Tax Information Agreements (Guernsey and Jersey)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
Exchange of letters amending the 2009 tax information exchange agreements (TIEAs) with Guernsey and Jersey were signed on 22 October 2013 to permit automatic and spontaneous exchanges of information. At the same time agreements were also signed to improve international tax compliance which set out the precise details of the information which will be automatically exchanged. The texts of the agreements to improve international tax compliance have been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs’ website. The texts amending the tax information exchange agreements will be scheduled to draft Orders in Council and laid before the House of Commons in due course.
Tax Policy Consultation and Draft Legislation
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government’s approach to developing tax policy emphasises the benefits of policy consultation and legislative scrutiny.
Following Budget 2013, the Government have engaged with interested parties, seeking their views on more than 30 areas of tax policy. The next stage of consultation aims to ensure that the legislation works as intended.
Draft clauses to be included in Finance Bill 2013 will be published on 10 December 2013, together with responses to policy consultation, explanatory notes and tax information and impact notes. The consultation on the draft legislation will be open until 4 February 2014.
ECOFIN (13-14 September)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
An informal meeting of the Economic and Financial Affairs Council was held in Vilnius on 13-14 September 2013. Ministers discussed the following items:
Working lunch for ECOFIN members
There was a debrief to Ministers from the earlier Eurogroup discussion. The Commission also presented on its recently published proposal on the single resolution mechanism.
Economic outlook and financial stability of the EU
ECOFIN discussed recent developments in the global economy, including the gradually improving macro-economic and financial situation on the euro area and the EU.
Improving access to finance for SMEs—European policy options
ECOFIN discussed a number of Commission-EIB designs for financing instruments aimed at leveraging finance for SMEs. The UK highlighted that participation in this scheme should be voluntary for member states.
Follow-up to the G20 leader’ summit and preparation of the IMF/World Bank annual meetings and the G20 ministerial meeting
The presidency and Commission gave a short update on the outcome of the G20 leaders’ summit on 5-6 September and Ministers gave a mandate to the Economic and Financial Affairs Committee to prepare and endorse the IMFC statement and the EU G20 terms of reference in preparation for the October meetings.
The UK endorsed the progress made at the G20 leaders’ summit on the automatic exchange of tax information and urged the Commission and the presidency to swiftly incorporate the new emerging global standard into EU law through the revision of the administrative co-operation directive.
Future shape of the financial system—from the Banking Union architecture to efficient structure of financial markets
The think-tank Bruegel presented on the structure of the EU financial system going forward, based on a paper they published for this discussion. An exchange of views followed.
Fight against tax fraud and tax evasion—towards a global standard on automatic exchange of information
This discussion was opened by guest speaker, Angel Gurria, the Secretary-General of the OECD, who outlined developments made at the EU and global levels towards reaching a global standard on automatic exchange of information. ECOFIN then held an exchange of views on continuing this progress with the aim of tackling tax fraud and evasion.
ECOFIN (15 October)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
A meeting of the Economic and Financial Affairs Council will be held in Luxembourg on 15 October 2013. The following items are on the agenda to be discussed.
Current legislative proposals
The presidency intends to give a state of play update on the following financial services dossiers: common securities depositories regulation (CSDR); Omnibus II; markets in financial instruments directive (MiFID); single resolution mechanism (SRM); bank recovery and resolution directive (BRRD); and deposit guarantee scheme directive (DGSD).
Preparation of the European Council on 24-25 October 2013
a) Indicators and policy areas for strengthened economic policy co-ordination:
ECOFIN will hold an exchange of views on indicators and policy areas for strengthened economic policy co-ordination. The Government recognise the desire for euro area countries to strengthen the co-ordination of their economic policies. However the Government consider that, consistent with the June European Council conclusions, participation in any new measures for economic and monetary union should be voluntary for those outside the single currency and be fully compatible with the single market.
b) Commission-EIB SME initiative:
ECOFIN will consider Commission-EIB designs for financing instruments aimed at leveraging finance for small and medium-sized enterprises (SMEs). The Government recognise the importance of ensuring small business has access to finance, but considers that national Governments are best placed to decide the most effective policies to achieve this. Accordingly, participation in this scheme should be voluntary for member states.
European Semester: Lessons from 2013 and way forward
ECOFIN will hold an exchange of views on lessons to be learned from the 2013 European semester—the Commission’s yearly cycle of economic policy co-ordination —and the possible ways for further improvement for next year’s exercise. The Government welcome the opportunity to discuss this with the Commission and other member states.
Follow-up to G20 Finance Ministers and Governors’ meeting on 10-11 October 2013 and Annual Meetings of the IMF and World Bank Group on 11-13 October in Washington
The Commission and presidency will provide a short update on the outcomes of these meetings. G20 Finance Ministers and Governors’ will discuss: recent developments in the global economy and financial sector vulnerabilities; international financial architecture reform; financing for investment; strengthening the G20 process; and a forward-look to priorities for the Australian presidency in 2014. The annual meetings of the IMF and World Bank Group will discuss the economic outlook and situation; and IMF policy issues, including governance, surveillance, resources and the IMF’s support to low-income countries.
Preparation of the 19th Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in Warsaw from 11 to 22 November 2013
ECOFIN will adopt conclusions on climate finance ahead of the UNFCCC conference in Warsaw in November.
Tax Information Exchange (Oriental Republic of Uruguay)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
A tax information exchange agreement (TIEA) with the Oriental Republic of Uruguay was signed on 14 October 2013. The text of the TIEA has been deposited in the Libraries of both Houses and will be made available on the HM Revenue and Customs website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
Double Taxation Agreement (Isle of Man)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
An arrangement comprising an exchange of letters amending the 1955 arrangement with the Isle of Man was signed on 10 October 2013 to permit automatic exchange of information. At the same time an agreement was also signed to improve international tax compliance which sets out the precise details of the information which will be automatically exchanged.
The text of the new arrangement and the agreement has been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs’ website. The text of the arrangement will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
Oral Answers to Questions
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Mr Dave Watts (St Helens North) (Lab)
4. Whether he plans to introduce a land tax.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government have no plans to introduce a land value tax at this time. In our view, the complexity and cost of administering such a tax, and, more importantly, the likelihood of a significant increase in tax bills for many council tax payers, particularly those such as pensioners with liquid assets, means that such a proposal is not tenable.
Mr Watts
I thank the Minister for his response, but given that we have massive increases in house prices, massive increases in the value of farmland and builders and supermarkets land-banking and pushing up the price of land, and given that 1% of the population own 69% of our total land mass, is it not time for action? Do we not need a land tax?
Mr Gauke
The hon. Gentleman will be aware that some of the construction numbers of late are much more encouraging, and the Government are taking action to improve house building, including our Help to Buy proposal. Believe it or not, not every problem this country faces can be solved by another tax.
Steve Brine (Winchester) (Con)
5. What recent steps he has taken to support small businesses.
Miss Anne McIntosh (Thirsk and Malton) (Con)
7. What his policy is on the payment of corporation tax by foreign-based companies; and if he will make a statement.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are committed to creating the most competitive corporation tax regime in the G20 to support investment that drives economic growth. We want a system that is stable and fair with all companies abiding by the rules and making their contribution. We are cutting the rate to 20% by 2015, clamping down on avoidance and aggressive tax planning and driving forward multilateral efforts to modernise the international tax framework.
Miss McIntosh
Will my hon. Friend join me in celebrating the water industry, a flagship industry since its privatisation over 20 years ago? Will he explain to the House the benefit to consumers of deferring corporation tax against current foreign investment received?
Nigel Mills (Amber Valley) (Con)
12. What recent progress he has made on his plans to tackle tax avoidance.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government continue to make strong progress on tackling tax avoidance. Following on from our announcement at Budget 2013, we have introduced the UK’s first general anti-abuse rule, which will act as a significant deterrent to abusive avoidance. We have completed our consultations on avoidance using partnership rules and the use of offshore intermediaries, and we have just launched a consultation on new information requirements and penalties for the promoters of tax avoidance schemes.
Mr Speaker
I would like to wish the hon. Member for Amber Valley (Nigel Mills) good luck for his forthcoming wedding. I trust all will go as smoothly as his question.
Nigel Mills
Thank you, Mr Speaker.
I welcome the measures that the Minister has announced. My constituents want to see everyone paying the tax they owe on their income. Does the Minister think that any measures are required to make sure that trade unions do that as well?
Mr Gauke
First, I add to the words of Mr Speaker and, perhaps, wish good luck to my hon. Friend’s future wife. He draws attention to a story that we have seen in the last few days: allegations of tax avoidance against Unite and against Labour. Maybe the links between the two are closer than we realised.
Stewart Hosie (Dundee East) (SNP)
While it is right that we all press down on active tax avoiders, a number of small businesses that find themselves categorised as such are simply unable to pay the correct amount. Does the Minister think that the average of 29 minutes that it can take for the Revenue to answer a telephone call, the fact that the tax code has reached 11,500 pages, the closure of local offices and the reduction in Revenue headcount—things for which he is responsible—might be contributing to this, at least in some way?
Mr Gauke
On support for small businesses, HMRC has in place a time-to-pay arrangement. On the service that is provided by HMRC, it is always seeking to improve and deal with telephone calls and letters as efficiently as possible. But we have to bear in mind that the yield that HMRC is bringing in is increasing by £10 billion over the course of this Parliament. HMRC’s performance on phone calls and letters is better than it was when we came to office. It has made considerable progress and that should be acknowledged.
Neil Carmichael (Stroud) (Con)
15. What recent assessment he has made of the contribution to the economy made by the manufacturing sector.
Lindsay Roy (Glenrothes) (Lab)
18. What estimate he has made of the annual value of the reduction in the additional rate of income tax to 45% to a person earning £1 million per annum.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The cost of reducing the additional rate of income tax to 45% is set out in table 2.2 of Budget 2013. We have not broken down the impacts on individuals by income ranges because of the significant behavioural response associated with the additional rate of income tax. The behavioural response is estimated in aggregate and reflected in the costing.
Lindsay Roy
Yesterday, yet another food bank opened, in Methil in my constituency. Fifty volunteers are doing an exceptional job in difficult circumstances. One of the volunteers asked me, “Why has the Chancellor prioritised tax cuts for the very rich, instead of using the revenue to alleviate family poverty in our society, and in Methil in particular?”
Mr Gauke
I would hope that the hon. Gentleman said in response that in the 2012 Budget we saw increases in stamp duty on high-value properties and a clampdown on tax allowances and reliefs for the wealthiest, all of which raised far more from the wealthiest than the 50p rate, which was failing to raise revenue.
John Robertson (Glasgow North West) (Lab)
T1. If he will make a statement on his departmental responsibilities.
Age-related Tax Allowances
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Catherine McKinnell
My hon. Friend makes a powerful point. The Office of Tax Simplification expressed surprise at the way in which the measure was introduced, and I shall go on to quote from the office as I set out the reasons why we do not support the Government’s policy.
It might be helpful to recap what has happened. Until the beginning of this tax year, individuals aged 65 or over were entitled to receive an additional age-related allowance, with a further addition for those aged 75 and over. Since 1977 and what was known as the Rooker-Wise amendment, all income tax allowances had been required to increase in line with the retail prices index, unless Parliament specifically determined otherwise.
As we are all aware, in Budget 2012, it was announced that from 2013-14—from this April—the availability of those age-related personal allowances for income tax would be restricted. The allowance for people aged 65 or over was frozen, as was the allowance of £10,660 for those aged 75 or over. Additionally, people turning 65 on or after 6 April 2013 were not entitled to any age-related allowances at all, meaning that the general personal allowance was all that applied to them.
On the basis of the speed with which the changes were introduced and our opposition to them, we tabled an amendment to this year’s Finance Bill that called on the Government properly to consider the impact of the changes to the personal allowance system on the group of people who are affected. We put that proposal forward at a time of overwhelming opposition to the changes. A whole body of evidence showed that the impact on pensioners would be hugely detrimental. As my hon. Friend pointed out, this came at the same time as a tax cut for those earning more than £1 million, who the Government were handing an average tax cut of £100,000.
The e-petition that has led to the debate is testament to the measure’s impact on pensioners and their level of concern about it. I commend Arthur Streatfield and his valiant efforts in obtaining 114,488 signatures, meaning that the debate could be secured.
My hon. Friend quoted Dot Gibson, the general secretary of the National Pensioners Convention, when she gave her backing to Arthur Streatfield’s e-petition, but it is worth repeating what she said:
“Since the Budget announcement...we have been inundated by pensioners like Arthur who are outraged that the Chancellor is giving a tax cut to those earning over £150,000 whilst pensioners on little more than £11,000 are having their tax allowance frozen. There has been a lot of nonsense about pensioners having been cushioned from the austerity measures, but they’ve already seen cuts to their winter fuel allowance, a reduction of their state pension increase because it’s now linked to the…Consumer Price Index rather than the Retail Price Index, rationing of care services in the community, closure of day care centres, changes to disability benefits and caps on housing support…The Chancellor’s decision to freeze the age related tax allowance is really the last straw for pensioners who feel they are being asked to pay for the mistakes of the bankers and politicians.”
The Opposition agree, which was why we voted against the changes during the passage of last year’s Finance Bill. It is absolutely the wrong priority at the wrong time, and in the current economic climate, the Government should be prioritising ordinary families, ordinary pensioners, the young and the long-term unemployed, not millionaires.
The Exchequer Secretary to the Treasury (Mr David Gauke)
For the sake of clarity, will the hon. Lady confirm whether the Opposition’s position is that, as a matter of principle, those under the age of 65 should have a lower personal allowance than those over the age of 65?
Catherine McKinnell
We are debating today the choices that the Government have made, the way in which this tax allowance change has been implemented, the speed at which it has been implemented, the lack of consultation, the lack of consideration and the lack of will from the Government to consider the impact on pensioners. That is what the focus of today’s debate must be, because it is about the current Government’s policies, the way in which they are being implemented and the impact that they are having on pensioners now. If the Minister would like to confirm that the Government have actually given some consideration to the impact on pensioners of the changes, that would be very helpful.
Mr Gauke
I hope to have the opportunity shortly to set out what the current Government have done for pensioners, but given that I did not hear a clear answer as to whether it is a matter of principle, can the hon. Lady confirm that the Labour party has no plans to reverse the abolition of age-related allowances?
Catherine McKinnell
Again, it would be helpful if the Minister could confirm for those taking part in the debate and for those following it—the many pensioners who have called for the debate and who want to know—what consideration the Government have given to their position and to the fact that pensioners are suffering a cost of living crisis. The Government seem to be taking no account of that.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship, Mr Hollobone, for, I think, the first time. I congratulate the hon. Member for Luton North (Kelvin Hopkins). He put his case with great eloquence and passion. I thank my hon. Friend the Member for Suffolk Coastal (Dr Coffey), who, as she says, represents a large number of pensioners in her constituency, including my uncle Norman. Hon. Members have had the opportunity to discuss these matters a number of times, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) said. In fact, we last debated the topic during proceedings on the Finance Act 2013, not to mention the lengthy debates during proceedings on the Finance Act 2012. I am pleased to have another opportunity to explain the Government’s position.
As hon. Members are aware, a phased withdrawal of age-related allowances was legislated for through the Finance Act 2012, meaning that there would be no new recipients of such allowances from April 2013. The existing age-related allowances have since been kept at their 2012-13 levels, meaning that we have frozen the age-related allowances at £10,660 for individuals born before 6 April 1938 and £10,500 for individuals born over the following 10 years. Once the personal allowance aligns with those levels, there will be one personal allowance for everyone. I appreciate that there is opposition to the measure, but we believe that in the light of the other changes we have made, particularly those that relate to the basic state pension, those steps will help us achieve a fairer, simpler tax system.
The Government’s first priority for income tax has always been to increase the personal allowance, and the allowance has seen above-inflation increases in every year since we came to office. Given his earlier remarks, I am sure the hon. Member for Luton North supports that. In this financial year, the allowance rose by £1,305—the largest cash increase ever—and next year it will continue to rise by a further £560. Those steps mean that we will meet our target of increasing the personal allowance to £10,000 a year early, taking the number of taxpayers who have seen the benefit of our increases to 25 million. We remain committed to ensuring that personal allowances are set high enough that pensioners who are solely reliant on the basic state pension do not pay any tax. As such, half the people over 65 will not have to pay any income tax at all in this financial year.
Kelvin Hopkins
The point being made is that many pensioners do not pay tax because their incomes are simply too low.
Mr Gauke
In a moment I will turn to what we are doing with the basic state pension and the steps we have taken to ensure that it is rising more quickly than it otherwise would have.
My hon. Friend the Member for Suffolk Coastal touched on simplification. We want to make the tax system simpler and easier for people to understand, and the changes to age-related allowances are an important part of that. It is worth pointing out that we are not the only people to conclude that such allowances add unnecessary complications to the tax system. A 2009 report by the Public Accounts Committee commented:
“The age-related allowance rules are complex and hard for older people to understand and place too much emphasis on older people having to prove their eligibility, resulting in errors in claims and potential overpayments of tax.”
And, in March last year, the Office of Tax Simplification published its interim report on pensioner taxation, highlighting no fewer than nine complexities.
The taper feature is one of the main sources of complication in age-related allowances. It is worth setting out how it works, to demonstrate the degree of complexity in age-related allowances. The taper removes an individual’s age-related allowance where their income exceeds the aged income limit,—£26,100 in 2013-14—at a rate of £1 for every £2 over the limit. The age-related allowance is reduced up to the point at which the income tax allowance is exactly the same as the normal personal allowance. That taper creates a 30% effective rate of tax for individuals on modest incomes and, most importantly, brings hundreds of thousands of people into the self-assessment system when, in many cases, they would otherwise have no need to complete a tax return.
Our changes to age-related allowances will remove such complexity and confusion for older taxpayers. The simplification is not only of benefit to taxpayers; a simpler tax system is also easier for the Government to administer, enabling HMRC to focus on reducing the tax gap, which I know the hon. Member for Luton North cares about passionately.
Mr George Howarth (Knowles) (Lab)
I apologise, Mr Hollobone, for not being here at the commencement of the debate; I had inescapable commitments elsewhere in the House. May I press the Minister to respond to a point? The arguments he puts would be better received by those affected if they did not compare the changes to their tax allowances with the fact that those at the higher end of the income scale have received benefits that amount to about £100,000, as my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) pointed out. That comparison is what makes the situation so objectionable.
Mr Gauke
If the right hon. Gentleman looks at the measures in the 2012 Budget, he will see that the amount raised from the wealthiest, in increased stamp duty on the most valuable properties and the cap on reliefs used by the wealthiest to reduce their income tax bills, raised far more money than the cost of reducing the 50p rate of income tax—a rate that the evidence suggested was not raising anything like the sums for which the previous Government hoped. There is a good reason why the Government in which he served for many years had a top rate of income tax of less than 50p: a top rate of 50p is not a terribly effective way of raising revenue. We must place this in the context of all the other measures that the Government are taking for pensioners. The overall tax system remains favourable to them, and there are measures that protect pensioner benefits, not least the triple lock for the increases in the basic state pension.
Kate Hoey (Vauxhall) (Lab)
I, too, apologise for not being here earlier, particularly to support my hon. Friend the Member for Luton North (Kelvin Hopkins) in his moving of the motion.
Does the Minister not agree that so many pensioners feel aggrieved about the change because having worked hard all their lives and saved for their retirement they now discover that they are getting absolutely no interest on their savings? Many of them have been living on their savings interest, and now they do not even have that—and will not for the next few years, it seems, if the Bank of England’s new independent director is right. Does the Minister not understand just how angry many pensioners are? They feel they have been let down.
Mr Gauke
The hon. Lady makes an important point about the difficulties faced by many of those who rely on their savings to support themselves. It is in all our interests that we have a strong and growing economy, and in the current economic climate it is right that we have low interest rates. We acknowledge that that creates difficulties, but the alternative—higher interest rates—would have significantly damaged the economy over recent years. Importantly, we have been able to bring in the triple lock, which has enabled us to increase the state pension at a faster rate than before and has included the largest-ever cash increase. That demonstrates the Government’s commitment to supporting pensioners wherever we can.
It is also worth re-emphasising that as a result of the decision to remove age-related allowances no one will pay more tax than before. Other factors, such as wage inflation and increases to the basic state pension, may, of course, affect tax liabilities, but no one will pay more tax from one year to the next because of the policy change alone. In fact, people over the age of 65 who pay no income tax at all—about half of all pensioners—are completely unaffected by the reform.
It is also worth reminding right hon. and hon. Members that, as the Chancellor announced in the Budget two years ago, the Government remain committed to exempting pensioners from national insurance contributions. There is a strong, principled case for that, because people have contributed throughout their working lives on the basis of a return, and I distinguish that argument from the one about personal allowances. I have debated this matter on a number of occasions and have never heard a strong case for those under the age of 65 having a lower personal allowance than those over that age.
Kelvin Hopkins
The Minister is doing his best to provide comforting words to pensioners but the reality, according to the Institute for Fiscal Studies, is that the average annual loss in the current year from all the tax credit and benefit changes since 2010 is £245 for a single pensioner and £470 for a pensioner couple. Those are substantial sums.
Mr Gauke
The hon. Gentleman refers to the Institute for Fiscal Studies, and it is worth remembering that last year the IFS concluded that pensioners are the group least affected by the Government’s tax and benefit changes.
I will run through some of those changes in a moment, but I want to come back to the point about how pensioners are taxed in comparison with those who are not pensioners, taking into account national insurance contributions. There is a good reason for the national insurance measure; I am not critical of it, and it is worth bearing in mind in the context of this debate.
Let me give an example of the burdens faced by pensioners compared with those faced by people of working age. Even under the freeze, a 69-year-old with an income of £16,000 in this financial year will still pay less than half as much tax and national insurance as someone aged 30 earning the same amount. A 69-year-old further up the income scale, earning £26,000 a year, still pays only 56% of the amount of tax and national insurance their working-age children pay. Someone born before 6 April 1948 earning £26,000 would have previously been eligible for age-related allowances but, following the withdrawal of the allowance, they will still see their total tax and national insurance bill reduced by 40% when they reach state pension age.
It is only right that we do not consider the changes to age-related allowances in isolation—I appreciate that I have made that point a number of times already this afternoon. Only about 40% of pensioners currently receive the age-related allowances but, by contrast, almost every pensioner in the UK—more than 11 million people—receives the basic state pension. Those 11 million pensioners have already benefited significantly from our decision to introduce the triple lock for the basic state pension, and they will continue to do so.
Last April, the basic state pension increased by the consumer prices index inflation rate of 5.2%, which represented the largest-ever cash increase in the basic state pension. This April, the triple lock guaranteed an increase of a further 2.5%, which was larger than the corresponding increases in inflation and average earnings. In contrast, under the previous Government’s plans, the basic state pension would have increased by only 2.8% last April and only 1.6% in the current fiscal year. In addition, we must not overlook the other benefits available to this age group, including winter fuel payments, free bus passes and prescriptions, and free TV licences for those over the age of 75. As I have said, the conclusion of the IFS is that pensioners are the group least affected by the tax and benefit changes implemented by the Government.
We are doing our best to protect this group of society, and to ensure that older generations can live with the dignity and respect they deserve. Taken as part of our wider policies on pensions, our changes to age-related allowances will reduce complexity while maintaining a more generous tax and national insurance regime for pensioners than for other groups. It is perhaps for those reasons that we hear none of the main parties advocating the return of age-related allowances, and I can confirm that the Government have no plans to reverse our policy in that area.
Living Standards
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The Exchequer Secretary to the Treasury (Mr David Gauke)
I add my congratulations to those of my right hon. Friend the Financial Secretary to the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), on the birth of her daughter earlier this year. I welcome her back.
I should also add a word of admiration not only for the hon. Lady, but for the shadow Financial Secretary, the hon. Member for Nottingham East (Chris Leslie). I admire them because, in their speeches today in a debate on the economy, they managed to ignore two points. First, they did not touch on any of the economic data that have emerged over the summer. We heard nothing about gross domestic product numbers, purchasing managers index surveys, employment numbers, CBI and British Chambers of Commerce forecasts or the OECD’s assessment yesterday. I appreciate that the Labour party has had a summer to forget—it has clearly forgotten.
Secondly, the hon. Lady and the hon. Gentleman managed to ignore the economic argument we have heard from them for the past three years that the Government are going too far and too fast. They argued that there was no way we would get growth while cutting the deficit, and that only by borrowing more would we have growth. They also had a five-point plan. As my hon. Friend the Member for Reading West (Alok Sharma) has pointed out, the flagship policy in the plan was a cut in VAT, which would be necessary to get the economy growing again, but that has disappeared from Labour’s platform. We have heard lengthy speeches from Labour Members on economic policy, but they have not talked about their economic policy.
Ian Mearns
The Minister refers to economic data from the summer months. We saw an increase in retail expenditure in the summer months, but is it any coincidence that, at a time when people have limited disposable income, household savings have decreased?
Mr Gauke
What is striking about the data we have seen is the encouraging, broad-based signs. The manufacturing numbers are very encouraging. Let us not say that the situation is about consumer spending only. There are encouraging signs in the economy, which was not reflected in the remarks of Labour Members.
Geraint Davies
The Minister will have heard my speech, so I will not recite it, but will he accept that there is a problem with the amount of lending to business by banks? Can he give any undertaking that the Bank of England will put pressure on banks to redirect the funds they have been given under the funding for lending scheme towards business rather than to household mortgages that are now out of the woods?
Mr Gauke
The fact that we have credibility in our fiscal policy means that the Governor of the Bank of England has been able to say what he has said about the greater certainty for interest rates, which is helpful for businesses. If we throw away that fiscal credibility, we will make life more difficult for businesses wanting to get credit.
We have talked about what the motion contains. It says that we should get more people into work: we agree with that. Over the year, employment has increased by 301,000, and unemployment has fallen by 49,000. In July, the claimant count fell, for the ninth consecutive month, to 1.44 million, the lowest level since February 2009. This is the result of a Government who have created the right tax and regulatory environment for businesses to flourish. The proposals from the Opposition would put all of that at risk.
We hear about bringing forward capital investment. We also recognise the need for infrastructure investment to spur the jobs and growth of the future, and that is why in June the Chief Secretary unveiled the biggest public housing programme for more than 20 years; the largest programme of rail investment since Victorian times; the greatest investment in our roads since the 1970s; fast online access for the whole country; and the unlocking of massive investment in cleaner energy to power our economy forward. We have increased expertise in Whitehall and we are working hard to deliver those projects as soon as possible.
The cost of living is an important issue, and we recognise that times are tough for many people. But let us look at the difference between the parties. Whereas we have reduced income tax for 25 million people—we have increased the personal allowance—the previous Government doubled the rate of income tax on low-paid workers. This Government have ensured that we have credibility so that we have been able to keep mortgage rates low: the Opposition would lose our credibility. Council tax doubled under the previous Government: it has been frozen under us.
The previous Government raised fuel duty 12 times while in office and had plans to raise it six more times subsequently—the equivalent of 13p per litre—and we have frozen fuel duty. When we came to office, the UK had almost the highest child care costs in the world, and we will help families with child care. Energy bills soared under Labour. Between 1997 and 2010, the average domestic gas bill more than doubled. Electricity bills went up by more than 50% and Labour remains committed to an expensive 2030 decarbonisation target that will only add to energy bills, whereas this Government are forcing energy companies to put customers on the lowest tariff. When it comes to beer duty, Labour planned to raise the tax: we not only froze it, we cut it.
My hon. Friend the Member for West Worcestershire (Harriett Baldwin), in an excellent speech, asked how we ensure that we have the sustainable growth that we need. We need sustainable public finances—an argument that we have made consistently and that has been consistently opposed by the Opposition. We need a highly skilled work force, and that is why 500,000 apprenticeships have been undertaken under this Government. It is why we are undertaking ambitious educational reform. We need welfare reform, with a system that makes sure that work is rewarded—not something that we inherited from Labour. We need a competitive tax system that encourages investment in the United Kingdom, not one that drives it away. We need to deal with the regulatory burdens that prevent growth—we have undertaken planning reform, which will help to increase housing supply.
What do we get from the Opposition? We get a Labour party that presided over a squeeze in living standards from 2003; a Labour party that must accept some responsibility for the deepest recession in a century; a Labour party that doubled the rate of income tax on low-paid workers; a Labour party that planned for increase after increase in fuel duty; a Labour party that remains signed up to decarbonisation targets that would increase energy prices; a Labour party that has consistently set out an economic policy that would consist of more borrowing, an approach that would lead to higher mortgage rates and ultimately higher taxes; and a Labour party that has opposed our council tax freeze. For Opposition Members to lecture us on living standards is extraordinary. As President Obama might have said, it is the audacity of the hopeless.
If we want to help hard-working people—I think we all do—it is vital that we stick to the task. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are too many private conversations. I am struggling to hear the Minister.
Mr Gauke
If we want to help hard-working people—I think we all genuinely do—it is vital that we stick to the task. [Interruption.] I know that we do. I am not sure the Opposition do, but I will give them the benefit of the doubt. We need to create a favourable environment for job creation. We need to maintain economic credibility by continuing to deal with the deficit, which enables us to keep mortgage rates lower. We need to reduce the tax burden on low-paid workers and we need to reform our welfare system to ensure that work pays. That, not borrowing and spending more—not more debt—is the answer, and that is the approach the Government will take.
Question put.
Henry Thorley and HMRC
David Gauke Excerpts(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (Mr David Gauke)
I thank my hon. Friend the Member for Stone (Mr Cash) for his remarks, for securing this debate and for putting forward his constituent’s case with his characteristic eloquence. The case relates to the investigation and subsequent prosecution of one of his constituents by what was then Her Majesty’s Customs and Excise. His constituent and his advisers have approached my hon. Friend requesting a public apology for what they have described as a malicious prosecution by HMCE. I have great sympathy with his constituent for the worry and distress that the case has clearly caused both him and his family, and I hope this afternoon to offer reassurance that the case can be further investigated by Her Majesty’s Revenue and Customs. I shall return to that in a moment.
For reasons I shall explain shortly, however, HMRC does not old information about the case, other than that supplied by my hon. Friend in his correspondence and by his constituent.
Mr Gauke
I am not disputing any of the facts provided by my hon. Friend, but I hope he will allow me to explain the reasons why HMRC does not hold information about this case, other than what has been provided to it by him, and why that constrains what HMRC can say. I will also explain how we might be able to take this matter a little further forward.
Let me deal with the first point about why HMRC does not hold information. In line with the requirements of the Data Protection Act, HMRC must not hold personal data indefinitely, so the organisation regularly reviews and destroys or deletes information. For cases involving criminal investigation, the retention period varies depending on the outcome of the investigation. The default period is six years from the conclusion of the investigation, but when the investigation leads to a conviction, the retention period is the length of sentence imposed plus one year, or six years, whichever is the longer. When an investigation ends in conviction but that conviction is later overturned on appeal, as clearly occurred in this case, the retention period is six years from the Court of Appeal ruling. In the case of my hon. Friend’s constituent, the data relating to the investigation and prosecution would have been destroyed as early as 1986.
However, the Data Protection Act also requires that when someone makes a request for the release of information, the recipient of that request must make a thorough search to see whether it is held, even if the normal destruction date has passed. To that end, HMRC has carried out a department-wide check of all electronic systems and a targeted search of manual records. It also asked the Crown Prosecution Service to check its records to see whether it held anything relating to this constituent’s case. That check has revealed that no such records exist.
Further correspondence from my hon. Friend, enclosing correspondence from his constituent and addressed to the Chancellor of the Exchequer, was passed to HMRC to reply under normal Treasury procedure. That correspondence was dealt with under HMRC’s complaints procedure for ministerial correspondence. I should make it clear that HMRC of course welcomes complaints as an opportunity to apologise and put things right where it has made a mistake, and as a source of learning to make its services better for taxpayers in future.
Mr Cash
On the question of procedure, is my hon. Friend aware of the Cabinet Office’s 2005 guidelines on dealing with letters from Members of Parliament to Ministers, which set out very precisely what has to happen in relation to such letters and the manner in which such letters have to be handled under the Cabinet Office guidelines prescribed by the Prime Minister?
Mr Gauke
The Treasury is aware of the guidelines that apply to ministerial correspondence, and we seek to comply with them. Where operational matters are involved and it is more appropriate for HMRC to deal with them in order to provide as much information as possible and to deal with them as appropriately as possible, HMRC will respond to those letters. My hon. Friend has received a letter from me and from HMRC—indeed, he has received several items of correspondence—on this front.
Let me return to the procedure. Usually, HMRC has a two-stage complaints process, which seeks to deal with as many complaints as possible at the first review. At the end of that stage, the reply tells the customer that if they are still unhappy, they can ask HMRC to look at the complaint again. At that stage, a different official takes a fresh look at the complaint and gives HMRC’s final response. If the customer remains unhappy, they may approach the Adjudicator’s Office. The Adjudicator’s Office will investigate the complaint, drawing together a full and impartial summary of details from the customer and HMRC.
Mr Cash
I have read out the salient reference in the statement of Mr Ian Godfrey Wright, the senior Customs and Excise officer involved. He is a member of HMRC, or he certainly has been—I dare say he is retired now. This statement is dated 1996, so it is possible that it could be followed up, and it contains serious allegations by a senior Customs officer about the conduct of Customs and Excise—as I believe it still was—at the time. It is not as though we are talking just about communication between me and the Minister; we are also talking about sworn statements made by a senior Customs officer, which can be followed up. They must have this record—if they have not got that, I do not know what is going on.
Mr Gauke
Again, I will not repeat the data protection guidelines and the length of time for which HMRC is entitled to hold on to personal data. I note my hon. Friend’s comments about a statement being made in 1996. I do not know what communications there were with HM Customs and Excise, the body in place until the merger in 2005, or how they were made. As I have made clear in my remarks, a search was made across HMRC to locate records on the case, and no records were found.
As I was saying, the Adjudicator provides an independent review of details and makes her decision and recommendation. Customers who continue to be dissatisfied can ask an MP to refer their complaint to the Parliamentary Ombudsman, who will then decide whether to investigate the complaint. If she decided to do so, her investigation might also look at the way in which the Adjudicator’s Office reviewed the complaint.
It is worth noting that this specific case did not follow the normal procedure. My hon. Friend is perfectly entitled to contact Ministers about the matter. He has received replies from senior officials at HMRC and one from me dated 23 May 2013. All those replies carried the same message: given the age of the case and the lack of any of the original papers, HMRC is not in a position to comment with any certainty on the case.
Letters from the Adjudicator to my hon. Friend on 13 March and 25 April 2012 contained a similar message and provided contact details for the Parliamentary Ombudsman. However, if the constituent or his advisers provide HMRC with full copies of all the documents they hold in connection with the matter, I can assure my hon. Friend that it will carry out a thorough review and revert to them with its findings.
Mr Gauke
I will give way, but first I will make this point: my hon. Friend has provided HMRC with information regarding the case that indicates that a conviction was quashed following the finding that there had been a misdirection. As he will also be aware, his constituent’s concern is that there was a malicious prosecution against him. If HMRC has evidence that there was a malicious prosecution against someone, of course it should apologise. If that evidence is presented to it and it is satisfied that that is what has happened, I would hope and expect it to do exactly that.
Mr Cash
Whether or not it was malicious, the question is whether an apology is due, given the fact that—of this there is no doubt—there was a prosecution, my constituent spent time in jail, the conviction was quashed and then he was released. I am simply asking for an apology. There is an element of farce about the situation. I do not want to be told that I should go off to the Ombudsman; I am talking to the Minister, who is accountable to the House. He has responsibility for HMRC and for the conduct of Customs and Excise before it, in one form or another. All I am asking for—it sounds as though I am not going to get it, even this afternoon—is an apology on the Floor of the House from the Minister in relation to this. It is no good just reading out all the bits of paper that have been supplied—
Mr Speaker
Order. The hon. Gentleman’s intervention is a little on the long side. He has expressed some frustration that he does not think that he will get what he wants this afternoon but, on the strength of his 29 years of service in the House and the indefatigability with which he has pursued a variety of causes over those years, he will be well aware that it is open to him to pursue the matter again, and again, and again.
Mr Gauke
Thank you, Mr Speaker, for setting out that prospect.
What I am seeking to say to my hon. Friend is that his constituent clearly feels wronged. He was, as my hon. Friend says, convicted on a case brought by HM Customs and Excise, and that conviction was subsequently quashed. I understand my hon. Friend’s position, which is, in essence, that in any circumstances when someone has been wrongly convicted, the prosecuting authority should apologise to that person. I fully respect that position. However, it must also be said that the fact that an individual is found not guilty after a criminal trial or their conviction being quashed by a higher court on appeal does not necessarily mean that it was inappropriate for the case to have been investigated, or even prosecuted, in the first place. I am sure that my hon. Friend, as a distinguished lawyer, can appreciate that point.
It may well be that in this investigation over 30 years ago HM Customs and Excise behaved wrongly and inappropriately. If that is the case, then his constituent would deserve an apology in those circumstances—let me clear about that—and I would be very happy to give that apology on behalf of HMRC. However, before HMRC is in a position to give a full apology, it needs to see the facts more fully. As I say, the mere evidence that a conviction has been quashed does not necessarily mean that HM Customs and Excise behaved in an unacceptable way. That is why I believe that it is essential that my hon. Friend’s constituent provide all the available paperwork that he and his advisers hold to enable HMRC fully to assess the reasons for the quashing of the conviction.
Mr Gauke
I will allow my hon. Friend to intervene again; he need not worry that I am galloping towards the end.
I am keen to ensure that HMRC looks at the evidence again thoroughly, and if it is in a position to make the apology—I can understand the reasons why my hon. Friend wants that apology sooner rather than later—I am keen to do all I can to facilitate that. My hon. Friend rightly has a reputation for being someone who weighs the evidence thoroughly, and HRMC also needs to weigh the evidence thoroughly before it reaches a conclusion. It might be the easiest thing in the world just to announce an apology, but it should do so on the basis of the facts, and at the moment it does not have those facts.
Mr Cash
Let me refer again to the statement by Mr Wright—a senior Customs officer who I presume, or hope, is still available to be spoken to because his statement was so clear. There is also the opinion of the leading counsel, and there are all the other papers that have been supplied. If the records are not in the Department and no papers are available other than the ones we have already supplied, then I do not know what else we would be able to produce. I think that a careful judgmental assessment of the justice of this case is required, and that the apology is due, although my hon. Friend is now making some very helpful remarks.
Mr Gauke
I am glad that I have had the opportunity to make some helpful remarks. I say to my hon. Friend that the more evidence there is that can be presented, the better. I assure him that HMRC will consider the matter thoroughly and follow the evidence. If an apology is due on the basis of that evidence, it will of course make an apology. I accept that no apology was made when the conviction was quashed more than 30 years ago and that there has been no apology in the intervening 30 years.
I hope that this wider airing of the case and the offer for HMRC to review all his constituent’s paperwork go some way towards providing the assurance that my hon. Friend is seeking. If I have not provided that reassurance or if HMRC’s investigation of the evidence proves to be less than fruitful as far as he is concerned, I suspect, as you have said, Mr Speaker, that we will return to the subject.
Question put and agreed to.