Main Supply Estimates 2022-23
Lucy Frazer Excerpts(1 year, 10 months ago)
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The Financial Secretary to the Treasury (Lucy Frazer)
I have today laid “Central Government Supply Estimates 2022-23: Main Supply Estimates”, HC 396. This is a replacement for HC 53 laid on 12 May which has today been withdrawn. This replacement includes updates as a result of the Government’s cost of living announcement made to the House on 26 May, ensuring Parliament has the most recent information available. Updates have been made to the estimates of the Department for Work and Pensions, the Ministry of Defence, Her Majesty’s Revenue and Customs and the Department for Business, Energy and Industrial Strategy.
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VAT on Defibrillators
Lucy Frazer Excerpts(1 year, 10 months ago)
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The Financial Secretary to the Treasury (Lucy Frazer)
It is a privilege to respond to this Adjournment debate on behalf of the Government. I congratulate my hon. Friend the Member for Rushcliffe (Ruth Edwards) on securing this evening’s debate. As we have heard, this follows last year’s tragic death of her constituent, Dylan Rich, at the age of just 17. It is also terrible to hear of the tragic death of Danny, the son of Bill and Pam Shurmer.
I commend my hon. Friends for the energy with which they are campaigning for a change in policy. As my hon. Friend the Member for Rushcliffe mentioned, she and I met the Prime Minister and the representatives from the West Bridgford Colts Football Club in March to discuss this issue. What she has said has touched all of us, and I wish to express again my condolences to Dylan’s family, who themselves have campaigned extremely hard on this issue, as well as to Pam and to Bill.
I have heard my hon. Friend’s argument and those of others here this evening. In answering the debate, I will briefly outline the Government’s thinking and approach. Let me begin by saying that we appreciate the importance of this issue. Automated external defibrillators—or AEDs—save lives. Understanding that, we have sought to boost their provision in many different ways. The Government encourage organisations across England to consider purchasing a defibrillator as part of their first aid equipment.
Many community defibrillators have been provided in public locations, including in shopping centres, through national lottery funding, community fundraising schemes, workplace funding or charities. The Government have also previously provided significant direct funding for the purchase of AEDs. In the 2015 Budget, the Government announced a £l million grant to support the purchase of public access AEDs. This was followed up by a further £1 million at the 2016 Budget. These schemes were operated by the British Heart Foundation. After the first round of funding in 2015, the foundation announced that more than 700 additional AEDs had been installed across the UK.
In addition, from May 2020, the Government have required all contractors refurbishing schools, or building new ones, through centrally delivered programmes to provide at least one AED. As things stand, there are already more than 43,000 registered AEDs in England.
The Government have also worked with the British Heart Foundation to develop “the circuit”, a national defibrillator network, which records information on unregistered AEDs, such as those in shops and restaurants. The circuit is now live in 13 of the 14 ambulance services across England, Scotland, Wales and Northern Ireland. This information is available in a centralised network for easy access in emergencies, meaning that ambulance services can find AEDs when they are most needed. The system also sends out reminders to make sure that AEDs are maintained and emergency-ready.
Meanwhile, the NHS Long Term Plan, published in January 2019, includes a section on cardiovascular disease and AEDs. The NHS has committed to developing a national network of first responders and access to AEDs, which will save roughly 4,000 lives a year by 2028.
Tax relief also has a part to play. VAT is not charged on AEDs donated, for example, to the NHS, rescue and first aid charities, and charities caring for disabled people. Local authorities and taxable businesses can also recover VAT on AEDs. The point of all of this is to say that there are existing reliefs, as well as historical funding and other initiatives, which are significantly improving access to AEDs up and down the country.
My hon. Friend the Member for Rushcliffe made a point about extending VAT relief. As she said, we have examined the specific merits of zero-rating AEDs. We are conscious that pass-through of a VAT relief on AEDs to consumer prices is likely to be low. Evidence on pass-through of VAT reliefs generally suggests that where markets are concentrated—as they are for AEDs—pass-through tends to be significantly less than 50%. In other words, a new zero rate would not necessarily lead to a reduction in prices. Instead, businesses might choose to absorb the tax relief as profit. If we are to take this step, we need to be sure that zero-rating AEDs would represent genuine value for money and make a real difference in expanding public access to AEDs.
As my hon. Friend recognised, we also have a wider responsibility, at a time of economic challenge, to minimise pressure on the public finances. However, I am grateful to her for all the work she has done, and continues to do, to bring this issue to public attention. I also recognise the campaigning work done by Pam and Bill, who are grieving the sad loss of their son, Danny. Therefore, notwithstanding the point I have made about VAT, I want to be clear to Members here today that, as we remember Dylan and Danny, we will continue to look at what more the Government can do to expand access to AEDs. The Prime Minister has therefore asked the Department of Health and Social Care to examine whether there are ways to further expand public access to defibrillators, and I have spoken to the Minister responsible—the Minister for patient safety—about this very issue. Like my hon. Friends the Members for Rushcliffe and for Hartlepool (Jill Mortimer), we know that AEDs save lives.
Question put and agreed to.
New Wealth Taxes
Lucy Frazer Excerpts(1 year, 10 months ago)
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The Financial Secretary to the Treasury (Lucy Frazer)
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Leeds East (Richard Burgon) on securing today’s important debate. I know that he and others feel passionately about it, particularly—as many have mentioned—at a time when households up and down the country are struggling.
I propose to start my response by talking about the tax system and the degree to which wealthier individuals already pay a significant—and proportionately significantly greater—amount in tax. However, before I do, I want to recognise the important contribution that many wealthy individuals make to the UK economy. The Conservative party—this Government—supports entrepreneurship; we support wealth creation and we support ensuring that successful businesses in our constituencies contribute to our local and national economies. However, we also understand the importance of ensuring that wealthy individuals make a fair contribution and pay the tax that is owed.
That is not just our thinking of the moment; it is the way we have dealt with this issue for a number of years. We already have a very progressive income tax system, with the top 5% projected to pay nearly half of all income tax in 2021-22. The hon. Member for Leeds East mentioned the top 1%, and he may know that they will be paying more than 28% of all income tax.
The hon. Member for Hemsworth (Jon Trickett) mentioned other taxes, and the principles I have set out apply well beyond income tax, with several other taxes on wealth across many different economic activities, including the acquisition, holding, transfer and disposal of assets and income derived from assets. Those all generate significant revenue for the public purse. For instance, for this tax year—2022-23—the OBR estimates that there will be inheritance tax revenues of £6.7 billion, capital gains tax revenues of £15 billion and property transactions taxes of £17.1 billion.
The Wealth Tax Commission’s July 2020 report found that, taking the narrowest definition of a tax on wealth—that is, inheritance, estate and gift taxes—UK taxes on wealth were about average compared with other G7 countries. At the same time, Government policy is, and will continue to be, highly redistributive in the round. In 2024-25, on average, households in the lowest income 10% will receive more than £4 in public spending for every £1 they pay in tax.
The hon. Member for Christchurch (Sir Christopher Chope) made some interesting points about the downside of higher taxes. That is why we are committed to ensuring that we are a low-tax economy.
The hon. Member for Leeds East mentioned the Wealth Tax Commission’s report. That was an important piece of work, which set out a significant amount of detail. The hon. Member for Salford and Eccles (Rebecca Long Bailey) suggested an annual wealth tax, but she may be aware that the commission rejected the idea of an ongoing wealth tax, charged on an annual basis, for a range of reasons. It is true that it saw some potential merit in a one-off wealth tax, as the hon. Member for Leeds East said, but that does not provide long-term revenues for the future.
Rebecca Long Bailey
Is the Minister aware that the report did discount an annual wealth tax, and looked at exploring the possibility of an annual wealth tax if it was done in tandem with overall reform of our taxation system? Does she agree that our taxation system is long overdue an overhaul?
Lucy Frazer
The Government are making changes to the tax system, including through a number of measures to ensure that those on the lowest pay are paying fewer taxes. The Wealth Tax Commission identified that there would be some advantages to a one-off tax, but it acknowledged:
“although one can point to entirely new taxes introduced within the recent past, there are none on this scale.”
This is not a matter of lack of political will, as the hon. Member for Brighton, Pavilion (Caroline Lucas) suggested. This is not a measure that we would bring forward, for a variety of good reasons. Denis Healey, a Labour Chancellor of the Exchequer, came to understand that later in life, when he wrote of his time in office in the 1970s:
“We had committed ourselves to a wealth tax; but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”
Jim Shannon
In my contribution, I referred to eight companies that have purposely avoided tax, without breaking the law, by moving their money overseas. Amazon, Google, Apple and Facebook are four of those eight. Have the Government any intention to put pressure on those companies to ensure that they pay tax? All the people of the United Kingdom could then get the benefit of that through education, health and betterment.
Lucy Frazer
The hon. Gentleman makes an important point. This matter needs international action, and he will know that international action is being taken. More than 130 countries signed up to a new international corporate tax framework in October 2021. That will help to ensure that multinational businesses pay their fair share, with the right companies paying the right amount of tax in the right place.
The hon. Member for Leeds East talked about capital gains tax. We recognise the importance of preserving the incentive for individuals to invest in this country and grow the economy, when they can choose to spend money in any jurisdiction. Having said that, we also recognise the importance of ensuring that a fair amount of tax is paid from assets through capital gains tax.
We have made a number of steps to reform both the dividend tax and the CGT regimes. For example, in 2016, the Government reformed the old, complex system of dividend taxation, simplifying it at the same time as increasing effective rates. In 2018, we reduced the tax-free dividend allowance from £5,000 to £2,000 per annum. In 2020, the Chancellor cut the lifetime limit of CGT entrepreneurs’ relief from £10 million to £1 million.
I would like to touch on the context in which this debate is taking place and the cost of living pressure on families, because those issues are important, as was recognised by many Members, including the hon. Member for Leeds East, the right hon. Member for Hayes and Harlington (John McDonnell) and the hon. Members for Strangford (Jim Shannon) and for Cynon Valley (Beth Winter). The hon. Member for Wansbeck (Ian Lavery) made a passionate speech, recognising the need to look after other people. That is exactly what the Government are trying to do, within the constraints and the global economic position we are in.
We are trying to support other people through our recent announcement of a £37 billion support package. We want to ensure that those who cannot work get support. We are taking a number of measures through the restart and kickstart schemes to ensure that people get into work and can support themselves. We are then ensuring that they are paid properly in work, and hon. Members will know about the increase in the national living wage and our measures to cut taxes to ensure that those in the lowest income brackets get sufficient sums when in work. We are also upskilling people so that they can increase their pay.
Ian Lavery
Does the Minister agree with the hon. Member for Christchurch (Sir Christopher Chope), who suggested that very wealthy people and companies should only pay extra, if indeed they choose to do so, in the form of a donation?
Lucy Frazer
My hon. Friend the Member for Christchurch was right to identify that that option is available, if people choose to take it. The Government have set out our tax regime, and that option is available to those who wish to pay more tax.
I was touching on the cost of living, which is important. As many Members have said, this is not just about statistics; it is about people. To give an example, a single mother with two children who works full time on the national living wage will receive £2,500 a year in additional support because of the measures we have taken. On the subject of statistics, the right hon. Member for Hayes and Harlington did mention some, but our latest statistics show that in 2020-21 1.2 million fewer people were in absolute poverty than 10 years earlier, in 2009-10.
Sir Edward Leigh (in the Chair)
We have to finish at 4.12 pm. Would you allow the mover of the motion two minutes?
Peter Grant
Thank you, Sir Edward, for intervening on my behalf. That is the second or third time that the Minister and her colleagues have quoted figures on how much better off certain people will be because of changes to the tax and benefits system. They have not yet been able to answer the question of how much of that additional income has already disappeared because of the increasing cost of the basic essentials of life.
Lucy Frazer
I anticipated that point, which is an important one, and we will of course bring forward more statistics for this year in due course.
Sir Edward Leigh (in the Chair)
Order. Minister, could you allow one minute for the mover to say something?
The Double Taxation Convention between the United Kingdom and Luxembourg
Lucy Frazer Excerpts(1 year, 10 months ago)
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The Financial Secretary to the Treasury (Lucy Frazer)
A double taxation convention with Luxembourg was signed in London on 7 June. The convention reflects the improvements made in the latest version of the OECD’s model tax convention. The text of the convention is available on the HM Revenue and Customs pages of the gov.uk website and will be deposited in the Library of both Houses. The text of the convention will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
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North Sea Oil and Gas Producers: Investment Allowances
Lucy Frazer Excerpts(1 year, 10 months ago)
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Rachel Reeves (Leeds West) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on North sea oil and gas producers’ use of investment allowances to minimise their liability under the energy profits levy.
The Financial Secretary to the Treasury (Lucy Frazer)
Less than a fortnight ago, my right hon. Friend the Chancellor set out a series of measures to help British people at what we know is a difficult time. The oil and gas sector is making extraordinary profits, not as a result of recent changes to risk taking, innovation or efficiency, but as the result of surging global commodity prices, driven in part by Russia’s war. The Chancellor reassured the House that the Government
“will make sure that the most vulnerable and the least well off get the support they need, and we will also turn this moment of difficulty into a springboard for economic renewal and growth.”
He also made the point that it
“is possible to both tax extraordinary profits fairly and incentivise investment.”.—[Official Report, 26 May 2022; Vol. 715, c. 449-450.]
That is why we have introduced the energy profits levy—a new 25% surcharge on the extraordinary profits that the oil and gas sector is making. At the same time, the new 80% investment allowance will mean that businesses will get a 91p tax saving for every pound that they invest, providing them with an additional, immediate incentive to invest. That nearly doubles the tax relief available, and means that the more investment a firm makes, the less tax it will pay.
The levy took effect from 26 May this year, and will be legislated for via a Bill to be introduced shortly. It will be phased out when oil and gas prices return to historically more normal levels, with a sunset clause written into the legislation. The levy will raise about £5 billion in revenue over the next year, so that we can help families with the cost of living in the shape of significant, targeted support to millions of the most vulnerable.
Rachel Reeves
I am here to talk about the cost of living crisis, but where are Tory MPs today? On 26 May, the Chancellor announced a welcome U-turn on his party’s opposition to a windfall tax—a policy for which we had been calling since January. At the same time as that handbrake turn, however, he created a tax giveaway for oil and gas producers that undermined that tax. Only this morning, in a statement to shareholders, the head of Serica Energy said that these measures would offset a “large element” of the energy profits levy.
All in all, we calculate that a third or more of any revenue from the new levy might be handed straight back in tax breaks. This cashback policy is typical of the sleight of hand that we have come to expect from this Conservative Government, so can I ask the Minister how much these tax breaks will cost? When will the Government have the courtesy of sharing that analysis with the House? How can the Minister be sure how much this new levy will raise when the Chancellor has added this gigantic get-out clause? Why are the Government incentivising investment in fossil fuels over investment in home-grown renewables, which do not benefit from the tax breaks in this announcement? Have the Government even bothered to check what this means for our country’s net zero target and climate commitments?
It is not just the cashback to oil and gas producers. Can the Minister confirm that someone who owns three homes will receive £1,200 of support for their energy bills —more than a low-income family will get? This incoherent policy package was born from Conservative chaos and also from the Chancellor’s embarrassment and stubbornness. Rather than simply admitting that a windfall tax was the right idea all along, he has introduced one with a great big, costly, gaping hole in the middle of it.
Lucy Frazer
The hon. Lady mentions that Labour has been calling for this levy since January. She will know that January was not the right time to introduce it because we did not know then what the price cap would be. Ofgem estimated that in the week when this announcement was made. She will also know that in January, inflation was not at 9%. The Chancellor has taken this decision carefully, considering the circumstances and not just making policy on the basis of ideology.
I am sure the hon. Lady will know that Labour has made £100 billion of spending commitments, with less than £10 billion fully funded. That would almost double our current borrowing. We Conservative Members are aiming to ensure that we are fiscally responsible with taxpayers’ money.
Let me respond to two other points that the hon. Lady made. First, she will remember that when the policy was announced, we said we had estimated that it would raise £5 billion for the package of measures that we had put forward to support people with the cost of living—as she said, that is what we are talking about today. Secondly, she mentioned the importance of reaching our net zero targets. She will know that the UK, under this Government, has already decarbonised faster than any G7 economy, and that there are many other tax levers for green energy, including the super deduction and research and development tax reliefs. She will know that we are consulting on broadening the emissions trading scheme and that we have committed £1 billion to a carbon capture and storage infrastructure fund, as well as £140 million to the industrial decarbonisation and hydrogen revenue support fund. We are ensuring that we tax extraordinary profits at the same time as protecting those who are struggling with the cost of living.
Alun Cairns (Vale of Glamorgan) (Con)
Two weeks ago, my right hon. Friend the Chancellor announced a package of support that is far more generous than what the Labour party ever proposed. It is focused on the immediate pressures that families are facing up and down the country. It is also funded by the energy profits levy, which focuses on and offers support and relief for future investment. Does my right hon. and learned Friend agree that we need not to only provide support in the immediate term, as the Chancellor demonstrated, but to look to the future energy security needs of the United Kingdom?
Lucy Frazer
My right hon. Friend makes an important point, and that is one reason why we set out the Prime Minister’s energy security strategy recently. My right hon. Friend also makes the important point that our package is more generous to those who are vulnerable. Under our package, the lowest-income households will receive double what Labour was proposing—£1,200, compared with £600. Hard-working families will receive £550 under our proposal compared with the £200 that they would have received under Labour’s proposal.
Peter Grant (Glenrothes) (SNP)
I welcome the acknowledgement from the Government yet again of the vast wealth that currently lies under the waters of Scotland. Oddly enough, in 2014, it had run out, but there still seems to be an awful lot of wealth to be got from the North sea just now.
Will the Minister explain why the windfall tax was only ever applied to the energy producers? Why was it not applied to other companies that, just through good luck, became mega-rich almost overnight? I am talking about the big multinational tech firms, online retailers and the importers of shoddy, useless personal protective equipment that cost the public billions of pounds. Why are they not facing a windfall tax, at the very least?
If an investment allowance is appropriate, why is it not being restricted to investments in technologies that will reduce the carbon footprint of the North sea? Why is it not being restricted to helping to transform Scotland’s and the UK’s oil production away from carbon-based fuels to other methods? Why is it being used effectively to give an incentive to continue the exploitation of our carbon resources?
The Minister said that the Government expect to get £5 billion from the windfall tax. What would the amount have been if they had not applied the investment allowance? How much are the oil companies saving as a result? The National Audit Office and the Public Accounts Committee have expressed concerns about the lack of reliable detail to show that tax reliefs have had the result intended. How will the Government know that they have? What steps will they take to prevent fraudulent claims?
Lucy Frazer
The hon. Gentleman makes a large number of points. The reason we are taxing this sector is that these are extraordinary profits that have been made not as a result of anything that the companies have done, but because of the price of gas. The Chancellor also said that he would look at electricity generation, because that is riding on the back of gas prices.
On the hon. Gentleman’s point about decarbonisation and the oil and gas sector, I point out that capital allowances will be available for capital expenditure from the oil and gas sector that makes the production of oil and gas less carbon-intensive, which could include electrification.
Peter Aldous (Waveney) (Con)
Ongoing investment in the North sea is vital to the transition to a low-carbon economy and to the creation of long-term jobs in emerging industries such as offshore wind, hydrogen and carbon capture and storage, which are very important in coastal communities such as the one that I represent. Can my right hon. and learned Friend give an assurance that the levy will not imperil that ongoing investment?
Lucy Frazer
The points that my hon. Friend makes are set out in the energy security strategy, because we recognise that the North sea will still be a foundation of our energy security. It is right that we continue to encourage investment in oil and gas as we transition to renewables. My hon. Friend is right that the sector, along with many others, provides important jobs for people in the areas where generation is taking place.
Richard Burgon (Leeds East) (Lab)
The additional tax breaks given to oil and gas firms mean that the Government are handing billions over to the very companies that are driving up people’s bills and fuelling climate change. That is money that could have been used to insulate 2 million homes, saving each household £340 every year. Are these tax breaks for more fossil fuel producers not the very opposite of what is needed to protect the planet, end our reliance on expensive gas and, crucially, invest in insulation that could get bills down?
Lucy Frazer
With the greatest respect, I think that the hon. Member misunderstands the policy. What we are introducing is a significant tax on the oil and gas sector that will fund the most vulnerable, so it is the firms handing money over, as he puts it, to us. We have said that we recognise that companies should invest, because it is good for jobs, good for investment, good for our competitive industries and good for our energy security for the future. We have recognised that we will give tax reliefs if that investment is made.
Caroline Lucas (Brighton, Pavilion) (Green)
Just six short months ago, the UK hosted COP26, and it remains its president—not that we would know that from this appalling policy from this Government. The Glasgow climate pact, which the UK signed, commits to the
“phase-out of inefficient fossil fuel subsidies”,
so can the Financial Secretary explain on what grounds handing an 80% tax break to the dirty, dangerous and outdated energy of the past could possibly be considered efficient, especially when new fossil fuel production will do nothing to help with energy security or affordability? It will simply be sold at global prices on international markets. How is that climate leadership?
Lucy Frazer
The hon. Lady will know that we need to ensure energy security. At the moment, oil and gas account for 50% of our domestic energy. It is important that we transition, but that we transition safely, as well as securing domestic energy security.
The hon. Lady makes a very important point about our leadership at COP. We led the world. We were the first country to introduce net zero targets; many others followed. The Chancellor set out packages to ensure private sector investment and Government support for transitioning, and that is what this Government are doing.
Clive Efford (Eltham) (Lab)
I welcome the fact that the Government have adopted Labour’s policy and introduced a windfall tax on these profits. They have had to be dragged kicking and screaming—[Interruption.] I am sorry; should I give way to the Minister for Energy, Clean Growth and Climate Change?
Clive Efford (Eltham) (Lab)
I am the soul of discretion, Mr Speaker. I feel wounded—deeply wounded!
As I was saying, the Government have had to be dragged kicking and screaming to accept a policy that they previously described as unnecessary and undeliverable. However, I fail to see how it is an efficient use of taxpayers’ money, given that it will incentivise the companies to offset the tax. Would it not have been better to invest the money in insulating homes and ensuring that people’s bills were brought down on a more permanent basis? Would that not have been a much more effective policy?
Lucy Frazer
The hon. Member will know, because I have said it this afternoon, that according to our estimate we will be receiving £5 billion from the oil and gas sector. Given that he mentioned insulation, he may be interested to learn that the Government have committed £3 billion over this Parliament to installing energy-efficiency measures in up to 500,000 homes, saving low-income households hundreds of pounds a year on their bills.
Darren Jones (Bristol North West) (Lab)
Clearly any additional tax cuts for the oil and gas sector should have been targeted at renewable energy generation rather than further drilling for fossil fuels. The Minister will know that the Government intend to introduce a climate compatibility checkpoint to ensure that all future decisions are in line with our climate change commitments. Can she confirm that if there is an overlap with the ongoing tax break for investment in fossil fuel drilling, it will be checked against the compatibility checkpoint?
Lucy Frazer
As the hon. Gentleman will know, a consultation is ongoing, and the Government will be responding to it in due course. I am sure that he will read the report of our response with some interest.
Christine Jardine (Edinburgh West) (LD)
The Institute for Fiscal Studies—which, I am sure, understands the policy—has been critical of it, saying that the windfall tax is too generous and that
“It is hard to see why the government should provide such huge tax subsidies and thereby incentivise even economically unviable projects.”
Why are the Government providing incentives for projects of that sort rather than raising the money that would help out desperate families, and help them to feed their children?
Lucy Frazer
What we have proposed is a windfall tax that will recover more than what Labour proposes would recover. That money—£5 billion—will support those who are the most vulnerable, which is why we have introduced the measure.
Alan Brown (Kilmarnock and Loudoun) (SNP)
This policy confirms that we are seeing more take, take, take from Scotland’s North sea oil and gas. The Government are taking resources and taking money. Norway has the biggest sovereign wealth fund in the world, but Westminster squandered all the income from oil and gas from the North sea. At the very least, will the Government reverse their decision and support the Scottish carbon capture and storage cluster and make it a track 1 cluster, and will they consider matching the Scottish Government’s £500 million just transition fund?
Lucy Frazer
I think the hon. Member is aware that the Scottish CCS is a reserve. [Interruption.] I am grateful to the hon. Member for confirming that he is aware of that.
Sir Stephen Timms (East Ham) (Lab)
It has been reported that this concession will deliver an additional subsidy of £200 million to Shell for its development of the Jackdaw field, which was going to go ahead anyway. How can that be justified?
Lucy Frazer
The investment relief should not be available for investments that are deadweight. It should be for new investments. However, I am happy to look into the point that the right hon. Member has made.
Stephen Flynn (Aberdeen South) (SNP)
Jeremy Cresswell, the emeritus editor of Energy Voice in the north-east of Scotland, highlighted his concerns that the investment allowances put in place by the UK Government as part of the windfall tax are directly for big oil, as opposed to for big renewables too. Can the Minister clarify an earlier point made in response to my hon. Friend the Member for Glenrothes (Peter Grant)? She said that electrification could be part of the programme: surely it must be part of it.
Lucy Frazer
Yes, it could be, and I am sure that HMRC will consider those reliefs when they are made. I hope that it is a should, but the position is that it could. The tax will be paid by the largest companies, to reiterate a point I made previously.
Cost of Living: Fiscal Approach
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The Financial Secretary to the Treasury (Lucy Frazer)
It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Barnsley Central (Dan Jarvis) for organising this important debate, and all Members for their valuable contributions.
Hon. Members have set out the concerns and struggles of their constituents. I assure hon. Members and their constituents that the Government absolutely recognise that families up and down the country are facing an unprecedented cost of living challenge at the moment. We understand that the cost of food is rising and that the cost of goods going up is hitting people’s pockets. It would be wrong of me to pretend that these issues are going to subside. We all know that the next few months are going to be difficult. I know that people are really worried. It would also be wrong of me to suggest that the Government can wave a magic wand and that there is some quick fix that no one has thought of to reverse all the price rises that are happening at the moment. These are global trends and they are driven by global challenges.
We recognise that these are serious issues facing our society, as the hon. Members for Barnsley Central and for Merthyr Tydfil and Rhymney (Gerald Jones) said. We are doing a significant amount. We have already done a significant amount to help the many families that hon. Members have spoken about. We have provided £22 billion of direct support to families grappling with the cost of living pressures, including the £1,000 that people on universal credit will get or the £1,000 that people on the national living wage will get, through the changes that we have made to those measures. Our support includes £9 billion of energy support to ensure that fuel duty is cut, and the council tax rebates of £150 for band A to D payers in England, as well as the warm home discount, which we have expanded to £150, and the £1 billion of household support that people are getting through their local authorities.
I recognise that it is important not just to talk about statistics or investment in global terms; we recognise that the cost of living pressures are affecting individual families. I listened very carefully to the hon. Member for Barnsley Central when he spoke about a public sector worker on universal credit who was struggling. I emphasise that a low-earning family with one adult working and two children under five will be £1,610 better off a year as a result of the recent changes we have made to national insurance contributions and the universal credit taper rate.
Peter Grant
Has the Minister bothered to work out how much of that £1,600 has disappeared in increased food and fuel bills since the announcement was made?
Lucy Frazer
Obviously, different people will experience different rises in the cost of living, depending on their circumstances. We absolutely recognise the rising cost of living, which is why we have already made a number of changes.
I will move on to the point that the hon. Member for Barnsley Central made about public sector pay, as did the hon. Members for Reading East (Matt Rodda) and for Glenrothes (Peter Grant) by analogy. I recognise the important work that public sector workers have been doing during the pandemic and in the ordinary course of business, helping to support our world-class public services. Hon. Members will know that last year’s spending review confirmed that public sector workers will see pay rises across the whole spending review period from 2022-23 to 2024-25. Pay for most frontline workforces, including nurses, teachers, the armed forces and police officers, is set through an independent pay review body. We will consider all recommendations from pay review bodies this summer, once those final reports are submitted. I also point out that many public sector workers will benefit from the increase in the national living wage that I mentioned. Two million people, many of them public sector workers, will benefit from that.
The approved mileage allowance payments, which the hon. Members for Barnsley Central and for Bolton South East (Yasmin Qureshi) raised, reflect all the running costs of a vehicle, including fuel and other vehicle expenses, such as servicing, insurance and depreciation; fuel is only about a third of the cost included in the rate. It is up to an employer what expenses they pay their employees. They do not have to use the allowance payment amounts, and can instead agree to reimburse the actual cost incurred. Individuals are not liable to pay tax on the difference as long as they can provide evidence of the expenditure. As with all taxes and allowances, we keep the rate under review.
The hon. Member for Barnsley Central talked about NHS car parking charges. I am pleased that he recognised that NHS staff working night shifts benefit from no car parking charges, as do disabled people, frequent out-patient attenders and parents of sick children staying overnight, but I am happy to look into the matter further with officials.
I listened carefully to the ideas raised by the hon. Members for Glasgow East (David Linden), for Kingston upon Hull West and Hessle (Emma Hardy), and for Easington (Grahame Morris). I have previously spoken to the hon. Member for Westmorland and Lonsdale (Tim Farron) about the housing issue he raised. I valued that conversation, and I thank him for raising those points again.
The hon. Member for York Central (Rachael Maskell) said that Labour restored people’s dignity, but the latest data shows that, compared with 2009-10, there are now 2 million fewer people in absolute poverty. The Chancellor, the Government and I are very proud of that statistic. I am very proud that, when Conservative Governments are in office—particularly this one—we have record unemployment, which allows people to earn a wage and support their families, whereas every single Labour Government has left office with unemployment higher than when they entered it.
I have set out a number of the measures that we have already taken to support people with the cost of living, which we absolutely recognise. We are also taking steps to boost the UK’s economy. I have not got time to go into all the measures today, but hon. Members know that the Chancellor has set out a long-term plan to boost the economy through capital, people and ideas, building on the progress that we have already made in in this area.
Emma Hardy
Before the Minister sits down, I want to push her a little further on financial inclusion. Will she meet me and the campaign group Fair By Design to look at the FCA’s remit with regard to financial inclusion and how we can reduce the poverty premium for people with the least money?
Lucy Frazer
I or another Minister would be very happy to meet the hon. Lady to discuss that.
We are helping to deal with the cost of living, but the only way out of the rising inflation that we face is to grow the economy more broadly, and that is what we are doing. I reiterate that the Government stand ready to do more to support people across the UK who are struggling with cost of living pressures. We will take action to ease these burdens, where we can, in the short term, while exercising responsible economic leadership to deliver the conditions we need to prepare the UK economy for the future.
Oral Answers to Questions
Lucy Frazer Excerpts(1 year, 11 months ago)
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John Penrose (Weston-super-Mare) (Con)
The Financial Secretary to the Treasury (Lucy Frazer)
The Government are committed to helping people keep more of what they own and I give credit to my hon. Friend for his work, which was instrumental in our lowering of the universal credit taper rate from 63% to 55%. That is a tax cut for low-paid workers on universal credit. He will know that from July we will raise the national insurance contributions threshold so that the amount that working people will be able to earn tax-free will increase by £2,690, helping to ensure that work pays.
John Penrose
I thank my right hon. and learned Friend for her kind comments. The changes that she has just re-announced are extremely welcome. With energy and food prices continuing to spiral, does the Treasury team accept that they will soon have to go even further? Do they agree that compared with increasing benefits, further cuts in these combined tax and benefits withdrawal rates will be a better way to put money in the pockets of many lower-paid families and that in future, the combined rates paid by less well-off families should never be higher than the top rates paid by the rich?
Lucy Frazer
My hon. Friend has a keen interest in this area and I read his report, “Poverty Trapped”, with some interest. He makes a valuable point and will know that the Government have made progress in this area. The old system applied an effective tax rate of more than 90% to lower earners in some cases and, as a result of the changes we have recently made, an adult working 35 hours at the national living wage with two children over five will, for example, benefit from an additional £1,610 a year.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I invite the Minister to come to Wakefield with me? I was there on Saturday morning. The people there have not read the Bloomberg report, but they can feel the impact of rising taxes and the cost of living. They know that they will be in desperate trouble in the coming months. Will she get real and bring the Chancellor to an area of good hard-working people who face the future with great fear?
Lucy Frazer
I thank the hon. Gentleman and am sure that I will soon make a visit to Wakefield. The Government understand the issue with the rise in the cost of living but over this year we have committed £22 billion to support people in their time of need. The people in Wakefield that the hon. Gentleman talks about will also benefit from the cuts we have made to taxes, such as the universal taper rate, a tax cut for 1.2 million people and an extra £1,000 in their pockets. We have increased the threshold to the NICs rate, a £6 billion tax cut for £30 million working people. As I said—[Interruption.]
The Financial Secretary to the Treasury (Lucy Frazer)
The Government are committed to ensuring a tax system that is fair and simple. I will give three examples: first, we have equalised the national insurance and income tax starting thresholds; secondly, our work towards OECD pillars 1 and 2 will help to ensure that multinational businesses pay their fair share; and thirdly, we are tackling avoidance and evasion to ensure that everyone pays the right amount of tax at the right time.
Dan Carden
I am grateful to the Minister for that answer. Liverpool, Walton ranks as the most deprived community in the whole of England. I am used to constituents contacting my office unable to afford their bills and to survive on their own incomes. What is new is that local independent businesses are now telling me that they are going under. At the heart of the Liverpool economy is hospitality and the visitor economy. Locally run and owned restaurants and cafés are now facing apocalyptic price rises. The VAT on soft drinks and food consumed on premises, and hot beverages and food taken away, has risen back to 20%—it was 5% and then 12.5% during the pandemic. What will Ministers do to save local independent businesses through the tax system?
Lucy Frazer
It is important that we support local businesses, and that is exactly what the Government have done. The hon. Member will know about the business rates support—amounting to £7 billion of support to businesses—that we provided at the last Budget, including £1.7 billion for the hospitality industry through a 50% rebate on business rates. For small businesses, we also increased the employment allowance by £1,000. That is a package of support for local businesses in his area and others across the country.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Mark Pawsey (Rugby) (Con)
The Financial Secretary to the Treasury (Lucy Frazer)
I thank my hon. Friend for his question and extend my heartfelt condolences to Naomi for the loss of her son. My hon. Friend may be interested to know that NHS England and NHS Improvement, along with the British Heart Foundation, Resuscitation Council UK and the Association of Ambulance Chief Executives, have developed the Circuit, which is a national defibrillator network that will register defibrillators in the UK and provide an overview of where they can be found. I know that the Chancellor and the Prime Minister are interested in this issue, as I met the Prime Minister with my hon. Friend the Member for Rushcliffe (Ruth Edwards). It is indeed an important issue.
Lucy Frazer
I do not want to foreshadow what the Foreign Secretary may or may not say in her statement, but I assure the hon. Gentleman that with regard to the protocol, the Government’s overriding priority has been and continues to be preserving peace and stability in Northern Ireland.
Mr Richard Holden (North West Durham) (Con)
Can my right hon. Friend the Chancellor confirm that a worker working full time, or 40 hours a week, on the living wage is now £1,700 a year better off in real terms than they were in 2010 and that, after July, that will rise to almost £2,000, with everybody earning less than £36,000 a year better off under this Conservative Government this year?
Update on Carbon Leakage Mitigations
Lucy Frazer Excerpts(1 year, 11 months ago)
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The Financial Secretary to the Treasury (Lucy Frazer)
The Government are taking ambitious domestic action to tackle climate change and recently opened a consultation on developing the UK emissions trading scheme (ETS), so the UK can become the world’s first net zero carbon cap and trade market[1] . While domestic action is critical, climate change is a global issue. When the UK took on the COP26 presidency, only 30% of the world was covered by net zero targets—now over 90% of the global economy is committed to net zero. In 2021, the UK placed climate change and nature at the top of the international agenda during its G7 and COP26 presidencies, presiding over the agreement of the Glasgow climate pact, to speed up the pace of climate action.
The Government also want to see other countries do more to drive down their own emissions and we continue to work on the global stage to support more ambitious international action. Recent global events and the resulting increase in energy prices reinforce the importance of transitioning to clean energy to ensure energy security and reduce our dependency on imported fossil fuels.
In parallel, Government are considering domestic action to continue to ensure the integrity of UK action to reduce its carbon emissions against carbon leakage, as our existing carbon leakage protection measures, including free allowances under the UK ETS, evolve to achieve our net zero objectives. This will also ensure that UK businesses are not disadvantaged. Carbon leakage is the displacement of production, and associated emissions, from one jurisdiction to another, due to different levels of carbon pricing and climate regulation across those jurisdictions.
The best way to prevent carbon leakage would be for all countries to move together in pricing, regulating, and therefore reducing carbon emissions. We are strongly committed to working with our international partners to develop a common global approach to carbon leakage. Multilateral solutions can take time to develop, however, and while we will continue to work on international solutions with partners, options for domestic action must be considered in parallel.
The Government are therefore exploring a range of policies that could mitigate future carbon leakage risk. These include policies to grow the market for low emissions industrial products, on which the Department for Business, Energy and Industrial Strategy recently undertook a call for evidence. Today, we are announcing that it is our intention to consult later in the year on a range of carbon leakage mitigation options, including on whether measures such as product standards and a carbon border adjustment mechanism (CBAM) could be appropriate tools in the UK’s policy mix. A CBAM applies a carbon price to specified imports, in order to mitigate differences in carbon pricing between jurisdictions, and therefore reduce the risk of carbon leakage.
The Government are clear that any policy or policies would need to carefully balance a range of priorities for the UK, both domestically and internationally, including compliance with WTO rules and our staunch commitment to free and open trade, alongside taking into account the needs of developing countries. As we determine our approach to carbon leakage, we will continue our ongoing engagement with our domestic and international partners.
[1]: Developing the UK Emissions Trading Scheme (UK ETS) — GOV.UK (www.gov.uk)
[HCWS26]
Draft Major Sporting Events (Income tax Exemption) (2022 Birmingham Commonwealth Games) Regulations 2022
Draft Major Sporting Events (Income Tax Exemption) (UEFA Women's EURO 2022 Finals) Regulations 2022
Draft Major Sporting Events (Income Tax Exemption) (Finalissima Football Match) Regulations 2022
Lucy Frazer Excerpts(2 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Lucy Frazer)
I beg to move,
That the Committee has considered the draft Major Sporting Events (Income Tax Exemption) (2022 Birmingham Commonwealth Games) Regulations 2022.
The Chair
With this it will be convenient to consider the draft Major Sporting Events (Income Tax Exemption) (UEFA Women’s EURO 2022 Finals) Regulations 2022 and the draft Major Sporting Events (Income Tax Exemption) (Finalissima Football Match) Regulations 2022.
Lucy Frazer
It is a pleasure to appear before you today, Mr Robertson.
The three draft regulations before the Committee will provide an income tax exemption for accredited overseas individuals who take part in the UEFA women’s Euro 2022 finals tournament, the Finalissima football match being hosted at Wembley stadium, and the 2022 Birmingham Commonwealth games. These exemptions will apply to any UK income received either for competing in any of these events or for duties and services performed in connection with them.
The Government recognise the great benefits that all sport, including sport at its highest level, brings to this country. International matches, tournaments and meets inspire the next generation of athletes, bring together communities and boost the economy. Clearly, after the challenges of covid-19, the Government must do all they can to ensure that the industry that supports those events can continue to flourish.
This summer, the UK will host three major sporting events. First, in June, UEFA will hold the Finalissima at Wembley stadium, where the European champions, Italy, will play their South American counterparts, Argentina, in the first match of its type. Secondly, in July, the UEFA women’s Euro tournament will take place in 10 venues across England, with the final taking place at Wembley stadium. Thirdly, this summer, Birmingham will host the 2022 Commonwealth games. I am sure Members will agree that these are all fantastic events, and the Government are determined to support them.
By granting tax exemptions, not only do we ensure the right to host these world-class events but, on a practical level, we reduce the extra demands for individual competitors by removing the need to consider withholding taxes, completing self-assessment tax returns and double taxation treaties. That is why we are introducing the measures contained in the regulations.
Under the regulations, non-resident players, officials and individuals who have been appointed by UEFA or the Commonwealth Games Organising Committee will be exempt from income tax on earnings connected to these events. The exemption for the Finalissima football match will be in place from 28 May to 2 June this year, the exemption for the women’s Euros tournament will run from 1 July to 6 August, and the exemption for the 2022 Birmingham Commonwealth games will run from 1 July to 11 August. The regulations will bring economic benefit to the local areas of Brighton and Hove, London, Manchester, Milton Keynes, Rotherham, Sheffield, Southampton, Trafford, Wigan and Leigh, and Birmingham.
Tax exemptions for world-class sporting events such as the ones covered by the regulations are nothing new. Such arrangements were in place for competitors and individuals connected with the 2012 Olympics, the 2011, 2013 and 2017 UEFA Champions League finals, the 2014 Glasgow Commonwealth games, the 2017 world athletics championships, and the 2020 UEFA men’s Euro football finals. I should point out that tax exemptions of this type are reserved only for the most exceptional events. I am confident that the Committee will agree that all three of the fixtures that I have mentioned meet that criterion.
The income tax exemptions for these three events will support the Government’s commitment to make the UK a global destination for world-class sport. I commend the regulations to the Committee.
Lucy Frazer
I am grateful to the hon. Members for their contributions and the indication that there will not be any opposition to these very important measures, which will ensure that we remain at the forefront of sporting activities, bringing wealth to our local economies.
The hon. Member for Ealing North mentioned the availability of tickets for certain matches. His constituents will have to be swift off the mark. For the UEFA women’s Euro finals, more than 350,000 of the more than 700,000 tickets available have been sold during presale and the public ballot window. I am sure that he will advertise that to his constituents. It means that Euro 2022 is already on track to be a record-breaking event, and I am sure it will bring a large amount of benefit to his constituency and the areas around him.
As the hon. Member for Dunfermline and West Fife knows, the Government are taking action on a number of measures to ensure that our economy works and that we tackle tax avoidance and tax evasion. I commend these measures to the House.
Question put and agreed to.
DRAFT MAJOR SPORTING EVENTS (INCOME TAX EXEMPTION) (UEFA WOMEN’S EURO 2022 FINALS) REGULATIONS 2022
Resolved,
That the Committee has considered the draft Major Sporting Events (Income Tax Exemption) (UEFA Women’s EURO 2022 Finals) Regulations 2022.—(Lucy Frazer.)
DRAFT MAJOR SPORTING EVENTS (INCOME TAX EXEMPTION) (FINALISSIMA FOOTBALL MATCH) REGULATIONS 2022
Resolved,
That the Committee has considered the draft Major Sporting Events (Income Tax Exemption) (Finalissima Football Match) Regulations 2022.—(Lucy Frazer.)
Treasury
Lucy Frazer Excerpts(2 years ago)
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Stephen Timms
The Minister mentioned Martin Lewis, and I wonder if she could provide the information that the Chief Secretary said she might be able to give in winding up this debate about the effect of this national insurance measure on people claiming universal credit. Martin Lewis has made the point that they will lose 55% of the £330 a year benefit. Will she confirm if that is correct?
Lucy Frazer
I was going to come back to that point, but I am very happy to deal with it now. The right hon. Gentleman is right that an individual may be affected by the taper, but they will be better off overall as a result of the change. If they are earning below the work allowance, they will get the full benefit. It is important to point out the changes we have already made for those on universal credit. As a result of those changes, 1.7 million households will benefit from the taper rate change, which is £1,000 of additional income for them.
[Official Report, 24 March 2022, Vol. 711, c. 508.]
Letter of correction from the Financial Secretary to the Treasury:
Errors have been identified in my response to the right hon. Member for East Ham (Stephen Timms).
The correct response should have been:
Lucy Frazer
I was going to come back to that point, but I am very happy to deal with it now. The right hon. Gentleman is right that an individual may be affected by the taper, but they will be better off overall as a result of the change. If they are earning below the work allowance, they will already benefit from the existing national insurance threshold. It is important to point out the changes we have already made for those on universal credit. As a result of those changes, 1.7 million households will benefit from the taper rate change and the increase to work allowances, which is on average around £1,000 of additional income for them.
Clive Efford
I am wondering whether the Minister missed new clause 2, because she did not address the problem. Yes, increases were introduced in the autumn Budget last year, but this year, people are getting less than they were anticipating due to the increase in the threshold of national insurance. People were being told yesterday that they should get an extra £330, but they will actually get less than half of that. What is the Government going to do about that? The Treasury is clawing back several hundred million pounds from some of the poorest workers in the country.
Lucy Frazer
I do not know whether the hon. Member was in the Chamber when the right hon. Member for East Ham (Stephen Timms) raised this point and I addressed it. He is right to point out that an individual may be affected by the taper, but overall they will be better off as a result of this change. If those people are earning below the work allowance, they will get the full benefit. I reiterate that the changes that we have already made mean that those who are on universal credit will benefit by £1,000 from the cut to the taper rate.
[Official Report, 24 March 2022, Vol. 711, c. 524.]
Letter of correction from the Financial Secretary to the Treasury:
Errors have been identified in my response to the hon. Member for Eltham (Clive Efford).
The correct response should have been:
Lucy Frazer
If those people are earning below the work allowance, they will already benefit from the existing national insurance threshold. I reiterate that the changes that we have already made mean that those who are on universal credit will benefit by around £1,000 from the cut to the taper rate and the increase to work allowances.