John McDonnell
MP for Hayes and Harlington · Labour · United Kingdom
“It is not a laughing matter—I am sorry for interrupting the flow of the discussion. It would be useful if the review looked at NATS’s long-term investment plans, particularly since its partial privatisation in 2001, which I opposed. I thank the Minister for meeting Unite this morning and thanking the workers, who have worked so hard.”
“On a number of occasions, I have raised the case of Lee Cheuk-yan, who many Labour Members will remember was the general secretary of the Hong Kong Confederation of Trade Unions and founder of the Labour party in Hong Kong. He was detained during the democracy movement five years ago.”
“I thank the Minister for his statement. NATS used to be in my constituency and then moved down to Swanwick. Of course, with Heathrow in my constituency, I receive—as I mentioned yesterday—a large amount of correspondence from a whole range of other MPs’ constituents, who think I am responsible for Heathrow airport.”
“I fully agree, and let me also say that wheelchair compensation is significant in this legislation. Most of us have dealt with cases like that. Going back to accountability in the process, a number of different organisations have provided us with notes on the legislation.”
“I apologise to my right hon. Friend; I should have checked this before the debate. The proposed new section 61G refers to priorities and objectives of the Secretary of State, which include a requirement for the Secretary of State to issue a document setting out those priorities and objectives for the CAA.”
“At the moment, when people in my constituency are faced with these problems, they do not know where to go; it is as simple as that. Finally, the debate that we will have on Heathrow expansion and the new policy statement will be interesting, given that we do not know what the flight paths will be. If I was a constituent of my hon.”
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“I have never given the IRA support in relation to money laundering or any other activity. Let me make it absolutely clear that wherever laundering takes place, it is illegal and should be tackled, and I shall welcome the hon. Gentleman’s future contribution to the establishment of procedures to ensure that that happens.”
“The issue of a public register is critical to any measures that are taken in the future, because such a register will enable these kleptocrats to be held to account—particularly in the developing world, where they have denied development resources to the economies of their countries.”
“One of the key things that I think the whole House must do in the coming period is re-establish the credibility and fairness of our taxation system, which has been so badly damaged.”
“May I ask the hon. Gentleman—[Hon. Members: “Answer!”] I am. Calm down. If the hon. Gentleman looks at my parliamentary record over the last 18 years, he will see that I was one of the first MPs to set up the tax justice meetings in the House that brought the Tax Justice Network here, and to do the necessary research. He will also see that, as shadow Chancellor, I have commissioned a review of HMRC’s activities in terms of the tax base, including those relating to avoidance and evasion. However, I understand his concern. I have worked on this issue on a cross-party basis for a number of years, and have criticised successive Governments for not doing enough.”
“I think that what people found extremely disappointing in the Budget debate was that, as my hon. Friend says, the cut in capital gains tax was being paid for by cuts in benefits for people with disabilities. That did indeed demonstrate very starkly that we were not all in it together. Perhaps these revelations will enable us to take steps towards the establishment of a fair taxation system that will fund our public services effectively.”
“My hon. Friend the shadow Leader of the House made that point last week, giving example after example of cases in which Orders in Council had been issued. They have been used very effectively by successive Governments, and it bewilders me that this Government are not taking that opportunity now.”
“The fundamental problem is not tax avoidance by this individual or that company; those are symptoms of the disease. The fundamental issue is the corruption of democracy itself. At the core of our parliamentary system is the idea that those who levy taxes on the people are accountable to the people. If those who make decisions about our taxation system are believed to be avoiding paying their own taxes, that undermines the whole credibility of our system.”
“May I press on for a little while? I am only on the third page of my speech. This is getting ridiculous. I will give way to the hon. Gentleman later, but I have already given way a fair amount. As you know, Mr Speaker, I am generous, but I do not want to speak for too long. Even today, we have not seen the Prime Minister’s full tax return or that of the Chancellor, and it is important that that should happen. The Prime Minister established the principle, which I advocated three months ago, that the Prime Minister, the Chancellor, the Leader of the Opposition and the shadow Chancellor should publish their tax returns—not summaries; their full tax returns—but that has not happened. However, what confronts us today is an issue far bigger than any individual. At the centre of the allegations is a single issue.”
“It depends on the issue that is being addressed. Sometimes harking back to the medieval period may be the most effective way of dealing with these problems.”
“I must press on. I will give way to the hon. Gentleman later, if that is okay. The common understanding is also that those who live here and benefit from public services will make a proportionate contribution towards them. The level of taxation may vary—sometimes it is higher, sometimes lower—but because we have a shared sense of fairness, we expect those with the broadest shoulders to carry the greatest burden in taxes. Over the last 30 years, however, we have witnessed the growth of wealth inequality on such a scale that it has undermined that basic principle of democracy. Figures from Oxfam suggest that the richest 1% own more than the rest of the world combined.”
“Let me press on for a little while. I will return to the hon. Gentleman, I promise. Great hoards of assets, in property and in financial wealth, have been built up. According to the best available measures, the levels of income inequality in Britain today are climbing as high as they were at the time of the first world war. The share of income going to the super-rich has risen almost inexorably for three decades. We are returning to the levels of inequality that were experienced before universal suffrage—before women had the vote, and before the development of universal free education and healthcare—in a world that existed before the gains of democracy brought obscene levels of wealth inequality under control, and created a more humane society for the majority.”
“Banks headquartered and operating in London have been particularly proficient in directing their funds through Mossack Fonseca shell companies. HSBC and its affiliates created more offshore companies through Mossack Fonseca—over 2,300 in total—than any other bank. Coutts, a subsidiary of RBS, created over 500 offshore companies through its subsidiary in Jersey. Supposedly reputable companies are aiding and abetting the systematic abuse of our tax system. We should be clear: the City of London is being viewed by many as a tax haven in the middle of a dense network of havens created for the super-rich to avoid the taxes the rest of us must pay.”
“This is not an accident. The offshore world is being constructed, piece by piece, by multinational corporations and the super-rich, aided by shady offshore operations such as Mossack Fonseca, and—we must be honest about this—supposedly reputable accountancy firms here in London are also playing their part. According to the Public Accounts Committee, PwC has aided tax avoidance “on an industrial scale”. Deloitte has advised big businesses on avoiding tax in African countries. Ernst and Young act as tax advisers to Facebook, Apple and Google, and just last month KPMG had one of its tax-avoidance schemes declared illegal by the High Court. Together, the big four accountancy firms in this country earn at least £2 billion annually from their tax operations. But it is not just them.”
“Let me press on. I will come back to the hon. Gentleman. The world of the Rockefellers and the robber barons is the one to which we are returning: a world in which there is immense, almost unimaginable wealth for a gilded elite, but insecurity for growing numbers. Much of that wealth is now held offshore in secretive, unaccountable tax havens. According to the most recent estimate, $21 trillion dollars, equivalent to a third of global GDP, is hidden from taxation systems in global tax havens. It is estimated that, if taxed fairly, that wealth would raise $188 billion a year in extra taxation. This is not about a few families seeking to “minimise their tax bill”, as was claimed by the hon. Member for Gainsborough (Sir Edward Leigh). It is systematic. An offshore world is operating parallel to the world in which the rest of us live.”
“It is not just a matter of tax, is it? It is not just a matter of income tax, either. Of course I recognise those figures, but distributional analysis has been undertaken independently of the Government. Conservative party policy since 2010 has seen some of the biggest losses for the poorest, not the wealthiest. The Women’s Budget Group put together the tax gains, the tax paid, the services cut and the benefit cuts. The poorest 10% will lose 21% of their income annually as a result of this Government’s policy—five times more than the top 10%. The analysis of the Institute for Fiscal Studies clearly shows that this year’s Budget hits the poorest 80% harder than the richest. Eighty per cent. of those cuts fall on whom? It is on women.”
“Let me deal with the tax threshold issue. The IFS has said that the biggest gains from the shift in the lower tax thresholds come for the higher earners. They are the ones who get the most and they benefit from the tax threshold moves. It describes the shifting of the tax thresholds as “very much a giveaway to the better off”.”
“I gave way earlier to the hon. Gentleman. I will press on because I know that others want to speak and I am sure he will want to speak himself. This is a world that the super-rich inhabit. They live by different rules and it is an alien world for the majority of the rest of us.”
“The hon. Lady makes an important point. We have supported the increase in tax thresholds to try to take people out of tax altogether, but the benefits overall have actually accrued to the highest earners rather than the lowest and we need a more sophisticated system than that. With regard to inheritance tax, the cut that was made this time around by the Government benefited the top 5% of the population. There must be a better way of ensuring that people can pass on their wealth to their children, rather than just benefiting the super-rich. We have to look at that again. I am happy to do that and meet her to discuss it.”
“The important thing now, as my hon. Friend the Member for Bolsover (Mr Skinner) has said, is that we build more homes to house those people. That will be an effective way of reducing prices, too. That will give access to home ownership to thousands more in the capital.”
“Contrary to the shocking opinion of the right hon. Member for Rutland and Melton (Sir Alan Duncan), that is not because we live in a country of “low achievers”, as he described them. We do so because we understand that a decent society depends on the contributions all of us make. Without the payment of taxes, we cannot run the public services that are essential to a decent society.”
“It is a world of offshore trusts and legal trickery that would put Byzantium to shame; a world in which it is perfectly normal to buy property in London through a company registered in the British Virgin Islands, managed by lawyers in Panama with offices in Bermuda; a world in which citizenship and attachment to a country are something to pick and to choose depending on price. The scandal of the “non-doms” continues, in which a few super-rich can pay a notional fee instead of the taxes that would otherwise be due from them as residents. Tucked away in this year’s Budget was an extraordinary clause that wrote off selected non-doms’ entire capital gains tax bill on any gains made before April 2017—a giveaway to the wealthy. This is not the world that most of us live in. Most of us pay our taxes.”
“We have to find a better way in our taxation system to benefit those at the lower end of the scale. At the moment, although we are happy with the rise in tax thresholds, there needs to be a way to compensate for that more equitably. Again, it is not us saying this; it is the IFS and many other independent assessors. They are saying that this is not the most effective way of redistributing wealth in this country. May I go back to my speech? I do not want to try your patience, Mr Speaker. It is an alien world for the majority of us.”
“It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. [Interruption.] It is also a corrosion of democracy when a revolving door apparently exists between HMRC, charged with collecting taxes— [Interruption.]”
“Let me press on. I have given way to the hon. Gentleman once. We do not have access to the specialist services that Mossack Fonseca and other companies provide. We cannot negotiate with HMRC when and how much to pay in tax. However, for the global elite, tax avoidance is as much a part of their world as the yachts and the mansions. This world is a corrosive influence on our democracy. The more the super-rich can escape the burden of taxation, the more it falls on the rest of us in society. It is morally wrong that a billionaire oligarch should be paying proportionately less in taxes than the migrant cleaner of his mansion. It is a disgrace that an immense global corporation such as Google should pay no corporation tax for nearly a decade, while small businesses are chased for tiny amounts.”
“Labour will work alongside leading tax experts to lead a review into publishing a public register of the trusts too often used to avoid paying tax and reduce transparency in our tax system. We must ensure that Crown dependencies and overseas territories enforce far stricter minimum standards of transparency for company and trust ownership. The Government’s current programme for reform is being laughed at by the tax havens. As my right hon. Friend the Leader of the Opposition said today, it was only this week, after signing a new deal on beneficial ownership, that the Cayman Islands Premier Alden McLaughlin celebrated a victory over the UK, saying: “This is what we wanted, this is what we have been pushing for three years”. The truth is that the Government are playing into the hands of those who want to abuse the tax system.”
“Full, public, country-by-country reporting of earnings and ownership by companies and trusts is a necessity if fair amounts of taxation are to be charged. The measures announced by the EU this week do not go nearly far enough, requiring only partial reporting by companies. The turnover threshold is far too high, and Labour MEPs in Europe will be pushing to get that figure reduced much more to make it more difficult for large corporations to dodge paying their fair share of tax. Banks need to reveal the beneficial ownership of companies and trusts they work with. That means creating a public register of ownership of companies and trusts, and not only of companies, as the Government are currently enforcing. The Prime Minister has a role to play in this, as it was he who lobbied for the exclusion of trusts from the proposed EU measures.”
“The Government’s proposed taskforce will report to members of the Government, the Chancellor and the Home Secretary, who are members of a party funded by donors featured in the Panama papers. To have any credibility, the inquiry must be fully independent. We must shine a light on, and start to prise apart, the corrupt networks that operate through tax havens. Part of that will involve creating a proper register of MPs’ interests. Members of this House should not be able to hide behind spurious claims of privacy. We want HMRC to be properly resourced to chase down the tax avoiders, with a new specialist unit dedicated to the task. Foreign firms bidding for Government contracts here should be required to name their owners.”
“In response to the leaks, the Government have stepped up their rhetoric on tax evasion but much of what has been announced falls short of what is needed or repeats existing announcements. I remind Ministers that page 223 of the Office for Budget Responsibility report that accompanied this year’s Budget outlined a disclosure scheme for companies operating in Jersey, Guernsey and the Isle of Man. The report said that owing to HMRC’s consistent underfunding, it did not have the resources to follow up on the links of the scheme. I again offer some words of advice to those on the Government Front Bench: fewer press releases and more action. It is time to move on and to close down tax havens and clean up this muck of avoidance. Let us take this step by step. We need an immediate and full public inquiry into the Panama leaks.”
“An economic system that allows tax avoidance on this scale is one in which the inventor and the entrepreneur come second to the owner of wealth, the worker comes second to the plutocrat and the taxpayer come second to the tax dodger. It is a system in which inherited wealth and privilege, rather than talent and effort, are rewarded. There has been criticism of the last Labour Government, and I was not enamoured of all their economic policies, but they did take measures against avoidance. Their measures on corporation tax avoidance are forecast—not by me, but by the Financial Times —to raise 10 times as much revenue as the present Chancellor’s schemes. The Panama leaks must act as a spur to decisive action.”
“Not only have they impeded efforts to clamp down on tax avoidance, but these schemes directly implicate senior figures in the Conservative party. Several Conservative party donors, three former Conservative MPs and six Members of the House of Lords are among those with connections to companies on the books of the offshore law firm Mossack Fonseca. As the super-rich flee their obligations to society, the burden of taxation is pushed elsewhere. As I have said, independent assessments of the tax and benefit changes introduced since May 2015 show that the poorest 10% are forecast to see their incomes fall by more than 20% by 2020, with 80% of the burden falling on women. It is the poorest and those least able to carry the burden who will suffer the most under this Government.”
“The structures of Government are being bent out of shape by tax avoidance. Decisions are warped around the need to protect the interests and wealth of the super-rich and of giant corporations. Democracy becomes corroded. On party donations, the Conservatives receive more than half their election campaign funding from hedge funds. In public view, here in London, its party leadership has made loud and repeated noises about tax avoidance, yet its MEPs in Brussels have voted six times, on instructions from the Treasury, to block the EU-wide measures against tax avoidance. As we have heard in evidence this week, the Prime Minister lobbied the EU Commission in 2013 to remove offshore trusts from new tighter EU regulations on avoidance. The Conservatives’ own record reveals that people no longer trust them on this issue.”
“It is always best to keep the in-laws on-side, Mr Speaker. It is a disgrace that an immense global corporation such as Google should pay no corporation tax for a decade, while small businesses are chased for tiny amounts. It is an affront to the basic principles of our democracy that large corporations should be able to negotiate sweetheart deals with HMRC. It is also a corrosion of democracy when a revolving door apparently exists between HMRC, which is charged with collecting taxes, and major accountancy firms whose business depends on minimising taxes. HMRC’s last director went to work for Deloitte, and now we find that the executive director appointed by HMRC to oversee its inquiry into the Panama leaks is a former adviser to tax havens who believes that tax is a form of “legalised extortion”.”
“People want to see the Conservatives take these steps. Otherwise, they will rightly stand accused of siding with the wrong people and of being the party of the tax avoiders. Incidentally, it was not long ago that the Chancellor of the Exchequer appeared on television to give advice on the “pretty clever financial products”, as he described them, that would allow the wealthy to dodge inheritance tax.”
“Let me press on if I can. We need serious action on enforcement. We need not central registers but, as Christian Aid and others are calling for, full public registers accessible to all, including journalists and other businesses, if we are going to curb the activities exposed in the Panama papers. This package of measures is Labour’s tax transparency and enforcement programme. We believe that it offers a sound basis to take the first necessary steps against avoidance and towards openness and transparency. We are presenting it today as we want to see immediate effective action. This is a test of leadership. The leadership of the Conservative party could take this opportunity to correct the series of errors that it has made. It could join us today in taking effective steps towards dealing seriously with avoidance.”
“The Government can make a start by supporting our motion today and adopting Labour’s tax transparency enforcement programme. I commend this motion to the House.”
“Don’t tempt me, Mr Speaker. Some of the Conservative party’s Back Benchers believe that tax avoidance is a sign of success. The party’s donors are named in the Panama papers, and the Prime Minister himself is a direct beneficiary of a scheme set up in an offshore tax haven through his prior ownership of Blairmore Holdings shares. The Panama leaks have presented a stark political choice. Do we continue to allow a system of corruption and avoidance, or do we now take the action necessary to restore fairness to our taxation system and to correct the abuse of democracy? That is the challenge, and the choice, ahead of us. I urge the Government and all Members of this House to join us in a serious programme of work to tackle the abuse of our tax system.”
“I want to clarify something that the Minister just said. Can he confirm that, under his proposals, members of the public will not have access to the register of beneficial owners of companies and trusts in overseas territories or elsewhere?”
“The Chancellor was willing to cut away that vital support to some of the poorest and most disadvantaged members of our community. Do not tell us that we are all in this together.”
“I also believe that it certainly calls into question his fitness for any leading office in government. What we have seen is not the actions of a Chancellor, a senior Government Minister, but the grubby, incompetent manipulations of a political chancer. For the record, let us go back to last Friday week. The Chancellor personally forced through cuts in personal independence payments. The statement issued by the Government that Friday on PIPs was not a consultation and not a suggestion; it was a statement of policy. Personal independence payments are the benefits that, for many disabled people, make life worth living. They help them get to work. They help them have some normality in their lives. Often, they keep people out of residential care.”
“I beg to move amendment (b), in paragraph (2), after “tax”, insert— “(except in relation to value added tax on insulation, solar panels and any other category of energy-saving material or their installation)”. I and my party share the sentiments expressed by the Chancellor and those across the House in condemnation of what happened in Brussels today. Our thoughts and prayers are with the victims and their families. We support the security measures, of course, taken by the Government and say to the people of Belgium that we stand with them. I am glad to see the Chancellor has at least turned up today. Let me make it clear from the outset that, in my view, and I believe the view of many others, the behaviour of the Chancellor over the last 11 days calls into question his fitness for the office he now holds.”
“The reason I refer back to fitness for office is because many of us know the distress that has been caused to so many people over the past week.”
“Mr Speaker, you heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable. [Interruption.]”
“On that Friday before last, there was outrage among disability groups—the Multiple Sclerosis Society, Parkinson’s UK and Disability Rights UK. Why? Because all of them, like many of us, had gone through that process of agreeing the criteria—at least coming to some compromise on what would constitute the criteria for access to this benefit. But the Chancellor moved the goalposts, those already agreed through consultation. Disabled people and their families have been sick with worry about the threats to their benefits.”
“The proposals that came forward did not just shock those on our side of the House; they shocked many Members from across the whole of the House with their brutality.”
“I want to give thanks to everyone on our Benches and across the House who has helped to force this rethink and helped end the worry that thousands of disabled people have been experiencing in the past week.”
“Friend the Member for Oldham East and Saddleworth (Debbie Abrahams). She rightly said, in response to the announcement: “In coming to this decision, the Tories are yet again ignoring the views of disabled people, carers and experts in the field, trying to press ahead with changes, just two years since the introduction of the system.” After it became clear that the cuts to PIP were planned as a way to fund tax cuts for the wealthy, my right hon. Friend the leader of the Labour party made this issue a key part of his excellent response to the Budget last week, and he was not alone in doing so. My hon. Friends the Members for Ilford North (Wes Streeting) and for Nottingham East (Chris Leslie) were among several Opposition Members who pressed the Chancellor on the issue, as I did when opening the Budget debate last Thursday.”
“No, I have given way enough—I will come back to the hon. Gentleman. There is scheduled to be a 6% real-terms decline in spending on disability benefits between 2015 and 2020. After that Friday, when we reached the Wednesday of the Budget, we discovered that these cuts to disabled people were being made to pay for capital gains tax cuts benefiting the richest 5% in our society and for corporation tax cuts. Of course, a deep feeling of unfairness was felt in this House, among Members in all parts of it. I welcome the expression of concern by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) during that period and his conversion to our cause of opposing these benefit cuts. But the first person to call attention to the scandalous targeting of people with disabilities was my hon.”
“This is a debate about the threat of cuts facing some of the most vulnerable people in our society. This is not a time for engaging in student union politics in this Chamber. By Friday of last week, the Chancellor was facing so much criticism that he needed to find someone to blame. So, in one of the most despicable acts we have witnessed in recent political history, the Chancellor sent out his large team of spin doctors to try to lay the blame on the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green. That was a disgraceful act of betrayal of one of the Chancellor’s own Cabinet colleagues to save his own skin and his leadership hopes.”
“Let me move on. I appreciate the point made. The betrayal was why the right hon. Member for Chingford and Woodford Green resigned. I have not agreed with a single policy that he has brought forward, but I do not doubt his sincerity in the policies that he has pursued.”
“I believe that the right hon. Gentleman’s interview on the Marr programme on Sunday expressed a profound concern that he had about the unfairness of the Budget, and we agreed with this. As I said, I have not agreed with a single policy he has pursued, but I do not doubt his sincerity. The right hon. Gentleman saw—”