Loan Charge

Darren Jones Excerpts

Thursday 18th January 2024 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

May I start by congratulating the right hon. Members for East Antrim (Sammy Wilson), for Hemel Hempstead (Sir Mike Penning) and the hon. Member for Motherwell and Wishaw (Marion Fellows)—with whom I have worked for many years on the Post Office Horizon scandal—and the hon. Member for Buckingham (Greg Smith), on securing this important debate today? I thank the Backbench Business Committee for granting the time and pay tribute to the members of the loan charge and taxpayer fairness all-party parliamentary group, other right hon. and hon. Members here in the Chamber today, and the journalists who have investigated this issue so doggedly, including The Yorkshire Post.

One of my core political beliefs is that, when one person has power over another, they must be subject to effective checks and balances. That is a crucial part of our democratic system and at the heart of the freedoms that we should all enjoy in a democracy such as ours. In my roles as a lawyer, a trade unionist, a Member of Parliament, the Chair of a parliamentary Select Committee —the Business and Trade Committee—and now a member of the Shadow Cabinet, I have always contributed to ensuring that the delicate balance of power is tilted towards the citizen and away from the powerful, and that unchecked power is challenged and brought into line. On this issue today, I recommit myself to that cause.

That is why we in the Labour party believe a key principle of our tax system is that the Government should treat everybody fairly. It is why we support attempts to tackle tax avoidance schemes, including disguised renumeration schemes. However, HMRC’s approach to the loan charge, which has affected tens of thousands of people to date, means that the Government have failed in ensuring that duty of fairness.

As we have heard, ordinary people who are victims of mis-selling are facing financial ruin and personal harm because of the way in which HMRC has pursued the loan charge. Tragically, at least 10 people affected by HMRC’s behaviour are known to have taken their own lives. The House should pause and reflect on that fact. We are talking about 10 people who were in such a state of despair—10 people who had not only the thought of ending their own lives, but the will to do so. There are 10 families now grieving for the loss of a loved one, all because of an administrative approach to tax collection. It could therefore not be clearer that the Government’s approach is not working. Ministers, including the Prime Minister when he was Chancellor, routinely referred to the 2019 Morse review and asserted that there was nothing else to do. That review cannot and must not be the final word on the matter or a roadblock to getting a fairer solution for people who have been victims of bad professional advice and mis-selling.

While people in everyday jobs, from NHS workers to social workers, are being pursued by HMRC, and some taxpayers are being told that they owe hundreds of thousands of pounds, the Government, as we have heard repeatedly, are doing little to pursue the actual promoters behind mis-selling schemes. Incredibly, HMRC has been issuing fewer than two fines a year against the architects and enablers of failed tax avoidance schemes. How can the Government possibly justify such a light-touch approach for the promoters of such schemes while many of those people caught up in them suffer such serious harm?

Over the course of this Parliament, the Labour party has repeatedly called on the Government to find a fair and effective way forward on the impact of the loan charge. There is no disagreement that such schemes are illegitimate and damaging. However, there have now been significant cases and testimonies to raise alarm bells in the heads of Ministers about the nature of the current approach.

In June 2020, during consideration of the then Finance Bill, hon. Members debated a new clause that would have forced the Government to review the impact of the loan charge scheme, including the fairness with which HMRC implemented the policy. Unfortunately, the Government dismissed the proposal, claiming that the Morse review went far enough. Again, in December 2021, my hon. Friend the Member for Ealing North (James Murray) tabled a new clause to then Finance (No. 2) Bill. It would have required the Chancellor to commission an independent review to consider HMRC’s approach to the loan charge scheme and make recommendations on how it should be altered. That review would have required the Government to explain to this House what efforts they had taken to guarantee the review’s independence. Also, once the review had made recommendations, it would have required the Government to say, on a six-monthly basis, whether they agreed with them, and if so, how effective they were on implementing them.

Such a review could finally have offered a way forward. Labour voted in favour of that new clause and the review it proposed in December 2021, but sadly it was defeated by the Government. Treasury Ministers must realise that this issue is not going away. Two years on from that vote, it is still clear that the Government’s approach to the loan charge means that ordinary people who are victims of mis-selling are suffering financial ruin and personal harm.

Ministers and hon. Members across the House have heard the harrowing accounts of people whose lives have been ruined. That cannot be what the Government envisaged in the first place, and it must not be allowed to continue. Will the Treasury use this moment today to finally agree to commission a further truly independent review? Such a review could consider the approach of HMRC towards the ordinary people caught up in the loan charge schemes and further consider what action should be taken against the architects and promoters of those schemes. That would be in the interests of restoring fairness in our tax system. It could provide a way forward for the many thousands of people caught up in the loan charge and should end the devastating consequences suffered by the people involved to date. That is all we are asking for: an independent review—albeit one, as hon. Members have said, that should be conducted quickly.

Finally, I urge the Minister to answer the specific question put to him today of whether HMRC officials are being awarded bonus payments for the recovery of loan charge moneys. I urge the Government to learn the lessons of other scandals and to stop burying their heads in the sand. I urge the Minister to be brave and to do the right thing.