Finance (No. 2) Bill

Ben Lake Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Bell Ribeiro-Addy [V]]

I shall speak in favour of new clause 9 in my name, and the amendments and new clauses in the names of my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and the Labour Front Bench.

The thread that weaves through these amendments and new clauses is utter outrage at plans for big corporations, including big firms that do not support trade union rights, that pay below the living wage or that avoid tax, to benefit from the Chancellor’s astonishing super deduction tax break giveaway. In particular, new clause 9 would require a meaningful equality impact assessment of capital allowance super deductions that must cover the impact of those provisions on households at different levels of income; people with protected characteristics; the Treasury’s compliance with the public sector equality duty; and equality in different parts of the UK and different regions of England.

For most of us, one of the key consequences of the pandemic has been to illuminate far-reaching health and socioeconomic inequalities in many countries. However much this Government try to conjure otherwise, it is just a statistical and factual truth that, as a result of years of cruel Conservative austerity followed by the callous Conservatives’ handling of the covid crisis, the pandemic’s impact has fallen disproportionately on the most vulnerable individuals and along gendered, ethnic, occupational and socioeconomic lines.

Inequalities in people’s protection from and ability to cope with this pandemic and its tremendous societal costs have stressed the importance and urgency of the societal changes needed to protect population health and wellbeing. According to the statement issued by independent experts of the special procedures of the United Nations Human Rights Council, condemning the Commission on Race and Ethnic Disparities’ report:

“The reality is that People of African descent continue to experience poor economic, social, and health outcomes at vastly disproportionate rates in the UK.”

Women—particularly the poorest women, black, Asian and minority ethnic women, disabled women, lone parents and young women—not only have been badly hit by the pandemic, but have suffered for years under this Government’s brutal austerity onslaught. Yet, coming in at an enormous £12 billion for 2021-22, the Chancellor’s announcement of a super deduction on purchases of capital goods by businesses was one of the largest spending items in the spring Budget. In fact, some argue that it is one of the largest single-year tax giveaways ever enacted by a Government. And who will it benefit? Although the Chancellor claimed in his speech that the Government’s response to covid had been “fair”, women, those on low incomes and those from BAME backgrounds stand to benefit the least from the untargeted tax breaks for large companies through the super deduction. We know that more businesses—and larger ones—are owned by men than by women. As such, it is important to recognise there are many potential equalities impacts to business taxation.

Incentives such as the super deduction are biggest for large firms and the Financial Secretary to the Treasury has admitted that only 1% of firms will benefit this year, as the rest are within the annual investment allowance. How can the Government justify the fact that under this Bill the rich and big business will be treated to mouth-watering tax giveaways and reliefs, despite unclear evidence about whether that will actually create the investment needed?

The Women’s Budget Group argues that this provision is likely to have “substantial deadweight costs”, bringing forward investment rather than generating new investment. The group also raised the point that it is unnecessarily limited to investment in “plant and machinery”, thereby excluding training and other human capital investments, and missing opportunities regarding the transition to a lower-carbon economy that recognises the economic benefits of spending on the social infrastructure that our public services provide. This goes to the crux of the problems with this Finance Bill, and with the Government’s lack of vision for a green recovery based on intersectional socialist economics and progressive taxation.

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to speak in this debate, Sir Charles. I rise to speak in support of amendment 53, which I hope will encourage the Government to bring some rigour and meaning to their rhetoric of levelling up and the use of taxpayers’ money.

In a Budget that confirmed £17 billion of spending cuts, relative to March 2020 plans, the Chancellor’s decision to announce the super deduction, equivalent to forgoing approximately 20% of the UK’s corporation tax revenues, was certainly a bold one, particularly as the Financial Secretary noted in November 2020 that the existing annual investment allowance already covers 99% of all UK businesses. The House has heard this evening that the super deduction is a major tax break for the top 1% of UK businesses. We have also heard many concerns that it is a blunt tool in need of significant refinement if its perceived benefits are to be targeted to those in greatest need of support. I also point to concerns that the super deduction will disproportionately benefit London and the south-east of England and that it flies in the face of the Government’s commitment to level up the UK economy.

I draw the House’s attention to a finding from the Centre for Progressive Policy, which has calculated that, although the super deduction could amount to a tax break worth up to £513 for London residents, it would be worth only half as much in Wales, whose sum benefit is the second lowest of the UK nations and regions, with only Northern Ireland benefiting less on this measure.

I am afraid that I disagree with other hon. Members who have suggested that the super deduction might, on the contrary, actually benefit and address regional inequality. My fear is the opposite—that the super deduction will, at best, lock in existing regional inequalities and, at worst, exacerbate rather than address the UK’s geographical economic imbalance. That is why Plaid Cymru wishes to amend the Bill to require that the Chancellor considers the impact and geographical extent of the super deduction across all the UK’s nation and regions and would support calls made by other hon. Members this evening that measures should be introduced to establish a deeper evidence base for these changes. Similarly, given the urgent need for climate action and the retooling of the economy for a net zero future, this amendment also requires the UK Government to consider the super deduction’s impact on efforts to mitigate climate change.

I hope that the Government will incorporate guarantees such as these into the Bill to ensure that we truly do rebuild back better from the pandemic, rather than resuscitate the UK’s deeply flawed pre-pandemic economy. Failure to do so would make it clear that their rhetoric of support for all nations, for the levelling-up agenda and for climate action are no more than fine words and lofty intentions.

[Richard Fuller]

It is right, as our hard-working business leaders emerge from the most torrid 12 months, that the Government set a clear course for their understanding of how those businesses will be taxed in future. I would have hoped that it would have been heartening for the people who have been running businesses through these most difficult times to listen in to this debate to hear what Members of Parliament have to say on their behalf. However, personally speaking, I think that most people who run businesses will be rather saddened by what they have heard—largely, a perspective that it is wrong for people to run businesses that are profitable, that there is sin in becoming rich by creating a business that creates products that people want, rather than virtue, and a complete lack of understanding that businesses that make profits are a sign of success, rather than a sign of failure.

Personally, I am rather in favour of us increasing taxes. When this or any Government seek to increase tax on corporations, I wonder whether they realise that, essentially, they are putting a tax on success—that every pound that we take away from a business, from its profits, is a pound taken away from things that the business owner may do him or herself. They might be radical things, such as investing in and expanding the number of people who work for the businesses, investing in machinery that will make their business more competitive in terms of exports, or lowering their debt so that they are on a more substantial and more stable footing for the long term. Every time a state takes away money from enterprise it is putting at risk the resources those companies have to do those things, and the future success of this country. Therefore the Government were right to consider carefully how to balance a change in corporation taxes, and given what has happened subsequently to the Budget, the Chancellor deserves a bit of a pat on the back for understanding what would be going on in the global realm of corporation tax, as well as the crucial importance of providing some short-term incentive for businesses to invest as we emerge from the recession.

--- Later in debate ---

Designation of freeport tax sites

[Ben Lake]

I beg to move amendment 54 in clause 109, page 63, line 14, at end insert—

“(1A) An area may be designated as a special area under subsection (1) only when a motion approving the creation of freeport tax sites has been agreed by—

(a) Senedd Cymru,

(b) the Scottish Parliament, and

(c) the Northern Ireland Assembly.”

This amendment would require the Treasury to have received consent from the devolved parliaments on proposed freeport measures before introducing the changes proposed by Clause 109.

--- Later in debate ---

[Ben Lake]

It is a pleasure to have the privilege of opening the debate on this clause. I rise to speak in support of amendment 54 in my name, which would require the Treasury to have received consent from the devolved Parliaments before it could designate freeport tax sites as outlined in clause 109.

Although the amendment will not be pushed to a vote, the very need for an amendment requiring democratic safeguards and devolved consent is sadly indicative of the Government’s disregard for devolution and the interests, rights and ambitions of the devolved nations. It is jarring that today’s debate, and its pursuit of powers, paid for by taxpayers across the UK, is happening despite the Government’s failure to achieve consensus across all four nations of the UK.

That unilateralism by the Government is not only disappointing but, I would argue, economically self-defeating, as the overwhelming body of evidence, some of which has been gathered by Committees of this place, including the Welsh Affairs Committee, of which I am a member, suggests that freeports will lead to the redistribution of jobs and investment, rather than their creation across the UK, unless the policy is very closely and carefully co-ordinated.

[Jim Shannon]

The hon. Gentleman is absolutely right: one of the prerequisites of the opportunity for freeports is to ensure that every part and every region of the United Kingdom of Great Britain and Northern Ireland benefits. Although every hon. Member is right to claim it for themselves, it is important that we all benefit. Does he agree?

[Ben Lake]

I agree with the point that the hon. Member makes. If the freeport policy is to have real benefit and ring true to the rhetoric of levelling up every single nation and region of the United Kingdom, it is clear that no port—or no nation or region—should be disadvantaged by the location of any other. In effect, we cannot have a situation whereby the Government are asking for Welsh, Scottish or Northern Irish taxpayers, along with English taxpayers, to pay for freeports in certain parts of England that may actively disadvantage those in Wales, Scotland or Northern Ireland. If they did, it would appear that the Prime Minister and his Chancellor would be willing to trample over the devolution settlements in pursuit of this freeport master plan.

The Wales Act 2017 largely devolved the regulation and supervision of ports and harbours in Wales to the Welsh Government, while economic development is also of course a devolved competence. UK Government demands, such as capping the number of Welsh freeports to one—an outcome that would likely lead to an overall reduction in the number of Welsh ports—are direct infringements on the Welsh Government’s responsibility for the Welsh economy.

It is therefore especially dangerous that Wales cannot count, it would seem, on its Secretary of State to defend its interests at the Cabinet table. Instead, rather than side with Wales’s democratic institutions, the Secretary of State for Wales has threatened that a freeport will be implemented in Wales come what may, including if Wales’s Parliament were to reject such a measure.



I am conscious that there are others who wish to make perorations on this topic this evening, so I will draw my remarks to a close. I look forward to summing up at the end. Although I will not press the amendment to a vote this evening, I hope that the Minister will consider my remarks and ensure that freeports are established with the consent of all four nations and supported by an engaged public debate. Refusal to do so would be a tacit admission that this Government will not hesitate to trample over Wales’s economic interests and aspirations if they run contrary to the plans drawn up in London.

--- Later in debate ---

[Jesse Norman]

I thank colleagues, not least my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), for a very entertaining and rowdy end to the debate. Let me pick up some of the points that have been raised on this important subject.

The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) asked about expected revenue for freeports. As she will be aware, it is not really appropriate to comment on that at the moment. These tax sites have not yet been agreed. The revenues, or at least the associated tax costs, are very much site-specific. I am therefore not in a position to comment on that, but of course once the sites have been agreed, the appropriate estimates will be brought forward.

The hon. Member for Salford and Eccles (Rebecca Long Bailey) argued—indeed, it was a recurrent theme—that freeports would have the effect of watering down employment protections. The Opposition have no evidence for that viewpoint at all. There is no deregulatory agenda whatever with freeports. Businesses and freeports will have to abide by UK worker and environmental regulations, national minimum wage standards, workers’ rights and the rest of it, just as any other company would anywhere else in the UK.

The hon. Member for Gordon (Richard Thomson) raised the topic of freeports in Scotland. He did not remind the Committee, but he will be aware, that the Scottish Government originally rejected the idea of a freeport, then rather changed their tune when they saw the local reaction. I encourage him and the Scottish Government, whatever their complexion after the election, to step forward and engage with the Government so that we can agree a freeport in Scotland.

My hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) talked about the different elements, and was worried that somehow the offer had been watered down. I reassure him that, although he did not notice that the structures and buildings allowance is legislated for in the Bill, the employer national insurance contributions relief will be legislated for in a forthcoming Bill and the business rates relief will follow in due course.

My hon. Friend the Member for Thurrock (Jackie Doyle-Price) rightly talked about the magnificent port at Tilbury. I have visited it myself, and a thoroughly splendid and impressive thing it is too. Finally, my hon. Friend the Member for Bridgwater and West Somerset put in what I think we can all agree was a typically low-key and restrained performance, for which we very much thank him. He put me ineffably in mind of a great moment in a work of literature and film with which I am sure the House will be familiar: “Animal House”. There is a marvellous moment where John Belushi’s future senator John Blutarsky says, “Was it over when the Germans bombed Pearl Harbor?” There is a pause, and someone says, “Leave him, he’s rolling.” That is what I felt we should do with our dear friend the Member for Bridgwater and West Somerset. With that, I will sit down.

[Ben Lake]

It is a pleasure to close the debate this evening. We have had a very beneficial debate on two main points about freeports and regional economic development. We had a very good discussion about the merits or otherwise of freeports for the areas in which they are located, and although I think we will continue to discuss whether any growth of investment generated by the sites will be new, partially new or a substitute for or displacement of economic activity elsewhere, it has been a good debate nevertheless.

My final point leads on from the question of whether any growth in investment would be new or a reflection of displacement of activity from elsewhere. That is particularly important when it comes to the question of levelling up and addressing regional inequalities and disparities. We still need to discuss that further. One potential solution in Wales’s case, for example, may be to look again at the cap of just one freeport in Wales. Perhaps we should have at least two. I am looking to other Members—perhaps that is one way to address the disagreements we have had tonight.

Either way, we have had a very good and beneficial debate and although I do not want to press my amendment to a vote, I hope that the Minister will consider how the Government can better work with the devolved Governments to address some of these concerns and the need to co-ordinate policies for our economic development. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 109 to 111 ordered to stand part of the Bill.

Schedule 21 agreed to.

Schedule 22

Relief from stamp duty land tax for freeport tax sites

Amendments made: 43, page 231, line 8, at end insert—

“(ca) Part 3A makes provision about cases involving alternative finance arrangements,”

This amendment is consequential on Amendment 52.

Amendment 44, page 231, line 26, after “sites),” insert

“other than in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies,”

This amendment is consequential on Amendment 45.

Amendment 45, page 231, line 39, at end insert—

“3A In section 81ZA (alternative finance arrangements: return where relief withdrawn)—

(a) in subsection (1), after “arrangements)” insert “or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies”,

(b) in subsection (3) (as substituted by Schedule 17 to this Act), at the end insert—

“(c) where the relief was given under Part 2 of Schedule 6C, the last day in the control period on which the qualifying freeport land is used exclusively in a qualifying manner.”, and

(c) after subsection (6) insert—

“(6A) Terms used in paragraph (c) of subsection (3) which are defined for the purposes of Schedule 6C have the same meaning in that paragraph as they have in that Schedule (as modified by paragraph 10A of that Schedule).

(6B) Paragraph 10 of Schedule 6C (as modified by paragraph 10A of that Schedule) applies for the purposes of subsection (3)(c) as it applies for the purposes of paragraph 8 of that Schedule.”

“3B In section 85(3) (liability for tax), after “arrangements)” insert “or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies”.”

This amendment makes provision about returns, and liability to SDLT, in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements.

Amendment 46, page 231, line 40, leave out “86(2)” and insert “86”

This amendment is consequential on Amendment 49.

Amendment 47, page 231, line 40, after “tax)” insert “—

(a) in subsection (2),”

This amendment is consequential on Amendment 49.

Amendment 48, page 231, line 41, after “sites),” insert

“other than in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies,”

This amendment is consequential on Amendment 49.

Amendment 49, page 231, line 41, at end insert “, and

(b) in subsection (2A), after “arrangements)” insert “or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies”.”

This amendment makes provision about the payment of SDLT in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements.

Amendment 50, page 231, line 44, after “sites),” insert

“other than in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies,”

This amendment is consequential on Amendment 51.

Amendment 51, page 232, line 2, after “81(1A);” insert—

“(azab) in the case of an amount payable because relief is withdrawn under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 10A of that Schedule (alternative finance arrangements) applies, the date which is the date of the disqualifying event for the purposes of section 81ZA (see subsection (3) of that section);”

This amendment makes provision about interest on unpaid SDLT in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements.

Amendment 52, page 235, line 25, at end insert—

“Part 3A

Alternative finance arrangements

Cases involving alternative finance arrangements

10A (1) This paragraph applies where either of the following applies—

(a) section 71A (land sold to financial institution and leased to person), or

(b) section 73 (land sold to financial institution and re-sold to person).

(2) This paragraph applies for the purposes of determining—

(a) whether relief is available under Part 2 of this Schedule for the first transaction, and

(b) whether relief allowed for the first transaction is withdrawn under Part 3 of this Schedule.

(3) For those purposes this Schedule has effect as if—

(a) references to the purchaser were references to the relevant person, and

(b) the reference in paragraph 3(2)(d) to land held (as stock of the business) for resale without development or redevelopment were a reference to land held in that manner by the relevant person.

(4) The first transaction does not qualify for relief under Part 2 of this Schedule except where it does so by virtue of this paragraph.

(5) In this paragraph—

“the first transaction” has the same meaning as in section 71A or 73 (as appropriate);

“the relevant person” means the person, other than the financial institution, who entered into the arrangements mentioned in section 71A(1) or 73(1) (as appropriate).”—(Jesse Norman.)

This amendment makes provision about the operation of Schedule 6C to the Finance Act 2003 (relief from SDLT for freeport tax sites, inserted by Schedule 22 to the Bill) in cases involving certain alternative finance arrangements.

Schedule 22, as amended, agreed to.

New Clause 25

Review of freeports

“(1) The Chancellor of the Exchequer must review the impact of sections 109 to 111 and schedules 21 and 22 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter.

(2) A review under this section must estimate the expected impact of sections 109 to 111 and schedules 21 and 22 on—

(a) job creation within the sites designated as freeports and across the UK as a whole,

(b) revenue from corporation tax and stamp duty land tax within the sites designated as freeports and across the UK as a whole,

(c) levels of artificial tax avoidance and tax evasion across the UK as a whole,

(d) levels of criminal activity,

(e) the necessary level of staffing for HMRC and the UK Border Force, and

(f) departmental spending by HMRC and other departments on enforcement.”—(Abena Oppong-Asare.)

This new clause would require the Government to review the impact of the provisions of the Act introducing freeports and publish regular reports setting out the findings.

Brought up, and read the First time.

Question put, That the clause be read a Second time.