UK Sovereign Wealth Fund

Jonathan Reynolds Excerpts

Wednesday 14th December 2016 Westminster Hall

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you very much, Mr Owen, for calling me to speak. It is a pleasure to take part in this debate.

I begin by thanking the hon. Member for Weston-super-Mare (John Penrose) for securing a debate on such a genuinely interesting issue: his proposition for a UK sovereign wealth fund. I have read with interest his recent paper for the Social Market Foundation, “The Great Rebalancing”; the ideas he presented there are very much the basis for his speech today. He was kind enough to advertise the paper’s availability for those seeking a late Christmas present for a loved one. However, I can genuinely say that I enjoyed his pamphlet and I enjoyed listening to his speech today.

I do not want to get the hon. Gentleman into any trouble, but I have to say that parts of his speech were very much on board with certain parts of current Labour party economic policy, even if we do not necessarily reach the same conclusion on this issue. However, on separating current and capital spending and balancing day-to-day spending while allowing for long-term investment, we are very much on the same page. I only hope that his Government will listen to him and implement such a sound economic policy, which is rapidly becoming a mainstream consensus position.

The Labour party has been calling for higher levels of Government investment, given that, as the hon. Gentleman and other hon. Members outlined, we are investing less as a percentage of GDP than any other comparable developed nation. As the hon. Gentleman writes in his pamphlet:

“The result is chronic under-investment relative to other developed nations, and creaking infrastructure which chokes and slows economic growth.”

Frankly, I could not agree more: we are committed to mobilising billions of pounds more for sustainable investment in the UK economy. We want to see £250 billion of direct Government expenditure in key infrastructure projects over the next 10 years and a further £250 billion mobilised through a national investment bank. Labour will deliver the long-term investment the UK economy needs, to boost growth and tax receipts, and to ensure that our welfare and public services can receive the funding they desperately need—today and in the future. In that way, the public finances will be better placed to respond to the demands of meeting pensions and benefits payments in the long term.

The hon. Gentleman’s idea is for a sovereign wealth fund that would be ring-fenced for pensions and benefits payments. I see some difficulties with that idea. Ring-fencing our pensions and benefits systems to a sovereign wealth fund means using a pot that would vary pro-cyclically to fund a social security system that functions counter-cyclically. In other words, benefits need to be paid out when the economy takes a downward turn, which is when the wealth fund would be at its weakest. Moreover, it seems risky to use a fluctuating fund as a ring-fenced source of public spending that needs to be fairly stable in the long term. What would happen if, at the moment people needed Government support, the wealth fund could not pay out?

The hon. Gentleman wrote in his paper that

“Clearly it wouldn’t be generationally fair or just to expect the same people who had just fought a war, or weathered the financial storm of a global financial crisis, to rebuild the financial cushion…within the next few years of a single economic cycle.”

However, I feel that an eventuality such as a war could cause exactly that type of situation. We have already seen that the Conservative Government consider it fair for the average UK citizen to pay the price of six years of austerity following a financial crash in which they played no real part, and I am not sure how a sovereign wealth fund would ensure that that could not happen again.

Of course, there are advantages to wealth funds if they are used, for example, to invest in infrastructure projects, which many Members have mentioned. However, countries with effective funds tend to run a budget surplus and, as we are all too aware, the UK does not—and has not done so for some time. Indeed, the last Chancellor missed out on all his deficit reduction targets and did not reach his arbitrary surplus goal, so it is no wonder the new Chancellor has abandoned that goal altogether. I struggle to see now how a fund could be built up, given the pressures on the public finances as they stand.

Overall, though, the concept of a sovereign wealth fund for the UK is definitely one that should be discussed. Other countries around the world have indeed benefited from establishing one, and Norway’s great success is often cited as an example. However, at this stage we do not have a workable proposal about how to build up the necessary reserves, and I would certainly not be happy with people becoming dependent on a fluctuating fund for state support and pensions, as has been advocated. Equally, we need to be realistic about how capable Britain is of building up such a vehicle at this time and about the difference between our circumstances and those in countries that have deployed sovereign wealth funds to their benefit.

However, I thank the hon. Gentleman for allowing us to debate this issue today. I look forward to hearing the Minister’s comments. I am sure that the idea of a sovereign wealth fund will be debated in more detail in the future.

Draft Immigration Act 2014 (Current Accounts) (Excluded Accounts and Notification Requirements) Regulations 2016

Jonathan Reynolds Excerpts

Tuesday 6th December 2016 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank you for calling me, Mr Nuttall, and I thank the Minister for his opening speech.

The Government have said that it is their intention to create what the Prime Minister herself has called “a hostile environment”. A whole package of measures, many of which came into force on 1 December 2016, deny undocumented migrants in the UK basic rights. When I see footage of desperate people loading their children into dinghies in the Mediterranean or paying traffickers thousands of pounds to risk death by being loaded into lorries in conditions worse than those faced by cattle, I am not sure we will ever create an environment more hostile than the one those people seek to leave. But what measures such as these can succeed in doing—undoubtedly very successfully—is to further debase the language, the discourse and the tone we use to talk about migration.

Having access to a bank account is a fundamental part of modern living, but the hostile environment includes prohibiting banks from opening current accounts for migrants who fail to pass an immigration check. Banks will be forced to check current accounts against migrant databases and notify the Home Office if checks confirm that an account holder no longer has permission to remain in the UK. That could lead to the freezing or closure of bank accounts and have huge consequences for people who might not be able to provide evidence of their leave to remain, potentially through no fault of their own. It will also leave vulnerable migrants at the mercy of banks that might have little understanding of how the immigration system works.

The regulations prescribe on accounts that are excluded by the current regulations, including those opened by migrants before the 2014 Act came into force in December of that year, as the Minister explained. People who had leave to remain at some point and legitimately saved up funds for their future will be particularly affected.

The Opposition therefore oppose the measures because we oppose the rhetoric of hostility and its practical side effects. We do not accept the scapegoating of migrants as a smokescreen for the Government’s austerity programme. If the NHS, social care and other public services are under strain—they certainly are in my constituency—it is because of the policies pursued by the Government and we should never forget or ignore the huge contribution of migrants to making those public services work.

Colleagues will be aware that serious concerns have been expressed about the effect the measures could have on individuals and communities. They are part of a worrying extension of powers that will further reduce the rights of all citizens and fly against the core British values of fairness, compassion and decency. The explicitly hard-line approach risks making the UK a more hostile environment for everyone, and in particular for all migrants and black and minority ethnic communities. There is a danger that bank workers, in fear of breaching the regulations, will end up making the wrong decisions, making judgments on ethnicity, surname and/or nationality that will disproportionately affect some groups. It has already been confirmed that several hundred people wrongly had their driving licences revoked by parallel measures. How many people will wrongly have their bank accounts frozen by this order? It will not be none.

Making it harder for people to get access to a bank account may also ultimately put people in danger. It will drive them further into the underworld in which they have no choice about whom they deal with, and what they have to do to gain the essentials of life. I do not want that for people who have the right to live here; nor do I want it for people who do not have that right. I do not want to compel anyone into that desperation.

The fact this Government have chosen to parade phrases like “hostile environment” embodies a dangerous and irresponsible opportunism. If they raise the temperature, create a certain political climate and appear to be licensing discrimination, that will have consequences which will be paid for by some of the most vulnerable people in our society.

Is immigration to the UK too high? In my view, it is. There have to be reasonable limits on immigration in any society. But these measures will make no difference to that. The Prime Minister has had six years as Home Secretary doing exactly this sort of gesture politics, yet immigration has hit record highs. We will see reductions in immigration only when we acknowledge that skills shortages at home will always drive immigration, and when we address the severe inequality found just beyond our borders.

As for a hostile environment, we are already a country where an MP can be been murdered while doing their job by someone who perversely has come to believe that his actions are the work of a patriot. The Government are not making a hostile environment, but they are making a toxic one. I therefore oppose the order and intend to divide the Committee.

Draft Bank Recovery and Resolution Order 2016 Draft Bank of England Act 1998 (Macro-Prudential Measures) Order 2016

Jonathan Reynolds Excerpts

Monday 5th December 2016 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

What a pleasure it is to see you in the Chair, Mr Pritchard. I thank the Minister for his introductory remarks.

The Opposition support measures to protect and enhance the stability of the financial system, including plans to avoid another banking crisis. Recent history has unfortunately revealed that the insolvency rules and legislative framework that applied to all companies were highly unsuited to the particular circumstances of bank failure. As the Minister said, this bank recovery order follows on from the Banking Act 2009. It is absolutely vital that we as legislators get this right. There is simply no room for error. These are measures that will be used only once in the event of a bank failure. There is an incredible duty on our shoulders to protect the people we serve—indeed, the Labour party takes that responsibility with the seriousness it commands.

In that light, we have concerns that the guidance for these orders is not as accessible and transparent as it might be. Not only does that make it challenging for the Opposition to provide effective scrutiny, but it raises questions about how usable the regulations will be by the industry itself and, indeed, the wider public.

Article 15 of the banking recovery order amends section 48Z of the 2009 Act to allow the Bank of England or the Treasury to activate default event provisions. The order states that the

“Bank of England…or the Treasury (in the case of a share transfer order)”

need to

“consider that such provision would advance one or more of the special resolution objectives.”

We have previously raised concerns that that will give considerable discretion to the relevant authorities. In a letter to my Front-Bench colleague in the other place dated 24 November 2016, the Government promised further guidance on the types of contracts, which could include clauses that are activated by the use of a crisis prevention or management measure. Will the Minister update us on whether any progress has been made in that regard?

Given that the power to remove directors is significant, we would want some oversight of a kind not covered by this provision of the people chosen by the regulator to serve as replacement directors. We would also like clarity about the tribunal under proposed new section 71G, which will presumably sit under the FCA. Are we to understand that it is to be a police force, a judge and a jury in all cases? I wonder whether anyone might claim it is unlawful, either via a judicial review or a human rights appeal, for the regulator to be able to make all those decisions using its own people when taking a bank from its shareholders.

What consideration have the Government given to providing for a periodic report back to Parliament or a review by an outside oversight committee to see what the regulator has done? More generally, we would like a clear assurance from the Government that the measures do not represent the risk of a spaghetti of committees—perhaps the FCA, the PRA, the FPC—making decisions in various contexts.

Moving on to the shorter macro-prudential measures order, I want to probe concerns about the power that the FPC will gain. If I understand the Minister’s remarks correctly, the FPC now has the ability to interfere with mortgage business on the basis of a cost-benefit analysis. Will he elaborate on this, as some fear that article 3 is somewhat vague? Is the idea to empower the FPC to constrict the buy-to-let mortgage market as much as possible? Although we support restricting that market, we have concerns about a committee of the Bank of England doing so without external oversight and without parliamentary referral. It would therefore be helpful to have assurances that any oversight is transparent, meaningful and democratic.

We are all aware that the issues raised by the orders have a topical significance. The decisive victory of the no side against proposed constitutional changes in the Italian referendum followed by the resignation of Prime Minister Matteo Renzi represents a challenge to ongoing efforts to break Europe’s economic malaise. Despite major changes for the better, there are those who fear that the European banking system remains one with large and unresolved problems. As the Bank of England UK bank stress tests last week emphasised, Government and financial authorities must ensure that precautionary measures are ready for use if needed to prevent contagion and to protect depositors and taxpayers.

We know that people and society want and need banks in which they can safely deposit their money and savings, which lend responsibly and provide credit to finance investment and growth across the country. We will support financial services where they deliver a clear benefit to the whole community and we will work with the finance sector and the Government to develop this new deal with finance for the British people.

Draft Double Taxation Relief and INternational Tax Enforcement (Turkmenistan) Order 2016

Jonathan Reynolds Excerpts

Thursday 17th November 2016 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I want to start by thanking the hard-working staff of Her Majesty’s Revenue and Customs who have put so much work into drawing up the treaty we are discussing. My understanding is that the double taxation treaty is part of an ongoing process of negotiating taxation treaties with the post-Soviet countries. Until now, arrangements have followed treaties signed with the USSR, so I am glad that we have the opportunity now to scrutinise the new proposals, which ought to reflect the modern relationship between our two countries. I will put a few questions to the Government in that regard.

Assuming the treaty is passed into law, if a company based in Turkmenistan pays dividends to a resident of the UK, either 5% or 15% of the gross amount of the dividend will be taxed. I say either 5% or 15% because it depends on the nature of the relationship between the recipient and the company. Similarly, interest or royalties arising may be taxed up to a maximum of 10% in the country where the company is based. There are similar provisions for capital gains tax, employment income and so on.

The explanatory memorandum refers to the fact that the UK’s double taxation treaties largely follow the approach recommended by the OECD’s model tax convention. It would be useful to know whether any aspects of this treaty deviate from the OECD’s model tax convention and, if so, which they are. Furthermore, in what aspects does this treaty differ from the United Nations model double taxation convention?

Article 21 of the statutory instrument lays out the allowance of a deduction from a Turkmen resident’s tax bill equal to the amount due in tax in the UK. The provisions for the equivalent deduction for UK taxpayers appear to be rather more complicated. Will the Minister briefly explain the reason for that?

Moving on to the overall effects of the treaty, it will be useful to have some clarity from the Minister on what effects she envisages arising from its implementation. The explanatory memorandum for this order states that the provisions of the arrangements have no impact on the public sector. The same document states that those provisions do not introduce new tax burdens; rather, they provide relief from tax and thus are of benefit to businesses “both large and small”. How much relief will be provided and how much will be lost to the public as a result? Is the net tax impact on the UK likely to be positive or negative?

I understand that precise calculations are difficult, but does the Treasury have any estimates of the broad effects for the Exchequer? How are such estimates reached? The explanatory memorandum states that the arrangements will benefit businesses both large and small. The Opposition’s role in scrutinising such arrangements, even though they may not technically be deemed of a regulatory nature, is certainly made more difficult by the absence of an impact assessment. Hon. Members may remember that in a debate in the summer on a number of double taxation treaties, Labour raised the fact that the Government had not prepared a tax information and impact note. For this order, the Government have again stated that an impact assessment has not been prepared, because double taxation agreements are not regulatory in nature. I put it to the Minister that that response does not seem in keeping with the general principle of impact assessments. Surely the precise legal framework is less important than giving transparency to the proposals so that taxpayers can have a better idea of what the treaty will mean.

According to the Government’s explanatory memorandum, the provisions of the order will

“serve an Exchequer protection role by including provisions to combat tax avoidance and evasion—partly by measures providing for the exchange of information between revenue authorities… They also encourage and maintain international consensus on the appropriate tax treatment of cross-border economic activity and thus promote international trade and investment.”

Will the Minister briefly elaborate on that? More generally, will she give assurances that the treaty will not create or increase any opportunities for tax evasion or aggressive tax avoidance? How does a treaty such as this one fit into the Government’s plans for tackling tax avoidance in a broader sense, and in particular on any plans they have to follow up on their commitment to confirming the UK’s leading role in addressing tax evasion and avoidance?

Hon. Members will be aware that my right hon. Friend the Member for Don Valley (Caroline Flint), supported by Labour Front-Bench Members, has already provided an opportunity to show such leadership via the principle of public country-by-country reporting. It would be good to hear of any progress that the Government are making in that regard.

I expect the Minister is well aware of the work of ActionAid to expose how some companies have used tax treaties to avoid paying their fair share of tax anywhere, to reduce their tax bills massively or to move money from poor to rich countries, exacerbating global inequality. Will she tell us how this treaty will be judged against each of those criteria?

The priorities for Opposition Front-Bench Members are to ensure that the new arrangements benefit this country and Turkmenistan, as well as strengthening the principles of fairness and transparency that ought to be at the heart of our tax system. The purpose of these treaties ought to be to create certainty about tax treatment, which would benefit businesses and their staff in both countries, as well as to combat tax evasion and aggressive tax avoidance. I hope that this treaty will deliver that and that I can get some answers to my questions today, but otherwise I will be more than happy for the Minister to write to me at a later date.

Outsourcing and Tax Credits

Jonathan Reynolds Excerpts

Friday 4th November 2016 Commons Chamber

[Simon Kirby]

That is a fair point. It is worth saying that most of these problems are errors—there is always, sadly, some fraud as well—but this is about getting the balance right between, on the one hand, the taxpayer and, on the other hand, making sure that people receive the service they rightly expect. We have cut fraud and error in benefits to some of the lowest levels ever, making savings to the taxpayer. As I have said, there are lessons to be learned and there is a balance to be struck.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) for securing this urgent question, and for her brilliant work in bringing this issue to light. Like her, I do not understand why it was not deemed appropriate for a Minister to come to the House to make a statement on a significant change in Government policy last week, not least because that happened the day after we had had a full Opposition day debate on Concentrix. Having listened to the Minister, I am not sure whether the policy has not actually changed again this morning. How can the Minister reconcile what he has just told the House with the statement last week that there would be no further outsourcing for such matters?

As my Front-Bench colleague, my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey), made clear in the debate last week, our party continues to stand by the victims of this terrible fiasco, the majority of whom were single mothers. There is clear human suffering at the centre of this chaotic debacle. These people did not deserve to face the hardship and stress they suffered. In order to move forward, we need confirmation that those unfairly targeted by Concentrix will at the very least be properly compensated, and that that will happen as soon as possible. The Government need to announce as a matter of urgency the timetable for a comprehensive investigation into the increasing number of systematic failures that continue to be brought to light.

As we are continuing to hear the details of these terrible cases from Members on both sides of the House, it would only be proper and decent for the Minister to issue a formal apology on behalf of his Government for the distress and hardship that they have caused. We are pleased that the Government have conceded to the Opposition that this was an unacceptable episode. Such contrition is welcome, but now the Government must proceed by putting right the wrong that has been caused, and they must properly report to Parliament on their progress towards doing so.

[Simon Kirby]

Compensation is available where error has occurred. That has been made very clear. The hon. Gentleman asks whether I am prepared to apologise; I think this is now the third time I have done so. If people have not received the high-level customer service to which they are entitled and if mistakes have been made, I do apologise. I also say, however, that this is a necessary part of government and there are lessons to be learned. We will all make better decisions as we go forward. We will have to wait for the independent NAO report. That has all been said before.

Leaving the EU: Financial Services

Jonathan Reynolds Excerpts

Thursday 3rd November 2016 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to contribute to what has been an excellent, thoughtful and timely discussion. I congratulate my hon. Friends the Members for Leicester West (Liz Kendall) and for Nottingham East (Chris Leslie) on securing this debate to discuss one of our most important industries at a critical time for its future. The financial services sector and its related professional services form part of the backbone of the UK economy. According to a report published earlier this year by TheCityUK, these sectors together represent nearly 12% of UK economic output. They contribute £66 billion in taxes and generate an annual trade surplus of £72 billion.

We have heard from several hon. Members today, particularly from my hon. Friend the Member for Wirral South (Alison McGovern) in her eloquent speech, that it is wrong to misinterpret the term “the City” as simply meaning London—it does not. The financial sector’s presence and contribution are felt throughout the UK. TheCityUK’s report also highlighted the fact that, when related professional services are included, the industry employs 2.2 million individuals across Great Britain, two thirds of whom are located outside the capital. For each of those workers, the value added to the economy is £87,000, compared with the annual average of £52,000 for workers in other sectors. It is evident from those figures that financial services go far beyond a handful of well-paid jobs in the square mile. This is an association that we need to break down to ensure that the future of the industry is given the careful consideration it demands in the Brexit negotiations in order to safeguard stability for the rest of us.

Next year will mark the 10th anniversary of the early stages of the global financial crisis. In the intervening decade, the City has made measurable progress towards becoming a fairer and better functioning sector through the combined efforts of regulators and the industry itself. None the less, public trust in financial services remains at an all-time low, in some cases for understandable reasons. There is still some way to go for the sector to rebuild its reputation and regain that trust. For that reason, the fact that financial services might suffer disproportionately as a consequence of Brexit might not elicit sympathy in some quarters. However, if the financial crisis proved anything, it is that the success of our economy and nation is inextricably linked to the performance of our financial services sector. Arguably, that relationship had become too dependent in several ways before the crisis, but it is still true that it is challenging for the UK to achieve its full potential if our financial sector is not in good health. The positive flipside is that when the City does succeed, it brings a raft of accompanying benefits.

Our financial services sector is world leading. There is good reason why centres such as Frankfurt and Paris are vying to capture a slice of our thriving activity. The Financial Times revealed this week that the French Government are on the cusp of launching a cross-party initiative to lure businesses across the channel, while local financial regulators have simplified the process for new financial companies to register in Paris. The city’s business district has unveiled new adverts that are designed to entice companies to move with the inventive strapline: “Tired of the fog? Try the frogs!” The tone may be light-hearted, but we must take seriously the hard-headed commercial motivations. These existential threats do not mean giving the sector preferential treatment at the expense of others; it is about recognising the sector’s value and ensuring that we can build the environment it needs to continue to grow.

The £72 billion trade surplus, as mentioned in TheCityUK’s report, represents more than that for all other net exporting industries in the UK combined. We are discussing the future of our largest export industry. Getting Brexit right is fundamental to the overall success of our financial services sector and our continued economic prosperity. We need to focus on three main outcomes for financial services to ensure that, at least in the interim, the Government do not inflict damage on one of the most productive elements of our economy.

The first is clarity. Markets loathe uncertainty. While the Government fail to deliver a clear outline of their negotiating plans for financial services, investment and key decisions will continue to stall among domestic and international financial institutions of all sizes because they lack the information that they need to plan properly for the future. Equally, the outline needs to be fair and then effectively communicated. We do not want a bank-by-bank process of deal making similar to the approach that appears to have been offered to Nissan under which one institution receives mystery assurances while another is kept in the dark. Coherence and transparency—not a system of discreet concessions to those who shout loudest—will be critical. The eventual agreement must not cover just one industry, but the whole British economy, to make sure that Brexit works for everyone.

Secondly, the City is heavily invested in and dependent on the principle of free movement for its workers. At the very least, the sector needs basic guidance on what will become of the EU nationals upon whom it relies to function. London in particular boasts a cosmopolitan financial services workforce, attracting talent from the EU and beyond that helps to fuel its success. There is ambiguity about what the status of these individuals might be in the eventual negotiations. Once again, that stalls companies’ ability to plan for the future and make the right hiring choices. Equally, it will discourage people from coming to this country. It is unacceptable to use the personal circumstances of individuals working in financial services as a bargaining chip, so I call on the Government to guarantee their ongoing residency rights.

Thirdly, one of the central goals of the Brexit negotiations must be to guarantee freedom of trade for UK businesses in the EU, which is critical to financial services. The industry’s exports to the EU represented £18.5 billion in 2014. We will strongly argue for the rights of UK financial services companies to win business across the EU. In a world where global markets are becoming ever more connected, it makes no sense to put up barriers. The fact that we are already compliant with EU standards and regulations puts us in a position of strength, because we should at least qualify for equivalence on the day we depart. I second the view of my hon. Friend the Member for Leicester West that passporting—the right to do business across the EU—is a deal breaker in the negotiations.

The scale of this task must not be underestimated. In the lifecycle of a typical equity trade, there are around 100 different stages at which EU laws have an impact. When we discuss passporting, it is important to recognise that we are talking about not one simple directive, but a bundle of legal instruments that stretch across myriad items of regulation. They include the markets in financial instruments directive, the European market infrastructure regulation, the market abuse regulation, the prospectus directive—the list is long. Each financial market component and participant contributes to a complex ecosystem that is made up of many co-existing businesses. Inhibiting or obstructing a single part of the ecosystem could have a significant unforeseen impact. The Government must therefore consider carefully how to provide clarity and equal access for every single link of the chain.

I want to conclude by sharing two scenarios that underline the importance of today’s debate. We are operating in an environment of extreme uncertainty that seems to be benefiting no one except currency speculators. Despite that, a recent report by consulting firm Oliver Wyman managed to produce two reasonable forecasts of what might happen, depending on which type of Brexit we can achieve. Its analysis suggests that an exit from the EU that can deliver passporting and equivalence, alongside access to the single market in a similar scenario to that enjoyed currently, would prompt a decline of about £2 billion in revenues from EU-based activity and put 3,000 to 4,000 jobs at risk. That is the best-case outcome. In the worst-case scenario, with the UK moving to third-country status, without equivalence, and our relationship with the EU being principally through the World Trade Organisation, the implications could be severe. That framework puts up to 35,000 jobs at risks and could cost approximately £18 billion to £20 billion in revenue each year.

I am most grateful for this debate, which has taken place at a critical juncture for the UK economy, and I thank hon. Members for the valid points they have raised. I urge the Government carefully to consider this sector, which sits at the heart of our economic health, and to take on board the arguments that have been made about protecting future jobs, future revenue and the future prosperity of the United Kingdom.

EU Draft Budget 2017

Jonathan Reynolds Excerpts

Monday 31st October 2016 General Committees

[The Chair]

We now have until 5.34 pm for questions to the Minister, should the Committee wish to avail itself of that opportunity. I remind Members that brevity is to be commended.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship today, Ms Buck.

The motion begins by referring to the European Union solidarity fund. As colleagues will no doubt be aware, the European Union solidarity fund was set up to respond to major natural disasters and to express European solidarity with disaster-stricken regions in Europe. Indeed, the UK was a beneficiary—

[The Chair]

Order. This is an opportunity for questions to the Minister, not for a statement.

[Jonathan Reynolds]

The UK was a beneficiary of the solidarity fund to the tune of £127 million during the 2007 floods, which I am sure many hon. Members remember. None the less, the Government’s position on the European Union solidarity fund has continued to be unclear. Last September, the Chief Secretary said that the Government were broadly,

“supportive of the principles of the EU solidarity fund in providing support when an EU country is seriously affected by a major natural disaster.”

However, he then said he did not,

“believe that new pressures should necessarily lead to requests for new money from member states”.—[Official Report, European Committee B, 14 September 2015; c. 4.]

More generally, by next year the EU will begin to look at the allocation of the next tranche of funding—

[The Chair]

Order. I encourage the hon. Gentleman to go straight to questions.

[Jonathan Reynolds]

Thank you, Ms Buck.

First, will the Minister outline the Government’s long-term plan with regard to the European Union solidarity fund and the UK’s relationship with it? Secondly, will the Government today confirm whether they have plans to carry out regional assessments looking at the Brexit impact on regions in terms of job creation, business activity and infrastructure projects forgone? Thirdly, is it the Government’s intention to develop a long-term replacement system of regional funding? Can the Minister confirm that this system will retain the seven-year tranche structure, as outlined, which allows long-term projects to flourish—

[The Chair]

Order. I remind the hon. Gentleman that he has the opportunity to ask supplementary questions, but it might be best to ask a question, allow the Minister to respond and then ask supplementaries.

[Jonathan Reynolds]

I see. I thought the Minister preferred them all at once.

[Mr Gauke]

I welcome the hon. Gentleman to his position on the Front Bench. I will deal with regional funding and assessments and also his point on the European Union solidarity fund. We are supportive of the principles of the European Union solidarity fund in providing support when an EU country is seriously affected by a major natural disaster. I make the point— it is a general point that may apply to several of his questions—that it is right that the EU prioritises its expenditure in the way that provides the most value for money and achieves the most for the people of the European Union. It is therefore right that through sound financial management, the EU frees up resources so that it can respond to natural disasters, and the solidarity fund is a means by which it is capable of responding.

The hon. Gentleman asked about the impact of Brexit and in particular the applications to regional funding. At this stage, I cannot say much more than the points we have already made about the support that we have provided for measures that have been announced. Essentially, the Government have agreed to guarantee projects entered into before the autumn statement. Anything that is entered into subsequent to the autumn statement but before we leave the European Union will be supported to the extent that it provides value for money and is consistent with the Government’s priorities. On regional assessments, all I can say at this point is that we will take into account the regional impacts when looking at our future position and determining our future priorities.

[Jonathan Reynolds]

I have just one more question. In preparing the Government’s statement to the Committee, what conversations have Ministers had with the devolved Administrations—in particular those in Scotland, Northern Ireland and Wales, where issues relating to the EU budget are particularly sensitive?

[Mr Gauke]

I am sure that it will not have escaped the hon. Gentleman’s notice that there were several meetings this time last week between the First Ministers of all the devolved Administrations, the Prime Minister and several colleagues, and I met the Finance Ministers on Monday afternoon. There is obviously significant interest from the devolved Administrations in these matters, which were discussed. Where the devolved Administrations sign up to structural investment projects under their current EU budget allocation prior to Brexit, we will ensure that they are funded to meet those commitments. It will be for the devolved Administrations to decide what criteria they use to assess projects, in line with the devolution settlements.

--- Later in debate ---

[Jonathan Reynolds]

I seem to be finally getting the hang of European Committees, just in time for us to leave the European Union.

From the Opposition’s perspective, it seems that we still do not have the information required, particularly on how the Government will manage the interactions between the obligations that they will enter into in the EU budget period we are looking at and our eventual exit from the European Union. There are many questions. The Government still need to inform the British public about their negotiating strategy for Brexit, but in particular, in relation to these documents, they must give an answer on the shortfall in funding to those parts of the UK that will be affected by our exit from the EU regional development fund and the European structural fund. I look forward to those answers coming forward in the months ahead.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 25th October 2016 Commons Chamber

[Mr Hammond]

I know that the SNP does not like a good news story, and I am sure that the hon. Gentleman will have been able, by 23 November, to think up a suitable response just in case there is such a story on that day.

On the wider issue of managing Britain’s exit from the European Union, the Prime Minister has been very clear. We understand the instructions that we have received from the British people, and within our obligation to deliver those we will seek to get the very best deal we can with the European Union that maximises the amount of trade in goods and services between our companies and the markets of the European Union, and between European companies and the UK market.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Financial services are one of the sectors most exposed to Brexit, but it is not just jobs in Canary Wharf and the square mile that are at risk; it is jobs throughout the UK, in Manchester, Leeds, Birmingham, Edinburgh and beyond. The messages that the Government have sent so far have been incoherent and counterproductive. Firms need assurance that they will get comparable access to the single market and the ability to retain EU nationals who work for them. Will the Chancellor help finally to put an end to his Government’s chaos today and make a promise to deliver both?

[Mr Hammond]

The hon. Gentleman is right to identify financial services as one of the areas that is particularly concerned about the way in which the exit from the European Union is managed, because the industry is particularly dependent on the passporting regime that is in place. He is also right to draw attention to the often overlooked fact that 75% of financial services jobs are outside London. This is an important UK-wide industry.

On the specific points that the hon. Gentleman makes, I have certainly sought to reassure financial services businesses that we will put their needs at the heart of our negotiation with the European Union. We understand their need for market access. We also understand their need to be able to engage the right skilled people. I have said on the record—I am happy to say this again today—that I do not believe that the concerns the British people have expressed about migration from the European Union relate to those with high skills and high pay. The problem that people are concerned about relates to those taking entry level jobs. I see no likelihood of our using powers to control migration into the UK to prevent companies from bringing highly skilled, highly paid workers here.

Draft Financial Services and Markets act 2000 (Ring-fenced Bodies, core activities, excluded activities and prohibitions) (Amendment) Order 2016

Jonathan Reynolds Excerpts

Monday 24th October 2016 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Sir Roger. I thank the Minister for his opening comments.

As we have heard, the draft order will make several changes to the ring-fence regime that is due to come into force in January 2019. As a result of the structural changes that the banks have begun to implement ahead of the regime’s introduction, the Treasury has suggested that a number of technical issues have become apparent that, if not rectified, could undermine the regime’s effectiveness. Any moves to fix legislative error and confusion are of course welcome. In fact, it is clear to the Opposition that there is an urgent need for consolidated legislation in this regulatory area.

Even commercial providers will not provide a complete, up-to-date version of the Financial Services and Markets Act 2000 and its successor legislation and statutory instruments. As such, it is very difficult indeed for practitioners to know exactly what the law currently is. Leaving it all in such a piecemeal mess—there has been legislation in 2012, 2013, 2014 and 2015 to make detailed amendments to already detailed provisions—is unacceptable and causes confusion for everyone involved. Will the Minister confirm whether the Government have plans to rectify the situation?

I notice that there is no regulatory impact assessment for the draft order, although the explanatory memorandum states that the Treasury will prepare a “validation impact assessment” for at least one of the changes: specifically, the removal of the qualifying declaration process. As my Front-Bench colleague in the other place has pointed out, surely it would have been wise to produce an assessment before the policy was introduced, or at least before the order was laid. The Government have until January 2019 to get this matter right, so why is it being rushed through and the correct assessment procedure not being followed? When will the validation impact assessment be published?

I have several questions for the Minister on the specifics of the regulation, in order to clarify the intent and purpose of some of the changes outlined. In particular, the Opposition are today seeking categorical assurances from the Government that the draft order does not contain any measures that could potentially allow different types of activity to slip past or weaken the protection of the ring fence. There is potentially a problem in that the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014 sets out exceptions to the prohibition on excluded activities that cannot be conducted by retail banks. Can the Minister confirm that no provision in the draft order could potentially provide a way around the general principle that there must be separation between different types of entity?

As hon. Members will be aware, the Financial Services and Markets Act 2000 works by providing general principles, for example the section 19 prohibition on conducting financial services without authorisation from the Financial Conduct Authority, and then having secondary legislation, for example the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, lay out the exceptions from that general rule. I therefore seek clarification that this regulation does not excuse the banks and others from being bound by the general principles in the statute.

I have specific concerns about the measures in article 2 to amend the Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014 to make new provision regarding the identification of qualifying organisations. Instead of a relevant organisation being required to give a “qualifying organisation declaration” to a UK deposit taker before it may be considered a qualifying organisation, it is proposed, as the Minister outlined, that a UK deposit taker may determine that an organisation is a qualifying organisation without that organisation having to give any such declaration. However, other regulations—for example, the prospectus regulations in securities law—make plain the sorts of information, or at the very least the categories of information, that must be established.

In comparison, these provisions seem worryingly loose and quite unclear. If the test of a good rule is whether we can know when it has been broken, how will we know when a bank has breached that proposed new rule? Why should a bank be making a decision about the status of an entity where that entity is not yet prepared to provide a balance sheet? Does this apply only to new companies—for example, a new subsidiary, in which case the parent should know the capital being assigned to it—or to companies that are unknown to the bank? If the latter is the case, why is it dealing with them for this purpose? Whether or not an organisation was part of the same group as a qualifying organisation would surely be a matter of fact. In what circumstances will banks be dealing with any entity where that is not clear?

More fundamentally, Labour is concerned about whether any ring fence will actually be able to protect the system, consumers and other financial institutions against the failure of an entity that cannot then find the money to pay back or transfer back whatever is owed to a protected entity. There are genuine, legitimate and serious questions about whether a ring fence, which allows transactions between group companies, is really any protection at all. The retail bank could still be funding the speculations by the investment bank even if the contracts purport to create a right to be repaid for the retail bank. As soon as a crisis strikes, debts will simply not be repaid, and there will be no money in the system to make repayment in full because investment banks will not hoard cash; instead, they will spend it and use it as leverage to borrow more money to speculate with.

As we continue to discover, there is much confusion about what falls on either side of the ring fence. That lack of clarity makes regulation very difficult. However, Labour Members are very clear that never again should we hand the dice back to the gamblers. We know that people and society want and need banks in which they can safely deposit their money and savings and that lend responsibly and provide credit to finance investment growth across the country. People deserve a much more holistic approach than the piecemeal approach that we have seen so far to legislation. What is required is an unswerving commitment to transform the sector and ensure responsible financing.

We will always support financial services where they deliver a clear benefit to the whole community, but we should all recognise that the level of anger that still exists following the financial crisis must be responded to. Getting the ring fence right is a key part of addressing that anger. I would be grateful to the Minister for his response today to the points I have raised.

Finance Bill

Jonathan Reynolds Excerpts

Tuesday 6th September 2016 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

I rise to support new clauses 2 and 3, the social justice arguments for which, in support of some of the most vulnerable individuals and families in our society, have been so eloquently and comprehensively set out by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) that, although I had prepared speeches on both new clauses, there is no need for me to take up the House’s time to echo what he has already said. I therefore simply put on record my full support for what he said, and I ask to be identified with his remarks.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I rise to support amendment 141, which is in my name and those of my hon. and right hon. Friends. I am extremely grateful to Mr Speaker for selecting my amendment, and I would also like to place on the record my thanks to the Public Bill Office, whose advice and help on the matter have been greatly appreciated by me and my office.

I hope that the amendment will find agreement on both sides of the House, and I hope that the Government will not oppose it. The amendment would establish a very small tax exemption for residual cash balances that remain in an employee share incentive plan when an employee leaves such a plan. A residual cash balance is a sum of money, insufficient on its own to buy a single share that month, which would usually be carried over to the next month but which has to be refunded if an employee leaves the scheme. I propose that that balance, capped at a maximum of £10, would instead be donated to charity. That would have the added advantage of reducing costly and burdensome processing by company payroll departments.

Share incentive plans are a good and tax-efficient way to save for the future, and many employees take them up. I believe we should encourage employee share ownership. When an employee leaves a share investment plan, there is commonly a cash residual amount remaining in the account; often, it is just a few pence or a few pounds. When the employee chooses to leave the plan—that is mandatory if the participant leaves the company’s employment—the cash residual can no longer be carried forward. Under the current system, any remaining cash held in the plan when the employee leaves the plan is required to be processed, via the employer’s payroll, to apply national insurance contributions and income tax via PAYE and to pay the net balance to the employee. This process typically costs between £2 and £9, but provides little benefit to the individual receiving such a small amount.

Furthermore, the benefit to the Exchequer is far less than the total cost to companies of administering these payments, with companies paying almost twice as much to process the payments as the Treasury actually receives. To put that into numbers for the ease of Members in the Chamber, it is estimated that the administration costs for companies are between £400,000 and £500,000, while the benefit to the Treasury is just £200,000. If amendment 141 was accepted, charities and good causes would benefit by about £360,000, on top of the savings that companies would make.

There is a precedent for such a change. There are already examples of situations in which HMRC has agreed to individual exemptions to share incentive plan providers, which are currently based on specific requests assessed case by case. There is an appetite for this change among share investment plan providers and HMRC. Amendment 141 would be only a very small change to this Bill compared with what it covers, but it is one that could bring benefits both to companies and to charities and good causes, while at the same time supporting share investment plans by removing a costly and bureaucratic part of the system. The amendment would also help to simplify the tax system and encourage more charitable giving, both of which are stated priorities for this Government and would be priorities for any Government.

I was very pleased and heartened yesterday when the Government accepted amendment 145 in the name of my right hon. Friend the Member for Don Valley (Caroline Flint). I sincerely hope that the Minister will accept this amendment and that we can achieve the same result today. If she does not say she will accept it, I will seek to divide the House, but I can genuinely see no reason why the Government would not want the amendment to be agreed to.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

It is a great pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I rise to support new clause 3, to which I have added my name. I, too, agree with everything said by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes). I cannot promise to be quite as brief as my hon. Friend the Member for Congleton (Fiona Bruce), because I wish to add one or two remarks of my own.

The fundamental problem is that family breakdown costs a staggering £47 billion per annum, according to the latest figures. Quite apart from the consequential social dislocation and pain that it causes, it is also undermining the British economy. Of huge importance is the fact that most breakdowns do not arise from divorce, but from the ending of relationships in which the couples concerned have not made to each other the public, exclusive and legal commitment that is marriage. Where they do make such a commitment, their relationships —not surprisingly—are far more likely to be stable.

In this context, there remains a massive public policy imperative to ask whether we are doing anything to make marriage less accessible than in other similarly developed countries. We are unusual in this country in having failed until recently to recognise marriage in our income tax system. The solution initially proposed was for a full transferable allowance, but in the event a transferable allowance of only 10% was enacted. A statistic that has already been mentioned but bears repeating is that the tax burden on one-earner married couples with two children on the average wage is 25% greater than the OECD average. The allowance is not making marriage more accessible in a meaningful way. In this context, it is no surprise that the take-up of the allowance has been so low, although the Minister welcomed the fact that the figure is moving in the right direction.

In going forward, two things could be done. First, if it is not possible in the short term to have a full transferable allowance, we should at least ensure that some married families on the basic rate receive a meaningful transferable allowance. Given that the research is so clear that child development is greatly enhanced by the presence of both mother and father in the family home and given the fact that the public policy benefits of marriage are so well developed, a full transferable allowance for married couples with children under five might be a good place to start.

Secondly, perhaps in the slightly longer term we could work towards the full transferable allowance for married couples generally. Of course that would not be cheap, but it would be considerably cheaper than the current cost of £47 billion. It would promote choice by removing obstacles to marriage. As has been pointed out, it is very much about promoting the life chances agenda. I look forward to the Minister saying one or two more words about this matter in her closing remarks.

--- Later in debate ---

[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.