Well, the Chancellor has seen a small fraction of the light. The Bill contains some measures to support industry and some measures to crack down on tax avoidance, as well as the Government’s long overdue but welcome commitment to zero-rating VAT on women’s sanitary products, a cause long championed by my hon. Friend Paula Sherriff. The Government have also accepted our amendment to the Budget resolution to legislate on energy-saving materials. It is, however, unfortunate that those provisions are not in the Bill, which is leading to continuing uncertainty. I welcome the creation of 2 million jobs in the United Kingdom since 2010, but those jobs have been bought on a sea of debt.
The Government talk about the simplification of taxes, as they did when they were in opposition. Tolley’s Tax Guide has grown by 50% under the present Chancellor, the Finance Bill contains 827 pages, and, according to the National Audit Office, there are about 1,300 tax reliefs and the Government have some idea of the efficacy of fewer than 300 of them.
Before dealing with the Bill in more detail, I want to say something about the deteriorating economic context in which it is being introduced. We have heard some of the figures during today’s excellent debate, but I think it is worth reminding ourselves of them. The current account of the balance of payments worsened to a record deficit of 5.2% of GDP in 2015. The Chancellor rightly wishes to encourage individuals to save more, yet the household savings ratio has plummeted, and is worse than it was at the time of the 2008 economic decline. In the last quarter of 2015, productivity was 1.2% lower than it had been in the previous quarter—the steepest drop since 2008. UK productivity is 18 percentage points below the average in the rest of the G7.
Household debt is on its way back up, and the Office for Budget Responsibility forecasts that by 2020 it will be at about the same level as it was in 2008. Since 2010, median weekly earnings, in real terms, have fallen by more than 5%, and public spending has fallen by more than 10%. The national debt has risen by nearly two thirds in just six years. The annual deficit is the second highest in the G7, and last year it was worse than the one in Greece. In March, the OBR revised its projections for GDP growth downwards, and revised its estimates for UK debt upwards. Let us not forget that the Chancellor has missed two of his three self-imposed fiscal targets, and the OBR estimates that his chances of hitting the third are about 50:50.
After six years in charge, it is about time the Chancellor took some responsibility for his many and manifest failures. The evident economic mistakes made by the previous Labour Government, for which I have repeatedly expressed my deep regret in the House, are almost as nothing when compared with the Chancellor’s rotten record. The Chancellor does not learn. For example, he has put the income tax rise threshold for tax credits back to what it was initially under the Labour Government when it wreaked havoc on working families, and it has wreaked havoc on the Treasury. Labour learns from its experiences and its mistakes; the Chancellor evidently does not.
The Institute for Fiscal Studies says that the direct effect of Government tax and benefit policy has been to take money from working age benefit recipients towards the bottom of the income distribution. The Chancellor planned to cut disability benefits for some of the most vulnerable and he will make some of the poorest struggle to repay tax credit debts, yet he is introducing cuts to capital gains tax, costing £2.7 billion by 2021, and cuts to corporation tax despite the rate already being the joint lowest in the G20. He believes in cutting the incomes of the most disadvantaged in our society while increasing the wealth of his rich friends. He says that we are “all in this together”. I think not.
It is unfair that the adverse effects of the Government’s harsh economic policies fall most heavily on women. House of Commons Library figures indicate the gender bias of benefit changes. Some 86% of cumulative tax changes and cuts in social security benefits spending due between 2010 and 2020 will come from women. That does not even include the swingeing cuts to public services, let alone the impact of universal credit.
The Panama papers demonstrate the widespread problem of tax havens and of the lengths to which some of those who can afford it will go to avoid tax. The Government’s repeated promises over the past six years to tackle tax avoidance have been shown to be largely hot air. After all, the UK, along with its overseas territories and Crown dependencies, remains the biggest secrecy jurisdiction in the world, and the British Virgin Islands are by far the most popular tax haven revealed by the Panama papers. While containing a few, limited anti-avoidance measures, this Finance Bill will do nothing fundamentally to fix that. By not acting, we damage our own economy, but we also damage some of the poorest people on earth.
In July 2015, the Financial Secretary said that he expected the UK’s overseas territories with financial centres to set out a timeline for introducing registers of beneficial ownership or similarly effective systems by November 2015. Despite the timeline not being met, the UK Government had not even expressed their disappointment until recently. Of 10 overseas territories and Crown dependencies, only two have accepted the Prime Minister’s request to adopt a public register of beneficial ownership. The measures announced now, including a £10 million taskforce and a new criminal offence—conspiracy to evade taxes—for something that is already a criminal offence, are too little, too late. The Financial Secretary to the Treasury told us today that Crown dependencies have agreed to provide full access to a register of beneficial ownership, but that will mean a central register kept by those territories, not a public register, which is what we need. When will the Government take serious action and when will the Government take some responsibility?
The Chancellor is borrowing like a drunken sailor, using the nation’s credit card to pay the day-to-day bills, which is just plain wrong and will end in tears. Borrowing to invest in infrastructure is fine. It is like borrowing on a mortgage to buy bricks and mortar. That is what Labour would do. We advocate capital investment in mass house building because we have a housing crisis in this country that has got much, much worse in the past six years. The measures in this Bill will do far too little to address that housing crisis. I am a socialist who spent most of his working life in business, and I understand the laws of supply and demand, but apparently this Tory Chancellor does not. Let me spell it out for him: increase the supply of housing. To address the housing crisis caused by insufficient supply, the Government should themselves build more housing.
This Chancellor should stop wringing his hands and blaming the last Labour Government. He has been in office for six years now and it is high time he took some responsibility. This Finance Bill is palpably inadequate. In failing to address the severe challenges facing our country, this Government and this Chancellor are failing all of us, but they are particularly failing the next generation. I urge all Members to vote against Second Reading tonight.