Savings (Government Contributions) Bill

Jane Ellison Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 17th October 2016 Commons Chamber

[The Financial Secretary to the Treasury (Jane Ellison)]

I beg to move, That the Bill be now read a Second time.

Let me start by reminding the House why the measures contained in the Bill are so important. We want people in this country to have all the tools at their disposal to save money in a way that works for them. We want to make it easier for everyone to build up the savings that they need, to meet their ambitions and to feel secure in their personal finances. We have already set to work to make that the case, putting an end to 17 million people having to pay tax on the interest they receive on their savings and making the biggest ever increase to the individual savings account allowance—to £20,000 from April next year—but we want to do more. The Bill will introduce two new schemes—the lifetime ISA and Help to Save—that will support more people as they save up for the future and provide them with new options to do so.

The lifetime ISA will provide a new option for young people who are looking to save for the long term. We want to make sure that they have a choice in how they save. For some, the pensions system alone is the way forward and we have done a lot to improve it, such as through automatic enrolment and initiatives such as the pensions dashboard. In our consultation last year on pension tax relief, we heard that the pensions system on its own is too inflexible for young people, so the lifetime ISA complements that system while giving people a new option that has been designed with flexibility in mind.

The lifetime ISA is a way of saving up to £4,000 a year. Someone can open an account between the ages of 18 and 40 and carry on saving up to the age of 50. On top of any interest they receive on their savings, they will earn a 25% tax-free bonus from the Government that is paid straight into their account.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Is the Minister at all concerned that this lifetime ISA will introduce an added complexity to the savings market, in particular for young people? Choosing whether to go for a pension or a lifetime ISA could be one of the most important financial decisions in a person’s life. Does she think that there is merit in increasing investment in independent advice and financial literacy so that young people are able to make informed financial decisions?

[Jane Ellison]

On the latter point, I will discuss advice a bit later on, but we are keen that people have access to good advice and good information. On the hon. Gentleman’s first point, this is about complementary products. It is not an either/or choice. The feedback from last year’s consultation was that many younger people did not want to make a binary choice between saving for later in life and saving for a house. This product is simple in its design but gives people that flexibility. As he says, it is important that people get advice, but the welcome that the proposal has received from consumer advocates indicates that people think that it is simple and flexible.

[Jonathan Edwards]

I am grateful to the Minister for giving way again. Their incomes mean that many young people are perhaps more hard-pressed than older generations. They do not have the choice of investing in a pension and a lifetime ISA, so they will be deciding which one to go for. The Government need to address that worry with these proposals.

[Jane Ellison]

That interaction has been addressed in the Bill’s impact assessment. There was some concern about the Help to Buy ISA and the interaction with automatic enrolment, but we have seen no evidence of it driving a higher opt-out rate. In fact, the opt-out rate for automatic enrolment is lower than forecast—even on the forecast that was revised down. I note the hon. Gentleman’s concern but I think it has been addressed in the work that we have done.

What is attractive about the lifetime ISA is that people do not have to make an immediate decision about why they are saving this money, which goes back to the hon. Gentleman’s point about people not having to make that decision at an early stage when they cannot see what is ahead.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Anyone saving into an auto-enrolment pension will get tax relief up front, but anyone who invests in a lifetime ISA will be making that investment out of taxed income. Does the Minister see the unfairness in that?

[Jane Ellison]

Obviously, we have the Government bonus, which I mentioned, but I go back to the point about this not being an either/or choice; this is about people having potentially complementary products that are for different purposes. This product is not about replacing a pension; it is about giving people a complementary product to help them save for later in life, while keeping open the option of building up money to put towards a house. As we have seen, many hundreds of thousands of people have taken that opportunity with the previous ISA product.

The lifetime ISA can be used by people to get on to the property ladder for the first time and can be put towards a home worth less than £450,000. Through this Bill, from April next year a new, more flexible way to save will be available to people, as one of a number of options.

The Bill also introduces Help to Save, which is about finding a better way to support families who are just about managing but are struggling to build up their savings. All Members will be aware of the research carried out by a number of bodies, particularly the excellent Centre for Social Justice, which estimates that 3 million low-income households have no savings at all. That is not a nice position for anyone to be in: living without having any kind of financial safety net in place and knowing that if they lose their job, they have barely got enough money to pay next month’s rent.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

Will the Minister acknowledge the concern of some that the two-year qualifying period for Help to Save is lengthy for people on very low incomes? Will she also acknowledge the credit union movement’s concern that as a result of the Government response to the consultation on Help to Save—this is how I understand it—it is going to be excluded from offering Help to Save products?

[Jane Ellison]

We have announced that we will be going with a single provider, National Savings & Investments, at the outset, but the primary legislation does not preclude more people providing the product in future; it was essential that we got national coverage for offering this product, but, like all of us in this House, I have huge respect for the credit union movement and we certainly see a role for it going forward, not least in respect of advice and support, a point referred to a moment ago. Perhaps we will tease more of that out in this debate, but I hope that gives the hon. Gentleman some reassurance.

The two-year period comes from looking at the advice and research that has been done by groups that deal with people in this category, and trying to capture the moment at which a savings habit is ingrained. This does not mean people cannot take money out; there is no penalty for taking money out earlier if they want to access it, but the bonus comes at the two-year point, and I will come on to deal with that. This is based on research by groups and charities that work with people in the target market for the product, so there is a robust reasoning for that two-year period.

If someone is trying to put some of that hard-earned money aside in an effort to be more financially secure, we want them to have the full support of their Government as they do so. That is why, through this Bill, we want to introduce the new Help to Save accounts by no later than April 2018. They will be open to any adult who is getting working tax credits or universal credit and working enough to earn the equivalent of at least 16 hours’ pay at the national living wage. That means about 3.5 million people are likely to be eligible.

As has been mentioned, people can save up to £50 a month for two years—we are talking about £1,200 in total—and the Government will give them a 50% bonus. If after those two years someone wants to do that again for the next two years, they will be able to do so. This way to save also offers complete flexibility. What people want to do with the money they have saved and with the Government bonus they have earned is completely up to them, and if they want to take their money out at any time, they can; there will not be any charge or penalty for doing so.

[Jonathan Edwards]

As usual, the House of Commons Library has produced a fantastic briefing on this Bill. In relation to this product, it mentions the conclusions of the Institute for Fiscal Studies, which says that only £70 million has been allocated by the Treasury to cover this new savings product in 2020-21, which is nowhere near enough to cover the Government contribution of 50% if everybody who is eligible takes up the product. Has the Treasury got its figures wrong?

[Jane Ellison]

We know that, historically—the hon. Gentleman is right on this—it has been difficult to target financial advice at some of those who are being targeted by this product. Indeed, not many financial products are being targeted at this particular group. However, I can reassure him that we will be doing everything we can—all hon. Members and credit unions have a role to play in this—to promote this product. If the take-up exceeds our expectations, we would be delighted, and we will certainly be working to that effect.

The scheme provides a real incentive for people on low incomes to keep saving what they can. That means that more and more families will have a rainy day fund, so that they can cope with unforeseen events that come their way. I am talking about the sort of events that many of us as constituency Members recognise. They are the ones that drive people into our advice surgeries because something has happened. Research from the debt charity, StepChange, suggests that if families have £1,000 in the bank, they are almost half as likely to fall into problem debt, by which it means being in arrears with at least one bill or credit commitment. This is a savings vehicle that will really help people to build up a pot of money, which can be used for any purpose at all, but which is also there if needed for a rainy day.

In conclusion, this Bill is all about rewarding people who are trying to save for their future and providing them with new options to do so, and it encourages more people to follow their example. Whether we are talking about a young person who wants flexibility in how they save for their future, or someone on a low income who is trying hard to set aside a bit of money each month, we want to ensure that they have a helping hand along the way. Through these two new savings vehicles, that is exactly what the Government will provide. It therefore gives me great pleasure to commend this Bill to the House.

--- Later in debate ---

[Rebecca Long Bailey]

Indeed. Products need to be explained as simply as possible and there needs to be a commitment from the Government that there will be an adequate advertising campaign to avoid any ambiguity about a product. I shall shortly come on to some of my concerns about the specific products to which the Bill refers.

It is important to examine the fact that those who live in more deprived areas or areas that do not have access to a healthy range of high street financial services are often more financially excluded, having limited access to reasonable lending facilities. This in turn leads many to rely on extremely high interest lending facilities such as payday lenders, which are often the only lending facility available. In many cases, that initiates a cycle of debt and sucks any possible savings surplus out of the monthly pay packet. It cannot be lost on the Minster that for some time now food banks have been reporting surges in the number of people in full-time employment who are accessing them. This in itself may suggest that many people have no spare cash to live on day to day, let alone to save.

These problems bring me to the Opposition’s main problem with the Help to Save scheme that the Bill introduces. We wholeheartedly support moves to encourage saving for a rainy day, but in many cases the idea that those on universal credit and working tax credit have a spare £50 at the end of the month is extremely optimistic. People can barely make ends meet, as the Government found out last year when there was a cross-party backlash after they tried to take thousands of pounds from the recipients of much-needed tax credits. The transition to universal credit will arguably leave people in an even worse position.

[Jane Ellison]

rose—

[Rebecca Long Bailey]

I will pre-empt the Minister’s reply that Help to Save is incredibly similar to the saving gateway scheme that was piloted by the previous Labour Government.

[Jane Ellison]

I do not wish to interrupt the hon. Lady, but it is important to make the point that this is about people saving up to £50. It must not be suggested that everyone must save £50. The figure is up to £50, and that can be a very small amount. I would just like to make that clear.

[Rebecca Long Bailey]

I thank the Minister for clarifying that point, but I think that some people would struggle to save even £5 a month, let alone £50.

Let me go back to the point I was trying to make about Labour’s scheme. We did introduce a similar scheme, but it is important to note that we had not spent the previous six years eroding the disposable income of the people whom it targeted. Help to Save might well look good on paper in terms of helping those on low incomes to save, but I must warn the Minister that, given the long-term effect of Government cuts and wider austerity measures, it will not have the desired impact in many cases. The cuts the Government are making to universal credit alone will cost 2.5 million families up to £1,600 a year, according to the Institute for Fiscal Studies. Where will these families find even £1 a month, or up to £50 a month, to put into this savings scheme?

It appears that the Government are not expecting the measure to put rocket boosters, as it were, under savings by those on low incomes. Their costing for the policy is £70 million in 2020-21. Some 3.5 million people will be eligible for the scheme, so if my and the IFS’s calculations are correct, that works out as a Government bonus of £20 per eligible individual in 2020-21.

I was very excited to read the Government’s impact assessment in the past few hours. However, the Minister should note that it arrived at only 1 pm today, and while I am pleased that it arrived at all, she will appreciate that it is really not acceptable to provide such information at the 11th hour if the Government wish to be transparent and capable of being effectively held to account. None the less, I was interested to see that the Government’s expected take-up rate was 500,000 people in the first two years. I will be grateful if she explains the rationale behind that figure. For example, are specific groups more likely to save than others?

--- Later in debate ---

[Ian Blackford]

I absolutely agree with the hon. Gentleman that that was the beginning of the end for defined benefit pension schemes in this country. At the time, just about every company in the FTSE 100 had a defined benefit pension scheme. There are hardly any today. My criticism of what the Government are doing with the Bill is that they are once again undermining pension saving. I will come on to the facts of the matter. We cannot get away from this: anybody saving into a pension does so out of pre-tax income. Anybody investing in the LISA will be doing so out of taxed income. That is unfair and unjust. As I mentioned earlier, this is more about a wheeze for the Government to generate taxation income. It is wrong and they should not be doing it without proper incentives for the young people they are targeting.

We would resist any further attempts to undermine pension saving and, specifically, to change the tax status of pension savings. That would be little more than an underhand way of driving up tax receipts—sweet talking workers to invest after-tax income in LISAs when their interests are best served by investing in pensions. We have considerable challenges in ensuring that we take appropriate action and provide the right kind of leadership to encourage pension savings above all else. That is not happening under this Conservative Government. Pension savings are the most tax-efficient arrangement for savers and that is what we ought to prioritise

We also need to revisit the issue of pension tax relief to make it fairer to pension savers. Many commentators and providers, such as Zurich, have suggested that a flat rate of pension tax relief could increase saving among low earners. While ensuring pensions remain an attractive investment for higher earners, it would be inherently fairer. Coupled with auto-enrolment, it would give a powerful boost to the pensions of millions of workers and help the vast majority of people to save more for retirement. It would also end the complexity of the current regime and set tax relief at a sustainable level for the longer term. That kind of approach rather flies in the face of what the Minister has signed off in the impact assessment, which states:

“The government could have done nothing more, relying on existing tax incentives to promote saving among younger people and working families on low income. However, this would have failed to provide the necessary level of support for those who are unable to use existing support to plan and save for their future.”

This is bunkum. Tax relief can be addressed, as I have said, but we must also take into account the fact that a review of auto-enrolment is due in 2017. We can strengthen auto-enrolment to deliver inclusion and encourage pension saving. We want to work with the Government to strengthen auto-enrolment and pension savings, which are the most efficient way for young people to save.

Just today, as we debate the Bill, the Financial Times has published an article highlighting new analysis on pension savings conducted by Aon. The analysis concluded that UK pension savings have a massive deficit of £11 billion a year. A poll of 2,000 pension savers indicates that only 16% of workers are saving enough to maintain their standard of living when they stop work. Why on earth do we want to take attention away, through the Bill the Government are bringing forward, from pension savings? Why are we not focusing on what we should be doing: fixing the problems in the pension industry? That is the priority of those of us on the SNP Benches.

The Aon analysis suggests that members of defined contribution schemes on average need to pay an extra £1,400 a year to achieve a decent retirement income. That is what we should be addressing in this Chamber here tonight. My message to the Government is this: let us all work together to tackle the under-investment in pension savings, to deal with the many challenges we face, and to enhance the attractions of pension savings. That is the priority. Today, too many people are excluded from workplace pensions.

I commend the introduction of auto-enrolment, but recognise that more needs to be done to enhance auto-enrolment and seek to offer affordable solutions to the low-paid, women and the self-employed who, to use the Prime Minister’s term, have been left behind. We need to tackle the issue of those who are currently excluded, such as the 20% of workers who earn less than £10,000 a year. We need to make sure we have an inclusive approach to pension savings that works for all workers.

The average value of conventional ISAs held by those aged between 25 and 34 is £5,186. The annual allowance for the lifetime ISA as proposed is £4,000, so from experience of ISAs this question needs to be addressed: who exactly will benefit? It looks like yet another policy to benefit the rich who can afford to save at such a level and therefore get the full benefits of the Government bonus. So much for the sermon from the Prime Minister about delivering policies for those left behind. It looks to us more like the same old policies for the benefit of the wealthy. When we look at the news today we see that the UK is looking to spend billions of pounds for the City to access the single market—and we should not be surprised. It is yet another case of the poor subsidising the rich.

We need to address the unintended consequences of quantitative easing, which has driven down yields, moderating expectations of future growth for pension funds and substantially increasing the deficit for many defined pension schemes, as the hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned. If we add to that the decline in annuity rates, which is cutting expectations of pensioner income, it means that savers have to increase their contributions to defined contribution schemes. This makes for a challenging environment for pension savers, which needs to be addressed.

On 11 July, the former Secretary of State for Work and Pensions, the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), said that

“there is a very real systemic issue with DB pension schemes that we need to look at, and my Department will be discussing it further in the months ahead.”—[Official Report, 11 July 2016; Vol. 613, c. 10.]

Since that statement, there has been silence from the Government. Where is the response to the fundamental challenges for today’s pensions and, as some might argue, the crisis in both defined benefit and defined contribution schemes?

We know of the significant factors affecting the BHS and British Steel schemes, and we know that hundreds of other schemes are facing significant deficits. Rather than seeing the Government face up to these challenges and the threat to the many beneficiaries of the schemes, we see a missed opportunity to tackle what ought to be the priorities. When will the Government respond in detail to what the former Secretary of State for Work and Pensions admitted, which we all know to be the case? I give the Minister the opportunity to intervene and tell us what the Government have done since the announcement of the previous Secretary of State. Where is the Government’s response? What do they have to say about the deficit on defined pension schemes? I see Government Members on the Front Bench looking down, but we need answers. What we get from this Government is no action.

[Jane Ellison]

I draw the House’s attention to the fact that we had DWP questions earlier today, and I am sure the hon. Gentleman took the opportunity to put his question then.

[Ian Blackford]

That was a politic answer. I cannot help but remark that I asked the Secretary of State for Work and Pensions a question earlier today, which was enlightening in itself. I asked a question about the WASPI women. I raised a specific point, saying that the SNP had put proposals in front of this Government as we were asked to do. We said that we could deal with the WASPI issue by spending £8 million, which, by the way, the Government could afford to spend because there is a surplus of nearly £30 billion sitting in the national insurance fund. What was the answer we got from the Secretary of State? It was to get the Scottish Government to do that. What he failed to realise is that this House has not given the Scottish Parliament the responsibility for pensions. Why not do that now, then? The Scottish Parliament and the Scottish Government would certainly take responsibility for pensions and for pensioners, which this Government are walking away from.

Nothing is being done by this Government. They are like rabbits caught in headlights. That is exactly what we got when the Financial Secretary intervened just now. This is a Government who have no answers to the real issues and the real problems that affect us in the pension landscape. They have been caught doing nothing in the face of systemic risk, which the Government themselves recognise. The Financial Secretary turned around and said, “It is not for me, but for the Department for Work and Pensions”. Well, I am sorry, but she is a Minister of the Government, and this is a Government responsibility. She should be coming to this place with answers.

We also need to recognise that although this Bill will help some savers, it does little to help those who cannot afford to save for later life. Of course, we have had the benefit of the Work and Pensions Select Committee holding an inquiry into the effect of the lifetime ISA on auto-enrolment. Evidence from the Association of British Insurers stated:

“Presented as a choice, no employee will be better off saving into a Lifetime ISA than they would under automatic enrolment. This is due to the loss of employer contributions.”

A recent Standard Life analysis shows that the typical gain from tax breaks and minimum employer top-ups to a qualifying workplace pension for a basic rate taxpayer is between 70% and 85%, compared with the return of 25% from a LISA. That is the con that this Government are trying to inflict on the people of this country. The long-term cost of forgoing annual employer contributions worth 3% of salary by saving into a LISA instead of a workplace pension would be substantial. For a basic rate taxpayer, the impact would be savings of roughly one third less by the age of 60. For example, an employee earning £25,000 per annum and saving 4% of their income each year would see a difference in excess of £53,000. After 42 years, someone saving through a pension scheme would have a pot worth £166,289.99 at a growth rate of 3%. Under a LISA at the same growth rate the value would be £112,646.75. Is the Minister going to defend this?

Small Charitable Donations and Childcare Payments Bill

Jane Ellison Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[The Financial Secretary to the Treasury (Jane Ellison)]

I beg to move, That the Bill be now read a Second time.

I obviously welcome the number of colleagues who have remained in the Chamber after the important debate that has just happened. I am sure that they will contribute to the debate on this important and, I hope, uncontroversial topic, as we set out to give further support to our fantastic charity sector. Although the Bill proposes relatively minor changes, they are really important none the less, because they can further the practical support that we give to our outstanding charities sector in this country, and the childcare payments provisions will help families with childcare. I shall take both aspects in turn and start with the measures to help the UK’s charity sector.

I am sure that I speak for everyone in the House when I say that I am enormously proud of the fantastic work done by charitable organisations in this country. Obviously, as the Member for Battersea, I might be forgiven for pausing to make special mention of just one of those charities: the fantastic animal charity, the Battersea Dogs and Cats Home—one of the most famous animal charities in the world, let alone in this country, which finds new homes for more than 8,000 animals every year. Indeed, the Treasury has been a beneficiary of its efforts recently, with the appointment of the new chief mouser, Gladstone the cat, which managed to make me only the second new arrival from Battersea to the Treasury over the summer.

Right across this country and our constituencies, we see charities of all shapes and sizes right at the heart of our communities, whether large charities working here in the UK and across the world, researching cures for diseases or running relief efforts for those who suffer from conflict or crisis—obviously, Haiti is in our minds at the moment, and the House has just debated Syria, where so many charities are doing such brave and important work—or the smaller, more specialised charities run by just a handful of dedicated volunteers. We want to give them all the support that they deserve.

Last year alone, we provided more than £5 billion to help our charities to do more of that brilliant work. Of course, one of the biggest ways that we give them that additional revenue is through gift aid, which was worth about £1.3 billion last year. We want as many charities as possible to benefit from that, but as things stand, it is not always practical or feasible for charities to claim it. If people are out there, collecting money with a bucket, for example, they can hardly ask someone to fill in a gift aid declaration form, alongside giving a handful of small change. That is why, as many colleagues who were here during the last Parliament will remember, we introduced the gift aid small donations scheme in 2013, to allow charities and community amateur sports clubs to claim a gift aid-style top-up payment on donations received in circumstances where it is difficult or burdensome to obtain a gift aid declaration.

It is important to point out that that scheme is not a replacement for gift aid. Where charities can obtain a gift aid declaration, they should do so. Unlike gift aid, which is a tax relief linked to donors’ tax contributions, the gift aid small donations scheme is a public spending measure, under which the Government pay a top-up of 25p for every pound of eligible donations received, regardless of the donor’s tax status. This scheme was designed to complement gift aid. When we introduced the scheme, we promised that we would review how it was working after three years, and we have done so. It is therefore a pleasure, as a result of that review, to introduce three measures in the Bill that will make further improvements to the scheme.

[James Duddridge (Rochford and Southend East) (Con)]

I thank my hon. Friend for giving way before going into more detail. I fully appreciate the need for extra simplicity. Would not a bold step be to assume that all charitable donations are subject to tax relief overall? I appreciate that that cannot be done straightaway because enormous sums are involved, but could that be the trajectory that the Government take ultimately to make the tax treatment of charities incredibly simple indeed?

[Jane Ellison]

My hon. Friend is right to suggest that we are seeking as much simplicity as we can get, but I will perhaps come on to and tease out during the debate why we want to ensure that that simplicity and light touch goes alongside a degree of assurance. Finding that balance is perhaps one of the areas where a range of views will be expressed. We are keen to have a degree of assurance about the claims made and the public money given to charities.

On the consultation that took place, it might help colleagues to know that John Low, the chief executive of the Charities Aid Foundation, has said:

“The inclusion of a Small Charitable Donations Bill could be good news for charities, particularly for smaller organisations which have often struggled to unlock the benefits of Gift Aid. This provides a real opportunity to simplify the scheme”—

that is the point made by my hon. Friend the Member for Rochford and Southend East (James Duddridge)—

“and make it fit for the 21st century”.

[James Morris (Halesowen and Rowley Regis) (Con)]

Small charities in my constituency include the Leasowes walled garden project, which is part of the Halesowen Abbey Trust—a small organisation dependent on small donations. What plans does the Minister have to communicate to those small charities the benefits of the scheme that she is outlining?

[Jane Ellison]

My hon. Friend might be interested to know that Her Majesty’s Revenue and Customs has a team that goes out promoting these schemes. I was really impressed to read that since 2014 it had given more than 600 presentations to charities of all sorts of sizes, up and down the country, but he is right to say that we can always do more. I really hope that as a result of the Bill and this debate, colleagues will feel that they, too, can play an important role in telling charities in their area the good news that the scheme just got easier. Obviously, we all have a lot of contact with smaller charities in particular, and we get to know them over the years in which we represent them.

The changes are the result of months of consultation and constructive discussion with the charity sector. I thank the hundreds of charities, representative bodies and other organisations that worked with HMRC to make this review work.

Let me turn to the first of our proposed changes. The Bill will make an important change to the criteria for eligibility for the gift aid small donations scheme. Currently, to be eligible, a charity must have been registered for at least two full tax years, and have claimed gift aid in at least two of the previous four tax years, without a gap of longer than a year; obviously, that is around the assurance process. The Bill removes both those criteria, allowing newer and smaller charities to access the scheme sooner. As we all know, for a charity, those early years are important. The change will provide a welcome financial boost when it is most needed. This is a substantial simplification of the scheme; the only remaining eligibility criterion that charities and community amateur sports clubs will need to meet is the gift aid matching requirement, under which charities must claim £1 of full gift aid for every £10 claimed under the small donations scheme.

There are two reasons why we feel it is necessary to retain this rule. The first is to incentivise charities to engage with the full gift aid scheme, which will provide them with even greater income over the longer term. The second is to protect from fraud the small donations scheme, which has substantially fewer record-keeping requirements than gift aid—an important factor that was looked at when the scheme was first designed back in 2012. It is by retaining the rule that donations under the scheme must be matched with gift aid donations that we can best do that. We are simplifying the rules on eligibility as far as possible to allow as many charities as we can to benefit, while protecting the integrity of the scheme.

[James Duddridge]

While I fully support the point that the Minister makes, I can conceive of a time when it is decided in a review that that link is not the correct one. Will the Minister consider adding a clause in Committee that would allow us to take out that requirement without going through the cumbersome primary legislative process in this House again? That would effectively allow her successors to make a slightly different decision in future, without having to come back to the House.

[Jane Ellison]

Clearly, all the points that colleagues make on Second Reading will be carefully considered and debated again in Committee. I understand my hon. Friend’s direction of thinking, but perhaps that will be discussed further in Committee.

The second important change enabled by the Bill is the future proofing of the small donations scheme to ensure that charities that use modern, innovative ways to collect money such as contactless donations will still be able to benefit. The small donations scheme was never intended to cover other methods of donation such as direct debit, online and text messaging, for which well-established and well-used processes for claiming gift aid exist. That remains the case, but we recognise that cash transactions have declined as new, innovative payment technologies have become more prevalent. We believe that the gift aid small donations scheme should keep pace with these amazing modern techniques.

Contactless donations collected using dedicated charity collection terminals share many of the same practical problems as bucket collections. Transactions are instant, and there is little opportunity for fundraisers to engage with donors to solicit a gift aid declaration. The Bill will therefore extend the scheme so that donations made using contactless technology will be eligible for top-up payments.

[Nigel Mills (Amber Valley) (Con)]

I welcome that decision by the Government. I should say, as I tabled an amendment to the original Bill to suggest exactly that future proofing, that I am glad that the Government have got there, perhaps a few years later than they might have done. However, is it really fair to end up with a different treatment if I swipe my phone cleverly at some terminal rather than if I happen to text the number that comes up on my screen? My sense is that I would not be willing to give details of my address through my mobile phone provider, so can we not be a little more generous and allow text donations in that situation?

[Jane Ellison]

Text messages can, as my hon. Friend knows, be gift aided, so we do not expect problems in that regard, but the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), will seek to respond more fully on those points at the end of the debate.

The final change proposed in the Bill is simplifying the rules on the top-ups that charities can receive on donations that they receive in their community buildings. Those rules were designed to ensure fairness and parity of treatment for charities structured in different ways. Without those rules, some charities are entitled to hundreds of thousands of pounds more than others simply because of differences in their historical structures. The gift aid small donations scheme is particularly well used by local churches. That was made clear by the Archbishops Council, which recently noted that in 2014 parishes could claim record levels of gift aid, with a significant part of the increase arising from the use of the gift aid small donations scheme. We want churches to continue to benefit from the valuable extra income provided by the small donations scheme, but it is important that the scheme continues to deliver the policy intention of providing fair and equal outcomes regardless of structure. The Bill will therefore address an anomaly in the original legislation.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I support the Bill, and I am grateful to the Minister for her explanation, but does she accept that the majority of charities, especially in my constituency, are small and rely solely for governance on volunteers? There has been a reduction in volunteer numbers across the United Kingdom. For many the Bill does not go far enough in promoting equal access to fundraising opportunities for charities that do not rely on staff.

[Jane Ellison]

Perhaps that is something that we can look at in more detail in Committee.

These are important simplifications. Throughout the consultation, we received supportive comments from charities, as demonstrated in the quote I gave earlier. There are always additional asks, and we would all want to be open to ideas about how we can further support charities. However, we think that the measures that we have introduced in the Bill are important next steps to make it easier for charities of all sizes.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

There is a lot of merit in the Bill, which reaches out to ensure that smaller charities benefit from the scheme. Does my hon. Friend recognise that many smaller charities do not even know that the scheme exists, so part of the challenge that we face is communicating with them properly so that they know that the scheme will be a lot less complex and that they can benefit from it? What measures will she put in place to ensure that that happens?

[Jane Ellison]

I have already mentioned HMRC’s outreach work, which I will certainly be encouraging. More promotional opportunities are planned, and I know that the Minister for Civil Society will say more about that at the end of the debate. It is a fair point and we want to make it easier, but obviously there are people who just do not know about this and still perceive barriers, so everything we can do to challenge that is welcome. We are extremely keen to hear thoughts from across the House on how we can do that, so we are always listening. I am very happy to put those suggestions to HMRC, and I know that my ministerial colleague will be happy to consider that in his Department as well.

Let me clarify the anomaly and how we are addressing it. The anomaly in the original legislation allows some charities to claim more than others, based only on how they are structured. The Government welcome the supportive and constructive approach adopted by the Church of England, the Roman Catholic Church and other religious groups during the recent consultation on the change.

The Bill also considerably relaxes the rules on where charities can receive donations that are still eligible for the gift aid small donations scheme. Currently, the scheme’s so-called community buildings rules mean that charities can claim top-up payments only on donations received during charitable activities that take place within the community building. However, we know that many local charities, although based in community buildings, carry out most of their activities in the local community, away from the building itself, which means they are unable to benefit fully from the small donations scheme. The Bill therefore relaxes the rules to allow charities based in community buildings to claim top-up payments on donations received outside the building but within the local community area. Colleagues will be delighted to know that, among the many small, local civil society groups, the scouts and guides, the air and sea cadets and other local uniformed groups, in particular, will benefit significantly from this change and will be able to receive the support they deserve for the vital work they carry out in our communities.

Taken together, this package of reforms has the potential to provide a real boost to many charities, particularly the up to 9,000 new charities that apply for recognition by HMRC each year. Based on provisional estimates, these changes are expected to benefit charities by £15 million a year, a significant increase that underlines the Government’s commitment to supporting a greater number of charities and a greater number of donations. The final figures will be certified by the independent Office for Budget Responsibility as part of this year’s autumn statement.

So far I have talked about the changes that will further support our charities. Let me turn briefly to the tax-free childcare aspects of the Bill, which will help us ensure that it is easier for hard-pressed parents to receive the support they need. In the previous Parliament we legislated to introduce tax-free childcare. That will provide up to £2,000 of Government support for childcare costs per child a year, which parents can use with any childcare provider they choose. The idea is that they can simply apply online to open an account for each child, and that for every £8 a parent pays in, we will pay in an additional £2. The system will be trialled later this year and then gradually rolled out to parents from early next year.

During our user testing of the system to date, we have found a couple of minor technical issues that we need to resolve in order to make it as straightforward as possible for parents. The Bill therefore makes two minor technical amendments to ensure that the scheme operates as intended. The first technical change relates to the duty of parents to confirm that they remain eligible to receive tax-free childcare each quarter. The Bill will allow greater flexibility over when parents are asked to make this confirmation. It will mean that once a quarter parents can confirm their eligibility for all their children at the same time, rather than having to do it separately for each child if they registered them at different times.

The second technical change will mean that parents can use a standard online form if they want to query a decision. That will make the process much more straightforward and convenient. We still want to ensure that everyone can ask for a review, so anyone who would struggle to get online will still be able to raise their queries in other ways.

[Mark Durkan (Foyle) (SDLP)]

Can the Minister confirm that what she has said is that credits will be available for each child, and that there will not be a two-child limit, as is proposed for working families tax credits? Can she compare the regime that will be offered under this Bill, which has shown great consideration to parents, with what would be the case for families on working families tax credits?

[Jane Ellison]

I might have to come back to the hon. Gentleman on the latter point about the comparison, because it is not really within the scope of the Bill. I can confirm that we are proposing only two changes—everything else is unchanged from the original legislation, and we are not proposing that there should be any other changes in the Bill.

As I said at the outset, the changes made through the Bill are relatively minor and technical, but they are important, whether they are making it easier for more of our charities to claim extra funding to support the fantastic work they do up and down the land in our constituencies, or whether they are making sure that hard-working parents can access tax-free childcare in the most simple and efficient way possible when it is introduced. The Small Charitable Donations and Childcare Payments Bill delivers against both those objectives, and I therefore commend it to the House.

--- Later in debate ---

[James Duddridge]

I am sorry, Mr Deputy Speaker. I in no way meant to challenge your ruling, but I did want to deal with the issue of SMS messages. I have absolute confidence in these two excellent Ministers, and I look forward to what will be said today. I shall go into a fair amount of detail about different payment methods later, but at this juncture, suffice it to say that SMS messages are absolutely right for this purpose. As many people have pointed out, people do not necessarily want to give all their details. There is also a demographic issue. My mother-in-law would be very happy to text a £5 donation, but if you ask her to use a smart phone or contactless payments, she thinks you are speaking a different language. It is discriminatory not to enable her to donate by text.

As for the point about the scouting movement—my eldest is going up to the scouts, and they collect—I understand that it will be included, but I hope that the specialists on the Front Bench will clarify the position. Earlier in the debate the changes involving buildings were welcomed. It will still be possible to collect money outside a building rather than inside.

[Jane Ellison]

rose—

[James Duddridge]

One of our excellent Ministers leaps to her feet.

[Jane Ellison]

I hope I can reassure my hon. Friend and, indeed, the whole House that this is a very positive measure for bob-a-job schemes up and down the country. I am sure that scouts and other uniformed youth groups will welcome it.

[James Duddridge]

The Minister takes me back to my own bob-a-job days in the Scouts. There was the Whip thinking that bob-a-job was something that one did on the Back Benches in order to progress in the future.

Tax: Draft Legislation

Jane Ellison Excerpts

Thursday 15th September 2016 Written Statements

[The Financial Secretary to the Treasury (Jane Ellison)]

The Chancellor of the Exchequer has announced that the date of the autumn statement will be 23 November 2016.

The Government remain committed to improving the tax policy making process through high levels of consultation and legislative scrutiny. Following the autumn statement, draft clauses to be included in Finance Bill 2017 will be published on 5 December 2016. This consultation on draft legislation will be open until 30 January 2017.

[HCWS165]

Tax Credits: Concentrix

Jane Ellison Excerpts

Wednesday 14th September 2016 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on Concentrix’s activities in relation to tax credit investigations made on behalf of Her Majesty’s Revenue and Customs.

[The Financial Secretary to the Treasury (Jane Ellison)]

I want to be very clear: the Government recognise the importance of tax credits to individuals and families. We all recognise that it is important for this support to reach the people who really need it. That is why HMRC works hard to check that it is making the correct payments, and to tackle any fraudulent claims. We must acknowledge that error and fraud exist in the system, and should be addressed to ensure taxpayers’ money is spent correctly. As part of this work, HMRC engaged Synnex-Concentrix Ltd in 2014 to help check people’s eligibility. As a result, almost £300 million of incorrect payments have been avoided.

I want to reassure the House on two key points. First, Concentrix has been paid only for making the right decisions; it has not received payment for taking someone’s money away wrongly. Secondly, Concentrix has not been allowed to engage in fishing expeditions or to pick on vulnerable claimants at random. Where there has been evidence to suggest a claim might not be correct, Concentrix has written to claimants to seek further information and confirm their eligibility. I realise—I know this as a constituency Member myself—that it can be stressful for someone to receive such a letter, but it is right that we investigate the full picture, with contributions from claimants themselves, to ensure we make the right payments. That is why both Concentrix and HMRC, where it does the same work, always send a letter and give claimants 30 days to provide information before taking any further action. It is important that people do indeed respond, and that they get in touch if they are struggling to respond to any of the questions.

Despite the best efforts of the staff manning the phones, Concentrix, with the high volume of calls in recent weeks, has not been providing the high levels of customer service that the public expect and which are required in its contract. HMRC has therefore given notice that this contract will not be renewed beyond its end date in May 2017. HMRC is also no longer passing new cases to Concentrix, but is instead working with it as a matter of urgency to improve the service it provides to claimants and to resolve outstanding cases. I can confirm to the House that 150 HMRC staff have been redeployed with immediate effect to help it to resolve any issues people are having with their claims as quickly as possible.

I realise that colleagues on both sides of the House are concerned to get difficult cases resolved and to assist vulnerable constituents appropriately. In addition to the extra resources I have mentioned, I have arranged a drop-in for Members in Room B, 1 Parliament Street between 9.30 and 11 am tomorrow, at which HMRC officials will be available to offer guidance to colleagues, should that be helpful.

[Rebecca Long Bailey]

I thank the Minister for her reply. Many hon. Members on both sides of the House have been contacted, as she has been, by distressed and anxious constituents—often hard-working individuals who have had their tax credits cut unfairly, in many cases pushing them into extreme hardship. Although Labour Members certainly welcome the fact that HMRC has finally taken action by announcing that the Concentrix contract will not be renewed, it is most regrettable that the Government undertook such action only when events were dramatically exposed by the media and, indeed, by my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) and my right hon. Friend the Member for Birkenhead (Frank Field).

It remains the case that Synnex-Concentrix will be carrying out these services for another eight months. There is therefore a risk that, without radical amendments to the contract itself, service failures will continue. Of most concern is the fact that the payment model arguably creates a conflict of interest, as has been noted by the Social Security Advisory Committee. Will the Minister therefore confirm what arrangements she will make urgently to revise the contract to preserve justice for the claimants?

As the Minister stated, I understand that HMRC will redeploy 150 staff so that claimants can get through to advisers and resolve their claims. Will she confirm how the Government will monitor that? Will the Government now commit to an official investigation into Concentrix’s conduct since it was awarded the contract in 2014, so that we can determine how this situation was allowed to arise? Finally, has she given any consideration to the real prospect of bringing this service back in-house?

[Jane Ellison]

I will try to answer those questions, but it is worth commenting that this Government, and indeed their predecessors, inherited a very complicated system. In the long term, the right answer is to replace tax credits, as is our intention, because we were bequeathed an unnecessarily complex system. However, we must make the system work while it is in operation, and that is now the focus of our activities.

On HMRC’s decision about the contract, I want to reassure the House that monitoring has taken place regularly throughout the contract. Indeed, HMRC has worked closely with Concentrix. It is the case that, as has been documented, performance has not been good in recent weeks. That has clearly been noted, and we are now taking action on it.

On the contract going forward, as I mentioned in my response to the urgent question, Concentrix will focus on resolving outstanding claims, not opening new ones. In other words, it will deal with those already open in an orderly and appropriate manner. HMRC is putting in additional resource. In particular, I have asked it to focus on the difficult cases—there have been some high-profile examples in recent days—to ensure that we resolve them as quickly as possible so that all our vulnerable constituents are helped and supported.

That is the key focus as we go forward. There is no need to go into inquiries and so on. We have a contract that is monitored on a regular basis. It will not be renewed when it comes to an end in May next year. The focus for all of us in the coming days and weeks—and for me and for HMRC in particular—is on making sure that the outstanding cases are resolved, especially those of the most vulnerable, and that people have the money to which they are correctly entitled.

[Sir Desmond Swayne (New Forest West) (Con)]

I have cases of women who have had their tax credits stopped because, they have been told, they are living with a man of whom they have never heard or, indeed, with the tenant of the property prior to them occupying it. Their benefits have been withdrawn. I am not sure that I need advice tomorrow morning in 1 Parliament Street—when, incidentally, the House is sitting. We need to know how quickly those cases can be reviewed.

[Jane Ellison]

I quite understand my right hon. Friend’s point. The drop-in is there as a facility should Members wish to use it, but it is not an alternative to the HMRC lines already in place. We encourage anyone affected to call the HMRC number on the letters they have received. We are putting significant additional resources into those helplines, with immediate effect, to make sure we can resolve the situation. I am reassured—although obviously I will be talking to HMRC consistently about this—that as soon as the facts of a case are resolved we can get money into people’s accounts in a short number of days.

[Stewart Hosie (Dundee East) (SNP)]

I am delighted that the Concentrix contract is not to be renewed. It will come as some comfort, at least, to those who have been affected by its activity. That contract was designed to save £1 billion in fraud and overpayment. The Minister tells us some £300 million has been saved. How much of those so-called savings was as a result of false accusations by Concentrix against tax credit recipients? If somewhere between 120 and perhaps many thousands of people were affected, why was the contract not cancelled sooner? The cost of the contract was reputed to be some £75 million. How much do the Government intend to claw back to directly compensate those affected? The Minister tells us, and I am pleased to hear, that HMRC civil servants have been drafted in to clean up the mess, but how much will that cost the taxpayer in additional pay, and will the Government be seeking payment from Concentrix to fund that remedial action?

[Jane Ellison]

I am not able to respond immediately from the Dispatch Box to one or two of the points raised by the hon. Gentleman. My clear priority and that of HMRC at the moment is to make sure that we resolve the outstanding cases, and in particular the difficult cases for vulnerable constituents. We will then turn our mind to some of the other points that he made. We are not renewing the contract, but we intend to continue to bear down on error and fraud. That is important, as there is a lot in the system, but we have had a great deal of success in recent years in reducing it—the amount of fraud in the system has halved from £800 million to £400 million. We need to continue to bear down on that, because money that is fraudulently obtained is money that is not available to taxpayers. It remains vital that we address that matter. But for the moment, my primary consideration is resolving the difficult cases to make sure that we look after our most vulnerable citizens.

[Stephen McPartland (Stevenage) (Con)]

I am a big fan of supporting those people who are trying very hard to get on in life and who depend on tax credits. One of my concerns is that over the next eight months those people will still be dealt with by Concentrix and will still have that fear of being falsely accused and prosecuted, almost, as they go forward. What reassurance can the Minister give that those people will be looked after, and will HMRC carry on with the contract in the future or will it issue it for new tender?

[Jane Ellison]

I have laid out the arrangements we are putting in place. The contract ends next spring. In the meantime, HMRC will support Concentrix on the outstanding cases—in particular, looking at more complex cases and supporting back-office functions while Concentrix staff focus on resolving already open cases. It is important to have a bit of perspective. Concentrix has assisted the Government and, indeed, the taxpayer in correctly identifying a lot of claims as either erroneous or fraudulent. It is important to keep the matter in perspective, but HMRC has made clear its operational intention not to continue the contract beyond the spring.

[Louise Haigh (Sheffield, Heeley) (Lab)]

I thank the Minister and HMRC for reacting so quickly to issues and concerns raised in the House, but several questions remain. What estimate has been made of the current backlog needing to be dealt with by Concentrix and HMRC? How should those people currently being dealt with contact Concentrix—through the current helpline or by contacting HMRC directly? Why were these appalling failures not acted on before they were revealed in parliamentary questions, if HMRC was monitoring the contract so closely? Will HMRC bring the contract back in-house in May next year? Will the Minister today commit to a review of all payment-by-results contracts, which are completely inappropriate in our welfare system?

[Jane Ellison]

I am aware that the hon. Lady has been very active on this—she has asked a number of parliamentary questions and has shown considerable interest in the issue. It is important to note, and the performance figures support this, that it is only really in recent weeks that performance has not been acceptable. It is not that this has been an acute problem for a considerable length of time. However, performance has not been acceptable in recent weeks.

People should contact the number on the letters they have received. I am aware that there have been problems getting through on the phone in recent weeks, and have tested it out for myself. We are putting in additional resources to allow Concentrix to focus on answering the phones and dealing with outstanding cases while additional HMRC staff resolve some of the back-office issues and some of the complexities, so that people can focus on the immediate issue.

Some more mandatory considerations are coming in, but we think there are around 2,500 cases in the system still to be dealt with at the moment. We expect more to come in because it is that time of year, after people who have not supplied additional information as they were requested to have seen their tax credits stopped. We feel that, with that additional resource, we can resolve that quickly, and that is my focus.

[Bob Blackman (Harrow East) (Con)]

Now that the position is that Concentrix is not going to deal with any new claims or cases, will my hon. Friend clarify for the House who, from HMRC or wherever, will deal with claims of errors, fraud and other problems, so that we send a strong signal to people that that will not be acceptable and that we want to see genuine claimants compensated for losing money that they need?

[Jane Ellison]

I reassure my hon. Friend that it has always been the case that both Concentrix and HMRC were pursuing matters of error and fraud; it was not the case that only Concentrix was doing so. HMRC will continue to pursue error and fraud cases. In recent years the Government have put additional resource into supporting HMRC’s work on general tax avoidance and evasion, and compliance.

[Frank Field (Birkenhead) (Lab)]

I thank the Minister for her statement and draw the House’s attention to how different that response was from those of the previous Government; I do not believe that we would have had today’s statement had there not been a leadership change, so I thank her for that. Will she pass on my thanks to her colleague, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stourbridge (Margot James), for the immediate action she took on the report I submitted on Hermes, whose unlawful use of self-employment HMRC has been asked to investigate?

I have two questions. The worry about this contractor is that to some people it appears to be cutting benefits first and asking questions afterwards, and there is no mechanism for a hotline for MPs to try to sort such issues out. Although I very much welcome her bringing the contract back in-house, it is the only contract that has ever been put in place that has allowed a private company to make decisions about people’s benefit levels, so might she review that?

[Mr Speaker]

It is quite cheeky of the right hon. Gentleman to ask two questions and to declare so openly his intention to do so, although it is perhaps not quite as cheeky as the hon. Member for Sheffield, Heeley (Louise Haigh), who asked five questions without making any such explicit declaration at all.

[Jane Ellison]

I thank the right hon. Gentleman for his comments on the priority given to resolving problems of this nature. It is worth reiterating that, through the contract, we have secured more than £280 million of identified savings in terms of error and fraud. There continues to be considerable fraud, particularly with regard to whether people live singularly in a household. It is important to recognise that the contract has brought important benefits to the taxpayer.

I recognise the right hon. Gentleman’s challenge on the nature of the contract. Such contracts have their place, but they must work appropriately. The contract must work to do the thing it set out to do, but it must at all times work for taxpayers and, above all, for the vulnerable. I will reflect on his wider point if I may, but I give him reassurance on that general point.

[Craig Mackinlay (South Thanet) (Con)]

All hon. Members will have received a deluge recently of harrowing cases of people who have had calls from and interaction with Concentrix. They were unsure at first whether the company existed and whether they had received a scam letter, which we see far too often. There has been a poor delay in opening post, and getting through on the telephone has been next to impossible. That service level is unacceptable in the public sector. Will the Minister confirm that her very strong announcement today, which is welcome, shows that the Government are committed to helping the vulnerable immediately and accurately?

[Jane Ellison]

I hope we have shown that. We have important contracts across the Government with people to provide services, but clearly they need to be provided to an acceptable standard. The decision is not to renew the contract. In taking that decision, HMRC has clearly taken into account operational performance. The focus for all of us—Ministers, HMRC and individual Members acting in their constituency capacities—is to ensure that our most vulnerable constituents are supported as soon as possible to ensure that the money to which they are correctly entitled hits their bank accounts and they do not have the stress of wondering where the money will come from.

[Mr Nigel Dodds (Belfast North) (DUP)]

All of us as constituency Members of Parliament can relay stories of how the service contract has worked and been deplorable, but on the jobs that will be lost—some of them are in Belfast—will the Minister tell us what contact she has had with the Northern Ireland Executive, or what contact HMRC has had with the relevant devolved Administrations or regions, about the effect on jobs? What will be done to give support to those who will lose their jobs?

[Jane Ellison]

It is important to note that the decision has been taken by HMRC not to renew the contract. To that extent, the decision for a private company such as Concentrix on what it does beyond that point is clearly a matter for the company. If the right hon. Gentleman has concerns of that nature, colleagues in the territorial office and the Department for Business, Energy and Industrial Strategy will be happy to talk to him in the normal way. It is important to stress that this is not a decision to end a contract here and now, but a decision not to renew it in the spring.

[David Rutley (Macclesfield) (Con)]

I welcome the steps the Government have taken to protect the vulnerable in this situation. Will my hon. Friend assure the House that the lessons learned in this case will apply not only to the contract when it is retendered in May, but across Government contracts more widely?

[Jane Ellison]

I hope I can give that reassurance for the future. To date, it has always been the case that, when the Government contract a supplier to provide a service, it should be provided to the right standard, and that contracts are monitored and we ensure that service levels are acceptable to Members and their constituents.

[Helen Jones (Warrington North) (Lab)]

Despite what the Minister has said, I have constituents who have had their tax credits cut off with no prior notification, and who have spent up to 70 minutes on the phone trying to get through, which is a huge drain on their resources. Will she tell us whether the contract included penalties for Concentrix if it did not provide an acceptable service level or answer calls within a set time? If not, who will take the responsibility for negotiating such a flawed contract?

[Jane Ellison]

Waiting 70 minutes to have a call answered is clearly not acceptable. I can imagine the distress that would cause somebody trying to get through. If you will forgive me, Mr Speaker, and if the hon. Lady will let me, I will write to her about the points she made about the contract—I do not have that detail to hand, and I need to assess what we can say given commercial confidentiality. If I can give her the answers she seeks, I will do so, but I will write to her if that is acceptable.

[Robert Jenrick (Newark) (Con)]

The National Audit Office found that the Concentrix contract delivered savings of £500,000 in 2014-15 compared with the original estimate of £285 million. It was expected to deliver at best half the original savings planned in the contract. As we have heard, and as we have learned from our constituency postbags, there were a large number of errors in the process. What more can the Government do to improve the tendering process in future, particularly at HMRC, and to improve the managerial capability at HMRC, so that we do not have such mistakes in future?

[Jane Ellison]

This is a payment-by-results contract. As I said in my response to the hon. Member for Salford and Eccles (Rebecca Long Bailey) at the outset, Concentrix will not be paid when it has not acted appropriately and when it has not got a result. It is important that we get these things right and I take my hon. Friend’s point. I reassure him that HMRC, and indeed Ministers, will always seek to get the right contracts. Clearly, when there are lessons to be learned, we must reflect on them and ensure that they are reflected in future arrangements.

[Greg Mulholland (Leeds North West) (LD)]

Last week in evidence to the Institute for Government, the former Work and Pensions Secretary, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), admitted that outsourcing to the private sector was not a panacea. Surely after the Concentrix contract fiasco it is time for full review of outsourcing to private companies in the welfare system. Is it not time to look at whether outsourcing is appropriate at all or, if it is to continue, at what better civil service oversight provision is needed to ensure that this sort of thing never happens again?

[Jane Ellison]

I again urge hon. Members to keep a degree of perspective. Many contracts deliver what we want. It is worth noting that the Concentrix contract delivered more than £280 million in savings to the taxpayer, which represents a sensible return on that investment. I have said what I have said about service levels—they must be acceptable and to the standard we have contracted for—and there are circumstances in which the use of private companies offers a cost-effective way to get something that the Government might not otherwise have, which could mean flexible capacity or the capacity to do something for an uncertain period. Sometimes, the flexibility that such contracts offer makes it easier than doing something in-house. I take the hon. Gentleman’s points and will reflect on them but I do not draw the same general conclusion as he does.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I welcome the Minister’s statement and concur with the excellent point made by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne). The Minister will know that genuine errors are made by constituents and HMRC. Going by one’s casework and constituency surgeries, it seems that sometimes full compassion is not shown by HMRC when looking at the circumstances when a genuine error is made. Can we ensure that that is done in those difficult circumstances for those who are most vulnerable and in need?

[Jane Ellison]

I have had the same experience as my hon. Friend. Only last week in a constituency surgery, I sat with a constituent who had a complex case and who was in a very difficult situation. Obviously, we can take up cases on behalf of constituents, but when constituents ring HMRC, it is important that they explain their circumstances. HMRC will make every effort to resolve the situation quickly. It is very aware of the need to get people sorted out and get money into their bank account, as appropriate, quickly, but I will re-emphasise that—as the House can imagine, I have discussed the issue in recent days. The interest in this urgent question and the points being made on both sides of the House will be seen and heard where they need to be.

[Ian Murray (Edinburgh South) (Lab)]

A significant number of my constituents have been left financially disadvantaged as a result of the antics and processes at Concentrix. Can the Minister assure the House that, while the priority is to resolve those cases urgently, she will look seriously into fining the company and using those resources to compensate my constituents for the financial distress they have suffered?

[Jane Ellison]

To reiterate what I said earlier, I will ask HMRC to advise me on the nature of the contractual arrangements. Again, it might be better if I wrote to the hon. Gentleman on that.

[Kevin Foster (Torbay) (Con)]

As a constituency MP who has dealt with a number of cases, I am pleased to note the action the Government have taken. That said, as a member of the Public Accounts Committee I have also sat through numerous reports on the quality of service HMRC provides, which is at times hardly of gold standard. What reassurance does the Minister have that, with HMRC picking up some of this work, we will not see a drop-off in the standard of services elsewhere and in future arrangements?

[Jane Ellison]

I do not believe that that will be the case. HMRC has been dealing with cases at the same time as Concentrix throughout the period of the contract. I have been assured that the 150 additional staff deployed with immediate effect will be focused on this. I have no reason to believe that any other services will suffer. My hon. Friend’s point is well made and will be re-emphasised to HMRC.

[Alison Thewliss (Glasgow Central) (SNP)]

I am glad to hear that the Concentrix contract is ending but, as the Minister said, it will still be dealing with ongoing casework. Will she personally intervene to help a constituent of mine who was plunged into £1,300 of debt through the incompetence of Concentrix? It failed to process the annual review and refused to acknowledge any of my correspondence. Will she take up this case?

[Jane Ellison]

Of course. If any Member wishes to write to me, I will ask HMRC to look at it as a matter of priority. The hon. Lady may not be around tomorrow morning, but there is an opportunity, if she or any other Member wants to bring a complex case, to go to the drop-in where HMRC officials will be available. If she would like to write to me, I will of course look at the case.

[Mr Jim Cunningham (Coventry South) (Lab)]

I first raised this issue last January. It has taken about eight months to get to this situation. The issue, which had been going on for weeks, related to a family who did not have any income over the Christmas period. Why does it take a BBC programme to bring Ministers to the Dispatch Box? On Monday, a member of my staff was given the run-around by HMRC and Concentrix because nobody would take responsibility. My constituents have spent hours on this. To involve the private sector in such a sensitive and humane issue does not work.

[Jane Ellison]

I am sorry to hear that the hon. Gentleman had that difficult experience. I cannot agree with his general point about there being no role for the private sector in this regard. I refer again to the amount of money that has been saved for the taxpayer. There is a lot of error and fraud in the system, and it is important that we bear down on that. We do not want money to go to people for whom it is not appropriate, in particular in relation to the nature of people’s households. Much of the fraud does rest in that area. As he highlights, this is a particularly difficult and sensitive area to investigate, but we need to continue to investigate it because the amount of fraud in the area of tax credits is considerable.

[Mark Durkan (Foyle) (SDLP)]

We can all share the stories of our constituents’ anguish and the frustration for our offices in dealing with this debacle, but we should remember that HMRC is itself not an innocent agent. It designed the contract. It put customer hostility and suspicion into the contract, and into the standards of performance and practice. It was, of course, HMRC that provided the names targeted by Concentrix. This has happened against a backdrop of the Government persistently running down the capacity and character of HMRC. Will some of those bigger policy misguidances also be looked at, as well as the enjoyment we are all having today in scapegoating Concentrix itself?

[Jane Ellison]

I return to the answer I gave a moment ago. We need to continue to bear down on fraud in the system. There is a considerable amount of error and fraud. I am afraid it would be naive to think that all of this is error. There is fraud in the system and there is a lot of error, which the original design of tax credits makes easier. We need to continue to bear down on fraud, but clearly we need to do that in a way that does not make it difficult to assist the most vulnerable.

[Sue Hayman (Workington) (Lab)]

The Minister has mentioned fraud a number of times. There is obviously fraud in the system, but I really do not see that as an excuse for errors and failures that affect our constituents. My constituent Sarah Hodgson has three young children and is struggling to put food on the table. There is no excuse for incompetent contractors. I am glad the Minister talks about the redeployment of HMRC staff to support people. The HMRC office in my constituency, which employs over 200 people, is due for closure. Our nearest regional office is more than two hours’ drive away and the phone system is clearly not working: it is not helping people with their inquiries. Will she please review the closure of our local offices, so that people can keep the support and the face-to-face contact they need in these situations?

[Jane Ellison]

I am sorry to hear about the case the hon. Lady mentions on behalf of her constituent. She raises a wider issue about the modernisation project that HMRC is going through. Perhaps it would be more appropriate if she wrote to me. Although the process of modernisation means that some regional offices are closing, it is important because it is fundamentally about delivering a better and more modernised service in the future for all our constituents.

[Sammy Wilson (East Antrim) (DUP)]

I trust there will be some compensation paid by the company for the ineptness in the way the contract has been handled and the extra costs that have been incurred. A lot of people today have talked about how wonderful it is that this is being brought in-house, but it was not so long ago that this House condemned HMRC for not answering more than half of the telephone calls made by constituents about tax matters. What steps has the Minister taken to ensure that, now that new cases will be brought in-house, there will not be the same problems with HMRC as there were with Concentrix?

[Jane Ellison]

It is documented that at times in the past HMRC has had problems with answering its phones, but I think that of late some of the information in the public domain is rather out of date. Indeed, performance in answering phones is considerably better and has reached a very good standard in recent weeks. It is important to retain some balance. It is worth noting that Concentrix has amended about 103,000 claims following the checks it has made. I reiterate that this has been an important exercise, but clearly it needs to be done in the right way.

[Julie Cooper (Burnley) (Lab)]

I welcome the news from the Minister that Concentrix will not have its contract renewed, but in the meantime I have ongoing concerns on behalf of my constituents. There has been a lot of talk about what is unacceptable, with a focus on fraud. What we are talking about here today are errors that have been made and have caused tremendous suffering. We are not talking about occasional exceptional errors; we are talking about a widespread number of errors that are causing exceptional misery for some families. Let me just share with the House the story of one of my constituents, a single mother of four, whose tax credits were stopped in error. As a result, her claim has been closed down, her children can no longer access free school dinners, she cannot get free milk tokens for her baby, and, more importantly, she has been told that her claim cannot be reopened for 44 days. Will the Minister assure me that she will intervene, as a matter of urgency, to make sure that this mother can continue to feed her children?

[Jane Ellison]

I am sorry to hear that the hon. Lady’s constituent has had such a difficult time. Obviously, without knowing the details of the case it is very difficult to comment across the Dispatch Box. I urge her to use the resource I have referred to throughout this urgent question to take up the case. I hope it can be resolved in that way as soon as possible. I have emphasised—HMRC is very aware of this—that speed is of the essence where people have had their tax credits erroneously stopped. She is right that there is error in the system. I reiterate the point that this is a too-complex system, which is exactly why the Government are looking to make major long-term reforms. Even the honest taxpayer can easily fall into error with a system that was so complex in its design from the start.

[Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)]

As we sit here, families up and down the country have been required to rely on charity and food banks. To make ends meet, as a result of what can be described only as frankly ridiculous decisions made by Concentrix, our constituents find themselves in a position not of their own making. To this end and given that so many are living a day-to-day existence, will the Minister confirm just how quickly people can expect to be paid the sums to which they are rightfully entitled?

[Jane Ellison]

It is really important that we get the facts of the case correct and quickly. At the point that that is done—it might be during the course of just one phone call—I am assured that money should be placed into people’s accounts in a matter of no more than four working days. That is what I expect to see. It is a matter of days and it certainly should not be weeks. We need to establish the facts in each instance. It is worth saying again—for the sake of the House having some sense of perspective on this issue—that last year only 1.6% of customers asked for a review of the decision, following a check. Given that a large number of people are being checked, that is quite a large number, but it would be wrong to think that this was a huge proportion of the cases in question. It is important to get things right and, as I say, we look to pay people within days—as soon as the facts of the case have been established.

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

The Minister says that HMRC is supporting Concentrix in performing its contract up until it ends next year. What is the cost to the public purse of that support, and is it recoverable from Concentrix?

[Jane Ellison]

It has always been the case, as we would expect, that managers within HMRC have worked with Concentrix throughout. I do not anticipate that enormous additional costs will be involved. There has always been a relationship between the two because there is some overlap in the work being done. I would expect that to continue as we work towards the end of the contract.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The Minister is currently engaged in crisis management, but unless she sees the bigger picture, crisis management itself is not going to be good enough. In her opening statement, she said that Concentrix was not allowed to phish, but it clearly has been phishing. One of my constituents got a phishing letter not only saying that they were going to stop the tax credits, but demanding £10,000 in back payments. It is quite clear that investigation is needed—and soon. Any such investigation needs to look not only at the contract terms, the audit process and Concentrix’s behaviour, but at what is the true resource requirement for dealing with the tax credits issues. Unless the Minister can confirm such an investigation and review, we will be back here in a couple of years’ time.

[Jane Ellison]

HMRC has data analytics and operational experience to deliver the kind of savings we are looking for in reducing error and fraud. Practical measures such as simplifying the tax credit system, better monitoring of changes of income through real-time information and improved detection of fraud will obviously go forward. They are all important parts of making sure that we improve performance. It is worth noting again that hundreds of millions of pounds to the taxpayer have been saved by reducing error and fraud. We want to make it harder for people to make errors in the future.

[Alison McGovern (Wirral South) (Lab)]

As long as I have represented them, people in the Wirral have been treated with disrespect and indignity by HMRC. This is only the worst of a long series of cases. Let me ask the Minister one simple question: when did she first meet Concentrix to raise our concerns with them?

[Jane Ellison]

I have been a Minister in this Department since mid-July. I have not met Concentrix because I have not been the Minister for that long. Clearly, however, my predecessor colleagues have done so. I have been working with HMRC on regular monitoring. Given the interest from colleagues of all parties in recent weeks, I have been getting daily updates from HMRC on terms of performance. In the relatively short time I have been in my post, particularly in view of the summer recess, I have not had a chance to meet Concentrix. On the hon. Lady’s general point, I am sure that HMRC will be disappointed to hear it, but I am also sure that it will want to reflect on her words.

[Carol Monaghan (Glasgow North West) (SNP)]

One issue reported by my constituents is the requirement to send all the documentation by registered post, which costs over £13—money that they can ill afford when they are living on the breadline. During the eight months in which Concentrix will continue to have this contract, will the Minister look urgently at alternative methods of providing documentation?

[Jane Ellison]

I will certainly ask that question, but I cannot give any assurance that it will be possible to alter the situation during the time that the contract has left to run. The hon. Lady highlights an important point about where we go in the future with these sorts of systems. It further highlights the fact that the more we can make these things digital and make it easier for people to get right, the more likely we are to avoid these sorts of unhappy situations.

[Gavin Robinson (Belfast East) (DUP)]

The Financial Secretary should know that I tabled five questions on this issue on Monday, and that I am well alive to the issues that many colleagues have raised this afternoon. With 1,800 people employed by Concentrix in Belfast and with Concentrix redeveloping one location in the city, will the Financial Secretary reflect on how appalling it was that members of staff—many of them my constituents—found out about this news last night only by a tweet from the BBC rather than through any communication from Concentrix or indeed any statement to this House?

[Jane Ellison]

As I have said a number of times, the contract is not going to be renewed; it has not been terminated. To that extent, consideration of whether any contract is renewed will take place in the normal course of events. The hon. Gentleman provides me with an opportunity to place on record my thanks to the many Concentrix staff who are working hard at their jobs and trying to resolve problems. At the same time as we shine a light on areas where performance is unacceptable, it is really important to take the chance to reflect on the fact that many people are working hard to do their jobs as well as possible to provide a good level of service. Indeed, many people are succeeding in that regard.

[Owen Thompson (Midlothian) (SNP)]

I know the Minister says that she sees no need for an inquiry, but I and many colleagues in the Chamber today—and certainly many of our constituents—very much disagree with that position. My question is: how can we learn the lessons to ensure that the practices employed by Concentrix never come to light again if we do not look into the practices carried out by Concentrix through some form of investigation or inquiry?

[Jane Ellison]

In the normal course of events, we would always look to how things should be arranged in the future after reflecting on what we can learn from things that have already happened. That would happen through a normal process of review and consideration. We shall have to agree to differ on the issue of whether an inquiry is needed.

[Christina Rees (Neath) (Lab/Co-op)]

I have been contacted by many distressed women in my Neath constituency about how awful Concentrix really is. Some Concentrix advisers have suggested to mums, who are desperately trying to renew their tax credits, to get payday loans to feed their children while their claims are being processed. A group has been formed, called “Concentrix Mums”, whose more than 5,000 members can share their horror stories. Let me provide just a couple.

--- Later in debate ---

[Jane Ellison]

I am aware of the Facebook group that the hon. Lady mentions, and I am also aware of some of the cases that have been documented there. To end where I began, that is exactly why we are deploying additional resources to make sure that we can deal with the most difficult cases for the most vulnerable people as quickly as possible. That will be my focus and that of HMRC in the coming days.

Value Added Tax (Place of Supply of Services: exceptions relating to supplies made to relevant business person) Order 2016 (S.I. 2016, No. 726)

Jane Ellison Excerpts

Monday 12th September 2016 General Committees

[The Financial Secretary to the Treasury (Jane Ellison)]

I beg to move,

That the Committee has considered the Value Added Tax (Place of Supply of Services: Exceptions Relating to Supplies Made to Relevant Business Person) Order 2016 (S.I. 2016, No. 726).

It is a pleasure, Mr Gapes, to serve under your chairmanship. The order introduces a change to the VAT place of supply rules for insurance repair services. Insurers who have structured their arrangements to receive such services free of UK VAT will be charged the tax from 1 October 2016. As is often the case with tax, this measure is somewhat technical. Supplies of insurance are exempt from VAT, which means that insurers do not charge VAT, but cannot reclaim the VAT that they pay on their costs. This measure is about the VAT that they are charged on repair services and aims to counter attempts by insurers to avoid incurring that VAT.

The VAT system includes place of supply rules that determine which country can collect the tax on any given supply. Under the normal VAT place of supply rules, repair services supplied from a repairer to an insurer are treated as supplied where that insurer is established. However, a small number of insurers have structured their arrangements to exploit the rule and avoid incurring VAT on costs that they are unable to reclaim. They do so by routing repair services to an associate offshore insurance firm located in a jurisdiction where no VAT applies, resulting, for example, in no VAT being charged on insured vehicle repairs carried out here in the UK. Such practices deplete public revenues and give avoiders a competitive advantage over those supplying similar insurance products.

We received complaints from UK insurers that such practices challenge fair competition and could force them to set up similar avoidance arrangements. In the summer Budget 2015, we promised to introduce a use and enjoyment provision in UK VAT law to address the issue. Following informal discussions with industry representatives, the Government consulted on a draft order in February 2016.

The order amends the place of supply to where the repair service is used and enjoyed, meaning that repairs carried out on goods used in the UK for UK policyholders will be subject to UK VAT, irrespective of where the insurance provider is based. The changes made by this order will end the tax avoidance by the few. It will yield approximately £5 million per annum from 2016-17 and deter others from implementing similar arrangements, protecting significant revenue. The administrative cost of the change to UK repairers will be minimal, as they already charge VAT in the normal course of events to their UK customers.

In conclusion, the measure demonstrates that the Government will not tolerate tax avoidance. We will take strong action to make sure that we have a level playing field where everyone pays their fair share. This statutory instrument will, in particular, help to ensure that UK insurance businesses can operate on an equal footing with their overseas counterparts, that services are subject to VAT where they are consumed and that we remove an incentive to locate offshore to avoid tax. I therefore commend the order to the Committee.

--- Later in debate ---

[Jane Ellison]

I am sure, Mr Gapes, that there will be opportunities in future to debate the wider issues. I will confine my remarks to the statutory instrument.

On the point about the relatively modest amount of money that will be saved by closing the loophole, as I said, we estimate that it will be £5 million. However, in closing the loophole we expect that we will prevent a far wider problem, which would amount to a considerable sum. To clarify, this is essentially pre-emptive action.

Reaction to the measure has generally been positive. The industry appreciates that we are trying to level the playing field. We involved industry representatives in discussions before the exposure of the draft legislation and they had the opportunity to comment. I note what the hon. Lady says about the definitions of “use” and “enjoyment”. The Government consider that that refers to where a service is consumed, so for insurance repairs, if the goods are to be used in the UK under insurance for a UK risk, the service is consumed in the UK and should be subject to UK VAT.

The measure comes into force on 1 October, and the Government will issue guidance. I make an undertaking, in particular, that officials will check with the chartered institute. If it has any further concerns we are interested in knowing them and in seeing whether we are able to reach a position with which it is entirely satisfied. However, those who have been consulted in the industry certainly feel that the terms are helpfully defined and that the measure will level the playing field.

As I said, the order is about ensuring that we do not have a significant loss of revenue in future and, at the same time, do not put those parts of the industry that are not trying to exploit the loophole behind those that are, acting early to ensure that the industry remains competitive and that everyone is playing by the same rules.

Question put and agreed to.

Finance Bill

Jane Ellison Excerpts

Tuesday 6th September 2016 Commons Chamber

[Seema Malhotra]

My hon. Friend makes an important point. The conundrum of how we fund, finance and incentivise pension savings needs to be thought about much more holistically. He highlights an example of incentives that reach not the majority, but a minority. We must keep that under review.

The Public Accounts Committee took forward the work of the National Audit Office on these issues and took evidence. Its report found that some reliefs

“costing some £100 billion a year, are designed to deliver a policy objective that could be met instead through spending programmes”,

which would be more rigorous and more auditable. The report states that

“HM Treasury and…HMRC do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.”

Nothing has really changed since the report was published last year. That is why Labour continues to raise this issue during the passage of the Finance Bill.

We need to question the efficacy of tax reliefs such as capital gains tax relief and entrepreneurs’ qualifying business disposals, or entrepreneurs’ relief. There are clear reasons for entrepreneurs’ relief and it can be argued that it incentivises investment, but does it make a great enough difference to be worth £3 billion a year to the Exchequer? I do not claim to have all the answers, but we do need evidence to prove that it makes that difference and the Government need to be challenged to justify this and other reliefs.

In Committee of the whole House, the then Financial Secretary to the Treasury defended entrepreneurs’ relief and, as usual, did so without evidence, saying:

“of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse”.—[Official Report, 28 June 2016; Vol. 612, c. 245.]

I challenge the Government to say when they will do that. New clause 14 would make the Government and all of us turn those warm words into action.

Furthermore, the Finance Bill introduces a new relief, investors’ relief, which extends the low rate of capital gains tax to investors in an unlimited trading company for at least three years. In principle, I support the idea of a relief that is intended to incentivise investment and to support access to capital for businesses, particularly at an early stage in a business’s life cycle, if we can provide evidence that it will help turn those with initial ideas into the successful job creators and innovators of the future. That is extremely important in creating the economy of the future, with all the opportunities that new technology and other initiatives can bring.

However, it concerns me that this could end up being yet another tax relief that is introduced for a good reason, but then left to mushroom into a relief that is extremely expensive and difficult to remove. We need a mechanism to ensure that there is time to review whether it is achieving the desired effect, whether the costs are aligned to those that are forecast and whether it constitutes value for money. For that reason, I support the sunset clause for the relief in Labour’s amendment 176, which would ensure that after a number of years, when we have the evidence on which to base our conclusions, those questions will not go unanswered.

I call on the House and the new Treasury Ministers to take seriously our scrutiny of tax reliefs and to support the Opposition amendments, which would put in place proper mechanisms for reviewing the reliefs and ensure that they remain targeted at supporting businesses, while showing evidence of value for money.

[The Financial Secretary to the Treasury (Jane Ellison)]

I will start by outlining the Government amendments in the group before responding to some of the points that have been made by hon. Members in what has been a thoughtful debate. As a new Treasury Minister, I have found a number of the speeches good food for thought as I look forward to a series of meetings into the autumn.

On Government amendments 149 to 151, the Finance Bill provides an incentive for people to invest in companies by reducing the main rates of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. We announced at the Budget that the 28% and 18% rates would continue to apply for carried interest. That is justified by the fact that carried interest is a performance-related award that is hybrid in nature, with characteristics that distinguish it from most other types of capital gain, as was alluded to by some hon. Members. We recently learned that it is possible to create an investment fund structure generating carried interest that, under clause 82 as it stands, would be taxed at 20% or 10%. That would clearly be unfair and contrary to policy. The amendments therefore ensure that the continuing 28% and 18% rates apply to all forms of carried interest.

--- Later in debate ---

[Rob Marris]

The Minister says that the measures will drive investment. What evidence is there for that?

[Jane Ellison]

That point has been made repeatedly. Contributions from those critical of the policy often miss the way in which measures interact. We are trying to create a climate that encourages investment. A number of international studies have indicated that low rates of CGT support equity investment in firms and promote higher-quality investment in start-ups. That is an important source of innovation and growth. The evidence is there. The measures are part of a package that is trying to create a climate that makes our country attractive to invest in and enables domestic investors to invest in company growth. At the same time, as we have stressed and as other measures in the Bill stress, taxes must be fair and must be paid; the hon. Gentleman took part in a good debate last night about some of those measures.

A number of external bodies have expressed support for clause 82—that also goes to the hon. Gentleman’s point. The CBI and the Institute of Economic Affairs have both welcomed the cuts as a means of encouraging entrepreneurship and growth, and, as I have said, there is a body of evidence, not least internationally, to indicate that lower rates support equity investment in firms and promote higher-quality investment in start-ups. Again, I welcome the support of and international perspective given by my hon. Friend the Member for Richmond (Yorks) on this subject.

The changes made by clause 82 are about encouraging investment where we want businesses to expand. As I have said, they are very much a part of a general pro-business agenda, but we have also been clear that we want fair and competitive taxes and that taxes must be paid. We addressed that in a good debate last night, when there was a good degree of cross-party consensus.

The hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned the geographical distribution of the CGT cut. HMRC publishes national statistics on CGT each year that include a breakdown of its payers by geographical distribution, so there is transparency on that. It is also worth saying that it has been estimated that up to 130,000 individuals will pay lower taxes as a direct result of these changes to CGT, including 50,000 basic rate taxpayers.

The hon. Member for Feltham and Heston (Seema Malhotra) made a typically thoughtful speech, not just on CGT but on her general thoughts on tax reliefs and how we review them, as well as on tax simplification. Again, I felt that she did not perhaps entirely address the interaction between the various measures—they cannot be seen in isolation. The other issues she mentioned are hugely important; for example, the investment in skills, but I did not think she was fair about what the Government have done on that agenda, which has resulted in record levels of apprenticeships. She is right to say that there are other issues such as that one, but these measures are part of a general package and are not the whole picture.

Amendments 175 and 176 were also tabled by the Opposition. In the 2016 Budget we announced the introduction of investors’ relief, benefiting long-term investors in unlisted companies. As has been explained, the amendments seek to end that new relief after a period of six years, with the option of an additional 12-month extension if agreed by both Houses, and ask the Chancellor to lay a review of the operation of the relief before both Houses.

The amendments are unnecessary as the Government keep all tax policy under review in line with normal tax policy making practice. The hon. Member for Aberdeen North (Kirsty Blackman) again, I thought, did not really give credit to the interaction of different measures nor to the wider point that, given that the Government are bringing the measures forward to stimulate economic growth, there is absolutely no incentive for us not to keep a very close eye on them and review them at regular intervals. We do so all the time because we want measures to work—we want our measures to stimulate economic activity, and we do not in any way want them not to work. Indeed, there are a number of measures in the Bill to correct things that have been done in the past, where we feel that an improvement could make something work better.

We feel that there would be limited merit in conducting a review within six years as the first data on the uptake of the relief in its first year of operation will not be available to HMRC until 2021. Amendments 175 and 176 are neither needed nor useful, and we ask the Opposition not to press them to a vote.

New clause 14, again tabled by the Opposition, proposes that the Chancellor publish, within six months of the passing of the Bill, a report of the Treasury’s assessment of the value for money provided by entrepreneurs’ relief. As I have just said, the Government keep all tax policy under review because we want it to do what we have set out as the intention behind it, namely to stimulate economic activity and to make investment in business attractive to people. That review includes entrepreneurs’ relief, as demonstrated by recent action taken to ensure that the relief is effective, well targeted and not open to abuse. We will continue to act, where appropriate.

My predecessor as Financial Secretary has already informed the House of this, but it is worth reiterating, as it is germane to this point, that HMRC officials have commissioned an in-depth survey of taxpayers’ reasons for using entrepreneurs’ relief and its effects on behaviour. We expect the results of that survey, which will be published at some point in 2017, to inform future changes to the relief. I hope that that gives Members some comfort that the relief is being looked at very closely.

In our wider debate, some general points were made about the Budget being tilted towards the south-east of England. A number of points could be made in rebuttal, not least the debate we had last night, which touched on support for the oil and gas sector in Scotland. More generally, some interesting points were made about having a simpler tax system. In the next part of our debate on the Bill, there will be an opportunity to discuss the Office of Tax Simplification, but as this point came up during the current debate it is worth noting that the Bill puts the OTS on a statutory footing. Around half of the OTS’s 400 or so recommendations to date have already been taken on board. I again take on board the point made by my right hon. Friend the Member for Cities of London and Westminster (Mark Field). I feel sure that this a topic that we will return to over the coming months and years.

I thank all Members who have spoken in the debate.

[Rebecca Long Bailey]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Clause 82

Reduction in rate of capital gains tax

Amendment proposed: 174, page 167, line 40, leave out clause 82.—(Rebecca Long Bailey.)

--- Later in debate ---

Brought up, and read the First time.

[Jane Ellison]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New Clause 2

Review of the impact of the duty regime for high-strength cider

‘(1) The Chancellor of the Exchequer must carry out a review of the impact of the rate of duty charged on sparkling cider of a strength exceeding 5.5%, and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.

(2) The review must address (though need not be limited to) the impact of the duty regime on tax revenues and on the consumption of alcohol.”



New Clause 3

Review of the operation of the transferable tax allowance for married couples and civil partners

‘(1) The Chancellor of the Exchequer must carry out a review of the operation of the transferable tax allowance for married couples and civil partners under Chapter 3A of Part 3 of the Income Tax Act 2007 and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.

(2) The review must address (though need not be limited to)—

(a) levels of take-up of the allowance;

(b) the impact of the allowance on individuals with children aged five years or under;

(c) the impact of the allowance on low-income households; and

(d) ways in which the allowance could be changed to target low-income families with young children.”

New Clause 6

VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service

The Chancellor of the Exchequer must commission a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, including but not limited to an analysis of the impact on the financial position of Police Scotland and the Scottish Fire and Rescue Service arising from their VAT treatment and an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994, and must publish the report of the review within six months of the passing of this Act.”

New Clause 8

Review of changes to tax on dividend income

‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include—

(a) the impacts across the distribution of such directors’ net income;

(b) the impact on company failure rates; and

(c) options for amending the law to minimise the impact on such directors who are on low incomes.

(2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.”

New Clause 15

VAT on Installation of Energy Saving Materials

‘(1) No order shall be made under the Value Added Tax Act 1994 which would have the effect of raising the rate of VAT on installation of energy saving materials, or any individual category thereof.

(2) No order shall be made under the Value Added Tax Act 1994 to vary Schedule 7A of that Act by deleting or varying any description of supply within Group 2 (Installation of Energy Saving Materials).

(3) “Installation of energy saving materials” has the meaning given in Schedule 7A of the Value Added Tax Act 1994.””

New Clause 16

Review of impact of tax measures on intergenerational fairness

‘(1) Within six months of the passage of this Act the Secretary of State must lay before Parliament a report assessing the impact of —

(a) Sections 1 to 3,

(b) Sections 19 to 22,

(c) Section 82,

(d) Sections 92 to 96, and

(e) Section 140

on the burden of taxation by age demographic.

(2) A report under this section must include an analysis of the proportion of taxation paid by working age people under the age of 35.”

New Clause 18

Impact of section 24 of Finance (No 2) Act 2015 on availability of affordable housing

The Chancellor of the Exchequer must commission a review of the impact of changes relating to income tax made by Section 24 of the Finance Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act.”

New Clause 19

Distributional analysis of the impact of taxation measures

‘(1) The Chancellor of the Exchequer must review the impact of the measures introduced by this Act on households at different levels of income, and lay before each House of Parliament the report of that review within six months of this Act coming into force.

(2) The Chancellor of the Exchequer must review the impact of government fiscal measures on households at different levels of income at least once in each calendar year, and lay before each House of Parliament a report on each review.”

Government amendments 132 to 134, 146 to 148 and 135.

Amendment 179, clause 99, page 185, line 20, at end insert—

“(c) “earning” do not include any amounts that constitute qualifying bonus payments within the meaning of section 312B of the Income Tax (Earnings and Pensions) Act 2003.”

Government amendment 138.

Amendment 141, schedule 3, page 337, line 1, at end insert—

“Provision for small amounts of partnership share money repayable to employees to be exempt from tax if instead applied charitably

10 In section 503 of ITEPA 2003 (charge on partnership share money paid over to employee), after “paragraph 55(3) (partnership share money paid over on withdrawal from partnership share agreement),” insert—

“paragraph 55(3A)(a) or (b)(i) (partnership share money paid over on withdrawal from partnership share agreement),”

11 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 6 (partnership shares) is amended as follows.

(2) In paragraph 55 (withdrawal from partnership share agreement)—

(a) in sub-paragraph (3) after “as soon as practicable” insert—

“, unless the plan includes provision authorised by sub-paragraph (3A)”

(b) after sub-paragraph (3) insert—

“(3A) The plan may provide that, where an employee withdraws from a partnership share agreement—

(a) if the employee does not agree to an arrangement in accordance with sub-paragraph (b), any partnership share money held on behalf of the employee is to be paid over to the employee as soon as practicable, and

(b) with the employee’s agreement—

(i) if the partnership share money held on behalf of the employee exceeds a threshold amount of not more than £ 10 specified in the plan, the full amount must be paid over to the employee as soon as practicable, and

(ii) if the partnership share money held on behalf of the employee is equal to or less than the threshold amount referred to in sub-paragraph (b)(i), as soon as reasonably practicable, the full amount must either—

(3B) Partnership share money paid over to a charity or accumulated for that purpose under sub-paragraph (3A)(b) shall not count as employment income by reason of section 503.

(3C) While the plan includes any provision authorised by sub-paragraph (3A), the company and trustees shall make available to participants and qualifying employees at least annually an account of the total amount of partnership share money that would have been returned to employees were it not for that provision and of the related charitable donations made.

(3D) The Treasury may by order amend sub-paragraph (3A)(b)(i) by substituting for any amount for the time being specified there an amount specified in the order.””

Government amendment 139.

Amendment 180, schedule 25, page 642, line 2, at end insert—

‘(4A) The Chancellor of the Exchequer may not appoint the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.

(4B) The Chancellor of the Exchequer may not appoint the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”

Amendment 181, page 642, line 40, at end insert—

‘(2A) The Chancellor of the Exchequer may not terminate the appointment of the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.

(2B) The Chancellor of the Exchequer may not terminate the appointment of the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”

Amendment 182, page 643, line 3, at end insert—

“References to Treasury Committee

5A (1) Any reference in this Schedule to the Treasury Committee of the House of Commons—

(a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and

(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which those functions are exercisable.

(2) Any question arising under sub-paragraph (1) is to be determined by the Speaker of the House of Commons.”

[Jane Ellison]

In this final debate, there is an array of amendments and new clauses to consider across a wide range of subjects. I am sure that we will cover a great deal of ground.

Let me first outline briefly the Government amendments, starting with Government new clause 9. To ensure fairness in the tax system, new clause 9 allows for the exemption from income tax of supplementary benefit payments funded by the Northern Ireland Executive. Government amendments 132 to 134 deal with disguised remuneration and Government amendment 139 deals with aqua methanol. Amendments 132 to 134 change the date for withdrawing a relief on returns arising from disguised remuneration for those who have not settled tax due to 1 April 2017, while amendment 139 changes the date on which the new aqua methanol duty rate comes into force to 14 November.

Government amendments 135, 146 to 148 and 138 concern venture capital trusts, the lifetime allowance and dividends respectively. They make changes to ensure that these policies work as intended.

Let me deal with the new clauses and amendments tabled by the Opposition. New clause 15, tabled by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and her colleagues is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials. Since 2001, the UK has applied the 5% reduced rate of VAT to the installation of 11 different types of energy-saving materials. That reduced rate remains in place and is unchanged. The European Court of Justice ruled last year that the UK had interpreted VAT law too broadly. Following that judgment, the Government published a consultation on this particularly complex issue, and we are considering the responses. While this new clause is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials, the tax lock legislated for by this Government already achieves the same effect. Indeed, it goes further.

[John Redwood (Wokingham) (Con)]

Will the Minister confirm that, now we are leaving the EU, we would have no intention of raising VAT to that rate? I hope that we will scrap it altogether.

[Jane Ellison]

As the Secretary of State for Exiting the EU said yesterday in his responses to the lengthy statement, those are all matters that will be looked at. He confirmed that he is indeed looking at it, as is the Treasury.

We feel that the tax lock goes further by preventing the use of secondary legislation to vary the scope of any reduced or zero rate. In effect, the new clause would serve no purpose except to duplicate existing legislation.

New clause 3 on the marriage allowance would place a legal requirement on the Government to carry out a review. Although I am sympathetic and have discussed the concerns of my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others who support the new clause, I hope to be able to show that such a report is unnecessary and to address some of these concerns.

Let me reiterate that the Government remain committed to recognising marriage in the tax system and to ensuring that the marriage allowance is delivered successfully. As hon. Members will be aware, take-up of this policy was initially lower than expected, but the Government have taken decisive action to change that. In spring this year, HMRC ran a successful marketing campaign to help raise awareness among eligible families, and the results were quite dramatic. Daily applications increased by a factor of seven between November 2015 and March 2016. Next month, HMRC will receive its 1 millionth successful marriage allowance application.

We are going even further. HMRC will launch a more ambitious campaign to raise awareness next month to help to continue the momentum. The Government have also assessed the distributional impact of the policy, which I know is a matter of interest to my hon. Friend the Member for Enfield, Southgate. We found that a quarter of those who will benefit are households with children, and most of the benefit from the marriage allowance will go to those in the bottom half of the income distribution scale. I understand that my hon. Friend will want to make more points about this issue in his contribution. I will seek to respond, briefly if I can, at the end.

My hon. Friend has also tabled new clause 2, which proposes a review of the impact of the rate of duty charged on sparkling cider of an alcohol strength exceeding 5.5%. The concerns that he raises—he has raised them before—are important, and the Government will continue to tackle alcohol problems as a driver of crime and support people to stay healthy, building on the alcohol strategy of 2012. The Government are aware that some ciders can be associated with alcohol harm and we have already taken action. Since 2010, for example, we have required drinks to contain a minimum of 35% apple or pear juice to be defined as cider, which is designed to increase the cost of the cheap white ciders.

From my previous role as a public health Minister, I am obviously aware of the concerns about alcohol harm. Further changes to alcohol policy would need sufficiently to target cheap drinks associated with these harms, without of course penalising responsible drinkers. The Treasury is always willing to consider any evidence about how these products should be taxed. Although I do not think a legislative requirement for a review is necessary, I look forward to hearing my hon. Friend’s contribution to the debate.

Amendments 180 to 182 deal with the Office of Tax Simplification. The amendments, tabled by the hon. Member for Ilford North (Wes Streeting), would require appointments to or dismissals from the position of the OTS chair to be subject to the consent of the Treasury Select Committee. The OTS provides the Chancellor with independent advice on simplifying the tax system. As I alluded to in the last part of the previous debate, to ensure that the OTS continues its important work, the Government are putting it on a permanent statutory footing and increasing its powers. I am grateful to my right hon. Friend the Member for Chichester (Mr Tyrie), the hon. Member for Ilford North, whom I see in his place, and other members of the Treasury Select Committee for their commitment to safeguarding the independence of bodies within government and to increasing their transparency. The Government’s view is that there is a balance between ensuring that there is robust scrutiny and doing so in a way that is proportionate to the function of the OTS.

Having considered the representations of my right hon. Friend the Member for Chichester and the hon. Member for Ilford North, the Government will ensure that the Treasury Committee is able to hold hearings with future OTS chair candidates before their appointments are formalised, and to put appointments to a vote in the House. We believe that those arrangements should be a permanent method of appointment of future OTS chairs. I do not think there is any justification for going further and legislating for a power of veto, which is what the amendments would do. I hope that members of the Treasury Committee will welcome the arrangements that I have outlined, and I invite them not to press their amendments.

[Mr Andrew Tyrie (Chichester) (Con)]

I am grateful to the Minister for what she has said about the proposals. I am pleased that it has been possible to work out a compromise which I think is very reasonable all round, and which builds on the arrangements made by the former Chancellor for the appointments of the chairman and chief executive of the Financial Conduct Authority earlier in the year. I see no reason why this should not form the basis for a permanent arrangement to ensure that we get the best possible candidate into the OTS, supported by Parliament, in future years.

[Jane Ellison]

I thank the Chairman of the Treasury Committee for his indication of support for these arrangements. As he says, we have set out a procedure for the future. I have written to him, and the Chancellor will write to him as well, to confirm that for the record.

New clause 8, tabled by members of the Scottish National party, would require the Government to review the way in which the changes in dividend tax will affect directors of microbusinesses. First, we feel that it would be impossible to deliver such a review, because information from the self-assessment process will not be available until 2018. Secondly and more fundamentally, the dividend tax changes cannot be viewed in isolation, as I pointed out in the previous debate. Small company directors will have benefited from various recent tax changes made by the Government, including cuts in corporation tax and business rates—with more to come into effect in the spring of 2017—and the introduction of the employment allowance, which has made a considerable difference to business people in my constituency to whom I have spoken and, I know, to those in other constituencies. We think that these matters must be looked at in the round, and we therefore do not feel that we can accept the new clause.

New clause 18 proposes another review, on the impact of section 24 of the summer Finance Act 2015 on affordable housing. Again, we feel that that is unnecessary. The changes made by section 24 are being implemented in a gradual and proportionate way. Only one in five landlords is expected to pay more tax, and we do not expect the changes to have a large impact on either house prices or rent levels owing to the small overall proportion of the housing market that is affected. It is worth noting that the Office for Budget Responsibility has endorsed that assessment.

I gather from my predecessors that the subject of new clause 6, which asks the Treasury to conduct

“a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service”,

has arisen a number of times in the past, and I am afraid that I cannot add very much to the responses that SNP Members have heard before in the context of this and previous Finance Bills. The Treasury made it clear to the Scottish Government that the proposed changes would result in a loss of eligibility for VAT refunds. They chose to go ahead, which was their legitimate right, but there can be no expectation that we will review the issue, given that the consequences were clear beforehand.

[Jonathan Edwards]

If the United Kingdom opts for non-membership of the single market following Brexit, the UK Government—the Treasury—will be able to initiate all sorts of proposals relating to VAT, one of which may well be to devolve it to the devolved Administrations. The Scotland Act 2016 currently assigns responsibility for 50% of VAT receipts, but if the UK Government decided on the non-membership option, it would be possible to go further. Is the Treasury considering that?

[Jane Ellison]

As a number of Ministers have made clear in the House, we need to consider a huge range of issues as we proceed, but, as I have said, we are clear about the matter for the present. No doubt the hon. Gentleman will raise his point again during debates about our future outside the European Union.

New clause 16, tabled by Liberal Democrat Members, would require the Government to publish a review. I do not think that any Liberal Democrat Members are present, so I shall speak briefly before moving on swiftly to deal with new clauses and amendments tabled by members of other parties who are present.

The Government already undertake equality assessments of all new measures, which includes considering age as a protected characteristic. I am sure the whole House welcomes the fact that the Prime Minister has now launched an unprecedented audit of public services to reveal—among other things—racial disparities, and to look at the way in which public services serve people throughout the country. The Treasury will, of course, play its part in the audit, and no doubt some of these issues can be considered as part of that important exercise.

New clause 19 would require the Government to review the impact of measures in the Bill on different levels of income. In every Budget and autumn statement since 2010, the Treasury has published distributional analyses showing the impact of Government policy on the share of tax paid and spending received across household income distribution. Since 2010, the Government have published far more distributional analyses than their predecessors. As the Prime Minister has made clear on many occasions since taking office, we are determined to make Britain a country that works for everyone, and our policy choices and actions stand as proof of our commitment. The Government have received representations on this matter, not just from Opposition Members but from my right hon. Friend the Member for Chichester, on behalf of his Committee. We will consider the appropriate format of documents to be published at future fiscal events at a time closer to the date of the autumn statement.

[Kirsty Blackman]

When does the Minister think the autumn statement will be delivered?

[Jane Ellison]

The Chancellor will make that clear in due course.

[Mr Tyrie]

As the Minister knows, the issue of distributional analysis is of great importance to the Committee. The previous Chancellor accepted it in 2010, but resiled from it in 2015, to the Committee’s considerable concern. On the understanding that the Chancellor really is considering reinstating the arrangements that had been in operation for the preceding five years, I would not be minded to vote for new clause 19. Am I to understand from what the Minister has said that a serious reconsideration is taking place, and that she or the Chancellor will return to the House in due course to inform us of their conclusions?

--- Later in debate ---

[Jane Ellison]

Treasury Ministers and the Chancellor take points made by my right hon. Friend and his Committee members very seriously. As I said earlier and as has been confirmed in an exchange of letters between my right hon. Friend and the Chancellor, we will consider the issue at future fiscal events closer to the date of the autumn statement. I may be able to write to my right hon. Friend with further information, but that is what I am able to say at the moment.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

I thank the Minister for giving way. She is being most generous.

Yesterday, in an intervention on the speech of one of the Minister’s colleagues, I asked when we were likely to expect the very important autumn statement. The response was “some time in November, maybe December.” Can the Minister confirm that that is indeed the case?

[Jane Ellison]

As I have said, the date will be confirmed in due course, but I think it reasonable to assume that the window of opportunity to which the hon. Gentleman has referred is broadly correct.

I shall speak briefly—as, again, there is no Liberal Democrat presence in the Chamber—about amendment 179, which deals with the apprenticeship levy. This would exclude qualifying bonus payments to employees of employee-owned businesses from being considered as part of the employer’s pay bill when calculating the levy. To ensure the levy is as simple and fair as possible, the Government have decided to use the existing definition of earnings—those used for employers national insurance contributions. This avoids unnecessary complication. This point about avoiding complication was made repeatedly to us during the consultation. We feel the amendment would add complication and therefore we urge the House to reject it.

Lastly, Labour amendment 141 on employee share schemes proposes a tax exemption for residual cash amounts remaining in share incentive plans when they are donated to charity. While we appreciate the proposal is made with the best of intentions, we are concerned the change would, again, add complexity and the amendment lacks details. We would need further development and evidence of this idea before giving it further consideration.

I will end there, but I may look to respond briefly at the end if there are any further points I can add that would assist the House. I look forward to the debate.

[Rob Marris]

I am disappointed by the Minister’s concluding remarks on amendment 141, which is in my name and those of my hon. Friends. She says the amendment lacks detail. We are talking about simplification today and I will go on to address the House on that issue, but this amendment covers more than an A4 page, so there is quite a lot of it. It might be the wrong detail—I freely accept that I am not an accountant—but I cannot get my head around the concept that it lacks detail. So I am disappointed and urge her to reconsider.

I am pleased at the movement from the Government on amendment 180. It will not surprise SNP Members to know that I want to touch briefly, as the Minister did, on new clause 6. Frankly, they have made their bed and they should lie in it. They were warned that this would be the financial effect, and having an inquiry into the financial effect of something they knew was going to happen and has happened—it may be an adverse financial effect—is what you get with devolution; you make your decisions and you live with them. They should not be looking indirectly through this mechanism for yet another bung from the English taxpayer when they are already getting shed loads of money under the Barnett formula. I support the Barnett formula and the Union, but sometimes people can push their luck a bit and I think that is what is happening here since they knew in advance what would happen.

I want to make some brief remarks on the question of evidence-based decision making and the difficulties we have in that regard as policymakers and legislators in this House. That applies particularly to financial matters. Although the House of Lords scrutinises Finance Bills, it does not vote upon them for good historical reasons. It cannot, therefore, amend the Finance Bill and we have to get it right here.

Oppositions cannot table amendments to put up taxes and it has become commonplace in recent years to table amendments to express concern and call for a review. That has been the mechanism used by those who take issue with a particular course of action, or lack of a course of action rather than moving amendments to abolish something, as the Liberal Democrats extraordinarily did yesterday with their amendment to abolish corporation tax, which, as the Minister said, would cost £43 billion a year. In this group, new clauses 3, 6, 8, 16, 17, 18 and 19 all call for a review, as did new clause 14 and amendment 176 which were debated previously. It is the flavour of the day.

This highlights a problem that the Minister addressed in her concluding remarks in the previous debate. We have at the moment an economy with extraordinarily good unemployment figures, and I praise the Government for that. That figure has come down, and we have had 2.5 million more jobs in the past six years. That is great, but it has been bought on a sea of debt, with the deficit going up 60% under a Government who said that they were imposing austerity in order to bring public finances under control. They are still not under control.

--- Later in debate ---

In conclusion, I return to the question of the VAT treatment of energy-saving materials. The 5% reduced rate must be kept. It is good for the renewables energy sector, which needs stability, and putting that commitment into statute today would be a good start. I shall therefore divide the House on new clause 15.

[Jane Ellison]

The hon. Lady referred to the issues that we have debated this afternoon as a “rag-bag”, but I think that is a bit unkind. I prefer to describe the debate as a smorgasbord of wide-ranging issues and thoughtful speeches. I shall not repeat my opening remarks, but I shall try to add something to each of the areas where it is relevant to do so, in no particular order.

I thank the hon. Member for Ilford North (Wes Streeting), who is no longer in his place, for welcoming the fact that the Chancellor is looking at the issue of distribution analysis, as he said he would in his letter to the Select Committee Chairman. We will comment further on that in due course. As a result, the hon. Gentleman decided not to press new clause 19 to a vote. [Interruption.] Ah, the hon. Member for Wolverhampton South West (Rob Marris) has returned to his place just as I was about to be nice about him. He must instinctively have known that I was going to thank him for his wide-ranging contribution to the debate. He presented me with some fair challenges as a new Minister. He also made some interesting points about tax simplification. I am due to have a meeting with the Office of Tax Simplification shortly, and he has certainly given me food for thought for my agenda. I reiterate that the Bill will put the OTS on a statutory footing, which I believe indicates the seriousness with which we take its work.

This has been a probing debate. My hon. Friend the Member for Enfield, Southgate (Mr Burrowes) is now on Select Committee duties and therefore unable to return to his place in the Chamber, but he made an interesting contribution on an issue that I know all too well—that of high-strength alcohol. This is something that needs to be looked at in the round, but I can assure him, given my three years in the job that I did before this one, that I take the matter very seriously. He was also generous enough to note, correctly, that the Department of Health has had a good deal of success, working with manufacturers, in reducing the number of very high-strength products on the market. I also note the discussion that took place about silver linings, in which varying views were expressed. I am sure that we will give further thought to these matters in due course. My hon. Friend the Member for Congleton (Fiona Bruce) and others also stressed the matter of the cost to society of some of those products.

My hon. Friend the Member for Enfield, Southgate also talked about the marriage allowance. I want it to be clear that the Government’s focus is on delivering the existing policy, but I did mention in my introductory remarks that a quarter of those who benefit are households with children. We do not want to create a two-track marriage system within the allowance, but the Government are none the less committed to helping low-income households and those with young children through a wide range of other policies including, for example, tax-free childcare and the new national living wage.

I want to add that the online application process for the marriage allowance takes only seven minutes. I call upon the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Congleton and for Enfield, Southgate and others who have an interest in this matter to assist us and promote it. I found in some of my summer recess meetings with groups in my constituency that awareness of the marriage allowance is low. It is of real benefit to lower-income married couples and all Members can contribute to promoting awareness and take up of it. None the less, I reassure all colleagues—my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) also spoke about this—that I will continue to look closely at take-up with HMRC. I also suggest that promoting the personal tax account is another good way of promoting the take-up of the allowance, because when appropriate people take up a personal tax account they can get a nudge to apply. I reiterate that HMRC will receive the millionth application next month, putting us on course to meet the OBR’s revised forecast for take-up this year.

I have already mentioned the seriousness with which we take the Office of Tax Simplification, but it is worth noting that the recommendations led to the introduction of cash-based accounting for tax. One million self-employed individuals took that up in the first year alone, so those recommendations were important.

I appreciate the intention behind amendment 141 tabled by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), but I said that the Government feel that the change would add additional complexity; I do not think he agrees with that. We have received no indication that fewer companies are making use of share incentive plans due to the administrative cost mentioned by the Opposition, but we will keep that under review. To tease out why our views differ on how the scheme might work and why the Government feel that the idea needs further development, if the hon. Gentleman is willing not to press the amendment, I am happy to meet him to discuss the matter and to understand why he feels that way.

[Jonathan Reynolds]

I thank the Minister for those comments. I have a small sense of frustration as I believe that nearly every Conservative Member—indeed, all Members—would back the change on its merits, but I understand that Ministers have limited room for manoeuvre at the Dispatch Box, so I will accept that offer in good faith and will not press the amendment.

[Jane Ellison]

I thank the hon. Gentleman for that and look forward to our meeting.

Several Members spoke about new clause 15, including my right hon. Friend the Member for Wokingham (John Redwood) and the hon. Member for Salford and Eccles, and I reiterate that nothing would be achieved that is not already achieved by the Government’s tax lock. The reduced rate of 5% has applied to installations of energy-saving materials since 2001 and that rate remains in place and unchanged. As for the wider issues about European Union VAT and excise systems, we are considering a range of issues as we look to exit the European Union.

On new clause 19, as I said, we feel that the tax lock, for which we have already legislated, actually goes further by preventing the use of secondary legislation, about which the hon. Member for Salford and Eccles was worried.

Turning to new clause 18, I will repeat to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) what I said in my opening remarks: the Government do not expect the measure to have a large impact on rents due to the small proportion of the housing market affected—around one in five individual landlords.

On the SNP’s new clause 8 and the points made about the changes to dividend tax, I reiterate that the way in which such changes affect small and microbusinesses cannot be looked at in isolation. The Government take the concerns of microbusinesses incredibly seriously—I met the Federation of Small Businesses only last week, for example. As for listening to the concerns of microbusinesses, I point hon. Members to the changes made to the Government’s “Making Tax Digital” consultation documents as evidence of our sensitivity to such concerns and we look to respond to them when we can. It is important to note that we believe the dividend tax is still progressive overall, and individuals with higher incomes will still pay a higher rate of tax on their dividends.

On the wider changes to small businesses and microbusinesses, I point the hon. Gentleman to Budget 2016 in particular, as it is introducing the biggest ever business rate reduction, worth £6.7 billion. It has yet to come into force, but it will make a very significant difference to a very large number of microbusinesses across all our constituencies.

Lastly, I hope to answer the highly technical point made by the hon. Member for Salford and Eccles, as well as the point made by the hon. Member for Foyle (Mark Durkan). Government new clause 9 will exempt from income tax supplementary payments that mitigate tax-exempt benefits paid by the Northern Ireland Executive. Any supplementary payments that mitigate tax benefits will themselves be taxable. As a result, all supplementary payments will be taxed in the same manner as the benefits they are mitigating, to ensure fairness and consistency with the tax system. I was asked whether the power being taken in this Finance Bill would be used more widely. No, the power being taken in this Bill will be restricted to only allowing for the tax status of the Northern Ireland supplementary payments to be established in regulations. Full welfare devolution has always been part of Northern Ireland’s devolution settlement. I hope that adds some clarity.

This has been a wide-ranging debate. We have touched on some good issues and found some common ground. The measures in this Finance Bill will benefit working people, boost UK businesses, and take on tax evasion and avoidance. In the days we have spent on Report, and during the Bill’s earlier stages, we have debated many aspects of it thoroughly, and on Third Reading the House will have a final opportunity to consider the Bill as a whole. At that point, I will set out the main reforms for which the Bill legislates, but I hope that this afternoon’s discussion has been helpful and that my responses to points have helped the various Members who raised them.

Question put and agreed to.

New clause 9 accordingly read a Second time, and added to the Bill.

New Clause 8

Review of changes to tax on dividend income

‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include—

(a) the impacts across the distribution of such directors’ net income;

(b) the impact on company failure rates; and

(c) options for amending the law to minimise the impact on such directors who are on low incomes.

(2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.”—(Philip Boswell.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Jane Ellison]

I beg to move, That the Bill be now read the Third time.

I remind the House just how important the measures contained in the Finance Bill are for the success and prosperity of people in this country. It is about putting more money back into the pockets of all the people who work so hard but sometimes struggle to make ends meet. It is about helping our businesses to grow and succeed, to invest and create jobs, and it is about protecting the nation’s finances by taking action to stop any individuals or businesses that seek to evade or avoid tax.

The Bill has been thoroughly debated for weeks, including with me as the Minister during the past two days. I therefore want to take a moment to thank hon. Members on both sides of the House for their excellent scrutiny of it and for the insightful and wide-ranging debate that has taken place during its passage through the House.

It is worth noting a couple of breakthroughs for which the Bill will be long remembered. The first is the amendment that was moved last night by the right hon. Member for Don Valley (Caroline Flint) on public country-by-country reporting, which the Government supported. The welcome degree of cross-party consensus cemented the UK’s position of international leadership on this issue. It is also worth noting the long and successful campaign by the hon. Member for Dewsbury (Paula Sherriff) and others that has brought significant progress on the issue of VAT on sanitary products. There are a number of other important measures, some of which we have debated today, and we have made important Government amendments to ensure that things work as they should.

I pay particular thanks to my predecessor, my right hon. Friend the Member for South West Hertfordshire (Mr Gauke), for his excellent work. Indeed, he did the lion’s share of the work in steering the Finance Bill through each of its stages. I also thank my hon. Friends the Members for East Hampshire (Damian Hinds) and for West Worcestershire (Harriett Baldwin) for setting out the Government’s case at different stages. I express my general appreciation to all hon. Members who have contributed to the Bill.

The Bill means that we will do more to help hard-working individuals and families, more to help businesses large and small, and more to safeguard the nation’s finances. Above all, it will ensure that we move forward into the new future from a position of financial strength in our economy. I therefore commend it to the House.

Finance Bill 2016

Jane Ellison Excerpts

Monday 5th September 2016 Written Statements

[The Financial Secretary to the Treasury (Jane Ellison)]

I have today published a written submission outlining the Government’s analysis of how the English votes for English laws principle relates to all Government amendments tabled for Report stage of Finance Bill 2016.

The Department’s assessment is that the amendments do not change the territorial application of the Bill. The analysis reflects the position should all of the Government amendments be accepted. I have deposited a copy of the submission in the Libraries of the House.

[HCWS130]

Finance Bill

Jane Ellison Excerpts

Monday 5th September 2016 Commons Chamber

[Rob Marris]

I did hear the hon. Gentleman say that, and I also heard the hon. Lady say, when she was moving new clause 5, that she did not even realise that that was the case. Paradoxically for them, I support the new clause and I hope it is agreed to. It looks attractive to me because such a review could lead to a situation in which taxation on oil and gas is increased appropriately. We will not know until we have the evidence, so let us have the review.

[The Financial Secretary to the Treasury (Jane Ellison)]

I will start by responding to the Opposition’s amendments and new clauses, before I turn briefly to those tabled by the Government.

Amendment 162 would require the Government to remove clause 45 from the Bill. That would stop the cut in corporation tax going ahead, because the clause will cut the rate of corporation tax to 17% with effect from 1 April 2020. Lower corporation tax rates enable businesses to increase investment. We cannot agree with the hon. Member for Salford and Eccles (Rebecca Long Bailey), who speaks for the Opposition on this matter. Lower rates enable businesses to take on new staff, increase wages or reduce prices. That is borne out by receipts data. The House may be interested to know that onshore corporation tax receipts have risen by more than 20% since 2010, despite the lowering of corporation tax rates. The Treasury and HMRC have modelled the economic impact of the corporation tax cuts delivered since 2010 and those announced at Budget 2016. The modelling suggests that the cuts could increase long-run GDP by more than 1%, or almost £24 billion in today’s prices.

The hon. Lady asked whether business investment has grown. It has increased by 30% since 2010. She mentioned foreign direct investment. In fact, only last week, the Department for International Trade reported a record number of inward investment projects in 2015-16, with over 80,000 new jobs created by more than 2,000 FDI projects. Again, we cannot agree with her criticism.

[George Kerevan]

The Minister mentions that the Treasury has modelled the impact of tax cuts. Is this the same Treasury model that predicted the collapse of the UK economy in the hours after Brexit?

[Jane Ellison]

Given the SNP’s track record on predicting the oil price, the hon. Gentleman should think carefully before digging—

[Kirsty Blackman]

Will the Minister give way?

[Jane Ellison]

No, I will continue because I want to move on to the points made by the hon. Member for Salford and Eccles.

On amendment 177, I note the comments made by the hon. Member for Wolverhampton South West (Rob Marris). He was quite correct in his analysis of what the amendment would do. I accept the point made by the hon. Member for Leeds North West (Greg Mulholland) that it is a probing amendment, but it would indeed cancel the charge for corporation tax in the 2017-18 financial year, depriving the Government of over £45 billion of corporation tax receipts in that year alone. I of course take the point that he wants support for small business and so on, but we are doing a great deal—for example, the business rates package, which will come into effect next spring. For fairly obvious reasons, we cannot support such a loss to the Exchequer.

New clause 5 was tabled by the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), but moved by the hon. Member for Aberdeen North (Kirsty Blackman). It calls on the Government to publish a review of corporation tax rates and investment allowances applicable to oil and gas-producing companies in the UK. The UK Government remain 100% behind the oil and gas sector and the thousands of workers and families it supports, but a further review into oil and gas taxes would not serve any useful purpose at this time because the Government have recently carried out such an exercise. In 2014, the Government published “Driving investment: a plan to reform the oil and gas fiscal regime”. It set out the Government’s long-term plan to ensure that the fiscal regime continues to support the objective of maximising the economic recovery of oil and gas, while ensuring a fair return on those resources for the nation. The Government have remained consistent in their approach.

[Callum McCaig (Aberdeen South) (SNP)]

One of the things to support the oil and gas industry that the Government have talked about is offering loan guarantees to companies experiencing financial stress. Will the Minister tell the House how that process is going and how many companies have received loan guarantees?

[Jane Ellison]

That issue was explored in some detail in Committee, so I will not respond on it now.

I want to make the important point that the changes introduced by the Finance Bill will provide the right conditions to maximise the economic recovery of the UK’s oil and gas resources by lowering sector-specific tax rates, updating the current system of allowances and expanding the types of activity that can generate financial relief. Another important point often stated—indeed, it has been made by many people who work in the sector and by investors in it—is that stability and certainty in the tax regime are major factors in making investment decisions. For that reason, we do not think it is right to have another review. Such a review could create further uncertainty at a time when it is not right for the industry, and it could delay investment. I therefore urge Members to reject new clause 5.

[Kirsty Blackman]

Will the Minister give way?

[Jane Ellison]

No. I am sorry, but I want to move on to new clause 11, tabled by the hon. Member for Salford and Eccles. It proposes an independent review into the efficacy of the taxation of securitisation companies. The Government do not consider that necessary. Regulations introduced under a Labour Government in 2006 applied specific corporation tax rules to the profits of securitisation companies. The regulations contain several anti-avoidance tests. As announced in the Budget, HMRC is reviewing these regulations to reflect recent changes to accounting standards and market developments. A consultative working group, made up of independent professional advisers specialising in securitisations, HM Treasury officials and HMRC technical specialists, has met four times since September 2015 and is looking carefully at a range of issues. Revised regulations developed with the group are expected to be published in draft for public consultation later this year or early next year. As this review is already under way, a further assessment is not required.

On Government amendments 152 and 153, clause 63 and schedule 9 make changes to ensure that the patent box operates in line with the newly agreed international framework resulting from the OECD’s base erosion and profit shifting action plan. As currently drafted, the changes in the Bill could result in different definitions of the term “qualifying residual profit” applying to the same parts of the patent box legislation. The amendments address that problem by providing a coherent and consistent definition for that phrase.

I will comment briefly on Opposition new clause 10. The new clause would require the Chancellor of the Exchequer to publish within six months of the passing of the Bill an independent report giving an assessment of the value for money and efficacy of the patent box. The Government do not support the new clause. We only now have full data for the first year of the patent box, and as such the report required by the new clause would not take into account the revisions to the regime made by the Bill. The proposed one-off publication would also fall short of the plans the Government already have in place to publish annual official statistics on the patent box.

The hon. Lady mentioned that she wished to see more evidence of the impact of the patent box. It is worth noting that, for example, GSK recently attributed a £275 million investment to the UK’s competitive tax regime and specifically mentioned the patent box as a reason to invest.

A number of Government amendments have been tabled to clause 65 and schedule 10, which legislate to counteract avoidance involving hybrid mismatches. The amendments make changes to the legislation to ensure that it works as intended and does not create unintended impacts in terms of its interaction with other areas of the UK tax system. The amendments are necessary to secure the forecast yield from the measures.

My right hon. Friend the Member for Cities of London and Westminster (Mark Field) made a typically thoughtful intervention. He mentioned turnover tax versus profits tax—I suspect that is a theme to which he might return. It is worth noting that a turnover tax can produce unfair outcomes, such as penalising businesses that make a loss and those in competitive markets. As I say, I am sure it is an issue to which he may well return.

The Government are committed to making our tax system fundamentally fair, ensuring that people and businesses pay what they owe and contribute to our nation’s success. I therefore once again urge the House to reject the amendments and new clauses tabled by the Opposition.

[Kirsty Blackman]

I will press new clause 5 to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

If Members of the House agree with those basic principles, I urge them to support the Opposition proposals as a small step towards that goal. Ultimately, however, I hope the Minister has listened carefully, because we deserve much more than the few tax avoidance provisions in the Bill. I should like to press new clause 13 to a Division.

[Jane Ellison]

It has been a wide-ranging and at times passionate debate. I shall address the Government amendments before addressing the amendments and new clauses tabled by the Opposition.

Clause 155 makes an administrative change to strengthen the procedural efficiency of the GAAR. Amendments 136 and 137 make small technical changes to the clause, which incorporate the new terms introduced by clause 156. The new terms provide a new way of counteracting under the GAAR procedure to enable the same advisory panel opinion to apply to multiple users of marketed tax avoidance schemes. We believe that the changes will streamline the procedure without altering the fundamental test to which taxpayers are subject under the GAAR. They will ensure that a provisional GAAR counteraction will apply equally to all counteraction procedures, and enable tax to be protected for the cases that we intend to address.

Amendment 145, to which the right hon. Member for Don Valley (Caroline Flint) spoke, would give the Treasury the power to require groups to publish a country-by-country report showing their profits, taxes paid and other financial information for the countries in which they operate. As she and others acknowledged in the debate, the UK has led international efforts, although the hon. Member for Salford and Eccles (Rebecca Long Bailey), who spoke for the Opposition, was, to say the least, miserable about the leadership that the UK has shown. I did not recognise the description she applied, but others were more generous, noting the fact that the UK has rightly led those international efforts to tackle tax avoidance by multinational enterprises, for all the reasons so brilliantly articulated by colleagues such as my hon. Friend the Member for Dover (Charlie Elphicke). We all support what he said. The Government have been a firm supporter of greater tax transparency and greater public disclosure of the tax affairs of large businesses. For those reasons, we fully support the intentions of amendment 145 and will support its inclusion in the Bill.

The Government have consistently pushed for a multilateral solution for country-by-country reporting. For example, the Chancellor made the case for looking at this at the G20 in July. Amendment 145 is very much in keeping with that aim and provides the Government with the power to implement when appropriate. It is none the less important that the power is used to deliver a comprehensive and effective model—as was acknowledged by the right hon. Lady—of public country-by-country reporting that is agreed on a multilateral basis. I am sure we will return to this issue and the basis on which we can go forward. It means a model that requires all groups, both UK headquartered and non-UK headquartered, to report accessible information for the full range of countries in which they operate. It is vital for ensuring that the policy intention of greater transparency is delivered. It is also important for ensuring that UK headquartered groups are not put at a competitive disadvantage. Again, I pay tribute to the right hon. Lady for recognising that concern, as expressed earlier in the year in a previous stage of the Bill, and that disclosure requirements cannot be avoided through group restructuring—another issue that we want to ensure we are on top of.

The Government remain focused on getting international agreement for such a model, as part of their continued efforts to ensure that taxes are paid and paid in jurisdictions where economic activities take place. The right hon. Lady and the House have my assurance that the Government will continue to take every opportunity to champion this agenda at an international level. It is increasingly clear that we move forward with a welcome degree of agreement across this House.

[Caroline Flint]

I thank the Minister for the Treasury’s decision to support my amendment. I hope we can work together to consider how we can make the journey to introducing this in this country, with others, a real possibility in the future.

[Jane Ellison]

Indeed. We have seen, in other areas where we have shown leadership, how much can happen in a very short space of time, so we are optimistic that we can make progress with a welcome degree of consensus across the House.

Amendments 163 to 168, 170 to 173 and new clause 12 all concern penalties for offshore tax avoidance and evasion. Clause 161 and schedule 20 create new civil penalties for those who have deliberately assisted taxpayers to evade UK inheritance tax, capital gains tax or income tax via offshore means. They would introduce a penalty of up to 100% of the tax evaded and public naming for the most serious cases. Amendments 163 and 164 would include within the penalty provisions the option of charging a penalty of up to 100% of any fee paid by a taxpayer to the enabler for the enabling service received.

Fees charged by organisations can take a vast array of different structures and formats. Without a clear definition of what constitutes fees, or how the fee relates to the services provided, we believe it would be disproportionately burdensome for HMRC to apply and use such a penalty. A penalty based on tax lost is a much clearer and more easily defined concept, which better meets the objective of sending a strong and clear deterrent.

Amendments 165 and 166 would increase the minimum penalties chargeable for deliberate offshore tax evasion. Again, the Government have significantly increased sanctions that can be applied for offshore tax evasion. However, we have to balance that against the need to maintain the proportionality of our penalties and retain the incentive for taxpayers to comply voluntarily and co-operate with HMRC, an area in which we have seen considerable activity. We therefore believe that the ranges we have set out provide a good balance. However, as with all of our penalties, we keep the rates under review.

Amendments 167 and 168 would make it compulsory for HMRC to publish details of those tax defaulters who meet the relevant criteria. Obviously, public naming incentivises evaders to come forward voluntarily and co-operate, but it allows the naming of those who refuse to co-operate with HMRC. In the vast majority of cases, we would expect HMRC to name those who meet the criteria. However, mandatory publication would be inappropriate in some particular exceptional circumstances, or perhaps when there are wider consequences, such as economic market impacts from the information becoming public.

Clause 164 and schedule 22 introduce a new asset-based penalty for the most serious cases of deliberate onshore tax evasion, where the tax loss exceeds £25,000, and would levy a penalty of up to 10% of the value of the asset connected to the evasion in addition to any other tax-geared penalties and interest due.

--- Later in debate ---

[Kirsty Blackman]

It is not entirely clear. Will the Minister let us know whether she will support the inclusion of new clause 7 on the basis that, as she has just made clear, it would be a good idea and important to do so? If she is not willing to support it, will she justify why the Government are willing to leave the loophole undiscussed and in place?

[Jane Ellison]

As I have just laid out, consultation is under way, which provides an opportunity to look at those precise issues. As I said, I invite the SNP to engage with that consultation.

Turning to deal with the lengthy speech and case made for Labour’s new clause 13, which provides for a report on the UK tax gap, the tax gap is an official statistic published each October and it is produced in accordance with a code of practice for official statistics, which assures objectivity and integrity. The methodology is judged by independent third parties to be robust, and it has been intensively reviewed and given a clean bill of health by both the International Monetary Fund and the National Audit Office. There is therefore no need for a report on the tax gap. Furthermore, HMRC publishes a methodological annexe alongside the tax gap publication, which provides details of the data and methodology used to produce estimates of the gap.

I think it fair to say that, in speaking about new clause 13, the hon. Member for Salford and Eccles painted a picture which, on the Government of the House and, I suspect in other parts as well, could be regarded as at the very least ungenerous and in many ways inaccurate, unfair and, indeed, unrecognisable, given the way in which the she downplayed the efforts made by the Government. To call that tinkering at the edges is simply nonsense.

Since 2010, the Government have given HMRC £1.8 billion to tackle evasion, avoidance and non-compliance, and, as I said earlier, over that period HMRC has secured £130 billion in additional tax revenues. We have shown considerable ambition, and, as other Opposition Members have been generous enough to acknowledge, international leadership. I therefore do not accept the criticisms that were voiced from the Opposition Front Bench. It is also worth noting that in the summer Budget of 2015, the Government invested a further £800 million to fund additional work to tackle tax evasion and non-compliance.

No Government, particularly the last Labour Government, have come close to being as ambitious as we have been since 2010 in respect of this important agenda. The fact that there was considerable agreement across the House in the earlier part of the debate, and the fact that the Government have accepted the amendment tabled by the right hon. Member for Don Valley, gives some weight to our claim that we are beginning to strike a UK consensus about the need to tackle this problem, and we have a chance to continue to make progress. I know that there is an appetite to return to these issues. There is a real desire to see the Government continue to lead internationally on avoidance and evasion, and the House can be reassured that that is exactly what we intend to do.

[Mr Speaker]

Does the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) wish to respond, which he is permitted, but not required, to do?

--- Later in debate ---

[Rebecca Long Bailey]

I am conscious that we are trying to make progress, so I am afraid that I will not take any interventions.

As was said earlier, the Chief Secretary to the Treasury stated during the debate in the Public Bill Committee:

“I am optimistic that we will have the measure in place by 1 April 2017; I am happy to put that on the record.”

He also stated that

“the Government have an open mind as to whether we would accept the amendment on Report, when we hope to have greater clarity. We are confident that by 1 April there should be no reason why the measure is not in place. It is possible that the Government will come forward with our own amendment, but we may well simply accept amendment 5.”––[Official Report, Finance Public Bill Committee, 7 July 2016; c. 146.]

As has been noted, my hon. Friend has indeed tabled such an amendment again, and a second amendment that would allow the Government even more flexibility by providing an extra year. The hon. Member for Christchurch (Mr Chope) made some very important points, and tabled another amendment setting a deadline of the start of the next calendar year. The Minister therefore has a vast array of options—more than the Government did in Committee—so I hope she will not disappoint my hon. Friend and, for that matter, the rest of the House.

A related issue has been raised a number of times with the Minister, but I am not convinced it has been fully addressed, so I would be grateful if she provided further clarification. There is concern that the full benefits of the zero-rating of sanitary products will not be passed on to women, and that some retailers will simply seek larger profit margins. When the rate of VAT was reduced to 5%, the Government said they would monitor whether the benefits were passed on to consumers. I asked the Minister in the Public Bill Committee to provide more information about whether this assessment ever occurred, and if so, what the data showed. Will she provide an answer? My hon. Friend has of course taken the initiative in negotiating directly with some retailers, who have committed to passing on the cut in full, but some smaller retailers may not do the same. What steps will the Government take to ensure that women will benefit from this change, not the pockets of retailers?

Finally, my hon. Friend has also tabled new clause 4, which would require the Chancellor to carry out an assessment of the revenue raised from VAT on women’s sanitary products since 1 January 2001, when the then Labour Government introduced the lower rate of VAT, and to lay before Parliament a report of that assessment within 12 months of the Act coming in to force. It must include an estimate of the total revenue raised since January 2001, and provide information about government policy relating to this revenue. As my hon. Friend has explained, that would address future funding for women’s organisations that benefited from the tampon tax fund set up by the previous Chancellor when pressure was originally brought to bear over the issue. We hope that the Minister can give us some reassurances that those services will receive the secure long-term funding they deserve. Should my hon. Friend divide the House, we will support the new clause.

I urge the Minister to accept at least one of my hon. Friend’s amendments and to bring to a conclusion the campaign against the tampon tax, an outcome that will owe much to the hard and determined work of my hon. Friend, along with the women who have fought for it outside this place. Finally, I place on the record my support for the comments made by SNP Members on maternity products, another area that I urge the Minister to look into.

[Jane Ellison]

I rise in 2016 to resume a debate that I first started with some college friends in 1986; I did not think then that this subject would end up being debated across the Chamber of the House of Commons, but I am glad that we are doing so.

The issue of VAT on women’s sanitary products—the tampon tax—has inspired a great deal of interest, as the speeches in this debate and the interest from our constituents have demonstrated. I will try to explain the Government’s approach and the amendment that we have tabled, and to give the Opposition some comfort on some of the questions they have asked, because there really is not very much between us on this issue and we want to try to make progress.

The Bill as it stands includes provisions to apply a zero rate of VAT to women’s sanitary products, with the intention being to do so as soon as possible. The Government strongly support doing so. We agree with the argument put forward by many hon. Members, including the hon. Member for Dewsbury (Paula Sherriff), that VAT should not be applied at the current 5% reduced rate. We have a shared objective of achieving that goal as quickly as we can, in a manner that is legal and proper—I will come back to that—and that, in our new changed circumstances after the referendum vote, will not have a negative impact on our negotiations over the UK’s exit from the European Union.

Achieving that shared goal in a legal manner before we leave the EU requires a change in EU legislation. That must follow a proposal from the Commission and the unanimous agreement of all member states. We have been actively pursuing that, and have made progress, which some Members have alluded to. The former Prime Minister secured the unanimous agreement of all EU Heads of State and Government that the rules must change at the Council in March. Prior to the referendum we received assurances from the Commission that it would publish a legislative proposal for us at the earliest opportunity and definitely before the end of this year. When the Government introduced the Finance Bill, they expected to be able to apply the zero rate soon after Royal Assent.

The referendum result changes the circumstances—my right hon. Friend the Chief Secretary to the Treasury explained in Committee that the result affected the prospects for rapid implementation. However, I reassure those Members who have tabled amendments and all other hon. Members that we will not rest on the issue. The Government will continue to push for the proposal to be brought forward and agreed to as soon as possible. However, until we leave the EU we need the legislative change to introduce zero-rating; until we have it, fixing a date risks contravening EU law at a time when we are entering critical negotiations with the EU about our future.

Turning to those negotiations, the Prime Minister has been very clear that our rights and obligations remain in place until we leave the European Union. That is important: at this time it would be against the UK’s interests and the interests of all our constituents and of the businesses and universities in our constituencies to go into conflict with our legal obligations. We would risk jeopardising our negotiating position by pre-empting EU legislation on sanitary products. We would also risk the UK’s rights in other areas where we expect other EU member states and the Commission to respect their obligations to us. As the Secretary of State for Exiting the EU said in his statement earlier, we must act in good faith towards our European partners. That is why the Government have proposed an alternative amendment that delivers on the intentions of the hon. Member for Dewsbury but ensures consistency with EU law. I hope that that reassures the House that we will give effect to the provisions in the Bill and commence zero-rating. We are pledging to continue to seek the powers to do so, but to put zero-rating into effect at the first moment when it is consistent with our legal duties.

The shadow Financial Secretary is concerned about the vagueness of that phrase. The Interpretation Act 1978 and schedule 1 to the European Communities Act 1972—I am sure it is everyone’s bedside reading—give exact meaning to the phrase “EU obligation”, which is our obligations under EU law. We are clear about that and we want that commitment in the Bill. That is a major step forward for the hon. Member for Dewsbury and everyone who has campaigned for zero-rating. The amendment commits the Government to commence by 1 April 2017 unless it is unlawful to do so. If on that date it is unlawful, there is a duty on the Government to commence at the first point when we can do so legally. That is the strongest commitment we can give, and one that I am happy to give today. I urge all hon. Members to support it.

On the amendments tabled by the hon. Member for Dewsbury and my hon. Friend the Member for Christchurch (Mr Chope), I have tried to offer them and other hon. Members reassurance that the Government and I want the tampon tax removed as soon as possible. We will keep up our engagement in Europe to secure that, but, equally, hon. Members will understand that the Government must act in accordance with the law. Until we leave the EU, that includes our obligations, as I have said. Those obligations prevent us from removing the tax at the moment. We are trying to change it, but we cannot be certain of the timetable, because such legislation has to be agreed by all 28 member states.

For that reason, we must oppose the amendments—they would set in UK law a fixed latest date for zero-rating—but I stress again that there is no great difference between our intention and that of Opposition Members. We all want the tax ended as soon as possible. I hope that will happen by 1 April 2017 and I am even more hopeful that it will happen by 1 April 2018, but it cannot be guaranteed. The Government’s amendment will ensure that zero-rating starts domestically at the first opportunity consistent with our legal obligations.

I ask Members to look at what we are saying and to realise how close together we are. I also urge them not to be irresponsible in supporting something that will bring us into breach of our obligations. The duty in the amendments proposed by the hon. Member for Dewsbury would impose a requirement on the Government to act illegally. We would be in breach of articles 1 and 110 of the principal VAT directive. Whatever Members’ views are of what the directive requires—we are making progress towards changing it—I would be surprised if members of Her Majesty’s official Opposition, or indeed any Member of the House, thought we could disregard it at such a crucial juncture, when the disregarding of the Commission’s and other nations’ obligations towards us could be significantly against the UK’s national interest. I again quote my right hon. Friend the Secretary of State for Exiting the European Union from earlier today, when he said:

“Until we leave the European Union, we must respect the laws and the obligations”

of membership. I agree with him.

I have every sympathy with the hon. Member for Dewsbury—[Interruption.] I should say that I have every sympathy with the amendments. I think she hinted that, if we do not have the legal change we need by 2018, the Government might have to introduce other measures. Our amendment solves the problem of having to revisit a law we have passed that we know might be illegal by April 2018. I suggest that that is not the most sensible way to legislate. The Government’s amendment achieves the same thing but keeps us within our legal obligations.

The other amendment tabled by the hon. Member for Dewsbury calls for a report on the revenue accrued from VAT on women’s sanitary products since 2001 and the tampon tax fund. I am very happy to reaffirm the Government’s commitment to the fund. As I have said, we are taking all actions available to stop charging this VAT as soon as possible, but until that can be achieved the revenue it raises will be put into the tampon tax fund and directed to women’s health and support charities. So far, the £15 million a year fund has supported 25 charities, including many that are well known to us in this House: The Eve Appeal, SafeLives, Women’s Aid and the Haven. I am sure many of us will be “wearing it pink” next week. We will think then of the wonderful charities—I am very familiar with them from my previous role as Public Health Minister—that are benefiting. Funding has also been allocated to Comic Relief and Rosa—again, a charity I know very well—to disburse over the coming year to a range of grassroots women’s organisations, many of which have been championed so ably by Members across the House, in particular by some Labour Members.

Charter for Budget Responsibility

Jane Ellison Excerpts

Wednesday 20th July 2016 Commons Chamber

[The Financial Secretary to the Treasury (Jane Ellison)]

I thank those Members who have been kind enough to welcome me to my new position on the Front Bench, including the Opposition spokesman. I was going to spend some time thanking those Opposition Members who contributed to today’s debate, but there is an obvious problem with that—none of them did! It is unusual to call an Opposition day debate and then not muster any Opposition Back-Bench speeches. I fear that the Scottish National party will be renewing its bid to become the official Opposition before too long. Nevertheless, we have had a good and thoughtful debate, and a number of serious points have been made. I therefore thank the Opposition for giving us the chance to debate this important topic, for allowing the House to reflect on the changes in the economic situation that the UK now faces, and for allowing Members to make contributions on how we move forward to rise to those challenges.

I must say at the outset that I do not recognise the picture of our country and of our economy that was painted in the speech we just heard. The phrase “dire economic situation” is simply not borne out by the facts, particularly on a day when we had excellent employment statistics. Turning to the situation in hand, the Government have made it clear that we will not hesitate to work with the Bank of England, wherever required, to stabilise our economy in the immediate term after the referendum decision, and we of course continue to monitor the position extremely closely. We will take any action that we can to prevent risks from crystallising, as we have made clear on numerous occasions, and we will look at all avenues to strengthen our economy. Although I hear this disputed from across the House, we must be clear that the UK economy starts from a fundamentally strong position; we totally reject some of the alternative views of history that were presented in this debate. Again, today’s employment figures are just one example of this, with unemployment falling to 4.9%, its lowest for more than a decade. That does not emanate from a dire economic situation, as was just suggested to us.

Any revision of our responsible fiscal framework would be set out following a thorough assessment of the economic data. We have heard the urging from those opposite to respond immediately, but it is important to examine what the economic data are actually saying, and that is what we are doing very carefully. That is why we have no plans to withdraw the autumn 2015 update of the charter for budget responsibility As the Chancellor and Prime Minister have made clear, we will update the House with further details in the usual way, through an autumn statement later this year.

[Stewart Hosie]

I welcome the Minister to her place and thank her for what she just said, which was that the Government are prepared to take whatever steps are necessary to stop potential risks crystallising. That is an important thing for her to say on the record. Notwithstanding the fact that she is saying there will be a delay until the autumn and they will look at the numbers properly, may we have an assurance that if those numbers are as bad as they might be, she will not rule out any fiscal measures to stimulate the economy if that is what is required?

[Jane Ellison]

As we have said—the Chief Secretary was clear about this, and I think the point was conceded by the hon. Gentleman—we have already heard from the Governor on monetary policy, and that is really important. Conservative Members have spent the past six years making the strength of the British economy the nation’s No. 1 priority. We will look at what is happening, and it remains our priority to make sure that we continue to chart a course that recognises some of the risks that exist in the current situation, makes sure we can manage them, and looks at the opportunities that are there to be seized. We have heard so little of that in this debate. We have heard a lot of talk from both the Scottish National party and Her Majesty’s Opposition about austerity. As the Prime Minister said at Prime Minister’s questions, the other way of talking about that is to say that it is living within our means. By being prepared to address that really difficult issue of a country living within its means, this Government and the coalition have secured hard-won credibility from which we can now move forward. That credibility is not held in every part of the House. It is not an accident that we are now able to move forward from a position of strength, or that people are prepared to invest in this country; it is because of the difficult decisions that have been taken over many years, the vast majority of which were opposed by those on the Opposition Benches.

Let me take this opportunity to make it very clear that any revisions to our plans will not alter the Government’s clear commitment to this country that we would restore balance to our economy. As the Chancellor has said, we will no longer pursue the target to reach a surplus in 2019-20. Our plans to do so were based on the assumption of a different-looking economic climate. As is regarded internationally as good practice and as we see in fiscal frameworks right across the globe, our fiscal plans had a flexibility built into them, so that we could make revisions in the case of significant alterations to our economic situation. Here in the UK, that means that, if the independent OBR were to forecast four consecutive quarters of less than 1% growth a year, that target would be suspended. Admittedly that risk is perhaps more prevalent now than it once was, but it remains the conviction of this Government that any responsible plan for the long-term good of this country must be centred on a determination to tackle the deficit and reduce our debt.

In the good speech of my hon. Friend the Member for South Suffolk (James Cartlidge), he made a point about intergenerational fairness. There is no greater intergenerational unfairness than bequeathing massive amounts of debt and deficit to those generations yet to come. That remains at the heart of our plans to ensure that the British economy is healthy and able to respond to unexpected shocks.

[Dr Philippa Whitford]

We often talk about bequeathing the public debt to future generations, but is not what is actually happening private debt—huge mortgages, study loans and so on?

[Jane Ellison]

The hon. Lady makes her point. Fundamentally, if we look at the debt the nation is carrying forward, the point remains that it is totally unrealistic of the Opposition to imagine that we can borrow massive amounts of money after they have spent the past six years voting down any spending cuts that were proposed by the Government. They just do not have the credibility to make that point.

We have seen, as a result of the referendum, how important it is that we have an approach that ensures that we are ready for any surprises that come our way. The Prime Minister told the House earlier that we have not abandoned the ambition to move to a surplus. As we have made clear, we will be setting out further details in the autumn statement.

Making savings, living within our means, and spending money efficiently are just one side of the task ahead. We cannot afford to take our foot off the pedal when it comes to creating the right conditions for growth, and there are many ways in which we can do that. In all fairness, speeches in this debate addressed that. For a start, we know that if we want to help our economy grow, we need to invest wisely in the right infrastructure. There has been much discussion about infrastructure spending, but some of that discussion has suggested that it is rather a binary choice between living within our means on the one hand and investing in infrastructure on the other, but, as the Chief Secretary said at the beginning of the debate, that is simply not true. We are putting more than £100 billion into infrastructure over the course of this Parliament alone, and that will go to funding some essential improvements and new developments right across our country. We will keep working to make sure that this country keeps improving the skills in our workforce so that our businesses have what they need to stay on top.

It is important that we remain resolutely outward-facing. Now is not the time to pull up the drawbridge. Now is more than ever the time to open the door and to hear the message of young people that they want us to be an outward-facing nation. We want to seek all those international opportunities. We heard not a single word in the debate about today’s employment figures, which reveal that youth unemployment is at its lowest since 2005. That is surely something that we should celebrate, for the sake of our young people.

It is vital that the UK remains one of the best places in the world to do business. We are sending out that message loud and clear. That involves making sure that our tax system remains fiercely competitive. It also means that we have to continue to take difficult decisions elsewhere to balance the books, because we have made major cuts in corporation tax to create that extremely competitive environment to attract business. Only this week we saw a great example of inward investment in our country.

Without doubt there are a range of challenges ahead, but there are also a range of ways in which we can continue to bolster our economy as we open a new chapter for the UK outside the EU. We are determined to do everything we need to do as a Government to restore confidence, stabilise the economy and navigate our way through the times ahead. As we start our negotiations to leave the EU, we will tackle those new challenges head-on and we will take on board any new risks that start to emerge.

It is vital that we send out a message of confidence, and not just from the Government. It is important that we as a nation and we as a House send out a message of confidence, and some of the speeches today, I am afraid, bore no relation to the reality of life beyond this Chamber. It is important that we send out a unified signal that Britain is open for business, that we remain outward-facing and open to inward investment, and that we have confidence in ourselves as a country and in all the things that we can achieve in the years ahead. The hard-won reputation that we have as a good place to do business cannot and will not be squandered as we look for those new opportunities. For all those reasons and many more, the Government reject the motion and urge the House to do the same.

Question put.

Oral Answers to Questions

Jane Ellison Excerpts

Tuesday 19th July 2016 Commons Chamber

[Michelle Donelan (Chippenham) (Con)]

6. What steps the Government are taking to reform the business rates system.

[The Financial Secretary to the Treasury (Jane Ellison)]

As my hon. Friend knows, in Budget 2016 we announced the biggest ever cut in business rates in England, worth £6.7 billion over the next five years. The package cuts business rates for all ratepayers, and 600,000 of the smallest businesses will not have to pay business rates again. The Government are also looking to modernise the administration of the tax to make sure that it is fit for the 21st century.

[Michelle Donelan]

I congratulate my hon. Friend on her new role. Have the Government decided whether car park business rates will be devolved to local authorities? That would offer a significant reduction in council overheads, which could enable Wiltshire Council in my constituency to reduce parking fees and improve the economies of our local market towns.

[Jane Ellison]

I congratulate my hon. Friend on taking such a close interest in what will boost her local economy. The Government have announced that they will devolve 100% of business rate revenues to local government. The details are subject to consultation, and the consultation document was published by the Department for Communities and Local Government earlier this month. She and her local council may well want to contribute to that consultation, and she may want to make the point that she made so well just now.

[Chris Bryant (Rhondda) (Lab)]

Some of the richest areas in the country find it easiest to raise money through the business rate system. If we are not to perpetuate poverty and the gap between rich and poor parts of the country, do not the Government, if they are going to proceed with this, have to make sure that there are proper balancing mechanisms? Otherwise, the problems that we have seen in so many parts of the country, which feel completely forgotten and left aside, will be perpetuated for future generations.

[Jane Ellison]

I am very well aware of the point that the hon. Gentleman makes. In my previous role, I had responsibility for the public health grant, and those points were made in that context on several occasions. We have an open consultation on business rates retention. We are aware of that issue, and the existing system of redistribution will be continued in some form. Obviously, that is something at which we will look closely.

[Mr Steve Baker (Wycombe) (Con)]

The business rates system sometimes interacts with the planning system to leave premises empty, but incurring tax. Will the Government work to ensure that councils are appropriately incentivised to ensure that premises are productively occupied so that business owners have a chance of paying the tax they incur?

[Jane Ellison]

I hear the point that my hon. Friend makes. That is clearly something to which further consideration will be given.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Any help that small businesses get from business rates reform will be very welcome in my constituency of Huddersfield, but that does not outbalance the fact that my university and my manufacturing businesses have been hard hit by Brexit. I know that the Minister is not one of the guilty Brexiters, but what will the Government do to help manufacturing industry and universities so hard hit?

[Jane Ellison]

The Chancellor has already made a number of comments about how we will deal with and address this situation, and more will clearly be said in the autumn. It is important that we recognise that, while we undoubtedly face some risks and have to look to manage them, we must also seize the opportunities we can take from the situation we are in.

To return to the point about business rates, taking 600,000 of the very smallest businesses out of business rates altogether is a good thing. It has not taken effect yet. It is important to make it clear that although that has been announced, it has yet to take effect. We all have a job to do in the spring to make sure that our local businesses get the maximum benefit.

[Julian Sturdy (York Outer) (Con)]

10. What progress he has made on the establishment of the northern powerhouse.

--- Later in debate ---

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

13. What steps his Department has taken to tackle global tax evasion.

[The Financial Secretary to the Treasury (Jane Ellison)]

I am really proud of the role that the Government and the UK have played in recent years. The country has taken a leading role in tackling tax evasion and avoidance, driving fundamental reform of the international rules and standards. For example, we led the development and early implementation of the new global standard for automatic exchange of information on offshore accounts. I am sure we will continue to offer global leadership on this vital issue.

[Tulip Siddiq]

The Panama papers revealed what most of us had long suspected—that the super-rich enjoy manipulating the tax system—but I was astonished to learn in a written response from the former Chancellor that the £10 million multi-agency taskforce set up to investigate those revelations still does not have the Panama papers in its possession. Will the Minister clarify what the £10 million has been spent on, or is it another example of creative Tory accounting?

[Jane Ellison]

I understand that there may be some logistical barriers to acquiring the papers—[Interruption] —with the journalists, in fact. I will write to the hon. Lady with more detail, but I do not believe there is any fault on the part of Her Majesty’s Treasury.

[Sir Henry Bellingham (North West Norfolk) (Con)]

15. Does the Minister agree that one strand of activity in the campaign is to continue to reduce corporation tax? Does she agree that we should have an aspiration to have the lowest corporation tax of any country in Europe?

[Jane Ellison]

Obviously, the effective rate is what really matters. We have set out a sensible and good ambition for 2020, but internationally what matters is what people pay. I return to the point that the UK has led the world. More and more countries have signed up to looking at how we ensure that multinational corporations pay what they should.

[Caroline Flint (Don Valley) (Lab)]

When it comes to corporation tax, we can only get the take that we should if we know what is going on in those companies. I welcome the Prime Minister’s words on tackling the Amazons, the Googles and others. May I suggest to the Minister—I welcome her to her new post—that the Treasury team reconsider introducing in the Finance Bill when it returns to the House in the autumn a public country-by-country reporting amendment, so that we can see what is going on, and so that whatever the corporation tax rate is, we get what we deserve?

[Jane Ellison]

I am aware of the right hon. Lady’s interest in the matter and of previous debates. The key thing is that that has to happen on a multinational basis—that is what we feel. It will be an issue at the forthcoming G20 Finance Ministers meeting and we will have more to say about it. I return to the fact that the UK has a world-leading position and will continue to push the global community to go further.

[Jeremy Lefroy (Stafford) (Con)]

14. What assessment he has made of recent trends in the level of employment.