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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“There was originally a deadline or cut-off point of 28 February for the receipt of furlough—people had to have been employed prior to that date. That was then shifted, for which the Committee was duly grateful, to 19 March. Yet there will still be many individuals who joined businesses before 19 March but, because there was not an electronic communication regarding that employment between the employer and HMRC prior to 19 March, they do not qualify for furlough support. The Committee believes the Government should look more closely at that. Our recommendation in that respect has been to push the date back to the end of March. There are a number of other categories of employed and self-employed, such as freelancers, those on short-term contracts and many others, who are not receiving the support we believe they should be entitled to.”
“The reality is, we estimate, that there are some 700,000 people in that situation who, for the last four months, have not had the support, or the full level of support, that many millions of others up and down the country have received. That cannot be right. It cannot be right because the Government, when they set out their strategy to resolve and tackle the crisis, stated that right at the heart of their mission would be fairness towards individuals and groups. I do not believe that that has been demonstrated in the case of the 700,000 individuals who are not getting the support that they should be getting. The second group are the new starters: those who took up employment typically around March this year.”
“He did not allude to the problem being anything to do with the expense involved; he talked about the administrative difficulties of differentiating between income received by self-employed people by way of dividend and other income received by way of dividend, perhaps in respect of passive investments, for example. I recognise that there is a complication there. However, the question has to be: is it an insurmountable complication? Our Committee’s investigations suggest that it is not. HMRC could adopt an approach of basically paying out on the furlough scheme, having a clawback arrangement in place in the event that mistakes are made, and perhaps having a penalty regime alongside that, first to discourage erroneous claims and secondly to help fund the activity involved in policing those arrangements.”
“The problem arises when it comes to calculating the furlough entitlement for those individuals: it is based solely on their PAYE income and does not take into account in any way the income, albeit self-employment income, that they receive by way of dividend. Of course, when we had the head of HMRC before our Committee, we asked him about that. I have to say that Jim Harra is a very capable head of HMRC; I worked with Jim when I had strategic responsibility for HMRC as a Minister at the Treasury some time ago, and he is a very capable man. However, he did not give the answer that the Committee wanted to hear on that occasion.”
“That has been the focus of the considerable amount of work that the Treasury Committee has undertaken, with 12 inquiry sessions and a first call for evidence that received a near-record 16,000 responses from self-employed people and those working in businesses up and down the land who are very concerned about these gaps in provision. I shall focus briefly on two groups in particular. The first group is those who are self-employed and choose to work through a limited liability company, paying themselves both by way of pay-as-you-earn income and through dividends received through that company.”
“As we know, the amount that has gone into supporting those on furlough is around the equivalent, on an annualised basis, of the day-to-day spending of our national health service. I think that, in the round, the Chancellor should be applauded for having come out with these measures to support the economy, individuals and businesses, and for both the scale of what he and the Government have delivered and the pace with which it has been delivered. It is important for me to express on the record my satisfaction with both those points. However, when we come forward with measures of that scale and at that pace, it is almost inevitable that there will be hard edges to policy and, indeed, gaps through which people fall. There are people whom one would normally want to have support who have not yet received that support.”
“May I begin by thanking the Backbench Business Committee for allocating time for this important debate? I say that it is an important debate because, of course, Her Majesty’s Revenue and Customs is seeking an additional £52 billion as part of the main estimates, those being attributable to the principal job support measures that the Government have brought forward—about £42 billion for the furlough scheme and a further £10 billion for the self-employed income support scheme. Those are vast sums. Even as a proportion of the entire amount that the Government are spending to support businesses and individuals and the economy during this period, those are very sizeable sums indeed.”
“I notice from the clock that I have reached 10 minutes, Mr Deputy Speaker, so in line with your earlier exhortation, I will conclude. I thank the Backbench Business Committee for giving us this opportunity. I ask the Minister please to look closely at the gaps that the Committee has identified. Finally, I wish the Treasury well in the enormously important and difficult decisions that it will have to take in the weeks and months that follow.”
“I would want to push back on that and say that we should keep our powder dry and wait and see. The Chancellor rightly said that people talk about sectors but often do not explain exactly which sectors. Part of the reason for that is that it is not clear at this stage, because things are unfolding in such an uncertain manner and it is not absolutely clear where the different parts of the economy will be in autumn. However, I think it only prudent that the Treasury keeps a very close eye on the sectors that are still damaged and inhibited as a result of social distancing, but, critically, still have the ability to grow and thrive once we come through the crisis. That is the kind of business where I think some targeting of these schemes would be appropriate.”
“I have written to my right hon. Friend the Chancellor to ask him what measures he may be considering bringing forward to provide further assistance to those communities in those circumstances. It occurs to me, for example, that the Minister might like to comment on the specific suggestion that businesses in such an area might have more flexible access to the furloughing of staff and be freed from some of the current restrictions in that respect. I would be interested in my right hon. Friend the Financial Secretary’s comments on that. Secondly, in Treasury questions this morning a number of Members asked whether there would be some kind of targeted support when the wholesale nature of the support schemes ends at the end of October. I think the Chancellor is signalling that he is quite resistant to that.”
“I thank my hon. Friend for his intervention and I think he is entirely right. It is simply the case that those who choose to take their income through limited companies by way of dividend are operating entirely within the rules. I do not think there is anybody, HMRC included, who would dispute that, and that lies at the heart of why they should be treated fairly. Perhaps I could just address two further points in relation to the Government support schemes and ask the Minister if he could comment on them in his wind-up. The first relates to lockdowns. One has already occurred in Leicester, but there may be further lockdowns, unfortunately, across the country. They will be localised, and it is very sensible that they should occur. Undoubtedly, however, they will impose very considerable further economic and social hardship on communities.”
“My hon. Friend is making an extremely important point. These are just the main estimates, not the supplementary estimates, and the schemes have been extended and modified since those figures were put together. Does he agree that it would be useful to hear from the Minister what additional funds might be sought through the supplementary estimates?”
“When the head of HMRC appeared before the Treasury Committee, he used an expression to the effect that HMRC has discovered in this process of rolling out these programmes that it has been capable of doing things that it did not think it was capable of doing. I say to HMRC and the Government: let us have that same approach adopted now in respect of the gaps, and let us look after and support those million-plus hard-working people up and down the country who are worthy of it. Question deferred until Thursday 9 July at Five o’clock (Standing Order No. 54).”
“I will be brief, Madam Deputy Speaker, because I realise that there is another debate to follow. I think that we largely agree across the House about what is working and the fact that the Government have come out with a major programme at considerable pace, which has been laudable. However, that is not the same as saying that everything is perfect or that it cannot be fixed. It seems to me that the Government and the Chancellor have in the past taken an iterative approach to some of these schemes, as the Minister has just been setting out, and our question will be: why can he not take an iterative approach to some of the gaps?”
“My right hon. Friend will be aware that, yesterday, the Treasury Committee published its report on the gaps in the Government’s support for the self-employed and those employed up and down our country. I do recognise the very considerable approach that the Government have taken to support people through these difficult times. However, there remain over 1 million people who should qualify for furlough or self-employed support who are not receiving it. Could I ask my right hon. Friend to look very closely at the recommendations of the Select Committee report, and to take action so that these hard-working self-employed and employed people up and down our country can get the support not just that they desperately need, but that they deserve?”
“Q6. When my right hon. Friend attended the Liaison Committee last week, he very kindly committed to me to speak to the Chancellor about the possibility of including self-employment income received by way of dividend in the calculation of furlough support. I wonder whether my right hon. Friend has had the opportunity to have that conversation and whether he has some good news for the House, because there are hundreds and thousands of self-employed people up and down this country who need that support.”
“Thank you, Mr Speaker. The future fund will provide venture capital-backed businesses with vital support, but of course it excludes investments made through the enterprise investment scheme and the seed enterprise investment scheme. It is certainly the case that there is significant public subsidy within those two schemes. However, businesses supported by them still face the challenges of the virus and, where successful, still go on to generate significant numbers of jobs. Will my right hon. Friend therefore take a second look at the qualification requirements for the future fund to see whether EIS and SEIS might be accommodated in some way?”
“I broadly welcome the statement the Chancellor has made relating to furlough and, in particular, the additional flexibilities that he has outlined, most notably about part-time working. However, as we come through this crisis, many businesses will be saddled with significant debts just at the time that we are looking to those businesses to invest and to grow the economy. Does he therefore agree that it is vital that the Government come forward as soon as possible with a clear plan as to how they are going to assist those companies with that indebtedness in terms of debt forbearance and equity finance so that they can fire up the economy and grow the jobs that the country will so desperately need?”
“We also need to start talking about the plan beyond coronavirus, even though that may seem some way away. We need to talk about growth and how we are going to support consumer expenditure in particular, given that consumers do not feel like spending and may have increased their savings during this crisis. Temporary tax incentives, such as a time-limited VAT break, may be good in that regard. Finally—as I stick within my four minutes—business indebtedness will have increased. We need the Government to look at how some of that debt can be turned into equity, so that businesses can focus on investing and creating jobs.”
“Indeed, there is a small minority of businesses whose business model has actually thrived under our current circumstances. They clearly do not warrant support. Secondly, there are companies that, in the medium term, can be bridged out of the current crisis, through the provision of support. That is where a particular focus must lie. Thirdly, there are those businesses whose business model is such that, under the new economy of social distancing and before a vaccine arrives, they are, sadly, going to struggle to survive even if they are given support. I urge the Chancellor to take the courageous and difficult decisions on targeting at business and sector level, to make sure that the Treasury’s finite resources are used productively to support jobs and the economy as we emerge on the other side.”
“Secondly, it is particularly important that employers should contribute to the cost of furlough beyond the end of June, because many of those with staff currently on furlough are not having to pay them and have no intention, in the medium term at least, of bringing them back in to their business. Thirdly, we need to encourage part-time working within the furlough scheme, where possible. Finally, the Chancellor should look very closely at targeting support, not just in respect of the furlough but in respect of the other support that the Government are providing. There are at least three categories of businesses in our economy at the moment. There are those that will survive without any additional support through this crisis.”
“For example, the furlough scheme is costing as much on an ongoing basis as the funding of the national health service. Before coronavirus, Governments agonised over whether we could spend another 1%, 2% or 3% on the national health service, but here we are spending the equivalent of 100% on furloughing 25% of all workers in the United Kingdom. I want to focus for a moment on how we might unwind the furlough scheme most productively and effectively. First, we should seek to taper it away, from 80% down to 60% and then to 40% and so on, to smooth our exit.”
“Thank you, Madam Deputy Speaker. May I begin by associating myself with the very poignant and moving remarks made by those on both Front Benches about those who have sadly lost their lives to this devastating virus, and with the appreciation that they showed to those who have helped so much and are on the frontline? I will address my remarks specifically to some of the economic issues around covid-19, not least the inevitable withdrawal of some of the Government’s support for businesses as we come out of lockdown. I do not say “inevitable” because the Government were not right to introduce the scheme in the first place—the Chancellor did entirely the right thing, and came in with the scale and pace to support business—but in the longer term, the amount of spend involved in such measures is simply unsustainable.”
“We cannot assess national taxation rights on property, on where people are, on where the management are or on where the intellectual property resides; we must do it on where value is created. These measures are a big step in the right direction. I urge the Financial Secretary to stick to his guns. He will face great pressure from the United States in particular, but in the absence of an international approach to this matter, it is vital that we take action. I think my five minutes are now up, and I am very aware of your exhortation, Madam Deputy Speaker, so I will conclude, except to say that I will be supporting the Second Reading of this Bill.”
“He is right to make those changes; it is a relief that is not fit for purpose. However, there are £24 billion-worth of reliefs every year relating to businesses, and at a time when we need economic growth encouraged at every single turn, it is imperative that the Treasury examines all £24 billion-worth of those reliefs and makes sure that they are all fit for purpose. Secondly, I was particularly pleased to see such a large number of clauses relating to the digital services tax. It is not right that search engines, online marketplaces and social media platforms should not be paying a fair level of tax in our country. It is not a case of evading tax; it is a case of the taxation system not being adequate for the 21st century.”
“I welcome those a great deal, but we also need to ensure that the banks are on notice that we expect them to deliver on the coronavirus business interruption loans and the other loans concerned. Through the Treasury Committee, I have had conversations with the British Business Bank and also written to the banks on its lending panel to urge them to come forward transparently and provide us with data on how much money is going out of the door relative to the number of applications on a daily basis. I call on the Financial Secretary to the Treasury and the Government to row in behind us and ensure that transparency, because what gets measured tends to get done. Let me turn to two specific points in the Finance Bill. The first is the changes that the Financial Secretary to the Treasury has just outlined in respect of entrepreneurs relief.”
“As the Chair of the Treasury Committee, I urge the Government to engage with businesses on the broader elements of the plan, so that they can both input and adjust accordingly. The element of which the Government have control, of course, is the support they are providing to the economy, at considerable scale and pace. The Chancellor is to be congratulated on that, but with scale and pace come hard edges to policy and challenges in delivery. Examples of both that the Government should focus on are, first, making sure that, for the self-employed who work through their own companies, dividends that result from self-employment can count when it comes to assessing the furlough amount that they can qualify for. Secondly, on delivery, we heard from the Chancellor earlier about bounce-back loans.”
“On timing, as the House will be aware, the Government have put forward five tests, one of the most important of which is the fifth test, which is that we should extract ourselves from lockdown but in a manner that does not cause a second flare-up of the virus, which happened with the flu pandemic of 1918. This is critical; if the Government get it wrong and we do have that second surge in the virus, it will be a catastrophe for our economy and we will have not a V-shaped recovery, but at best a double-dip recession of some magnitude. It is therefore very important that the Government be allowed the time and space to take those decisions, and that we are patient with them. Secondly, on the nature of our withdrawal, it is important that we have transparency.”
“The economic backdrop to this Finance Bill is among the most challenging that this country has ever faced. The Office for Budget Responsibility, for example, in the scenario that it put forward, suggested a 35% contraction in the economy followed by a rapid bounce back—the so-called V-shaped recovery. Whether that is realistic or not remains to be seen, but it is the case that the Government have some significant control over two areas of policy that will determine whether we come back with a V-shaped recovery or not: the timing and nature of our exit from the lockdown.”
“Does he know at this stage when the conclusions of that exercise may be reached, so that we can provide vital reassurance to employers and employees who fear for their jobs up and down our country? This is a time in our history where not just days, but hours matter.”
“These are truly shocking times and a great weight lies upon the shoulders of my right hon. Friend the Chancellor. I hope it is felt right across the House that we wish him every success in his endeavours to steer us through this crisis. He has come forward with a huge response to the current situation, which I know will, in many quarters and businesses up and down the country, provide some reassurance. There are, however, inevitably some areas on which there is still work to come, not least in terms of the employment support package. I note the fact that he will shortly be engaging closely with trade unions and businesses to flesh that out. May I urge him to do so as quickly and promptly as possible?”
“I suspect that one of the key questions we will be putting to the Chancellor of the Exchequer, when he appears before our Treasury Committee this time next week, will be to probe the figures around the headroom that is assumed in those particular numbers.”
“I think the Chancellor said that he was fundamentally sticking to the rules in the Conservative party manifesto to ensure that day-to-day spending is in balance over a three-year horizon. I think the Chancellor also suggested that, given the OBR’s forecasts, in about 2022-23 the head- room around those rules would be something in the order of £12 billion. That is all well and good—that is a reasonable level of firepower—but he also pointed out that the impact of coronavirus will not, because the cycle of the Budget forecasting by the OBR will have had a cut-off about two weeks or more ago, have been taken fully into account.”
“In 2013, the then newly appointed Governor of the Bank of England, Mark Carney, was asked by the Treasury Committee about what he saw as the main challenges over the coming years, and he did not mention one of the three external challenges that I have just presented. These things come at us pretty fast and are sometimes very unexpected, and the Chancellor is to be congratulated on looking closely at those challenges, and coming up with robust responses. None the less, at the heart of this Budget hangs an important question: are the fiscal rules to which we are working robust enough, and do the spending and taxation proposals in the Budget—we will, of course, pick over them in some detail over the coming hours and days— stack up in terms of maintaining the fiscal responsibility that the markets expect of us?”
“There is no doubt that this Budget has been framed against one of the most challenging moments in this country’s economic history. As the Chancellor set out, many fundamentals of our economy are strong: record levels of employment; the lowest level of unemployment since 1974; low and stable inflation; and real wages that have risen over a two-year period. Nevertheless, the Chancellor was equally right to point to the huge challenges that lie ahead. He did not mention the trade deal that we are negotiating with the European Union, or—at least explicitly—the many accelerating challenges around climate change. Instead, he rightly and substantially focused on the challenge of coronavirus. These challenges often emerge without much warning.”
“My right hon. Friend is absolutely right that we flex the rules to accommodate the circumstances. My point is that when we talk about headroom within our fiscal rules, we have to make sure that the number we are focused on is as accurate as possible. Given what is happening with coronavirus and the fact that the OBR struck its forecasts some time ago, the current forecasts are almost certainly already out of date.”
“Quite the reverse. I began by pointing out that the fundamentals of the economy are strong. They certainly were not strong in 2010. We inherited something of a mess from the Labour party.”
“The Select Committee will want to probe how sustainable that is, particularly in light of possible recasting of forecasts going forward. The Chancellor also raised a very interesting point about how to categorise human capital as between day-to-day spending and investment. I know he will be looking at that very closely. I can assure him that the Treasury Committee will be also be looking at that very carefully to make sure it is a rational and sensible thing to do, and not in any way shuffling the figures around to spend more and break existing arrangements. The announcements on greater spending on housing, green investment, flooding arrangements, roads, rail and the A303—thank you for what you are doing for the south-west, Chancellor—are all important, particularly given our historically low levels of productivity.”
“My right hon. Friend intervenes exactly as I am about to move on to just that point. I assume that the Chancellor is adhering to the rules set out in the manifesto. In other words, we will borrow up to 3% of GDP, subject to a cap in the event that the interest on that borrowing meets or exceeds 6% of the Government’s revenues. It seems to me, from what I have quickly scribbled on the back of a piece of paper, that the kind of figures for public sector net investment he envisages rolling out—I think he gave a figure of £110 billion by 2024-25—probably pushes us right up against that 3% level. I am looking at the Chancellor and he is kind of nodding, slightly at least, so I am assuming that that is broadly correct.”
“On levelling up, the Green Book needs to accommodate the fact that we need to get away from the natural returns we get in London and the south-east, and get investment out into the regions, particularly the south-west of England. [ Interruption. ] I see the Chancellor nodding again. That all helps to meet our net zero quest.”
“I am afraid I have to completely disagree. To give them credit, the Government were in the vanguard of making the commitment to net zero by 2050. Indeed, the Chancellor made a very important announcement just now about a huge investment in carbon capture and storage, which could be a part of further revolutionising the production of power and energy in our country, and making sure it is greener. Turning briefly to the remarks the Chancellor made in respect of the Green Book and how investments are analysed, it is very important that we get that right, not least in encouraging green investment. The Chancellor might want to look at the kind of discount rates we apply to green investment propositions to make sure that the Government are encouraged to invest upfront rather than further back in time.”
“He is absolutely right that making the changes that he suggested—a reduction from £10 million to £1 million—is not about beating up on the self-employed or entrepreneurs; it is about making sure that tax reliefs are fit for purpose. The changes that he has made, including the increase in R&D tax credits, the more generous treatment in the structures and building allowance and the changes in the employment allowance, will be much more meaningful and powerful in supporting small businesses than entrepreneurs’ relief ever was.”
“I am encouraged by his comments about the helpline. Secondly, is it enough support? That needs to be monitored very carefully. Finally, there is the targeting aspect. Businesses in particular sectors are hurting more than others. We need to make sure that additional help is provided for them, just as we did in similar circumstances in the 2001 foot and mouth crisis, when the agricultural sector needed support. We need to recognise that there are particular types of businesses in that situation. I am conscious of the time that I have taken and the fact that other Members will want to come in, so I will end by touching on a specific measure that the Chancellor raised: entrepreneurs’ relief. He has taken a brave step, and the right step, in that respect.”
“We face both a supply and a demand-side effect for SMEs. The Bank of England dropped the base rate by 0.5% today, which was clearly co-ordinated with the Budget, and made changes to the counter-cyclical buffers that banks have to hold. That is all well and good and will help banks to put more money into those businesses, but the real issue will be around the fiscal measures that the Chancellor has announced, particularly relating to business rates, time-to-pay arrangements and the deferral of taxation. I will just say to the Chancellor that the Committee will look at three particular aspects, the first of which is how quickly help can be got out there and whether HMRC is spring-loaded to ensure that businesses are aware of what is available and how to take advantage of it as quickly as possible.”
“On where the investment is going, I have yet to pore over the granular detail, as the hon. Lady suggests, in the Red Book. What I do know, with regard to looking after the less advantaged and the lowest paid in our society, is that important reference was made by the Chancellor to the increase in the national living wage, worth £1,000 a year. Of course, this is a Government who increased the personal allowance, taking millions of people, particularly the lowest paid, out of tax altogether. The changes to the threshold of national insurance contributions to £9,500 will also serve that particular purpose. Turning to the support that the Chancellor has identified for small and medium-sized enterprises, this is absolutely vital and lies at the core of how we will cope, or otherwise, with what is to follow over the coming weeks and months.”
“We have engaged multilaterally with the OECD and the European Union for the preferred outcome of a multilateral approach, which will avoid double taxation problems and issues associated with going unilaterally, but we have waited too long. We must not, like other countries, step back under pressure. We must go forward with that tax as of the start of the next tax year. I say to the Chancellor that we in the Committee are his candid friends and we look forward to working with him. Given the kind of pressures and difficulties for our economy and our country at the moment, we are, right across the House, all in this together, and we look forward to him appearing before our Committee on Wednesday next week.”
“Google, Facebook and Amazon—those kinds of businesses—need to pay fair taxes in our country. It is a case not of tax avoidance, but of the international tax regime being unfit for the 21st century. We have to get away from attributing tax rights simply to where the bricks and mortar, the people and the intellectual property are, and where management decisions are taken, and look more at where value is created. In the case of those businesses, a huge amount of that value is created here and we must tax it appropriately. I know the Americans will apply quite a lot of pressure and have done so already, but I urge him to stand up to that.”
“The Prime Minister has been consistently clear that we will engage with other parties over the issue of social care, and those discussions will occur. My plea to the House is that people do not seek to take political advantage of the situation and that they engage in a constructive manner. Finally, the fundamental review of business rates is most welcome. We know why business rates have generally been there—they are easy to collect and it is difficult for tax avoidance and so on to occur—but they are a huge burden on many small and medium-sized enterprises up and down the country. There was no mention in the Chancellor’s remarks of the digital services tax, and I hope I can take that to mean that we are going ahead with that—he is nodding—in the matter of a short few weeks. It is right that we do that.”
“My right hon. Friend the Chancellor will know that I have written to him about the legal duty that the OBR has to produce two economic forecasts in each financial year, which of course has been complicated by the cancellation of the last Budget. Can I ask him to set out for the House the approach that he intends to take and how he will avoid the necessity of having two forecasts very close together saying essentially the same thing?”
“23. What discussions he has had with Cabinet colleagues on potential opportunities for (a) farmers and (b) the agricultural sector after the UK leaves the EU.”