I am disappointed by the Minister’s concluding remarks on amendment 141, which is in my name and those of my hon. Friends. She says the amendment lacks detail. We are talking about simplification today and I will go on to address the House on that issue, but this amendment covers more than an A4 page, so there is quite a lot of it. It might be the wrong detail—I freely accept that I am not an accountant—but I cannot get my head around the concept that it lacks detail. So I am disappointed and urge her to reconsider.
I am pleased at the movement from the Government on amendment 180. It will not surprise SNP Members to know that I want to touch briefly, as the Minister did, on new clause 6. Frankly, they have made their bed and they should lie in it. They were warned that this would be the financial effect, and having an inquiry into
the financial effect of something they knew was going to happen and has happened—it may be an adverse financial effect—is what you get with devolution; you make your decisions and you live with them. They should not be looking indirectly through this mechanism for yet another bung from the English taxpayer when they are already getting shed loads of money under the Barnett formula. I support the Barnett formula and the Union, but sometimes, people can push their luck a bit and I think that is what is happening here since they knew in advance what would happen.
I want to make some brief remarks on the question of evidence-based decision making and the difficulties we have in that regard as policymakers and legislators in this House. That applies particularly to financial matters. Although the House of Lords scrutinises Finance Bills, it does not vote upon them for good historical reasons. It cannot, therefore, amend the Finance Bill and we have to get it right here.
Oppositions cannot table amendments to put up taxes and it has become commonplace in recent years to table amendments to express concern and call for a review. That has been the mechanism used by those who take issue with a particular course of action, or lack of a course of action rather than moving amendments to abolish something, as the Liberal Democrats extraordinarily did yesterday with their amendment to abolish corporation tax, which as the Minister said, would cost £43 billion a year. In this group, new clauses 3, 6, 8, 16, 17, 18 and 19 all call for a review, as did new clause 14 and amendment 176 which were debated previously. It is the flavour of the day.
This highlights a problem that the Minister addressed in her concluding remarks in the previous debate. We have at the moment an economy with extraordinarily good unemployment figures, and I praise the Government for that. That figure has come down, and we have had 2.5 million more jobs in the past six years. That is great, but it has been bought on a sea of debt, with the deficit going up 60% under a Government who said that they were imposing austerity in order to bring public finances under control. They are still not under control.
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We have a mounting deficit. We have crumbling infrastructure and services, where we are storing up problems for the future. Prosaically, if we drive around lots of towns in England—I do not know about Scotland, Wales and Northern Ireland, but I suspect the situation may be the same—we see crumbling roads because local authorities are cutting back on filling in potholes. That is a short-term saving but it leads to longer term costs. It is an example of what is happening throughout the economy. We have also had six years of stagnating and falling wages. However, the interactions between the Government’s economic measures that have led to the negatives—I have delineated only some of them—and the positive of employment being up by 2.5 million are unclear to many of us, and I think are unclear to economists.
The Minister referred in the earlier debate to a package of measures, and she quite properly referred to the interaction of different measures. These things make it difficult when one is considering economic policy. On the disaggregation of various measures, it is difficult to know whether one measure or package of measures or
what cocktail of measures is effective or ineffective. The Minister said that the Government review tax breaks and tax reliefs all the time and that all policies are under review. That is good. What we are saying in some of these amendments and new clauses, and have been saying repeatedly in opposition, is: “Make that public”.
I also repeat to the Minister something I said yesterday. There is a question mark as to how much some of these measures and policies are kept under review. The question mark comes from the National Audit Office in a report of about two years ago which, in round terms, said that there are five different types of measures which could broadly be called tax relief, and it delineated them. It then said that it could count about 1,200 such tax reliefs and that it could only find evidence that about 300 of them were being monitored by the Government for efficacy.
The Minister may well believe and be told that these reviews are going on all the time—there are some reviews and she has referred to several of them today. However, I have to tell her from a somewhat, but not very, different angle that that is not what the NAO found two years ago. I urge her to go back to Her Majesty’s Revenue and Customs and the Treasury and find out what is going on with this.
Sadly, in the Labour leadership campaign we have seen from various commentators the emergence of the post-factual world. I am in favour of evidence-based policy making. That does not mean we reach a cosy consensus, which is sometimes what those who are post-factual think is what we inevitably end up with. I will give the House a simple example. If a suburban road has a 30 mph speed limit and a survey finds that 60% of cars are going above 40 mph, the policy that one could make as a result of that could vary between putting in speed humps, putting in chicanes, using radar guns or even raising the speed limit to 40 mph. Those are the policy implications that we as politicians from our differing perspectives might draw from such a common set of facts. Trying as much as one can—it is not always possible—to have a common set of facts is important for evidence-based policy making, and I do not think that the Government, as legislators, have enough information. Therefore, we cannot be sure that the measures we pass in this House have any likelihood of doing what they are intended to do.
Earlier today I gave the example of tax relief on pension contributions; perhaps the worst example is £30 billion a year spent trying to do something when there is no evidence that it does what we want it to do. It might be that from that fact—I take it as a fact because the House of Commons Library cannot find any real evidence that behaviour is changed by that massive tax relief—one could draw different conclusions. One could say one must try harder to advertise it, and we should be doing it anyway because it is a good thing. At the other end of the spectrum, one could say it should be abolished entirely, and in the middle one could say, “Well, we should tinker round the edges and get tax relief at the higher rate—the 40% rate—down.” But we should try to start with a common basis, even though we will not always be able to do so, and many of the new clauses and amendments are seeking to flush out that information. That is a step towards the situation I wish to see—it is adverted to in amendment 180, which
refers to the Office of Tax Simplification—in which we as a society and as a legislature look seriously at tax simplification.
The right hon. Member for Cities of London and Westminster (Mark Field) referred to this earlier today. He also referred to it yesterday in the context of corporation tax, and asked whether we ought to consider substituting that tax with a turnover tax, given all the avoidance that goes on. Depending on how it were done, that could be simpler. I agree with him that we ought to have that debate. My hon. Friend the Member for Feltham and Heston (Seema Malhotra) also made an excellent speech earlier today on evidence-based policy and getting the relevant information.
This ties in to the question of simplification because we need the evidence in order to achieve that. For example, many of the small business tax reliefs generally sound very good, and they might indeed be good; I do not know, because we do not have the evidence. I have been in small and medium-sized businesses, and in my experience, those who make the decisions are often unaware of that part of the tax regime until they come to speak to their accountant at the end of the year. So the tax relief has not in fact altered the behaviour of that business during that first year, although it might do so in years two and three. My experience of being in and interacting with small businesses, although not huge, tells me that they are often too busy trying to run their business to say, “There is a tax relief for this and a way of doing that, and we were going to do this in sales but now we are going to do that instead.” They are too busy pursuing the goals that they have set themselves to be bothered about that, so let us have some simplification.
Many Members, although not all, talk about tax simplification. When the former Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne), was in opposition and my party was in government, I remember hearing him speak in Finance Bill Committees—six of which I served on—and repeatedly referring to the tax code. He was the first to use that Americanisation, as I remember. This was seven or eight years ago, and he said that according to Tolley’s tax guide, as it then was, the tax code ran to about 1,000 pages. At the latest count, it is about 1,500 pages. We have had no simplification; we have gone the other way.
One of the reasons for that is that Governments have understandably not had the guts to say, “If you have simplification, it will lead on occasion to things being rough and ready and you will lose the nuances.” As a lawyer, I can say that on occasions that is right. We see this most graphically in the area in which I practice, that of employment tribunals. When they were introduced as industrial tribunals decades ago, they were supposed to be the people’s access to justice. They were supposed to be simple, rough and ready, but what did we get? We got layers of complexity and precedents.
Additionally, we now see the awful situation of people being unable to afford to go to a tribunal since the Government brought in fees. The court fees introduced by the last Government for a full employment tribunal hearing can amount to £2,000. Also, the complexity now means that people need legal representation, but they cannot get legal aid and, generally—certainly in England and Wales; I do not know about Scotland—they cannot get a so-called no win, no fee agreement. So access to justice is reduced because of the complexity.
It is very difficult for a lay person in England and Wales to access an employment tribunal without access to specialist legal advice, which generally costs money because of the legal aid regime.
One solution would be to make legal aid available for employment tribunals. Another would be to make the tribunals less complex, but that would lead to rough and ready justice. The same would apply to the tax measures in this country. I urge the Government to consider monitoring and getting evidence on the 1,200 or so tax reliefs and on the distributional analysis to which some of the new clauses refer. I also urge them to take the bull by the horns and have the guts—I salute them for having had the guts to take measures on tax avoidance—to go for a simplification that would help business, even if it occasionally resulted in a somewhat rough and ready system.