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• Decent Homes (Hillingdon)
  

  In this Chamber we debate the main issues facing our country and the world, and we pass laws that affect the lives of millions, but as Members we also retain the centuries-old right and tradition, stemming from the earliest days of Parliament, to be able to raise the grievance of an individual constituent when all other routes appear to have been exhausted and the constituent considers that justice has not been done. Often the airing of an individual case can throw light on a more general malaise that needs to be addressed, so in that tradition I wish to raise today the case of one of my constituents, Mr Bernard Fagan, and the performance of Hillingdon council, its arm's length housing management company, Hillingdon Homes, and its contractors and sub-contractors in the delivery of the previous Government's decent homes programme.

  The decent homes programme was a well intentioned attempt to bring all council accommodation up to a decent standard and modernise the housing stock by installing new kitchens, toilets, bathrooms, doors and windows and making other basic improvements. The programme was a welcome and desperately needed fillip for council tenants after years of neglect and lack of investment by past Governments. The overall cost of the programme was originally estimated to be £20 billion.

  Unfortunately, because of a lack of confidence in local councils to deliver a programme of that scale successfully, the previous Government attached a number of conditions to the investment programme. If a local council wanted to receive a share of the capital investment, it was required either to transfer its stock to a housing association or other landlord, or to establish an arm's length management organisation, or ALMO, and transfer its housing stock to that new body. The ALMO would undertake the day-to-day management of tenants' homes and the area's decent homes programme.

  The local council and its tenants had to agree to the stock being transferred to the ALMO, and refusal to transfer would result, in effect, in their losing access to the decent homes investment programme for their area. In my constituency, despite many anxieties, uncertainties and worries, tenants were forced over a barrel to agree to the transfer; otherwise they would have largely had to forgo the opportunity to receive new kitchens, bathrooms and other improvements to their homes.

  Despite some limited acknowledgement of the need for greater tenant involvement in the management of their homes, the setting up of the ALMO largely resulted in a transfer of staff from the council's existing housing department, the production of a new logo, a wage increase for the senior officers of the new body and, I have to say, little else to distinguish the operation of the ALMO from that of the council's housing department.

  In my constituency, the new ALMO, Hillingdon Homes, was allocated about £60 million to undertake the local decent homes programme, and selected one of my local tower block estates, on Avondale drive in Hayes, for inclusion in the programme. I have worked closely with local residents and tenants associations in my town-in fact, I have set up many of them-and on the Avondale estate the residents association is chaired by my constituent, Mr Bernard Fagan. When the local decent homes programme commenced in 2005, I kept in close touch with local residents, through the association, to monitor its implementation.

  I intervened at an early stage in 2005 because tenants contacted me and the local councillor Lynne Allen. They were fearful that the asbestos removal from individual apartments was taking place without the families being decanted from the properties by Hillingdon Homes, and there were concerns that there were not the appropriate protections for the tenants and indeed the workers involved in removing the asbestos. As a result of those concerns, the local councillor and I met the tenants, visited the estate and contacted Hillingdon Homes and the council, and gained assurances that proper procedures were being, and would be, followed.

  Later, in December 2005, Mr Fagan contacted me again to seek an urgent meeting to discuss the problems he was experiencing with regard to the renovation of his apartment, under the Hillingdon Homes decent homes programme. When we met in early January 2006, Mr Fagan took me through the catalogue of errors, poor workmanship, delays and failures of performance that he had experienced at the hands of the contractors and subcontractors whom Hillingdon Homes had employed to install a new kitchen and bathroom in his flat. At that early meeting, he pointed out 19 specific examples of poor workmanship that he had identified.

  I shall quote from Mr Fagan's first detailed letter to me, in January 2005, that described his experience of the Hillingdon Homes decent homes programme:

  "On 11th May, Bogdan Building Services, under the supervision of Apollo London Ltd"-

  the contractors and subcontractors appointed by Hillingdon Homes to undertake the decent homes programme on his estate-

  "carried out the gutting out phase of my flat refurbishment. They removed a perfectly functional hood extractor fan and its outlet, in spite of a signed and endorsed drawing clearly stating that this appliance should be refitted. I believe that this was done because the operatives involved had difficulties with interpreting the drawings and with written and oral instructions in the English language...On 12th May, an operative posing as a plumber began working in my home. He installed a toilet 10 mm above the floor, falling short of entering its outlet square and risking leakage...On 13th May, electricians began work on my kitchen and I was left without power in this room for 30 days...On 16th and 17th May, an inept operative masquerading as a carpenter began work on my flat. The standard he achieved over these two days was appallingly bad and he had to be removed from my flat."

  I should say at this point that Mr Fagan is a time-served retired carpenter; after years of extensive experience as a professional craftsman, he knows a professional job when he sees one. On one occasion, he felt so sorry for one of the Bogdan operatives that he had to show him how a particular tool operated so that the work could be completed.

  I return to Mr Fagan's diary of events:

  "On 19th May, my new kitchen was fitted. The worktop that the kitchen fitter attached to the base units was butchered with a jig saw, short of the required length, with copious amounts of sealant used to disguise the mistake...On 26th May, a tiler achieved a standard close to acceptable in my kitchen, but the standard in my bathroom falls short of what one might reasonably expect."

  Overall, the work took nine weeks, more than twice the time mentioned in the information pack sent to tenants in preparation for the work by Hillingdon Homes. During this period, on 15 May there was a fire in Mr Fagan's flat that had resulted from the cooking appliance that he had been supplied as a temporary replacement for his cooker while the work was carried out. The cooking appliance supplied was not the appliance promised by Hillingdon Homes, but a cheaper version. Mr Fagan suffered burns and some of his furniture was damaged. Eventually, he received some form of compensation.

  From May until November of that year, Mr Fagan was in regular contact with Hillingdon Homes, seeking remedial action to tackle a litany of problems in his flat resulting from the poor workmanship. He was met by what he described to me as bureaucratic obfuscation, delays, procrastination, incompetence and mismanagement-those are just the repeatable expressions that Mr Fagan has for his treatment at the hands of Hillingdon Homes.

  It took me several letters over a period of months to get any practical response from Hillingdon Homes. When the ALMO responded with offers to undertake remedial work, Mr Fagan had had enough and refused to allow the same unskilled and untrained operatives back into his home. He insisted on proper repairs to address the mistakes made and tried to insist on at least some direct labour operatives to do the work that was needed. Eventually, some remedial work was undertaken, but long delayed and after a lengthy struggle with Hillingdon Homes, and on two occasions with action only agreed on the steps of the court as Mr Fagan resorted to legal action.

  As I said, Mr Fagan is an active member of Avondale residents association, and currently its chair, so he was concerned to discover whether other tenants had experienced similar problems. I therefore wrote to Hillingdon Homes to ask whether any other tenants had expressed concerns about the work undertaken in their apartments. I was informed by the surveying manager of Hillingdon Homes-I have never met a surveying manager before, but we now have one-that the contractor, Apollo, had undertaken a survey that recorded a 92% satisfaction rate among all tenants who had responded to the company's survey from the 101 properties completed in the programme to date. However, it reported only a 42% satisfaction rate from the Avondale estate, with 38% dissatisfied.

  At meetings with Hillingdon Homes and tenants, I urged the ALMO to undertake an independent survey. It refused, and instead sent round one of its own project team to visit the tenants-one of the very people who had been complained about. In the absence of an independent survey, I held a meeting with the tenants and conducted a written survey of my own, which reported overwhelming dissatisfaction with the improvement programme.

  Let me outline the basic issues of concern with regard to our experience of the decent homes programme in Hillingdon. The first major concern is the poor quality of the work undertaken, as evidenced by the experience of Mr Fagan and his neighbours. Work on the programme was contracted to Apollo London Ltd, which in turn subcontracted much of the work to Bogdan Ltd. In one of its publications, Hillingdon Homes explains that Bogdan Ltd was set up by a Mr Bogdan Hrab, a carpenter who had worked on school projects for Apollo in Hillingdon. He recruited what is described as

  "a core of Romanian tradesmen",

  chosen for their

  "skills and competency, which he personally monitors."

  Hillingdon Homes argues that the appointment of this company was

  "not price-driven but on a tried and tested basis."

  The ALMO also implied in one of its publications that the demand for labour for major projects in my area, such as terminal 5 at Heathrow, meant that there was a shortage of skilled workers, and Bogdan and its Romanian work force met this need.

  The poor workmanship of the operatives working on the Avondale estate led Mr Fagan to question whether these Bogdan employees were indeed the qualified tradesmen they purported to be. Although Hillingdon Homes sought to assure me that Apollo vetted its sub-contractors, to date no satisfactory evidence has been produced by Hillingdon Homes or Bogdan Ltd to confirm the qualifications of the Bogdan staff. In fact, Hillingdon Homes has now denied that it is its responsibility to ensure that the workers are qualified, and Apollo has refused to release details of the tradesmen's individual qualifications.

  Because at that time Romania had not acceded to the European Union, the visa requirements for entry into the UK for employment meant that workers recruited would have to demonstrate their qualifications. In February 2007, I wrote to the Home Secretary to clarify the visa arrangements and to seek an inquiry into the practices of Apollo and Bogdan Ltd. My letter was passed to the Department for Business, Innovation and Skills. The response I received from the Minister of State confirmed the following:

  "Although Romania joined the EU on 1st January 2007, its nationals still need permission to take employment here. Authorisation would only be given if they met the skills and other criteria of the work permit scheme and applications require suitable evidence that the worker is suitably qualified. I understand that a work permit application has not been received from Bogdan Building Services. If a company employs a Romanian national without the appropriate authorisation, they and the worker may be committing a criminal offence."

  Different rules apply for workers who are self-employed, but it is difficult to see how the operatives employed by Bogdan or Apollo could in any way be classified as self-employed. The Minister advised me that the letter had been referred to the immigration service's enforcement unit to consider what action was to be taken. That was 2007, and I have heard nothing since.

  Interestingly, when it was asked whether there was a shortage in my area of the skilled contractors needed for such a contract, the Department for Work and Pensions confirmed that on the contrary, there were local building workers with the requisite skills looking for work in the area.

  Questions were asked about the cost and value for money of the refurbishment work undertaken. The initial estimate of the unit cost for the refurbishment of the kitchens and bathrooms was put at £10,000 by Hillingdon Homes. Mr Fagan and his fellow tenants challenged that figure and undertook a costing of the work themselves, collecting samples of materials and sample costs for the workers' time. They came out with a calculation significantly less than the official Hillingdon Homes estimates. At a later date, Hillingdon Homes reduced its costing from the original £10,000 to £7,900 per unit, but even at that level the tenants have questioned the rate of profit obtained by the contractor and the value for money achieved by the ALMO itself.

  It is worth noting at this stage that Apollo was one of the companies that the Office of Fair Trading found to be guilty of price fixing in their dealings on local council contracts. It was forced to repay more than £2 million by way of fines only 18 months ago, one of the highest amounts of any company involved in the scam. Also, the Information Commissioner discovered that it had been involved in the blacklisting of trade union members, which may relate to the low rates of pay given to some of the operatives on the site in question.

  Questions have also been asked about the insurance arrangements on the Hillingdon Homes programme after individual claims were pursued against Apollo, with one insurance assessor suspiciously withdrawing from claim negotiations and different dates being attached to the same insurance documents.

  Throughout the implementation of the decent homes programme, Mr Fagan and other tenants have expressed strong concerns about the lack of accountability and responsiveness of Hillingdon Homes. Tenants have cited examples of the failure to undertake adequate and timely inspections of work, the reliance on the word of the contractor rather than listening to the tenants themselves, the delays in responding to tenants' concerns, complaints often being ignored, the patronising manner in which the tenants have been treated and the fact that they have been provided with inaccurate and obscure information. All that has increased the level of frustration, because, to quote Mr Fagan again:

  "Had this programme been implemented properly it would have been socially beneficial but unfortunately its management and execution have not lived up to its noble aspirations."

  With regard to the Romanian workers themselves, Mr Fagan wanted me to make it explicitly clear to the House that he is himself an Irish person who came here to seek work, so this is not an attack on the workers themselves but an attack on the company that may have brought them here without the appropriate skills and qualifications and put them in an impossible position to respond to the needs and demands of the contract. He believes that they may well have been exploited in the process.

  Over the past three years I have raised my concerns about the decent homes programme in Hillingdon in direct correspondence with Secretaries of State and Ministers in the Department for Communities and Local Government. Apart from parliamentary questions, my last speech on the matter in this Chamber was in November 2007. I said then that there was a need for an investigation of the council's performance on this matter, and that we knew of a number of examples of poor workmanship. I said that I knew of cases in which tenants had been injured as a result of the work, even following the resources that had been ploughed into the programme.

  I feel that I have done my duty in raising this matter, but there has been a lack of response from Hillingdon Homes, the council and, I have to say, Ministers themselves. Despite getting local remedies to individual problems for tenants, I remain deeply concerned by how the programme was implemented in my area. I repeat my call for an independent investigation into the way in which Hillingdon Homes and the council undertook it.

  The Hillingdon ALMO is to be scrapped and housing management taken back into the council in the autumn. I welcome that, but it should not be used to cover up the problems caused by the mismanagement of the decent homes programme. There needs to be a thorough and detailed independent investigation of Hillingdon Homes, and the abolition of the ALMO should not be used as an excuse for not holding that investigation.

  My local experience naturally led me to wonder whether it had been replicated elsewhere. I know that the decent homes programme nationally has been criticised for overspends and delays, with more than 300,000 properties still not refurbished. I am aware of the National Audit Office January report, which states that it will be another eight years before the work is undertaken. There are criticisms in the report of the absence of monitoring and weaknesses in the information systems,

  "which has reduced the Department's assurance that value for money was being achieved and this in itself constitutes a risk to value for money, because the Department cannot establish definitively whether the Programme has delivered the required improvements at a cost that was considered reasonable."

  There is a need for a further review of the programme. I want the work to be completed to improve people's homes, but at a time of limited resources, it behoves us to ensure that whatever resources are available are wisely spent and meet the needs of the tenants. That is why I feel that in my constituency there is a continuing need to review the decent homes programme and its implementation, and to ensure that the situation I have described is never repeated.

• Finance Bill: Schedule 1 — Rates of capital gains tax
  

  Following on from my right hon. Friend's exposition, I want to speak briefly to amendment 10, which stands in my name. Amendment 10 simply calls for a report on the implications of aligning the rates of capital gains tax with those of income tax. I drafted amendments that were not in order, which calls into question the ability of Back Benchers to amend the Finance Bill and is perhaps something that can be discussed at a later date.

  When capital gains tax was introduced in 1965, it was an attempt to get some equivalence between income tax and taxation on gains through capital investments. There has been reform since then. It is interesting that, under Conservative Chancellors, capital gains tax was aligned with income tax rates. Then, in the late 1990s, the Labour Government introduced the tapers and the link to the time that an asset was held. In 2007, there was further need for reform when it was discovered that executives of hedge funds were determining carried interest-their bonuses, that is-as part of their capital gains tax relief. As a result, they were effectively paying 10% tax on their income-less than their own cleaners. All parties in the House acknowledged that that was a scandal and recognised the need for reform.

  It is accepted that there is an element of compromise between, on the one hand, an equitable tax relationship between income tax and capital gains tax, and, on the other, an arrangement that will support genuine entrepreneurs and business. There has always been an element of fudge, but there was a view that we would try to address the issue in this Finance Bill, whoever was in Government. The previous Government were considering capital gains tax reform, and that was widely supported by the Institute for Fiscal Studies and the Institute of Chartered Accountants. Indeed, Lord Lawson himself made statements about the need for a more equitable relationship between the two, in order to tackle tax avoidance. Such reform was also included in the Liberal Democrats' manifesto. I do not want to bait the Lib Dems tonight. This is too important an issue for that, although it can be quite entertaining.

  In an interview with Andrew Marr, the Prime Minister said:

  "I think everyone recognises there is a problem. When you have a capital gains tax rate of 18% and a top rate of income tax at 50%, you'll find people finding all sorts of ways to treat income as capital gains."

  He went on to say that the new Government would look at taking a different route to help what he described as the fairness agenda. The problem is exacerbated by the 50% increase. With income tax at 50%, even the 28% rate of capital gains tax proposed in the Bill will still leave a 22% differential to encourage further tax avoidance as people designate their income as capital gains.

  My amendment simply asks for a report to be produced that will examine afresh the implications of the alignment between income tax and capital gains tax. I believe that we shall return to this issue in further Finance Bills, because I do not believe that this compromise will hold, or that it will be seen to be equitable or fair. I believe that tax avoidance will continue, certainly among the highest paid, who will re-determine their income as capital gains in order to pay the lower rate of 28%. I accept that an increase of 10% is significant, but it is not significant enough to implement the fairness agenda that the incoming Government have proposed.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I am grateful for the Minister's assurance that information on the tax gap will continue to be published, but my amendment also deals with when it will be published, and asks for further information to be given on the measures that will be taken to tackle the problem.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I think that the debate has been helpful to Members on both sides of the Committee. An attempt has been made to get out of the trenches, and to engage in a wide-ranging discussion of how we can proceed in a pragmatic way. I believe that this will become one of the key issues that people will expect us to address as the economic crisis continues. If they see public expenditure cut so that their local schools are not refurbished, and if they see a tax on welfare benefits, they will expect us at least to maximise the revenue from the tax that people and organisations should be paying. Justice and fairness in the taxation system will become critically important to more and more people.

  Some of the arguments that we have heard today have been very helpful, and at times they have been entertaining. I am fascinated by the concept that reducing taxation reduces evasion and avoidance: that is almost an argument for no taxation at all, although it may not gain much purchase in the House. We all accept the arguments about simplicity, but the problem with simplicity is that it makes loopholes possible, and we then need complexity to tackle the loopholes. It is a circular problem. However, it is a joint venture for us to try to ensure that the legislation that we draft is appropriately simple.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I was talking about what had been experienced in the past, but we can all sign up to the pious statement that we will achieve as much simplicity as possible. I merely say on the basis of practical experience in the House that, unfortunately, when we have sought simplicity, people have argued for further complexity to tackle the loopholes. However, we will all aim for simplicity, and the onus is on us to try to draft legislation in a way that achieves it.

  I welcomed the Minister's statement about the continuation of, and consultation on, the commitment to the anti-avoidance rule, but I hoped that at some stage a future report from Government would enable us to engage in a wider debate on how we could install in legislation the duty to comply more simply and effectively. As my right hon. Friend the Member for East Ham (Stephen Timms) pointed out, the issue that arises time and again is the ingenious use of devices to avoid the spirit of the law. In other contexts, we draft legislation in such a way that when a device appears it can be seen to be a device, which is patently against the spirit of the legislation and whose effect can therefore be outlawed. I also welcomed the wider debate on the anti-avoidance principle to be installed in legislation.

  This has been a helpful debate. I leave the Minister to the savagery of Richard Murphy's blog: I am sure that Mr Murphy will respond to each of the points that he raised. Let me make this point, however: whether the tax gap is £40 billion or £120 billion, when people out there are experiencing cuts in public services and reductions in their pensions and are having to work for longer, they will expect us to collect those taxes. The subtle distinctions between evasion and avoidance will be lost on them. They will expect the House of Commons to produce legislation ensuring that HMRC is sufficiently staffed and sufficiently resourced to bring in the tax, and to deal with the significant part of the deficit that we have identified in the past few weeks.

  On the basis of the assurances that we have had from both Front Benches of co-operative working on this issue, I beg to ask leave to withdraw the amendment.

  Amendment, by leave, withdrawn.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  To follow up on the question of my right hon. Friend the Member for East Ham (Stephen Timms), are there any measures that the right hon. Gentleman would consider tax avoidance that should be brought within the purview of Her Majesty's Revenue and Customs, such as the large-scale offshoring mechanisms that corporations use to avoid tax? All that the amendment asks is for a report to be made about the measures that the Government will take on such issues.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I am grateful for that response. Successive Governments have pragmatically examined the latest tax avoidance mechanisms and then sought to work through them systematically to address them. The amendment is intended simply to bring forward a report on those mechanisms so that the House can have more oversight of that process.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I understand the point that the hon. Gentleman is making. My amendment tackles tax evasion, which is clearly an illegal activity, but we need to address a wider issue that goes beyond the normal tax planning: tax avoidance beyond the spirit of the law. In previous debates, we have tried to insert into the tax laws of this country a general duty of tax compliance, which exists in other countries. Such an approach puts an onus-as a duty in law-on the individual to comply and to try to emphasise that duty, rather than to look for every possible means to avoid tax. There is a gradation in these matters, but I tackle both these things because they are both legitimate concerns in wider society and will become increasingly pressing ones as individuals experience the public expenditure cuts that will take place as we seek to tackle the deficit.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  That is why I was hoping my amendment would achieve consensus in this House, although that might be a first for me. I was hoping that it went with the flow of Government policy, as well as with past Government policy, if not with past practice under successive Governments. A number of practices of tax avoidance clearly incur public opprobrium. The hon. Gentleman has cited a number that are listed in the Red Book, but there are others. These are seen as instances where people are not doing the right thing within the spirit of the law, which is why, no matter how difficult it can be at times, we can identify practices that fall within either tax evasion or tax avoidance by the practical response from the community.

  This is an issue whose time has come, particularly because of the current financial climate. There is clearly a concern among Members in all parts of the House about tax evasion and tax avoidance, and there will increasingly be concern about it in the wider community. Therefore, my simply asking for the Treasury to produce a report before this latest round of taxes are implemented-this would give an element of timetabling and immediacy to the proposals that will be introduced by the Treasury-is nothing but helpful and will be seen in the wider community as actually getting the Treasury to examine this issue with some seriousness in a way that may not have been happening under previous Administrations of all political parties. I cannot see how anybody could vote or argue against this, but I shall sit down and wait for the argument to come.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I agree wholeheartedly. I shall say more about that shortly, because it is one of the issues that we raised-I think-four years ago at the time of the merger of the departments. We hoped at that stage for a more detailed report on personnel management and the number of staff who would be employed to deal with tax evasion in particular.

  The fact that Her Majesty's Treasury does not distinguish between evasion and avoidance in its global figures suggests that the Treasury itself finds the distinction difficult to define. I tried to find a clear Treasury quantification of what is generally described as the tax gap in order to draft an amendment that would have some purchase in the real world, especially the world of Treasury practice.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  Complication is certainly an issue. That is partly why I want the Chancellor to report to the House on the measures that will be used to tackle tax evasion and avoidance. We need a simplification of the process, but we also need to know how many staff the Government will employ for collection purposes.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  Let me say as objectively as I can that I have not yet seen a Budget that simplified the taxation system, and I have been here for 13 years. I live in hope, which is why my amendment requests a further report that might indicate the path that the Government intend to take. I am merely a humble seeker for truth in this matter, as always.

  I investigated various sources in my search for estimates of the tax gap. The latest HMRC estimate that I could find was £40 billion, but there is an element of uncertainty reflected in a reported memorandum circulated to staff in HMRC and the wider Treasury, asking people to come up with ideas for identifying and calculating the gap.

  The HMRC estimate has been challenged by others. I chair a group called the Left Economics Advisory Panel, which brings together a number of Left economists including some who have been working with the Tax Justice Campaign. Over the years many Members will have worked with Richard Murphy and John Christensen, who are held in respect across parties because of the work they have undertaken in this sphere, and the advice that they have given to the Treasury and other organisations for a number of years. According to their estimate over the past year, the tax gap could be anything between £70 billion and £120 billion.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I can only say that that is one of the reasons why I have raised the issue so consistently. I hope that some Government will address it, and will do so effectively. It is also why I have sought to amend the Bill in a consensual way. All I am asking is for the Treasury to produce a report setting out our best current estimate of the extent of avoidance and evasion, and to propose measures that the Government could take. That would be a way for the Government to demonstrate that they are taking the issue seriously and tackling it.

  There have been other estimates of the tax gap that go beyond that of Richard Murphy, some of which are as high as £150 billion a year. Interestingly in respect of the Treasury's £40 billion figure, it estimated in a table it published earlier this year that corporation tax accounted for 16% of its tax gap and that capital gains tax along with national insurance contributions and so forth accounted for 6%, so the taxes this particular amendment addresses are significant contributors to the tax gap.

  I fear that unless this issue is addressed we will continue to have a sterile debate in the House about cuts in public services, whereas if we tackled the tax gap we would avoid a significant amount of the public service cuts that will impact upon all our communities. I therefore urge that we have a serious debate and that the Treasury produces a report quantifying more exactly the levels of tax avoidance and tax evasion, and that we then look at possible measures-including, I agree, on simplification. Issues to do with what resources we apply to tackling tax evasion and avoidance are also of relevance, however, and that comes down to staffing.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I fully concur, which is why I think that HMRC must apply a lot more resources to tackling quantification. The estimates I have been given range widely from the £40 billion from the Treasury for both avoidance and evasion-its figures do not distinguish between them-to the £25 billion from the TUC solely for tax avoidance, to the higher estimates of anything between £70 billion and £150 billion for both evasion and avoidance. I know that Richard Murphy in particular has focused on evasion, which could account for anything between 40% and 60% of the budget deficit-the structural deficit as well-that this House has recently been debating, and dividing on almost unnecessarily it seems to me.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I fully agree.

  I have not included any reference to VAT, which is one of the largest areas of tax evasion and avoidance. Interestingly, it appears from the responses we have had over the years from the Treasury that it uses different methodologies to calculate the different forms of evasion and avoidance for particular taxes. I find that extremely confusing.

  The amendment has been described as not tribalist. Well, I am a tribalist, but I am trying not to be on this issue; instead, I am being as consensus-seeking as I can be. Even though I come from a class-based politics, I am trying to come at this from a straightforward administrative perspective, asking how we can arrive at a situation in which HMRC will report to the House-to the Chancellor of the Exchequer-on the extent of evasion and avoidance and the measures that are going to be pursued. The reason why I am making a link to the changes in tax measures is that I want there to be a time limit, so that we get a report back to the House; otherwise, this situation will continue year after year.

  This issue does relate to that of staffing, which I raised with the previous Government and am raising with this one. I chair the cross-party PCS trade union group in Parliament, which regularly meets PCS members who work in HMRC and who are tax inspectors. It is clear that they have performed an excellent service to our country over the years, and their productivity has been increasing year on year. However, over the past three years job cuts totalling 12,000 within HMRC have been announced that specifically affect staff involved in tax generation. At a time when we are desperately trying to tackle the deficit through measures other than reductions in public expenditure and cuts in public services, we could do that by tackling tax evasion and tax avoidance. However, at the same time, we have the prospect of another 12,000 jobs being lost within HMRC.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  That is an interesting point. Tax compliance should be a duty in law, so there should be a requirement on us all to pay our appropriate level of tax. Tax planning is perfectly consistent within the law and is appropriate for individuals and organisations in order to ensure that they pay the appropriate tax. However, such devices should not be used to avoid paying the rightful level of tax and certainly should not be used for the purposes of tax evasion, which is the illegal avoidance of tax.

  As I was saying, my concern is that, just when we need staff to tackle tax evasion and avoidance, we are faced with the previous Government's plan for a further 12,000 job cuts within HMRC. I urge the new Government to review the matter and to look again at the staffing level that will be required if we are seriously to address tax evasion and avoidance. That is another reason why my amendment calls on the Chancellor of the Exchequer to lay before us a report that sets out the measures he proposes to take

  "to ensure the payment of tax which is due".

  In devising those measures, appropriate discussions will need to take place about the level of staffing and the qualifications and abilities required of such staff. Such factors will militate against the scale of job cuts that have taken place.

  On another issue, but one that has certainly been close to the hearts of several Members over the past two years, such measures will need to take into account not just staffing levels but staff location. The closure in recent times of local tax offices has reduced HMRC's ability to respond to tax evasion and tax avoidance on the basis of local knowledge, and to assist local companies and individuals in proper tax planning so that they can comply with the law. I request that any report that the Chancellor introduces deal with the implications of the closure of local tax offices and, therefore, the appropriate location of the staff themselves.

  I have tabled two amendments, the first of which, amendment 11, deals with corporation tax.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I appreciate the point that my hon. Friend makes. I accept that there have been issues relating to a new department settling down over time, but I want to pay tribute to the staff involved for the excellent job they have done in the set-up of the new organisation, for the flexible way they have worked and for the co-operation that has worked across past agencies as they have come together. I accept that that might be an issue and it could be referred to.

  I will not repeat the same speech when we deal with amendment 12.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  I beg to move amendment 11, page 1, line 6, at end insert-

  '(2) Subsection (1) shall not have effect unless the Chancellor of the Exchequer has laid before the House of Commons a report on the extent of avoidance and evasion of corporation tax and on the measures he proposes to take to ensure the payment of tax which is due.'.

  I almost feel like apologising for returning to the issue of tax evasion and tax avoidance, which I have pursued for a number of years since the debate that we had about the merger of Inland Revenue and Customs and Excise to form Her Majesty's Revenue and Customs. The amendment is fairly straightforward in seeking that a report be prepared by the Chancellor of the Exchequer before corporation tax and capital gains tax measures are agreed by the House. I will not repeat myself in relation to amendment 12 to clause 2, although I will move amendment 12 formally. We have argued consistently about how to tackle evasion and avoidance and the investment required to do so.

  Let me explain the rationale behind the amendment. I listened to the Second Reading debate into the early hours, including the discussions about Randalls of Uxbridge, which were enlightening at that point in time-

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  As my hon. Friend says from a sedentary position, the discussions were refreshing, to say the least. I think there is another sale on at the moment.

  The debate was about how to resolve the deficit that has arisen as a result of the credit crunch and the economic crisis that we face. Clearly, the division was around the level of reductions in public expenditure required and the time scale for their implementation. There was fierce debate about the level of public expenditure decreases and their implications for jobs losses, cuts in services and the impact on communities.

  What was absent from the debate was a discussion of increasing tax revenues as an alternative to cuts. Everyone appreciated that the deficit needs to be reduced. There was some agreement, even across Benches, on some cuts, particularly with regard to ID cards and, perhaps, Trident. With regard to cuts in education and welfare benefits, however, there were strong differences. We need to look again at tax avoidance and evasion. There has been confusion about definitions in previous debates. Tax evasion is defined closely as the illegal non-payment or under-payment of taxes, usually resulting from the making of false declarations, or from no declarations of taxes to tax authorities, and can result in legal penalties. Tax avoidance is seeking to minimise a tax bill without deliberate deception, but contrary to the spirit of the law.

• Finance Bill: Clause 1 — Main rate of corporation tax for financial year 2011
  

  The difference is clear with regard to legality and illegality. The technical implementation of tax legislation can be complex, so people can misunderstand which side of the fence they fall. During earlier debates in the House, the Denis Healey quote was cited that the difference is a prison wall. The implementation of measures to tackle tax evasion in particular is critical to the sound management of public finances and, obviously, to probity in the management of tax resources.