As I pointed out in a debate on bankers’ bonuses on Monday, executive pay and bonuses are meant to be the reward for successful stewardship of a company.  The company is owned by the shareholders – which in many cases are the pension funds of millions of people.  If the company has done well, the dividends increase and the share price rises then the shareholders will be happy.  And if that success is down to clear strategic thinking by a director, then a bonus is in order.

But the evidence of the last decade is that while company performance has been modest, executive pay has rocketed.  The big problem is that company boards effectively set their own terms and conditions.  The remuneration committees devise remuneration packages that will have a generous base salary, a bonus entitlement, pension contributions, long notice periods and a host of other benefits from school fees for the children to flash cars with maybe a chauffeur thrown in.  Two issues arise.  These committees are being generous with other people’s money and their membership is all too cosy.

It’s not the job of government to tell any company what it should pay it’s staff, beyond the minimum wage.  But it is the role of government to make sure that companies are properly regulated so that shareholders are protected from greedy or incompetent directors.  So Vince is right to want to open up the remuneration committee memberships and to ban full time directors of other companies from sitting on them.  They have too much of a vested interest in bidding up pay in another company so that their company follows suit.  It’s also right that shareholders and the public get see in much greater detail what is being paid to directors.   It’s time to call a halt to the executive gravy train.

But bankers and directors of other quoted companies are just part of the problem.  Huge rewards can often be received for modest talent in other parts of the private sector and the public sector.  As I pointed out in the aftermath of last August’s riots, people resent the easy rewards for some pretty minor “celebrities”.   And one of the reasons why the country has a budget deficit is the huge increase in pay for public sector senior managers under Gordon Brown.  Yesterday at Treasury Questions I raised this with my colleague Danny Alexander, Chief Secretary to the Treasury.  Here’s the exchange from Hansard:

Stephen Williams (Bristol West) (LD): The Business Secretary’s announcements will give more power to non-exec directors and shareholders to control pay in the private sector. The Government effectively discharge those roles in the public sector, so what measures is my right hon. Friend undertaking to control high pay in the public sector?

Danny Alexander: Ministerial salaries were cut by 5% and then frozen for the whole of this Parliament. As Chief Secretary, I now personally sign off any new pay above £142,000, the equivalent of the Prime Minister’s pay. That is a vital deterrent to the cycle of ever higher pay at the top of the public sector—so much so that in central Government alone the number of people paid more than £150,000 has dropped by 55 since May last year. When applications come in, I can and do reject them if I think they are too high. In fact, since May 2010 83 like-for-like cases have sought my approval. Pay was lowered in 45 of those cases and frozen in a further 23, saving more than £1 million a year for the taxpayer, including a £100,000 cut in the pay for the new chief executive of Royal Mail.

Bristol’s retail scene has been a hot topic for all of the period that I’ve been involved in the city’s public life.  As the councillor for Cabot ward (all of the city centre) from 1993 to 1999 I was involved in decisions about the future of Broadmead and also smaller shopping districts like Park Row and Christmas Steps.  There were also the problems in Whiteladies Rd and Cotham Hill where too many bars and cafes were being opened.  Now as the MP for the much larger area of Bristol West I probably have the largest number of shops of any constituency MP in the south of England.

The debate was fascinating, with contributions from over 5o MPs.  There was huge interest among Lib Dem and Conservative MPs but the Labour benches were empty for most of the debate.  Draw your own conclusions!

I’ve pasted below the Hansard record of my speech.  Bear in mind that this is a 5 minute speech on a strict time limit – the Commons Chamber even has a countdown clock so MPs don’t over-run!  I took one intervention from Kingswood MP Chris Skidmore.  I gave some thoughts on reform of local government planning and finance and specifically mentioned two contentious local issues – Tesco on Cheltenham Rd and the three Costa coffee shops.

You may also be interested in two previous blogs on the High Street:

http://stephenwilliamsmp.wordpress.com/2011/10/18/an-audience-with-mary-queen-of-shops/

http://stephenwilliamsmp.wordpress.com/2011/05/17/how-can-we-save-our-shops-and-high-streets/

9.14 pm

Stephen Williams (Bristol West) (LD): The whole debate so far has reminded me of when I was waiting to make my maiden speech, listening to potted descriptions of every town and city in the country, learning a lot about geography as well as politics. I shall now do roughly the same thing, talking from a city perspective about my Bristol West constituency, which covers the whole city centre and the shopping centres of Broadmead and Cabot Circus in the regional capital of the south-west of England. The constituency is also a patchwork of distinct neighbourhood shopping centres and high streets, bookended by Clifton village and Stapleton road, with the unique areas of Park street, Whiteladies road and Gloucester road running through the middle. Gloucester road may not be the oldest high street in England but it is certainly the longest. It has been argued in many media outlets that it is the greatest high street in England, with 2 miles of independent shops.

In the 1990s, as you will be aware, Madam Deputy Speaker, as a fellow Bristol Member, our city centre faced great challenges from out of town, but it has fought back. Bristol city council worked in partnership with the private sector and we have a new shopping centre, but more important, thousands of people now live in the heart of the city of Bristol. I do not think it has been mentioned in the debate that we need more residents in town and city centres. I certainly endorse the recommendations in the Portas report for town centre teams and for a presumption in favour of town and city centres in the planning regime.

High streets, whether in cities or towns, certainly face multiple challenges; indeed, as has been said, they are at crisis point. Rationing of parking spaces has been referred to. Control of crime is another issue, as is the switch to online retailing. Every time I make my traditional Christmas visit to the Montpelier Royal Mail sorting centre, I am struck by the sheer number of Amazon parcels of the books and DVDs my constituents are buying.

The other major threat to all our high streets and locally owned businesses comes from the large national chains and multiples. Supermarkets have been mentioned many times during the debate so I shall not say too much more about them, but I am probably the only Member in the Chamber who has experienced a riot in his constituency caused by the opening of a branch of Tesco. It took place over the Easter and royal wedding bank holidays in April last year. I certainly do not condone the antics of those constituents, but I very much share their frustration. Large businesses do not

17 Jan 2012 : Column 712

work with the grain of local opinion. It was not that people did not want a Tesco; they just did not want another Tesco in an area where the brand was already at saturation point.

There are also national chains of bars, restaurants and cafes. They use their lawyers and large planning departments to circumvent local authority planning decisions. In my constituency, we have an example involving Costa Coffee—a brand owned by Whitbread, the brewers—which has opened three outlets in Bristol; in Gloucester road in my constituency, in Clifton Down and in Westbury village in the neighbouring constituency of Bristol North West. The company has flouted the decisions of Bristol city council; Costa’s managing director wrote to me to say that Costa was “re-energising and revitalising” high streets and

“regularly complements independent retailers…to offer a wider range of choice.”

That sort of banality infuriates local residents when they think they cannot work with the system to get what they want. We certainly need to reform the planning system to combat uniformity and promote diversity.

Chris Skidmore (Kingswood) (Con): As a fellow Bristol MP, I entirely agree with the hon. Gentleman and I hope we might work together to share our experiences of local high streets. Kingswood high street is a valuable part of my constituency. Does he agree that if a planning application for a major store is rejected, there should be a breathing space and the large store should not be allowed to re-enter the system straight away?

Stephen Williams: Yes. I thank the hon. Gentleman—an MP for Greater Bristol—for that intervention.

The other flaw in the planning system is that when permission is refused by a committee of local councillors, the applicant goes ahead and opens the business because they know that an appeal will take a long time. That is a loophole that Costa has certainly exploited and it needs to be blocked. We need to reform the planning process, but we must also reform local government finance.

The use classes have been mentioned many times. Surely, it is common sense that the A1 retail use class cannot apply equally to Tesco, Sainsbury’s and all the other retail multiples and to Mrs Smith’s corner shop; none the less, that is how our planning system works.

What we need is to let go so that we have more localism, so that local councils, whether Bristol or South Gloucestershire, are sufficiently granular at the local level to micro-manage what they want in their high streets. If they do not want any more supermarkets or chains, they should be able to say so emphatically, and there should be no ambiguity in the classes of use to allow the large companies to drive a coach and horses through local opinion and local democratic decision making. Local communities could then promote the shops that they want, and democratically elected councillors could block the sharp practices of the large multiples.

Finally, finance has been mentioned a couple of times. The uniform business rate needs to be reformed so that local councils can offer waivers to businesses that they wish to attract to an area. Gloucester road has shops with most uses, but it does not have a book shop, so perhaps a rate incentive would attract a book retailer to the area. Business improvement districts have made a

17 Jan 2012 : Column 713

huge improvement to Bristol city centre, but I would argue that any shopping centre would benefit from a BID in which landlords are incentivised to take part as well. That is a key recommendation of the Portas report, which I thoroughly enjoyed reading, and which I have thoroughly enjoyed endorsing in this debate.

The roof top events space of Bristol’s new M-Shed Museum was the setting for a one day conference of public health professionals from across England.  I pointed out to delegates that downstairs in the Bristol at Work gallery was the only place where you could now find a cigarette vending machine, donated by lmperial Tobacco.  These machines, which provided easy access to cigarettes, could be found in almost every pub in England until last October.  Since last October they’ve been consigned to history.

The next step on the way to comprehensive tobacco control will come in April with the ban on the open display of cigarettes at tobacco kiosks in supermarkets.  So when you’re buying your Easter eggs, lottery tickets or just visiting customer services you will not be able to see the rows of branded tobacco products.

But once the pack of fags has been bought people will still be exposed to the subtle marketing techniques of the cigarette companies.  Tobacco plain packs will offer protection against the antics of the “Silent Salesmen” of Imperial, Phillip Morris and the other multi-nationals who own the still all too familiar brands.   Over the last decade in Britain and around the world all the other marketing and advertising avenues have been blocked – the design of the cigarette packet is the only tool left to the companies to push their brands and together recruit a new generation of young smokers.

The primary aim of the campaign to introduce plain packs of cigarettes will be to protect children and young people from the subtle marketing techniques of the brand owners.  They’ve become adept at designing packs that might appeal to teenage girls, for instance boxes in the shape of lipstick tubes.  Boys may be tempted by the sliding compartments of boxes that look like smart phones or I-Pods.  Names like “vogue” or “sobranie cocktail” where the cigarettes as well as the packs are given an upmarket look might appeal to those who fall for products that are “reassuringly expensive”, to borrow a phrase from another branded product.

Plain packs would be the same size, same colour, same font for the product name and nothing else other than the health warning.   The Silent Salesman would not just be mute, he’d look very dull and lonely.

Those of us who support plain packs being introduced in Britain do so in order to prevent the cigarette companies from recruiting new addicts.  Hardly anyone takes up smoking as an adult.  Most of the new customers for the industry are teens.  As one expert put it this morning, “smoking is a paediatric epidemic driven by the marketing of the tobacco industry.”

I’m proud that Smoke Free South West is spearheading this awareness raising campaign and that it was launched in my constituency.  You can find out more by looking at http://www.plainpacksprotect.co.uk/  and signing up for updates. The campaign is being supported by a wide coalition of health bodies, including Cancer Research UK , the British Heart Foundation and the Royal College of Physicians.  The All Party Parliamentary Group on Smoking and Health, which I chair, will building support in Parliament for the campaign.  Further impediments to the antics of big tobacco’s army of silent salesmen will help stop another generation of people becoming trapped into the addiction of this most terrible product.

Note – people in this topic might also want to read http://stephenwilliamsmp.wordpress.com/2011/03/09/tobacco-control-why-im-proud-of-the-coalition-government/ and http://stephenwilliamsmp.wordpress.com/2011/11/16/protecting-children-from-smoke-in-cars/

The funding comes as the Government gears up for the launch of the Green Deal later this year, the first scheme of its kind in the world, aimed at radically overhauling the energy efficiency of millions of homes across the UK.

The LEAF is managed by a consortium of community networks administered by the Energy Saving Trust. Money is intended to be used for understanding energy efficiency at a local level and renewable energy generation issues. More awards will be made later this month and the projects need to be completed by end of March.

Bristol Green Doors showcase houses where the owners have done something to reduce their energy consumption. They bid for funds so that they could help people clad four properties in a terrace with external wall insulation. The project will promote and normalise low-carbon retro-fitting on ‘hard-to-treat’ private sector homes; and capture key learning points for communities and businesses for the successful delivery of multi-property installations. Three owner-occupied houses and three rented apartments in a 4th house will be supported to jointly procure the installation, funded by the grant and part matched with secured private finance and in-kind support from partners, providing improved energy use and CO2 emissions on a solid-wall terrace considered ‘hard-to-treat’.

The installation will coincide with the second Bristol Green Doors city-wide open homes event on the weekend of 17^th and 18^th March 2012, becoming a ‘live’ teaching tool in real homes, where technical details usually hidden to visitors can be seen clearly as work in progress. The householders have agreed to participate to share their experiences, motivations and learning with the public visitors to their home, becoming part of the ‘Green Doors’ network of homes across Bristol.

I’m delighted that Bristol Green Doors have secured this funding.  I spoke at their launch event in 2010 and visited several homes that had taken action to reduce their energy consumption.  I’ve also seen a terraced house in Easton where the Technology Strategy Board have completely revamped the house with every possible energy saving measure.

Retrofitting houses in Bristol West will be a major challenge.  Like the majority of my constituents I live in a house built over a century ago, which has solid stone walls.  I can reduce my fuel bills and my carbon footprint with draught insulation, double glazing and so on but my walls will still be cold.  Cladding is expensive and in conservation areas or on listed buildings would have to be done internally – huge disruption as well as costly.

Anyway 2012 will be a major year for the Coalition Government’s energy saving policies.  As well as the Green Deal we will also see the Green Investment Bank making its first investments.  We will find out next month if the Bank HQ is going to be in Bristol. I working hard with many others from the city to make that happen.

[note – I wrote about Bristol Green Doors in September 2010 - http://stephenwilliamsmp.wordpress.com/2010/09/11/in-praise-of-bristol-green-doors/ ]

This weekend I thought about the reforms demanded by the Chartists in the mid 19^th century.  I’d finally got round to visiting the grave of one of the Chartists’ leaders, John Frost.  He’s buried in the graveyard of Horfield Parish Church, about a mile from my home in Bristol.  I’ve known since my O’ Level history days about Frost and his role in leading the 1839 Newport Rising. But it wasn’t until a recent visit to the superb displays on Chartism at Newport Museum that I discovered that Frost had ended his days in Bristol.

Chartists from the Monmouthshire mining valleys had marched on Newport on 4^th November 1839.  There was a violent fracas with the Mayor and the militia holed up in the Westgate Hotel, with 22 people being killed.  Frost and his co-leaders William Jones and Zephania Williams were arrested and charged with high treason.  They were the last people to be sentenced to death by hanging, drawing and quartering.  The Home Secretary commuted the sentence to transportation to the Australian penal colonies.

This was meant to be banishment for life.  But Frost was able to return in 1856, sailing to Bristol (it seems not on the SS Great Britain) where he stayed until his death aged 93 in 1877.  He was politically active into his old age and lived to see partial progress on two of the aims for which he had sacrificed so much.

So how much has now been achieved?  The Chartists weren’t concerned with House of Lords reform, such was the rotten state of the House of Commons at the time.  But they were very much interested in the amounts spent on elections and how to influence MPs.

Here’s the six point Charter, issued in 1839:

1)     “A vote for every man twenty-one years of age, of sound mind, and not undergoing punishment for crime.” – not achieved for men until 1918 and fully for women in 1928 at Parliamentary elections. You can read elsewhere on this blog about my views on prisoner voting.

2)     “The secret ballot – to protect the elector in the exercise of his vote.”  –  the public hustings and declaring of votes was ended by the Ballot Act in 1872.

3)      “No property qualification for members of Parliament - thus enabling the constituencies to return the man of their choice, be he rich or poor.” – the only people now prevented from standing are bankrupts, Church of England vicars (again read elsewhere for my views on disestablishment), members of the House of Lords and the Royal family.  A £500 deposit is needed for elections to the Commons but there are no residence or property qualifications.

4)     “Payment of MPs – thus enabling an honest tradesman, working man, or other person, to serve a constituency, when taken from his business to attend to the interests of the Country.” – a salary for all MPs (of £400) was introduced in 1911.

5)     “Equal Constituencies, securing the same amount of representation for the same number of electors, instead of allowing small constituencies to swamp the votes of large ones.” – this won’t actually be achieved until the next general election in 2015, when finally all constituencies will have approximately 76,000 electors, rather than the huge anomalies that currently exist.

6)     “Annual Parliaments – thus presenting the most effectual check to bribery and intimidation, since though a constituency might be bought once in seven years (even with the ballot), no purse could buy a constituency (under a system of universal suffrage) in each ensuing twelve-month; and since members, when elected for a year only, would not be able to defy and betray their constituents as now.” – unlikely  that we will ever get a general election every year, in fact we will now have 5 year fixed term Parliaments.  The expenditure on campaigns by parties still needs reform…though bribery of voters was outlawed in 1883.  The accountability of MPs is still a hot topic!

When Frost died he may have been satisfied that some of the aims of the Chartists had been realised.  But I’m sure he would have been astonished to be told that by 2012 so much more still needed to be done to reform politics in Britain.

NOTE – if you are in Bristol and want to see John Frost’s grave it can be found at Horfield Parish Church.  From the Wellington Hill gate it is on the left against the wall of Manor Farm Boys Club Hall.  Appropriately it’s made of Welsh slate.  It has the rather pleasing epitaph, “The outward mark of respect paid to men merely because they are rich & powerful hath no communication with the heart.”

I know that some people who agree with me that Thatcher was a divisive and damaging Prime Minister are boycotting the film.  My advice to them is swallow your pride and go and see it.  You’ll be rewarded by a superb performance by Meryl Streep and will have your memory stirred about the seminal events of the 1980s.  If you’re confident about your political convictions then they shouldn’t be threatened by a short film.

The 1979 general election was the first that I watched with interest.  I was 12 and in my first year at Mountain Ash Comprehensive School.  The Cynon Valley was not the sort of place where people owned up to voting Tory. But on the back of crippling strikes, inflation and high taxation even on the small council estate where we lived some people talked about the need for change.  One house bravely displayed a Tory poster.  To counter this I asked the local Labour Party for a poster and advertised the re-election of Ioan Evans MP from my bedroom window.  It was my first party political act.

I got up early to watch the election results coverage before going to school.  Thatcher was to be Prime Minister all the way through secondary school, my time at Bristol University and my first couple of years in work.  It was my arrival at Bristol in the autumn of 1985 that first exposed me to the complete polarisation of views on Mrs T.  I had come from a community that had just been deeply scarred by the miners strike.  I was now a fully fledged political activist, though in the SDP.  At university I was befriending people from the home counties who had been to famous schools.  And many of them worshipped Mrs T.  To them she was Mrs Thatcher or the blessed Margaret.  My spitting out of the word Thatcher was considered highly amusing.

Five years later I stood in the lobby of Coopers and Lybrand (PWC today) with the admin staff watching Thatcher’s resignation on the only tv in the building.  I went back upstairs and practically skipped around the tax and audit departments, enjoying breaking the news to my colleagues.  Most of them were not pleased.  But to me it was something of a political liberation and certainly the end of an era.

The politician in me admires Thatcher as a successful operator, succeeding despite all the odds that were stacked against her inside the Tory Party.  She was a remarkable politician, helped by some luck in her enemies.  But I don’t subscribe to the view that she is a remarkable human being.  The truly great Prime Ministers such as Gladstone, Lloyd George and Churchill were remarkable in all senses.  Thatcher does not seem to have any cultural hinterland and there is little evidence of empathy for the feelings of others, in particular the victims of her policies.

Two decades on her political legacy is not settled history.  But for me her period in power did more harm than good.  I supported giving council tenants the right to own their homes, the taming of the union leaders and think she was right in her view that people should work hard to get on and not always look to the state for support.  But her policies crippled large sections of British industry and impoverished whole communities.  She sowed the seeds of Eurosceptic madness in the Tory Party.

A great leader would have united the country at a time of economic and social change.  But Thatcher was a divider not a unity figure.  She brought discord not harmony.  She certainly changed Britain.  In my opinion, it was not for the better.

The volunteers were getting the place ready, cleaning, laying out beds and sorting out the donations of food and clothes that pour in at this time of year.  Amazingly, between now and when they tidy up after new years day more than 5oo Bristolians will have volunteered some of their time.

The charity also relies on about 1,500 donors for all the food.  Some comes from people bringing in a few tins they’ve cleared out of their kitchen cupboards.  Schools, clubs, workplaces and churches have collections.  Local companies also donate.  For instance last year Miss Millies did one complete meal run of chicken and chips.  This year Yeo Valley Dairies will be giving 600 pints of milk.  The store room is already stacked high with shelves full of tins and wheelie bins full of cereal boxes and tea bags!

As well as meals the people visiting the centre will be entertained by films, games and visiting bands.  There will be a chance to see a doctor and various other health care needs will be met.  There will also be barbers volunteering their services and even a head masseur.  The centre has to be alcohol and drug free.  The toilets have blue lights to make it harder for junkies to find veins to shoot up…

Of course what really matters is not that people get a nice end to 2011 but that they get a better life in 2012.  Most of the people who will use the centre are not homeless in the sense that they sleep rough.  Rather they are the “hidden homeless” who are staying at friends (sofa surfers) or even sleeping in their cars.  Everyone will get advice on Bristol’s wide range of services for people without a permanent home of their own.  They will get a survival handbook detailing all the advice and support agencies in the city.

During 2011 I have met several homeless charities.  I opened the new media training centre at the Foyer and had lunch with people at the Salvation Army in Wade Street.  Shelter have told me about all the problems faced by people who are homeless or in danger of becoming homeless. I’ve also been out early in the morning with the rough sleepers team from St Mungos.  As well as their core staff and premises, all these charities have a team of volunteers.  So maybe as the end of the year approaches, a new year resolution could be to find a charity that you can support.

You can find out more about Caring at Christmas here: http://www.caringatchristmas.org.uk/

Amnesty members have been writing letters for five decades about the treatment of prisoners and other human rights violations.  The Bristol branch is one of the most active.  Many Bristolians will have contributed to their funds at the Amnesty second hand book shop on Gloucester Road or attended the annual August Garden Party at Goldney Hall.  I have gone every year since I joined Amnesty in 1991.

Amnesty members write letters direct to prisoners themselves to let them know that they are not forgotten by the outside world.  Even if the letters do not reach the prisoners they will be intercepted and read by their captors who will then know their actions are being observed.  Letters are also sent to heads of national governments or their ambassadors in London.  For almost 7 years now as Bristol West’s MP I have also been on the receiving end of these letters and have met many local Amnesty members, including the active branch at Bristol University.  I have raised numerous issues with ambassadors and with the Foreign Office.  The Coalition Government has a specific Minister in the FCO for Human Rights, my friend and Lib Dem colleague Jeremy Browne.

Amnesty members today were raising a number of cases from a booklet produced specially for the occasion.  Individuals need help from Algeria to Zimbabwe.  I picked the case of Jean-Claude Roger Mbede from Cameroon.  Jean-Claude, a student aged 31, is in prison in Kondengui.  He was sentenced to 3 years for “homosexuality and attempted homosexuality”.  His case is one of many in Cameroon where gay men are arrested and imprisoned.  They are often attacked by guards and other inmates.   I wrote personally to Jean-Claude saying that as a gay man myself I was distressed that he was in prison.  I promised to raise his case with the Cameroon Ambassador to Britain.  I wrote to him as a fellow human being and he won’t know I am an MP.  But I hope my official letter to the Ambassador will do some good.  You can read about Jean-Claude’s case at http://www.amnesty.org.uk/content.asp?CategoryID=12138#mbede

But tax revenues can also be increased by making sure HM Revenue & Customs collect in all the tax that is due.  Here we enter the murky world of tax evasion and avoidance.  Let’s start with some definitions.  Tax evasion is illegal, tax avoidance is legal. I know that usually surprises people, including people who avoid tax!  Tax evasion is basically lying about your income and expenditure and defrauding HMRC of taxes on income or expenditure taxes like VAT.  It is an offence and people can and do go to prison if convicted.

Tax avoidance is legal as it results from tax reliefs and incentives passed by Parliament.  So if you have an ISA, you are avoiding income tax on the interest on your savings.  If you arrange your affairs within your family to take advantage of the tax thresholds available to each person, then you are avoiding tax.  If you make contributions to a pension then you get income tax relief.  So that makes most of us tax avoiders but it’s OK as it’s within the law.  It’s best to think of the vast majority of tax avoidance as sensible and prudent tax planning.

The problem comes with individuals and companies who stretch beyond credibility the rules Parliament has passed.  Unscrupulous wealthy people or corporations exploit loopholes and grey areas.  Rather than engaging in sensible and legal tax avoidance they construct contrived and wholly artificial trust or business structures so as to dodge taxes that would have been paid in normal circumstances.  The result is a loss of tax revenue, the so called tax gap, estimated to run into tens of billions.

So why do people get away with it?  Successive governments have passed legions of clauses in tax legislation trying to close off any room for exploitation of new tax reliefs.  HMRC enter into protracted negotiations with companies and either settle or take the issue to court.  Settlements give HMRC a certain amount of money and are entered into to save time and neutralise the risk of losing the case in court.  But they are controversial as readers of Private Eye will know.

We now have an incredibly complex tax code.  There are lots of tax reliefs to incentivise people and businesses to structure their personal finances (savings, pensions, etc) or business planning (capital investment, research, etc) in a way that is for the greater good of society.  But to stop abuse each relief is accompanied by anti-avoidance rules that try to second guess all potential loopholes.  It hasn’t worked and we need to try a new approach.

The Liberal Democrats promised in our 2010 manifesto that we would tackle tax avoidance problems.  The Coalition Agreement provided for a study into what’s called a General Anti-Avoidance Rule, a rather ugly acronym of GAAR.  The Treasury duly commissioned top tax barrister Graham Aaronson QC to set up an expert group to make a recommendation on whether the UK should have a GAAR.   The basic point of a GAAR is that it would be explicitly stated that personal and business arrangements that are set up purely to avoid tax and for no legitimate commercial purpose, would not be considered legal tax avoidance.  Essentially they would be irresponsible tax planning bumping right into illegal tax evasion.

Aaronson has now published his report and I met him to discuss it last week.  He recommends legislation for a GAAR to cover initially income taxes (incl NIC), capital gains tax, corporation tax and petroleum revenue tax.  It would be a shield against future tax avoidance schemes.

Most other developed economies have a variant of a GAAR.  The USA has its Codification of Economic Substance Rule.  It’s now time that the UK had a tough general rule blocking unfair tax avoidance of the sort that perverts the will of Parliament.  That’s why as co-chair of the Liberal Democrat backbench committee on Treasury and Business I have tabled a Parliamentary motion calling for the Treasury to implement the Aaronson report.  I have secured the support of other senior Lib Dems including Deputy Leader Simon Hughes and former Chief Secretary to the Treasury David Laws.  The full text of the motion is set out below.

Finally, a personal note.  To avoid some smart alec coming along and trying to embarrass me about my professional career before I became an MP, let me confirm what has long been in the public domain that I am a member of the Chartered Institute of Taxation, the country’s premier tax planning body.  I worked for PWC and Grant Thornton as well as in the tax functions of large companies.  The vast majority of the UK’s tax profession, in law, accounting and industry, operate entirely within the law, advising clients on how to structure their affairs in a tax efficient way.  The contrived and artificial schemes pursued by some wealthy people or companies are not approved of by responsible advisers.  Abuse of the tax code gives advisers a bad name and also facilitates the vilification of large companies and wealthy people in general.  Such abuse must be stopped and a GAAR may be the way to do it.

It’s worth reminding ourselves that Britain fell into a deeper economic hole than any other major economy between 2007 and 2009.  It all appeared really bad at the time…but in fact we now know it was even worse than Gordon Brown claimed.  Accurate economic data lags behind events and the last Labour government published its own figures.  The independent Office for National Statistics (ONS) has now confirmed that the economy shrank by 7% in the last 3 years under Labour.   The Coalition has set up the independent Office for Budget Responsibility (OBR)  to prepare economic forecasts. The figures George Osborne announced today were not his own, they were from OBR.  The OBR have confirmed that growth will be lower than their previous forecasts but Britain is not heading f0r a recession.  

The OBR have also stated that the low growth is not a result of the government’s deficit reduction, as Labour claim.  Rather, it is a result of an external inflation shock (oil prices etc) and turbulence in the Euro zone.  The OECD have made similar points.  It is worth noting that in May 2010 Britain and Italy were able to borrow at the same interest rate.  Now Italy’s borrowing costs have soared to over 6% whereas Britain’s triple AAA bond rating keeps costs at 2%, similar to Germany’s.  This international confidence keeps down the cost of government borrowing and helps everyone with a mortgage or business loan to service.

The government has also acted to help young people who are struggling to find work.  The £1billion Youth Contract, trailed by the Deputy Prime Minister last week, will give unemployed 18 – 24 year olds an opportunity to work in the private sector.   We are also expanding child care places, helping parents to work and their infants to experience high quality early years education.

To boost economic growth there will be a splurge of capital spending.  Bristol West will benefit from the £42 million rapid transit scheme from Temple Meads, through the city centre and onto Ashton.  This will complement the electrification of the railway to Paddington. 

The econmoic backdrop is stark.  But our Coalition Government has acted to protect us from external pressures and to rebalance and strenghthen our economy.