This is a finance bill for the corporations, not the people – McDonnell’s speech

John McDonnell

Below is the full text of John McDonnell’s House of Commons speech today at the second reading of the finance bill 2021.

Budgets and their associated finance bills give practical meaning to the political aims of governments.  Manifestos, the rhetoric of the party’s leading members and eventually the Queen’s Speech are the mechanisms used to describe the society the election winning party aims to construct. Its budgets and its finance bills are the tools by which the foundations of that society are laid.

What we can discern from this finance bill is that, despite all the rhetoric from the Prime Minister and all the personalised, personally signed, social media promotions by the Chancellor, the society they want to build back, to return us to, is in essence the same pre-Covid society of insecurity and inequality that left us so vulnerable to the pandemic.

I’ve heard the Prime Minister and Chancellor claim that we have only been able to meet the demands of the pandemic because of the so-called strength of the pre-Covid economy. So it’s worth reminding ourselves what the pre-Covid economy was like.

4.2 million children in poverty, 30% of all children. Rough sleeping had more than doubled. Food banks handing 1.5 million food parcels a year. Nearly a million people working on zero-hours contracts. Going into this pandemic, the NHS had suffered the longest funding squeeze in its history and there were 100,000 vacancies including 40,000 nurse vacancies.

Social care was even worse, with £8bn taken out of social care budgets since 2010 and, according to Age UK, 1.5 million older people not getting the care they need. And the existential threat of climate change was effectively ignored with the government hopelessly off target to secure the modest goal of net zero emissions by 2050.

Surely we cannot stand by and let this government return us to all that. And if this finance bill is to have any relevance, it must also address the impacts and challenges presented by Covid. Unemployment is forecast to hit 6.5% this year.

Introducing the furlough scheme without conditions enabled fire and rehire employers to cut wages and conditions. Low wages and inadequate sick pay have resulted in around 750,000 households being behind on their rent or mortgage. Millions more are behind on household bills.

With the eviction ban ending on 31 May, and no action on debt, we risk a surge in evictions – leading to more homelessness. Pubic services remain stretched to near breaking point only getting through by the commitment and absolute dedication of often underpaid and undervalued staff.

Half of all care workers earn less than the living wage. This government clapped for our key workers yet now is rewarding millions of them with a pay freeze or an insulting 1% rise. Inequality was rising before the pandemic, and this pandemic has only widened inequality.

The government’s response contained in this finance bill has nothing to do with building back better. There are some that have suggested that because the government has been forced by the pandemic into large scale spend and borrowing, and corporation tax rises are mooted, that the Chancellor is implementing the policies advocated by Labour in its 2019 manifesto.

Nothing could be further from the truth. It is not the rhetoric that is important. Without structural change in our economy that fundamentally shifts the balance of power and wealth in favour of working people, our society will simply replicate the inequality and injustices of the past.

This Finance Bill demonstrates that it’s largely the same old Tories. Taking us back – building back, but not better for the many.

Look at the evidence from the Budget and in this bill. Far from addressing the mounting poverty in our society, the government is not only cutting Universal Credit but in this bill is freezing the tax thresholds of the low-paid and doing nothing for those who don’t even earn enough to reach this threshold.

On low pay, the government has already failed to meet George Osborne’s much heralded target of a minimum wage of £9 an hour by 2020 and is imposing a pay freeze on many of the very people who have helped see us through the pandemic.

To compound this disregard for people struggling to get by on poverty pay, there is also nothing in this bill that discourages employers from using the brutal fire and rehire tactics to force through permanent wage cuts.

The timings of the tax proposals set out in the bill also betray the reality of the government’s attitude to inequality. It pushes through a tax threshold freeze for low and middle income earners but delays corporation tax increases, which there is already speculation could be dropped in a pre-election give away to business.

Plus the bill contains no action to fulfil the much publicised proposals to equalise the rate of capital gains tax with income tax. Instead, the bill proposes ‘super deductions’ tax reliefs – a huge giveaway to large corporations.

Tax reliefs have a long history of corporate abuse and failure to meet their stated objectives – entrepreneurs allowance, patent box and tonnage tax. Unless legislative protections are put in place, there will be huge opportunities for tax abuse and waste, a level of corporate looting that could make the billions at stake in crony contracts and Greensill scandals look like chicken feed in comparison. 

Similarly, past track records demonstrate the bill’s proposals for free ports unless strictly regulated open up a vista of tax abuse, wage undercutting and the draining of investment from surrounding regions. It cannot be right that the government’s free ports will be in place before the OBR has done any assessment of their merit. 

Nothing exposes the vacuity of this bill more than its failure to address the existential threat of climate change with firm action. There is nothing in this bill that dictates the priority and the scale of investment and action needed.

If there is one thing that people may be beginning to learn in recent months is that the promises of the Prime Minister and the policies of the Chancellor do not generally coincide with either reality or the truth.

What this finance bill evidences starkly is the level of the corporate capture of this government. This is a finance bill for the corporations, not the people.

Before the much heralded corporation tax rises ever happen, corporations will be compensated with huge tax relief subsidies: a massive tax giveaway to the corporations paid for by tax rises on working people.

Far from building back better, this finance bill lays the foundations for widening inequality, a low pay insecure work economy complemented by tax abuse and with crony capitalism embedded.

The test of the government’s purpose in this bill will be its attitude to the inevitable amendments that will be tabled to seek to:

  • Protect the lowest paid from the stealth tax increases of threshold freezes
  • Ensure tax reliefs are not used as methods of tax abuse
  • Prevent ministerial interference 
  • Tackle low pay and exploitation 
  • And ensure responsibilities to tackle climate change are upheld.

We’ll see then if this is a government for the people or the corporations.

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