Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they have made any recent assessment of the future of digital currencies; and whether they have any plans to trade digital currencies.
Answered by Baroness Penn
Certain cryptoassets, offering new ways to transact and invest, are part of a trend of rapid innovation in financial technology. However, these developments also present new challenges and risks – including risks to consumers and to financial system. The Government established a Cryptoassets Taskforce in 2018, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (FCA).
HM Treasury and UK authorities have taken a series of actions to support innovation while mitigating risks to stability and market integrity. These include launching a new anti-money laundering and counter-terrorist financing regime for cryptoassets in 2020; confirming an intention to legislate to regulate cryptoasset promotions, ensuring they are fair, clear and not misleading; and consulting on a proposal to ensure cryptoassets known as ‘stablecoins’ meet the same high standards expected of other payment methods. The Government will issue a response to this consultation shortly. The Government is carefully considering what, if any, regulation might need to follow as the cryptoasset market grows and evolves in the UK. The Government has adopted a staged and proportionate approach to cryptoassets regulation, which is sensitive to risks posed, and responsive to new developments in the market.
The UK, like many countries globally, is actively exploring the potential role of central bank digital currency (CBDC): an electronic form of central bank money that could be used by households and businesses to make payments. The Government has taken several actions to signal its commitment to leading the global conversation on the opportunities and risks of a potential CBDC, including: the creation of a new Taskforce led by HM Treasury and the Bank of England to lead exploration of a CBDC, with separate forums to engage civil society and technology experts; a public commitment to issue a joint consultation on the use cases for a UK CBDC in 2022, followed by the publication of a technical specification; and, at the international level, using our G7 Presidency last year to develop and agree a set of public policy principles for CBDC, which are intended to support and inform exploration of CBDCs in the G7 and beyond.
The Government and the Bank of England have not yet made a decision on whether to introduce a central bank digital currency in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so.
The Government has not set out any proposals to trade cryptoassets or other digital currencies.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of the amount of duty lost because of the fraudulent use of red diesel in the UK.
Answered by Baroness Penn
As set out in the Hydrocarbon Oils Bulletin published by HMRC, the taxation of 4,710 million litres of gas oil (i.e. red diesel) raised £522 million in 2020-21, and the taxation of 5,065 million litres of red diesel raised £559 million in 2019-20.
The Measuring Tax Gaps 2021 report published by HMRC sets out that the oils tax gap, which includes Great Britain and Northern Ireland diesel, is estimated at 1% (£190 million) in 2019-20, of which £150 million was in duty and a further £40 million in VAT. As set out in the annex of this report, the tax gap is driven by the misuse of rebated fuel, which is subject to a lower duty rate.
The Chancellor confirmed at Spring Budget 2021 that the Government will remove the entitlement to use red diesel from most sectors from April 2022. This will help to ensure fairness between the different users of diesel fuels and that the tax system incentivises the development and adoption of greener alternative technologies.
The reduction in legitimate red diesel usage following these reforms coming into effect is expected to reduce the level of illegitimate use overall, as it will be harder to obtain red diesel for deliberate misuse in road vehicles due to there being less red diesel in circulation.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what is their latest estimate of (1) the amount of red diesel used in the UK, and (2) the duty derived from red diesel.
Answered by Baroness Penn
As set out in the Hydrocarbon Oils Bulletin published by HMRC, the taxation of 4,710 million litres of gas oil (i.e. red diesel) raised £522 million in 2020-21, and the taxation of 5,065 million litres of red diesel raised £559 million in 2019-20.
The Measuring Tax Gaps 2021 report published by HMRC sets out that the oils tax gap, which includes Great Britain and Northern Ireland diesel, is estimated at 1% (£190 million) in 2019-20, of which £150 million was in duty and a further £40 million in VAT. As set out in the annex of this report, the tax gap is driven by the misuse of rebated fuel, which is subject to a lower duty rate.
The Chancellor confirmed at Spring Budget 2021 that the Government will remove the entitlement to use red diesel from most sectors from April 2022. This will help to ensure fairness between the different users of diesel fuels and that the tax system incentivises the development and adoption of greener alternative technologies.
The reduction in legitimate red diesel usage following these reforms coming into effect is expected to reduce the level of illegitimate use overall, as it will be harder to obtain red diesel for deliberate misuse in road vehicles due to there being less red diesel in circulation.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the level of household debt in England.
Answered by Lord Agnew of Oulton
The Government regularly monitors personal debt levels by working closely with the Money and Pensions Service (MaPS) and the Financial Conduct Authority (FCA). The Government also engages regularly with a range of stakeholders in the debt advice sector on their research and findings.
The FCA conducts a biennial Financial Lives Survey which provides a comprehensive insight into the finances of the UK population. The latest findings from the survey were published in February 2021, which also analysed the impact of the pandemic on people’s finances. The results showed that between March and October 2020, the number of people with low financial resilience increased by 3.5 million, from 10.7 million to 14.2 million.
MaPS monitors financial difficulty through their research, in particular the Debt Need Survey. MaPS will publish the results of their 2021 Debt Need Survey early this calendar year, which will include a regional breakdown of their new Need for Debt Advice measure.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many retail businesses that have traded throughout the COVID-19 pandemic have offered to repay any business rates relief they have received.
Answered by Lord Agnew of Oulton
Several businesses have publicly announced their intention to return their business rates relief or otherwise entered discussions with the Government on this issue. The Government has been clear throughout the pandemic that businesses should use support appropriately, and it welcomes any decision to repay support where it is no longer needed. Any funds returned will support the continuing efforts to protect people’s jobs and incomes.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of calls for debt relief from emerging economies to help manage (1) the healthcare, and (2) the economic, consequences of the COVID-19 pandemic.
Answered by Lord Agnew of Oulton
The Government is concerned with the rising debt vulnerabilities in low-income and emerging economies. In April 2020, G20 Finance Ministers agreed to pause debt repayments from the most vulnerable countries in 2020. On 14 October, the Chancellor met with his G20 counterparts where they agreed an extension of this initiative by 6 months, with the possibility of a further six month extension to be reviewed in 2021. The G20 focused on these countries as they are particularly vulnerable to the economic pressures of the pandemic.
On 14 October, G20 Finance Ministers also agreed, in principle, to a “Common Framework for Future Debt Treatments beyond the DSSI”. This historic achievement marks the first time creditors from the G20 and Paris Club of official creditors have agreed to participate in coordinated debt restructurings. The Common Framework will initially apply to countries eligible for the DSSI. The UK will continue to push for strengthened coordination on emerging economy debt issues.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what estimate they have made of (1) the number, and (2) the total cost, of fraudulent claims that have been made to the Job Support Scheme.
Answered by Lord Agnew of Oulton
The Job Support Scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to COVID-19, to help keep their employees attached to the workforce. This scheme will open on 1 November 2020 and will run for six months. The scheme will build on other support schemes announced by the Chancellor and administered by HM Revenue & Customs.
As the scheme is yet to open there is no information held on the number or cost of fraudulent claims made under the scheme. In line with the other payment-out regimes they administer, HMRC will, when the scheme opens, undertake pre-payment authentication and risking to identify and block fraudulent claims. HMRC will also carry out proportionate risk-based, post-payment compliance checks to test the veracity of claims made using the normal compliance tools available.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the support (1) banks, and (2) other financial institutions, are providing to businesses trading in the UK during the COVID-19 pandemic.
Answered by Lord Agnew of Oulton
To support businesses and relieve pressure on their finances and cashflow, the government launched three loan guarantee schemes to give banks and other lenders the confidence they need to lend to businesses: the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), and Bounce Back Loan Scheme (BBLS). As of 20 September, over £57bn has been approved under the three schemes. On the 24th September, the Chancellor announced an extension to the deadline for new loan applications for CBILS, CLBILS, BBLS and the Future Fund to 30 November.
The Government also recognise the vital role that non-banks and challenger banks play in the provision of credit to SMEs. We are grateful for the way the sector has responded to the current crisis, and we remain committed to promoting competition and widening the funding options available to UK businesses.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the likelihood of negative interest rates being introduced in the current financial year.
Answered by Lord Agnew of Oulton
Monetary policy, including decisions on Bank Rate, is the responsibility of the independent Monetary Policy Committee (MPC) of the Bank of England. Therefore, the Government does not comment on the conduct of monetary policy.
As noted in the minutes published on 17 September, the MPC will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how many financial institutions in the UK have been subject to fines for misconduct in each year since 2000; and what was the total amount of fines paid by them.
Answered by Lord Agnew of Oulton
Information on the FCA’s enforcement powers and its policy on financial penalties is set out in detail in the enforcement section of their website, and in their Handbook.
We have passed Baroness Kennedy’s questions on to the FCA, who will reply directly to her by letter. A copy of the letter will be placed in the Library of the House.