I thank the Minister and her Treasury colleagues, past and present, for their progress of the Bill through the House. I thank my own shadow Treasury colleagues, past and present, for their hard work in holding the Government to account. I thank my shadow Treasury team staff for their hard work on the Bill in the interesting times in which we have found ourselves. The Clerks deserve a mention for being pestered every five minutes by members of my staff—indeed, by the staff of other hon. Members, too. I make special
mention of all Members who have worked very hard on the Bill and participated in a number of extremely thoughtful and interesting debates.
The Opposition will not be supporting the Bill on Third Reading. Although it contains some measures that we support, we simply cannot vote in favour of a Bill that does nothing to address the underlying issues in our economy. It has unfairness at its very core. I will, however, run briefly over the areas where we have found some consensus across the House.
First, there is the need to zero-rate VAT on women’s sanitary products. Many Members across the House spoke in support of this yesterday. I appreciate the Government’s sympathy with the campaign by my hon. Friend the Member for Dewsbury (Paula Sherriff). I place on record once again my congratulations to my hon. Friend who, along with many women outside this place, has campaigned tirelessly on this issue. Unfortunately, we still had to divide the House, as the Minister refused to put down a firm date for implementation of the zero rating. I hope the policy will not be kicked into the long grass once the Bill has completed its passage through Parliament. I know the Minister supports the general principle of the policy and I am sure that my hon. Friend the Member for Dewsbury will be very quick to call the Government out should they try to avoid taking this matter forward responsibly.
We have also found a broad level of agreement on country-by-country reporting. I am pleased that the Government saw fit to accept the amendment tabled by my right hon. Friend the Member for Don Valley (Caroline Flint). Again, I put on record my thanks and congratulations to my right hon. Friend for her hard work and determination on this issue. The amendment stated that the Government “may” exercise their powers in this regard. However, I hope that the Government “will” exercise their powers in that regard, and I shall follow their progress very closely.
We support the Government’s steps towards closing the so-called Mayfair tax loophole, even though they did not accept our amendment to provide that all carried interest would be subject to income tax—but that, unfortunately, is where the consensus ends.
One of the biggest problems facing the economy at the moment is low rates of investment. Investment by businesses has already fallen for the last two quarters and investment by Government is scheduled to fall in every year of this Parliament. Overall investment as a share of GDP is lower now than it was in 2007—despite rising profits to companies and an all-time low cost of borrowing for the Government.
The Government maintained in yesterday’s debate that cuts to the headline rates of corporation tax and capital gains tax contained in the Bill would incentivise business investment, but they did not convince me or my hon. Friends that that would actually be the case. When we debated the cut to corporation tax yesterday, I provided some helpful figures to demonstrate that it is not clear that reductions will deliver the investment that the country desperately needs. For the benefit of Members who were not in the Chamber yesterday, I shall briefly recap.
The House of Commons Library analysis shows that business investment was higher in the year 2000 when corporation tax was at 30% than it was in 2015 when it was a full 10% lower. There is no obvious correlation between a low rate of corporation tax and high rates of business investment. Furthermore, corporations are not in need of cash in most cases. Figures provided by the House of Commons Library show that the UK corporation industry was sitting on cash reserves totalling £581 billion last year, so something is clearly precluding them from investing in the future. Frankly, the measures in this Bill will do nothing to change that behaviour.
Because of this lack of investment, productivity in the UK has fallen. Every hour of work in Britain produces one third less than every hour worked in Germany, the US or France, while real wages have fallen by 10% since 2008. That is simply not good enough—it is not good enough for British workers; it is not good enough for the economy; and it is not good for our sense of national pride. We need investment in infrastructure, in skills, in innovation and in industry. Labour is committed to providing £500 billion-worth of investment: £250 billion will be Government capital spending; and £250 billion will come from the national investment bank.
The national investment bank, along with regional banks, would transform regional economies and rebuild our financial system. Government capital expenditure would be used to improve vital infrastructure such as transport, housing and energy supply. Those are the kind of policies that businesses need to thrive, and I hope that the Government will consider them. They have not put such policies into the Finance Bill, but they have the power to put them into further pieces of legislation as this Parliament progresses.
The Bill fails to address the long-term pressures facing the UK’s energy supply industry and fails to deliver on our climate change targets, as agreed just a few months ago by the right hon. Member for Hastings and Rye (Amber Rudd), now the Home Secretary. The renewable energy sector, as we heard in the previous debate, has been consistently undermined by this Government, and the Bill before us today does nothing to provide the stability or support that this industry craves.
Earlier today, we debated a specific amendment on the VAT treatment of energy-saving materials in the hope that the Government would make it clear in statute that the proposed solar tax hike would not go ahead. Unfortunately, the Government would not agree to our new clause and as such the insecurity for this industry continues. Furthermore, the Bill still makes sweeping changes to the climate change levy, which could seriously undermine its efficacy. In Committee of the whole House, we tabled an amendment calling for a review of the impact of the climate change levy on carbon emissions, but we were unfortunately defeated in the Lobbies. The change will go ahead with no assessment of whether the somewhat altered levy will do its job. That, too, is just not good enough from the British Government.
Over the weekend, we saw China and the United States ratify the Paris climate deal. Together they are responsible for 40% of the world’s carbon emissions, so that marks a huge step forward in climate change responsibility. Our Government, however, have not ratified
the treaty, and have rowed back on almost all their green commitments since the election. I will not list them again, as it is an extensive list, but the Bill does nothing to tackle the issue of climate change head on, and, we believe, weakens measures that are already in place.
As for the key issue of tax avoidance, I must reiterate our view that the Government’s piecemeal approach of slowly introducing new little schemes and penalties is simply not enough. As I said yesterday, we need to see real commitment to an overarching strategy that provides genuine “legal teeth” to tackle the tax avoidance industry. At a time when our public services are tearing at the seams as a result of increased demand and a lack of resources, it is not acceptable for people to be allowed to avoid paying their taxes. It is time for tax avoiders to understand that being part of our society means paying one’s fair share towards the upkeep of that society. Labour has set out its stall with its tax transparency and enforcement programme, much of which was reflected in the amendments that we tabled yesterday. I hope that the Minister took some of our suggestions on board.
It is disappointing, to say the least, that the Government did not see fit to accept our new clause proposing a wide-ranging review of the UK tax gap and its causes. They have to appreciate that we must design a system that will really challenge the tax avoidance industry. We must overhaul our tax laws so that they are based on broad principles that will make avoidance difficult. A full public inquiry would expose the perversity of the industry, and would signal to the world that we are serious about stamping out tax evasion and avoidance wherever they may flourish.
Let me end by saying this. Labour wants to build a high-investment, high-wage economy. It wants to build an economy that will allow the UK to be a country of the future, leading the way on research and innovation; an economy in which everyone pays their fair share, and support is provided for those who need it; an economy and a society of which the British people can be proud. However, that can be done only with a Government who are committed to making it happen. We do not believe that the Bill will achieve those goals, and we will therefore vote against it this evening.
Question put, That the Bill be now read the Third time.