Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the (a) effectiveness of the reduction in VAT for the hospitality sector and (b) potential merits of extending that reduction.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors. As announced at Spring Budget 2021, the Government extended the 5% temporary reduced rate of VAT for the tourism and hospitality sectors until the end of September. On 1 October 2021, a new reduced rate of 12.5% was introduced for these goods and services to help ease affected businesses back to the standard rate. This new rate will end on 31 March 2022.
All taxes are kept under review, but there are no plans to extend the 12.5% reduced rate of VAT. This relief has previously been costed at over £7 billion, but the latest forecast means it may now cost over £8 billion. The Government has been clear that this relief is a temporary measure designed to support sectors that have been severely affected by COVID-19. It is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced and then removed in order to rebuild and strengthen the public finances.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much of the Barnett consequentials resulting from the Autumn Budget 2021 are as a result of health spending in England.
Answered by Simon Clarke
Autumn Budget 2021 confirmed an additional £1.3bn for the devolved administrations this year:
These figures include Barnett consequentials resulting from the additional £5.4bn provided to the NHS in England to support the Covid-19 response over the coming months. Precise detail on the consequentials resulting from this spending will be provided in the next publication of the Block Grant Transparency.
Detail of funding provided to the devolved administrations at Spending Review 21 can be found online at the following link:
https://www.gov.uk/government/publications/autumn-budget-and-spending-review-2021-documents
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the Barnett consequential funds are from the Autumn Budget 2021, by (a) revenue and (b) capital expenditure.
Answered by Simon Clarke
Autumn Budget 2021 confirmed an additional £1.3bn for the devolved administrations this year:
Detail of funding provided to the devolved administrations at Spending Review 21 can be found online at the following link:
https://www.gov.uk/government/publications/autumn-budget-and-spending-review-2021-documents
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions he has had with stakeholders on the potential merits of exempting the Scottish deposit return scheme for drinks bottles and cans from value added tax.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Chancellor keeps the tax system under review and is always glad to receive representations for improving it.
Officials have received representations from the Scottish Government and range of other stakeholders and have had meetings with them.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what analysis has been undertaken on the impact on Scottish retail shops and tourism businesses of the decision to end tax free shopping for international visitors.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
On 11 September 2020, the Government announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers) following the transition period. The following rules were implemented on 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) can purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances apply to passengers entering Great Britain from any destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain has not been extended to EU residents and has been withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods has been removed across the UK.
The Government published a consultation which ran from 11 March to 20 May 2020. During this time the Government held a number of virtual meetings with industry stakeholders to hear their views and received 73 responses to the consultation. The Government has also met and discussed these changes with many stakeholders following the announcement of these policies.
The detailed rationale for these changes was provided in the written ministerial statement and the published summary of responses to the consultation and a detailed technical note has also been made available to stakeholders.
On 25 November 2020 the independent Office for Budget Responsibility (OBR) set out their assessment of the fiscal impact of the withdrawal of the VAT RES.
Factoring in a higher-than-usual elasticity of 1.9 to account for spending on luxury goods, the OBR estimate that the withdrawal of the VAT RES will result in a significant direct Exchequer saving of around £400 million per year, once passenger numbers recover from the impacts of Covid-19. Based on the 1.2 million users of the scheme who received a refund in 2019, this includes an assumption that approximately 20,000 – 30,000 fewer tourists visit Great Britain a year. That is 0.07% of the 40 million visitors to the UK in 2019.
The OBR also looked at this package in the round when assessing the indirect impact on the economy – including the effects of extending duty-free sales – alongside the substantial support provided to the economy and retail industry.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what correspondence and representations he has received from the Scottish Government on the Scottish Fiscal Framework negotiations.
Answered by Simon Clarke
The published Scottish Government Fiscal Framework agreement sets out the arrangements for an independent report to inform the review. Namely that the UK and Scottish governments will jointly commission an independent report on the Block Grant Adjustment arrangements, which is to be presented to both governments by the end of 2021. This independent report on the Block Grant Adjustment arrangements will then inform the UK and Scottish governments review of the Fiscal Framework.
The scope and authorship for the independent report, as well as the arrangements for the subsequent review, are to be finalised by the Joint Exchequer Committee. For transparency, a communiqué is typically published after meetings of the Joint Exchequer Committee to outline agreements reached between the UK and Scottish governments.
The UK Government is committed to following the arrangements for the report and the review as set out in the Fiscal Framework agreement. I look forward to continuing the engagement the UK Government has had with the Scottish Government on preparations for the review.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of the negotiations on reviewing the Scottish Fiscal Framework being a transparent open book exercise.
Answered by Simon Clarke
The published Scottish Government Fiscal Framework agreement sets out the arrangements for an independent report to inform the review. Namely that the UK and Scottish governments will jointly commission an independent report on the Block Grant Adjustment arrangements, which is to be presented to both governments by the end of 2021. This independent report on the Block Grant Adjustment arrangements will then inform the UK and Scottish governments review of the Fiscal Framework.
The scope and authorship for the independent report, as well as the arrangements for the subsequent review, are to be finalised by the Joint Exchequer Committee. For transparency, a communiqué is typically published after meetings of the Joint Exchequer Committee to outline agreements reached between the UK and Scottish governments.
The UK Government is committed to following the arrangements for the report and the review as set out in the Fiscal Framework agreement. I look forward to continuing the engagement the UK Government has had with the Scottish Government on preparations for the review.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the process will be for discussions with the Scottish Government on the scope of the independent report into the Scottish Fiscal Framework; and if he will make a statement.
Answered by Simon Clarke
The published Scottish Government Fiscal Framework agreement sets out the arrangements for an independent report to inform the review. Namely that the UK and Scottish governments will jointly commission an independent report on the Block Grant Adjustment arrangements, which is to be presented to both governments by the end of 2021. This independent report on the Block Grant Adjustment arrangements will then inform the UK and Scottish governments review of the Fiscal Framework.
The scope and authorship for the independent report, as well as the arrangements for the subsequent review, are to be finalised by the Joint Exchequer Committee. For transparency, a communiqué is typically published after meetings of the Joint Exchequer Committee to outline agreements reached between the UK and Scottish governments.
The UK Government is committed to following the arrangements for the report and the review as set out in the Fiscal Framework agreement. I look forward to continuing the engagement the UK Government has had with the Scottish Government on preparations for the review.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the process is for the production of an independent report on the Scottish Fiscal Framework; and what the timetable is for (a) the appointment and (b) the production of that report.
Answered by Simon Clarke
The published Scottish Government Fiscal Framework agreement sets out the arrangements for an independent report to inform the review. Namely that the UK and Scottish governments will jointly commission an independent report on the Block Grant Adjustment arrangements, which is to be presented to both governments by the end of 2021. This independent report on the Block Grant Adjustment arrangements will then inform the UK and Scottish governments review of the Fiscal Framework.
The scope and authorship for the independent report, as well as the arrangements for the subsequent review, are to be finalised by the Joint Exchequer Committee. For transparency, a communiqué is typically published after meetings of the Joint Exchequer Committee to outline agreements reached between the UK and Scottish governments.
The UK Government is committed to following the arrangements for the report and the review as set out in the Fiscal Framework agreement. I look forward to continuing the engagement the UK Government has had with the Scottish Government on preparations for the review.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what data is shared with HMRC by NHS Scotland, Scottish health boards or agencies to assist in the implementation of the Scottish rate of income tax.
Answered by Jesse Norman
HM Revenue & Customs (HMRC) administer Scottish income tax as part of the UK income tax system. Scottish income tax is collected through existing PAYE and Self-Assessment processes, which have been adapted to reflect Scottish income tax rates and thresholds.
HMRC receive data from employers across the UK as part of their administration of income tax, and do not have any specific data-sharing arrangements with NHS Scotland or other Scottish health agencies to assist in the administration of Scottish income tax.
Further information about how HMRC administer Scottish income tax and work with employers can be found in the Scottish Income Tax HMRC annual report 2020, which is published on GOV.UK: https://www.gov.uk/government/publications/scottish-income-tax-hmrc-annual-report-2020.