Plastic Packaging Tax (Descriptions of Products) Regulations 2021
Helen Whately Excerpts(2 years, 2 months ago)
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The Chair
Before we begin, I would like to encourage Members to observe social distancing and wear masks.
The Exchequer Secretary to the Treasury (Helen Whately)
I beg to move,
That the Committee has considered the Plastic Packaging Tax (Descriptions of Products) Regulations 2021 (S.I. 2021, No. 1417).
The statutory instrument seeks to tackle plastic packaging waste in the most effective way possible by making sure that the legislation is properly targeted. I will first speak briefly about the context of the legislation, before moving on to the plastic packaging tax and the statutory instrument itself.
The Government are committed to tackling plastic pollution. Plastic waste is a major environmental threat. Plastics do not decompose. Plastic waste can last centuries. Those centuries may be spent in landfill sites, but too often plastic ends up where it should not—littering the streets and countryside, piling up on beaches and in rivers, and caught on the tides in the world’s oceans. In this country alone we generate nearly 5 million tonnes of plastic each year. In 2001 we recycled just a quarter of all our packaging waste. By 2017 that proportion had grown to 60%, but we can and should go further.
As hon. Members may recall, in 2018 the Government committed to introduce a tax on plastic packaging—a pledge we reiterated in our manifesto in 2019. This tax has already been legislated for in the Finance Act 2021. The tax will be charged at £200 per tonne of plastic packaging that is manufactured or imported in the UK, and which does not contain at least 30% recycled plastic. That will provide clear economic incentives for businesses to use recycled plastic over virgin plastic. This will in turn incentivise packaging producers to overcome the challenges of including recycled plastic in packaging. It will also incentivise increased collection and recycling of plastic waste, reducing the amount incinerated, dumped in landfill or strewn about so that it finds its way into the natural environment.
We estimate that the tax will lead to around 40% more recycled plastic being used in packaging in 2022-23 alone. Given that the use of new plastic generates more carbon than the use of recycled plastic, we estimate that the tax will save nearly 200,000 tonnes of carbon dioxide emissions in its first year, thereby achieving a dual purpose of reducing carbon emissions as well as reducing plastic waste.
This tax’s introduction has been subject to a long process of engagement and deliberation, first through two consultations in 2019 and 2020, and then through three technical consultations on the necessary legislation, including a consultation on the statutory instrument we are discussing. At every stage, the Government have listened to a range of organisations, including plastic packaging manufacturers, trade bodies across the plastics value chain and other interested stakeholders. Following these discussions and deliberations, in the Finance Act 2021 the Government introduced legislation setting out the tax’s initial scope, based on a well-established definition of packaging. The definition is similar to that in the producer responsibility obligations set out by the Department for Environment, Food and Rural Affairs, which also seek to boost recycling rates.
The tax and the reforms to the producer responsibility obligations are designed to be complementary. However, unlike the producer responsibility obligations, this tax is charged at the point of manufacture and import, and has a different definition of packaging aimed at reducing the burdens on businesses while securing environmental aims. The definition of plastic packaging included in the Finance Act 2021 covers products designed to contain, handle, protect, deliver or present goods at any stage in the supply chain. It does not matter whether the product is used in the supply chain or by the end consumer. For example, bubble wrap and tape are both designed to be suitable in the supply chain, but can also be used by consumers. This definition ensures that items such as Tupperware and other homewares, which are not designed to be suitable for use in the supply chain, are not subject to the tax.
The primary legislation introduced in the Finance Act 2021 also exempts packaging products that are permanently set aside for a non-packaging function. By doing so, it makes sure that items that are manufactured or imported for a completely different purpose than a packaging function are not inadvertently captured within the tax. For example, plastic film that is applied to whiteboards used in teaching institutions will not be taxed, and nor would, for instance, plastic bottles made for an art installation.
I thank hon. Members and others who have taken the time to explain to Her Majesty’s Revenue and Customs and the Treasury the highly specialised nature of silage film and its use for the production of silage. After careful analysis of additional information, I can advise that, although silage film is within the overall scope of the tax, it falls under an exemption for items where packaging is not the primary function. That is because its primary purpose is to enable the fermentation necessary for the production of silage, rather than the packaging of silage. Manufacturers and importers of silage film will still need to count it towards the 10 tonne threshold to determine whether they need to register and keep a record of it being set aside for a non-packaging function to support HMRC’s compliance activity, but where that is done no tax will need to be paid.
Turning to the statutory instrument specifically, although it is critical that we tackle the scourge of plastic waste, we do not want to tax all plastic products. However, taken in isolation, the measures in the Finance Act 2021 would mean that the tax would apply to plastic products that do not typically contribute to the environmental harm that the tax is designed to address. Equally, the tax would not apply to single-use plastic packaging designed for the end consumer, such as bin bags or carrier bags. The 2021 Act allowed for additional regulations to amend and improve the definition of packaging within the scope of the tax, and that is what these regulations do.
The statutory instrument will add to the scope of the tax packaging products that are specifically designed for a single-use packaging function by a user or consumer for goods or waste—for example, bin bags and carrier bags, as I mentioned, as well as nappy sacks and disposable plastic plates. In addition, the instrument will remove packaging that is designed for the long-term storage of goods from the scope of the tax. To fall within that category, packaging must be designed to be sold filled with goods and be reused for the same or similar goods—for example, a first aid box, a glasses case or a power tool case.
The instrument also removes from the scope of the tax products where the plastic is an integral part of the goods, without which the goods cannot reasonably be used or consumed. That removes products where it is not possible to reasonably separate the packaging from the item. To fall within that category, the packaging must be discarded with the goods or after the goods have been used or consumed. That includes printer cartridges, aerosol actuators and the ball of a roll-on deodorant. Finally, the instrument removes from the scope of the tax products that are designed for reuse in the presentation of goods, including shop fittings, display shelves and presentation stands.
These adjustments follow the substantial consultation and engagement with businesses that I mentioned, and will mean that the tax better fulfils its objective of incentivising the recycling of plastic and reduced plastic waste in a targeted way. I therefore commend the statutory instrument to the Committee.
Helen Whately
I will briefly respond to some of the points from the shadow Minister, the hon. Member for Erith and Thamesmead. I welcome her support for the tax and her overall support for the legislation, and I thank her for reminding us of the objectives, including our ambition to increase the use of recycled plastic over virgin plastic.
The hon. Lady raised concerns about some of the exemptions that I have outlined today, or about the targeting of the tax. Overall, we agree on the ambition to limit exemptions to ensure that the tax achieves its objective. The Government are determined to be pragmatic, but also to ensure that the tax achieves its objective of targeting those plastics that are particularly harmful to the environment. As I said in my opening speech, we carried out a huge amount of consultation and engagement with industry and those interested in this tax and legislation in order to get the targeting of the taxation right. That has led to the details of this statutory instrument, with the very specific exemptions that I outlined and the inclusion of certain single-use plastics that are used for disposal, for instance—bin bags and so on.
I say to the hon. Lady, who suggested that this was too narrow a focus, that this is a hugely ambitious tax, which sets out to change the incentives so that we see much greater use of recycled plastic and more plastic being recycled into the plastic supply chain, leading to—this picks up on her point about what assessment of impact there has been—our expectation that we will see a 40% increase in the use of recycled plastic following the introduction of the tax.
To pick up on the hon. Lady’s point about whether there are concerns or confusion about the clarity of the regulations, I should say that substantial guidance has been set out on which products are in the scope of the tax and how it should be applied; the Government have worked closely with the sector and industry on preparing the details of that. Businesses that are concerned or uncertain can indeed contact HMRC, which will lead on the implementation.
Helen Whately
Let me cover the comments that the hon. Lady made, if she will give me a moment. She asked about imported packaging. I assure her that we are determined that there should be a level playing field, so the tax will apply equally to packaging manufactured in the UK and that imported into the UK.
The hon. Lady then asked about food packaging. We have consulted with the sector on that; we recognise some of the challenges but also the progress already being made to increase the use of recycled plastic in food packaging. We would not want to disincentivise further progress along those lines so we very much include that consideration, as with other examples of when it is more challenging to use recycled plastic.
Finally, the hon. Lady asked about chemical recycling; I am absolutely aware of questions from that part of the recycling sector. We are keen to see the use of chemically recycled plastic, which is really important for increasing the supply and quality of recycled plastic—especially some types of plastic that are hard to make with mechanically recycled plastic. The Government are investing in chemical recycling facilities to support the development of the technology. This legislation allows for chemically recycled plastic to contribute towards the 30% recycled plastic threshold for the purposes of the tax. I know that some have argued that that is not enough, but the mass balance approach that they are arguing for is a significant shift; it is about a chemically recycled plastic being attributed to packaging rather than contained in packaging. That is quite a fundamental change. We are looking at that but it would require new legislation, and we will not rush into that at this point.
In conclusion, this is an important piece of legislation, which will help this country fight the scourge of plastic pollution and cut carbon emissions by boosting recycling rates. Ultimately, it will play a part in unlocking economic benefits through the encouragement of green growth and innovation. Equally, the instrument will make sure that we tackle plastic waste in a proportionate and effective way, for the benefit of consumers and businesses alike.
Abena Oppong-Asare
I thank the Minister for answering the points I raised. I welcome the fact that detailed guidance will be provided by HMRC, particularly in relation to businesses. I appreciate that the Government have done extensive consultation with a number of stakeholders, but the ones I have engaged with represent quite a number of businesses. What are the timescales when it comes to HMRC’s publication of the guidance? There has been confusion about what businesses are eligible to do, and it is important that we get the issue right.
Helen Whately
I am happy to respond briefly. Guidance has in fact already been published; this particular guidance first came out in November, and the most recent update was just a couple of days ago. I hope that answers the questions put by the businesses that the hon. Lady referred to; they can, of course, follow up with HMRC if they have any further questions.
Question put and agreed to.
Treasury
Helen Whately Excerpts(2 years, 3 months ago)
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Lucy Frazer
Legal interpretation tax losses arise when businesses take a different view from HMRC of how the law should be applied, resulting in a different tax outcome. This issue has proven stubborn and difficult to tackle. Disputes often arise late in the day and are not identified in time for formal compliance enquiries to be undertaken, resulting in irrecoverable losses to the Exchequer. The new notification requirement will tackle the legal interpretation tax gap in a well-targeted and proportionate way, raising £130 million over the next five years, while driving positive behavioural change.
Rebated Fuel Rules: Construction Industry
The following is an extract from the Westminster Hall debate on Rebated Fuel Rules: Construction Industry on 19 January 2022.
Helen Whately
Despite diesel being one of the most polluting fuels that vehicles and machinery can use, red diesel benefits from a significant duty discount—a duty rate of around 11p compared with almost 68p per litre on standard diesel. That really is significant. As a consequence, businesses using red diesel pay far less for the harmful emissions they produce than individual car owners. The tax changes that we are introducing in April mean most current users of red diesel in the UK will instead be required to use diesel taxed at the standard fuel duty rate like motorists, which more fairly reflects the harmful impact of the emissions that are produced.
[Official Report, 19 January 2022, Vol. 707, c. 165WH.]
Letter of correction from the Exchequer Secretary to the Treasury:
An error has been identified in the response I gave to the debate on Rebated Fuel Rules: Construction Industry.
The correct statement should have been:
Helen Whately
Despite diesel being one of the most polluting fuels that vehicles and machinery can use, red diesel benefits from a significant duty discount—a duty rate of around 11p compared with almost 60p per litre on standard diesel. That really is significant. As a consequence, businesses using red diesel pay far less for the harmful emissions they produce than individual car owners. The tax changes that we are introducing in April mean most current users of red diesel in the UK will instead be required to use diesel taxed at the standard fuel duty rate like motorists, which more fairly reflects the harmful impact of the emissions that are produced.
Rebated Fuel Rules: Construction Industry
Helen Whately Excerpts(2 years, 3 months ago)
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The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Mr Bone, and I congratulate the hon. Member for Upper Bann (Carla Lockhart) on having secured this debate on the important changes we are making to the taxation of diesel, which take effect this April. Before I address the points raised by the hon. Member for Upper Bann and other hon. Members, I will briefly run through the reform we are introducing and the thinking behind it.
I hope it will not come as a surprise to hon. Members that the Government take their world-leading environmental commitments very seriously and are determined to achieve our climate change and environmental targets, including to improve the UK’s air quality. That is why, to help achieve net zero and improve air quality, the Chancellor announced back at Budget 2020 that the Government will reduce the entitlement to use so-called red diesel from April this year.
Red diesel is currently used for a wide variety of purposes, such as powering bulldozers and cranes in the construction industry, as well as in the refrigeration section of lorries, in off-grid heating and in agriculture. It accounts for around 15% of all the diesel used in the UK and, as such, is responsible for the production of nearly 14 million tonnes of carbon dioxide a year—that is nearly 3% of total UK emissions. I am therefore quite surprised to hear such opposition from hon. Members from the Scottish National party, the Liberal Democrats and Labour, as well as from hon. Members from Northern Ireland, considering the importance of tackling climate change and reducing emissions.
Helen Whately
I will make a little more progress, and then I will be very happy to. I am keen to make sure I address hon. Members’ points, which I have listened to and noted down during the debate.
Despite diesel being one of the most polluting fuels that vehicles and machinery can use, red diesel benefits from a significant duty discount—a duty rate of around 11p compared with almost 68p per litre on standard diesel. That really is significant. As a consequence, businesses using red diesel pay far less for the harmful emissions they produce than individual car owners. The tax changes that we are introducing in April mean most current users of red diesel in the UK will instead be required to use diesel taxed at the standard fuel duty rate like motorists, which more fairly reflects the harmful impact of the emissions that are produced.
Importantly, the Government have also heard from developers of alternative technologies—cleaner alternatives to red diesel—that the low cost of running a diesel engine on red diesel currently acts as a barrier to entry for greener alternatives. This widespread use of red diesel is actually counterproductive in terms of our ambitions to tackle climate change, reduce emissions and reduce pollution overall.
Jim Shannon
I kindly put two issues to the Minister. First, all Members, including my hon. Friend the Member for Upper Bann, have said that there needs to be a staging of this process. Only then will the new technology come through. That is not being negative; we all wish to achieve these goals, but there is a practicality issue. The second point, which I raised in my contribution, is that if exemptions are being given to farmers—which I agree with—would it be possible to have exemptions for those who depend on the generator system? Minister, we are not agin ye—to use an Ulsterism—but we really do think that at this stage there should be some honesty and flexibility in the process.
Helen Whately
I heard the hon. Member’s point there. A number of colleagues, including the hon. Member for Upper Bann, talked about there being a cliff edge, and others have asked for a delay. This was first announced back in 2020 and was confirmed in the spring Budget of 2021 to be introduced this coming April, so I would say that there has been a substantial lead time into the introduction of this policy—it is simply not coming as a surprise.
There has been substantial consultation with industry and consideration of the cases that specific sectors have made about the challenges that the shift to paying tax at the same rate as standard diesel might mean for them. The Government have listened to those concerns and made specific exemptions where we can see very material impacts—for instance on the cost of goods and services to households. There is an exemption around some use of red diesel for the purposes of generating energy for those who are off-grid—there is a specific exemption relating to that.
Although the construction sector, and mining and quarrying, which my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) mentioned, argued throughout the consultation process that they should be exempt, their case was simply not compelling against our overall objective to incentivise greener alternatives and greater fuel efficiency and to shift to a position, which can only make sense, where the appropriate level of tax is paid on such a polluting and harmful fuel to reflect the harm that using it causes. However, as I say, we did listen and consult substantially on this proposal; we heard among others from the construction sector and from business representatives in Northern Ireland. We did listen, but we had to make the decision that this is part of an overall direction of travel where we are committed to tackling climate change and the harmful effects of pollution.
Sir Greg Knight
I do not think anyone is questioning the Government’s motive. The problem is, in relation to quarrying in particular, that no alternative equipment is available. We cannot pursue quarrying with a battery-powered machine or an electric machine with long cables. There is no alternative to using diesel.
Helen Whately
As we have heard from those who are trying to develop alternatives, one of the barriers to developing those alternatives—one of the things that reduces the incentives to do so—is the relatively low cost of red diesel. It is only by addressing the fact that there is such a low tax rate on red diesel that we incentivise the development of alternatives—and we are seeing the development of alternatives.
Helen Whately
I will make some more progress. JCB developing its hydrogen-fuelled digger is one example, and Volvo is another example. So we are seeing the development of alternatives. This proposal is a really important part of ensuring that the incentives are there for these things to happen.
I will pick up on a few other points that hon. Members have made. The hon. Member for Upper Bann talked about the impact of covid on the construction sector. I heard the phrase “a perfect storm” from the right hon. Member for Orkney and Shetland (Mr Carmichael). I will say a couple of things. First, we looked at the cost implications, and that is why there have been some exemptions in very specific areas where we thought the taxation change might have a material impact on household costs. However, for the areas where the change is being introduced, the Government do not believe there is a material change in the ultimate prices to households. The cost of fuel is relatively small for most businesses—I recognise that that is not the case for all businesses.
The other issue, in the context of covid, and taking a step back, is that we have put in a £400 billion package of support for the economy throughout this pandemic. We have already provided £250 million to local authorities in England and recently provided an extra £100 million that local authorities will distribute to businesses affected by covid to support them through the difficult times that we recognise they are going through. The Barnett equivalents of those amounts will go to the devolved nations. So we are giving a huge amount of support to businesses throughout this pandemic—we are absolutely mindful of that. Given that that support is in place, that particular issue is not a reason not to continue with the very important commitments that we have made—and that other parties have supported—to transition to a greener economy.
Mr Carmichael
Will the Minister tell the House what reduction in emissions will be achieved as a consequence of this measure?
Helen Whately
The right hon. Member has asked me to forecast something that clearly has a level of uncertainty. Some businesses will—[Interruption.] If he will just listen to me, some businesses will continue to use diesel but will switch to standard diesel. Others will shift to alternatives. We also expect to see greater fuel efficiency. What we do know, as I said earlier, is the size of the problem. Diesel emits 14 million tonnes of carbon dioxide a year—around 3% of total UK emissions. It is a significant amount, which we should not be overlooking and trying to delay taking action on. I am surprised to hear colleagues arguing for that.
Peter Grant
I am grateful to the Minister for admitting that the Government do not know what reduction in diesel fuel usage they expect to get from the proposal. I will ask the question another way. The figures in the Government’s Budget papers have been cleared by the Office for Budget Responsibility, which will have looked at the assumptions built into them. Is it correct to say that in forecasting the tax take from the tax over the next four years the Government have assumed that there will be no reduction in the number of litres used and therefore in the usage of diesel fuel?
Helen Whately
That is not a figure that I have seen, but I can double-check that. I was asked specifically whether there has been an economic impact assessment. We consulted on the proposal and assessed the expected impact. As usual, a tax information and impact note was produced and published, as hon. Members would expect.
For those who said that the change will not make a difference to the environment, or will backfire, as I mentioned it is about incentivising the development of alternatives. Alternatives are already being developed. Specifically to support that, the Government have doubled the funding for energy innovation through the £1 billion net zero innovation portfolio. The Department for Business, Energy and Industrial Strategy recently announced £40 million of funding for the red diesel replacement competition, which is part of that portfolio, to specifically grant funding to projects that will develop and demonstrate lower-carbon, lower-cost alternatives to red diesel for the construction and mining and quarrying sectors.
Helen Whately
My apologies—I thought that I had until 5.45 pm. In that case, I will wind up by saying that I thank hon. Members for their contributions and hope that they will recognise the importance of the tax reforms for our ambitions to tackle climate change and reduce pollution.
Taxation: Silage Film
Helen Whately Excerpts(2 years, 3 months ago)
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The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Amber Valley (Nigel Mills) on securing the debate and on his comments. I have listened carefully to what he has said. I share his expressed aim of ensuring that we get this tax right, and I very much appreciate the tone that he took.
As context to this debate and to the plastic packaging tax overall, I think that we can all agree that plastic waste is a significant and serious environmental threat, because plastics do not decompose. They can last centuries in landfill sites. With our commitment to reach net zero while driving jobs and growth, and our pledge, through the Environment Act 2021, to leave a better world for future generations and build back greener, the Government are determined to use our battle against pollution and climate change to make a positive difference to people’s lives and the wider economy. That is why we have been focused for some years on developing the right incentives, so that businesses can play their part in supporting us in the green economic transition.
That includes our introduction, back in 2015, of a 5p levy on single-use plastic bags, which led to a more than 95% drop in plastic carrier bag sales in England’s main supermarkets. Last year, we went even further, doubling the levy to 10p. As part of DEFRA’s 2018 resources and waste strategy and our 2019 manifesto, we said that we would introduce the tax on plastic packaging that we are discussing today. We estimate that the tax will lead to around 40% more recycled plastic being used in packaging in 2022-23, compared with current levels. Given that the use of new plastic in manufacturing generates more carbon than recycled plastic, we estimate the tax will save nearly 200,000 tonnes of carbon dioxide in the same year.
Turning specifically to how the tax relates to silage film, let me address the points that my hon. Friend made so logically. First, the design and structure of the plastic packaging tax reflects extensive stakeholder consultation, including two design consultations in 2019 and 2020 and three technical consultations on the legislation. Her Majesty’s Revenue and Customs has also established an industry working group made up of trade bodies and organisations, which was consulted on the finer detail of the policy, legislation and guidance. As part of that consultation work, Treasury and HMRC officials met Berry BPI, a plastic packaging manufacturer based in my hon. Friend’s constituency. There has been substantial consultation and engagement, so I was surprised to hear my hon. Friend say that the guidance comes as a surprise.
My hon. Friend talked about DEFRA’s producer responsibility obligations, which it is in the process of reforming. I am clear that, as he indicated, those obligations and the tax are different schemes with different sets of rules and objectives, and they use intentionally different definitions of packaging. The definition for the plastic packaging tax covers products designed to contain, protect, handle, deliver or present goods at any stage in the supply chain. Unlike DEFRA’s responsibility obligations, the tax includes goods that meet that definition even if they are used by an end user. That is in order to better achieve the objective of the tax, which is to reduce the environmental harm caused by plastic.
During silage season, large amounts of silage film are used by farmers throughout the country. I am sure hon. Members are aware of the quantity of plastic used; I see it in my own area of the countryside. As we attempt to reduce the use of non-recycled plastic and the amount of plastic overall that ends up in landfill, it is right and it makes sense for the Government to include the use of plastic for silage in the tax. Like cling film and plastic wraps, silage film meets the definition I outlined because it is suitable for use in the supply chain for the containment of silage, but it can also be used by farmers—the main end users—to make their own silage.
Robbie Moore
I want to pick up on what I feel is the nub of the issue. Silage wrap is used as part of the process of fermentation to produce silage; it is not classified as packaging in isolation. Could the Minister explore that point specifically?
Helen Whately
I fully appreciate my hon. Friend’s point, which I will come to in a second. There are two sides to this issue. On the one hand, silage film can be part of the supply chain; on the other, it can be used by farmers, as end users, to make their own silage by wrapping grass and other crops with the film. If the Government exempted silage wrap and similar items, such as pallet wrap and cling film, we would be shying away from dealing with the overall challenge posed by the use of plastic packaging. That would undermine the aim of this tax, which is to reduce the environmental harm caused by plastic. I do not for a moment dispute that the film is part of the process of turning grass into silage. However, that does not exempt it from falling within the definition for the tax.
That definition is targeted so that it does not include plastic packaging products that are essential for goods to be used, in contrast to products that are essential for goods to be manufactured. Therefore, products such as tea bags, coffee pods, inhalers and lighters are not taxable because the product contained by the packaging simply could not be used by the end user without the packaging. However, that is not the case for silage film.
Douglas Ross
The Minister has accepted that farmers cannot get silage without silage film. Grass cannot ferment without it. Should it therefore not fall under the heading of plastic packaging that is an integral part of the good? Simply put, it is needed to produce silage. The Minister briefly said that there had been wide consultation. Did any farming unions across the United Kingdom contribute to the consultation? If not, does that not suggest that they did not think they were affected by the change?
Helen Whately
I am happy to get back to my hon. Friend on the conversations that have taken place with different sectors, including the agriculture sector, that were part of work done over the last couple of years on the introduction of the tax.
The definition is set such that it does not include plastic packaging products that are essential for goods to be used, such as coffee pods or asthma inhalers. However, where single-use plastic is required for something to be made, as is the case with silage, it does fall within the definition.
Nigel Mills
We are getting to a perverse situation where things such as coffee pods or perforated bags for boiling rice, which there is no need to use as rice can be cooked without the plastic and coffee can be made without single-use plastic pods, are exempt from the tax, yet silage film, which is an integral part of the process and which there is no way around using, falls within the tax. That is not achieving the objectives. It will seem bizarre to people that we exempt plastic coffee pods but not silage film. Plastic coffee pods cannot be drunk.
Helen Whately
I gave examples of some specific products where the plastic is inherently part of the product—ink cartridges would be another. I recognise that there are some kinds of plastic that are harder to make using recycled plastics. One objective of the tax is to improve the rationale and incentives for the development of plastic packaging that uses more recycled plastic, and to make sure that more plastic is recycled and re-enters the supply chain. Although that will not necessarily happen immediately, it is part of shifting the incentives to encourage businesses to innovate and develop those products. We are already seeing that; as my hon. Friend the Member for Amber Valley knows, Berry BPI is already making great strides in producing high-quality recycled plastic that can be used for a variety of purposes, including agricultural purposes. I know that other businesses are working on this and, with the incentives, more will follow suit.
In conclusion, I reiterate that we have worked closely with manufacturers, importers, the devolved Administrations and others affected by this tax at every stage of its introduction. HMRC has been working closely with the industry, and that has informed the development of the categories of products that are in and out of scope of the tax. I assure hon. Members that HMRC and the Treasury are continuing those conversations and listening to industry. I am confident that by incentivising innovation and encouraging new ideas across our economy, including in agriculture, we will ultimately achieve huge benefits for the environment, nature and the world.
Question put and agreed to.
Finance (No. 2) Bill (Fifth sitting)
Helen Whately ExcerptsTuesday 11th January 2022
(2 years, 3 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 January 2022 - (11 Jan 2022)
The Chair
With this it will be convenient to discuss the following:
That schedule 16 be the Sixteenth schedule to the Bill.
New clause 8—Emissions certificates—
“The Government must publish within 12 months of this Act coming into effect an assessment of the impact of sections 99 and Schedule 16 of this Act on the goal of tackling climate change and the UK‘s plans to reach net zero by 2050.”—(Alison Thewliss.)
I think we might try to see whether we can let SNP Members speak to new clause 8 before the retaliation from the Government Benches, because I think that will make it easier to follow the debate.
The Exchequer Secretary to the Treasury (Helen Whately)
I thank you, Sir Christopher—and the hon. Member for Gordon, who duly flagged the order of proceedings. Clause 99 and schedule 16 make technical amendments to capital allowances, company car tax and vehicle excise duty legislation so that the tax system continues to function as intended when vehicles are certified through the new domestic comprehensive vehicle type approval scheme due to be introduced this year.
A vehicle manufacturer is able to apply for a type approval to allow specific types of vehicles to be used on the road and can then certify that each vehicle manufactured within that type conforms with the specifications of the approval obtained. Since the end of the transition period on 31 December 2020 following the UK’s withdrawal from the European Union, European type approvals have no longer been automatically recognised for vehicles for use on roads in Great Britain.
Since 1 January 2021, a provisional domestic type approval scheme has been in operation. Manufacturers with an EU type approval have been required to apply for a provisional domestic type approval, which is valid for a maximum of two years. During 2022, the provisional domestic type approval scheme will be gradually replaced with a new comprehensive domestic type approval scheme, which will introduce new certificates of conformity. This will be implemented through separate legislation in 2022 by the Department for Transport.
Clause 99 and schedule 16 make technical amendments to relevant legislation to update the types of official vehicle approval certification recognised for determining the level of a vehicle’s carbon dioxide emissions for the purposes of capital allowances, company car tax and vehicle excise duty, including new certificates of conformity that will be introduced through the domestic type approval scheme, allowing manufactures to continue to report their CO2 emissions. This will ensure that vehicle owners and keepers continue to pay the tax for their vehicles as intended from 2022 following the introduction of the new scheme.
For the purpose of capital allowances, the clause and schedule will also confirm in legislation that the applicable CO2 emission figure from the official documentation will be that certified under the worldwide harmonised light vehicle test procedure. The technical changes in the clause and schedule will ensure that the tax system continues to function as intended when vehicles are certified through the new domestic comprehensive vehicle type approval scheme due to be introduced in 2022.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 99, which introduces schedule 16, which concerns emissions certificates for vehicles. When purchasing a car, capital allowances are in part determined by the level of CO2 emissions. A 100% first-year allowance is available for new cars that have zero CO2 emissions, including electric cars. Otherwise, writing down allowances are available at the main rate of 18% per annum for electric cars and those with low CO2 emissions—up to 50 grams per kilometre driven—or 6% per annum for those with emissions exceeding 50 grams per kilometre. The measures in the clause allow for greater CO2 emissions figures to be used for purposes of capital allowances, taxable benefits arising from provisions of cars and vehicle excise duty. For that reason, we will not oppose the clause.
Richard Thomson
Thank you, Sir Christopher, for your opening comments on this group. My party does not get too many advances or victories in this place, so it is important to savour them when we can. I will certainly savour this one. I have a sense of clairvoyance about what the Minister will say in response.
We fully support the intention behind schedule 16. It is important to have the certification regime in place. However, as I argued when discussing the SNP’s new clause 5 in the previous group, it is important not only that consumers have confidence in the figures that are published, but to understand the impact that their publication has on behaviour. When we discussed new clause 5, we talked about the very incremental changes to vehicle excise duty, and my party proposed that we should look at the impact of those on consumer behaviour. Similarly, we feel we must understand how emissions certification changes consumer and manufacturer behaviour.
As a fundamental point, when we are as engaged in trying to achieve net zero as all Governments in these islands say that they are, it is important that Government have clear oversight of how spending and taxation influence behaviour in driving movement towards net zero. This measure should be no exception, and that is what our new clause seeks to achieve. In the fairly safe assumption that it will not be accepted by the Government, I would like to know how they intend to monitor how the changes drive behaviour.
Helen Whately
It is a pleasure to hear the hon. Member for Gordon argue for new clause 8. It would require the Government to publish, within 12 months of the Bill coming into effect, an assessment of the impact of clause 99 and schedule 16 on the goal of tackling climate change and the UK’s plans to reach net zero.
For the reasons we set out in detail during the Committee’s debate on new clause 5, this similar new clause is simply not necessary. Moreover, clause 99 and schedule 16 make only minor technical amendments to vehicle tax legislation to ensure that it continues to function as intended. The measure is not expected to have any significant climate change impacts. I therefore urge the Committee to reject new clause 8.
I thank the hon. Member for Erith and Thamesmead for expressing the Opposition’s support for clause 99 and the schedule. I commend the measures to the Committee.
Question put and agreed to.
Clause 99 accordingly ordered to stand part of the Bill.
Schedule 16 agreed to.
Clause 100
Increase in membership of the Office of Tax Simplification
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 9—Composition of the Office of Tax Simplification—
“The Government must publish within 12 months of this Act coming into effect an assessment of the composition of the Office of Tax Simplification membership with a view to ensuring it is diverse and representative.”
New clause 10—Capacity of the OTS—
“The Government must publish within 12 months of this Act coming into effect a review of the membership and capacity of the OTS, including consideration of the capacity the membership would have to deal with an expansion of its remit to include fairness in the tax system.”
Finance (No. 2) Bill (Third sitting)
Helen Whately ExcerptsWednesday 5th January 2022
(2 years, 3 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 January 2022 - (5 Jan 2022)
The Chair
With this it will be convenient to consider that schedule 10 be the Tenth schedule to the Bill.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Dame Angela.
Clause 75 and schedule 10 make technical amendments to the existing legislation that restricts the entitlement to use rebated red diesel and biofuels from 1 April 2022, to adjust restrictions and ensure that the legislation operates as intended.
To help achieve net zero and improve UK air quality, the Government announced at Budget 2020 that they would reduce the entitlement to use rebated diesel and biofuels, which currently enjoy a duty discount, from this April. These tax changes will ensure that most current users of rebated diesel use fuel taxed at the standard rate for diesel from April 2022, like motorists, which more fairly reflects the harmful impact of the emissions they produce. The changes will also incentivise users of polluting fuels, such as diesel, to improve the energy efficiency of their vehicles and machinery, invest in cleaner alternatives or just use less fuel.
Following consultation in 2020, the sectors that will be allowed to continue to use rebated diesel and biofuels beyond April 2022 were confirmed at spring Budget 2021, with the changes legislated for in the Finance Act 2021. Clause 75 and schedule 10 will make technical amendments to the Hydrocarbon Oil Duties Act 1979 and the Finance Act 2021 to adjust restrictions on the entitlement to use rebated diesel and rebated biofuels, clarify how the changes to the new rules work, and allow the legislation to operate as intended.
In summary, the changes will alter the circumstances in which the use of rebated diesel and rebated biofuels will be permitted from 1 April 2022, including provisions aimed at transition to the new rules. They will also amend definitions relating to certain vehicles, machines and appliances. Some of these changes follow feedback received from stakeholders since the Finance Act 2021 received Royal Assent. Overall, the technical changes in this clause and schedule will ensure that the Government’s reforms to the tax treatment of rebated diesel and biofuels from April 2022 work as intended.
Abena Oppong-Asare
I thank the Minister for her explanation of the clause, which introduces technical amendments to the changes introduced to restrict the entitlement to use rebated fuel, more commonly known as red diesel. We discussed the substance of that change in Committee on the last Finance Bill. As I said then, we support the intention behind the Government’s measure. There is a clear need to ensure that fuel duty rebates are as limited as possible in order to meet our net zero commitment.
The amendments made by this Bill are technical in nature, and we do not oppose them. However, will the Minister set out which, if any, industries will be affected by the changes and what work is being done to ensure that they are prepared, given that we are now only a few months from the introduction of the changes? Will she also update us on preparations by Her Majesty’s Revenue and Customs and other agencies for the changes? Is she confident that the Government will be able to ensure compliance from April this year? The Minister’s colleague, the Financial Secretary to the Treasury, mentioned that there has been some restructuring around HMRC, but I echo the earlier comments by the hon. Member for Glasgow Central and my hon. Friend the Member for Ealing North, who explained that HMRC has been busy for a number of years. Will the Minister update us on what work has been done to ensure that we are prepared for this change?
Alison Thewliss
I am glad that the definitions are being amended to include fairs and circuses, of which there are many in my constituency, to allow them to continue to use rebated diesel and biofuels after 1 April 2022. In that industry it is quite difficult to adapt machines to use other sources. The showpeople I represent will be pleased that the Government have listened on this measure, and I thank the Minister for that.
Helen Whately
I welcome the support that the hon. Member for Erith and Thamesmead expressed for the intention behind this measure and her recognition that the changes are of a technical nature and that the Opposition therefore will not oppose the clause. I assure her that there has been substantial consultation on the overall policy. Indeed, as the hon. Member for Glasgow Central said, the Government have listened, and that is reflected in some of the changes. I am confident in HMRC’s ability to monitor compliance.
Question put and agreed to.
Clause 75 accordingly ordered to stand part of the Bill.
Schedule 10 agreed to.
Clause 76
Rates of tobacco products duty
Question proposed, That the clause stand part of the Bill.
Helen Whately
The clause implements changes announced in the autumn Budget 2021 on tobacco duty rates. The duty charged on all tobacco products will rise in line with the tobacco duty escalator, with additional increases made for hand rolling tobacco and to the minimum excise tax on cigarettes.
Smoking rates are falling in the UK, but smoking remains the biggest cause of preventable illness and premature deaths in the UK, killing around 100,000 people a year and about half of all long-term users. All those factors mean that we need to continue to encourage more people to kick the habit. We have already set out ambitious plans to reduce the number of smokers from 14% to 12% of the population by 2022, as set out by the Department of Health and Social Care in its tobacco control plan. We have announced that we aim to reduce smoking prevalence in England to 5% or less by 2030. That includes a commitment to continue the policy of maintaining high duty rates for tobacco products to improve public health.
According to Action on Smoking and Health, smoking costs society almost £14 billion per year, including a £2 billion cost to the NHS because of the disease caused by smoking. At autumn Budget, the Chancellor announced that the Government would increase tobacco duty in line with the escalator. The clause specifies that the duty charge on all tobacco products will rise by 2% above retail price index inflation. Duty on hand-rolling tobacco increases by a further 4%, to 6% above RPI inflation. The clause also increases the minimum excise tax—the minimum amount of duty to be paid on a pack of cigarettes—by an additional 1%, to 3% above RPI inflation.
The clause will continue our tried-and-tested policy of using high duty rates on tobacco products to make tobacco less affordable and to continue the reduction in smoking prevalence. That will reduce the burden placed on our public services by smoking. I commend the clause to the Committee.
Abena Oppong-Asare
As the Minister set out, the clause raises the duty on tobacco products, in line with the duty escalator, by RPI plus 2% for cigarettes and RPI plus 6% for hand-rolling tobacco. The minimum excise tax has been increased. We do not oppose those increases, but I will take this opportunity to make a couple of wider points about action to prevent smoking and the Treasury’s role in it.
Action on Smoking and Health stated that last year’s Budget was
“a small step forward on tobacco, but on its own won’t deliver on the Government’s commitment to a Smokefree 2030.”
In fact, projections show that the Government will miss that target by seven years, and double that for the poorest in society. As the Minister knows, tobacco duty has a dual role: raising revenue for the Government and reducing smoking rates. The latter role is most effective when combined with a comprehensive funded strategy to reduce smoking. Unfortunately, the funding for such a strategy has been repeatedly cut in recent years as part of broader cuts to public health grants. The Minister mentioned that smoking has fallen, but recently published evidence shows a 25% increase in smoking among young adults since the first lockdown, so it is clear that there is a lot of work to be done.
In a debate on smoking last year, the Under-Secretary of State for Health and Social Care, the hon. Member for Erewash (Maggie Throup), said in response to a question on taxation:
“That is a matter for Her Majesty’s Treasury. However, the Department continues to work with HMT to assess the most effective regulatory means to support the Government’s smoke-free 2030 ambition, which includes exploring a potential future levy.”—[Official Report, 16 November 2021; Vol. 703, c. 181WH.]
Will the Minister tell us what work the Treasury is doing to design a levy on tobacco manufacturers, along the lines of the “polluter pays” principles, to pay for campaigns to stop smoking and other public health measures? Those large and profitable companies often pay relatively little tax in this country, while those who smoke rightly pay a large amount of tax every time they buy a pack of cigarettes. Many public health experts urge the Government to look at the idea of a levy, and I strongly hope that the Minister will say more on that.
Helen Whately
I am glad to hear that the Opposition will not oppose the clause. The hon. Lady has said that it is not enough on its own, and the Government agree. Our tax treatment of tobacco is just one of a set of policies in place to reduce smoking. I assure her that the UK is seen as a global leader on tobacco control. Over the last two decades, we have implemented regulatory measures to stop young people smoking and non-smokers from starting, and to support to help smokers quit.
The hon. Lady also asked about a tobacco levy. I can tell her that the Government consulted on proposals for a tobacco levy in 2015. That consultation concluded that a levy is not the most effective way to raise revenue or protect public health. It would add complexity and additional costs, while the amount of revenue it could raise is uncertain.
Helen Whately
I am happy to take that point away and look into the position taken by my colleagues in the Department of Health and Social Care and the Treasury. I will get back to the hon. Lady on the question of the levy. I can assure her that work is currently happening on a tobacco control plan. The Government are considering policy and regulatory changes, which will be part of our ambition to be smoke-free by 2030. Those will be set out in due course in our tobacco control plan. I commend the clause to the Committee.
Question put and agreed to.
Clause 76 accordingly ordered to stand part of the Bill.
Clause 77
Rates for light passenger or light goods vehicles, motorcycles etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 5—Vehicle taxes: effect on climate change goals—
“The Government must publish within 12 months of this Act coming into effect an assessment of the impact of sections 77 to 79 on the goal of tackling climate change and on the UK’s plans to reach net zero by 2050.”
New clause 15—Review of VED revenue from light passenger or light goods vehicles, motorcycles etc in context of future demand for electric vehicles—
“(1) The Government must publish within twelve months of this Act coming into effect an assessment of the expected level of revenues of Vehicle Excise Duty from light passenger or light goods vehicles, motorcycles etc in future years in the context of the expected uptake of electric vehicles.
(2) The Review must also consider possible alternatives to Vehicle Excise Duty on these vehicles.”
Helen Whately
Clause 77 makes changes to uprate vehicle excise duty—or VED—for cars, vans and motorcycles in line with the retail prices index from 1 April 2022. VED is paid on vehicle ownership, and rates chargeable are dependent on various factors, including the vehicle type, date of first registration and carbon emissions. The Government has uprated VED for cars, vans and motorcycles in line with inflation every year since 2010, which means that rates have remained unchanged in real terms during this time. The changes made by clause 77 will uprate VED rates for cars, vans and motorcycles by RPI only for the 12th successive year, meaning that VED liabilities will not increase in real terms. The standard rate of VED for cars registered since 1 April 2017 will increase by only £10. The flat rate for vans will increase by £15 and motorcyclists will see an increase in rates of no more than £5.
New clause 5, tabled by the hon. Member for Glasgow Central, asks the Government to publish within 12 months of this Bill coming into effect an assessment of the impact of sections 77 to 79 on the goal of tackling climate change and on the UK’s plan to reach net zero by 2050. Similarly, new clauses 4 and 8 tabled by the hon. Lady ask the Government to publish, within 12 months of this Bill coming into effect, impact assessments on the goal of tackling climate change and on the UK’s plan to reach net zero by 2050, first on the Act as whole, and, secondly, on section 99 and schedule 16. These amendments are unnecessary and should not stand part of the Bill.
The Government are proud of our world-leading climate commitments, most recently set out in the net zero strategy. The latest Budget and spending review confirm that since March 2021, the Government will have committed a total of £30 billion of domestic investment for the green industrial revolution. That investment will keep the UK on track to meet its carbon budgets and nationally determined contribution, and to reach net zero by 2050. The net zero strategy sets out how the Government will monitor progress to ensure that we stay on track for our emissions targets. That includes commitments to require the Government
“to reflect environmental issues in national policy making”.
At fiscal events, including the spending review 2021, all Departments are required to prepare their spending proposals in line with the Green Book, which sets out the rules that we use in the Treasury to guide individual spending decisions. The Green Book already mandates consideration of climate and environmental impacts in spending, and it was updated in 2020 to emphasise that policies must be developed and assessed against how well they deliver on the Government’s long-term policy aims such as net zero.
Furthermore, the Treasury carefully considers the climate change and environmental implications of relevant tax measures. The Government incorporated a climate assessment in all relevant tax information and impact notes for measures at Budget—they are published online—and we will continue to do so in future TIINs. For example, the TIIN for the new plastic packaging tax incorporates an assessment of anticipated carbon savings—nearly 200,000 tonnes of carbon dioxide in 2022-23. In addition, HMRC is exploring options further to strengthen the analytical approach to monitoring, evaluating and quantifying the environmental impacts of tax measures.
Given the substantial work already under way on these issues, the proposed amendment would add unnecessary bureaucratic requirements and layers of complexity. I therefore urge the Committee to reject new clause 5 and, for the same reasons, I will urge the Committee to reject new clauses 4 and 8 when we turn to those.
New clause 15, tabled by the hon. Members for Ealing North, for Erith and Thamesmead and for Blaydon, asks the Government to publish, within 12 months of the Act coming into effect, a review of the impact on VED revenue of future demand for electric vehicles. This new clause is also unnecessary and should not stand part of the Bill. The Government are committed to achieving net zero carbon emissions by 2050, and the transition towards electric vehicles and the phase-out of new petrol and diesel cars and vans will make a vital contribution to that. The Government have committed to ensuring, as we move forward with this transition, that revenue from motoring taxes keeps pace with this change, to make sure that we can continue to fund the excellent public services and infrastructure that people and families across the UK expect.
Analysis that projects the possible impact on VED revenues of future demand for electric vehicles is already in the public domain. First, since 2016, the Government have asked the Office for Budget Responsibility to publish a fiscal risks statement to improve disclosure and management of fiscal risks. The OBR’s 2021 fiscal risks report makes an assessment of the fiscal impact of achieving net zero, including the impact on VED and fuel duty receipts, which it explores under different climate change modelling scenarios.
Secondly, the net zero review published by the Treasury in October of last year also examines the possible decline in tax revenues, including VED and fuel duty receipts, as part of the transition to net zero. It notes that, were the current tax system to remain unchanged across the transition period, tax receipts from most fossil fuel-related activity would decline towards zero across the first 20 years of the transition, leaving receipts lower in the 2040s by up to 1.5% of GDP in each year relative to a baseline where they stayed fixed as a share of GDP.
Given that analysis of future VED revenues has already been published by both the Government and the OBR, the review of this issue sought by this new clause is unnecessary. I therefore urge the Committee to reject new clause 15.
Overall, the changes outlined in clause 77 will maintain revenue sustainability by ensuring that motorists continue to make a fair contribution to the public finances. I therefore urge that this clause stand part of the Bill.
Abena Oppong-Asare
Clause 77 raises the rate of vehicle excise duty for various categories of vehicle by RPI. This is a regular update to VED to ensure that it remains the same in real terms, and we do not oppose it. I do wish to make broader points about taxes affecting drivers and, in particular, to speak to our new clause 15.
Electric vehicles are not liable for vehicle excise duty, and of course their owners do not pay fuel duty. New clause 15 calls on the Government to report on expected future levels of vehicle excise duty in the context of the increasing uptake of electrical vehicles. It is designed to encourage the Government to begin to think and talk publicly about that critical question.
The transition from petrol and diesel cars to electric vehicles is critical as part of our broader transition to net zero. The Opposition have constantly raised concerns about the fact that the Government are not doing enough to support the take-up of electric vehicles, whether through supporting consumers and producers or improving the critical charging infrastructure. We continue to believe that the Government must do more in that area, but we also believe that they must begin to set out how they will deal with the fiscal consequences of the transition.
Fuel duty and VED currently raise around £35 billion for the Treasury each year. They are by far the largest revenue-raising environmental taxes. It is a truly significant amount of Government revenue, equivalent to nearly half the Education budget, but as electric vehicles become an increasing share of vehicles on the roads, that revenue will decline rapidly. One estimate shows that tax revenues from car usage could fall by around £10 billion by 2030, £20 billion by 2035, and £30 billion by 2040. The Treasury’s own net zero review stated that much of the current revenue from taxing fossil fuels was likely to be eroded during the transition to a net zero economy.
We might have expected the review to set out what the Treasury planned to do about that, but it was notably silent on that matter. When the Minister responds, can she tell us what work the Treasury is carrying out on that important issue and when it will set out its plans? Can she tell us what alternatives to VED the Treasury is considering—for example, road pricing or other taxes? Crucially, how will the Treasury balance the need to maintain income from driving with the need to incentivise the switch to electric vehicles? Those are critical questions, which cannot and must not be left to the last minute. We deserve to have an open debate about the best way forward. Motorists and taxpayers deserve clarity about how they will be taxed in the future. I hope that the Minister can begin to give us some insight into the Treasury’s thinking on this issue.
Finance (No. 2) Bill (Second sitting)
Helen Whately ExcerptsTuesday 14th December 2021
(2 years, 4 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 December 2021 - (14 Dec 2021)
Lucy Frazer
I thank the hon. Lady for indicating her support for clause 24, and I commend it to the Committee.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 25
Tonnage tax
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Sir Christopher.
Clause 25 reforms the UK’s tonnage tax regime from April 2022, with the aim that more firms will base their headquarters in the UK, using the UK’s world-leading maritime services industry and flying the UK flag. The UK tonnage tax regime was introduced in 2000 to improve the competitiveness of the UK shipping industry. It is a special elective corporation tax regime for operators of qualifying ships. Now that the UK has left the European Union, the Government will make substantive reforms to the regime for the first time since it was introduced, to help the UK shipping industry grow and compete in the global market. The reforms will make it easier for shipping companies to move to the UK, make sure that they are not disadvantaged compared to firms operating in other countries and reduce administrative burdens.
Clause 25 will make changes to the tonnage tax legislation contained in schedule 22 to the Finance Act 2000 to reform the regime from April 2022. Specifically, it will give effect to the following measures announced at the autumn Budget in 2021. The Government will give HMRC more discretion to admit companies to the regime outside the initial window of opportunity, where there is a good reason. The Government will reduce the lock-in period for companies participating in the tonnage tax regime from 10 to eight years, aligning the regime more closely with shipping cycles.
Now that the UK has left the EU, the Government will remove the consideration of flags from EU and EEA countries. Following this legislative change, HMRC will update its guidance to encourage the use of the UK flag by making it an important factor in assessing the value that companies who want to participate in tonnage tax will bring to the UK in the strategic and commercial management test. Finally, following the UK’s departure from the EU, the Bill will simplify a rule that may include distributions of related overseas shipping companies in relevant shipping profits.
These changes to modernise the tonnage tax regime will make sure that the UK’s maritime and shipping industries can compete in the global shipping market, bringing jobs and investment to nations and regions across the UK. I commend the clause to the Committee.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 25, which makes amendments to the tonnage tax regime. Tonnage tax is a special elective corporation tax regime open to operators of qualifying ships that fulfil certain conditions. The amendments will have effect from 1 April next year. At the autumn Budget in 2021, the Government announced that they would introduce a package of measures to reform the UK’s tonnage tax regime from April 2022, which they say aims to ensure that the British shipping industry remains highly competitive in the global market. As part of the package, the Government say these amendments support their aim of simplifying the operation of tonnage tax legislation and making it more flexible following the UK’s departure from the European Union. Clause 25 gives effect to some of these measures by amending the tonnage tax legislation contained in schedule 22 to the Finance Act 2000, as the Minister said.
In his Budget speech on 27 October, the Chancellor of the Exchequer said:
“When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours.”—[Official Report, 27 October 2021; Vol. 702, c. 282.]
Alison Thewliss (Glasgow Central) (SNP)
I support the comments made by the Labour Front-Bench spokesperson on this issue. Switching flag is the most crazy kind of gesture politics. Would it not have been better to look at green shipping? That would create a tax incentive for the industry, which is one of the leading contributors to emissions, to transfer to better forms of power, to reduce its carbon emissions and to have some positive impact on global emissions and the net zero target, rather than pursuing the gesture politics of switching flags on a ship.
Helen Whately
As I set out, the clause reforms the UK’s current tax regime to help the UK shipping industry grow and compete in a competitive global market. Overall, this will be to the benefit of our maritime industry and, therefore, to the UK as a whole, supporting GDP, tax revenues and jobs in the UK.
I will pick up on a couple of comments made by the Opposition Front-Bench spokespeople. On the points made by the hon. Member for Erith and Thamesmead, the clause is all about helping our shipping industry compete in a global market and making sure firms are not disadvantaged compared to those operating in other countries. It comes at a minimal cost to the Exchequer and we expect to see tax revenues in the sector increase as a result, because it will mean that more shipping groups are likely to headquarter in the UK. That will bring tax advantages and benefits to the UK, as well as tens of thousands of jobs that relate to that.
On the second point that the hon. Member made, I emphasise that the Treasury takes the recommendations of the Macpherson review very seriously and follows them in full. The reforms to our tax regime were rightly announced some months before they will come into force, in April next year.
The hon. Member for Glasgow Central talked about environmental factors. As part of the reforms, HMRC expects to update the guidance on assessing eligibility for the tonnage tax regime, and environmental factors will be considered as part of that, so it can help us on decarbonisation actions and ambitions.
Abena Oppong-Asare
I thank the Minister for her explanations. Has an assessment been made of whether anyone profited as a result of the Chancellor’s premature announcement to the press? Has any assessment been carried out?
Helen Whately
I emphasise what I said a moment ago: the Treasury followed in full the approach that should be taken, as set out in the Macpherson review in 2013. The Government’s tonnage tax reforms will ensure that the UK’s maritime and shipping industries remain highly competitive and bolster our reputation as a great maritime nation.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Amendments of section 259GB of TIOPA 2010
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 26 makes a change to ensure that corporation tax rules for hybrids and other mismatches operate proportionately in relation to certain types of transparent entity. Following recommendations by the OECD, the UK was the first country to implement anti-hybrid rules in 2017. These rules tackle aggressive tax planning by multinational companies that seek to take advantage of differences in how jurisdictions view financial instruments and entities.
With the benefit of three years’ experience of operating the rules, and with other countries following suit and introducing their own version of the rules, the Government launched a wide-ranging consultation on this area of legislation at Budget 2020. Following that consultation, several amendments were made to the rules in the Finance Act 2021, but the change that we are now considering, relating to transparent entities, was withdrawn from that Act to allow the Government additional time to consult stakeholders, so that they could ensure that the amendment had no unintended conse-quences.
We have had further engagement with stakeholders, and the amendment now provides for the specific change for transparent entities that the Government committed to making following last year’s consultation. The change made by the clause is technical and will impact multinational groups with a UK presence that are involved in transactions with certain types of entity that are seen as transparent, for tax purposes, in their home jurisdictions. Following the changes, this type of entity will be treated in the same way as partnerships in the relevant parts of the rules for hybrids and other mismatches. It is important that these rules are robust in tackling international tax planning, but also that they are not disproportionately harsh in their application.
Finance (No. 2) Bill (Second sitting)
Helen Whately ExcerptsTuesday 14th December 2021
(2 years, 4 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 December 2021 - (14 Dec 2021)
Lucy Frazer
I thank the hon. Lady for indicating her support for clause 24, and I commend it to the Committee.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 25
Tonnage tax
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Sir Christopher.
Clause 25 reforms the UK’s tonnage tax regime from April 2022, with the aim that more firms will base their headquarters in the UK, using the UK’s world-leading maritime services industry and flying the UK flag. The UK tonnage tax regime was introduced in 2000 to improve the competitiveness of the UK shipping industry. It is a special elective corporation tax regime for operators of qualifying ships. Now that the UK has left the European Union, the Government will make substantive reforms to the regime for the first time since it was introduced, to help the UK shipping industry grow and compete in the global market. The reforms will make it easier for shipping companies to move to the UK, make sure that they are not disadvantaged compared to firms operating in other countries and reduce administrative burdens.
Clause 25 will make changes to the tonnage tax legislation contained in schedule 22 to the Finance Act 2000 to reform the regime from April 2022. Specifically, it will give effect to the following measures announced at the autumn Budget in 2021. The Government will give HMRC more discretion to admit companies to the regime outside the initial window of opportunity, where there is a good reason. The Government will reduce the lock-in period for companies participating in the tonnage tax regime from 10 to eight years, aligning the regime more closely with shipping cycles.
Now that the UK has left the EU, the Government will remove the consideration of flags from EU and EEA countries. Following this legislative change, HMRC will update its guidance to encourage the use of the UK flag by making it an important factor in assessing the value that companies who want to participate in tonnage tax will bring to the UK in the strategic and commercial management test. Finally, following the UK’s departure from the EU, the Bill will simplify a rule that may include distributions of related overseas shipping companies in relevant shipping profits.
These changes to modernise the tonnage tax regime will make sure that the UK’s maritime and shipping industries can compete in the global shipping market, bringing jobs and investment to nations and regions across the UK. I commend the clause to the Committee.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 25, which makes amendments to the tonnage tax regime. Tonnage tax is a special elective corporation tax regime open to operators of qualifying ships that fulfil certain conditions. The amendments will have effect from 1 April next year. At the autumn Budget in 2021, the Government announced that they would introduce a package of measures to reform the UK’s tonnage tax regime from April 2022, which they say aims to ensure that the British shipping industry remains highly competitive in the global market. As part of the package, the Government say these amendments support their aim of simplifying the operation of tonnage tax legislation and making it more flexible following the UK’s departure from the European Union. Clause 25 gives effect to some of these measures by amending the tonnage tax legislation contained in schedule 22 to the Finance Act 2000, as the Minister said.
In his Budget speech on 27 October, the Chancellor of the Exchequer said:
“When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours.”—[Official Report, 27 October 2021; Vol. 702, c. 282.]
Alison Thewliss (Glasgow Central) (SNP)
I support the comments made by the Labour Front-Bench spokesperson on this issue. Switching flag is the most crazy kind of gesture politics. Would it not have been better to look at green shipping? That would create a tax incentive for the industry, which is one of the leading contributors to emissions, to transfer to better forms of power, to reduce its carbon emissions and to have some positive impact on global emissions and the net zero target, rather than pursuing the gesture politics of switching flags on a ship.
Helen Whately
As I set out, the clause reforms the UK’s current tax regime to help the UK shipping industry grow and compete in a competitive global market. Overall, this will be to the benefit of our maritime industry and, therefore, to the UK as a whole, supporting GDP, tax revenues and jobs in the UK.
I will pick up on a couple of comments made by the Opposition Front-Bench spokespeople. On the points made by the hon. Member for Erith and Thamesmead, the clause is all about helping our shipping industry compete in a global market and making sure firms are not disadvantaged compared to those operating in other countries. It comes at a minimal cost to the Exchequer and we expect to see tax revenues in the sector increase as a result, because it will mean that more shipping groups are likely to headquarter in the UK. That will bring tax advantages and benefits to the UK, as well as tens of thousands of jobs that relate to that.
On the second point that the hon. Member made, I emphasise that the Treasury takes the recommendations of the Macpherson review very seriously and follows them in full. The reforms to our tax regime were rightly announced some months before they will come into force, in April next year.
The hon. Member for Glasgow Central talked about environmental factors. As part of the reforms, HMRC expects to update the guidance on assessing eligibility for the tonnage tax regime, and environmental factors will be considered as part of that, so it can help us on decarbonisation actions and ambitions.
Abena Oppong-Asare
I thank the Minister for her explanations. Has an assessment been made of whether anyone profited as a result of the Chancellor’s premature announcement to the press? Has any assessment been carried out?
Helen Whately
I emphasise what I said a moment ago: the Treasury followed in full the approach that should be taken, as set out in the Macpherson review in 2013. The Government’s tonnage tax reforms will ensure that the UK’s maritime and shipping industries remain highly competitive and bolster our reputation as a great maritime nation.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Amendments of section 259GB of TIOPA 2010
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 26 makes a change to ensure that corporation tax rules for hybrids and other mismatches operate proportionately in relation to certain types of transparent entity. Following recommendations by the OECD, the UK was the first country to implement anti-hybrid rules in 2017. These rules tackle aggressive tax planning by multinational companies that seek to take advantage of differences in how jurisdictions view financial instruments and entities.
With the benefit of three years’ experience of operating the rules, and with other countries following suit and introducing their own version of the rules, the Government launched a wide-ranging consultation on this area of legislation at Budget 2020. Following that consultation, several amendments were made to the rules in the Finance Act 2021, but the change that we are now considering, relating to transparent entities, was withdrawn from that Bill to allow the Government additional time to consult stakeholders, so that they could ensure that the amendment had no unintended conse-quences.
We have had further engagement with stakeholders, and the amendment now provides for the specific change for transparent entities that the Government committed to making following last year’s consultation. The change made by the clause is technical and will impact multinational groups with a UK presence that are involved in transactions with certain types of entity that are seen as transparent, for tax purposes, in their home jurisdictions. Following the changes, this type of entity will be treated in the same way as partnerships in the relevant parts of the rules for hybrids and other mismatches. It is important that these rules are robust in tackling international tax planning, but also that they are not disproportionately harsh in their application.
Oral Answers to Questions
Helen Whately Excerpts(2 years, 4 months ago)
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Carla Lockhart (Upper Bann) (DUP)
The Exchequer Secretary to the Treasury (Helen Whately)
To help ourselves achieve net zero and improve UK air quality, we are reducing the entitlement to use red diesel, which currently enjoys a duty discount, from next April. The full duty rate more fairly reflects the damaging impact of diesel emissions, and will incentivise the development of greener alternatives.
Carla Lockhart
In my constituency and across Northern Ireland, small family-run construction companies and those operating on a larger scale are telling me that this move will cripple their profitability, and that alongside the significant increase in the cost of materials in the last year, it will make their operation even more challenging. Will the Chancellor and the Minister agree to meet industry representatives to hear about the real-life impact, and to explore how it can be addressed and how jobs and profitability in Northern Ireland can be protected?
Helen Whately
We recognise that this is a significant change for some businesses, but we have consulted on it since it was first announced in 2020. Those whom we have consulted include representatives of the construction sector and representatives from Northern Ireland, and the case simply is not compelling in comparison with the importance of reducing our harmful emissions. Red diesel leads to 14 million tonnes of carbon dioxide emissions each year, and we need to incentivise greener alternatives as part of our transition to net zero.
Matt Warman (Boston and Skegness) (Con)
I fully support the Government’s push towards net zero. Drainage boards do vital work to protect people, businesses and livelihoods from flood risk. Does the Minister agree that as they come to set their budgets it is vital that the Government provide assurance that their work will not be affected by changes to red diesel duty?
Helen Whately
My hon. Friend is right to say that drainage boards do really important work. The fact is that the public sector, as well as the private sector, needs to decarbonise. In fact, in a low-lying constituency where there is a great awareness of flooding and climate change it is probably even more important, and I am sure his constituents appreciate the importance of reducing our carbon dioxide emissions. I know that the Department for Environment, Food and Rural Affairs is working with the Association of Drainage Authorities on the point that he makes.
Mr Toby Perkins (Chesterfield) (Lab)
Siobhan Baillie (Stroud) (Con)
The Exchequer Secretary to the Treasury (Helen Whately)
The Government’s heat and building strategy announced £3.9 billion of funding to decarbonise buildings over the next three years. This included £1.8 billion of support for low income households. I am sure that my hon. Friend will be pleased to hear that her constituency was recently allocated £5.2 million to retrofit low-income homes.
Siobhan Baillie
A retrofit strategy also requires established accreditations that customers can trust and training that workers will want to re-skill into. SGS College, the Active Building Centre and others in my patch across Stroud are uniquely placed to create those programmes and certifications for the whole country so that we can implement the Government’s ambitions. Will my hon. Friend be working with the Department for Business, Energy and Industrial Strategy and the Department for Education to ensure that funding is available for this crucial work?
Helen Whately
My hon. Friend is absolutely right say that we need to have the right skilled workforce for our transition to net zero, and training is part of that. This year we have provided £6.4 million to help 18 training providers to train around 8,000 people, and our £2.5 billion funding for the national skills fund includes funding for employer-led boot camps. I would be very happy to meet her to discuss the part that SGS College and the Active Building Centre in her constituency could play in making sure that we have the workforce we need for the net zero transition.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
A decade ago we saw the failure of the green new deal, and only recently we have seen the complete and woeful failure of the green homes grant scheme. These were supposed to retrofit homes, create jobs and boost the economy. Will the Treasury work with the Department for Business, Energy and Industrial Strategy to get a grip on this, so that they invest taxpayers’ money in achieving net zero and creating jobs rather than throwing good money after bad?
Helen Whately
The green homes grant and its associated scheme for the Chancellor’s plan for jobs saw £1.75 billion invested in improving more than 100,000 homes. We are now bringing in a more targeted replacement, the home upgrade grant, to support low-income households, and that received £950 million at the spending review. We will continue to support low-income households to ensure that they become more energy efficient, which is good for keeping bills down and an important part of our net zero transition.
Jason McCartney (Colne Valley) (Con)
Mr Speaker
Order. I appeal to Members that if you all want to get in, you have to help each other. If you are not going to help each other, do not be disappointed when you do not get in. It is not fair, and the same goes for the Front Benchers. Topicals are meant to be quick, short and speedy to keep the business going. We are not being fair. Whoever is answering that question, please do so briefly.
The Exchequer Secretary to the Treasury (Helen Whately)
As we build a strong economy, we need to raise skills. That is why we announced in the spending review an increase of £3.8 billion in skills spending over this Parliament. The spending review included funding for a specific 50-plus training scheme to support people like those being helped by Teach A Trade so that they can retrain and stay in work. I am happy to speak further to my hon. Friend about how we can support Teach A Trade and others like it to do what they do.
Alison Thewliss (Glasgow Central) (SNP)
In this season of generosity and good will, will the Chancellor deliver a gift to the hard-pressed hospitality and tourism sector and amend the Finance (No. 2) Bill to extend the lower rate of VAT beyond March next year?
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
I chair the caucus of 40 Conservative MPs who have the River Severn—Britain’s longest river—flowing through their constituencies. The river is causing increasing destruction and chaos for our communities with the increasing floods. Will the Minister meet the River Severn Partnership, a consortium of councils up and down the River Severn, to hear what the flooding Minister—the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Taunton Deane (Rebecca Pow)—heard earlier this year during her visit to Shrewsbury, that there will be a gross value added uplift of up to £150 billion if we find a solution for managing Britain’s longest river?
Helen Whately
We recognise the important work of the River Severn Partnership. Between now and 2027, £170 million will be invested in flood and erosion risk management in the English Severn and Wye region, but I would be happy to meet my hon. Friend and colleagues to talk further.
Cat Smith (Lancaster and Fleetwood) (Lab)
Peter Gibson (Darlington) (Con)
I thank my right hon. Friend the Chancellor for all that he is doing on levelling up and, in particular, for the establishment of the Darlington economic campus. Can he update the House on how things are progressing and how many of his team are now enjoying life in Darlington?
Helen Whately
We are seeing a growing number of Treasury staff working in Darlington along with many Ministers spending time there. I am due to be there tomorrow and I think that my right hon. Friend the Chief Secretary to the Treasury will also be there this week.
Karl Turner (Kingston upon Hull East) (Lab)
Cider Industry: Duty Changes
Helen Whately Excerpts(2 years, 5 months ago)
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The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Mr Davies. I raise a metaphorical glass to congratulate my hon. Friend the Member for North Herefordshire (Bill Wiggin) on securing this debate, and I thank him for his constructive tone and his welcome for many of the announcements on alcohol duty in the Budget.
It is clear that my hon. Friend is indeed a true friend of the many cider producers in his constituency. I know that this is an industry with a long history in Herefordshire. In fact, as far back as 1724, Daniel Defoe wrote of the county’s people that
“they have the finest wool, and the best hops and richest cider in all Britain.”
As a Kent MP, I know that other parts of the country might dispute that claim, at least when it comes to hops. Today, as my hon. Friend pointed out, Herefordshire is home to many cider makers, small and large, producing drinks that are enjoyed both in this country and around the world. Although Herefordshire is a centre for the industry, the economic benefits of cider production are felt nationwide.
My hon. Friend is quite right to highlight cider producers’ contribution to the national economy and the many jobs that the industry supports. I am sure hon. Members can understand why the Government want this fantastic industry, which has been with us since at least Roman times, to go on to even bigger and better things.
Before I address the detailed points raised by my hon. Friend, I will briefly run through some of the changes we are making, which we believe will help the industry to go on to achieve further success. First, I will discuss alcohol duty reform. Quite frankly, reform of our alcohol tax laws is long overdue. They have barely changed since the 1990s. As my hon. Friend said, that is largely because of incoherent and prohibitive European Union rules that have hindered much-needed change. However, now we have left the EU, we have an unmissable opportunity to create alcohol laws that are simpler, fairer and indeed healthier, and by doing so we can help cider producers—along with British brewers, wine producers and spirit makers—to innovate and grow. That is why in the Budget we announced a series of major reforms to our alcohol duty laws, including the biggest reduction in cider duty for 98 years. Our new draft relief will cut duty on draft cider by 5%, encouraging people to choose to purchase cider in our great British pubs.
We look forward to working with the industry to understand how keg size and distribution methods can best support small producers and cider makers. We are also cutting duty on craft sparkling cider by up to half, so that anyone buying a 75 cl bottle of such cider that is 6.5% alcohol by volume will pay £1.25 less duty. This boost is a clear benefit of the Government’s decision to introduce a common-sense approach to alcohol duty and to remove the arbitrary and unfair premium rates on sparkling ciders and wines in the current system.
The new lower duty rates for ciders below 3.5% alcohol by volume will incentivise cider producers to innovate and develop healthier alternatives for consumers. As the Chancellor said at the Budget, sales of fruit cider have increased from one in 1,000 ciders sold in 2005 to one in four sold today. As has been mentioned, we are also cutting duty on such drinks by 13p a pint in the pub.
My hon. Friend the Member for North Herefordshire was right to highlight the health risks of white ciders. Although we are reducing the cost of lower-strength ciders, we are increasing duty on high-strength drinks, including harmful white ciders. Under our reforms, people buying superstrength ciders will pay 7p per 500 ml can. We believe that, together, such measures will not only boost British craft cider producers, but give consumers more choice, with healthier, lower-alcohol alternatives. They will boost community pubs by incentivising people to drink at their local instead of at home.
Beyond the duty changes, we are supporting the traditional cider industry in other ways. Although we are listening closely to the industry as part of our consultation on changing minimum duty requirements, we are keeping the definition of “cider” as a drink made wholly from apples and pears. My hon. Friend pointed out that we need to champion the little guy, and I agree. That is why all the measures will be underpinned by a new small producer relief for businesses making cider that is less than 8.5% alcohol by volume. That will build on the duty exemption that the smallest cider makers currently enjoy and help smaller, innovative craft cider makers and other producers, such as those found in Herefordshire and Somerset, to expand and grow their businesses without facing substantial tax increases.
On consultation, I want to stress that the reforms announced at the Budget were part of our review on alcohol duty last year. That involved a call for evidence and received over 100 responses from the industry and other groups. We spent almost a year carefully considering the feedback from cider makers and other producers. We have been closely discussing our proposals with the industry throughout the policy development process. The consultation will be published in October and remains open until January, and I welcome the industry’s views on the questions raised in the consultation documents and on the points covered by my hon. Friend during the debate.
I take on board my hon. Friend’s point about the difference in duties between flavoured and non-flavoured ciders. We believe that maintaining this difference helps to safeguard traditional cider’s valuable contribution to local heritage and agriculture. As I said a moment ago, there is also the small producers relief, which is a very important support for our smaller cider makers.
I recognise that the changes outlined at the Budget are significant, and we will continue to listen to the sector. I have heard the arguments that my hon. Friend has made, and I look forward to working with him and other colleagues on this matter.
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
In the context of promoting high-quality cider in the spirt of this commendable debate, which was secured by my hon. Friend the Member for North Herefordshire (Bill Wiggin), would the Minister look at minimum unit pricing for drinks from a healthcare perspective? That would actually clear out and stop the production of dangerous white ciders, which are part of the problem that feeds alcoholism and alcohol dependence in this country. Would she take that suggestion away and look at it?
Helen Whately
I thank my hon. Friend for that point. I hate to pass the buck, but the question he asks about minimum pricing in shops and supermarkets—I was asked about this issue in correspondence recently—is a Home Office matter. From a Treasury point of view, and as he will have seen from the policies that I have been describing, our reforms to the alcohol duty system take a public health approach to changing the current system, in which higher-strength drinks sometimes enjoy a lower duty. We are moving to a system whereby higher-strength drinks will pay more duty, encouraging the production and, relatively, the consumption of lower-strength drinks, and therefore healthier options.
In conclusion, once-in-a-generation duty cuts, new incentives to grow and innovate, and a boost for pubs—our reforms spell exciting times for cider in this country. These steps will not only put more money in people’s pockets, but encourage people to try new healthier and, may I say, delicious drinking choices. I am confident that together these measures will support our wonderful, traditional cider industry for many more years to come.
Question put and agreed to.