Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what representations they have received from industry and consumer groups to end or suspend VAT on fuel bills; and what steps they intend to take on this matter.
Answered by Viscount Younger of Leckie - Shadow Minister (Work and Pensions)
In recognition of the fact that families should not have to bear all the VAT costs they incur to meet their needs, domestic fuels such as gas and electricity are already subject to the reduced rate of 5 per cent of VAT. The Government keeps all taxes under review but going further would impose significant additional pressure on the public finances, to which VAT makes a significant contribution.
The Government has introduced a raft of measures to support vulnerable households with the cost of energy, including increasing the Warm Home Discount, Winter Fuel Payments, and Cold Weather Payments. This is alongside introducing the £500 million Household Support Fund and giving working families on Universal Credit an average of £1,000 more per year.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government when they intend to begin the consultation on the regulation of buy-now-pay-later services, announced following the Woolard Review – A review of change and innovation in the unsecured credit market, published on 2 February.
Answered by Lord Agnew of Oulton
On 2 February, the Government announced its intention to regulate Buy-Now-Pay-Later products. On 17 March, the Government tabled an amendment to the Financial Services Bill (now Act) to allow the Government to bring Buy-Now-Pay-Later products into the scope of FCA regulation in a proportionate way. The Government is now working to publish a consultation document soon.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the Financial Conduct Authority's finding on 10 August that a pensions adviser was “seriously incompetent” in his work providing advice to 183 members of the British Steel Pension Scheme, what plans they have to set up an industry-wide redress scheme for steelworkers given poor pension transfer advice.
Answered by Lord Agnew of Oulton
This is an operational matter for the Financial Conduct Authority (FCA), who are operationally independent from Government.
The question has been passed on to the FCA who will reply directly to the Noble Lord by letter. A copy of the letter will be placed in the Library of the House.Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the level of personal debt of (1) entrepreneurs, and (2) company directors of small businesses, who have not been eligible for assistance through the Coronavirus Job Retention Scheme; and what assessment they have made of the proportion of such debt which has been used to keep businesses afloat.
Answered by Lord Agnew of Oulton
The Coronavirus Job Retention Scheme (CJRS) has helped to pay the wages of people in 11.5 million jobs across the country, and the Self-Employment Income Support Scheme (SEISS) has paid out £24.5 billion in grants to 2.8 million self-employed individuals.
Both of these schemes were designed with two principles in mind. First, the need to target support at those who need it most. Second, the need to protect money against error, fraud and abuse, whilst reaching as many people as possible. The Government recognises that some of the eligibility criteria and conditions needed to ensure that the CJRS or SEISS work for the vast majority of people have meant that some may not qualify for them.
Those ineligible for the SEISS or CJRS may still be eligible for other elements of the unprecedented financial support available, such as tax deferrals and billions in loans and business grants.
The Government loan guarantee schemes (including the Bounce Back Loan Scheme (BBLS)) have provided unprecedented support to businesses, with over 1.5 million loans worth over £75bn. Under BBLS no repayments are due from the borrower for the first 12 months of the loan, giving businesses the breathing space they need during this difficult time. In addition, the Government covers the first 12 months of interest payments charged to the business by the lender.
To give businesses further support and flexibility in making their BBLS repayments, the Government has implemented the “Pay as You Grow” (PAYG) options. PAYG will give businesses the option to repay their BBLS facility over ten years. The Government has also made the full repayment holiday available to borrowers from the first repayment. Together, the 12-month payment holiday and interest-free period for borrowers, along with the PAYG options, provide a generous support package giving businesses the time to get back on their feet. Businesses concerned about repayment should contact their lender to discuss the options available to them.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government when they expect to publish the results of their fundamental review of business rates; and when they expect that proposals for reform resulting from that review will be available for parliamentary scrutiny.
Answered by Lord Agnew of Oulton
As set out in the Government’s Interim Report, published in March 2021, the final report of the Fundamental Review will be published by Autumn 2021.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to divide Her Majesty’s Treasury into (1) a department for economic and industrial policy, and (2) a ministry of finance; and if they have no such plans, whether they have any plans to change the structure of Her Majesty's Treasury.
Answered by Lord Agnew of Oulton
There are no plans to divide the Treasury. The only significant structural change planned, as announced at the Budget, is the establishment of an economic campus in Darlington. The campus is expected to include at least 750 roles from across the Treasury, the Department for International Trade, the Department for Business, Energy and Industrial Strategy, the Ministry of Housing, Communities and Local Government and the Office for National Statistics.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact on carbon emissions of charging VAT on the repair and maintenance of residential properties; and what plans they have to ensure that the VAT treatment of (1) constructing new build, and (2) repairing and maintaining existing, residential property is aligned.
Answered by Lord Agnew of Oulton
The Government currently maintains a zero-rate of VAT on the construction of new build residential properties. This is to provide a lower burden of tax for purchasers of new homes. The supply of existing homes is exempt from VAT for the same reason. Renovation and conversion costs are also eligible for a reduced rate of VAT, providing conditions are met.
While all taxes are kept under review, the Government has no plans to review the VAT treatment of housebuilding and repair at this time.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the remarks by the Financial Secretary to the Treasury on 25 January that "I and my officials do not believe that [the directors income support scheme] as framed overcomes the fundamental issues of protecting taxpayers’ money and safeguarding it against fraud and abuse" (HC Deb, col 137), which aspects of the proposal for a directors income support scheme by the Federation of Small Businesses do not (1) protect taxpayers' money, and (2) safeguard against fraud and abuse.
Answered by Lord Agnew of Oulton
The Directors Income Support Scheme, as currently framed, is intrinsically reliant on self-certification. As the Government cannot readily verify this information, an effect of this reliance on self-certification is to open the scheme up to an unacceptable level of fraud by organised criminal groups and others who would seek to exploit these schemes. The Government cannot expose the tax system to these risks, but continues to engage with the FSB regarding these concerns.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of (1) the benefit to the UK economy of tax-free shopping being available to non-EU visitors, and (2) the impact of ending participation in (a) the VAT Retail Export Scheme, and (b) air-side tax free concessions, on (i) the number of tourist visits to the UK, (ii) the total shopping spend of tourists visiting the UK, and (iii) the viability of the UK retail sector.
Answered by Lord Agnew of Oulton
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact of the ending of air-side tax free concessions on (1) jobs, and (2) public finances; and what action they plan to take to offset any such impact.
Answered by Lord Agnew of Oulton
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.