Finance (No. 3) Bill (Third sitting)

Kirsty Blackman Excerpts

Thursday 29th November 2018 Public Bill Committees

The response to a similar previous Opposition amendment—the Minister has used a similar form of words this time around—was that from the Government’s point of view it is a matter of principle that those subject to specific taxes should not be put on a register. However, is not clear to me how that differs in kind from the Government’s commitment to a foreign-owned property register. Also, I gently draw the Government’s attention to the fact that we are talking about companies, not individuals. I doubt whether any arguments about privacy would apply to any extent.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to take part in the debate with you in the Chair, Mr Howarth. It is good to take part in this interesting debate on the changes that the Government propose.

We are happy to support Labour amendments 39 and 38. If it is pushed to a vote when the time comes, we shall support new clause 4, but I make it clear that it is not our position that corporation tax should be changed in the way the Labour party suggests. However, the new clause asks for a review of the effect of the potential change and we think it is reasonable that Opposition policies, as well as the Government’s, should be scrutinised. It is, I think, fairly reasonable for us to support the review on that basis.

Our amendment 35, as the hon. Member for Oxford East said, is similar to one of the Labour amendments. Its aim is to have a review of the effect on public finances of the expected change, including in relation to the tax gap. I do not want to contradict the hon. Lady, but the Government have put out two sets of contradictory figures on the revenue implications for the Exchequer. The Government’s 29 October policy document links to the original numbers she cited. It gives a link to more information and then provides figures contradictory to those in the policy document.

The policy document does not have the £690 million figure; it predicts an increase of £700 million in 2020-21, a reduction of £300 million in 2021-22, a reduction of £15 million in 2022-23 and, crucially, a reduction of £20 million in 2023-24. The previous set of figures said that the impact would be negligible in the fourth year. Now the Government are suggesting that there will be a decrease in the amount of money coming into the Exchequer as a result of the change. Presumably, we may imagine that the reduction will continue in future years, whereas the Government previously argued that their previous figures were correct, when they predicted not much of an increase or decrease either way in future years.

I was slightly confused by the information that the Government provided, and it would be useful to have clarity about which figures are correct, and why the policy document contains one set of figures but links to a different set on the website. Possibly a change needs to be made there, as the link to more information takes people somewhere that does not give more information—it contradicts the original information provided. I found it quite difficult to wade through that. Given what I have outlined, it is even more important that our amendment should be accepted. We need clear information from the Government, and a clear idea of what revenue effects are, or are not, expected.

Another thing that was mentioned in an earlier consultation document is the expectation that it will cost HMRC £160,000 to make the changes necessary to put the new system in place. That also needs to be teased out in the information provided. The amendment would reduce the effect on public finances, and that would include any additional spend required by HMRC staff as a result of the suggested changes.

I am concerned that there is a lack of transparency about the conflict between the two sets of figures provided, and that the Government have not been particularly clear about their intentions behind the change. I understand that they feel that making the change would put everyone on a more level playing field, but surely they should do that only if they expect a change to have a positive impact. There is no point in moving people from being liable for one tax to being liable for another tax to reduce the impact on the Exchequer, if that is the only predicted change.

Perhaps the Government want the extra money in year one, because they feel that Brexit will be such a disaster that we could do with extra money in year one, and they are willing to take the hit in future years. Given the potential impact on future years, the change will not be revenue-neutral in future. If the Government think that it will be, it would be useful to know that.

Having said all that, I am not clear about the Government’s intentions behind the change; it would be good if they could explain the rationale behind what they are doing. I have looked at the explanatory notes and they do not make it much clearer. The Government may think that this system is fairer. If that is their view, it would be useful for them to explain that.

I am not sure whether we will press the amendment to a vote; that depends a lot on the Minister’s response, the information he provides and any follow-up information he commits to providing.

[Mel Stride]

I thank colleagues for their contributions. The hon. Member for Aberdeen North asked about the rationale for making this change, and whether it was simply to treat everybody equally—there is clearly a point to that, but is it sufficient to justify the change? Equality of treatment has its merits, but, as I explained in my opening remarks, there is the issue of bringing into the corporation tax regime those who hitherto have been engaged in activities that fall due to income tax rather than corporation tax. With that come all the anti-avoidance measures, including the corporate interest restriction, the hybrid mismatch regime, the carried-forward income loss restrictions and the capital gains and loss restrictions that were set out in the recent Budget. That is quite an important point.

[Kirsty Blackman]

I thank the Minister for attempting to explain. Pulling those people into all those anti-avoidance measures still results in a negative impact on the Exchequer. I contend that there may be no point in pulling them into these different measures if there is no positive benefit to be had from doing so.

[Mel Stride]

The latest OBR estimate is that the changes will raise £365 million across the forecast period, although I will come to the issue raised by the hon. Member for Oxford East about the timing of the figures. She referred to the consultation that we carried out between March and June 2017; we came back with our report on 1 December 2017. Draft legislation for the UK property income measure was published on L-day on 6 July, and the technical consultation was run until 31 August 2018. Responses were received from representative bodies from the property retail sector and accountancy firms. The measure was consulted on pretty thoroughly.

On the timing issues raised by the hon. Lady, the way in which the Office for National Statistics tax accounting treatment works means that increased corporation tax receipts are scored in the year of implementation, but the corresponding reduction in income tax receipts is scored in a subsequent year. There is a mismatch between the moneys coming in under the CT arrangements and the moneys that have been transferred into that regime, which do not go into the scorecard until a year later. That would largely explain the profile to which she referred.

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[Mel Stride]

The hon. Lady is right that HMRC will be privy to the information, but there is a difference between being privy to the information and treating with individuals and companies in terms of their tax return. Collating all that information and presenting it in the form that she envisages is a distinct activity.

I undertake to write to the hon. Member for Aberdeen North about the online number that she discovered and the numbers that were provided in the policy document. I wish I was so good that I just knew all the answers and was over the detail to that degree, but I will certainly write to her on that, and on the cost of making the changes to the system. I am happy to have a look at the £160,000 figure that she raised and see how it breaks down.

[Kirsty Blackman]

If possible, it would also be useful to know before we come back on Report whether the Government expect the revenue impact for the Exchequer to be negative in future years, beyond the four-year timescale that is predicted. That makes a difference in terms of whether it is, as the Minister says, a good measure across the four years or a really bad measure across 10 or 12 years.

[Mel Stride]

I think I am right in saying that over the longer term, in revenue terms the measure is likely to be broadly neutral. The OBR, of course, will only cast out across the scorecard period. It will not analyse the fiscal impacts beyond that, but if the hon. Lady would care to write to me with any questions on that, to the extent that I can answer them of course I will do so.

I commend the clause and the schedule to the Committee.

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[Anneliese Dodds]

I agree with my hon. Friend. When we are talking about this sector in particular, we must always bear in mind the impact not only on revenue but overall on investment and the need to ensure that high-quality infrastructure is provided. I know that that is enormously important and something that the Minister is concerned with and working on. For the reasons I have set out, we will press amendment 38 to a vote.

On new clause 4, I say in response to the hon. Member for Aberdeen North that there may be some agreement on some issues, but on corporation tax rates there is a difference to the extent that Labour feels that we need to work with other countries to prevent a race to the bottom. That is something we have already been doing. A race to the bottom is damaging, particularly when many businesses tell us that the corporation tax rates do not drive their decision to locate in the UK; they may be one of a basket of factors, but other matters, particularly sunk costs, are important. Therefore, we are happy for our proposals to come under scrutiny at every point, and we hope that in doing so we might persuade the SNP to come to our view as well.

[Kirsty Blackman]

To be totally clear—I am sure the hon. Member for Oxford East did not mean this—we do not support a race to the bottom either. Our manifesto position was that we supported no further reductions in corporation tax, which is slightly different from the Labour party position.

In the spirit of trying not to take up too much of the Committee’s time and the fact that amendments 35 and 38 are broadly similar and we have covered the ground of both amendments quite a lot during the course of the debate—although the answers we received could have been clearer—we are happy not to press amendment 35 and to support Labour party amendment 38.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Schedule 5

Non-UK resident companies carrying on UK property businesses etc.

Amendment proposed: 38, page 210, line 45 [Schedule 5], at end insert—

“Part 2A

Annual review of effects of this schedule

34A (1) The Chancellor of the Exchequer must undertake an annual review of the effects of the provisions of this Schedule on corporation tax receipts.

(2) The report of the review under sub-paragraph (1) must be laid before the House of Commons before—

(a) in respect of the first review, within 12 months of this Schedule coming into force, and

(b) in respect of each subsequent review, within 12 months of the date on which the report of the previous review was laid before the House of Commons.”—(Anneliese Dodds.)

This amendment requires an annual review of the revenue effects of this Schedule, in each year following the Schedule coming into force.

Question put, That the amendment be made.

Leaving the EU: Economic Analysis

Kirsty Blackman Excerpts

Wednesday 28th November 2018 Commons Chamber

[Mel Stride]

My right hon. and learned Friend raises a number of points. The paper does not duck the question of the economic impact of the proposed deal compared to the status quo—the relationship with the European Union as it persists today. It makes it very clear that it will be detrimental in the economic sense. That is extremely clear. But I would put it to him that the deal is the best for the economy going forward as part of a deal that also delivers on several other things, some of which are entirely non-economic, such as control of our borders and free movement.

[Kirsty Blackman (Aberdeen North) (SNP)]

Before and after the EU referendum, the Scottish National party said that leaving the EU would damage our economy. In December 2016, almost two years ago, the Scottish Government produced “Scotland’s Place in Europe”, our compromise position that makes it clear that, second only to staying in the EU, remaining in the single market and the customs union would be the best thing for Scotland’s economy and for the economy of the UK as a whole. The Prime Minister’s deal will cost every person in Scotland £1,600 compared to staying in the EU. The economy will grow more slowly. The agri-food sector will be particularly affected across all scenarios. Trade deals that we might strike will only increase GDP by a potential 0.2%. Public sector net borrowing will be higher. In what alternative reality is this a good deal?

[Mel Stride]

The hon. Lady is arguing to remain in the European Union. That would not respect the will of the British people as expressed in the referendum, the largest turnout in any electoral event in this country’s history. She talks about the imposition of trade barriers and the impact on the economy. There would be few impacts worse, I suggest, than Scotland becoming independent and having a customs barrier between ourselves and Scotland.

Finance (No. 3) Bill (First sitting)

Kirsty Blackman Excerpts

Tuesday 27th November 2018 Public Bill Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment (a), leave out—

“(b) at 11.30 am and 2.00 pm on Thursday 29 November”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment (b), after “Tuesday 11 November;” insert—

“(1A) The Committee shall hear oral evidence in accordance with the following Table—

[Kirsty Blackman]

It is a pleasure to make the first substantial speech in this Finance Bill Committee—the first of many, I am sure.

Once again, the Scottish National party has tabled an amendment to the programme motion. It has concerned me for a long time that Finance Bill Committees do not take evidence and I think it would be better for the quality of debate if they did. This year, there are specific issues relating to the lack of consultation on the draft clauses and to the tight timescale for considering the Bill. I raised in Committee of the whole House my concerns about the fact that paper copies of the Bill were published on a Wednesday and we had to debate them on the Monday, which did not give us enough time given that the House was in recess. External organisations have also raised concerns about the lack of time for scrutiny, particularly for the unusually high number of clauses that were not consulted on in draft form. Glyn Fullelove of the Chartered Institute of Taxation, whom I quoted in Committee of the whole House, has been a particular critic of the process.

The SNP asks that, on Thursday, instead of having two normal sittings as planned, we take evidence from the Treasury, Her Majesty’s Revenue and Customs, the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chartered Institute of Taxation. They all know more about the legislation than we do, so it would be incredibly useful to hear from them.

I must also point out that the Government have included several clauses to make changes to previous legislation that was deficient. If Government legislation is deficient, I contend that more consultation must be a good thing.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Given that, as I understand it, the Committee in the other House is taking evidence on elements of the Bill, surely the hon. Lady agrees that we should be afforded that opportunity in this House.

[Kirsty Blackman]

Absolutely. It is odd that the House of Lords is more democratic than this place in relation to the Bill.

The Finance Bill Committee should take evidence. I know that it is a long-standing convention that it does not, but having served on the Public Bill Committee on the Taxation (Cross-border Trade) Act 2018 and heard the evidence taken, I know how useful it was for Committee members and how many of them referred to it in subsequent debate. It was an incredibly useful exercise and the legislation that came forward was better as a result.

As I flagged up in last year’s Finance Bill debates, it is very good that external organisations have submitted written evidence, but I guarantee that the majority of hon. Members in this Committee have not read it all because of how little time we have had. Allowing us to question witnesses on the evidence that they provide on the Finance Bill Committee would be incredibly useful. The Government might not accept that this year, but can we consider taking evidence in future years? I am not the only one calling for this. The “Better Budgets” report produced by the Chartered Institute of Taxation and various other organisations called for the Finance Bill Committee to take evidence two and a half years ago, so external organisations have requested it, not just the SNP.

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I hear what the hon. Lady says. Some of us have not been in the House for a great deal of time. I sat on the Housing and Planning Bill Committee, which lasted for 20 sittings, with a marathon sitting just before Christmas three years ago. We heard a great deal of evidence that significantly informed the debates. Some members of this Committee might have been on that one. Interestingly, some of the evidence we took proved to be absolutely spot on, because the Government subsequently ended up changing some of their housing policies. The Government made the same argument at the time: “No, we have thought this through. We have consulted”, but the ability to hear from experts who live and breathe these issues was beneficial.

It was the same on the Criminal Finances Bill, which covered a pretty niche area. The job of Parliament is to scrutinise legislation, so we need the tools to do that. Whichever party is in control, it has the full back-up of the civil service, who are themselves experts and, to their credit, know their work, but it is important that the Opposition are able to get independent assessment and adjudication of what the Government tell us. That does not mean I do not believe a word that Ministers say—I believe everything they say. It is just that we do not necessarily get the full facts. I have found it very useful in the past to have evidence sessions, and the Government should give serious consideration to that.

I think this is the fourth Finance Bill I have sat on in the past two years, although my recollection is not what it used to be. We have also had the customs Bill, which is also a finance Bill, so we have had effectively five finance Bills in a short period of time and in a time of incredible turbulence and change. There might not be a convention or a tradition to take evidence in Finance Bills, but there comes a time when we think, “This is as good a time as any to take evidence because the circumstances have changed substantially.”

We have also had what amounts to movement on the convention in relation to the amendment of the law. As everybody knows, it has been used only about half a dozen times since 1929 when Winston Churchill introduced it. It has been used six or seven times, including three times by the Government in less than that period in years. That is a substantive and significant change. The Minister kindly responded to my letter about that and indicated that it was not necessarily a significant change, but it is. If we as a Committee—as a House—have done something only six or seven times in the best part of 90 years, changing that convention is significant. For that reason as well, we need to take a step back and decide that perhaps we need evidence sessions to tease out some of those important things.

It would also give assurance to the House, to Back-Bench Members and to the public in general that we take those matters seriously and that it is not business as usual—that just because we have done something for years or decades, we do not carry on doing it regardless. It would send a message that, in these turbulent times, the House takes the country’s finances seriously.

Therefore, we should seriously consider taking evidence. After all, we are all open to public scrutiny in one fashion or another—in fact, there is no doubt that we welcome it, and I do not suggest that the Government do not welcome it too. If we do not object to that scrutiny, why do we not institutionalise it, do what other Committees have done in the past and take evidence? Let experts in their field challenge us, and let us challenge them.

[Kirsty Blackman]

One of the Government’s arguments against taking evidence is the fact that the Bill is split between the Committee of the whole House and the Bill Committee, but does the hon. Gentleman agree that we in the Bill Committee tend to consider the more technical amendments on which we most need evidence to make good legislation?

[Peter Dowd]

That is a perfectly fair point. Inevitably, when we get into Committee, the clauses that we discuss are very technical and it is those technical clauses for which we need some evidence.

At the end of the day, we have had written evidence from the Chartered Institute of Taxation on clauses 7, 11, 81 and several others, which I read with great interest. Some of the comments were very pertinent. It would have been a good opportunity to tease out some of the issues in those clauses in more detail. As I said, none of us are concerned about challenge—that is why we came into Parliament. We are here to be challenged, and that is the nature of our democracy.

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[Sir Robert Syms (Poole) (Con)]

I have just a few points about where we are going. There are a number of events in Parliament that get quite a lot of public interest; the Queen’s Speech is normally one and the Budget is another. People make representations to the Treasury in advance of the Budget, but afterwards the Financial Times and almost every insurance company, bank and accountancy firm produce reams of information on what changes have occurred. The one sure thing about the Budget is that a number of trees will be cut down, to supply information to the great British public on what changes have already occurred. Actually, I do not think that this is one of those Committees that needs to take lots of information, because most of us will have lots of information already.

One could substitute vested interests for the point about experts, because there are an awful lot of vested interests in this country. As a large Committee of the House of Commons, we sometimes have to navigate our way through that, so we could sit for months listening to vested interests on a whole range of subjects and not actually make any decisions. The purpose of this Committee is to look at what the Government have done, maybe make some decisions and then report back to the House.

[Kirsty Blackman]

On that point, is the hon. Gentleman seriously suggesting that both the Treasury and HMRC have vested interests other than trying to make good law?

[Sir Robert Syms]

Out in the big wide world, there are an awful lot of people who would come to this Committee, given the chance. The biggest difficulty we would have would be deciding who to invite, and we could be sitting in this Committee for months. I think it is quite clear that most people understand the key points of the Budget, because lots of information has been produced. When I was in opposition and the Labour party was in government, I probably made a similar speech to the one made by the Opposition spokesman. The Minister will probably make the same speech that Labour Ministers made when we raised the same point. The only point of having additional information is that it helps the Opposition in tabling amendments. That is the only reason normally stated.

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[Sir Robert Syms]

We could have a general rule that every single Committee of the House should take evidence on every single mater, but the problem is that Committee sittings would then last considerably longer. They would need to be staffed up and we would have difficulty getting Members to serve on the Committees and listen to all that evidence. Ultimately, governing is about taking decisions. There has to be a balance in understanding what points of view people take. We can sit here endlessly listening to advice, but we have to make choices.

[Kirsty Blackman]

We cannot sit hear endlessly listening to advice, because the Committee has to end by 11 December. We are talking about one day of taking information from people so that we can be better informed in the debates that we will have up until 11 December, at which point this Committee will end, because that is what the House has decided.

[Sir Robert Syms]

Members of the Committee have a mandate to scrutinise the Government. If we take one day out of that scrutiny, we are reducing our ability to question the Minister on some very important matters. Personally, I would like to take all the time to question the Minister on why decisions have been taken, and I am sure I will get very good answers.

[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to serve under your chairmanship, Ms Dorries, and a pleasure to serve on my third Finance Bill Committee—I think that it is the fourth such Committee for the hon. Member for Bootle, but it is reassuring to see broadly the same team arrayed. We were a fairly jovial and decent lot in the last Committee, so I am pleased to be serving alongside them again. The hon. Member for Bootle said that he always believes everything that the Minister says, which is a fine start to our deliberations over the coming weeks. My hon. Friend the Member for Poole said that I was probably dusting off the previous Labour Government’s speech from when they were faced with the same questions. Indeed I have, so I hope that will be acceptable to Opposition Members.

Amendments (a), (b) and (c), tabled by the hon. Member for Aberdeen North, seek to revise the programme motion by introducing a day of oral evidence and extending the time spent in Committee. It is of course important that the provisions of the Bill receive sufficient parliamentary scrutiny. The Government’s tax policy making framework ensures that that occurs, and I do not think that evidence to a Public Bill Committee would effectively further that aim.

The amendments would introduce a day of oral evidence from, among others, the Institute for Fiscal Studies, the Chartered Institute of Taxation and the Office for Budget Responsibility. Let me be clear that I agree that effective parliamentary scrutiny of this and any other Finance Bill is crucial, and I am always open to considering how that can be improved. However, for the following reasons, I am not persuaded by the merits of delaying the Committee in order to allow oral evidence to be taken. We accept that any additional evidence sessions would certainly increase the amount of scrutiny of the Bill, but that is not the same as saying that, in the absence of such sessions, the scrutiny of the Bill would be insufficient—as my hon. Friend the Member for Poole has set out, there has been very considerable scrutiny already—or indeed that additional days of evidence would provide a proportionate response to the need for scrutiny.

First, in line with the new approach to tax policy making set out in the Government’s 2010 framework, the Government already undertake extensive consultation with stakeholders before legislating in the Finance Bill.

[Kirsty Blackman]

On that point, does the Minister not accept that this year that “extensive consultation” has not been as extensive as it has been in previous years, and nor as extensive as it should be?

[Mel Stride]

I do not accept that. As I will argue, there is a process that we go through, which starts with the Budget announcement. We then go into formal consultation, which is applied to a number of measures within the Bill. We also of course publish draft clauses—I think that was on 6 July this year. I believe that around 226 pages of draft legislation were published at that time out of a total Bill length of 315 pages. It is considerable. We have received written evidence, the Bill will go through this Committee, it was considered by Committee of the whole House, we will then have Report stage, and we will examine amendments all the way through. The level of scrutiny received by a Finance Bill is well in excess of most Bills that come before the House.

My second point, which was raised by the hon. Member for Aberdeen North, relates to the fact that the Bill was considered in Committee of the whole House. Were the amendments to prevail, any evidence session in this Committee would not capture the important issues debated in Committee of the whole House. The Committee should be aware that Committee of the whole House is, I would argue, where the more important measures are considered, and they are put to the whole House rather than simply the members of this Committee.

[Mel Stride]

I am not going to be drawn into what may or may not happen in future—the usual channels and the Government of the day take those decisions—other than to say that this is not a unique occurrence. As the hon. Gentleman recognises, this has happened in the past. Indeed, the very argument that just because it has not happened in the past does not mean it should not happen now, which is being applied to the seeking of an additional day, could also apply to the amendment of the law resolution. It has happened in the past and this is not the first time with a Finance Bill. In fact, the two I have taken through the House to date have been subject to those provisions.

The IFS, the OBR and others produce analysis of Budget measures before or after the event. They also typically give oral evidence to the Treasury Committee on the Budget as a whole before the Committees on the Finance Bill. Oral evidence at a Public Bill Committee will replicate that analysis while limiting its scope to those parts of the Bill not selected for the Committee of the whole House.

Finally, the programming of business is a matter for business managers and the usual channels. Those channels establish the programme motion that was agreed by the Programming Sub-Committee, which is made up of Government and Opposition Members. They were not persuaded that oral evidence sessions would be beneficial and, I am afraid, neither am I. As such, I urge the Committee to reject the amendments.

[Kirsty Blackman]

The Minister’s argument does not make sense in relation to the things that are most important being discussed in the Committee of the whole House. I would contend that clause 1 is probably the most important in the Bill given that it allows Government to charge income tax for future years. I suggest that the ones discussed in the Committee of the whole House are the most political, as they are agreed between the usual channels, and ones where the Opposition tend to think they might be able to get a win out of the Government, as was adeptly proven last week with the number of amendments accepted by the Government. I take the opportunity to say that I am pleased about that, because our amendments are not often accepted—I am quite chuffed about that one.

The Public Bill Committee debates are on the more technical aspects. This is less political and less likely to be chewed over by the Financial Times on its front page because it is immensely technical. The tax code has changed significantly and increased massively in the past few years. There is a huge volume of tax legislation and lots of it is incredibly technical. The stuff we are discussing in the Public Bill Committee is immensely technical and I disagree with the Minister on how external organisations have raised concerns about how few of the draft clauses were consulted on.

[Mel Stride]

The hon. Lady is absolutely right that this Committee will debate a number of technical clauses. Surely if they are technical, does that not lend itself to an examination based on written evidence based on, for example, approaching me with written questions or discussions or indeed a meeting, or perhaps a meeting that I can facilitate with officials present to get into the detail, rather than a broad brush quick day with various advisers and organisations that we quiz?

[Kirsty Blackman]

The Minister makes a slightly circular argument. He suggests that questioning him would help us to improve the legislation and that questioning external experts who have to apply tax changes would be less useful.

[Peter Dowd]

Does the hon. Lady agree that there is an issue? The Labour party tabled a number of amendments, 10 or 11 of which were ruled out of scope. I do not criticise that at all. There is no criticism—

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[Kirsty Blackman]

I hope the Minister can answer my question in the positive. In the clauses, the devolved and reserved aspects are split. They are considered separately, which makes a huge amount of sense. I asked the Minister earlier whether he would consider doing that in future years for all clauses, particularly those similar to clause 5. I am not expecting a positive, definite answer that he will do that in future years, but will he commit to considering splitting the devolved and reserved aspects on income tax in future years, so that the House can better scrutinise legislation?

[Mel Stride]

I thank the hon. Lady for her question, which we touched on in the Committee of the whole House. She will be aware that clause 3 is subject to the English votes for English laws process because non-savings earnings are devolved to Scotland, so that clause only applies to Northern Ireland, Wales and England, while clause 4 on the savings and dividend rates applies UK-wide. I understand her point and we will be happy to look at that in the future. As things stand, we support where we are at the moment in the division of those particular clauses.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Corporation tax charge for financial year 2020

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[Kirsty Blackman]

I will speak relatively briefly on clause 2 and the amendment. To begin with, it is clear that the SNP supports clause 2 and we are not going to argue against the Government having the ability to charge corporation tax next year. It is quite important they do that for a number of reasons. One is that, of all the taxes levied upon businesses, corporation tax is one of those better liked by them. It depends not just on fixed assets, like business rates, but on the profit businesses are making, so they feel less unhappy about paying as it is more of a fair tax than some of the others. It is only a fair tax, however, if it is charged and if the companies are paying the corporation tax they are due to pay.

As for the asks being put forward from the Opposition Front Bench on this, the Government should not be scared of publishing more extensive data than they do currently on the tax gap, particularly around corporation tax in this instance. If the Government were to do that, they would be incredibly transparent and, if they are as good at collecting corporation tax as they suggest, that would dissuade other people from trying to dodge the tax in the first place. This would be both transparent and good for scrutiny, while also dissuading those who are looking to see where they can dodge the system. If people knew that corporation tax was difficult to dodge—if the Government put forward that information—they would be less likely to try and dodge it.

On the issue of multinational corporations and what a small minority—by far a small minority, not all of them—do in trying to not pay the tax they owe in certain countries, the Government have made great play of trying to be global Britain and saying that after Brexit this is going to be, apparently, an outward-looking country. Where better to start being global Britain than by making multinational agreements on improving the tax system? That would be good for everybody.

Every country benefits if more of the tax owed by corporations is taken. Coming together with other countries across the world and making that something that the UK Government set out to do in this new global Britain landscape would be really good. This is about not just the Government trying to make trade deals and seeing what we can do to benefit us, but trying to make these multinational agreements where everybody would benefit. Companies looking to avoid tax would know it would be incredibly difficult to do that because countries across the world would come together. If the Government want to lead the world in anything, I suggest that reducing tax dodging is an area where they should try and think about doing so.

The comments from Opposition Front Benchers about HMRC staff were incredibly important. The SNP has consistently made the case against HMRC offices being closed on the basis that expertise is being reduced. I raised this issue during consideration of the Taxation (Cross-border Trade) Act 2018. We can see where expertise is being reduced in areas such as Border Force, which previously had immigration-related staff and HMRC-related staff, who dealt with tax issues. Due to the Government’s political priorities, the two were put together. They particularly looked at immigration-related staff and improving Border Force’s capacity in that regard, rather than looking at improving capacity with regard to HMRC staff. In that instance, the Government chose not to increase the capacity to crack down on tax dodging and tax avoidance in relation to customs.

I am concerned that the changes to HMRC offices will result in more issues being overlooked. If the Government think they are doing a good job, they should not be scared to come forward with as much information as possible about this. That would achieve two things. First, it would allow them to be transparent and allow us to scrutinise them and ask the necessary questions, particularly about the tax gap and tax avoidance issues. Secondly, it would mean that people who were thinking of coming here to avoid tax would have that information and would see that the UK was not a good place for that.

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[Mel Stride]

I shall come to the issue of the amendments momentarily. I would just say in conclusion to this debate on tax that it is a dangerous position for the Opposition to adopt. They are telling large businesses and entrepreneurs and the 5 million small businesses up and down the country that a significant tax hike is in theirs and the economy’s best interest when it clearly is not. The clause introduces the ability further to relieve that element of taxation.

The hon. Members for Bootle and for Oxford East spoke at some length about avoidance. The Government have an exemplary record on clamping down on avoidance, evasion and non-compliance. There have been 100-plus measures since 2010, bringing in and protecting some £200 billion in revenue, a vital amount of money for our public services.

As the Committee will be aware, we have one of the lowest tax gaps in the world at 6% for 2015-16, the last year for which figures are available. That compares very favourably with the record of the last Labour Government—in 2005-06, the figure was well above 7%. The difference would fund every policeman and woman in England and Wales. We recognise that bringing in tax receipts is extremely important.

On HMRC staffing, 28,000 full-time equivalents in HMRC are engaged in tax inspection. We have invested an additional £2 billion in HMRC since 2010 for that purpose. The fruits are already being seen in near record lows in the tax gap.

The hon. Member for Bootle urged us to work closely with the EU on tax avoidance. The Committee of the whole House debated clauses 20, 23 and 19 on control of foreign companies, exit taxation rules and certain anti-hybrid rules, all of which emanate from the EU anti-tax avoidance directive. We have been in the vanguard of the base erosion and profit shifting project, as the Committee will know, to clamp down on avoidance.

The hon. Members for Bootle and for Aberdeen North mentioned digital businesses. We need to understand the important point that, when we look at profits generated by companies through digital platforms and the interaction of UK consumers with them, we are not referring specifically to avoidance—the hon Member for Bootle may have suggested that. We are looking at the current international tax regime and whether it is fit for purpose in taxing that form of profit generation. The current regime basically assigns taxation rights to the jurisdiction when there is economic activity in that jurisdiction, as defined by the buildings, where the intellectual property rests, whether people are employed, where the risks are taken, where the management is domiciled and so on. We want to move to a situation where we are able to tax those businesses because of the profit generation—the value generation—that they are creating, as I have described.

[Kirsty Blackman]

It would be useful if, after this meeting, the Minister could write to us with details of countries with which he or his team have had discussions. Any other information about the nature of those discussions would be incredibly useful. so that we can be sure that the Government are taking this seriously on a multinational level.

[Mel Stride]

I would be very happy to do that. The hon. Member for Bootle specifically asked me what meetings I had had about the digital service tax measure. I have had personal interactions with a number of countries. I attended the OECD meeting in Paris some months ago where I furthered and put forward the UK’s position, which is broadly that we should work on a multilateral basis with the OECD and the EU so that we come to a collective agreement. The value of doing that is not limited to the fact that we would iron out any risks of double taxation that would result from going on a unilateral basis. However, we have also made very clear, as the Chancellor announced in the Budget, that we will unilaterally bring in just such a tax by 2020 in the absence of multilateral arrangements. I would be very happy to write to the hon. Lady with further detail on her specific question.

Amendments 8 and 9 seek to make the clause contingent on a report on how the corporation tax receipts of multinational companies and technology companies compare with their respective UK-based revenue. Like most countries, the UK taxes companies on their UK profits and not their UK revenues to reflect their ability to pay. Therefore, the proposed report would have limited relevance to policy. However, the Government have not been complacent about taking action within the rules of the international corporate tax system, as I have described.

Amendment 10 seeks to make the clause contingent on a review of HMRC’s effectiveness in applying the general anti-avoidance principles in relation to corporation tax collection. The Government apply a wide range of anti-avoidance measures, as I have set out, bringing in some £200 billion since 2010. The general anti-abuse rule, or GAAR, has been operational since 2013. Although the GAAR works principally as a deterrent, it has enabled HMRC to counteract the tax advantages that people try to gain by using abusive arrangements. An additional review of the GAAR’s effectiveness would not add significant value. The GAAR advisory panel provides an important safeguard by ensuring that HMRC’s decisions on GAAR cases are informed by its independent opinion.

Finance (No. 3) Bill (Second sitting)

Kirsty Blackman Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 27th November 2018 Public Bill Committees

The institute’s concern is that the proposed corrections to the provisions will create a new mistake by imposing a tax charge when an employee pays for emergency repairs to a vehicle and is reimbursed by the employer. With that in mind, can the Minister assure Members that the concerns of these tax experts have been addressed, or actually taken into account?

[Kirsty Blackman (Aberdeen North) (SNP)]

Many of the points that I was going to make have been covered by the hon. Member for Bootle. However, a few things require to be dwelt on for more time or should be looked at from a slightly different angle.

When I first became aware of the Opposition’s amendments, I did not think that it was a tack that they should take. However, when I looked into the information behind them and at the detail, I discovered that it is actually a very sensible tack to take, for a number of reasons. I note the comments about the 4,000 Scottish jobs that could be affected. It is important to note the number of jobs that could be affected by any changes to this area, particularly through tweaks to the benefit-in-kind system.

I also point out the number of new car registrations, which the Society of Motor Manufacturers and Traders has on its website. There has been a 7.2% fall in the year to date, which is incredibly significant. If the Government are thinking about ensuring that companies have those up-to-date cars with the lowest emissions, it is really important that companies are incentivised to ensure that their employees drive an up-to-date fleet, rather than older cars.

The other thing to note is that registrations in October 2018 were at their lowest level since 2013, which is significant. We might expect low numbers when we were coming out of a recession, but there has been a significant drop in registrations over the past year. It is important that the Government think about this wider context when making these decisions.

It is particularly important to note the impact of these changes on the industry, given the context of Brexit and the concerns raised by the car industry. Now is not a good time to consider making changes that are likely to negatively impact the automotive industry, particularly given the nature of its supply chains, which are so integrated with European Union countries. There is the potential for those supply chains and those manufacturing businesses and jobs to move wholesale to the EU, rather than the integrated supply chains that we have now being maintained. It is important to note that wider context when making any changes, because the Bill will not act in isolation; it will have to operate in the context of whatever potential economic hit will come from Brexit.

On the ICAEW’s comments about the potential for an accidental charge following emergency repairs, I agree with the hon. Member for Bootle that the Government might need to amend the Bill further in order to make it workable, so that it does what they intend it to do. If we are not going to listen to the utmost experts on this issue, what is the point in having the consultation? If we are to have a consultation, it will be meaningful only if the Government listen and actually make the suggested changes. These people are the experts and negotiate the tax system on a daily basis, so they are the ones who can highlight potential problems.

To expand on that a little bit, I totally accept that protecting the Treasury is important in the changes being made, and that the Government are attempting to protect the Treasury from problems that it did not necessarily foresee when it created the Bill in the first place. However, there are changes to the Finance Bill every year. As the hon. Member for Bootle said, this is the fourth Finance Bill Committee that I have served on, and every year there seem to be different changes to benefit in kind issues. I understand that the Treasury is trying to protect itself, but if there is an immensely complex tax system and it is changed every year, it is difficult for people to comply with the legislation, even those who are trying to do so. I think that the Government need to think more carefully and do some sort of sensible review, as suggested by the Opposition, into the whole landscape of benefit in kind issues and then make changes in one go, so that they are easily understood and can be complied with them. As I said earlier, there is no point having a tax system if people do not understand it and cannot pay the tax because they do not understand how they are supposed to comply with the system.

That also has a knock-on effect on the automotive industry. If it is too difficult for employees to claim the relief that they are supposed to be able to claim, or to have the benefit in kind accepted as such, as they are supposed to, it means that fewer companies will be willing even to attempt to comply with the legislation. I think that it is really important, in terms of the new vehicles and ensuring that the Government can collect the correct tax.

In relation to whether or not this is a stealth tax, I would certainly say that there are stealth changes being made to these taxes, and not ones that have been widely publicised or understood well enough by individuals having to go through the system. If the only way to comply with tax changes is to ensure that you have a very good tax lawyer or tax adviser in place, then I would suggest that the system is a bit too confusing. It should be easier for people to jump through the hoops that are in place, and constant changes by the Government are not helping.

I will speak briefly to the proposed amendment. The explanatory notes, on pages 14 and 15, state that this was first proposed in the autumn statement 2016 and put through a technical consultation. The Government are having to make changes in relation to the anomalies that were raised. The Government decided to take action to protect the Exchequer at the first opportunity. Although this was consulted on, the Government did not see the potential pitfalls in the way they put forward the legislation. Therefore, either the consultation was deficient or the Government’s ability to listen to the consultation responses was deficient. There was certainly an issue with the process.

I am pleased that the Government have changed their ways—or have said that they will—about the number of Finance Bills we are going to have in any given year, especially as I have served on four Finance Bills since 2016, and I only avoided one in 2017 because a general election was called. That seems to me to be too many tax changes in any year, given that we still have all the changes happening on a significantly more than annual basis. I think the Government need to take a step back in some of these situations and have a much more wide-ranging look at the issues, particularly in relation to benefits in kind. Every single year there are changes in the benefits in kind legislation in the Finance Bill, which every year we have stood up and debated.

First, we need to look at the whole system of benefits in kind and then make decisions about the entire system that are easily understood by people. People are much more likely to comply if they can actually understand the legislation. If there are constant changes, that makes it is much more difficult for people to jump through the hoops they are supposed to jump through and to pay the correct tax that they are supposed to pay.

Secondly, in relation to the impact on the automotive industry, I am particularly pleased that the Labour party has put forward the amendment about the different regions and nations of the UK. It is really important that we consider the differential impact, not least in the context of Brexit. Areas where there is significantly more manufacturing, such as the north of England, are likely to be hardest hit by the economic shock resulting from Brexit. That is shown across the Whitehall analysis papers. If they are being hit by that, we do not want them to be hit by other things. Doing that analysis on a regional basis is really important.

[Mel Stride]

I thank the hon. Members for Bootle and for Aberdeen North for their contributions to the debate.

Clause 7 makes two changes to ensure that the optional remuneration arrangement—OpRA—rules for cars and vans work as intended. First, the clause addresses an anomaly in the OpRA legislation. Under current legislation, the value of any connected costs is not included when calculating the value of the amount foregone. That was not the original policy intention. It is important to note that we are not looking at new measures as such; we are looking at closing loopholes and ensuring that the original legislation passed in 2017 operates as intended. The clause ensures that the value of the amount forgone includes any costs connected with the taxable car or van, such as servicing and insurance. The clause also ensures that the value of the deduction available for a capital contribution is adjusted if a company car is made available for only part of the tax year. Again, that brings the original intention of the legislation into effect.

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Where an employer provides an employee with a car that is available for their private use, there is a taxable benefit in kind—the car benefit charge. The car benefit charge is based on the original list price of the car and the amount of emissions it produces. Some employees make a capital contribution towards the cost of the car. That sum is deducted from the list price and reduces the car benefit charge. The normal rules for calculating the car benefit charge automatically adjust the deduction allowed for capital contributions on a pro-rata basis if the car is made available for only part of the tax year. Similar adjustments were not included in the OpRA rules for calculating the amount forgone. This means that currently the amount deductible for capital contributions where the car is available for only part of the year, and provided through an OpRA, is overstated. The effect is that the comparison of the amount forgone under OpRA to the modified cash equivalent of the car or van benefit charge is not made on a like-for-like basis. These changes reinstate the original policy intention and ensure fairness.

[Kirsty Blackman]

The Minister said that an oversight was made in relation to the legislation as drafted. Does he share my concern that the Government should not be making oversights in tax legislation and agree that, in fact, the process we have for scrutinising tax legislation is therefore deficient?

[Mel Stride]

I certainly accept the hon. Lady’s contention that oversights are never acceptable—of course they are not. As I set out, there was significant consultation and scrutiny of both the policy measure and the detailed legislation. Unfortunately, on this occasion the two issues being highlighted here did not come to the appropriate attention in the drafting of the 2017 legislation. If the hon. Member for Aberdeen North is saying that there was insufficient scrutiny, I do not believe that was the case, given the large amount of scrutiny applied in this circumstance.

The changes are expected to affect a small proportion of the 1 million or so individuals who are provided with a company car or van for private use. The average cost of the changes for those affected has been estimated at between £120 and £140 a year in extra tax. There will also be a slight increase in national insurance contributions for employers, in line with the original policy intent. The Exchequer yield from the changes is estimated to be negligible, but by stopping the growth of separate arrangements, significant amounts could be protected.

The hon. Member for Oxford West and Abingdon suggested that the issue of emergency repairs needed to be looked at in greater detail. That is already covered by the legislation. As the explanatory notes state, the clause

“does not affect the operation of sections 239(1) and (2) in relation to other payments or benefits. For example, should an employer reimburse an employee for costs incurred (such as replacing a tyre), the exemption in section 239(2) will still apply.”

HMRC will also ensure that that is reflected clearly in the guidance.

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This is not an insurmountable issue, but it requires the Treasury and the Charity Commission to enter into a discussion to ensure that no additional risks are created, not necessarily by design, but by omission. We have seen a fair amount of that recently.

[Kirsty Blackman]

Will the hon. Gentleman clarify that when he says Charity Commission, he also means OSCR, which is the relevant body in Scotland?

[Peter Dowd]

Yes, I agree to that point of clarification. That is the intention. The Charity Commission and the Scottish body would no doubt recognise the seriousness of this problem, and in their strategy for dealing with fraud, they make the following point:

“The commission continues to see, and has to act on, serious problems arising in charities in relation to poor financial management and inadequate financial controls, accounting and record keeping. In 2010-11, out of 1,912 completed compliance assessment cases, the proportion involving serious concerns about fraud, theft and other significant financial and fundraising issues increased from 16% the previous year to 26%.”

Figures for subsequent years can be found in the commission’s annual publication “Tackling abuse and mismanagement”. The commission goes on to say:

“The National Fraud Authority in its annual fraud indicator report of 2012 estimated annual losses of £1.1 billion, or 1.7% of annual charity income during 2010-11.”

There is therefore a problem, because that is cash not going where it was intended. The impact of fraud and financial crime on a charity, particularly smaller charities, can be significant, going beyond financial loss and the impact of the financing of a charity’s planned activity. These crimes cause distress to trustees, and so on, and have an adverse effect on the charity. It is important to deal with them, says the Charity Commission.

If the Treasury is going to offer tax incentives for charitable donations, it is vital that the proper safeguards are in place to ensure that tax forgone does not act as an incentive to other risks. For example, from my understanding, the Charity Commission holds the only centralised list of registered charities; therefore a clear procedure for HMRC and the Charity Commission to communicate would be necessary to guarantee tax exemption. That is important.

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[Peter Dowd]

In relation to the amendment, it is important to ensure that, where charitable donations are given—whomsoever they are given by and to—the giver knows, in good faith, that the cash that they give will go towards genuine charitable purposes. That is the key issue. Whether the definition of “charity” is open to debate in relation to any organisation is another matter. The key, and the point I think my hon. Friend is trying to make, is that charities really ought to be charities.

We hope that a statement on the discussions between the Charity Commission and the Chancellor would address some of these issues. It continues to be a big issue in this country that people who can afford to pay their taxes should pay their taxes. It is important that anybody who gives to a charity can rest assured that their charitable donation, won through their hard work, will be used with the best intentions. Our amendment would, in all good faith, ensure that.

[Kirsty Blackman]

The Committee will be glad to hear that I will speak only briefly. I am happy to support the Opposition’s amendments. I want to focus on amendment 16, which deals with the communication that is needed between HMRC and the charities regulator. That is incredibly important. We need such communication for individuals to be assured that their money will go to the right place and that the correct tax exemptions exist for that.

Amendment 16 would require the Chancellor to make a statement to the House

“detailing discussions between Her Majesty’s Government and the Charity Commission regarding the provisions of this section.”

If the Minister is minded not to accept the amendment, which is very sensible and the provisions of which it would be easy for the Government to carry out, is he willing to write to Opposition Members about the discussions between the charities regulators in England and Scotland and the Government, the nature of those discussions and the advice the Government have received from charities on the potential impact of the clause? Will he also cover the eloquent point made by the hon. Member for Bootle about ensuring that protection from fraud is built into any changes that are made under the clause?

If the Minister is minded to accept the amendment, that would be grand. If he is not, will he commit to contacting us with those details so that we are aware of the discussions the Government have had and we can be both comforted that our constituents who decide to give their benefits to charity can do so knowing they are less likely to be the victims of fraud as a result, and aware that HMRC is across the issue and ensuring that people do not unintentionally become victims as a result of the changes?

[Sir Robert Syms (Poole) (Con)]

I must admit that I am a little surprised by the clause, because it looks to me like the Treasury is giving away money. These days, many people are in pension schemes and, when they die, there is some money. That might go to a relative, but they might wish for it to go to a charity. The Government are being big hearted—dare I say big societied—with the clause, in that they want the individual who goes to meet their maker to leave some of their resources to a charity that is dear to their heart.

My guess is that Cats Protection and various dog charities will be the biggest beneficiaries of the clause, but it will come down to either an employer making a judgment depending on what their employee wanted, or, in the process of probate, a solicitor taking a decision that a particular charity should get that money. In most cases, we probably are not talking about multi-millionaires, and sadly, not enough people have sufficient pension or death benefits. We are probably talking about small sums of money. The simplest solution, given that there is already quite a wide definition, is to widen that definition a little more to allow someone who cares passionately about heritage or pets or some inner-city regeneration scheme to direct the money to their cause rather than to Her Majesty’s Treasury.

I am a bit worried about Treasury Ministers being so generous in introducing the clause, but it probably makes sense on better regulation terms—on reducing some of the red tape when people end up dying. It will give a little more scope for people to dispose of the money that they have earned, because they have worked all their lives for that pension, and when they die, I think it not unreasonable that they should leave it to the cause that they particularly want to support.

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[Kirsty Blackman]

This is a process question for the Minister about going forward and ensuring that we scrutinise legislation in the best way. It would have been helpful if, in the explanatory notes, there had been some comment provided by the Scottish and Welsh Governments because both measures involve making changes that affect devolved benefits.

Given the devolved and reserved aspects of many of the matters we are discussing, I again make the case for a geographical split in the changes that the clause makes. There could have been specific Scottish, Welsh, RUK or whole UK sections, which would have made effective scrutiny easier. I emphasise that it would have been incredibly helpful to have that. I suggest for next year’s Finance Bill that, if the Government make changes of this nature, they could make both changes to ensure the most appropriate scrutiny.

I am happy to support the Opposition amendment. The hon. Member for Bootle made a powerful case about the gendered impact of the social security changes of recent years and the fact that women have been disproportionately hit by them. We do not want to see those changes exacerbated by a tax system that amplifies the issues faced by women as a result of the Government’s policies on social security. I am comfortable supporting the Opposition’s amendment and I plead with the Minister to consider making the changes that I have requested for future years.

[Anneliese Dodds]

It is an enormous pleasure to be in this Committee with you in the Chair, Ms Dorries, and to make my first brief speech here. I would like clarification from the Minister on the specific issue of tax treatment of council tax reduction schemes. Subsection (5) on page 8 of the Bill refers to “a” council tax reduction scheme, stating that

“Payment under a council tax reduction scheme”

is exempt from income tax. However, page 26 of the explanatory notes refers to

“the” council tax reduction scheme.

I am sure that colleagues will know that there is no longer one council tax reduction scheme across the UK, since central Government decided to top-slice that form of social security and devolve the design of it to different local authorities, albeit with the stipulation that the protection should be maintained for older people. Only a very small number of local authorities still provide full council tax relief, including council tax relief for low-income families. I am enormously proud that Oxford City Council is one of those.

Central Government have washed their hands of responsibility for this benefit. They have refused to provide figures on take-up, for example, in response to parliamentary questions that I have tabled. They have also refused to provide figures on the number of low-income people now being taken to court because they cannot pay council tax, because they are no longer provided with the relief. I am not cavilling over semantics when I ask the Minister to make crystal clear that the exemption from income tax provided in the Bill will apply to all council tax reduction schemes, not to some particular version of those schemes that the Government might wish to focus on.

Related to that, I heard a very worrying rumour that the Government might seek spuriously to argue that funds spent on council tax relief for families by local authorities should not be counted in central Government’s assessment of local authorities’ expenditures, because they are, in theory, discretionary. I disagree fundamentally with that position, because it would penalise those authorities that support the worst off. It would be helpful if the Minister confirmed that, just as I hope he will confirm that council tax relief for families is viewed as legitimate in the Bill, and for income tax purposes, it will be viewed as legitimate expenditure when it comes to the allocation of central Government support for local authorities.

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[Kirsty Blackman]

I will speak relatively briefly. It is always difficult to follow the hon. Member for Oxford East, who is leading for the Opposition on these measures. I concur with her comments about the Labour amendments—the Scottish National party will be happy to support them. Foreign ownership of properties and the impact on price is pertinent and relevant to the SNP proposal.

On amendment 34, the explanatory notes are incredibly difficult to follow. By the time we get to “ggg” in the explanatory notes, things become very difficult to refer to. If there is another explanatory note of that length in future years, it would be useful if the staff could come up with a better numbering system. As I say, it is difficult to refer to those sections when we are going around the alphabet for the third time.

The public register proposed by Labour is an interesting idea and, in principle, the Scottish National party is in favour. As I said, transparency is important when encouraging everybody to pay the correct amount of tax, because if tax owed is publicly known—the calculation of the tax gap is pertinent to this topic—people are more likely to pay. The Government should say clearly, “This is the amount of tax owed, this is how hard we are chasing it down and, as a result, this is the tax gap.” It bothers me that the Government say regularly that the UK tax gap compares favourably with that of other countries. It does not matter whether it compares favourably with other countries: any tax gap is a bad thing and, if one exists, the Government clearly need to work to ensure that they are reducing it as far as possible. Given the issues that have been brought up by Opposition Members and by many external organisations, it is clear that the Government could do more to reduce the tax gap. It is not good enough to say, “We are doing quite a good job, and therefore we should stop here.” The Government need to be able to say, “We are doing the best job on reducing the tax gap that we possibly can.”

On foreign ownership and the residential property price, I was disappointed that the Labour amendment on landholdings was not accepted—I understand the reasons why it was not allowed, but I would have been keen to debate it. There are specific Scotland-related issues not so much about residential property—that is an issue in Scotland but not to the same extent as it is in London—as about other landholdings. That is a significant problem in the Scottish context. Foreign ownership of those landholdings concerns a huge number of people in Scotland.

Regarding the benefits of transparency, the SNP has called for measures to reduce tax avoidance, and the Government have talked a good game about things like Scottish limited partnerships after a huge amount of pressure from the Scottish National party. However, we are still waiting for action. If the Government say they are doing positive things to reduce tax avoidance, they need to follow through. Rather than just producing a consultation, they need to take the required action to reduce the numbers of people who are abusing Scottish limited partnerships. We need the Government to be seen to be serious in this regard, and to take the action they have promised to take. The House operates on trust, and throughout my time in this place, I have seen a number of Opposition amendments withdrawn because ministerial teams from all Departments have given assurances. If the Government do not take action soon on Scottish limited partnerships, they risk seriously eroding that trust and may end up in a situation in which ministerial assurances, and particularly assurances from Treasury Ministers, are not accepted because the Government have not followed through previously.

The income tax, national insurance contribution and capital gains tax gap sits at about £13.5 billion, which is a significant amount of money. If any changes are being made to those taxes, and particularly to CGT, it is reasonable to ask about the impact on the tax gap, and reasonable for the Government to have those figures at their fingertips. They should be able to say not just what the impact is on the total tax take from any changes, but also what the impact is on the tax gap.

If the Government are talking about cracking down on tax avoidance, it is important that they prove to us that the tax gap is being reduced. It is not good enough to just say, “We think this measure will reduce tax avoidance.” The Government need to tell us by how much they will reduce tax avoidance. They need to be clear on the impact of those changes before they introduce them.

I intend to push amendment 34 to the vote if we have the opportunity to do so. I would be happy to support the Labour party on their amendment. I would also like to seek further assurance and a clarification from the Minister in relation to the pursuit of tax avoidance reduction measures, and a commitment from him that the Government will follow through on the tax avoidance reduction commitments they make today.

[Mel Stride]

I thank the hon. Members for Oxford East and for Aberdeen North for their contributions. I compliment the hon. Member for Oxford East on arraying a mass of highly technical questions on a very technical area. I will do my best to answer her them, but I will write to her accordingly if I am unable to do so. She accurately mapped out the process that we have been going through for a number of years, moving into the space of the appropriate taxation of non-resident entities when it comes to property transactions. She recognises, as I do, that it is the right direction of travel, and that it is right to introduce the measures set out in clause 13, although she has several concerns about the detail.

The hon. Member for Oxford East dedicated a specific section of her remarks to the issue of property-rich businesses and the trading exemption. She gave some examples where she felt that this would be an inappropriate exemption, around both the general principle of the exemption for trading purposes and the specific threshold figure of 75%. She used the expression “cliff edge” to refer to what there might be around that number.

On the basic principle, this measure seeks to avoid the circumstances whereby a business—a significant supermarket chain, for example—might be sitting on a substantial amount of land and might even have banked some land for future development. However, the business’s principal purpose is the purchase and sale of a variety of goods, with that being the core of the particular business being looked at. Were a sale of that business under those circumstances to occur, it would seem appropriate that the investors in that business—where it was consequently below the 75% threshold—would not fall within the measures due to the taxation measures that we have been considering.

As to the specific figure of 75%, it is the same issue as the 25% threshold figure that the hon. Member for Oxford East raised in relation to whether individual investors would fall within these measures, or whether they would be expected to know or not know about the property richness of the business in which they were investing—we inevitably run into a generalised problem with figures, which is that we have to choose one. There will always be a debate about whether 75% is the right figure, or indeed 25%. However, a figure has to be applied, to make it scientific and rigorous.

Then there is the question of what we have done to ensure that 75% and 25% are the right figures, as opposed to figures that we have just plucked out of the air. That leads us to the extensive consultation that has been undertaken in respect of the Bill, with some 80 responses around the measures raised by the hon. Member for Oxford East. As I would say of all tax measures, this one included, they are kept under continuous review by the Treasury, so it is quite possible that we will return to these matters in future legislation, specifically on the issue of thresholds.

The hon. Member for Oxford East spent some time referring to the amendments and the question of whether there should be a register of those who fall within the scope of these capped measures. There is a basic principle here that just feels right to me, which is that the Government should not be in the business of holding up individuals to the public as falling due for particular types of tax. Once you start moving into that kind of space, it feels rather disproportionate and a little authoritarian, if I may say so. It is right to resist that urge.

I was going to raise one other matter in that context, which is important, and that is that the hon. Member for Oxford East referred—she very kindly did this for me although I did not do so in my opening speech—to the implementation of a register of beneficial owners of overseas entities owning or buying property in the UK. We will bring that in by 2021, and the register will be the first of its kind in the world. That underscores the importance of transparency to this Government.

--- Later in debate ---

[Anneliese Dodds]

I am grateful to the Minister for those comments, but I would like to clarify a few points, so that we are not talking at sixes and sevens. In relation to the trading exemption, the point is not that it would exempt certain categories of business as opposed to others, but that it would exempt those businesses that are trading before and after the disposal, so it introduces a new concept that is not applied to UK-resident investors to the same extent. That is what is relevant, rather than whether we are talking about a supermarket or not. That would be relevant to the property richness test, but the trading exemption is a separate element of the Bill that I was trying to push on.

In relation to the 25%, the Minister always valiantly attempts to support his Government’s policies. He is right that a figure must surely be attached to any numerical proposition in a Bill. He tried to do that here and said that 25% had been arrived at. The suggestion was that any figure could be contested. Again, it is not the specific value of that figure that is problematic, but what the figure refers to. My contention was that the Government should focus not necessarily on the proportion of the gain, but on the value of the gain. His Government have decided to focus not on the value but on the proportion. As I said, 25%—or rather, 20%—of a gain could be £1 million, which is a tremendously large value, but it could be a smaller proportion if it is just 20%.

[Kirsty Blackman]

Does the hon. Lady agree that having both of those in the Bill would be useful, so we could have the 25% figure or gains over £200,000, or any such figure as the Government deemed appropriate?

--- Later in debate ---

[Kirsty Blackman]

I am willing to try the patience of the Committee in this instance.

Amendment proposed: 34, in schedule 1, page 147, line 34, at end insert—

“21A The Chancellor of the Exchequer must review the expected revenue effects of the changes made to TCGA 1992 in this Schedule, along with an estimate of the difference between the amount of tax required to be paid to the Commissioners under those provisions and the amount paid, and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Kirsty Blackman.)

This amendment would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of the changes made to capital gains tax in Schedule 1.

2019 Loan Charge

Kirsty Blackman Excerpts

Tuesday 20th November 2018 Westminster Hall

[Kirsty Blackman (Aberdeen North) (SNP)]

I appreciate being called in this debate, Mr Walker, and I thank the hon. Member for Wycombe (Mr Baker) for securing it.

In previous years, the SNP has raised concerns about the implementation of IR35 legislation, and during discussions on the Finance Bill I suggested a review into the way that it was being implemented. It was not necessarily that the legislation was a bad idea, but the way it was implemented did not work for people because they could not navigate the system appropriately. I raised that issue in 2016, just as my colleagues did previously.

I have been approached by many constituents about the loan charge. Some were recommended to join these schemes by the companies they worked for, which wanted them to move on and become contractors. One person told me that a presentation was given in the company’s boardroom by another company running one of the schemes. Individuals were encouraged to go to that presentation and transfer into one of the schemes rather than being employees of the company. That is a real concern.

I am concerned about the way that this measure is being implemented. I have a constituent who filled in his details before 30 September, as he was requested to do, but has not yet received a settlement figure from HMRC. Another constituent in the same boat has been told that they will receive a settlement figure by 5 April next year, although the Treasury promised that those figures would arrive by 30 November this year. People are being told that the settlement figures will not be calculated until 5 April, but they have also been told that they will need a payment plan in place by then in order to be compliant. If that settlement figure is not calculated until April and the payment plan will be required immediately, people do not have enough time to make the decisions they need to make on any settlement figure.

Clarity about timelines would be hugely appreciated. This has been a moveable feast, and the Treasury and HMRC have regularly changed the dates and times by which people have been required to submit information. It is important to have clarity so that people know when they need to have a payment plan in place.

It is important that people pay the tax they owe. At least one of my constituents is disputing the calculation made by HMRC. They have not been given a breakdown of the calculation and cannot work out why HMRC has come to that figure. There needs to be transparency so that people understand why HMRC thinks they owe what it says they owe, and they can then make rational and reasonable decisions about payment plans.

I have been clear with any constituent who has approached me, and with HMRC, that we need a mutually beneficial payment arrangement. We cannot have people being made bankrupt as a result of these payments. The change from 12 months to a five-year period for repayments is welcome, but if someone is being asked to pay back hundreds of thousands of pounds when they are existing on jobseeker’s allowance, it is not possible to pay that money back over five years.

I am also concerned about individuals who are being asked to sell or move out of their family home and have it repossessed. That causes problems for local councils as well as for the family involved, and just passes the buck. If HMRC wants to recoup the money, it would be sensible to do that in a way that means people can pay it, rather than having to be made bankrupt. We need give and take by HMRC, as well as transparency and clarity about dates.

[Drew Hendry]

Does my hon. Friend agree that one of the biggest problems facing people in this position is the uncertainty of not knowing how they will cope with paying these large amounts back over a period of time, when no assistance or guidance has been provided as to how they might make those payments?

[Kirsty Blackman]

As I said, this has been an incredibly moveble feast and HMRC keeps moving the goalposts. It is important to have clarity about the future timeline. Constituents need to understand what they will need to pay back, the timescale involved, and why they are being asked to pay back the amount requested.

--- Later in debate ---

[John Glen]

I certainly will. I took the precaution of speaking to the Financial Secretary again this morning, and I would like to clarify that, with the time-to-pay arrangements, the five-year period will automatically be put in place for those with incomes of less than £50,000. For those with larger incomes, there is an opportunity for dialogue with HMRC. With respect to individuals who have not had that settlement made known, I will be happy, as we all will as constituency MPs, to take those cases up with HMRC.

HMRC is helping thousands of scheme users to get out of avoidance for good.

[Kirsty Blackman]

rose—

[John Glen]

Just one moment. It will consider all personal circumstances to agree a manageable and sustainable payment plan wherever possible, and it has recently announced simplified payment terms for individuals looking to settle their tax affairs before 2019.

I want to address another issue of the debate. Those who oppose the legislation have made claims that the loan charge will bankrupt public sector workers, including teachers, nurses and social workers. It is my understanding that 1,500, or 3%, of individuals will be involved in the health and education sectors but that most of the scheme users worked in professional services. The average salary of the scheme users was £66,000, which is considerably higher than the average annual wage.

--- Later in debate ---

[Mr Charles Walker (in the Chair)]

There is no time, Minister. You have 40 seconds.

[Kirsty Blackman]

I have contacted HMRC on behalf of constituents and have been told that it cannot talk to me about those individuals and that they will get an answer by 5 April. That is not helpful.

[John Glen]

I obviously cannot respond on an individual’s situation, but what I will say is that disguised remuneration schemes are complex and contrived and, as my hon. Friend the Member for Wycombe said, fail the “too good to be true” test.

Although the Financial Secretary and I have tremendous sympathy for those facing large tax bills, it is unfair to let people get away with not paying the tax they owe. There is support for people who have used the schemes and now find themselves in difficult situations, which require those affected to approach HMRC and bring the matter to a close. I will now allow my hon. Friend the Member for Wycombe to make some concluding remarks.

Finance (No. 3) Bill

Kirsty Blackman Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment 6, page 2, line 24, leave out subsection (4).

This amendment would take out provisions removing the legal link between the personal allowance and the national minimum wage.

[The Chairman of Ways and Means (Sir Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Clauses 5 and 6 stand part.

Clauses 8 to 10 stand part.

Clause 38 stand part.

That schedule 15 be the Fifteenth schedule to the Bill.

Clauses 39 to 42 stand part.

New clause 1—Additional rate threshold and supplementary rate—

“The Chancellor of the Exchequer must, no later than 5 April 2019, lay before the House of Commons a distributional analysis of—

(a) the effect of reducing the threshold for the additional rate to £80,000, and

(b) the effect of introducing a supplementary rate of income tax, charged at a rate of 50%, above a threshold of £125,000.”

New clause 2—Impact of provisions of section 5 on child poverty and equality—

“(1) The Chancellor of the Exchequer must review the impact of the provisions of section 5 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the impact of the changes made by section 5 on—

(a) households at different levels of income,

(b) people with protected characteristics (within the meaning of the Equality Act 2010),

(c) the Treasury’s compliance with the public sector equality duty under section 149 of the Equality Act 2010,

(d) different parts of the United Kingdom and different regions of England, and

(e) levels of relative and absolute child poverty in the United Kingdom.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

New clause 3—Review of the effectiveness of entrepreneurs’ relief—

“(1) Within twelve months of the passing of this Act, the Chancellor of the Exchequer must review the effectiveness of the changes made to entrepreneurs’ relief by Schedule 15, against the stated policy aims of that relief.

(2) A review under this section must consider—

(a) the overall number of entrepreneurs in the UK,

(b) the annual cost of entrepreneurs’ relief,

(c) the annual number of claimants per year,

(d) the average cost of relief paid per claim, and

(e) the impact on productivity in the UK economy.”

New clause 7—Review of changes to entrepreneurs’ relief—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made to entrepreneur’s relief by Schedule 15 to this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider—

(a) the effects of the provisions on business investment,

(b) the effects of the provisions on employment, and

(c) the effects of the provisions on productivity.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact on investment of the changes made to entrepreneurs’ relief which extend the minimum qualifying period from 12 months to 2 years.

New clause 8—Review of geographical effects of provisions of section 9—

“The Chancellor of the Exchequer must review the differential geographical effects of the changes made by section 9 and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This new clause would require a geographical impact assessment of income tax exemptions relating to private use of an emergency vehicle.

New clause 9—Report on consultation on certain provisions of this Act—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) section 5,

(b) section 6,

(c) section 8,

(d) section 9,

(e) section 10,

(f) Schedule 15,

(g) section 39

(h) section 40,

(i) section 41, and

(j) section 42.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft, and

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 11, 13 and 15.

New clause 18—Review of public health and poverty effects of Basic Rate Limit and Personal Allowance—

“(1) The Chancellor of the Exchequer must review the public health and poverty effects of the provisions of section 5 to this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider—

(a) the effects of those provisions on the levels of relative and absolute poverty in the UK,

(b) the effects of those provisions on life expectancy and healthy life expectancy in the UK, and

(c) the implications for the public finances of the public health effects of those provisions.”

New clause 19—Personal allowance—

“The Chancellor of the Exchequer must, no later than 5 April 2019, lay before the House of Commons an analysis of the distributional and other effects of a personal allowance in 2019-20 of £12,750.”

This new clause would require a distributional analysis of the effect of increasing the personal allowance to £12,750.

[Kirsty Blackman]

What a pleasure it is, Mr Deputy Speaker, to speak first in this debate. I very much appreciate the way the selection has worked out in my favour today. I rise to speak to amendment 6 and new clauses 7, 8, 9 and 19 in my name and the names of my SNP colleagues. For the avoidance of doubt, should the Opposition press new clause 1, new clause 3, or new clause 18, we will support them.

As I am sure that you, Mr Deputy Speaker, and those on the Treasury Bench will be unsurprised to hear, I would like to start by raising my concerns about the process. It is the case that the personal allowance is reserved while matters relating to the upper limit of basic rate taxation are devolved. I therefore have issues with the way that clause 5 is constructed. I request, as I did on Second Reading, that in future years these two sections of the Finance Bill are split and considered separately. I hope that the Minister and officials will take that on board in drafting future Finance Bills. It would make the debate cleaner and easier to follow for MPs and for those outside the House. As I have said previously, there are real issues with the way that the House scrutinises both tax and spending measures, and this would be a simple change that would ensure that better scrutiny could be brought to bear on these matters.

Amendment 6 would take out provisions removing the legal link between the personal allowance and the national minimum wage. The legal link between the two was put in place to kick in in years where the personal allowance was below £12,500. I have two concerns with the removal of this link. First, we have no guarantee that the personal allowance will not in future be reduced to less than £12,500, because this House cannot bind a future House of Commons and a future Government might decide to reduce, rather than increase, the personal allowance.

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

I of course support my hon. Friend’s point on increasing the minimum wage for under-25s. Is she aware that the gap between the rate for 16 and 17-year-olds and the higher rate has widened over the past three years?

[Kirsty Blackman]

I am not surprised that that has happened, because any Government who believe that a 16-year-old can live on less than an over 25-year-old are not going to make rational decisions in relation to pay for those at the younger end of the age spectrum. It would be a very good move if the UK Government were to change their policy and move to a situation where 16 and 17-year-olds, and those all the way up to 25, and in fact those over 25, were paid an amount they could actually live on, rather than an amount that does not enable them to buy the day-to-day essentials.

[Richard Graham (Gloucester) (Con)]

This is a small, but I think important, point: does the hon. Lady accept that that minimum level is exactly what it says—a minimum level? Many people, including my apprentice, earn far more than that, but if we set the level much higher, we are likely to reduce the number of opportunities available to 16 and 17-year-olds.

[Kirsty Blackman]

I do not believe that that is true. I know somebody who went for a job interview, and at the end of it they were offered the job. The person offering them the job actually said, “How old are you, because I want to see how little I can pay you?” Those decisions are being taken because of the discriminatory nature of the way the minimum wage is set. What we should have—and this is an argument I have made to the Government on a huge number of occasions on a number of different things—is a situation where those on the bottom of the pile are protected first, and then we should get rid of discriminatory practices where people might discriminate against 16 and 17-year-olds. I would raise the bar, rather than lower it; that is generally an argument I have made to the UK Government.

New clause 19, which we hope to push to a vote today, proposes that the Chancellor brings forward a report that analyses the distributional and other effects of a rise in the personal allowance to £12,750 in 2019-20. It is Scottish National party policy that the personal allowance be raised to £12,750. Given the increasing, and staggering, levels of in-work poverty, given the UN report criticising the UK Government’s implementation of austerity, and given the fact that millions of families across the UK have savings of less than £100, increasing the personal allowance even by a small amount will have an impact on the individuals and families who are struggling the most.

It is no incentive to work if we know that when we work we will still not be able to get out of all-consuming poverty. We need a UK Government who recognise that those who earn the least are suffering the most. In Scotland, the SNP has recognised that and we have made progressive changes to the tax system.

I do not want to live in a country where children are going hungry. The UK Government have got their head firmly in the sand on this issue. I do not understand how they can continue along this track when we are having people come into our surgeries in tears because they have not eaten in days.

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

The hon. Lady is right. There are probably between 3 million and 4 million people in this country on poverty wages and a large number of them are driven to use food banks. Food banks were introduced for people waiting to get their refugee status sorted out, not for this purpose. Does the hon. Lady agree that they have, however, now become an institution in this country?

[Kirsty Blackman]

I absolutely agree and will come on to food banks, but on refugees and those seeking leave to remain in the UK, these are the people I see in my surgeries in the highest levels of poverty. They cannot work because the UK Government are not allowing them to, even though they have a valid immigration application. Concerns have been raised with me about individuals whose children are literally starving as a result of the UK Government saying that they cannot work or have recourse to public funds. This is a hostile environment that is impacting directly on the lives of children. The UK Government need to rethink. The bar should be set where children are not starving as a result, and then we can take action against those who are trying to swizz the system.

The only decent meal that some children receive is the meal that they have at school. The UK Government cannot continue to say that food bank use is increasing in European countries too, as if that somehow makes it okay. They have a responsibility to step up and to change the tax system, the minimum wage and the social security system to ensure that no child ever goes hungry.

Our new clause 7 would require a review of the impact on investment of changes to entrepreneurs’ relief, which extend the minimum qualifying period from 12 months to two years. Given that we have Brexit hanging over us and the massive uncertainty that that brings, putting another hurdle in the way of businesses is probably not the right course of action. Both the Chartered Institute of Taxation and the Association of Taxation Technicians have raised concerns about the unintended consequences of the change. I believe that a review is the only sensible option going forward. The Treasury regularly makes tax changes, but it does not regularly review their effectiveness, even after they have been in place for a number of years, and when it does it rarely makes those reviews public. It is all well and good to think that something may have a certain effect, but it is necessary to check whether the intended effect has come about. If such changes are made, a review should be undertaken regularly—certainly in the following two years—and it should be made public, in the interests of transparency and good policy making, so that everybody can see not just that the change has taken place, but what its effect has been, so that we are up front and honest and everybody is clear.

New clause 8 concerns the geographical effect of clause 9. The UK Government often fail to recognise the rurality of many of Scotland’s communities, and I am not clear that this change will not have a significant effect on those in our most remote communities. These are places where it is hard to get the staff we need for our life-saving services and where depopulation is a real and ever-present concern. They are also places that will be hit incredibly hard by ending freedom of movement. Given the hit to our crofters over the convergence uplift that was supposed to be given to rural communities in Scotland but was allocated elsewhere, it is clear that the UK Government are not prioritising our rural communities. They need to sense-check any such proposals and change them to ensure that they do not cause further difficulty for those living in our most remote areas, not just in Scotland but in other areas of the UK where being far from centres of population is an issue.

New clause 9 would require a report on the consultation undertaken on certain provisions of the Bill. Glyn Fullelove, the chair of the Chartered Institute of Taxation’s technical committee, has been critical of a number of measures in the Bill that were not previously consulted on, saying:

“The effects of inadequate scrutiny in the past are visible in the amount of tinkering in the new Bill”.

That is something I raised on Second Reading. He goes on:

“would all these tweaks have been necessary if there had been adequate consultation and more thorough scrutiny in the first place?”

If the Government intend to take back control, they need to ensure that control is in the hands of MPs, with adequate advice provided by expert stakeholders. It cannot be appropriate for tax changes to be drafted by officials and put into a Bill by the UK Government, with no opportunity for stakeholders to give oral evidence, no amendment of the law resolution and a total lack of a review of these clauses. That is not a sensible way to run anything, let alone a country. I have severe concerns about this part of the Bill. My concerns are mostly about transparency and process, as well as the lack of scrutiny of many of the measures.

In relation to the changes to personal allowance, the Government have not been progressive. We would expect that from a Conservative Government, but if they look up the road in Scotland, they will see that the changes that we have made have benefited the people at the bottom of the pile. The UK Government need to do more to benefit those people.

Lastly, the UK Government need to take seriously the fact that the personal allowance is not devolved to Scotland but the basic rate is, and changes need to be made. I would appreciate it if the Minister committed to considering making changes in the drafting of the Bill to separate out the devolved and reserved issues, so that we can have proper debates and better read-across, so that we can have transparency in the discussion of tax and spend in this place and so that we can make better laws as a result.

[Julian Knight (Solihull) (Con)]

It is an enormous pleasure to speak in this Committee stage of the Finance (No.3) Bill, and it is an even greater pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman) in today’s debate. There are always many responses to a Budget and a Finance Act, and people often look at them and pull them apart over time. In this case, however, I think most people would say that the Budget and Finance Bill have been tremendously well received among financial commentators and many pressure groups. One of the areas that have been most well received is the bringing forward by a year of the increases to personal allowances. The increase to £12,500 for basic rate taxpayers and £50,000 for the higher—40p—taxpayers will make a direct impact on the lives of 32 million of our fellow residents.

--- Later in debate ---

[Leo Docherty]

This is not a debate on universal credit. This is actually about job creation. That is the more important point when it comes to entrepreneurs’ relief.

[Kirsty Blackman]

New clauses 3 and 7 both ask the Government to say exactly what the effect of entrepreneurs’ relief will be. Does the hon. Gentleman agree that it would be best for reliefs to be targeted to ensure that the most jobs are created, the most people benefit and the most businesses can grow as a result of the changes? Does he therefore agree that it would be good for the Government to explain why their proposal is better than any other proposals?

--- Later in debate ---

We know the age-old truth, that Labour will not stop there. Their recklessness would consume far more than they profess. Just like their predecessors, they will not stop with the so-called privileged few. In time, they will widen the net, broaden the base and drag more and more into punitive taxation to feed the habit of the wanton and the insatiable. Labour’s true message to the millions of hard-working people up and down our United Kingdom is that in the end, they will come not just for the better off; they will come for you. We will continue to stand up for hard-working families up and down our country, with plans that work and an economy that delivers. I commend these clauses to the Committee.

[Kirsty Blackman]

This has been an interesting and wide-ranging debate, although I cannot say that I share the enthusiasm of the First Deputy Chairman of Ways and Means (Dame Eleanor Laing) for Cicero.

I want to pick up the comments of Government Members about hard-working people. They regularly use that term to mean people who are earning above the higher rate threshold, and it sounds as though they are saying that people who are on the minimum wage—people who are retail workers, hospitality workers, carers, cleaners—do not work hard, when in fact they do. They work incredibly hard, and our lives would not be the same if it were not for those people working incredibly hard on the minimum wage. We will push new clause 19 to a vote for that reason.

Lastly, I beg to ask leave to withdraw amendment 6.

Amendment, by leave, withdrawn.



Question put, That the clause stand part of the Bill.

--- Later in debate ---

I have no doubt that the analysis the Treasury will produce, having conceded on this amendment, will be one of the ways by which we give ourselves and the country the chance to have an informed debate on the most important question to have faced this country in over half a century.

[Kirsty Blackman]

I rise to speak in favour of SNP amendments 7 to 10 and new clauses 10 and 11. I would also like to mention amendments 14, 15, 22, 20 and 2 and new clause 17, all of which we would be comfortable supporting, if any of them are pushed to the vote.

There has been a lengthy discussion across the Committee on trade deals. People are confusing free trade agreements and trade deals. It is perfectly possible to make arrangements that improve the flow of trade without signing an FTA; they are two very separate things. It is not understood widely enough that any trade agreement between countries involves compromise. Whatever is signed up to between, let’s say, the UK and the USA will involve the UK having to give some things away as well as gaining something.

The consultation on trade deals looked at trade deals with New Zealand and Australia, with the comprehensive and progressive agreement for trans-pacific partnership, and with the US. However, despite the fact that UK Government Members have talked about how important our trade is with countries such as South Korea and how fast it has grown, the Government have not consulted on that and they did not do so because we have those trade deals already, as a member of the EU. That is why our trade has grown so quickly with South Korea.

Thank you for your indulgence, Dame Rosie. I will move now to the actual subject of the debate. Our amendment 7 asks that clause 89 be subject to the affirmative resolution procedure. I appreciate that the Minister has put a list in the Library, and I will take a look at the list of tax changes he proposes to make under the clause, but I am on the Committee that is sifting the statutory instruments the Government are bringing forward, and some of those SIs that the Government think should be taken under the negative procedure should never have been so proposed. Some are fairly dramatic changes to the law—to powers or new institutions, for example—and yet are being put to the statutory instrument sifting Committee as negative instruments.

I hope that the Minister will forgive me, but I do not trust the Government to introduce only measures in the category that we believe should be subject to the negative procedure. I will look carefully at that list, but I will still press amendment 7, because, given my experience of Ministers, I do not yet have the level of comfort that I need.

[Robert Jenrick]

I hope that in due course the hon. Lady will have an opportunity to read the letter that is in the Library and see that these are truly minor technical amendments, changing, for example, a reference to the EU to a reference to the EU and the UK, and a reference to euros to a reference to pounds sterling. I hope that, in due course, she will be comfortable with those minor technical changes.

--- Later in debate ---

[Kirsty Blackman]

As I have said, I will definitely read the letter. However, I draw the Minister’s attention to the House of Lords Committee that met, I understand, on 17 November—or possibly not, as that was at the weekend, but very recently—to discuss the Finance Bill 2019. Someone drew my attention to an article by Wendy Bradley, which talks about HMRC’s powers and about power creep. Wendy Brady says that

“it is incumbent on Parliament to determine whether the powers it has given HMRC are sufficient and being exercised correctly”.

That, in my view, is important in relation not just to HMRC, but to the powers of the Treasury and the powers of Ministers. I think it important for Parliament to consider what delegated authority we are handing over, whether to the Minister, to the Treasury, to the Chancellor, or to HMRC directly. As I have said before, the Government do not adequately review these matters, publicise those reviews and repeat them regularly. It is important to have a handle on this, especially now, when so much delegated authority is being given to various institutions. It is important for someone to have an idea of how much power has been taken away from Parliament and ceded to those institutions and for there to be a regular review of whether it is still necessary for it to be in their hands.

Let me now say something about the release of the analysis and the changes that the Minister has said he will make. I praise the hon. Member for Streatham (Chuka Umunna) for his work and his amendment and for creating the real change that we have seen in the Government’s position today. It is important for us to be able to support and trust that analysis—to believe that it is accurate. Mention of the OBR was positive in that regard, because people trust that the OBR is an impartial observer of these matters.

The hon. Member for Ochil and South Perthshire (Luke Graham) initiated a debate in Westminster Hall about the OBR’s remit, and I found it incredibly interesting. I learnt a huge amount about the workings of other organisations around the world. We do not have an organisation that reviews Government policy impartially across the board because the OBR’s remit is so tight, being confined to scrutiny of budgetary matters. I was pleased to support the hon. Gentleman that day. Widening the OBR’s remit would be extremely useful, because, as I have said, people out there trust the OBR to get this right.

A status quo baseline against which all the options should be compared is important, and I am pleased that the Minister referred to it. What was said about whether the analysis will be produced in good time was also important, especially given the lack of time that we had to scrutinise the Bill and the short period during which it was in our hands before we had to talk about it on Second Reading. It was only published on the Wednesday, and then we had to stand up and talk about it on the Monday. Let me say again that if the Government want us to trust, they need to gain that trust, and they must therefore produce legislation in what is actually good time, rather than what they say is good time.

Obviously, everything in the Bill is a prediction. Everything in the Red Book is a prediction for future years. Everything that the Government predict, in terms of their tax take for the changes to entrepreneurs relief or anything else in the Red Book, is a prediction. We have to work on that basis, but we must have the best possible predictions, and, as I have said, they must be looked at by an impartial observer so that we can be absolutely sure that they are as close to accurate—or as close to a best guess—as they can possibly be.

[Jonathan Edwards]

A number of Members have talked about the upcoming votes being the most important votes that we will ever undertake as Members of Parliament. Does the hon. Lady therefore agree that it is vital that the independent assessment should be published in the public domain, so that our constituents can understand the decisions that we are making? We should not have to have one of those Reading Room scenarios, as we did with previous assessments.

[Kirsty Blackman]

I agree. The Reading Room provided for the cross-Whitehall analysis was not fit for purpose, in that I could not go there and mull over the papers in the way that I would normally do. Generally, if I am presented with a Finance Bill, for example, I will sit at home and read it. That is what I like to do on a Saturday night. I will sit at home and read these things. We have to be able to access any analysis that is published in a way that suits us, and releasing it publicly would be the best possible way to do this. Another reason for doing that is that the external stakeholders could provide their comments in the best possible way, so I entirely support the hon. Gentleman’s suggestion.

New clause 11 asks for a report on the consultations that have, or have not, been carried out in relation to the tax measures. As I said on Second Reading, not enough of the tax measures in the Bill were consulted on this year. I understand that there were more such consultations in previous years. If we do not want the Government to have to row back next year because they have screwed something up as a result of inadequate consultation, it will be important for these tax measures to be published and consulted on and for us to get the expert advice that we need from the stakeholders.

Clause 90 is just bizarre. I read it, and then I had to go back and read it again because I could not believe that a clause would give the Government the power to spend whatever they liked. It does not cap the spend on the emissions reduction trading scheme’s preparatory expenditure. I was genuinely confused about how the Government could propose that. The clause will give the Government carte blanche. Our amendment 9 and our new clause 10 ask for a Commons resolution and an expenditure review before that expenditure can take place. We think it reasonable—and I am sure the general public would think it reasonable—that if the Government want to spend money on something, they should tell us how much they intend to spend.

The Government are spending money to stand still. This is a cost, and the Government have to spend the money for things to be exactly the same after Brexit as they are today. It is a cost that we would not have if we were not leaving the European Union. The Minister talked about the estimates process. I am pleased that he is as interested and excited by the estimates process as I am. I talk on the estimates whenever I possibly can. There are two parts to the estimates process: one in February and the other in July. I am not sure whether this money counts as in-year spend or as part of next year’s spend. We might be able to discuss it in February, which would be great, because at least that would be before we leave the EU. However, if it is classed as next year’s expenditure, we might not be able to discuss it until July, by which point the money will have been spent.

[Patrick Grady (Glasgow North) (SNP)]

We can discuss this all we like during the estimates process, but does my hon. Friend agree that it is incredibly difficult to actually vote on any of this? Despite all the promises made when the English votes for English laws system was introduced, it really is impossible for Members of Parliament to have a say on specific aspects of Government spending through the estimates process.

[Kirsty Blackman]

That is absolutely the case. The Minister’s comments about the lack of ability to scrutinise spend in the Finance Bill were incredibly illuminating. The reality is that we cannot adequately scrutinise or amend spend anywhere. I was talking to some people about the Budget process and the Finance Bill in the last couple of weeks, and about how the two fit together. I explained that we discuss tax in the Finance Bill, but that we do not discuss spend until the estimates process. Some spending measures will come through, at which point we will sanction them. For example, if the immigration Bill comes forward, we would imagine that it would have some spend associated with it, and we will debate that spend at that time. But a huge proportion of the billions of pounds that the Government spend on a regular basis is only ever discussed during the departmental estimates, which we cannot amend or change. I do not understand how we can have a Parliament that is supposed to be so powerful and supposed to be taking back control when we do not have control over Government spend, which is surely fundamental to how the Government behave.

Draft Double Taxation Relief and International Tax Enforcement (Guernsey) Order 2018 Draft Double Taxation Relief and International Tax Enforcement (Isle of Man) Order 2018 Draft Double Taxation Relief and International Tax Enforcement (Jersey) Order 2018

Kirsty Blackman Excerpts

Tuesday 13th November 2018 General Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to be here, Mr McCabe. This is a nice warm-up for all the time that we look forward to spending together in a room like this considering the Finance Bill.

I align myself with most of the comments made by my colleague, the hon. Member for Oxford East, particularly about beneficial ownership. She always asks difficult questions of the Minister, who is left scribbling and trying to come up with the answers. Hopefully, he will have them and we will all leave here happy as a result, but I am not sure that that will happen. In relation the UK’s ability to tackle tax avoidance and evasion, some changes have not been made despite the fact that they have been called for in this place. I would like to highlight a 2017 European Parliament report that said that

“most of the offshore structures revealed in the Panama Papers were set up from Luxembourg, the United Kingdom and Cyprus”.

The UK is one of the three countries specifically mentioned, which shows that there is still a long way to go before it can be recognised as somewhere that does not incentivise these kinds of things and does not allow them to happen.

The Scottish National party has a strong track record in relation to our work on Scottish limited partnerships, and we are still waiting for change in relation to our support for the Magnitsky changes and the work that we have done on that. Finally, to pick up on a point made by the Opposition spokesperson, there is not much point having an international agreement if we do not use it. Some of the agreements that have been made and signed have not come into force. If the double taxation treaties that are discussed in the explanatory notes come into force, particularly on transparency-related issues, it is important that the Government come back to us with information about how regularly the information sharing was used. If there are problems and tax avoidance is going on, but the Government do not use the measures in the Bill that has been introduced to obtain the information that they need to tackle tax avoidance, that would be a major concern. If the orders are introduced—the Government currently have a working majority, so that is possible—it is important that the Government commit to return to the House and report on the application of the arrangements, particularly in relation to the new information-sharing provisions. It is important that we do not just do the right thing but are seen to be doing the right thing. It would give Opposition parties some comfort if we had a commitment from the Government.

Finance (No. 3) Bill

Kirsty Blackman Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

It is great to be back here, speaking in another Finance Bill debate—especially when we know that yet another is likely to be just around the corner, in March, if there is a no-deal Brexit and there then has to be what the Chancellor euphemistically calls “a fiscal event”.

As we heard from the hon. Member for Bootle (Peter Dowd), this Budget was a continuation of austerity. We continue to have the benefits freeze, we continue to have the rape clause, and we continue to have cuts in Government Departments. The Scottish Government fiscal resource block grant allocation will have been cut by 6.9% in real terms between 2010-11 and next year, and the Barnett allocation for health has not been passed on in full, despite repeated assurances from the Government that it would be.

Next week we will get into the nitty-gritty of the Finance Bill. Breaking with the tradition so far in the debate, I am going to talk a lot about the measures that are in the Bill, and about some of the aspects that concern me. I shall talk a fair bit about process as well. As the hon. Member for Bootle said, there have been real issues in relation to process, in this Bill more than in previous Finance Bills.

Paper copies of the Bill were not made available until Wednesday, when the House was in recess and those of us who do not live in London were mostly not in London. I had to go to the people in the Vote Office and ask them to post a copy to me. They did post it to me, which was terribly kind of them. However, I had already had to ensure that the Scottish National party’s reasoned amendment was tabled before I had seen any copy of the Bill, let alone a paper copy. The process was not fit for purpose. It is not right that we should have to table amendments before seeing a Bill, and I implore the Minister to ensure that it does not happen again. If it does, we will protest even more vociferously.

There are other issues relating to process. The Chartered Institute of Taxation has said:

“Just 37 of the 90 substantive clauses in the Bill, and 12 of the 19 lengthy schedules, were included in the draft bill published for consultation over the summer.”

It is unusual for so few measures to be consulted on, but what is even more unusual is the timescale. The Government are expecting external organisations to digest clauses that they have never seen before and then to comment on them, in advance of the Committee of the whole House, which we expect to be on Monday and Tuesday next week. Having had the Bill in their hands for less than a week and a half, they will be expected to make serious suggestions for improving it. Let us not forget that the purpose of the scrutiny is to try to make the legislation better. In fact, the Government have pointed out that two measures in the Finance Bill exist to correct errors made in previous years. The Government made errors in previous years when there was a more lengthy consultation process for most of the measures, so I contend that there are likely to be even more errors in this Finance Bill, given that it has not had external scrutiny due to tight timescales.

On that point—the Minister probably knows what I am going to say now—we need to have evidence sessions in the Public Bill Committee. If we are not going to have enough time for appropriate scrutiny in writing that is provided to MPs in advance, it is even more important, especially this year, that external organisations give evidence in the Public Bill Committee. I will move an amendment to that effect when we come to the programme motion. Members across the House have voiced support for the Committee taking public evidence. The problems raised by the Government regarding the fact that we will already have had Committee of the whole House by that point are realistic ones when it comes to the measures going before a Committee of the whole House, but we would still benefit from scrutiny of the measures that are going to Public Bill Committee. If the Minister could find a way, through the programme motion, for the Public Bill Committee to begin with an evidence session including organisations such as the Chartered Institute of Taxation and the Association of Accounting Technicians, it would be incredibly appropriate and even more necessary than usual this year.

As is noted in the Opposition amendment, there is no amendment of the law resolution, which means that any amendments to the Budget have to be tight in relation to the Budget resolutions. That means that we table an awful lot of amendments saying, “We’re calling for a review into this”, and then the Government stand up in the Public Bill Committee and say, “Why would we do a review? You’re only calling for a review. You’re not calling for anything tangible.” But we cannot call for anything tangible because the Government have tied our hands. I have made this point before and I will make it again: the Government must remember that they will not be in government forever. When they are in opposition and the same thing is being done to them, they will be standing up and complaining about it. They have caused this problem and opened these floodgates, and it is really bad for transparency and scrutiny if they keep behaving like this.

Clause 5 is about the personal allowance and the basic rate allowance, and the Government have chosen not to separate out the reserved and devolved matters in this clause. Now, I get that we have not had this devolved situation for particularly long, so this may be an oversight by the Government, but I implore them to ensure that in future years these matters are dealt with in separate clauses. It would be easy for them to do that. Indeed, it would also be easier for Mr Speaker, because he would be able to certify one part as English votes for English laws and not the other part, which is a reserved competency in relation to the personal allowance. This would make scrutiny and read-across better. It would just be a better process of making tax law if these two things were separated out. I ask that these points are taken into account the next time we have a Finance Bill, whether that is in March, October or November next year.

I sit on the European Statutory Instruments Committee, which is currently looking at the proposed negative instruments—it is riveting, honestly. As with lots of the legislation that is coming through just now, the Brexit clauses in the Bill allow the Minister further delegated powers. In fact, one of these clauses allows the Government to set spend for a new tax in relation to current pricing, without saying what that spend would be—I think that is around clause 80. The right hon. Member for Wokingham (John Redwood) talked about taking back control, but parts of this legislation allow the Government more control and more unfettered power. It would actually be more sensible for this House to take decisions over how much spending should be allocated in this regard, rather than giving Ministers more control.

As hon. Members would expect, I am going to mention fixed odds betting terminals. The Government say that they cannot lower the stakes from April next year because it would not give companies enough time to prepare adequately for the changes required, yet they expect companies to prepare adequately for Brexit by April next year, despite not actually having told companies what Brexit will involve. If the Government are serious about making changes to fixed odds betting terminals, they need to stop listening to the lobby on this and start taking into account the public health benefits of the changes.

[Karen Lee]

Does the hon. Lady agree that the delay in introducing the cut to the maximum stake on fixed odds betting terminals will lead to an increased number of people developing gambling addictions, getting into debt and, in the case of problem gamblers, even taking their own lives?

--- Later in debate ---

[Kirsty Blackman]

I agree with the hon. Lady. There is a clear health impact to lowering the stakes. Making the changes in April, rather than next October, will have a genuine impact on the health of a huge number of individuals.

[Richard Graham (Gloucester) (Con)]

I am very clearly on the record as having supported changing the tariff that people can spend on fixed odds betting terminals from £100 to £2; it is absolutely the right thing to do. Let me be clear that it is quite extraordinary for a Labour Member to stand up and start lecturing the Government on having made an incredibly important and valuable change to legislation that rights the wrong of this fixed odds betting terminals—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. Mr Graham, you have been here long enough to know that we have short interventions; you do not need me to tell you that. If you want to speak, I will put you on the list, but we must have short interventions.

[Kirsty Blackman]

I should say that I am not from the Labour party. The Government’s reasoning for the delay is what concerns me, especially when it is completely the opposite of the reasoning they are using about Brexit, where they are saying, “It’s fine. Everybody has heaps of time to prepare—loads of time.”

I thank the Government for the changes to transferable tax history. They have worked very well with the industry to ensure that late-life oil and gas assets can be exploited for longer. I first raised this issue in March 2016, so I am very glad that the Government are now moving on it. However, this is not the whole picture. It is appreciated that this change has been made, as it will have a small but positive effect. I am pleased that this measure has come through, but we still have not seen the oil and gas sector deal, nor have we seen proper unequivocal support for carbon capture and storage. I want the Government to make louder noises about carbon capture and storage, and they need to after pulling the rug from under the feet of the industry three years ago. They need to be even louder and more vociferous in their support because the industry has been stung. The companies that were keen to take part in carbon capture and storage have been stung by the decisions of the previous Chancellor, so the Government need to be as clear as possible about support for carbon capture, utilisation and storage, which is a real industry for the future.

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

My hon. Friend correctly said that we have not seen an oil and gas sector deal. Is that not disgraceful considering that the Red Book shows that, over the lifetime of this Parliament, the industry is going to bring in an extra £6 billion of tax revenue. Instead, the Chancellor stood up and bragged that he is holding the tax at the current level for the oil and gas industry, instead of actually working to get an oil and gas sector deal?

[Kirsty Blackman]

The sooner that deal can be announced and that commitment can be made by the UK Government, the better for the industry. Confidence is still shoogly just now, and although that confidence is rebuilding, we need clear commitments for the industry and the clear support of the UK Government so that the industry feels more secure and takes decisions on investment and exploration. That is why signing a sector deal as soon as possible would be hugely appreciated.

More generally, one of the things that infuriates and frustrates me about this UK Government particularly is that they think that if they stand up and invent a new definition for something, it will immediately become true. They have decided that if they say “living wage” instead of “minimum wage”, people will actually be able to live on it. That is not how it works. People still cannot live on it, even if the Government call it a living wage, and that is especially the case for the under-25s, who are not eligible for the living wage. It does not cost someone who is 24 less to live than someone who is 25. The Government need to get rid of those differential rates.

The UK Government say that they have ended austerity. By anyone else’s definition, they have not ended austerity. Just because they say, “We’ve ended austerity,” it does not mean that they have actually ended austerity. There are still cuts to Government Departments. There is still the benefits freeze. We still have all those issues.

[Leo Docherty]

Will the hon. Lady give way?

[Kirsty Blackman]

Not just now. In terms of the economic growth forecasts that the OBR has apparently made—

[Chris Philp]

Will the hon. Lady give way?

[Kirsty Blackman]

I am not taking any more interventions.

The OBR has made economic growth forecasts on the basis of a smooth and orderly Brexit. It has not made economic growth forecasts on the basis of us crashing out in a no-deal scenario, so its forecasts are only worth anything if the Government can strike a deal, as the Chancellor knows, which is why he has spoken about another fiscal event coming.

Frictionless trade is not frictionless just because the Government call it frictionless. If a good has to be stopped at the border, if somebody has to fill in an additional form or if there is any delay, that is not frictionless trade. Just because the Government say, “This is frictionless trade,” it does not mean that it is actually frictionless trade.

The Government need to improve their processes around the Finance Bill. This year has been the worst in terms of those processes, and they have to improve. The Government could do that by ensuring that we take evidence at the Public Bill Committee.

The Government have to actually do the things they say they are doing. If they say they are going to give Scotland the Barnett consequentials for health, they should give it the Barnett consequentials for health. If they say they are ending austerity, they should end austerity. If they say they are putting in place a living wage, they should put in place a living wage.

Lastly, if the Government are talking about tax cuts, they need to look at the situation in Scotland. The figures I have from the Library say that around half of taxpayers in England pay more than they would if they lived in Scotland, and that half of taxpayers are the people who earn the least, not the most. The UK Government should look at what the Scottish Government are doing and learn some lessons.

[Several hon. Members rose—]

--- Later in debate ---

[Sir Vince Cable]

I think there are separate sets of figures, but I thank the hon. Gentleman for his clarification. His first point is particularly interesting, and I thank him for his rapid desktop research. His figures suggest there is potentially a very big tax increase in the pipeline, which is one of the assumptions in the Budget that was not spelled out on Budget day.

[Kirsty Blackman]

Last year’s Red Book explicitly mentioned the impact of immigration and population change on public sector borrowing, and it said that, as the population increased with net migration increasing, public sector net debt would fall. Does the right hon. Gentleman share my concerns about the likely impact of a future immigration Bill on the public finances?

[Sir Vince Cable]

Yes. All the evidence we have shows that net migration has had a positive effect not only on the economy, in per capita terms, but on Government revenue because, by and large, these are young people who work and pay tax revenue to the Government. I totally share the hon. Lady’s concerns about future immigration legislation.

--- Later in debate ---

[Andrew Bowie]

As is being said from a sedentary position behind me, I think the total amount of money by which somebody in Scotland will be better off, if they are below a certain level, is about £24 a year. What the SNP is doing is punishing aspiration and stopping people—[Interruption.] As is being shouted from behind me, it is gesture politics. The SNP is punishing the entrepreneurs and the wealth creators that we need to attract to Scotland, especially to the north-east of Scotland. I could go on, but I will not because I have a lot to get through.

We are hearing exactly what we heard two weeks ago from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—doom and gloom. This is the politics of gripe and grievance, and SNP Members cannot even find it within themselves tonight to welcome the huge strides that we have taken in supporting the oil and gas sector since 2014. I share the frustration of the hon. Member for Aberdeen North (Kirsty Blackman) about the oil and gas sector, although I would say that that is an issue for the Department for Business, Energy and Industrial Strategy, rather than the Treasury right now. But no reference was made to the welcome given by Oil and Gas UK or indeed by individual companies in that sector for our commitment to the stable regulatory and fiscal regime that, since 2014, has made the North sea one of the most attractive basins in the world in which to invest. I think that is something all representatives from Scotland, especially from the north-east of Scotland, should celebrate and thank this Government for.

As well as slashing income tax for millions of people, the Bill will implement a number of indirect tax cuts, such as the freezing of duty rates on beer, on ciders and most of all on whisky. This is a measure that we Scottish Conservatives have lobbied on relentlessly, and it will be a great boost to our local breweries and distilleries, such as Deeside Brewery in Banchory and Royal Lochnagar at Balmoral, both of which I have the honour of representing in this place.

There are freezes to support our haulage sector—heavy goods vehicles duty will be frozen for 2019-20. I am sure the importance of this freeze to the British haulage industry will be obvious to everyone as we prepare to leave the European Union. I have a dream that one day these vehicles will be able to transport Scotch whisky, which we as a Government are supporting; Aberdeen Angus beef from farms that are championed by the Conservatives, but abandoned by the SNP; and Peterhead haddock fished from this new sea of opportunity, with us out of the common fisheries policy, being delivered by this Government, along the Aberdeen western peripheral route, if the Scottish Government ever manage to resolve the mess they have got into on that road and do so without wasting even more of Scottish taxpayers’ hard-earned cash.

[Kirsty Blackman]

If we do get this wonderful Aberdeenshire produce—it is the best in the world, I would suggest—on to lorries and they drive down to Dover but are then not able to cross the channel, what does the hon. Gentleman expect will happen to the Peterhead haddock?

--- Later in debate ---

[Kirsty Blackman]

What does the hon. Gentleman say to the half of English taxpayers who would pay less tax if they were to live in Scotland?

[Bill Grant]

I take the hon. Lady’s point, but I understand that the saving she refers to is very modest to the tune of £24 a year for some, which equates to less than 50p a week. It is a step in the right direction, but a very small step and hardly a progressive tax system. As one whose mother cleaned other people’s houses and made beds at Butlin’s on Saturdays, I am not minded to accept lectures on poverty from Scottish National party Members.

I disagree with the suggestion that the Budget failed to provide funding for a social security system that treats people with dignity and respect. The Chancellor was listening. The entire ethos of the evidence-based and empowering system of universal credit is that work should always pay, and that work brings with it dignity and respect. No one can disagree with that. The dignity of work is important to all constituents in all parts of the United Kingdom.

The Bill will facilitate an additional £1.7 billion per annum being invested to increase work allowances by £1,000 from April 2019. I hear Opposition Members cry “More!” Everyone’s an Oliver—they want more, more. That “more” has to be earned and this Government have an economy that works and is earning more.

Oral Answers to Questions

Kirsty Blackman Excerpts

Tuesday 6th November 2018 Commons Chamber

[Mel Stride]

We take a very balanced approach to the economy, which of course includes ensuring that we stick rigorously to our fiscal rules. We have met the two intermediate rules a full three years early. We continue to bear down on the deficit, and debt as a percentage of GDP will continue to fall throughout every year of this Parliament.

[Kirsty Blackman (Aberdeen North) (SNP)]

Each additional EU citizen working in Scotland contributes £10,400 to Government revenue. What assessment has the Minister made of the reduction in tax revenue as a result of the ending of free movement?

[Mel Stride]

I am sorry to keep reverting to the same answer, but it is effectively the same question that I keep being asked: “What will the analysis look like when the deal is concluded?” Of course that prompts the question of what exactly the deal will be. In the fullness of time, when the deal is agreed, we will come back to the House with a full analysis.

[Kirsty Blackman]

Her Majesty’s Revenue and Customs can collect customs duties only if it has a working customs system, so how is the roll-out of the customs declaration service going? How is HMRC going to achieve the Government’s commitment in the Red Book to halve the time it takes to apply for customs trusted trader status?

[Mel Stride]

The hon. Lady raises the issue of the CDS system. The current expectation is that that will be fully functioning by the end of March next year, which means we therefore have a robust back-up in the extension of the CHIEF—Customs Handling of Import and Export Freight—system. This is to make sure that that gears up for the huge increase in the number of customs declarations that will need to be made in a no-deal situation. We will of course continue to work hard on that matter.

EU Customs Union and Draft Withdrawal Agreement: Cost

Kirsty Blackman Excerpts

Monday 22nd October 2018 Commons Chamber

[John Glen]

I have set forward the Government’s position with respect to the negotiation and the idea about a modest extension in terms of months. It will be for the Secretary of State and the Prime Minister to update the House sooner, but I acknowledge my right hon. Friend’s point with respect to the opportunities that exist beyond the EU in terms of finding a settlement that gives us the freedom to develop our trading relationships.

[Kirsty Blackman (Aberdeen North) (SNP)]

I was going to start my question by thanking the Chancellor for coming and answering questions on the cost of Brexit, but it is not the Chancellor who is here and I am afraid that the Economic Secretary is not doing a very good job of answering the questions on the cost. Can he tell us please: in the event of no agreement on staying in the customs union and the single market, what will be the loss in productivity to businesses in the UK and in Northern Ireland specifically and how many redundancies does he expect to see in Northern Ireland and in the UK? What is the loss cost to the UK economy of the EU citizens who have chosen not to come here or who have chosen to leave as a direct result of the Brexit vote? Lastly, if he truly believes that we would be better off as a result of the UK leaving the EU without being in the customs union or the single market, can he tell us what his models say about how much better off each of us will be?

[John Glen]

No, I cannot give the hon. Lady a cash figure for every member of the United Kingdom, but what I can say is that the Government and the Treasury are determined to make preparations for all eventualities. That is why we are preparing 70 statutory instruments to take through this House in the event of a no deal. The EU should be very clear that we are going to be ready for all eventualities while being committed to negotiating the best possible outcome, as directed by the British people two years ago.