Sir Mel Stride
MP for Central Devon · Conservative · United Kingdom
“May I welcome the Chancellor to his position and thank him for his kind remarks earlier? May I also wish him every success, because I am afraid that under this Government we need some? He will know that if we are to fix the economy, we have to fix the welfare bill.”
“Given all that is going on, this could be the last time. The legacy of this Chancellor has been the highest taxes on record, a benefits bill spiralling out of control, and unemployment 300,000 higher than it was at the last general election. The right hon.”
“The right hon. Lady cannot bring herself to answer the simple question I asked. I will tell her: she is borrowing one quarter of a trillion pounds more than the plans that she inherited—that is her legacy. We hear that the right hon. Member for Makerfield (Andy Burnham) is considering borrowing even more.”
“May I begin by agreeing with you, Mr Speaker, and saying how disrespectful it is that this U-turn on fuel duty has already been released to the media earlier this week?”
“Today’s announcements will bring little comfort to the hundreds of thousands of people who have lost their jobs, the countless businesses that have folded and the high streets that are now hollowed out.”
“The Conservative party has been campaigning for a fuel duty freeze for months. The Chancellor repeatedly rejected those calls, creating unnecessary uncertainty for motorists and businesses. Why did it take her so long to realise that putting up fuel duty during an energy crisis is a bad idea?”
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“Friend’s hero Lord Lawson who was able to bring tax rates down. Let us hope that my right hon. Friend is in a position to emulate that in due course. I turn briefly to inflation, which is right at the core of what is happening in the economy. The threat to the public finances from inflation cannot be overstated. The big debate now is whether price surges and increases in inflationary expectations will be transitory or more persistent. My right hon. Friend referred to the surge in demand relative to supply, which of course will lead to price increases; all else being equal, one might imagine that it will pass relatively quickly. We have seen the commodity, transport and energy price increases that my right hon. Friend referred to, but there are other price increases that we might expect to be stickier.”
“I was particularly delighted by the shift in the universal credit taper rate from 63% to 55%. That will help countless low-paid families to earn more and keep more of their money, and encourage more people into work. When I was a Treasury Minister, we looked endlessly at this and I pushed really hard on it. I know how expensive it is to do that—my right hon. Friend the Chancellor suggested £2 billion a year—so I take my hat off to him for having grasped that particular nettle. My right hon. Friend is also right to set out an aspiration to get taxes down before the end of this Parliament. The same pattern occurred under Lady Thatcher, who is much referred to when we talk about tax. In the early years of the Thatcher Government, the tax burden rose quite strongly, and it was my right hon.”
“If we fail in that endeavour and inflation takes off, interest rates go through the roof, the cost of servicing our debt becomes ruinous and international markets lose faith in our economy, we will be back broadly where we were in 1992 when we had Black Wednesday. Conservative Members will remember the long, hard lesson of that: it took us a generation to re-establish our ability to look the electorate in the eye and say, “We have a fiscally responsible Government.” There were some announcements on tax today. May I say first that the drop in the bank surcharge is absolutely the right thing to do? We are putting corporation tax rates up to 25% from 19%, so it would be absurd to cripple our financial institutions with uncompetitive international tax rates.”
“If we do not get back to the pattern of demand for public transport that we had before we locked down, it is conceivable that further subsidy will need to go to the public transport sector. Other areas, such as the health service, might have additional demands, but I point out to my right hon. Friend—he knows this more than most —that the NHS public expenditure take has risen in the last 10 years from 32% to 42%. He must get very good at saying no to Ministers when it is necessary to do so, and telling them to go back to their Departments, work harder and get more out of what they are given. That is a lesson for us all, incidentally, particularly those of us on this side of the House.”
“We have had Chancellor after Chancellor failing to meet their fiscal targets; they have either abandoned them completely or delayed or modified them in some form. Depending on what happens to demand in the economy relative to supply, there may be a case for fiscal stimulus even further down the line. One thinks of the removal of the universal credit uplift, the energy price increases, the labour market demand-supply mismatches and the rise in taxes, often taking demand out of the economy. None the less, and setting that to one side, the Chancellor’s default position must be to stick to those fiscal targets and resist the huge cacophony of demands for more and more expenditure, particularly the day-to-day expenditure that he is rightly targeting in his fiscal rules. Some of those demands might end up being necessary.”
“Let me touch on inflation—I am pleased that my right hon. Friend spent quite a lot of time on it during his speech—and its impact on interest rates. We have already seen the Monetary Policy Committee beginning to divide on whether rates should go up, and there is an expectation, certainly in the markets, that rates will start to increase. We have seen 10-year gilts going up in more recent times, and it is possible that quantitative easing will start to unwind —perhaps passively initially—when we reach a certain trigger level of interest rates, so it is important that this credible plan is there to deliver on those fiscal targets. The history, however, is not good in that respect.”
“My hon. Friend is absolutely right. I will come to the matter of wages and wage growth momentarily, but let me dwell on the challenges facing the economy. Another thing that the OBR points out is the increased sensitivity to interest rate rises—the Chancellor made this point—and the damage that they can do to the public finances. I think my right hon. Friend gave the example of a 1% rise leading to a £23 billion increase in debt servicing costs. To put that in perspective, it would wipe out the value of the corporation tax increases and income tax threshold freezes that my right hon. Friend announced in the last Budget. That would be gone in one enormous gulp, so we must be careful about the vulnerability we have. Though we have low interest rates, and interest rates might move up in baby steps, that applies to a very large debt indeed.”
“The Chancellor has been in a very difficult position and I think he has put forward a very positive set of proposals. The devil will be in the detail; my Committee will look forward to examining that detail, including with my right hon. Friend on Monday.”
“On research and development, it seems to me that in the plethora of announcements, figures, dates, schemes and adjustments to relief that my right hon. Friend identified, we may have slipped on our target of hitting £22 billion by 2024-25—if I heard him correctly, it has slipped to 2026-27—and I am not quite sure where we are on our target of 2.4% of GDP by 2027. Those are vital targets for us to meet in the longer term. Finally, there needs to be an overarching examination of how the recovery is balanced. Those hit hardest by the pandemic have been the poorest in our society, who are much more likely to have faced the impact of lockdown and loss of income, and young people. My Committee will look very closely at all the issues that I have raised, including that point. Once again, I welcome the Budget.”
“We are a world leader in life sciences, FinTech, financial services and the digital sector and we have opportunities in artificial intelligence, robotics and genetics, but if we are to grasp those opportunities, we have to get the level of business investment up. I think that my right hon. Friend referred to that level increasing over time; that may be true, but it is still quite a long way below where it ought to be, looking at it historically. The super deduction is a very important move that the Chancellor has already made, and the extension of the annual investment allowance to 2023 is very welcome, but I think we may need to look even deeper at how, beyond the end of the super deduction, we can continue to see business investment rise.”
“However, what we must not do is avoid pulling the lever where there are genuine pinch points in the labour market in the shorter term. If we do not act to bring in skills if necessary, we will simply encumber businesses in a way that may mean many going out of business, and replace them with imports, which can also be inflationary. The other such area is skills. Further to the point that the Chair of the Select Committee on Education, my right hon. Friend the Member for Harlow (Robert Halfon), made about the importance of skills, I was really pleased by the announcements from my right hon. Friend the Chancellor about post-16 T-levels and lifelong learning. Those announcements are vital to repurposing the workforce to get the challenges of the future sorted. In the longer term, there is a huge opportunity for us in this country.”
“It is certainly the case that the Bank of England’s projections on inflation have been under-baked. In fact, if we go back in time, we can see that its recent revisions have been more dramatic, which really illustrates my point. I have a feeling that there will be rather more inflationary pressure than many people imagine. Some of the drivers of inflation are outside the control of my right hon. Friend the Chancellor, but some are very much within it. One of those is immigration. I totally accept the comment from my right hon. Friend the Prime Minister that we do not want to instinctively “reach for that…lever of uncontrolled immigration”. He is absolutely right: this country left the EU to get control of our immigration.”
“I hope that Members will agree that this is a worthy measure that will benefit our museums and galleries and ensure that the very best cultural objects from around the world can continue to be seen by a UK audience, safe in the knowledge that, should there be delays in returning works, those objects may continue to be protected from seizure while they remain in the UK. I commend the Bill to the House.”
“That will ensure that this protection remains fit for purpose and can adequately respond to unforeseen circumstances and increase confidence in the UK’s system for those that generously share their cultural objects with UK audiences. The new power to extend would apply following an application from a UK museum or gallery, and extensions would be granted for a further three months initially, with a possibility of a further extension if considered necessary. The circumstances under which an extension may be considered will be set out in guidance to be developed in discussion with the devolved nations. The measure is strongly supported by the museums sector and Arts Council England, the Government’s development agency for museums.”
“For example, we all remember the disruption to air travel caused by the Icelandic volcano that erupted in 2010. Museums rely on international exhibitions as a major part of their income. When museums were required to close last year, many international loans were being held in the UK, having appeared in exhibitions. The restrictions and difficulties of international travel that we have all faced since last March meant that even where exhibitions had concluded, it was not always possible to return loaned items within the 12-month time limit. The Bill will allow the period of protection to be extended beyond 12 months at the discretion of the Secretary of State for Digital, Culture, Media and Sport for institutions in England, and of the relevant authorities for the devolved nations.”
“Some examples of objects that have benefited from protection include the world-famous Terracotta Warriors, on loan from China to the National Museums Liverpool in 2018, and the baby mummified mammoth Lyuba, which was borrowed by the Natural History Museum from Russia in 2014. Indeed, the Egyptian Government made it clear that immunity from seizure was a requirement for the loan of its Tutankhamun treasures to the Saatchi Gallery in 2019 for the exhibition “Tutankhamun”, which was seen by no fewer than 580,000 people. With their long experience in managing exhibitions, museum staff are incredibly versatile and adept at dealing with unexpected problems, including transportation delays. Thankfully, such delays are uncommon and can normally be managed to the satisfaction of the lending museum, but problems do occur.”
“The legislation has been effective over the years and has enabled many exhibitions to be enriched by loans that the public might not otherwise have been able to see. There are now 38 institutions across the UK that have been approved for immunity from seizure and where objects have benefited from protection. In 2020, 14 institutions hosted exhibitions that included objects protected under the 2007 Act. This protection means that international museums are confident in lending some of their most significant cultural objects to appear in these exhibitions for the UK public to enjoy.”
“The Secretary of State for Digital, Culture, Media and Sport is responsible for approving institutions in England, and the devolved Administrations have similar powers for other parts of the UK. To gain approval under the Act, institutions must demonstrate that their procedures for establishing the provenance and ownership of objects are of a high standard. In 2007, it was considered that 12 months was an adequate period of time to allow objects to arrive in the UK and to be returned following their inclusion in a temporary exhibition. Section 134(4) provides therefore that the protection continues “for not more than 12 months beginning with the day when the object enters the United Kingdom.” The only exception to that, and when a period can be extended, is when an object suffers damage and repair work is required.”
“That unhelpfully coincided with the planned “From Russia” exhibition at the Royal Academy here in London, which was scheduled to open in January 2008—thankfully, those loans were secured when part 6 of the 2007 Act came into force. Section 134 provides that an object will be protected against seizure if it is normally kept outside the UK, it is not owned by a UK resident and it is brought here for temporary public display by a museum or gallery approved under section 136 of the Act. For an object to be protected, the borrowing museum must also have complied with regulations made under the Act which relate to publishing information about the loan in advance of it coming into the country.”
“In the early 1990s, Noga, a Swiss trading company, claimed that it was owed a substantial sum by the Russian Government and embarked on a series of high-profile claims against Russian property, including the attempted seizure of state-owned assets. In 2005, Noga turned its attention to art when it attempted to seize 54 French impressionist paintings from Russian museums that were on their way back to Russia and travelling through Switzerland. After some delay and concern for the care of the paintings, they were released, but the alarm bells had begun ringing. Understandably, Russia became increasingly nervous about sending its art treasures abroad and announced that it would not lend any works of art to any country without a guarantee of immunity from seizure.”
“The 2007 Act was introduced by the Ministry of Justice and part 6 was given over to the Department for Digital, Culture, Media and Sport to introduce immunity from seizure. Under section 134 of the Act, cultural objects on loan from abroad to feature in exhibitions in the UK museums and galleries approved under the Act are protected from court-ordered seizures for a period of 12 months from the date the object enters the UK. The legislation was in response to concerns from a number of countries that their art treasures were in danger of being seized while abroad in response to claims by third parties that they were owed money by the foreign state or because of territorial disputes between countries. Let me add some context to those concerns.”
“I beg to move, That the Bill be now read a Second time. May I make a declaration of interest? Many years ago, I qualified as a Blue Badge guide, which entitled me to guide in, among other important historic places, the British Museum. I pay tribute to all the Blue Badge guides who do such fabulous work in explaining our culture and history and, indeed, the cultures and histories of other countries, to those who visit the United Kingdom. This Bill seeks to amend part 6 of the Tribunals, Courts and Enforcement Act 2007, which provides immunity from seizure for cultural objects on loan from abroad in temporary exhibitions in public museums and galleries in the United Kingdom.”
“Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).”
“Friend the Member for Keighley (Robbie Moore) raised the issue of the Ilkley Toy Museum, which sounds absolutely fascinating and I look forward to visiting that at some point in the future. Through my hon. Friend the Member for Vale of Clwyd (Dr Davies), by way of an intervention from my hon. Friend the Member for Heywood and Middleton (Chris Clarkson), we finally got the pronunciation correctly delivered of the volcano in Iceland, so I thank him for that contribution. Finally, I thank my hon. Friend the Minister for all her support and her very hard-working officials at the Department for Digital, Culture, Media and Sport, who were very patient in answering the many questions I had of them in pursuing the Bill. Question put and agreed to.”
“With the leave of the House, I thank all those who have participated in this debate to support what I think is a very important Bill. The shadow Secretary of State, the hon. Member for Wirral South (Alison McGovern), managed to convey far more eloquently than I did the importance of this narrow Bill to the broader issues at stake. I thank my hon. Friend the Member for Workington (Mark Jenkinson) for sharing his experiences and knowledge of this sector. My hon. Friend the Member for Guildford (Angela Richardson) told us about the time that the volcano erupted and informed us that she was not a cultural object. Perhaps one day she will be a cultural icon—who knows? My hon. Friend the Member for Dudley South (Mike Wood) shared his experience of many museums, particularly those in his constituency. My hon.”
“When it comes to the honesty or otherwise of what the Government have done, I think they have been upfront, very clear and very honest in making it clear that they have broken that commitment, unlike, I have to say, the less straightforward way in which, repeatedly in this debate, the Opposition and the shadow Chancellor have ducked the fundamental question: what is the Opposition’s alternative plan? In response to an intervention by my hon. Friend the Member for Sevenoaks (Laura Trott), the shadow Chancellor, when asked why Labour had supported an increase in national insurance in 2003, said, “Well, we had a plan.” I humbly remind her that that was 18 years ago. What we need to see now is a plan from the Opposition, as well as the criticism.”
“I rise to welcome, broadly, the motion. It seems to me that social care is one of those issues that parties of both colours have grappled with for many years, yet now we are at last at the point where a Government have the courage and are sensible enough to actually come forward with some realistic proposals. As to the breaking of manifesto commitments, no party ever wishes to do that, but listening to the Opposition it seems to me as if the global pandemic never occurred, as if the economy never shrank by the greatest level since 1709 during the great frost of that year, as if millions of jobs were never imperilled, and as if this Government never had to step in fiscally in a way that probably no Government outside wartime have ever had to do, and with such positive effects.”
“The first thing that the Treasury could have done is to seek to cut expenditure in other areas, yet I have no doubt that if it came forward with any proposals of that nature, the Opposition would have fiercely resisted that as austerity all over again. We have to understand that on the current projections, there are many unfunded commitments, including, for example, keeping our railways going, going for net zero, additional funding that will be needed for school catch-up and so on.”
“First, the hon. Gentleman’s knowledge of my constituency is obviously rather deficient, because I expect that mine shares many characteristics in common with his. I do not dispute the fact that any major fiscal move, such as putting up national insurance and bringing in this levy in this manner, will have associated complexities and difficulties. My pledge to the House is that the Treasury Committee will, I am sure, after private discussion, decide that we wish to look more closely at a number of the issues that are being raised in this debate, including the one that he mentioned. Let us be honest about the options that were available to the Treasury. How could we have squared the circle and funded £10 billion-plus a year?”
“Despite the fact that the Bank of England now seems to feel that there is more money—I suspect that the Office for Budget Responsibility will confirm that around the time of the Budget— because the economy is doing a bit better than we expected, probably to the tune of about £25 billion, it would be a very brave Chancellor who started to borrow yet more and more, knowing that one day it is possible that the markets might turn around and look at the United Kingdom and decide that they no longer have confidence to lend to us. That would be a very dark day.”
“I will come back to the hon. Gentleman’s point, but let me just stick with the options. The second option was to lean into growth, to assume that we could grow our way out of this problem. We have just had a huge contraction of the economy. We are not yet back up to the pre-pandemic level, although the Bank of England thinks that we may arrive at that point some time towards the end of the year, and we have many headwinds to growth ahead of us, not least the bottlenecks in supply chains, the labour shortages that we have witnessed in certain areas, and many other issues. The third thing that the Treasury could have done is to borrow more money, and that is probably what the Opposition would have done in this situation.”
“I will not, actually, because I am very low on time. That is the sword of Damocles that hangs regularly over the head of our Chancellor, so that leads us to taxation. If we look at taxation and the amounts involved here, there are only three taxes that we could consider. About two thirds of all tax is raised through income tax, national insurance and VAT. We then ask ourselves, “What criteria are we going to apply to the tax measures to test whether they are the right ones or not?” There are at least two. One is that we should look after the least advantaged in our society—the lowest-paid—and the second is that we should look after those who are the youngest, who have borne the greatest brunt of the economic consequences of the pandemic.”
“One of them is that a regrettable consequence of the increase in the employer’s national insurance rate is that it will exacerbate the so-called “three people problem”, whereby the different tax treatment of the employed, the self-employed and those receiving income through their own company will be widened, with consequences for IR35. I am out of time, but I support this motion today.”
“We are also up at 20%, I think—near the upper limit of where VAT should be, given the distortionary consequences of going further. That inevitably leads us to national insurance, just what Labour was led to in 2003. The original proposal, it seems to me, failed both of my tests. If we just put up national insurance, it would have been regressive. It would have hit the poorest hardest, but what is right about the Chancellor’s approach is that he has extended it to those beyond the state retirement age and those receiving income by way of dividends. That critical move makes this, in general, the right approach. There are many issues that the Committee will no doubt look at.”
“I will not—I am very short on time. We are looking to the younger generations, to some significant degree, to fund predominantly the needs of elderly people and social care. If we look at those taxes, income tax rises would have been very progressive—there is no doubt about that. We would have had to have about twice the level of increase that we are looking at with national insurance to have raised the same amount of money. I think we need—the Minister made this point—a UK-wide solution to this, not one based on income tax, where, of course, elements of income tax are devolved to other nations across the United Kingdom. If we put up VAT, that would be hugely regressive, particularly at the level of income received rather than expenditure. That would therefore have been wrong.”
“Does my right hon. Friend agree that it is difficult to justify raising national insurance to fund social care for the predominantly elderly, when the impact of that tax rise would fall mainly on young people and those who are earning little in the workforce? Does he also recognise that those two groups are the very groups that have been most impacted by the economic consequences of the pandemic?”
“The devil, as ever, will be in the detail. However, may I initially broadly welcome these proposals, particularly compared with what we were expecting, which was a rise across national insurance as it stands at the moment? This is a much broader-based levy: it includes those who have retired and those who are receiving dividends. It seems to me that that has a very welcome consequence; the broadest shoulders will pay the most. But can my right hon. Friend also address one of the criticisms of what we feared might have been brought forward today, which was the impact on the young in particular and this issue of intergenerational fairness, and how he feels that this approach is going to be useful in that respect?”
“Given the rapid pace of our economic recovery and the plans for the further reopening of the economy, I support my right hon. Friend’s decision to phase out furlough by the end of September. However, does he accept that a small number of sectors are likely to require yet further support after that time—not least the travel sector, whose revenues, according to evidence received by the Treasury Committee, have suffered a 90% fall during the crisis?”
“The Committee will be showing a close and careful interest in the progress of that transformation programme. By way of intervention, I note the observation of my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) about the importance of those responsible for shortcomings being held accountable. We will no doubt have something to say about that in the report. The whole issue of compensation leads on to the issue of the general view that there should be personal responsibility for investments, as well as Government backing, and we will need to look at that. I am terribly short of time, so I will leave it there. I welcome the Bill.”
“The FCA’s approach to the perimeter was limited. It did not take a holistic view of the perimeter and therefore there was inadequate supervision of unregulated activities. The halo effect, which the shadow Minister also raised, was without doubt a wider systemic problem within the FCA. Our inquiry is ongoing. We have taken evidence from Dame Elizabeth, from senior personnel at the FCA, including Andrew Bailey, who was the chief executive officer of the FCA during the appropriate period, and my hon. Friend the Economic Secretary to the Treasury. We will have much to say in our report, which will be published no later than the end of this month. Looking ahead, the speakers so far have rightly asked how we make sure that this does not happen again. That lies within the transformation programme that the FCA is now undertaking.”
“Indeed, the answers to the key questions put by the Government to Dame Elizabeth as part of the directions for her inquiry were clear: the permissions granted to LCF were not appropriate to the business it carried on; the FCA did not adequately supervise LCF’s compliance with the FCA rules and policies; and the FCA’s handling of information from third parties regarding LCF was wholly deficient. The FCA had appropriate rules to regulate the communication of financial promotions by LCF. However, the FCA did not have in place appropriate policies. Numerous red flags were examined by the Committee, but they had been missed over a long period. There were wider failings within the regulatory system, and we have heard some of those from the shadow Minister, the right hon. Member for Wolverhampton South East (Mr McFadden).”
“I take this opportunity to offer my thanks, on behalf of the Committee and of the LCF bond holders, for the very thorough report that she and her team produced, for the witness session she attended as part of our inquiry and for the courtesy and information that she provided to me outside that witness session by way of correspondence and discussions over the telephone. Dame Elizabeth Gloster carried out some excellent work. As a consequence of her report, the level of the failings on the part of the FCA is very clear.”
“This is a very important Bill. It seeks to compensate for some significant wrongs. As part of our ongoing inquiry into London Capital & Finance and the FCA’s response to it, the Treasury Committee has heard many harrowing stories of those who, in many cases, lost life-changing amounts of money as a consequence of what happened. The Treasury Committee has been involved in the LCF situation for some time. My predecessor, Baroness Morgan, initiated the inquiry by Dame Elizabeth Gloster through approaches by the Committee to the Treasury and the FCA.”
“Due to the increasing concentration of wealth in older generations, the value of the average inheritance received by younger generations is becoming significantly greater through time. Does my right hon. Friend recognise this trend and the fact that it means that living standards will increasingly be determined not by skill, entrepreneurship and hard work but by chance, which will have a detrimental impact on social mobility? While it is absolutely right that families can pass on wealth to their loved ones, does my right hon. Friend none the less recognise the strong trend here, and if so, what steps might he consider taking to address this?”
“The Treasury Committee will, of course, closely scrutinise the Bill, and will no doubt have much to say about it.”
“Within about 24 hours, I was able to raise it with the Chancellor on the Floor of the House in Treasury Questions, and within 24 hours of that, to his great credit, he changed the guidance, and now we see the provision in the Bill. That is how Parliament should work, so I am grateful to Tony and others who were able to point me to that issue. In conclusion, I very much welcome the Bill. There are areas that will need considerable scrutiny. When I had my time as Financial Secretary to the Treasury I think I took through three Finance Bills with more than 1,000 pages of legislation, and I know the extraordinary amount of work involved in that, and the extraordinary amount of detail that my right hon. Friend will be going through over the coming days and weeks. I wish him well.”
“The scrutiny Committee will certainly be interested in the operation of freeports. One element of the Bill that I was especially pleased to see that has not been mentioned so far and probably will not be mentioned again in this debate is the change that ensures that where an employee receives a covid test provided by an employer in their place of work, it does not count as a taxable benefit in kind. Were it to do so, millions of workers up and down the country would find that they were liable for tax in relation to those tests. I raise the matter because there is a small but important lesson in scrutiny here. Tony Verran, who is a member of the Treasury Committee secretariat, having joined us on secondment from HMRC, spotted this anomaly in HMRC guidance.”
“Freeports feature prominently in the Bill. The Chancellor is, of course, enthusiastic about these, and they have exciting potential, particularly in terms of the levelling-up agenda, but I point to two areas where caution is needed. One is the possibility of fraud in freeport areas. Careful scrutiny is needed of the tax incentives, albeit it that SDLT structures and building allowances and enhanced allowances for plant and machinery seem to be tax breaks that are difficult to game, because they relate to fixed assets in a specific geographical location. The second issue is possible displacement of economic activity. We do not want activity that would have occurred anyway, perhaps nearby, occurring in a particular location simply because there are advantageous economic and tax arrangements in place.”
“That could be one solution to profit shifting. We must not forget, however, that this country has been in the vanguard, unilaterally rolling out the digital services tax to make sure that companies including Amazon, Google and eBay pay the appropriate level of tax. It is for the Americans to join us in a multilateral endeavour to make sure that such taxes actually work. I am quietly optimistic that the new American Administration is at least leaning in the right direction. I would be interested to hear the Exchequer Secretary explain why the diverted profits tax increase just maintains the punitive margin between the level of that tax and the increased corporation tax in the years ahead, rather than the decision being made to widen the margin, given how successful the diverted profits tax has been in preventing profit shifting.”
“Turning briefly to the diverted profits tax, I will pick up on one or two remarks made by the shadow Minister, who seemed to imply that the Government’s record on clamping down on avoidance and evasion was rather wanting. My recollection of my time as Financial Secretary to the Treasury is quite the opposite. I direct the hon. Gentleman to HMRC’s annual report on the tax gap—the amount of money not collected that could be collected—which I think in recent years has been at historic lows, and has certainly been among the best of the figures available across tax authorities around the world. Remarks were made about tax breaks for tech giants. It is for the Government to decide whether their corporation tax policy is to go in lock step with President Biden’s idea of minimum corporation tax rates across the world.”