Taxation: Capital Gains Tax
Baroness Kramer Excerpts(10 years, 8 months ago)
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Lord Bridges of Headley
My Lords, as your Lordships will know, during the last Parliament this Government took a number of steps to tackle avoidance and evasion. Indeed, they were relentless in their crackdown on tax avoidance. HMRC will have secured £100 billion in compliance yield. This includes more than £31 billion from big business and £1.2 billion extra from the UK’s richest people.
Baroness Kramer (LD)
May I press the Minister? If the Government are seeking to provide support to working people, will it not be appropriate to begin to align capital gains tax rates with income tax rates, especially for these large, short-term capital gains?
Lord Bridges of Headley
The noble Baroness makes an interesting point. As noble Lords know, this Government are intent on helping working people. Last year, we cut income tax for more than 26 million people, took more than 3 million out of income tax altogether and created more than 1,000 jobs every single day. This Government intend to do better still.
Algorithmic Trading
Baroness Kramer Excerpts(10 years, 8 months ago)
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Lord Bridges of Headley
As so often, the noble Lord speaks with a great amount of insight and experience, I am sure, on this matter.
Baroness Kramer (LD)
I wonder if the Minister could answer the question from the noble Baroness, Lady Wheatcroft, on the impact on small investors. Would he not agree that ever higher speed high-frequency trading, together with dark pools, has in effect rigged the trade in financial instruments against small investors?
Lord Bridges of Headley
I reiterate that the PRA, and Andrew Bailey in a speech last month, drew attention to a lot of these issues. I hope the noble Baroness takes some consolation from that and from what I said about the FCA. On smaller investors, as I said, the Government are looking at this issue. I draw attention to the Foresight report which said,
“transaction costs have fallen for both retail and institutional traders”.
We therefore need to look at this in a balanced and proportionate way.
Charities (Protection and Social Investment) Bill [HL]
Baroness Kramer Excerpts(10 years, 9 months ago)
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Baroness Kramer (LD)
My Lords, I declare an interest as a trustee of two small local charities.
I want to address just two issues, neither of which has been raised so far in this very excellent debate. The first is the power introduced by the Bill for charities to make social investments. The noble Lord, Lord Hodgson of Astley Abbotts, has led the charge on this issue incredibly effectively, and I completely support the proposals that the Bill encompasses.
However, I want to talk about the other side of the coin: the power or capacity, particularly of small charities, to issue those social investments—specifically, for example, social impact bonds. The noble Lord, Lord Hodgson, talked about this, as did I, in the debates on the then Financial Services Bill. We thought that we were getting a response from the Government but in the end it went nowhere, and I hope that this Bill provides an opportunity to retrieve that situation.
A charity may wish to issue social investment bonds because, for example, it has been successful in achieving a contract with a local authority for a payments-by-results project, perhaps working with disadvantaged youngsters to keep them on the straight and narrow, rehabilitating prisoners or all kinds of other important areas. I say to the noble Lord, Lord Borwick, that a charity will have typically won the contract because it will have come forward with innovative ideas on how to tackle the problem in a way that government institutions have historically failed to do. So let us not denigrate the work that is done under contract; it is very important.
If a small charity succeeds in winning a contract, it now has to fund the project, and the obvious direction is a social impact bond. However, under Section 21 of FiSMA 2000 and the financial promotions order that sits underneath it, in order to go to ordinary people and ask them to purchase one of those bonds—perhaps for £100, £200 or whatever—it has to meet the demands on any publicly marketed investment, including a full prospectus under the Companies Act. The estimate is that, on the cheap side, an organisation might be able to achieve that for, say, £150,000. I believe that the noble Lord, Lord Hodgson, thinks that to achieve that benchmark the figure is closer to £500,000. However, it is obviously a ridiculous and completely impossible amount for any small charity that engages in a relatively small project.
We are left with the ridiculous situation that members of the charity—one of whom might be one of your Lordships—could go to members of the community who are excited by the project, who know a lot about it and who think that it is really worth while and say, “Would you make a donation?”. That would be entirely legitimate. If they were to say, “Would you give me some money? In fact I might return it to you. It’s not guaranteed but I might be able to give it back to you when I get my payment through payment by results, and indeed give you a little financial interest on top of it”, that, I am afraid, would be an imprisonable offence. It is an absolutely insane situation which needs to be tackled.
When we went through the Financial Services Bill, the Treasury Minister, the noble Lord, Lord Sassoon, made it quite clear that he understood the problem but, for lack of time and focus in a very complex Bill and at a time when, frankly, financial services were under very broad scrutiny because of so many abuses, the Government were not able to give the time and attention to come forward with a solution. The noble Lord, Lord Hodgson, suggested that there would be a way of introducing a new section under FiSMA that, for example, allowed people to self-certify as a sophisticated social investor without the need for this complicated and expensive process. That could be added to, for example, a materiality benchmark so that an individual could not invest more than £200. Various kinds of packages could be put together to make that possible.
This truly is important for small charities. The majority of donations in this country are, frankly, hoovered up by the big boys and the little charities struggle in every way to access finance, no matter how worthy their causes. It is often their very local communities that understand the good work and the specific projects that they do. Therefore, there is an enormous argument for using this Bill to deal with what I think everyone recognises as an unfortunate and unintended problem.
Perhaps I may raise one more issue, which goes into the area of abuse. My 95 year-old godmother, like many people of her generation, has always been very generous to charities. One can imagine that her daily post includes numerous letters from every charity under the sun requesting money. She can deal with that but there is one form of request that is exceptionally stressful, and that is the request that comes with unsolicited goods in it. I name the British Red Cross as being particularly culpable in this area, sending coasters, bookmarks and cards of every kind. My godmother feels too guilty to put those items in the bin but she also feels that if she uses them she must make a payment, and surely she is not alone in that.
Personally, I make many fewer donations to the British Red Cross because I despise this form of solicitation, and I am also very concerned that a significant proportion of anything that I give is used to send these kinds of items out to thousands of other people on an unsolicited basis. However, it is also a form of pressure. I hope very much that the measures considered in this Bill will at least allow people to disengage from receiving these solicitations or from having their money spent on providing such items for other people. It is a subtle form of pressure that I think, frankly, ought to be beneath any good charity.
Deregulation Bill
Baroness Kramer Excerpts(11 years, 5 months ago)
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Baroness Kramer
Baroness Thornton
My Lords, I understand that the Minister has something new for the Committee, which it may be better to hear before we proceed any further.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, as you will know, the Government introduced three measures into the Bill earlier this year relating to the regulation of taxis and private hire vehicles. Although an extensive review of the legislation has been carried out by the Law Commission and its recommendations are being considered, the Government decided that three measures could be taken forward separately to help reduce burdens on businesses more quickly. This clause is one of those.
Its purpose was to allow the use of private hire vehicles for leisure purposes. Noble Lords will be aware that, outside London, a person who is licensed as a private hire vehicle driver cannot use the family car and therefore has to purchase a second car. At £20,000 or £30,000, or the lease equivalent, that is a barrier which denies people employment. It is an issue that we need to address at some point. It also means in particular that in a number of rural areas there is, frankly, a shortage of private hire cars and taxi services. Bringing in more of those vehicles and their services for local people could be helped by removing this barrier.
However, after the Government listened closely to issues raised about the way in which we have presented this clause, we have decided that listening, as we always do, is important, and concluded that although we can still see arguments for tackling this underlying problem—I think that there is general agreement on that—it would be better done as part of the package of measures recommended by the Law Commission in a broader reform of taxi and private hire vehicle licensing than through this clause.
It is therefore my intent—although I am not sure how the procedure works—to withdraw this clause, and I am delighted to have the opportunity to do so.
Viscount Ridley (Con)
My Lords, I apologise to the Committee for not being present at Second Reading, but perhaps I may be allowed to comment on Clause 12, which I believe is a fair and reasonable measure that will bring improvements for customers.
At the moment it is only outside London that a private hire operator cannot subcontract a booking in a different district. Is there something peculiarly wicked about provincial private hire firms that does not apply in London? A London-based private hire firm can subcontract, as can a foreign unlicensed company, and this gives it a huge advantage. It puts private hire firms outside London at an iniquitous disadvantage, but it also leads to perverse, inconvenient and even unsafe consequences for customers. I shall give your Lordships a real example.
There is a private hire firm in Birmingham that has a contract to transport any staff with minor injuries from Jaguar Land Rover’s plants to hospital. As the firm cannot subcontract a booking to an operator in another district, if the injury occurs in the Wolverhampton plant, the car does a 55-mile return journey to take the person to a hospital 2.6 miles from the plant. For most of that round trip the car is empty. Jaguar Land Rover wants to deal with a single operator, but this is the result.
Another real example is of a private hire operator in Derby asked by a customer to collect an important client in another district. It must refuse the job, and refuse to arrange it with another firm in that district. The firm appears unhelpful to its customer. I have a third real example. A private hire firm in north Tyneside has a member of staff with a terminal illness. He would like to continue working, but from home. Since he lives just outside the north Tyneside border, that is illegal. I have another example. People often hire private minibuses to do long journeys for groups of up to six or eight people—to an airport, for example. That vehicle must return empty. If it breaks down en route, the operator is breaking the law if he asks another firm in the district where the breakdown happens to take the customer on. This measure would reduce congestion, pollution and noise a little, too.
Please note that the beneficiaries of this change in the law would include people with disabilities. That is because a wheelchair-enabled vehicle that has taken a customer from his home in district A to a hospital in district B would now be able to collect a different customer at the hospital and take him back to district A. As far as I can tell from Hansard, when exactly these measures were discussed and passed in this House in 1998 for London, one organisation that was widely praised in the debate for its support of the measures was the Suzy Lamplugh Trust. It therefore surprised me to hear today that it is against this measure. If this rule is good for London, it is surely good enough for the rest of the country. Can it be that London-based private hire firms are worried about competition from firms based outside London? This is an excellent and sensible measure that has benefits for customers.
Baroness Kramer
My Lords, Clauses 11 and 12 cover separate, different but sensible measures. Obviously, a thought for safety penetrates all of our thinking as we address this range of issues.
To pick up on the issue raised by my noble friend Lord Bradshaw and explained by others, particularly my noble friend Lord Greaves, the amendments do not in any way change the rules on vehicle licences. Those are tough and carried out by local authorities and there is absolutely no change. If my noble friend Lord Bradshaw knows a firm that thinks it can run a £200 car for successful private hire and meet the standards, I suggest that he call the local authority. It would be extremely difficult for a car that has that kind of market value to achieve the standards that are rightly required by local authorities in licensing those vehicles.
Clause 11 aims to reduce the administrative and financial burdens on some taxi and private hire drivers. The measures we have included in the Bill, which I will address in relation to Clause 12, will also help to improve the experience of booking taxis and private hire vehicles. I join with others in saying that in making his case my noble friend Lord Greaves prayed in aid London. Both the measures in Clause 11 and Clause 12 are already the status in London. Indeed, when we turn to London as the example that we are trying to copy, that is exactly what Clauses 11 and 12 do. It means that we have a good history of the way in which Clauses 11 and 12 function.
Clause 11 will standardise at three years the duration of both taxi and private hire vehicle driver licences; and at five years the licence for a private hire vehicle operator. Shorter periods would be permitted only where there are specific circumstances around a particular application. For example, a local authority might decide that a probationary period was necessary. Typically the duration would be three years for the vehicle driver licence and five years for the operator licence. Frankly, it means that those people will not have to renew their licences as frequently as they do in some areas.
The Department for Transport carries out a biennial survey of licensing authorities. Our 2013 survey showed that nearly half of licensing authorities grant taxi and private hire driver licences for three years, so this is not a sudden revolution. A number of local authorities use a shorter term but we can see by comparing safety records that there is nothing to suggest that those local authorities that grant their licences at three years have an inferior record. That is important to note. When it comes to the operator licences, a number of licensing authorities routinely grant private hire operator licences for five years although the substantial majority do less than five years. Again, there is nothing to suggest that there is a difference in safety between one authority and another on the basis of those differences in licensing terms.
The Government therefore consider that this is an area of taxi regulation that would benefit from deregulation. By setting a standard duration of three years for taxi and private hire vehicle driver licences and five years for private hire vehicle operator licences life will be made a lot simpler and substantially cheaper for licence holders. We estimate that the measure will save drivers around £8 million per year and operators around £1 million per year. People who are in this trade are not wealthy people. They find it tough to make a living and any little help we can offer is valid when it is not putting safety at risk.
I appreciate that some stakeholders have expressed concern about safety implications. There may be a slight misconception. It is now the case that many licensing authorities that grant annual licences actually carry out criminal record checks only every three years. Although the licence is annual, the criminal records checks—the issue that has noble Lords exercised—are typically a three-year process. Of course, we are now saying that the standard for criminal records checks will be three years. That would be a relatively small change for most authorities. They will continue to do those formal checks. As I said, we have examples in London and in the many local authorities that already use that three-year cycle that it is not associated with additional risk.
Clause 12 will allow private hire vehicle operators to subcontract bookings across licensing boundaries. Again, this is a capacity that has been available continuously for London. The noble Viscount, Lord Ridley, made the case extremely well and illustrated the many situations in which this is an extremely important measure and the extent to which car hire companies outside London are put at a disadvantage compared with London operators. One of the main motivators behind this measure is that it is so difficult when people call a taxi firm that cannot provide a taxi and are then turned away. I have a relevant personal experience, which could have turned out to be extremely difficult. I was in Gloucestershire and going to visit an elderly friend in a nursing home. I got to the station and there was no one around. I looked at the board and started calling taxi firms and car hire firms and not one could supply a car. They explained to me that they could not call someone else because they would have to call out of the area and they could not do that. In such cases one would hope to have a mobile phone that is smart-enabled to get on to the web to try to find other firms in the area to call. I was glad that I was not a mother with three children, that it was not getting dark and that it was not raining. It seems unreasonable not to allow the taxi firm to subcontract in order to be able to meet the booking.
We are often concerned about young people out late at night who try to find a taxi to take them home safely. In that situation, we do not want them having to track down one company after another. They should be able to call an operator who they have confidence in who can find them a taxi, even if it is subcontracted from out of area. You can already subcontract in area, and I should make that clear to those people who may have used subcontracted taxis or private hire vehicles and were not aware of it.
The noble Lord, Lord Greaves, said that he was concerned about disabled people. Surely that is the group which has the most to benefit from this change. Most car hire companies have a limited number of wheelchair-accessible vehicles and there may be circumstances where a disabled person needs to travel in a particular kind of vehicle. It is all very well to say that disabled people need to make advance bookings, but I want people with disabilities to be able to live their lives as freely as the rest of us can and not always have to think about things in advance—or, frankly, have to do without. We have a mechanism here which gives an operator the scope to reach out of area and subcontract to someone else who has a wheelchair-accessible vehicle to meet a need. That is exceedingly beneficial.
I want to make it clear that the initial operator who takes a call and makes a booking remains liable to the passenger who made the booking. He is the person with whom the contract has been established. If someone chooses to call a particular operator, that operator retains the liability for the subcontractor, so the terms and conditions, the recording of the booking and the fare, if it has been agreed, all remain with the operator who the customer has contacted.
Baroness Thornton
I should like to ask the noble Baroness two questions. First, has she taken into account the fact that enforcement works differently in London, with TfL working in conjunction with the police on street enforcement, yet there is still a huge problem of sexual assault involving licensed minicab drivers? Secondly, how many disabled groups has she consulted about this deregulation and can she tell us what they had to say about it?
Baroness Kramer
I personally have engaged more with disabled individuals rather than with groups, which were approached by the Law Commission as part of the consultation. But the Committee will understand the reality of what I have just described. Many Members of the Committee will have friends with disabilities or indeed may themselves have them, and they will recognise what I have just described. It is for the Committee to make its decision, but I think that noble Lords will recognise the particular set of problems and will empathise with those who have a disability.
Enforcement against an operator continues to be the responsibility of the local authority which licensed that operator. Where there is an issue of enforcement against a driver, again it is for the local authority which licensed that driver to enforce. However, to make life easier and help things to work more smoothly, in some places around the country local authorities have concordats between each other so that they can delegate enforcement powers and thus make the process more simple and straightforward. Liverpool and South Bucks already do this, and I would think that it is a logical direction for many local authorities to go, not because enforcement is difficult but because it is even easier if ongoing relationships with neighbouring areas where subcontracting may take place are developed. We already have vehicles from out of area coming into area. When you order your private hire vehicle, you may be sending it out of area, so cross-boundary issues arise on a regular basis even as it is. As I say, some areas have decided that the sensible way to deal with this issue is to work together with a concordat between them.
The noble Lord, Lord Greaves, raised one issue which I thought was interesting and is one that I will take away and think about, and that is the issue of disclosure; that is, where an operator looks at the cars he has available, cannot find a vehicle available in his own company, and therefore looks elsewhere. That is something I will take a look at. However, I want to make it clear that there are real anomalies which we have to deal with. At the moment we have a silly situation in some parts of the country where related companies cannot subcontract to each other. Although they may be part of the same company, one branch will be licensed in one area and the other in another area. That, quite frankly, is one of the silly anomalies that we want to get rid of. Also, because the company you call and the individual you call is liable throughout, in order to uphold its reputation the company will make sure that the people it subcontracts to meet its own standards and are reputable. We have just heard today that very many people will turn to a company which they consider to be reputable. The notion that such a company would subcontract to drivers who let the company down, drive customers away and ruin its reputation is, I suggest, reasonably far-fetched. Under all circumstances, the driver to whom the business has been subcontracted has to meet licensing standards, and that is something we should not forget.
These are, frankly, two relatively small measures. The subcontracting issue is particularly helpful for someone with a disability who needs to call for a vehicle when many of a company’s cars within the area are already taken. We have to take that seriously. I go back to the issue on licensing. The three-year period is a reasonable standard that is used by many local authorities. It delivers the same level of safety that we see in other local authorities so why not relieve of an extra burden those who function at the margin in terms of income, if there is no safety price to pay?