Taxation (Post-transition Period) Bill

Debate between Anneliese Dodds and Alison Thewliss

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Anneliese Dodds]

With enormous respect to the Minister, the problem with his Government’s approach is the fact that they do not indicate what they have got with that spending. As I said, £4.4 billion has been spent on preparedness for Brexit and for the end of the transition period, and the £80 million that he refers to, but there is no indication from the Government of how many additional customs officers we have received as a result of that spending. I hoped that he was intervening on me to provide an indication of the additional workforce that has been recruited. It is a matter of regret that he was unable to do so.

[Alison Thewliss (Glasgow Central) (SNP)]

The hon. Lady is quite rightly querying how money has been spent. I do not know whether she has had letters from the Government asking MPs, as small businesses, to get ready for Brexit. I got two of them, including one that referred to me as an MSP, so perhaps the Government are not spending their money particularly wisely or accurately.

[Anneliese Dodds]

I am grateful to the hon. Member for that very relevant point. I am sure that it is not only Opposition Members but Government Members who have had many businesses contacting them, often in despair, about the communications and advertisements asking them to get ready when there is so little indication of what they have to get ready for.

Yesterday morning, the Business, Energy and Industrial Strategy Committee heard from the Food and Drink Federation, which said that the guidance being published now was already too late. Some 43% of its members who supply Northern Ireland have said that they will not do so in the first three months of next year. That is desperately worrying. TheCityUK said that in the worst-case scenario, 40% of the UK’s EU-related financial activity could be lost. Every day between now and the end of the year counts to get a deal, and failing that, to plan for the no-deal outcome that the Prime Minister himself conceded would represent a failure of statecraft.

With that in mind, Labour supports this Bill passing. Labour is a responsible Opposition, and we are determined to see the minimum disruption possible, but we cannot support such continued lack of clarity on critical issues. When businesses need clarity as a matter of urgency, it is not good enough to state that further guidance will be forthcoming. At the very least, they need a timetable for the provision of that greater certainty. They need to know what rules of origin will apply from 1 January. The continued lack of clarity could create unprecedented new costs. They need to know when appropriate tariff codes will be published. They need to know whether the Government will be providing easements, and they need to know these things in concrete terms, not through the winks and nudges that have substituted for clarity so far.

Businesses need to know whether there will be a pause in penalties arising out of this legislation and, if so, what would be done to counterbalance that and prevent wilful avoidance. They need to know whether the measures in the Bill countermand the existing guidance provided to Northern Irish businesses, some of which was updated just on 7 December. They need to know, as revealed in The Irish Times, whether and when the information on the trusted trader scheme for Northern Irish business—details of which have allegedly been coming out of internal communications —is going to be fully published, so that businesses can follow that scheme.

I want to end my contribution by asking the Minister to place himself in the shoes of a small manufacturing company. We have many excellent such companies across the United Kingdom—in Northern Ireland and in Great Britain. Companies will already have faced enormous challenges during this period because of covid. Potentially, they have staff off because they have to self-isolate. Potentially, there is continuing uncertainty about the future of furlough because of this Government’s unwillingness to provide that certainty. Potentially, they were counting on the job retention bonus, but they are not going to receive it. They are now trying to plan which members of staff they will need to have in the company at work to get ready for 1 January. The stress and strain are immense.

The Minister and his Government must do all they can to overcome those uncertainties and help businesses to plan. That is the least they can do for businesses and the people who work for them, who have had such a hard year.

Financial Services (Implementation of Legislation) Bill [ Lords ] (First sitting)

Debate between Anneliese Dodds and Alison Thewliss

Tuesday 26th February 2019 Public Bill Committees

[Alison Thewliss]

Again, amendment 5 seeks to limit some of the sweeping Henry VIII powers that the Government are taking under this Bill, as they did with the European Union (Withdrawal) Act 2018. We seek to disapply sections 8(5) and 8(7) of the withdrawal Act, which allow regulations to do anything, with some exceptions, that can be done by an Act of Parliament. We would very much like to see the Government bringing back some proper, primary legislation as part of a wider strategy on financial services, rather than putting all these out in the way that they are. As I have argued at different stages—and I do not seek to repeat all the arguments here—the Government are giving themselves a huge amount of power under this Bill. We would like to pull that back somewhat, which is what this amendment seeks to do.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I rise to speak in support of amendment 14. It is a pleasure to serve under your chairmanship, Sir Edward, and to follow the hon. Member for Glasgow Central. I very much agree with the sentiments she has expressed. Labour’s amendment 14 is similar in intent to the SNP’s amendment 5, albeit that it would achieve its outcome through a different route; but we will support the SNP’s amendment if it is pushed to a vote, as well as our own.

As members of this Committee will be aware, we have consistently expressed our concerns about the proliferation of Henry VIII powers created through secondary legislation during the process of preparations for no deal. Indeed, that was one of many reasons why we voted against this Bill on Second Reading. The transposition of EU regulations, as mentioned by my hon. Friend the Member for Stalybridge and Hyde, is not an apolitical technical process, necessarily.

During the process of debating the different no-deal SIs that have already been passed through the House, there has been contention on a wide range of issues, including the resourcing and capacity of our regulators to carry out the tasks that heretofore have been carried out by EU bodies; the regulators’ capacity and accountability when levying fines as provided via the new legislation; the ability of Government to alter criminal convictions, which has been provided by part of this process; the setting of thresholds at UK level that previously were set at EU level involving complex sets of calculations; the discretion provided to regulators to apply or disapply EU-level decisions, with reference not to onshored EU legislation but instead to the objectives of those regulators; and many more. We have talked about all of those within the Delegated Legislation Committees and they are significant. It is our contention that they should not have been dealt with through secondary legislation.

--- Later in debate ---

[Alison Thewliss]

The amendment would require the Government to prepare a report outlining the impact of any regulatory divergence from the EU as its regulations under this Bill are introduced. It has been accepted that the majority of this Bill’s impact will only be known after the Brexit date of 29 March, if indeed that is still the date. I have not checked my phone; who knows what has happened in the interim? All kinds of things may happen while we are in this room. Who knows?

The Minister spoke earlier about some of the in-flight legislation not being suitable or appropriate, because the UK will no longer be part of the process of making that legislation. He accepts that this is putting a lot of power in the Government’s hands in deciding what fits and does not fit, what we need to take on, and what we do not need to take on. The appropriateness of whether it will have significance to different industries, and whether we think they are appropriate, is all in the Government’s hands.

As the hon. Member for Oxford East has often said on this, it really does amount to a political decision. It is a political choice to decide which of those things are appropriate to different financial services organisations. The amendment would give a bit more clarity on the impact assessment of those decisions—political choices—that the Government intend to make. If we are going to diverge, that has an impact on how we are then able to conduct business with the EU. We need to have a better understanding, for each of those regulations, of how that will have an impact, financial and otherwise. We need a bit more clarity on what that impact will be.

This amendment gives us more opportunity to do that—to hold the Government to account on a continuing basis, and to make sure that we have a full understanding as a parliament on what the impact of the Government’s political decisions will be.

[Anneliese Dodds]

I rise to support the Opposition’s new clause 2, which is similar in intent to the SNP’s amendment 10. I would like to associate myself with many of the comments by the hon. Member for Glasgow Central. It is a pleasure to follow her in this debate. Labour’s new clause 2 is broader in scope than amendment 10, but it pushes in the same direction.

Our new clause would require the Treasury, prior to making any regulations under this Bill, to publish a report on the impact of the provisions of those regulations. In particular, we specify that the report should cover the following aspects: first, the impact of the provisions on households at different levels of income; secondly, the impact of provisions on people with protected characteristics as defined in the Equality Act 2010, with which I am sure we are all familiar; thirdly, the impact of the provisions on the Treasury’s compliance with the public sector equality duty with which I am sure, again, Members are familiar; and finally, the impact of the provisions on equality in different parts of the UK and different regions of England. The new clause underlines the pressing need for a greater understanding of the impact of legislation such as this on the real economy and on the people who work within it and are impacted by it.

Throughout this process, the Opposition have been concerned about the lack of impact assessments being provided for different pieces of legislation, yet even when they have been provided to us, they have often been highly restricted in scope as well as often arriving late in the day. Often, the main element receiving consideration within the impact assessments has been the familiarisation costs to business of the different measures. That has rightly been criticised by my hon. Friend the Member for Wallasey (Ms Eagle), and indeed last night by the Chair of the Treasury Committee. They both pointed out that the formula for calculating even familiarisation costs is highly mechanistic, relying solely on an assessment of the time spent reading each word of the new regulations, rather than a proper consideration of the level of impact of new regulations on different business practices, for example. Indeed, the Chair of the Treasury Committee has suggested that a better approach might be to ask firms for an assessment of what their adjustment costs will be, then produce a proxy based on that assessment. That could be a sensible way forward. I appreciate that the formula is currently set across Government, rather than just by the Treasury, but surely the area needs to be considered in a much broader context. We have tried to broaden the debate by specifying the elements that need to be taken into account in assessing the Bill’s impact, in line with our general approach to economic decision making.

Financial regulations often come across as a very rarefied area, but we all know that, as my hon. Friend the Member for Colne Valley pointed out, the consequences of getting them wrong can be enormous, especially for specific groups. Whether or not we agree—personally I do not—that cuts to social security were necessary to reduce the deficit that had been created by measures that followed the financial crisis, the burden of those cuts has clearly had an uneven impact on different groups.

The areas of regulation covered in the Bill could have highly disparate impacts. Arguably, the process of financialisation and the intensification of investment banking compared with relationship banking—boring banking, as we might call it—have helped to fuel the imbalance in lending. Over recent years, there has been an enormous move in the UK banking system away from loans to small and medium-sized enterprises and towards loans for real estate. That process has been much more marked outside London and the south-east—it has had a regional impact. The Bill covers some of the instruments that were involved in that process. Capital requirements also have an impact on the structure of banking and its regional distribution, so it is very important that we consider the issues properly.

Finally, I have a question for the Minister about his understanding of the impact of the better regulation provisions. I had assumed all along, as I am sure many other hon. Members did, that those provisions would not apply to this process, given the Government’s stated intention not to water down regulations. As hon. Members will be aware, the better regulation approach specifies “one in, three out”: for every new regulation introduced, three regulations must go. The same issue came up in a debate last night on a very different subject, albeit one that also related to no deal: the REACH etc. (Amendment etc.) (EU Exit) Regulations 2019, the no-deal provisions on the registration, evaluation, authorisation and restriction of chemicals—another incredibly complex body of legislation.

We do not have a clear answer from the Minister on the matter, so I would appreciate his assurance that the better regulation provisions will not apply to the process. If they did, it would counteract any claims made in this Committee or elsewhere that there would be no watering down. The issue is particularly relevant to new clause 2, because the better regulation process focuses only on the costs to business; it does not consider the costs, from a regional perspective, of not regulating, or the potential countervailing benefits to other groups. I have been informed that the better regulation provisions will not be applied to Grenfell-related fire safety regulations. Will the Minister confirm that they will not apply to this process, either?

If we suddenly find that the “one in, three out” provisions apply in this case, we will be in very different territory. There will be even more need for a proper impact assessment, because to an extent it will counteract some of the mechanistic impacts of the “one in, three out” process.

Immigration Rules: Paragraph 322(5)

Debate between Anneliese Dodds and Alison Thewliss

Wednesday 13th June 2018 Westminster Hall

[Alison Thewliss]

I absolutely agree. It is worrying that even the Home Affairs Committee cannot get answers on certain things. This rule is of huge concern, and decisions under it are clearly still being made, as I heard from people I spoke to at the Highly Skilled Migrants demo last week. They are clear upon that.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

The hon. Lady is being generous in giving way, and she is making a very powerful speech. Does she not agree that the Home Office was made aware of such issues in letters from me and others present in this Chamber back in mid-March, but no action was taken? Having such a delay in action is simply not good enough when that is affecting people’s lives in such a terrible manner.

[Alison Thewliss]

Yes, I absolutely agree with the hon. Lady. For some months, I have been trying to get answers for the constituents who have been to me. The woman I mentioned came to see me in January, and she still has no answers in her case. When constituents come to us, it is not always evident that they are affected under those particular rules, and we often have to see the refusal letter to understand exactly why the refusal has been made, but a growing number of people have been getting in touch with me about finding themselves in this circumstance. Those who are not my constituents I have encouraged to get in touch with their own MP, as I am sure they have done going by the number of people in the Chamber today.

To add insult to injury, The Times reported this morning that a new visa route for migrants who want to start businesses in the UK

“is to be expanded to include non-graduates under efforts to increase technological innovation.”

That is rank hypocrisy. How can the UK Government reasonably expect to attract new migrants to the country when they treat the highly skilled population who are already here, and have been for years, with such utter disrespect?

I have a number of questions, which I hope the Minister will assist with. When will the review that I mentioned be published? How many cases are in process, and how many are awaiting judicial review? I have asked the Home Office how many people have been refused under the provision, and I understand that Channel 4 News also put in a freedom of information request to the Department without getting an adequate response.

Was an instruction issued to start refusing cases under the rule? If so, by whom and when? On 2 May, The Daily Telegraph reported that Home Office caseworkers had discussed using previous amendments to tax returns to cast doubt on current tax returns. How widespread is that practice? Will the Minister allow people caught up in all this the right to work, the right to access NHS services and the right to rent during their appeals? They often lose those rights as soon as the administrative review is refused—that is the first line of appeal after the initial refusal—and, as was mentioned by the hon. Member for East Renfrewshire (Paul Masterton), that can have a serious impact, in particular on women who are pregnant.

Will the Minister tell me whether compensation is to be offered to those wrongly caught up in this mess, just like Windrush? People affected can be out tens of thousands of pounds, particularly if they cannot get legal aid for their cases, because they have not been able to work and have gone into debt and arrears.

Lastly, what does the Minister have to say about the impact of this policy on individuals? I have been told by many about the strain on their mental health; relationships with their family here and with relatives abroad, who they are not able to visit; the stress of having to report to the Home Office regularly, sometimes on a fortnightly basis; and the loss of employment. Does the policy have a wider economic impact?

The Home Office’s policy of deliberately targeting these highly-skilled migrants is yet another example of this cruel Tory Government’s hostile environment policy in action. The group being targeted here are highly skilled: they are doctors, accountants, IT professionals, teachers and academics, to name only a few. They have put down roots and contributed greatly to their communities.

The UK Government continue to talk about attracting talent, yet their behaviour towards this group shows that they clearly are not interested in retaining much of the highly skilled population who are already here—already well integrated and contributing hugely. I urge the Minister to take swift action now to support highly skilled migrants who have done us the honour of choosing to live here.

Sanctions and Anti-Money Laundering Bill [Lords]

Debate between Anneliese Dodds and Alison Thewliss

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 1st May 2018 Commons Chamber

[Anneliese Dodds]

My hon. Friend is absolutely right. I understand that those 80,000-plus properties, which are often owned through secrecy jurisdictions, are the ones that crop up most often in corruption investigations. It is often exactly that kind of property that appears to be used illicitly, and it is enormously important that we get a grasp of this problem. We have seen—through the various laundromat investigations, for example—how British property has been used not only to hide illicitly gotten gains, but to guarantee additional profit, because those properties can be let out, guaranteeing a future income stream.

In that regard, I will give the Government one more opportunity. I have asked them many times to indicate whose side they are on. Are they on the side of the investigative journalists who have shown us so much about the movement of dirty money through our financial system, either through the laundromat investigations or through the Paradise, Panama and Luxembourg leaks papers, or are they on the side of those who want to shut down debate on this matter? It would also be helpful to know whether they think it is appropriate that the BBC and The Guardian are being singled out by the firm Appleby and having legal action taken against them purely because they published information from the Panama papers leaks. They are the only two British companies to be singled out in that way.

Moving back to the substance of new clause 8, the Government initially intimated that they would introduce the register back in April. Instead, it now will not be available until 2021, but we heard nothing from the Minister about why that delay is necessary. Investigative reporters have already created a register of sorts that we can all access on the internet. It was created by journalists at Private Eye and other organisations who matched up Land Registry data with company data. I am not aware of any significant worries about the reliability of that information, so why are there so many concerns in this regard? The Financial Action Task Force is due to report soon on our systems to combat money laundering, and this is not the time to delay any action.

If Ministers feel the need to slow down the process in order to consult the Opposition and produce draft legislation, I can tell them that Labour Members support such a measure. The Government do not need to jump through hoops with this legislation—they can move ahead immediately with our full support—so there is no need for delay. In fact, there is every need for haste. I look forward to hearing whether Conservative Members think that there are genuine reasons for this hold-up, because I do not believe that there are any. There is cross-party support for the original timetable. Indeed, faster progress was urged by Conservative peers when the matter came up in the other place, so I hope that the Government will listen to them and to the Opposition, and deliver this register to an appropriate, faster timetable.

On the question of registers, the topic of trusts has been raised in previous debates as well as this one. In fact, it is covered by an Opposition amendment, and the Minister also mentioned it. Not having transparency for trusts will place us behind developments in the European Union, because there is now consensus at the EU level about the need to ensure that there will be transparency for business-like trusts, so we will be behind the curve on that one. Of course, the coalition Government lobbied against transparency for trusts, and we now know that David Cameron personally intervened to try to prevent it. However, this Government could take a different approach and introduce greater transparency, so I hope that they will shift that position.

On the offence of failure to prevent money laundering, I hope the House will not mind if I briefly ask the Minister when exactly we will see the Government response to the consultation and call for evidence, which ended last year, on the failure to prevent economic crime. Although that process ended many months ago, we still do not know what action the Government will take—we are still waiting. There is no lack of evidence for the need to take action; there is only a lack of will, sadly, and that needs to change.

Our new clause 13 is similar to the SNP’s new clause 2, but it is rather broader, as it deals with trust and company service providers, as well as Companies House. In the previous debate, the Minister for Europe and the Americas rightly drew attention to the fact that the UK was a frontrunner in adopting a public register of beneficial ownership. The Opposition are of course pleased that the Government have accepted the need for such a register for the overseas territories but, as Members on both sides of the House have said, we need to ensure that the information in any such register is accurate, and that is the point about which many concerns have been raised.

I have been in correspondence with the Minister and with the FCA about one particular case, namely that of the so-called Business Bank Italy, in which a number of rather strange figures seem to be involved. One of them gave his title as the Italian translation of “the chicken thief” and maintained that he lived on the “Street of 40 Thieves” in the town of “Ali Babba”. I have tried to find out whether he and those associated with him are being prosecuted, but he has certainly been under investigation in Italy, and some of his associates have been prosecuted for their involvement in the mafia over there.

In contrast, the only person to have been prosecuted— I would also say persecuted—in the UK for submitting false information is Kevin Brewer, who is actually a whistleblower. He created a fictitious company and told the world about it in the pages of a national newspaper, but his prosecution has since been held up as showing the Government’s determination to

“come down hard on people who knowingly break the law”.

He broke the law in order to show that the law was an ass under the current system, and it is a disgrace that he has been prosecuted when others seem to be able to operate with impunity. The right hon. Member for East Antrim (Sammy Wilson), who is no longer in the Chamber, referred to an 85-year-old who was exercising significant control in 25,800 companies, so it is essential that such individuals are investigated.

New clause 13 would require any company formation agent to carry out appropriate due diligence on the beneficial owners of the companies that they are forming. It would cover both trust and company formation service providers, and Companies House, where companies can be directly registered without anyone else being involved in the process. I will not re-run our debates during the Bill’s previous stages, but suffice it to say that rather than providing additional clarity—I say the same of the additional exchanges that I have had with Ministers since—the waters have only been muddied. There is a huge ambiguity about the precise role of Companies House. Some Ministers seem to resist the view that it should be responsible for checking data on the business database, while others say that it should exercise that kind of due diligence and is doing so perfectly well. What I see as a parliamentarian, as do many businesspeople and others who are concerned about the fraudulent companies that appear to be able to operate with impunity, is Companies House sadly being severely behind the curve that has been set by crooks and criminals.

The Minister said that change would be difficult, but it would not. For example, when one registers a company with Companies House, one can enter whatever information one wants in the boxes on the website. That website does not even have the highly technologically sophisticated tool of a drop-down menu, which means that people can enter non-existent addresses, as I just mentioned, suggest that two-year-olds are people of significant control in a company and so on. The situation is ridiculous and dealing with it would not require a huge amount of investment.

We also need stronger action when it comes to the responsibilities of trust and company service providers. There is extensive evidence, most recently revealed by “Panorama”, that existing anti-money laundering legislation is insufficient to deter the money-laundering activity facilitated by some TCSPs.

I have had an extensive exchange of letters with the Treasury, and I am grateful to the Minister for corresponding with me on this subject, particularly regarding the problem of foreign TCSPs registering companies with Companies House. I have been informed by the Government that foreign TCSPs are of lower risk than UK-based ones, despite the fact they are not covered by UK anti-money laundering legislation. I received the latest letter this very morning, for which I am grateful, and it concludes by stating that foreign TCSPs are regulated by their home jurisdictions. That is okay then—they are regulated by their home jurisdictions, so there is no problem. Sadly the evidence suggests quite the opposite.

We have seen some positive moves from the Government today, under enormous pressure from Members on both sides of the House, on Magnitsky clauses and on beneficial ownership registers for overseas territories, but we need appropriate scrutiny of sanctions and anti-money laundering legislation, a return to something nearer the original timetable for foreign-owned property registration, and the exercise of proper due diligence on the information submitted to our companies register if we are really to clean dirty money out of our financial system.

We have to stop crooks, criminals and the corrupt benefiting from our country’s good name. Our Government need to stop obfuscating and start acting.

[Alison Thewliss]

I rise to speak to the amendments in my name. I will rattle through them and say why they have been tabled. The primary concern is about Companies House. Very much as the hon. Member for Oxford East (Anneliese Dodds) has just said, we have laid out our serious concerns at all stages of the Bill. It is disappointing to get to this stage and find that the Government are still not listening to those concerns.

Companies House does not have the adequate resources or powers sufficiently to monitor and ensure the integrity of the company incorporation data submitted to it.

Sanctions and Anti-Money Laundering Bill [Lords] (Fourth sitting)

Debate between Anneliese Dodds and Alison Thewliss

Thursday 1st March 2018 Public Bill Committees

[Anneliese Dodds]

I am grateful to the hon. Lady for raising that issue. It is particularly important that highly respected international bodies are above any insinuation or reproach. It may be that there has been confusion and a lack of knowledge about the provenance of some of those funds, but we need to remove from the system any opacity that could give that impression.

Operation Car Wash, which came up only last month—it is funny that all of these cases use the washing metaphor, but it is clearly because they are about washing out the provenance of money—covered Brazil and Peru. A giant construction firm in those countries paid £1 billion in bribes for, it appears, political purposes, and it appears that some of the payments went through SLPs. When we look at the evidence, we see we need to have a far stronger grip on this problem.

In early summer last year, legislation was introduced by the Department for Business, Energy and Industrial Strategy to try to regulate SLPs, under which they were to be forced to disclose their beneficial owners within the next 28 days or face daily fines. I am concerned that we still do not know how many such firms have genuinely indicated their beneficial owners—I hope we will hear from the Minister on that now. I am not privy to information on how many fines have been levied, and most commentators suggest that not a single business has been prosecuted. Perhaps some have been fined but not prosecuted. Perhaps we can find out more about that.

The Opposition are concerned that more action needs to be taken. To return to our earlier exchange, it is important that the UK Government take responsibility, because they have reserved powers over Scots corporate law. The Scottish Government have asked the UK Government to act, and it appears that previous actions to require more ownership information may not have gone far enough. I hope the Minister will enlighten us on that and support our amendment.

[Alison Thewliss]

The hon. Lady has already said much of what I was going to say, so I am sure that, if that I am a bit briefer, that will be okay with everyone. We have serious concern about SLPs, and the Bill provides an opportunity to do something about it. When we know there is a problem and an opportunity to put it right, it would be negligent of us as parliamentarians to look the other way.

I understand that, even in the new regime where people with significant control should be registered, up to December 127 or so SLPs had registered via law firms, but 489 had registered via anonymous mailbox addresses, which means that the people with significant control are not there, are barely identifiable and are very hard to trace. We know from recurring stories in The Herald worked on hard by David Leask and the researcher and expert in this field, Richard Smith, that such companies keep the issues, scandals and money laundering behind the scenes, and that it keeps going on. We therefore need to do everything we can in every area to tackle these problems.

There is the broader issue of SLP non-compliance and the inadequacies of Companies House, which we may speak about later in our proceedings. Not having a postcode when registering a company should be a pretty simple compliance issue—the process could be stopped at that point, never mind going into the more technical detail. We therefore need to look at this issue carefully. Never mind all the overseas territories; we are allowing it to happen here, in this country, behind mailboxes in Scotland. Frankly, that is unacceptable. We need to do something about it. If we continue to let it go, the problem will not go away.

We can talk about how we might go ahead with this issue in terms of enforcement, because other countries have tackled it. My colleague Roger Mullin and others have worked on it for many years, and we should take the opportunity to look at it here and now. If the Government are not willing to accept any of the amendments, I urge them to table their own and not to let the opportunity pass.

Finance (No. 2) Bill (Sixth sitting)

Debate between Anneliese Dodds and Alison Thewliss

Tuesday 16th January 2018 Public Bill Committees

[Anneliese Dodds]

I am grateful to the Minister for that explanation. I understand broadly that we are essentially talking about three changes across the board: the duty rate increase of 2% across all tobacco products, the extra 1% for hand-rolled tobacco, and the minimum excise tax to ensure that there is a minimum tariff for the very cheapest cigarettes.

We are asking for a review and will continue to do so, because it is so necessary. I think that some of the changes are quite positive. The new measures around hand-rolled tobacco are important, given that that form of cigarette has become increasingly popular—more than a third of smokers now use hand-rolled tobacco. Men, rather than women, and people in more deprived socioeconomic groups are particularly likely to smoke hand-rolled cigarettes. We think it is important for action to be taken in that regard.

The MET is also important to ensure that cigarette taxes on their own do not lead to compensatory behaviour, such as switching to a lower price brands. Evidence from countries such as Thailand suggests that when taxes went up, people just compensated by smoking cheaper cigarettes rather than stopping. We are asking for a review because we are concerned about the sufficiency or otherwise of the duty rises reported here for the Government’s overall anti-smoking efforts.

[Alison Thewliss]

On that point about cheaper brands, does the hon. Lady agree that there is also a huge risk that people will turn to illicit tobacco, which is also a tax avoidance matter with people bringing cigarettes into the country?

[Anneliese Dodds]

I am grateful to the hon. Lady for making that germane point. I understand that more research is needed into the extent to which people substitute illicit brands. Of course, that is the nature of the beast, because these products are illicit and therefore difficult to discover. Many of those involved in the trade are involved in other forms of criminality. It is enormously important to deal with that and with the health problems associated with illegal products, which can include lots of chemicals in addition to the tar and other noxious substances present in all cigarettes. I absolutely agree with her.

There is evidence that cigarette taxes are leading to a reduction in smoking, and that the reduction is greater when there are measures in place to prevent the proliferation of very low-cost cigarettes. But there is also evidence that the effectiveness of both is greatly enhanced when coupled with health interventions, not just public awareness campaigns. For example, nicotine replacement therapies have been shown to increase the long-term success of quitting by about 3% to 7%, and if a quit attempt is made by a former smoker with the support of a health professional as part of a structured support programme, they are far more likely to keep that quit in place and not to start smoking again.

Similarly, behavioural support has been shown to increase the likelihood of a smoker quitting long term by a similar figure: between 3% and 7%. I mention that now because current developments are extremely worrying in this regard. A recent report by Cancer Research UK and Action on Smoking and Health shows that cuts to the public health budget nationally have led to dramatic changes in services for smokers. Only 61% of local authorities now offer what the National Institute for Health and Care Excellence suggests for evidence-based intervention to help people stop smoking. I am shocked by that, as I am sure are other members of the Committee. There have been huge cuts to local anti-smoking services, and I understand that at least one local authority now has no budget at all for addressing smoking. In one in nine local authority areas GPs no longer prescribe nicotine patches or similar measures.

Why am I mentioning that now? Let us face an obvious point: tobacco taxes are regressive, because they affect those on lower incomes most. We cannot escape that. If help is available for people to quit, then that regressive impact is in some way compensated for. The evidence is that only about half of the people who smoke actually enjoy it, so huge numbers want to quit. The average smoker in the UK spends £23 a week on cigarettes, and obviously that figure is increasing as a result of these additional duties.

There has been a debate within the international evidence, and this may come up within the Minister’s responsibility when he returns to the issue. Most of the international examination that says that there might not be a regressive impact has suggested that in the long run, low-income smokers will save on their medical costs. But that does not apply in the UK, thank goodness, because we have a national health service that is free at the point of use so everybody is able to use it and there is no such medical saving in that regard.

If those professional services for stopping smoking are not available, particularly to people on low incomes, it will be difficult to avoid the conclusion that this is a regressive tax being imposed without the help that people need to stop smoking. Only about one in twenty people who try to stop unaided manage to stop smoking for six months. People who do stop smoking for some time do have a number of symptoms, as those trying to do it will know. These symptoms are severe, and in many cases they lead to people going back to smoking even if they do not want to do that. It is therefore particularly important that we have help for young people. Labour—