeat that: our plans do not require a rise in VAT. The Tory plans do.” Well, we all know it is a Tory plan now, do we not? And we all know who is voting for it. What are the public to make of this sudden about-face? Who has the moral mandate for this level of tax increase and for taking this proportion of tax to pay for the deficit as opposed to rolling back the state? Where is the mandate for making the poorest pay for this Budget as they will? More importantly, however, where is the contribution from the banks?”
“There is indeed a choice, as Sir Alan Budd also agrees. However, the OBR actually agreed with the figures for growth based on our March Budget and the figures for unemployment; in fact, it considered our figures to be conservative. The March Budget statement was also able to announce that debt had been reduced by £11 billion, which is an important point. The debt had been reduced because there was more income tax, more national insurance, more VAT income and more tax from businesses. A further announcement was made subsequent to the general election, with a further reduction of £5 billion, to which my right hon. Friend the Member for Birmingham, Hodge Hill referred in his opening speech for the Opposition.”
“The Government expect between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector up to 2015, but how is it that the figures leaked from the Treasury contradicted the figures from the OBR? I am wondering about that, so perhaps someone can give me an answer, because the figures are compiled by the very same people. Treasury officials compile the figures for the OBR, and the leaked figures are from the Treasury. I am therefore a little bit confused, but perhaps somebody can explain that one for me—perhaps the Liberal Democrats have an answer for us, as they are so enthusiastic about the Budget. The Chancellor has said that some have suggested that there is a choice between dealing with our debts and going for growth, but that this is a false choice, and I agree with him.”
“We have had unprecedented growth over the past 13 years, and it only just created that many jobs in that period. How can these projections point towards the creation of 2.5 million jobs? Perhaps the Liberal Democrats are going to tell us, because they had a cup of tea with the Governor of the Bank of England, after which we saw a miraculous turnaround—perhaps there was something in the tea. Perhaps they can now explain to us what was said that convinced them that miraculous growth in the private sector was going to solve this country’s economic problems, as we undergo the most unprecedented assault on the state ever attempted in peacetime. We have also seen figures leaked from the Treasury.”
“Friend the Member for Birmingham, Hodge Hill (Mr Byrne) can tell me whether there is a revolving door at the Treasury. We lost the first Chief Secretary to the Treasury and now we have lost the head of the OBR. They are going in and out so quickly that, if they have not got a revolving door, they should put one in pretty quick. It would make it much more efficient for people when leaving their posts so quickly. What has changed Sir Alan Budd’s mind? Has he changed his mind? The Treasury is assuming that growth in the private sector will create 2.5 million jobs in the next five years to compensate for the spending squeeze. Can the Minister tell me when since the second world war the private sector has ever grown that quickly? When has it ever created that many jobs?”
“The hon. Gentleman is new to the House—and he might well be new to politics—but I am sure that, if he looks in his history books and reads all the quotes, he will find that most parties going into an election do not rule out such an increase, unlike in the foolish statements made on “Newsnight” by the now Prime Minister and during the general election by the Liberal Democrats. Now there is trouble at’ mill—we have some problems here—because Sir Alan Budd has resigned. Can anyone tell me how a man who only a short while ago described his job as “the most exciting challenge of my professional life” can have given up so quickly? This man must have the most exciting job coming up to give up such a prospect already. How have we lost the head of the Office for Budget Responsibility so quickly? Perhaps my right hon.”
“The announcement yesterday—such as it was—from the Secretary of State for Education that he was drastically cutting back on schemes such as Building Schools for the Future will make it even more difficult for the Government to deliver growth in employment and growth in the private sector, because they are rowing in completely the opposite direction.”
“The report on exports came as a survey of credit conditions by the UK Bank of England underlined the concern at the prospects for demand in the UK. Credit conditions were expected to deteriorate by the most since the first quarter of 2009, when the recession was at its deepest.” What we are seeing there is the extreme concern in the business sector since the Budget was announced— [Interruption.] I hope the Liberal Democrats are listening to this. The construction sector in particular accounts for 10% of our GDP, and public sector expenditure accounts for 40% of the construction industry.”
“Economists had expected a more modest decline…of 55…It was the weakest reading since August 2009…Business expectations went from a reading of 72.1…to 64…The Services PMI is particularly closely watched because it accounts for the greatest share of private sector business output…‘Worrying signs for the UK service sector appeared in June as growth slowed in response to another below par increase in new business…Confidence declined to the greatest extent in 14 years of data collection in reaction to the government’s austere emergency budget, with concern expressed that the fiscal tightening could push the country back into recession.’” According to the Financial Times : “The Purchasing Managers’ Index figures came in amid signs that global manufacturing took a hit in June, with China, the US and the eurozone all seeing weaker growth in the sector.”
“As the Financial Times has said: “Britain’s…services sector expanded in June…at the slowest rate in 10 months…The Markit/CIPS UK services Purchasing Managers Index…for June was weaker than consensus forecasts among economists, showing a 54.4 headline reading, down from 55.4 in May.”
“I agree with my hon. Friend. There are plenty of eminent economists saying that this is not the time to draw back the fiscal stimulus. However, the point that I want to make is that the reduction in the debt that the then Chancellor was able to announce in the March Budget was due to the intervention of the Government. There was less unemployment, we were paying out less in unemployment benefit, and there were more people in work and more businesses; therefore, the tax income was higher than had been predicted, indicating that the way through the recession is not this austere Budget, but continuing with the stimulus until growth is stronger. However, the worrying thing now is that, following the emergency Budget, businesses are starting to question whether growth is on its way.”
“It will indeed; my hon. Friend is absolutely right. The Guardian website on Sunday 4 July stated: “CBI disappointed by extra £4 billion capital spending cut. Spending on building and infrastructure projects, many of them to support private sector businesses, will fall faster than expected after the chancellor announced £6.2 billion emergency cuts three weeks ago, with £2 billion of the total from capital expenditure projects. The CBI said: ‘Capital investment is crucial to driving the economy forward and the government needs to make sure we get back to the long-run average of 2.25% of national income as soon as possible’.” Are you listening on the Liberal Democrat Benches? What they are voting for is just above 1%.”
“We have heard it all before, and we are hearing it again. This time, however, they have actually got to vote for something. They are actually in charge and responsible for what they are voting for, and they are going to pay a very heavy price indeed.”
“HSBC banking analysts concurred: “We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget”. How has it come about that a party that went through the general election giving all those quotes about how they were going to break the banks up and break them down, and make the bankers pay until the pips squeaked, has come to support a Budget that takes from the bankers with one hand, pays it back with the other and rewards the banks with a tax benefit at the end of it? And at the same time they will be marching through the Lobbies to the drumbeats of the Tories, voting for cuts in benefits and an increase in VAT, and making the poorest people in our communities pay, when the banks are not paying. It was all puff and wind from the Liberal Democrats during the election.”
“Here is one: “Bankers were relieved that the chancellor’s speech failed to repeat the coalition government’s threat to end ‘unacceptable bonuses’”. Deutsche Bank analysts noted the significance of the corporation tax change: “Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that is it should almost offset all of the banks’ tax. Overall a good outcome for the banks.” A number of bank analysts calculated that some banks could benefit from the Chancellor’s measures. As I have said, Deutsche Bank concluded that it was a “good outcome” for banks, while an analyst at UBS expected Lloyds and HSBC to benefit by 2012 because the cut in their corporation tax bill was larger than the hit that they sustained through the bank levy.”
““To recognise this, we are proposing a new levy on bank profits at a rate of 10%...This levy would be supplementary to corporation tax”. Well, where did that happen? If we look at corporation tax outcomes— [Interruption.] The hon. Member for Cheadle (Mark Hunter) intervenes from a sedentary position. Would he like to repeat what he just said? I think he said that the Lib Dems did not win. Well, we all know that; that is why we are complaining about what they are doing. If I look at what the banks are saying about corporation tax, I find that they are rewarded and compensated for the £2 billion levy that the Budget wants to raise. We have some more juicy quotes here; the Lib Dems might want to listen to them.”
“He then went on to say: “The banks have basically been given untrammelled support by Labour and Conservative governments to do exactly what they like, and take massive risks with our livelihoods and our savings. They have been holding a gun to the economy. A progressive liberal like myself is not going to be squeamish about blowing the whistle on a vested interest.” Well, where is it? Where is the whistleblowing on those vested interests? The Liberal Democrat website—I do not know whether Liberal Democrat Members ever look at it—still says that they are going to bring “fundamental change” to our banking system. “We will break them up and break them down.” It continues: “Until such a time, the taxpayer will have to continue underwriting the banks”— well, we know that from this Budget.”
“Member for St Ives (Andrew George), who did not make a very good job of defending his position on the increase, that that includes VAT. On 12 March the Deputy Prime Minister called for a 10% tax on bank profits and a £2 billion job creation scheme to rescue the victims of recession. We keep being told by the Liberal Democrats that they have had an enormous impact on this Budget, so perhaps they could explain the impact they made here. I would have supported and voted for a 10% tax on bankers’ profits, instead of for taking people’s benefits away from them or for poor families paying VAT increases. After all, where did the financial problems start? The Deputy Prime Minister kept digging during the general election, and on 20 April accused the bankers of behaving like “Arthur Scargill in pinstripes”.”