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.”
The complete record
Every one of 7,997 lines we hold for John McDonnell, in date order, each linked to its source. Free to read, in full, without an account. Page 63 of 160.
“It makes no difference to this Chancellor: everything must go, everything is up for sale. When will he learn that you cannot keep paying the rent by selling the furniture? The Chancellor has consistently put his political career ahead of the interests of this country. Yesterday he tried to do the same, and he failed. His disastrous economic failures are the result of putting personal ambition ahead of sound economics. The Chancellor is clinging to the tattered remains of his fiscal charter, using it to justify brutal cuts to vulnerable people. In contrast to his rule—widely savaged by economists, and now on the point of being torn up by Government statisticians—Labour has a real alternative. Labour will build a society based on a fair tax system, where the wealthy and powerful pay their fair share.”
“I have spoken for more than 25 minutes. You have made it clear, Mr Deputy Speaker, that there are many Members who want to speak. I have been extremely generous in giving way—more than any other shadow spokesman before. Last year, we noted that the Chancellor could meet the conditions of his fiscal rule only by selling off profitable state assets, even at a loss to the taxpayer. Official figures yesterday suggested that taxpayers will face a loss of more than £20 billion pounds as a result of the Chancellor’s decisions on RBS share sales. Yesterday, again, we learned that the Government are considering the privatisation of the Land Registry. That is despite their deciding against it as recently as 2014. That is despite the Land Registry returning millions of pounds in profits to taxpayers. That is despite a 98% customer satisfaction rate.”
“In the debates at the time of the charter, I and many others warned the Chancellor of the potential impact of global adverse headwinds. The Chancellor responded by boasting “of having an economic plan that actually produces better results than were forecast”. —[ Official Report , 25 November 2015; Vol. 602, c. 1385.] Since then, we have seen business investment fall, his export target recede into the distance, the trade deficit widen, manufacturing and construction enter recession, and the biggest productivity gap for a generation. Last week, to crown it all, the Chancellor told us the economy is smaller than we thought. I say to him that if his economic plan is now producing worse results than forecast, imposing more stealth taxes and cuts in the Budget will only— [ Interruption. ]”
“Can we address one of the domestic threats to our economy? This week the former Governor of the Bank of England warned that bankers have not learned the lessons from 2008, and without reform of the financial system, another crisis is certain. Will the Chancellor take responsibility for the domestic vulnerabilities within our economy that have built up under his watch? Will he withdraw his proposals to water down the regulatory regime for senior bankers?”
“At a time when many of our constituents were filling in their tax returns and paying their taxes, they saw what the Government were allowing Google to get away with.”
“If it is true that he is associated with the current EU negotiations on the future of our relationship in Europe, may I say that it is unfortunate to say the least that securing a firm agreement on tax avoidance and evasion has not been a core issue in those negotiations so far. It could be a significant missed opportunity for this Government. We have called this debate today because, over the past 12 days, we have witnessed the most supine capitulation to corporate interest by any British Government in the recent history of this country. Understandably, it has caused immense anger within our community among individual taxpayers, businesses small and large, independent commentators and people across the political spectrum.”
“I beg to move, That this House notes the agreement reached between HM Revenue and Customs and Google to pay £130 million in respect of taxes due over the period 2005 to 2015; and calls on the Government to publish the full details so that the British public can judge whether this is, as stated by the Chancellor of the Exchequer, a major success; and further calls for a swift international agreement to implement country-by-country reporting of company accounts. I welcome the Minister who is responding to the debate. I truly sympathise with him as he has been placed in this situation by the Chancellor. I understand that the Chancellor is in Rome today.”
“I will give way in due course, but may I remind Members that this is a time-limited debate and I wish to press on as quickly as I can? Of course Members will have the opportunity to engage. On the Friday before last, Google announced late in the day by press release the company’s tax deal with HMRC. Google celebrated a deal comprising a payment of £130 million to HMRC in respect of taxes from 2005 to 2015. Astoundingly, in the early hours of the morning, the Chancellor was in an equally celebratory mood and tweeted that this was a “victory”—a major success.”
“I will give way in due course. Calm down. The Google deal and the Chancellor’s exultation about it were immediately received with incredulity by independent tax analysts—understandably. The Chancellor and HMRC were all too keen to publicly parade the deal, but when challenged to release the detail of it, hid behind confidentiality conditions.”
“I am grateful for the intervention. The hon. Gentleman probably knows that I was not the most enamoured of the Labour Government’s track record during that period, but it was a Labour Government who started this inquiry and the hon. Gentleman’s Government took six years to complete it. According to a recent estimate by the Financial Times , the measures introduced by the Labour Government will reap 10 times the amount of tax that this Government have secured.”
“Let me come on to that point. It did not take long for independent analysis to show what a derisory sum the Google tax payment was. The word “derisory” is not just my description, but the word used by the hon. Member for Uxbridge and South Ruislip (Boris Johnson), the Mayor of London, as well as many others. Google had a UK turnover of approximately £4 billion in 2014-15. If profits here were similar to those across the whole group, about a 25% return, that implies £1 billion-worth of profits. If the standard 20% corporation tax is levied, that implies a £200 million tax bill for the one year, not the £200 million paid by Google for the decade. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, independent assessors have estimated that the Google tax rate for the past decade was 3%.”
“The economic activity definition has to be examined when profits are assessed. I will come on to that point because it is valid and reasonable.”
“Let me press on as we are time-limited. It is no wonder that local small businesses and taxpayers in all our constituencies feel so strongly that the arrangement with Google is grotesquely unfair. They have not been allowed to ignore their tax demands for a decade, then negotiate a sweetheart deal at mates’ rates. It show who counts with this Government that, in the month when they let Google pay a paltry sum in back tax, they lose in court in their pursuit of disabled people over the issue of the bedroom tax, and then they decide to appeal the court decision so that they can persecute some of the most vulnerable and the poorest people in the land over a relatively insignificant sum. That demonstrates to us a bizarre, upside down and callous sense of justice and fairness.”
“That implies very little economic activity in Google UK. That argument wore a bit thin when it was pointed out that Google employs 2,300 staff in the UK on average earnings of £160,000, and is building a new headquarters in addition to the two it already has.”
“Within 72 hours the Google deal had gone from “a major success” to merely “a step forward”, according to No. 10. I see that this weekend the Business Secretary was describing the deal, with masterly understatement, as “not a glorious moment”. Yesterday Ruth Davidson, the leader of the Scottish Conservatives, said: “It doesn’t feel fair. And in our hearts, I think we all know it isn’t fair.” I agree wholeheartedly. During the urgent question discussion last Monday the Minister was specifically asked by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) whether he knew the rate of tax that Google was paying. He said bluntly, “No.” We heard the assertion that the HMRC calculation of back tax was on the basis of tax levied on profits as a result of an assessment of economic activity.”
“I am not sure whether the hon. Gentleman was listening. I just answered that point by reference to my critique of the Labour Government. I convened the Tax Justice Network campaign meetings in this building, and I have campaigned for 18 years. The FT assessment is that the measures introduced by the Labour Government will reap 10 times as much as anything introduced by this Government. Let me press on. Last Monday, to get some answers about the Google deal, I tabled an urgent question to the Chancellor, and I am grateful that Mr Speaker granted the question. Typically, the Chancellor failed to turn up and the Minister was left to defend this “victorious” deal. By that time, No. 10 was furiously distancing itself from the Chancellor.”
“In due course; let me press on a little further. As last week wore on, there was a growing sense of outrage at the Google sweetheart deal. Many felt betrayed by the Chancellor. We supported the Chancellor on the introduction of the diverted profits tax legislation to tackle firms using complex profit-shifting schemes to avoid tax. It was referred to as “the Google tax”. We learned last week that Google will not be paying a penny under that legislation. We also supported the Chancellor in seeking international agreements on tackling tax avoidance, but we discovered at the weekend that Conservative MEPs had been directed by the Chancellor on at least six occasions to vote against the very tax avoidance measures being introduced by the EU that the Chancellor told us he was supposedly promoting.”
“Of course; I have welcomed that. I have just been saying that I have supported the Chancellor on each piece of legislation that he has introduced to tackle tax avoidance and tax evasion. This deal flies in the face of everything the hon. Gentleman and I have been supporting in the Chamber.”
“I will address the Bermuda question, so if my hon. Friend waits a few minutes she will hear just how shocking the situation really is. The Chancellor appears to be missing an opportunity in the EU negotiations to secure a robust international agreement to tackle tax avoidance and tax evasion, which Members across the House have been calling for.”
“I am going to press on. We all supported the changes to public procurement rules that enabled the Government to prevent public contracts from being awarded to companies found to be engaged in tax avoidance schemes. Staggeringly, it is understood that no company has been denied a public contract on those grounds and that, even though its tax affairs were under such lengthy investigation by HMRC, Google was awarded public contracts to supply services—who to?—to HMRC.”
“I support the Government in that action, but this deal flies in the face of that action and undermines the agreements that we are trying to make. Over the weekend we also heard from Mr Jones, the Google whistleblower. In his view, HMRC ignored his exposure of Google’s tax avoidance methods. That evidence was received by the Treasury Committee on a cross-party basis. We all accept that the existence of tax havens and the complexity of national tax systems present an ongoing challenge to national Governments. As a result, we have all supported the negotiation of international agreements on tax collection. The UK is a signatory to some of these. As the hon. Member for Croydon South (Chris Philp) said, the Government have agreed in successive steps to abide by the base erosion and profit shifting programme under the auspices of the OECD.”
“It risks establishing a race to the bottom in which all countries seek to outbid each other to offer the lowest possible taxation. We have written to the Competition Commissioner to request a formal investigation of the deal.”
“Let me press on, because time is short. At the end of last week, the UK joined 30 OECD partner countries in signing up to the multilateral competence co-operation agreement. We supported that. That is the kind of international co-operation, albeit limited, that will help close the loopholes and ultimately close down the tax havens. It is the kind of agreement that we have backed for years and that we support the Chancellor in undertaking, but last week, by allowing the special treatment of one company, the Government drove a coach and horses through the entire international approach. As the EU’s Competition Commissioner suggested, that could amount to unlawful state aid. The UK is now being depicted across Europe as a tax haven.”
“I know that the hon. Lady was not here at the time, so perhaps she should check my voting record throughout my 18 years in this House. I do not want to keep on repeating this. I wanted both Governments to go further, but an independent assessment has shown that the legislation introduced by the previous Labour Government will drag in 10 times more in tax than the current Government’s legislation, and even then I wanted to go further. We should at least accept the independent assessment that has been made.”
“We need a real tax reform agenda, based on the principle of complete openness and transparency. First, that means, as a start, the publication of the details of this deal in full, so that we and our constituents can judge whether it is fair enough. Secondly, we need real country-by-country reporting of a company’s activities, and not just a secret exchange of information between tax authorities, but full publication so that we can all judge.”
“With almost half the workforce having been laid off, and with offices having been closed across the country, it is widely known that morale is at rock-bottom, especially with the loss of highly experienced and expert staff. [ Interruption. ] Madam Deputy Speaker, a reference has just been made to declaring an interest. I have no interest to declare. I think that was a reference to the Public and Commercial Services Union and part of its trade union group. It does not fund the Labour party or my constituency. There is no interest to be declared. We cannot allow the Government to go on like this. Trust and confidence in our tax system is being undermined. Every pound in tax avoided by these large corporations is a pound taken from the pockets of honest taxpayers. It is also a pound not spent on our schools, our NHS and our police.”
“Is this the case, or was it just a publicity stunt that has now been dropped? My hon. Friend the Member for Leeds West (Rachel Reeves) referred to Bermuda. On the “Andrew Marr Show” on Sunday a senior Google representative revealed that the company has £30 billion of profits resting in Bermuda, a British overseas territory. This is in order to avoid US tax rates. We now know that the Chancellor has been lobbying the EU and instructing his MPs to vote against anti-avoidance measures against Bermuda. It is a disgrace. It was also revealed last week that Government Ministers have met Google 25 times over the past 18 months. I note that the Prime Minister himself has spoken at Google’s conference not once, but twice. If Ministers are to meet anyone, my advice is that they go and meet the trade union representatives of HMRC staff.”
“I am going to press on, because time is short. I have written to the Competition Commissioner to request a formal investigation of this deal. There was a visible flicker of life from the Chancellor a few days ago. In the pages of Monday’s Financial Times he let it be known that he might, after all, favour country-by-country reporting for multinational corporations. Tax experts and campaigners and I have long argued that this is a vital step towards transparency, and therefore towards fair collection. By revealing in their accounts in which tax jurisdiction their revenues were earned, a proper rate of tax can be applied to multinational companies. If the Chancellor now supports country-by-country reporting, I welcome that. However, the impression was given that even without international agreement the Government would act.”
“The same advisers advise Her Majesty’s Treasury and help write our tax laws. That is unhealthy and unacceptable.”
“The hon. Gentleman has taken an interest in this matter over many years and has regularly been in debates with me in this Chamber. I fully agree that we need a more radical approach. Let me complete the recommendations briefly, because I think that they will open up a much wider debate. Thirdly, we need an end to mates’ rates and sweetheart deals with major corporations. Tax law should be applied fairly whatever the size of the company. Fourthly, we need full transparency in the relationship between Ministers and companies, so I want to see publication of all the minutes of all such meetings. Fifthly, we need firmer action to curb the tax avoidance industry, so action should be taken against the advisers when the tax avoidance schemes they designed are found to be unlawful by tax tribunals and courts.”
“I am unable to accept the Government’s amendment because it fails to support our key demand for openness and transparency. The amendment would remove Labour’s central demands for publication of the Google deal and the adoption of full public country-by-country reporting. If anything good is to come out of the sordid deal that the Government cut with Google, I urge Members of this House to use this opportunity to secure a just, fair, open and transparent system of taxation for our country and to start that process by backing our motion today.”
“I cannot give way, because I am concluding my speech. Sixthly, we clearly need independent scrutiny of HMRC and the implementation of taxation policy overall. Let us now explore the establishment of a cross-party committee, along the lines of our Intelligence and Security Committee, to perform that role. Finally, we need an end to the counterproductive staffing cuts and office closures at HMRC. For most of my time in Parliament, I have been campaigning for a fair tax system that secures tax justice. Of course companies such as Google make a significant contribution to research and development and through the employment they provide, and I welcome that, but we expect all companies to play fair when it comes to their tax responsibilities.”
“Is the Minister saying that Google employs 2,300 staff in this country on an average salary of £160,000, and they cannot be defined as involved in economic activity or as adding any value? What are they doing? Playing cards all the time? Are they not actually involved in economic activity—this sizable proportion of the Google workforce?”
“Are the Government not concerned that the agreement creates a precedent for future deals with large technology corporations, such as Facebook and Amazon? Will the Minister assure us that this deal does not undermine international co-operation on tax avoidance, such as the OECD base erosion and profit shifting scheme that the Chancellor once supported? I also ask the Minister, once more, to halt the programme of HMRC staffing cuts, which is undermining morale and removing the very staff with the collective experience and expertise in collecting these taxes. Finally, will he address a confusion that seems to have arisen? Does he agree with the Chancellor, who thinks the deal was a major success; with the Prime Minister’s Office, which said this morning it was only a step forward; or with the Mayor of London, who described it as derisory?”
“The statement offered today has left a number of questions unanswered, which I turn to now. Does the Minister not agree that it is important in our tax system that everybody is treated equally and fairly, whether they be large multibillion-pound corporations or small businesses? In that respect, independent experts have suggested that the effective tax rate faced by Google is now about 3%, despite estimated profits of £1 billion in 2014 alone. Will the Minister confirm whether this is the effective tax rate faced by Google over the past 10 years? In the interests of openness and transparency, will he now publish details of the deal and how it was reached? Will the Minister confirm that Google is not changing the company structures that enabled this avoidance to take place over the past decade?”
“I thank the Minister for his statement. However, many will feel it is a display of disrespect to this House that the Chancellor of the Exchequer confirmed the deal with a tweet over the weekend, but has refused to come here today personally to make a statement. I pay tribute to the former and current Chairs of the Public Accounts Committee, my right hon. Friend the Member for Barking (Dame Margaret Hodge) and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), as well as all the campaigners for tax justice who have forced this issue on to the agenda. The Chancellor has managed to create an unlikely alliance between myself, the Sun newspaper, the Mayor of London and, according to reports, even No. 10 this morning. All of us think this deal is not the “major success” the Chancellor claimed at the weekend.”
“Only eight weeks ago the Chancellor promised “an economic recovery for all, felt in all parts of our nation” —[ Official Report , 25 November 2015; Vol. 602, c. 1358.] On the day that the International Monetary Fund warned about the global economy and called on Government to increase their investment spending—something that Labour Members have consistently called for—will he now reconsider his economic plan, and particularly his investment plans?”
“If the Chancellor will not reconsider his investment plans, can he at least appreciate how angry the families of steelworkers in south Wales are this morning? They know that when the bankers’ bonuses were threatened, he immediately shot across to Brussels with an army of lawyers to defend them and that he will jump into a helicopter for a Tory fundraiser. It has taken him four months to lift a finger to save steelworkers’ jobs. Does that not prove that he is actually the bankers’ Chancellor?”
“The Chancellor bowed to Labour pressure last week and made a U-turn on tax credits. Although tax credits will not be cut in the new year, as planned, the cuts to universal credit are going ahead in full, so he has not reversed his cuts to family incomes, but just delayed them. I am sure that he has looked at the impact of the changes in detail, so will he tell the House how much a single parent with one child who works part time on the so-called national living wage will lose as a result of his planned changes to universal credit?”
“Let me explain to the Chancellor exactly what a single parent with one child who works part time on the national living wage will lose. They will lose an average of £2,800 a year as a result of the cuts to universal credit. This was not an autumn statement that supported families, but one that punished them because 2.6 million families will still be worse off by £1,600 on average. Let me offer the Chancellor another way out. If he reversed the tax giveaways to the wealthy that he announced in his summer Budget, he could reverse fully these cuts to family incomes, while still achieving his fiscal mandate. Will he now address the threat to these families?”
“But we were promised, specifically by this Chancellor, that by today the deficit would be eliminated and debt would be under control and falling dramatically. People put their trust in that commitment. [Interruption.]”
“Mr Speaker, like me, you have witnessed many autumn statements and other statements by the Chancellor of the Exchequer. You will know that there is the iron law of Chancellor’s statements: the louder the cheers for the statement on the day, the greater the disappointment by the weekend when the analysis has been done. From what we have heard today, we do not need to wait until the weekend for the statement to fall apart. Over the past five years, the Chancellor has barely set a target that he has not missed or ignored. Five years ago, the newly elected Chancellor and Prime Minister came to the House and warned us that the dire economic situation that our country faced meant that a five-year programme of austerity measures was needed: job cuts, wage freezes and cuts in public services.”
“We are now potentially to bequeath to our children a debt of £1.5 trillion. That will be their debt. The Chancellor — [Interruption.] The Chancellor— [Interruption.] The Chancellor continues to miss—”
“The Prime Minister also assured us that although it was going to be hard and sacrifices had to be made, we were all in it together. Today, five years on, the Chancellor must have some front to come to the House and lecture us about deficit reduction. Today is the day when he was supposed to announce that austerity was over and the deficit was under control. Given what people have heard today, I think that they will feel absolutely betrayed. The reality is that, after five years, the deficit has not been eliminated, and this year it is predicted to be over £70 billion. Instead of taking five years to eliminate the deficit as the Chancellor promised, it is going to take 10. Furthermore, debt-to-GDP will not be the 69% that he promised five years ago. As he said today, it will be 82.5%.”
“I never envisaged that when it came to nationalising I would be outdone by a Conservative Chancellor. The only difference between us is that I would like to bring services such as rail back into the ownership of the British people. The Chancellor wants to sell them to the People’s Republic of China. Nationalisation is okay for him as long as it is by any state but ours. To assist Comrade Osborne in his dealings with his new found comrades, I have brought along Mao’s little red book. Let me quote— [Interruption.]”
“On international aid, let me caution that the international aid budget was supposedly protected, but now it is to be raided for defence spending. On defence, the Government commissioned an aircraft carrier last year. A few years ago, they at least woke up to the fact that it needed aircraft as well. But the funding for the defence review is to come from £1l billion-worth of cuts, with the inevitable loss of thousands of defence workers’ jobs, whose specialist skills will be lost forever. Alongside those cuts and many more to help dig himself out of the financial hole he has got himself into, the Chancellor is selling off whatever public assets he can. It is no longer the family silver up for sale—the furniture, fixtures and fittings are now being sold. We know who is the first in line to buy.”
“The Royal Institution of Chartered Surveyors has said that the UK’s biggest infrastructure programmes could grind to a halt unless the Government adopt new measures to tackle the skills and funding issues. The most ironic cut of all must be the virtual closure of large sections of the Department for Business, Innovation and Skills. There are 146,000 unfilled vacancies due to the lack of skilled workers, so naturally the Government’s solution is to move to effectively close the very Department tasked with improving skill levels. On the environment, the Government have announced today various measures but let us be clear. Ministers can go to the Paris summit on climate change with the proud record of nearly killing off the UK’s once flourishing solar renewable energy sector.”
“His record on building anything so far does not inspire confidence at all. Over the past year, he has forced himself on to building sites throughout the country to secure a photo with a high-vis jacket. When he did his Bob the Builder speech at the Tory party conference, what he did not tell delegates was that his investment record is abysmal. Only 9% of the projects have started under his infrastructure pipeline in two years. In 2012, he announced a £40 billion guarantees scheme. Three years on, only 9% of that sum has been signed up. In 2011, he announced a £20 billion pensions infrastructure platform but four years on only £1 billion of commitments have been secured. The construction industry is actually shrinking this year and going into recession. The Chancellor has also failed to invest in skills.”
“The Chancellor’s much vaunted pledge on house building is cobbled together from reheated promises from the past. The vast majority have already been announced. The Tories should be judged by their actions, not their words. The Chancellor’s first act in office was to slash housing investment by 60%. His plans today could still mean 40% less to build the homes we need, compared with the investment programme he inherited from Labour. As a result, house building remains at its lowest peacetime level since the 1920s. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) said this morning, “if hot air built homes, then conservative ministers would have our housing crisis sorted.” I worry that the vast majority of young people hoping for a new home will be disappointed by the Chancellor’s failure to deliver.”
“In education, the Government claim that schools budgets will be protected, but we fear that the Government will use the new funding formula to take funding away from the pupils who need it most—the most deprived. We will monitor the funding formula carefully to ensure equity. In today’s statement, the Chancellor has announced that for further education there will be a settlement that restricts it to cash protection. In effect, that means that around the country sixth forms and FE colleges will be under threat and at risk of closure. At a time when the economy is crying out for a skilled, educated workforce, the Government are denying young people access to the local courses they need. On today’s announcements on childcare, we note there is a delay yet again—for another two years. That is another delay following a commitment given.”