My contribution to the debate on the Finance Bill, 5 September 2016

John Redwood (Wokingham) (Con): I remind the House that I have declared in the register of interests that I am a registered investment adviser, but obviously I am not speaking on their behalf in this debate.

It seems to me that there is common ground among all parties in this House that we need to collect a decent amount of tax revenue and that we want to ensure that those who are rich, particularly companies that seem to generate a lot of turnover and possibly profit, pay their fair share.

We recognise, I think, that we have to operate in a global market. We are talking about what are usually large corporations that genuinely make different levels of profit and generate different amounts of turnover in different jurisdictions, and that have genuinely complicated arrangements when they switch components, technology, ideas and work between different centres.

Even in a service business that does that through electronic communication and digital activity, there may be different people in different centres around the world who contribute to servicing the client and to dealing with the particular product. There are, therefore, genuine issues for the honest company in trying to define and measure precisely where work is done, where added value is greatest and what is a fair attribution. We as legislators have to understand that complexity and try to come up with a good judgment, collectively and globally between the main jurisdictions, on what is a fair way to instruct those global companies to report in our different jurisdictions so that sensible amounts of tax are captured.

We also need to remember that we as legislators often help create the very problem that offends quite a lot of MPs, because we speak with forked tongue when it comes to tax matters. When discussing tax, this House often wants to offer tax breaks. The House will say, “We would like companies to do more R and D or invest more in plant and equipment,” or, “We would like individuals to save for their retirement, save generally or be entrepreneurial, set up a business and then sell it in few years at a good profit.” We collectively decide that we should encourage more of that conduct by letting people off income tax, capital gains tax, corporation tax or a combination of general taxes as an incentive for them to behave in the way we would like. We must, therefore, take some responsibility for tax avoidance—obviously not for law-breaking—by those who use the tax breaks we provide.

We are now trying to define something that is not strictly law-breaking, which we all condemn and is an enforcement matter, or a friendly tax incentive, which we probably still agree on. I suspect that every MP in this House thinks that something should be encouraged by tax incentive, but we are trying to define something in the middle, which has come to be called aggressive avoidance, where there are elements of doubt. That is where legislators need to do a better job, because we need to be able to say to people and companies, “This is illegal conduct and you will be prosecuted for it, and everything else is legal conduct and meets your obligations.” If we find that we are not collecting enough tax, perhaps the problem lies with us and perhaps we have to review the whole range of incentives and tax breaks that we offer, because that may be the origin of the problem of our not collecting as much tax as we need or would like to meet the requirements of our public services and other needs.

I will keep my remarks suitably brief. We need a certain amount of humility as legislators. It is very easy to get on a high horse about rich individuals and rich companies. Some of them do break the law—a minority, I trust—and they need to be pursued and prosecuted. Many others are honestly trying to report their tax affairs, complicated as they are, in multiple jurisdictions. This evening we are debating a 644-page addition to our tax code.

Given that we are just one medium-sized country and that a multinational company may have to report to 30, 40 or 50 different countries, all of which are generating tax codes on that monumental scale, we should pause a little and ask ourselves whether we are getting in the way of levying fair tax by the very complexity of the rules we are establishing.

Dutch history as seen by the Dutch

I was expecting the museums and story lines of the Netherlands to rejoice in  the “golden age” of Dutch economic and trading success and naval power, the seventeenth century. I was not disappointed. Nor did I begrudge them their celebrations of  two great naval triumphs. They did force the surrender of the Prince Royal, The English flagship, in the four days battle in the 1665-7 war, allowing them to destroy it with fire after allowing the sailors off the vessel. Admiral Ruyter later in that war launched an audacious and successful raid against the English fleet at anchor in the Medway, destroying 6 ships and towing away a seventh. It was the English Admiralty’s biggest disaster. The Dutch celebration of it on a beautiful cup presented to the Admiral was entirely justified.  The Dutch navy tended to have fewer large ships, but it offered brave and sometimes successful opposition to English power.

The two museums I visited that told some of this story glossed over the English acquisition  of New Amsterdam,  now New York, in the same war, and some  English victories that also peppered largely inconclusive naval wars on and off between 1652 and 1674. The unpleasant violence of the colonial and trading rivalry between the two countries was brought to a welcome end by the peaceful invasion of Britain by Prince William of Orange, married to Mary Stuart. The British establishment welcomed them and switched allegiance to them so their arrival and assumption of the crown was uncontested. The two countries  moved to naval co-operation.

The museums did try to broach the long shadow cast over western European nations by slavery. Where a UK museum would be able to counter point the misery of slavery with the important role played later by leading British figures to secure the end of the slave trade, the Dutch museums just acknowledged the bad life of the slaves and the role of slavery in helping to create the great wealth of the merchant classes in the seventeenth and eighteenth century Netherlands. It was also clear from the Rembrandt displays that arms manufacturers and dealers were some of the richest patrons.

Beneath these dark clouds there are the eternal light drenched canvasses showing the sheer abundance of food and household comforts that Dutch commercial success and wealth brought. Much of the wealth was honestly come by from successful manufacture and trade.  For many Dutch people life was good, especially in the golden age. There was also reasonable social mobility, with people moving through hard work and enterprise from poverty to well heeled lifestyles.

The odd thing about the presentations was the episodic nature of the exhibits and stories, and the large missing gaps. I can appreciate the life and success of the Dutch golden age. I was surprised by the complete absence of material on the evils of the twentieth century occupation in the second world war, and the apparent sidelining of the Great war being waged just a few miles down the road in what was the southern low countries.

It is true that there was one other long shadow hanging heavy over Amsterdam which they do remember. I could not myself face going to Ann Frank’s house. It is such a heart wrenching story. To their credit the Dutch do remember the massacre of the Jews, whilst otherwise  ignoring  several years of being occupied by the Germans. Similarly, there are Napoleon memorabilia of his brother as King and then Napoleon himself as Emperor of an annexed Netherlands, but little about what this meant for those who had to live under the French tyranny.

It was perhaps fitting, however, that by far the largest painting in the Rijksmuseum is a large portrayal of Wellington receiving news at Waterloo of the imminent arrival of the Prussians. Waterloo meant their liberation.

A visit to the continent

I spent the week-end in the Netherlands. It was a pleasure to visit the EU now we have decided to leave. I no longer went fearing I would need to explain why we are dragging heels on joining the Euro, not accepting Schengen and not joining them in their political union. I would have no more self imposed moral obligation to state if asked why I thought the Euro scheme was a prime  generator of mass unemployment and political tensions. Now we are leaving we are no longer to blame for anything that goes wrong, no longer under some requirement to try and argue for a different route, no longer having to try to stop all sorts of changes we do not want which we judge to be against Europe’s wider interest. As good visitors we should wish them well and regard these things as their matters.

So I was relaxed and able to enjoy the continent more than when we were committed. Even better news was I found my Dutch hosts were great. They treated me as a friend, ally and of course as a valued customer. No-one mentioned Brexit. They were all charming, keen to make my stay comfortable, and willing to share their culture and cuisine with a friendly neighbour. I saw if anything an improved relationship. This was a private visit as a tourist.

I also had some surprises. Throughout my stay I did not see a single twelve stars EU flag. I was ready for it. Once again, now we are leaving, the flag does not worry me. It used to, as it was for me a symbol of our loss  of democratic self government. Now it is the flag of our continental friends. Its absence was curious. There were plenty of flags on display. They mainly proudly flew the Dutch flag from the public buildings, the tourist kiosks and the boats, interspersed with some City flags.

It was also curious in the museums I visited which traced the history of the Netherlands through into the present century I saw no mention of their commitment to the EU or the impact it was having on their lives. I am not drawing any conclusions from any of this.  I am at a loss to know why it is so.

I did find their presentation of their national story fascinating, and will talk more of it tomorrow. The recently refurbished Rijks Museum is beautifully done, and provides a stylish  backdrop to Rembrandt’s fine paintings and many other great works of art. The take away was we should get along fine once we have sorted out our new relationship with the EU.

Car parking

When I organise car parking for an event, I try to arrange parking spaces at a 45 degree angle to the incoming flows. This seems to allow more vehicles into a given space, and certainly makes it easier for drivers to get in and out.

The other day I heard an interesting item on radio from a mathematician. He had worked on optimising the use of car park space, and had concluded that you can fit in 23% more cars in a typical surface car park if you organise one way flow into and out of the park, and use Angled spaces. It reduces the amount of spare space you need to allow cars to turn into spaces, and improve the flow of vehicles in and out. If you add more exits than entrances it reduces delays from traffic even more.

We are short of car parking in many places in the UK. Getting cars off the highway and into parks is good for cutting congestion, good for reducing emissions, and good for drivers trying to get to work, the shops, schools or wherever they need to go. I think Councils should look at this suggestion and see if they can improve the flows in their parks and raise capacity. The only cost is a bit of new line painting in most cases. It should raise them more revenue as more cars get to use the parks, and more are enticed in away from more contentious parking on the highway. Indeed, expanding car park places could be allied to some reduction in on highway parking where that causes obstacles and delays.

I have suggested to my local Council that they take a look at this.

Why do some pro EU bloggers take such a poor view of other EU countries?

Why do those keenest on the EU think the other members are so nasty and will want to damage us as they inflict self harm?

And why do they think all the laws of the Treaty we are renouncing legally still apply to us, yet the rules do not apply to those staying  in.

The other member states are bound by Article 8 of Lisbon requiring them to have good relations with us. They are bound by WTO rules against many tariffs and barriers. They will find it very difficult to agree a damage package, as many of them do not want to do that or fear retaliation.

I am much more positive about our former EU partners than the pro EU lobby. I have talked to various senior business and government people on the continent before and after the vote and found them keen to build, not undermine our trade.

Action Plan for Brexit

ACTION PLAN FOR BREXIT

  1. Send Article 50 letter explaining we are leaving using our own constitutional arrangements as per previous Article, which will be an Act of Parliament.
  1. Offer talks on trade and tariffs if they wish to change anything, saying we are happy to offer them no change to current arrangements. In other words we stay in the Single Market as now, without the freedom of movement and the contributions. The advantage we have is when it comes to trading we are happy with the status quo, so they are the ones with a problem if they wish to change it.  This reverses the presumption of many commentators that the UK needs to negotiate with the rest of the EU, and is the supplicant. By definition we cannot negotiate with them over taking back control. You are not taking back control of your laws, money and borders if you need to negotiate this with other EU countries. By offering to keep all rules, laws and trade arrangements relevant to trade and investment we have no need to negotiate, unless they wish to impose new barriers on us. So we make them the generous offer of no change so they can continue to sell us so much more than we sell them, and see if they can reach agreement on barriers amongst themselves which we would then need to talk to them about. Were they to be able to agree tariffs or other barriers they need to  be WTO compliant, and it would allow us to impose tariffs on things like food and cars where they sell more to us. They are very keen to avoid tariffs.
  1. Cancel EU contributions and incorporate the money in UK budgets, providing 0.6% GDP boost through the extra spending and tax cuts amounting to the £10bn net a year we currently send to the EU and do not get back.
  1. Announce that as from the specified date any EU citizen coming to the UK to work is welcome to do so until we have left the EU, but will  need to apply for a work permit on our departure under the rules then applying worldwide on a non-discriminatory basis.
  1. Develop and take work permit system for EU migrants to Parliament for approval.  The scheme would be based on allowing high level migration (qualifications and or pay rates) but controlling worldwide numbers of lower paid employees. It would allow for seasonal labour and labour where there was a shortage or skills gap the UK could not easily plug in the short term.  The Irish border would operate as today, but any continental EU migrant using that border would need a work permit to get a job.
  1. Work out new fishing arrangements and discuss with other North Sea  neighbours both within and outside the EU
  1. Launch Repeal Bill for 1972 Act with confirmation of EU laws as UK laws into Parliament.  The aim should be a short and straightforward Bill that takes back control of our laws in the first clause, and guarantees all current EU law in the second clause as good UK law, pending any subsequent decisions to repeal or amend items not required to meet our trade obligations with the rest of the EU. This would include early passage of new migration controls, and the cancellation of EU contributions.

Mr Cameron’s legacy

I have  read some harsh things about David Cameron’s period in office. My view is somewhat different to the negative commentaries I have read, and probably different to David’s own view of his place in history.

To me he deserves to be written about as the most important Prime Minister since the end of the 2nd World War. His brave decision to allow UK voters the choice on the EU has made a big difference to our political future. It has saved us from the troubled prospect  of being alongside the Eurozone as it struggles to complete the political union it needs. It removes from us any responsibility to fund or bail out the troubled banks and regional economies of the Eurozone that are suffering from the present scheme. It means we do not have to keep on being the delayer, the negative influence on projects for more EU government.  It will energise us by allowing new policies on trade, business, budgets, investment, foreign policy and the rest. It will mean a more global connected UK with better links and influences worldwide as an independent country again.

Until this June I always regarded Edward Heath as the most important post war Prime Minister. It was his strategic vision of the UK being part of the emerging European Union which settled so much of our country’s future. It led to our law codes and policies on everything from energy to transport, from agriculture to fishing, from trade policy to taxation and budgets being completely determined or substantially influenced by the EU. I watched as successive governments found they had to accept a growing body of EU law. I saw Parliament push through volumes of legislation which it could neither amend nor stop. Large areas of policy could no longer be debated with rival views in elections, as they were settled elsewhere.

David Cameron himself will say his greatest achievement was gay marriage. He will rightly remind people of the need for steadying influences to get over the big banking and economic crash of 2008-9. The Coalition he led did launch a major recovery in jobs and business prosperity which was much needed, and confirmed a more tolerant approach to differing lifestyles much encouraged by other political parties too.

However, these will be less remembered than the big event of the EU referendum. Why did he do it? I suspect because he himself was no committed believer in EU political integration. He had many Eurosceptic thoughts and moments. He never wanted us to join the Euro, the keystone of the project. He did veto the Fiscal Treaty for the UK. He did take the Conservative party out of the centre right federalist grouping in the European Parliament. He did try to get the UK back powers of self government. He had no wish to join Schengen and was frustrated we could not even decide our own benefit payments.

It is curious at the end he put so much effort in trying to win the referendum for Remain. He could have stayed above the fray and said he would implement the decision of the voters. He was popular in 2015 for offering a referendum. He could have said the renegotiation had not achieved all that he wished – as it clearly fell short – and that he would let the people decide.

It looks as if he was persuaded to be so strongly Remain and to back Project Fear by George Osborne and Peter Mandelson, who took a joint prominent role in the campaign. It was this choice that led to his resignation. I suspect history will be kinder to him, when over the years ahead we see just what opportunity freedom has given us. We may well also see that the EU’s ultimate destination is indeed one which a large majority of UK people do not want. The UK was in it for the trade, and that is what we have to grow and develop from outside.

 

Manufacturing PMI soars

I don’t attribute a great deal to PMI surveys. I always thought the immediate post Brexit ones were jaundiced by the views of senior business people who did not like the result of the referendum and who expressed their disappointment rather than providing an independent view of what was going to happen in the economy. This month they have corrected for the pessimism of last month. I will still prefer to stress the actual numbers for output and incomes, which have been fine so far this year.

I just hope the Bank of England and the other commentators who put a lot of store by the negative numbers last month will put equal store by the very positive numbers this month! I look forward to their revisions of outlook based on these surveys that they like so much.

 

(The manufacturing PMI rose by 5.0 points, a record rise, to take it well into positive territory)

“No attempts to stay in the EU by the backdoor”

Getting out of the EU is not a negotiation. It is a  decision. We do not need Germany’s permission. Mrs Merkel does not have a veto. It is about taking back control. We should get on with it. We should continue trading tariff free, as I expect the other EU states to cone round to wanting.

The Prime Minister moved the language on yesterday with her opening statement to the Chequers meeting. She made clear that there are positive opportunities from Brexit which she wishes the Departments to work on. She does not want to backslide into some watered down membership.  Meanwhile it appears the mood in the country is shifting more towards people wanting the government to get on with implementing the decision of the referendum.

The latest ICM poll shows support for the Lib Dems at just 9%, the one national party that is very clear it disagrees with the verdict of the referendum and wishes to prevent it happening. It shows Labour on 27%, where the position under Mr Corbyn is that the verdict of the referendum has to be respected but with a party that is still in Remain mode, and a challenger who wants a second referendum on the negotiation. The Conservatives who now have the policy of implementing the referendum are on 41% and UKIP who also want to implement the vote on 13%. In England the Conservative advantage over Labour is 45% to 28%.

This polling backs up specific polling on how people now think about the vote, and shows that a majority of the country do want to get on with it. Of course it is important that the government, in advancing Brexit, does so in ways which respect the worries of many Remain voters. The government does need to do all it can to protect trade, build economic confidence and ensure a smooth transition. As uncertainty is the alleged villain, moving more quickly to resolve the situation should help reduce the threat from delay and the unknown.

If people had had second thoughts about their leave vote on a big scale as some suggest, you would expect the polls to look  rather different to this pattern.

Train horns on the railway line by Oakey Drive

A number of constituents have contacted me to complain about train drivers sounding their horns on the railway line by Oakey Drive.

I took this matter up with Network Rail. I have now received the enclosed reply from Stuart Kistruck, Acting Route Managing Director for Wessex. The letter is available here.

Mr Kistruck confirms that Network Rail staff have covered the whistle boards and explained to drivers that they no longer need to sound their horns. South West Trains has also been notified of this action.