Finance (No. 2) Bill

Part of Bill Presented – in the House of Commons at 2:12 pm on 1st April 2014.

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Photo of Chris Leslie Chris Leslie Shadow Chief Secretary to the Treasury 2:12 pm, 1st April 2014

That is a very interesting explanation. There is a shift in policy, which is to let certain banks off the hook when it comes to the bank levy. Perhaps the hon. Gentleman is right and that is a strategy. I have given the Minister an opportunity to explain what exactly the Government’s plan is, but he will not put it on the record. We will have to explore that in more depth in Committee.

While we are on the financial services sector, let us look at what the Government are doing in clause 107, which relates to stamp duty reserve tax. My hon. Friends might begin to wonder what that is all about, especially when we say that it is known as the schedule 19 charge, which refers to the 1999 Finance Bill. Many people think, “Oh well, we’ll see what comes of these taxes.” But the schedule 19 charge, set out in clause 107 of this Bill, seeks—this is the priority of these Conservative and crypto-Conservative Members—to give a tax cut of £145 million to the investment management industry by abolishing stamp duty reserve tax. At the same time, my hon. Friends’ constituents are having to cope with the bedroom tax, extra council tax charges and the VAT increase. Despite the hardships they are facing, the priority of the Chief Secretary and the Exchequer Secretary is to give away £145 million by abolishing stamp duty reserve tax. I know that they have been lobbied heavily on that.

We will oppose that change, because we think that the Government should be using that resource to help scrap the bedroom tax, if indeed it is raising any money—I have my doubts about that. The National Housing Federation states that it might well be costing more than the Government planned. We certainly should not be giving away that money, especially at a time when the investment management industry, which holds £5.4 trillion in collective funds, increased its holdings by about 7% in 2013. I do not think that £145 million is an unreasonable sum to ask from a sector that has been doing very well in recent years. We should be making sure that we pursue a fair policy and so will oppose that clause.

We then come to the Bill’s tax avoidance measures. We know that the Government have a bad record on that—[Interruption.] Well, they do. The oh-so-successful Exchequer Secretary, who cannot even manage to get the amounts of money he promised from the banks, cannot manage to get from the Swiss the £5 billion he promises through the Swiss tax deal. The Chief Secretary stood up a moment ago and said that he would get only £1.7 billion. We had a deal with the Lichtenstein Government, which we projected would bring in £2 billion; in fact, it has brought in £2.5 billion. When we have tax deals with tax havens, they work. However, when the Exchequer Secretary gets his fingers on these things, it is amazing how it all goes wrong—it is his reverse Midas touch.

The Government have fallen into bad habits in pencilling into the Red Book projections of revenues from the avoidance measures that involve what the OBR calls particularly uncertain assumptions. The Government are, of course, quick to spend the projected money; Paul Johnson from the Institute for Fiscal Studies calls such moves the Chancellor’s manoeuvres, always relying on revenues that are by nature uncertain. It is important that we scrutinise whether the supposed tax avoidance deals will deliver what the Government say.

Rather than the measures in the Bill, we need action to deliver starter jobs, guaranteed for the long-term unemployed. The number of young people out of work for a year or more has doubled and we need compulsory starter jobs for those who have suffered unemployment, which is a scourge not just on society but on their career prospects. We need action on child care. Free child care should be extended from 15 to 25 hours, paid for through a proper collection of the bank levy.

We need a help to build scheme to counter-balance the Help to Buy scheme. There is a serious risk—as the Chief Secretary knows, even the Governor of the Bank of England has concerns about these things—of a lop-sided recovery unless we match the boosting of demand with boosting of supply. A help to build scheme particularly focused on ensuring that small and medium-sized construction companies can do better is one way to make a big difference.