Oral Answers to Questions

David Gauke Excerpts

Tuesday 16th November 2010 Commons Chamber

[Mr David Ward (Bradford East) (LD)]

5. What the evidential basis is for his Department’s estimate of the additional tax revenue to accrue by 2014-15 from expenditure on measures to address tax evasion and avoidance, and fraud and debt.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Her Majesty’s Revenue and Customs routinely measures and monitors various performance matrix, including yield-to-cost ratios and a number of statistical models. These were used as part of the spending review process to estimate the effect of investing resource to support its compliance strategy. On the basis of this analysis, HMRC estimates that the additional expenditure of £900 million over the spending review period will result in an extra £7 billion of yield per year by 2014-15.

[Mr Ward]

I thank the Minister for his answer. I guess that Members from both sides of the House would welcome the £900 million sprat that is being used to catch a £7 billion mackerel. However, I understand that the £42 billion gap caused by avoidance, evasion and fraud still exists. Are the Government doing enough, and do we need to do more?

[Mr Gauke]

The hon. Gentleman is absolutely right to highlight that issue. We think that the number is very high and that it is possible to find savings in HMRC’s budget. However, there have been specific proposals for where HMRC has identified that it could recover large levels of yield, and this Government have been happy to provide the funding to do that.

[Kerry McCarthy (Bristol East) (Lab)]

I am sure that the Government will be aware of the growing public outrage at the fact that a company such as Vodafone seems to have been able more or less to decide the size of its own tax bill, and, in doing so, is rumoured to have avoided a sum as high as £6 billion. Do the Government agree that we need far more transparency and accountability when it comes to such backroom deals with large companies, or are we now entering a world where only the little people pay their taxes?

[Mr Gauke]

This Government are determined to crack down on tax evasion and tax avoidance, but the Vodafone deal was a matter for HMRC, and it is right that the Government are not involved in such negotiations. I hope that the hon. Lady will not be aligning herself with those involved in campaigns to close down Vodafone shops. The fact is that companies should pay the correct amount of tax, but she should not believe everything she reads.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Tax avoidance and tax evasion would be less prevalent if we had a simpler and fairer tax system. I wonder whether my hon. Friend would consider following the policy of the noble Lord Lawson, which was to abolish complicated tax breaks in order to finance lower marginal rates.

[Mr Gauke]

My hon. Friend makes an excellent point. As a Government, we are cutting the rate of corporation tax, from 28% to 24%, which is the lowest rate that we have ever had in this country.

[Mr Chuka Umunna (Streatham) (Lab)]

8. What steps he is taking to review the regulation of credit rating agencies.

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[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Her Majesty’s Revenue and Customs is currently reviewing options for delivery of the tax inquiry services that it provides through its network of inquiry centres, contact centres and online services over the next spending review period. HMRC is committed to providing services that are cost-effective and also meet the needs of its customers.

[Katy Clark]

We have already seen a reduction of 25,000 staff and 200 collection offices, which must result in a worse service to the public. We are also seeing cuts in the amount of money spent on dealing with tax avoidance and evasion. The Minister’s colleague mentioned an extra £900 million, but we have been told that that is not additional money, and that less money is actually being spent on dealing with tax collection. Is it not time that we prioritised not only giving a better service, but collecting more tax?

[Mr Gauke]

That money is new investment to tackle tax avoidance and evasion. It is specific, targeted funding. As for the service that is provided, it is right for HMRC’s service to adapt to the way in which customers change their behaviour. We have seen a 40% reduction in the number of people using inquiry centres over the last four years, and HMRC should of course adapt to that.

[Andrea Leadsom (South Northamptonshire) (Con)]

Recent press reports have suggested that there are many so-called zombie households in the United Kingdom, in which families have got themselves into so much debt that they rely on interest rates remaining low to stay afloat. Does my hon. Friend agree that our policies to keep interest rates low, and to enable the Bank of England and the Monetary Policy Committee to keep them low, are key as we go through a critical period in our recession?

[Mr Speaker]

A sentence from the Minister in reply will suffice, as the question is about tax inquiry services. We are grateful to him.

[Mr Gauke]

Let me put it this way: we would have a lot more inquiries if taxes were going up, which is the policy the Opposition advocate.

[Mr Peter Bone (Wellingborough) (Con)]

14. What assessment he has made of the effects on his Department’s ability to reduce the deficit of the reduction in the UK’s EU budgetary rebate; and if he will make a statement.

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[Nic Dakin (Scunthorpe) (Lab)]

15. What mechanism he plans to use to ensure that households which include one or more higher rate taxpayer cease to receive child benefit payments.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

From January 2013 Her Majesty’s Revenue and Customs will withdraw child benefit from higher rate taxpayers using PAYE and self-assessment systems. The vast majority of claimants will continue to receive child benefit, and will not be affected by this change.

[Nic Dakin]

Earlier this year, the Prime Minister said he wanted this Government to be the most family-friendly Government we have ever had in this country. How does this proposal support a family where one partner stays at home to look after the children while the other partner earns over £45,000 a year?

[Mr Gauke]

It does families and everyone else in this country no good if we do not get to grips with the fiscal crisis. If the Opposition are saying households paying higher rate income tax should continue to receive child benefit while those who do not earn so much contribute towards that, it once again shows that they are not getting to grips with the scale of the crisis.

[Richard Graham (Gloucester) (Con)]

Does the Minister agree that the logic of the policy outlined by Opposition Members is that any child from Prince William and Catherine Middleton would benefit from child tax benefit, whereas the poorest of my constituents would not?

[Mr Speaker]

Members really should not refer to members of the royal family in questions. That is strongly to be deprecated, and it certainly should not happen again. I ask the Minister to give a very brief reply.

[Mr Gauke]

My hon. Friend is perhaps getting a little ahead of himself. I think all we should say is that should that happy eventuality occur, I am sure he or she will get by without child benefit.

[Diana Johnson (Kingston upon Hull North) (Lab)]

16. What estimate he has made of the cost to the Exchequer of redundancy and retraining requirements arising from implementation of proposals contained in the comprehensive spending review.

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[Stephen Timms (East Ham) (Lab)]

The White Paper last week stated that HMRC will be taking on new responsibilities in collecting and processing real-time pay data for the calculation of universal credit. How much has been allocated for the IT to deliver that change?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The response to the consultation on real-time information—the next stage of it—will be published shortly. We will outline the details in that, but additional sums have been identified as part of the spending review process to pay for the real-time information project.

[Mr Aidan Burley (Cannock Chase) (Con)]

T6. More than 20% of my constituents in Cannock Chase are employed by manufacturing centred small businesses. Will the Chancellor assure them that the small business tax review will simplify and reduce taxes for small businesses rather than complicate and increase them?

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[Mr Gauke]

The intention is to strengthen HMRC’s capability to collect taxes. If that involves making use of private sector expertise to collect additional debt, which is the intention, that is surely a good thing that should be welcomed by all parties.

[Mr John Redwood (Wokingham) (Con)]

Given that the Irish Government have said that they neither want nor need a bail-out, will the Chancellor support them at ECOFIN and put off those people in the EU who seem to want to make a crisis out of a problem?