HM Treasury

10 most recent Written Questions

Question to the HM Treasury

To ask the Chancellor of the Exchequer, with reference to the Small Business, Enterprise and Employment Act 2015 amended by the Enterprise Act 2016, what estimate he has made of the cost to the pubic purse in each year of the delay in the implementation of the £95,000 cap on public sector exit payments; and if he will make a statement.

Answer (Steve Barclay)

The annual Whole of Government Accounts (WGA) publications contain the cost of exit packages made by public sector employers in scope of WGA for the relevant financial year.

The Government legislated for a £95,000 cap on exit payments in the Small Business, Enterprise and Employment Act 2015 as amended by the Enterprise Act 2016. The combined total cost of exit payments over £100,000 in financial years since then (2016/17 and 2017/18) is £0.4 billion. The exit payment cap will reduce this amount by setting a limit of £95,000 on payments. Information on the 2018/19 financial year is not yet available.

HM Treasury consulted on regulations implementing the £95,000 cap last year. The Government intends to publish its response to the consultation by Summer and the regulations will be laid before Parliament this year.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, what the cost to the public purse is of increasing the Minimum Income Guarantee for people receiving local authority social care other than in a care home in line with inflation in the financial year 2020-2021.

Answer (Steve Barclay)

HM Treasury has not made an assessment of the cost to the public purse of this proposal. It is for Local Authorities to set Minimum Income Guarantee rates in their area, subject to nationally mandated floors. At the 2019 Spending Round we gave LAs access to up to an additional £1.5bn for social care, on top of existing grants.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, what steps he is taking to help prevent the sale of mortgages to vulture funds.

Answer (John Glen)

A mortgage prisoner is an existing borrower that cannot switch to a cheaper deal with a new lender because they don’t meet stricter borrowing criteria set by strengthened regulations post financial crisis. The Government is aware that these borrowers have been in a difficult and stressful situation. That is why we have worked closely with the FCA to implement their rule change to remove the regulatory barrier that has prevented some customers from switching.

I have written to Stephen Jones, Chief Executive Officer of UK Finance to outline my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules.

However, FCA data shows that some of these borrowers may be in problem debt and are therefore likely to exceed the risk appetite of many lenders, including those in arrears. As with any borrower in the UK that experiences problem debt, the Government and the FCA are committed to working alongside lenders to provide appropriate support for these individuals. That is why we have established a range of initiatives to support those in problem debt, including the Money and Pensions Service which has been set up by the Government to support consumers with free and impartial information for every stage of their financial lives. Treasury officials are also working on implementing Breathing Space which will give borrowers in problem debt the opportunity to get their finances back on track. We have also ensured that regulations concentrate on helping people avoid repossession, including protection in the courts through the Pre-Action Protocol which makes it clear that repossession must always be the last resort for lenders.

The sale of mortgage books is a commercial decision for lenders and the Government does not seek to intervene in these decisions.

I cannot comment on future UK Asset Resolution (UKAR) sales other than to say that a range of buyers, including active lenders, will be invited to participate and we will continue to require bidders to agree to our robust customer protections. In asset sales to date, we have not received a bid from an active lender that covered all of the portfolio on offer.

In all sales of UKAR loans, customer treatment is a key consideration for UKAR and the government in selecting a bidder and all bidders have to agree to UKAR’s customer treatment conditions in order for their bid to be considered. This is a strict requirement, not open to negotiation, and is considered before bids are assessed on price.

The purchaser is obliged to ensure the servicer of the mortgages is regulated by the Financial Conduct Authority (FCA). For the latest asset sale and future sales the legal title holder must also be FCA-regulated. This is a contractual requirement.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, whether he has plans to support people that are unable to transfer from high interest rate mortgages to more affordable mortgages.

Answer (John Glen)

A mortgage prisoner is an existing borrower that cannot switch to a cheaper deal with a new lender because they don’t meet stricter borrowing criteria set by strengthened regulations post financial crisis. The Government is aware that these borrowers have been in a difficult and stressful situation. That is why we have worked closely with the FCA to implement their rule change to remove the regulatory barrier that has prevented some customers from switching.

I have written to Stephen Jones, Chief Executive Officer of UK Finance to outline my expectation that as many of its members as possible should move quickly to offer new deals to borrowers that are eligible to switch under the new FCA rules.

However, FCA data shows that some of these borrowers may be in problem debt and are therefore likely to exceed the risk appetite of many lenders, including those in arrears. As with any borrower in the UK that experiences problem debt, the Government and the FCA are committed to working alongside lenders to provide appropriate support for these individuals. That is why we have established a range of initiatives to support those in problem debt, including the Money and Pensions Service which has been set up by the Government to support consumers with free and impartial information for every stage of their financial lives. Treasury officials are also working on implementing Breathing Space which will give borrowers in problem debt the opportunity to get their finances back on track. We have also ensured that regulations concentrate on helping people avoid repossession, including protection in the courts through the Pre-Action Protocol which makes it clear that repossession must always be the last resort for lenders.

The sale of mortgage books is a commercial decision for lenders and the Government does not seek to intervene in these decisions.

I cannot comment on future UK Asset Resolution (UKAR) sales other than to say that a range of buyers, including active lenders, will be invited to participate and we will continue to require bidders to agree to our robust customer protections. In asset sales to date, we have not received a bid from an active lender that covered all of the portfolio on offer.

In all sales of UKAR loans, customer treatment is a key consideration for UKAR and the government in selecting a bidder and all bidders have to agree to UKAR’s customer treatment conditions in order for their bid to be considered. This is a strict requirement, not open to negotiation, and is considered before bids are assessed on price.

The purchaser is obliged to ensure the servicer of the mortgages is regulated by the Financial Conduct Authority (FCA). For the latest asset sale and future sales the legal title holder must also be FCA-regulated. This is a contractual requirement.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, how much money from the public purse will be allocated to Northern Ireland, Scotland and Wales under the Barnett consequentials following expenditure on High Speed Two.

Answer (Steve Barclay)

The Barnett formula will be applied in the normal way on any planned changes in UK government departmental budgets, as set out in the Statement of Funding Policy.

Full details of any Barnett consequentials for Scotland, Wales and Northern Ireland will be set out at future fiscal events and spending reviews.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, pursuant to the Answer of 12 February 2020 to Question 13939, what assessment he has made of the implications for his Department's policies on withdrawn pensions of the potential reinstatement of pensions to war widows who lost them on remarriage or cohabitation; which groups other than war widows have had pensions withdrawn; and if he will make an assessment of the potential merits of restoring war widows’ pensions to war widows who divorce their subsequent spouses and then remarry them.

Answer (Steve Barclay)

It has been the policy of successive Governments that changes to public service pension and compensation schemes should not be applied retrospectively where benefits have already been awarded. This principle is a foundation for keeping the schemes sustainable and given this, the Government currently has no plans to reinstate war widow(er)s pensions with retrospective effect.

‘Pensions for life’ for surviving widow(er)s and civil partners were introduced across all public service pension schemes during the late 1990s – early 2000s, with prospective effect. Existing members of pension schemes who were accruing pensions were usually given the option to remain on former schemes or move across to new schemes.

However, in 2014, the Government made prospective changes to the Armed Forces Pension Scheme (AFPS) and War Pension Scheme (WPS). These stated that any Military Widow(er) who remarried or cohabited from 1 April 2015 onwards would retain their pension for life. This change was welcomed by campaigners, including the War Widows Association (WWA), who recognised at the time that such changes would not be applied retrospectively.

Question to the HM Treasury

To ask the Chancellor of the Exchequer, for what reasons he did not accept the recommendation in Sir Amyas Morse's review for a maximum period for repayment of the loan charge for people on lower incomes of 10 years.

Answer (Jesse Norman)

The Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes. HMRC undertake a variety of activities such as changing promoter behaviour using the Promoters of Tax Avoidance Schemes (POTAS) regime; challenging promoters for failures under the Disclosure of Tax Avoidance Schemes (DOTAS) regime and pursuing criminal investigations and arrests where appropriate.

In December 2019 the Government announced in its response to Sir Amyas Morse’s Independent Loan Charge Review further measures to tackle promoters of avoidance schemes. Further detail on these measures will be set out at the Budget.

At Budget 2016 it was estimated that 50,000 individuals would be affected by the loan charge. As a result of the changes announced by the Government in December 2019, it is estimated that around 11,000 will now be taken out of scope of the loan charge altogether. In addition, individuals who have settled or are settling their tax liability with HMRC will also be out of scope of the charge. There is not yet a firm estimate of the number who will choose to settle and so be out of scope of the loan charge.

The Government accepted all but one of the recommendations of the Independent Review. The recommendation to introduce a write-off of tax due on the loan charge after 10 years of a time to pay arrangement, was not accepted. This would treat tax avoiders more favourably than other individuals with HMRC debts (including tax credit claimants), would reduce taxpayers’ incentive to pay off the debt, and would have unwelcome wider impacts that change how HMRC and those in debt interact.

A copy of the Government response can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/854490/20191219_Government_response.pdf

Question to the HM Treasury

To ask the Chancellor of the Exchequer, what steps he is taking to tackle the ongoing promotion of payroll loan schemes.

Answer (Jesse Norman)

The Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes. HMRC undertake a variety of activities such as changing promoter behaviour using the Promoters of Tax Avoidance Schemes (POTAS) regime; challenging promoters for failures under the Disclosure of Tax Avoidance Schemes (DOTAS) regime and pursuing criminal investigations and arrests where appropriate.

In December 2019 the Government announced in its response to Sir Amyas Morse’s Independent Loan Charge Review further measures to tackle promoters of avoidance schemes. Further detail on these measures will be set out at the Budget.

At Budget 2016 it was estimated that 50,000 individuals would be affected by the loan charge. As a result of the changes announced by the Government in December 2019, it is estimated that around 11,000 will now be taken out of scope of the loan charge altogether. In addition, individuals who have settled or are settling their tax liability with HMRC will also be out of scope of the charge. There is not yet a firm estimate of the number who will choose to settle and so be out of scope of the loan charge.

The Government accepted all but one of the recommendations of the Independent Review. The recommendation to introduce a write-off of tax due on the loan charge after 10 years of a time to pay arrangement, was not accepted. This would treat tax avoiders more favourably than other individuals with HMRC debts (including tax credit claimants), would reduce taxpayers’ incentive to pay off the debt, and would have unwelcome wider impacts that change how HMRC and those in debt interact.

A copy of the Government response can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/854490/20191219_Government_response.pdf

Question to the HM Treasury

To ask the Chancellor of the Exchequer, how many people will be affected by the 2019 Loan Charge after the Government has implemented the recommendations of Sir Amyas Morse's review.

Answer (Jesse Norman)

The Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes. HMRC undertake a variety of activities such as changing promoter behaviour using the Promoters of Tax Avoidance Schemes (POTAS) regime; challenging promoters for failures under the Disclosure of Tax Avoidance Schemes (DOTAS) regime and pursuing criminal investigations and arrests where appropriate.

In December 2019 the Government announced in its response to Sir Amyas Morse’s Independent Loan Charge Review further measures to tackle promoters of avoidance schemes. Further detail on these measures will be set out at the Budget.

At Budget 2016 it was estimated that 50,000 individuals would be affected by the loan charge. As a result of the changes announced by the Government in December 2019, it is estimated that around 11,000 will now be taken out of scope of the loan charge altogether. In addition, individuals who have settled or are settling their tax liability with HMRC will also be out of scope of the charge. There is not yet a firm estimate of the number who will choose to settle and so be out of scope of the loan charge.

The Government accepted all but one of the recommendations of the Independent Review. The recommendation to introduce a write-off of tax due on the loan charge after 10 years of a time to pay arrangement, was not accepted. This would treat tax avoiders more favourably than other individuals with HMRC debts (including tax credit claimants), would reduce taxpayers’ incentive to pay off the debt, and would have unwelcome wider impacts that change how HMRC and those in debt interact.

A copy of the Government response can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/854490/20191219_Government_response.pdf

Question to the HM Treasury

To ask the Chancellor of the Exchequer, what steps he is taking to tackle people who promoted loan charge schemes.

Answer (Jesse Norman)

The Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes. HMRC undertake a variety of activities such as changing promoter behaviour using the Promoters of Tax Avoidance Schemes (POTAS) regime; challenging promoters for failures under the Disclosure of Tax Avoidance Schemes (DOTAS) regime and pursuing criminal investigations and arrests where appropriate.

In December 2019 the Government announced in its response to Sir Amyas Morse’s Independent Loan Charge Review further measures to tackle promoters of avoidance schemes. Further detail on these measures will be set out at the Budget.

At Budget 2016 it was estimated that 50,000 individuals would be affected by the loan charge. As a result of the changes announced by the Government in December 2019, it is estimated that around 11,000 will now be taken out of scope of the loan charge altogether. In addition, individuals who have settled or are settling their tax liability with HMRC will also be out of scope of the charge. There is not yet a firm estimate of the number who will choose to settle and so be out of scope of the loan charge.

The Government accepted all but one of the recommendations of the Independent Review. The recommendation to introduce a write-off of tax due on the loan charge after 10 years of a time to pay arrangement, was not accepted. This would treat tax avoiders more favourably than other individuals with HMRC debts (including tax credit claimants), would reduce taxpayers’ incentive to pay off the debt, and would have unwelcome wider impacts that change how HMRC and those in debt interact.

A copy of the Government response can be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/854490/20191219_Government_response.pdf