Finance Bill

Mike Penning Excerpts

Committee of the whole House
Wednesday 10th January 2024 Commons Chamber

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

I rise to speak to the clauses relating to VAT and excise, beginning with clause 25, which restores the full tax rebate for machines and appliances that use non-gas heavy oils and bio-blends for commercial heating purposes. The Government have said that this is to correct an anomaly brought about by the April 2022 changes to the Hydrocarbon Oil Duties Act 1979, which mean that machines using kerosene have benefited from a full rebate while those using other types of heavy oil were made ineligible for lower duty rates when used for heating.

The Government have said that their April 2022 tax changes were intended to reduce the use of gas fuels and to make progress against the UK’s climate commitments. However, perversely, under the current system companies receive a tax penalty for using next-generation renewable fuels such as hydrotreated vegetable oil for heating, instead of kerosene, despite the fact that HVO produces nearly 90% less greenhouse gas emissions. I therefore support clause 25, which seeks to correct that unintended error and restore equivalent tax treatment for the use of non-gas heavy fuels for commercial heating. However, let us be clear: the correction will have a limited impact on businesses across the UK facing rocketing heating bills as the cold starts to bite this winter.

We also know that it is often the scandalous lack of grid connections that forces many businesses, particularly in rural areas of Scotland, to operate their machines off grid, using heavy oils and biofuels. Changing tax incentives, although significant, will not deliver the overhaul our energy system needs to become a clean energy superpower. After 13 years of mismanagement, our energy grid is on its knees, with new developments forced to wait up to 15 years for a new connection and more than £200 billion of privately funded energy projects stuck in limbo.

Labour will prioritise reforming the grid, overseeing the largest upgrade to our national transmission infrastructure in a generation and accelerating connections for those who are forced off grid. We cannot afford to keep dragging our feet any longer. The Government claim they are serious about delivering the transition and boosting the use of clean energy sources, but the neglect of our grid infrastructure has been shocking. We know that the significant increase in both clean power generation and clean industry that the UK will need to reach net zero will require four times as much grid infrastructure in the next seven years as has been built in the past 30. Although the Opposition do not oppose clause 25, which is a welcome correction, ensuring that tax incentives for non-gas heavy fuels remain consistent is the bare minimum we should be expecting from the Government on this vital issue.

I move on to clause 27, which seeks to clarify UK primacy on VAT and excise law following the passage of the Retained EU Law (Revocation and Reform) Bill. The Government’s draft legislation seeks to ensure that in relation to VAT and excise law it will no longer be possible for any UK Act of Parliament or domestic subordinate legislation to be quashed or disapplied on the basis that it was incompatible with retained EU law. The Government state that this measure will

“ensure the stability of the VAT and excise regime”,

providing legal certainty for businesses. Labour, unsurprisingly, supports the objective of this legislation; ensuring that firms have clarity over how the VAT and excise regimes should be interpreted following the UK’s departure from the EU is crucial to retaining business confidence. However, following the Government’s public consultation, which concluded in November, it remains entirely unclear whether the measure achieves its stated objective of reducing the complexity for businesses of interpreting the VAT regime.

In its consultation response, the Chartered Institute of Taxation highlighted a number of concerns about the proposals, pointing out that the significant complexity in interpreting this draft legislation risks undermining the certainty it seeks to deliver. Specifically, the CIOT points out that the distinction drawn in the legislation between disapplication and the quashing of UK law as a result of EU law, and interpretation,

“might in practice be insufficient to achieve the desired result”.

Consultation feedback also pointed out that the measures in clause 27 do not make it clear how far higher courts are intended to be bound by prior case law from the Court of Justice of the EU, thus creating uncertainty for businesses and advisers.

Although taking a “bespoke UK approach” to VAT and excise legislation is welcome in principle, the draft legislation also fails to address the fact that the removal of the reliance on EU provisions will create significant gaps in UK legislation where our domestic rule book did not fully transpose EU directives. It is not just tax experts that have sought to draw attention to this issue through the Government’s consultation; the industry body for the banking and finance sector, UK Finance, has warned over and over again that the draft legislation

“does not appear to adequately address”

the complexity of the VAT landscape

“thereby sustaining a high degree of uncertainty for industry and the prospect of settled interpretations of VAT law being disturbed.”

The trade body pointed out that although EU VAT law includes a clear VAT exemption for intermediary services in connection with bank accounts, the exemption has not been implemented in UK law. With business no longer able to rely on the direct effect of EU law, material changes to VAT exemptions in the financial services sector will come into effect. That is just one example from my own shadow brief, but it highlights the additional uncertainty that this “clarifying” draft legislation has already created for business. Despite the clear message from tax experts and industry in the consultation, it seems that the proposals are at best problematic. It is of particular concern that the Government seem to have ignored that feedback and ploughed on, with not a single amendment made to the draft legislation.

Detailed guidance is needed to address the significant issues that have already been raised regarding clause 27 and to ensure it meets its objectives. Labour will not oppose the measure as we remain supportive of it in principle, but urgent clarity is needed as it will come into effect from the beginning of this year. The shock that a Government measure designed to provide “legal certainty and stability” has raised more questions than answers has slightly worn off for those of us obliged to follow the circus on the Government Benches on a daily basis.

To conclude, we will not oppose the two clauses, but the detail of the proposals continues to raise questions about the competence of the Government. From being able to afford low-carbon fuel and avoid crippling heating bills to having certainty over the VAT regime, UK businesses deserve far better. After 13 years of leadership, we need a Government who can provide the confidence that businesses desperately need, using the clean energy sources of the future to drive growth and investment across the country.

[Sir Mike Penning (Hemel Hempstead) (Con)]

It is a pleasure to have sat through the Committee stage of the Bill and to hear the Government talk about the advantages we have from Brexit. I am pleased to hear that the Government have looked, and continue to look, extensively at the taxation system—in particular at the interpretation of VAT, as mentioned in this clause.

One interpretation of VAT in this country massively affects people who are visually impaired and those who cannot read, perhaps because of dyslexia: there is no VAT on books, but the Treasury apply VAT at 5% to audiobooks. If that interpretation of VAT is to be taken as far as it possibly can, I am disappointed that disabled people are not being protected within the structure of the Bill, in the way that they have been for many years.

Years ago, when I was disabilities Minister, I was told that VAT changes could not happen because we were in the EU. We are no longer in the EU and we can set our VAT rates as we would like. It would be fundamentally good if the Government came forward with an interpretation of VAT that said that people who rely on audiobooks, through no fault of their own, do not have to be penalised by VAT at 5%. I am not talking only about the visually impaired—I declare an interest: I am dyslexic and rely on audiobooks, although not completely. People who do not read Braille are being punished as well.

The Government continue to look at new taxation rules and new ways of making sure that people do not get around the taxation system, and it is clear that they are looking at the implementation of VAT. What better spring present for those who rely on audiobooks than for the Minister to say that he will meet me, talk about the issue further and perhaps look at the early-day motion in my name?

[Drew Hendry]

The technical changes in clauses 25 and 27 open up a lot of questions. I agree with the Labour Front Bench spokespeople that there are many questions on operation that still have to be answered, but there are wider questions about both these clauses, inspired by their context. Before I get to them, I want to point out that this Finance Bill is a stark reminder that the Westminster Government never reflect the values of the people of Scotland. We need independence so that we can build a fair and dynamic economy that works for everyone. People are suffering through the bitterest cost of living crisis. The provisions set out in the Finance Bill are nowhere near enough to help households in Scotland, which have been left paying the price for disastrous decisions by Westminster Governments—not least the harm of Brexit. There is no help for families struggling with rocketing food prices, and no help for mortgage payers, many of whom are now seeing huge increases in their fixed-rate deals.

BACKBENCH BUSINESS

Mike Penning Excerpts

Thursday 15th June 2023 Westminster Hall

[Sir Mike Penning (Hemel Hempstead) (Con)]

I beg to move,

That this House has considered the matter of VAT on audiobooks.

It is a pleasure to serve under your chairmanship this afternoon, Mr Sharma. We are in the coolest place in Westminster, so let us see if we can stay in here; this is probably the only room with any decent air conditioning.

I will start by declaring an interest: as well as being a former disabilities Minister, I am also dyslexic. I was not diagnosed until I was in the military, when I was sent on a course and was told by an education officer that I was dyslexic. I thought that it was some kind of tropical disease. No one ever said to me at school when I had real struggles with English and maths, particularly reading, that I might have a learning difficulty. I was told by my headmaster that I was thick and I was not allowed to take my 11-plus exam—I would have failed it. But no one with dyslexia is thick; they just struggle sometimes with understanding words and mathematics. I also declare an interest in that I am a non-executive director of a law firm, even though, unlike the Minister, I am not legally trained.

Let me say at the outset that I would like this to be a genuine debate, because it is not an “us and them” situation. For people with visual impairment, or with dyslexia or another learning difficulty that prevents them from being able to read the written word as easily as most people, the subject of this debate is an anomaly that I hope we can try to resolve.

I know that there are discussions about the issue within Government; I think there were when I was a disabilities Minister back in the coalition Government, but it looked at the time as if it would be difficult to resolve. Campaign groups out there have said to me, “We should be able to take the Government to court” under the 2010 legislation, although of course the Government are exempt—under section 29. My speech might show that the Government should take note when it comes to other pieces of legislation, because the legislation as it is at the moment may well be technically illegal; I again cite the fact that I am a lay person and not a legal beagle.

According to the Publishers Association, in 2020 sales of audiobooks rose by 69%, which might have had a lot to do with covid. The Prime Minister, who at that time was the Chancellor, said on 11 March 2020:

“A world-class education will help the next generation thrive, and nothing could be more fundamental to that than reading. And yet digital publications are subject to VAT. That cannot be right. So today I am abolishing the reading tax.”—[Official Report, 11 March 2020; Vol. 673, c. 290.]

He was talking about e-books, but I do not think that anybody out there knows the difference between audiobooks and e-books. Actually, I think the Government made a genuine mistake. We have zero VAT rating on books and publications of all types—whether that be academic, fiction or non-fiction—and e-books are exempt. Why were a whole group of people, from many different backgrounds, thrilled for a minute or two by the announcement, only to realise, once they saw the small print, that they would still be excluded?

For many of our constituents, audio is their only communication with the outside world and their way of finding out what is going on. If someone uses audiobooks to read fiction or non-fiction, perhaps, as we all want to do, they want to get on in life. Audiobooks are part of that process—for training, learning and education. We are holding them back by having 20% VAT on every audiobook they purchase.

People with disabilities are already being penalised extensively; Scope has said they are £970 per month worse off—a figure I recognise from when I was the Minister. We give people with disabilities other benefits, but if someone is using audiobooks extensively, that 20% is a huge amount of their income or household income. We are not just talking about people who are visually impaired or who are dyslexic, like myself. My form of dyslexia is quite minimal, but I tend to memorise everything. As Members have probably noticed, I do not tend to read from a script; I get much too wooden when I try to. In my case, it is much better to memorise most of the points that I want to raise.

My question to the Minister is simple. I know she cares passionately about making equality fair, but the Equality Act 2010 as it stands does not quite hit the nail on the head or do what is says on the tin. Does it protect all people from discrimination? In other words, does it protect people who need to use audiobooks from discrimination, when they have to pay 20% to be able to read? The rest of the population who can read visual books do not have to pay that.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

Is it not true that young people especially enjoy audiobooks and it is a real path for them into the joy of reading? Some will not be able to discover that joy because of the expense, but it is how many first access literature?

[Sir Mike Penning]

I agree, and I hope that is part of the problem that the Minister, as a Treasury Minister, will recognise. It is difficult to work out how we can ensure that people who are being discriminated against—as opposed to people who can read in general terms; I will return to that point—have the ability to access audiobooks, while protecting the Treasury from the cost burdens. That is probably where the biggest problem lies.

If we were just talking about people who are visually impaired—a group of people who, without being rude, can be quite easily identified—the Treasury could make those calculations quite quickly. But what about when we get into the realms of what I was just talking about—people with learning difficulties, one of which is dyslexia? A huge percentage of those people have not had a diagnosis. How do you capture them?

To the point made by the hon. Member for Motherwell and Wishaw (Marion Fellows): how do we take into account people who are not natural readers? I do not want to get into a class situation, but I did not read many books when I was at school because I struggled to read, and I know people who were in school with me who were not dyslexic but who just did not read. We want people to expand their knowledge, education and view of the world as much as possible, so if someone can read—they are not visually impaired—but they want to use audiobooks, should that not be okay? I think the Treasury would turn around and say, “How do you find the costs?”

I agree with the hon. Member for Motherwell and Wishaw, but I am just trying to play devil’s advocate. That is the only way we can do it. We do not know who uses e-books but they have been removed from VAT. All printed books and publications are exempt, but audiobooks are not. Even though it would be easier to define an exemption for a certain group of people—I vividly remember conversations about that when I was disabilities Minister—I do not think that would be fair, not least for the millions of people out there who are dyslexic but have never had a diagnosis; dyslexia covers a very large spectrum.

The Equality Act means that no one should be discriminated against because of their disability, sex or race—a whole list of things. Given that Parliament cannot be caught under the Act, I suspect that it might be disingenuous to tell outside bodies that they may discriminate. It would be saying, “We are not breaking the Equality Act, but we are telling you to do so.” Take an obvious example: a local authority that wanted to sell audiobooks would have to charge VAT—in a library, for instance—whereas there is no VAT on books. Parliament is telling an agency of Government—that is, His Majesty’s Revenue and Customs—to charge VAT on audiobooks. If it did so without an Act of Parliament, that would be discriminatory, but because we are exempt under section 29, it is not.

Long before the word “Brexit,” I was pretty well known for being what used to be called a Eurosceptic. I wanted to leave the European Union and for this country to have its sovereignty. But if there are laws on our statute books, we should use them. Section 6(1) of the Human Rights Act 1998 states:

“It is unlawful for a public authority to act in a way which is incompatible with a Convention right.”

There are other Acts of Parliament on the statute book. I am sure that there are plenty of lawyers who would argue one way and plenty who would argue another, but morally and ethically it cannot be right that there is legislation on the statute book—the Human Rights Act, the Equality Act and other European Acts—that states that we should not discriminate, and yet we are still in a situation in which someone who wants to improve their life for whatever reason is, by no choice of their own, penalised by our tax system. I am sure that the Minister will probably say that this is very complicated, and I know what her brief will say, because it is not dissimilar to the briefs that were given to me when I was sitting in that very chair. But because something is difficult, it does not mean it is right to do nothing about it.

One of my constituents, whose sight is failing—I will not in any way indicate who she is—is finding that her ability to work in commerce is being affected. She now relies almost completely on audiobooks, although there is also now software that will help people. She relies on audiobooks, and she does not want anybody to know that. She works from home and for her own reasons— I will not put words in her mouth—she wants to use audiobooks, because of her visual impairment. How can it be right that, if she needs an audiobook this week, she has to pay 20% on the product, but last month or last year, when she could read the publication, she did not have to pay that 20%?

Let us look at education for a second. This is where I deviate from the notes that people have helped me try to write—I will come back to some of it; people have been very supportive of me bringing this debate. Education books are quite rightly VAT-free, like all printed books. Audiobooks are not. The Minister will probably say that a lot of the VAT can be claimed back, but for individuals it cannot. If mum and dad, or grandpa and grandma, want to help their son, grandson or grand- daughter who is at a special needs school by buying them an audiobook, they cannot claim that VAT back, even if the organisation could. That child is being held back because the family perhaps do not have the money to buy the audiobook. For every five audiobooks they want to buy, one will be lost to VAT. We need taxes to pay for the schools that I have just alluded to, and for the education system, the health service and various other things. But for the public to have trust in our taxation system, it has to be fair and proportionate, and, in the public’s eye—because we are spending their money on their behalf—it has to be right and proper.

This has been going on for too long. It is worth reading the comments of the Prime Minister when he was the Chancellor:

“That cannot be right. So today I am abolishing the reading tax.”—[Official Report, 11 March 2020; Vol. 673, c. 290.]

That referred specifically to printed books and e-books. Why on earth did it not include audiobooks? I really do not understand.

I will not be able to mention all the relevant organisations, but I have particularly been helped by Scope and the Royal National Institute of Blind People. The House of Commons Library has been fantastically helpful. I did not want the debate to be about me saying, “You’re a nasty, horrible Government, because you are not doing this”. It is not about that. Governments have not addressed this issue since before the current Government came in.

Things get left out when you are in government, and you think, “I wish I had done that.” I am leaving this House whenever the next general election comes, and I do not want to leave with a few things still on my bucket list that I wish I had done more about, perhaps when I was the Minister. I wish I had kicked harder when I was the disabilities Minister, particularly against my Treasury colleagues, so I am going to kick now for people who are suffering this 20% tax through no fault of their own, which surely has to be morally and ethically wrong.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

It is a real pleasure to serve under your chairmanship, Mr Sharma, and as they say, “Follow that!” The previous contribution was a passionate and informed speech by someone who really understands the difficulties that the tax on audiobooks represents to some people. The right hon. Member for Hemel Hempstead (Sir Mike Penning), whom I congratulate on securing the debate, might not be legally qualified, as he said, but he certainly knows what he is talking about. I followed his argument carefully, and I love the idea of him ticking something off his bucket list. Any kind of persuasion that can be used to get rid of the tax is well worth using.

One of the reasons why I enjoy Westminster Hall debates is that they tend to be less contentious. They tend to be a meeting of minds, with people who are interested coming together to try to solve a common problem, which is not something that too many of our constituents see too often.

I also want to thank a number of organisations, especially the RNIB. In my time in this place, I have also been involved in the Axe the Reading Tax campaign, which led to the abolition of the tax on e-books. It is an aberration—an unintended consequence—that there is still a tax on audiobooks. I love audiobooks. I am a voracious reader—not of anything mind-blowingly interesting, I must say, but it is a great way to relax—and I know that many other people, especially those with visual impairment, dyslexia or other conditions, get great joy out of losing themselves in a good book for a few hours on an afternoon like today. There is nothing nicer.

Audiobooks benefit younger people, including people studying. I have to confess—I may have to ask Hansard not to record this, although I know it will—that I cannot read Dickens. I can read lots of older authors who are considered fantastic—I love Hardy—but I cannot read Dickens. I was required to read a Dickens novel for an Open University course I was doing, and I thought, “I can’t do that,” but an audiobook was my answer. I love listening to someone reading Dickens to me, but I cannot read him myself, so there are sometimes good educational benefits. If people who struggle to read can access the literature in a different form, it may pique their interest in reading. We all know that everyone, especially young people—and especially nowadays—benefits from sitting down quietly and absorbing things in a way that does not involve playing video games and killing people online.

It is really important that people with visual impairment, dyslexia or other medical conditions that require them to read in a different way are not excluded. I listened very carefully to the right hon. Gentleman, and there are real issues in trying to circumnavigate who is eligible for some kind of exemption. That is why in this case—in many other cases too, but especially this one—I plead with the Minister to make it a universal exemption. In other words, people should not have to prove that they cannot access books in any other way. The tax should be gone, because accessing literature is important for everyone.

[Sir Mike Penning]

The hon. Lady is making a very important point that I probably did not express very well in my speech. Asking people to prove their disability may exclude a whole tranche of people. That sort of vetting would be so negative for so many people that they just would not do it. I agree completely that a general relaxation of VAT is the only way forward.

[Marion Fellows]

I totally agree, and the right hon. Gentleman expressed it much better than I was able to.

Reading has many mental health benefits, and there is a clear link between reading and improved wellbeing. Given that the cost of living crisis has led to soaring rates of stress, anxiety and depression, there are clear benefits to making audiobooks more affordable. Norway— I frequently refer to small, independent nations in other debates, although I do not do so on this occasion for any other reason—has scrapped VAT on audiobooks altogether.

The National Literacy Trust says that two in five audiobook listeners are children, and young people said that listening to an audiobook or podcast got them interested in reading books. Something that encourages children to read has to be good. Most children and young people who enjoy listening say that they also enjoy reading, compared with children who do not enjoy listening. Introducing children and young people to reading in a way that they find engaging and enjoyable is a vital means of improving literacy. I have grandchildren, and they love listening to stories on the BBC or through the fancy machine that I bought one of them for Christmas last year. It encourages them to think about books in a positive way. Many more children would benefit if there were no tax on audiobooks. Reducing VAT on audiobooks is essential to ensure that young people especially listen to books.

I want to ask the Minister a question—the RNIB asked me to ask her this, so I will. Has she evaluated the cost of extending the VAT exemption to those who are blind, partially sighted or have print disabilities? Has anything been done on that? As well as that question from the RNIB, I would like to ask a further question: how much would it cost to just remove the tax entirely?

I do not think I need to go on further because the right hon. Member for Hemel Hempstead covered this topic extremely effectively. I cannot find an argument against this, so I am going let the Opposition spokesperson speak and listen carefully to what the Minister has to say on this very important topic.

--- Later in debate ---

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) on securing this debate, and I thank him sincerely for the personal experiences that he has brought into it.

For what it is worth, I did not know that my right hon. Friend has lived with dyslexia. I have seen him so many times in the Chamber, both at the Dispatch Box and as am eminent Back Bencher. I am genuinely in awe of his ability to memorise the briefs that we get. Anyone who has had to stand at the Dispatch Box, whether in Government or in Opposition, will know how densely written and complex they can be.

[Sir Mike Penning]

The Minister and the civil servants who are listening will realise just how petrified officials were when I walked into my first ministerial position and said, “By the way, I memorise—I do not read—the submissions that you want me to read out at the Dispatch Box.” In a further seven Departments, the message not to try to push stuff in front of me eventually got round Westminster. It is interesting that we take for granted that people are reading verbatim what is in front of them. An awful lot of people with reading and learning difficulties do not. They actually go with their gut feeling, which is what I have always tended to do.

[Victoria Atkins]

My right hon. Friend makes an important point more generally, if I may have your munificence for a moment, Mr Sharma. It is so important that people such as my right hon. Friend show that dyslexia or other learning conditions need not be a barrier in a person’s ability to achieve success nowadays. In many ways, he will have been at the forefront of that change. I was horrified to hear about the reaction he had at school. I hope and trust that nowadays, children with a similar condition would not have that reaction; it would be much better understood. The fact that he rather endearingly described that he thought it was a tropical disease shows just how far we have come. He and others have been at the forefront of that, and I am genuinely grateful to him for sharing his experiences with us.

Ensuring that everybody is able to access books in all their forms is something that this Government take very seriously. Driving up standards in literacy has been our long-term priority in education, and our focus over the past decade has been on improving the teaching of reading for everybody. We have given students across the country a solid foundation in reading. That is not just to give young people the skills that are vital for their success in later life, but—as the hon. Member for Motherwell and Wishaw (Marion Fellows) put it so eloquently—to encourage a lifelong love and respect for one of life’s greatest pleasures.

I very much understand the enormous pleasures that audiobooks can bring, as someone whose constituency is quite some distance from London—I know the hon. Lady’s is, too. I have had an excitable seven, eight, nine, 10 and then 11-year-old throughout my career in this place, and having an audiobook that really grips a young child’s attention can be a godsend to parents struggling on long journeys.

I am veering into flippancy, but there is a much more serious point about what an audiobook can mean for an individual’s ability to read and enjoy reading. My right hon. Friend the Member for Hemel Hempstead gave the compelling example of his constituent who is losing her sight and with it, she fears, her ability to continue enjoying reading. I take that very seriously. I understand his point about the difference in timing and the implications of VAT.

We believe that a love of reading should be ignited at a young age, which is why we have committed to ensuring that early reading is taught well in schools. We have introduced packages of measures.

[Victoria Atkins]

Although this part of my speech focuses on children, I very much accept the point about people having a love of reading throughout their life. I want to mention the positive work, which I hope is welcomed across the House, in schools to improve literacy and give that love of reading to young people. The English hubs programme promotes a love of reading and spreads best practice in teaching pupils to read. It supports schools in England in providing excellent phonics and early language teaching. The hon. Lady will be able to help us with what happens in Scotland. The ability to teach reading, particularly through the use of phonics, is very much recognised. Through the hub programme, literary specialists provide tailored support to schools, including by running events to showcase excellent practice in teaching and reading, and by working with local schools to develop their practice. So far, it has supported 1,600 schools intensively, and focuses on supporting the children who are making the slowest progress in reading, many of whom come from disadvantaged backgrounds.

[Sir Mike Penning]

The work the Minister alludes to is on key stage 1 English. It is on the teaching of phonics. The hubs are brilliant—absolutely great—but they do not help dyslexic kids, or kids who are visually impaired, because it is a book-reading hub; it is not what they need. Nothing I have said today takes away from the fact that we want more people to have that wonderful experience of reading, but those who cannot are being excluded from those hubs.

[Victoria Atkins]

I hope my right hon. Friend will understand that this is not my area of expertise, and that I am here responding on VAT, but I will take away his observations on the hubs. Schools find their own ways of teaching their children. I recently had the pleasure of a Friday afternoon visit to a wonderful primary school in my constituency, Mareham Le Fen Primary School. They have “mystery reading”, where someone reads an extract of a book to the entire primary school to try to encourage pupils to finish that book. Schools across the country have programmes like that to encourage reading and to make it a real pleasure for children, and I very much support any efforts to bring that about.

We have provided £8.7 million of funding this academic year to support schools in purchasing complete systematic synthetic phonics programmes for their curriculum—that is a good example of Department for Education jargon. By ensuring high-quality phonics teaching and improving literacy, we are giving children a solid base on which to build as they progress through school. We published the reading framework in 2021. Over 90% of schools have read that framework, which provides guidance on how to improve the teaching of reading. It focuses on the early stages of teaching reading, and on the contribution of talk, stories and systematic synthetic phonics. It also helps schools to meet expectations for teaching early reading.

We very much appreciate the fact that these measures are paying off. England came fourth out of the 43 countries that tested children of the same age for primary reading proficiency in the Progress in International Reading Literacy Study, the results of which were published last month. That is a real success, and we know that it is down to the concentration on phonics and is driven by improvements for those pupils who have perhaps struggled in the past. I am very grateful, as I know my right hon. Friend the Member for Hemel Hempstead is, to ministerial colleagues whose efforts over the years have driven those changes.

However, we also recognise the importance of provision for children with special educational needs and disabilities, including children who live with some of the conditions that we have heard about today, including partial sightedness and blindness, dyslexia and other learning conditions. These cohorts may require extra support, so the next reading framework to be published will include guidance on supporting children who are struggling to read, including those with special educational needs. The Government speak regularly to experts, including SEND specialists, specialist schools and English hubs, about how we can support teachers to ensure that children with dyslexia and other learning difficulties can progress well in their reading, and meet the expectations on them by the time they leave primary school.

If I may, I will now turn to the subject of VAT. Of course, as colleagues from across the House know, VAT is a broad-based tax on consumption, and the 20% standard rate applies to most goods and services. Although there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations.

We did indeed cut the VAT on certain digital publications in the March 2020 Budget to support literacy and reading in all its forms, and to make it clear that e-books, e-newspapers, e-magazines, and academic e-journals are entitled to the same VAT treatment as their physical counterparts.

The extension of the zero rate of VAT to e-publications was introduced to address the inconsistency of approach between certain physical publications and their digital counterparts, so that there is a mirroring between the two; if a publication in physical form has a zero rating, then in digital form it now has the same exemption. There will be categories of publication where, because the physical form does not have zero rating, the digital form does not either. I say that because audiobooks—and podcasts, which the hon. Member for Edinburgh West (Christine Jardine) mentioned—would not come under that approach, if one were to extend it to audio publications. We say that there is no such inconsistency in relation to audiobooks, but I appreciate that that is the point under discussion today.

As colleagues know, any VAT relief would come at a cost to the Exchequer, and it would be very difficult to target. The hon. Member for Motherwell and Wishaw said that the RNIB has asked if this approach has been costed, both for people living with sight conditions and the public more generally. My answer to her is that there is ongoing work on that. I do not have figures that I can give her today, because I need to satisfy myself that any figures I give are accurate, but I take her point, and I will write to her in due course, when I am in a position to do so, because that is a very fair question.

As was noted by the hon. Member for Ealing North (James Murray), who spoke for the Opposition, there is a sense that the law has to try to keep pace with the speed of change in technology, which can be difficult; I think we all acknowledge that. For example, many audiobooks are now provided through subscription, along with other forms of media, such as podcasts, and trying to introduce distinctions between these different types of products would introduce additional complexity into the VAT system.

There is also no guarantee that the benefit of any VAT relief would be passed on to the consumer in the form of lower prices. That is quite an important point. We all assume that the VAT exemption announced in March 2020 was passed on to consumers by businesses, but it seems that that is not necessarily the case. It is not for me to advise either right hon. and hon. Members or charities, but where that benefit is not being passed on to consumers, perhaps publishers of e-books and so on should be asked why.

Audiobooks are enjoyed by a wide range of consumers, so the majority of any relief would primarily be felt by those not living with disabilities that prevent them from accessing physical and digital books. Also, I am obliged to mention, as in any debate on VAT, that it is the third largest tax in the UK in terms of yield, and it allows the Government and the state to provide public services. It is forecast to raise £161 billion this financial year alone. Many public services are supported from those funds, so we have to look very carefully at every request to change or tweak the VAT system, or to use it to meet the laudable aims and concerns of colleagues from across the House.

There was a question about the VAT cut. Some might say, “Hang on a minute; if the Government have imposed the VAT cut, why can’t they force businesses to pass on that cut?” We set the tax framework, and businesses must operate within it, but if a business chooses to absorb that tax relief as profit, rather than pass it on to consumers, that is a commercial decision taken by the business. That may be something that others outside this Chamber may wish to reflect on when considering the issue as a whole.

In conclusion, we understand why my right hon. Friend the Member for Hemel Hempstead called for this debate. We agree that literacy is a vital issue, not just for our youngest citizens but throughout our lifetimes. We are confident that our record over the past 13 years shows that we are making the right decisions for children in school. We believe that the measures that we continue to take to support reading are the best way to target our resources to deliver this wonderful benefit to everyone. However, we do not rest on our laurels; that is why the reading framework guidance will also focus on the needs of children living with special educational needs.

I thank my right hon. Friend for his debate, and I thank hon. Members from across the House for their contributions. I am sorry that I am not able to give quite the news that my right hon. Friend was hoping for, but I look forward to discussing the matter with him in future.

[Sir Mike Penning]

I thank the Minister for her restricted comments. I fully understand that she will not commit. To give her a little bit of help, the Publishers Association estimates that we are talking about £22 million a year going into the Exchequer. It may be wrong, and I accept that not everybody would pass on a VAT relief.

I should have done this earlier, but I thank the Library, the Publishers Association, the National Literacy Trust, the Macular Society, RNIB, Scope, Glaucoma UK, Sight Scotland, Sight Scotland Veterans and my former colleagues in the military, Listening Books, AbilityNet, Disability Rights UK and the Authors’ Licensing and Collecting Society. One tiny point: I think 57 colleagues signed my early-day motion. I look forward to further conversations with the Minister; we will be back. The Backbench Business Committee was generous to give me 90 minutes here. With those sorts of numbers supporting me, I might be on the Floor of the House with the Minister, perhaps in the autumn, when she might have nicer and more helpful comments for me.

Question put and agreed to.

Resolved,

That this House has considered the matter of VAT on audiobooks.

Health and Social Care Levy Bill

Mike Penning Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[Sir Mike Penning (Hemel Hempstead) (Con)]

It is a pleasure to follow many colleagues who have talked from the heart about the great concerns that their constituents and we as family members have about the health and social care framework.

I will be supporting the Bill tonight because, as I said last week, kicking the can down the road, as several Governments have for years and years, is not the answer, but I have a couple of questions that I would like the Treasury Minister to address. I completely agree with the Chair of the Health and Social Care Committee, my right hon. Friend the Member for South West Surrey (Jeremy Hunt) that if we just throw this money into the NHS and social care, it will not even touch the sides. It will just disappear. Previous Governments have done it up to now, so we have to be really careful about how the money is hypothecated and where it goes.

I am particularly worried that the top management, who earn so much, will not actually address the issues that we are talking about today. Naturally, I pay tribute to all the frontline workers in social care, all of our emergency workers and those in the NHS, but I worry about the decisions that are made and the salaries that some chief executives of trusts are on. Frankly, they are not only miles above what the Prime Minister gets, but miles above what even those in the City get. It is absolutely mind-boggling, so we have to be really careful about that and about the trusts doing what Parliament tells them to do. I know that will be addressed in the Health and Care Bill. We cannot have a situation again like the one I mentioned last week, where the Prime Minister came into my part of the world and said, “You are going to get a new hospital.” That was fantastic news; I put out press releases galore. We have been campaigning for that for years, but what we are going to get is a refurbished Victorian hospital in the middle of Watford. That is not the answer. The trusts need to do what they are told.

I will touch on one other area—dementia—which is the elephant in the room, and which my hon. Friend the Member for Rushcliffe (Ruth Edwards) mentioned. There is a lottery for our constituents and our loved ones when we are trying to sort out the difference between personal care and healthcare when it comes to dementia and Alzheimer’s. What goes on is immoral: one silo, the Department of Health and Social Care, fights against another, the Ministry of Housing, Communities and Local Government, about who might pay for that care. We have seen it in my family, in my constituency and in my surgeries. We have been fighting to appeal. People seem to be encouraged to appeal, so people appeal, but by the time the situation is dealt with, many of our loved ones and many of those in care have passed away. Only then do people win, so something is seriously wrong.

As we look at the extra money that is going in, we must break down the silos and the really immoral way—postcode lotteries are going on around the country today—that we judge who is entitled to healthcare and who is entitled to personal care. Dementia and Alzheimer’s—I always mix up the two—are illnesses, not something that people want or have brought on themselves, yet many people are having to fight to show that they have a condition so that the Department of Health and Social Care might pay for care. I hope that as we look forward we can try to address that. These are difficult conundrums, but we cannot put our constituents with Alzheimer’s or dementia—our loved ones, in my case and that of other hon. Members—in a position where they have to beg because their care relates to a different condition.

Health and Social Care Levy

Mike Penning Excerpts

1st reading
Wednesday 8th September 2021 Commons Chamber

[Sir Mike Penning (Hemel Hempstead) (Con)]

This is a massively important debate on a subject that comes into our constituency surgeries every week—it has done since the day I came into this House, and did when I was working for Sir Teddy Taylor all those years ago. This is not new. What is new is a Government attempting to address it. I sat on the Opposition Front Bench for four and a half years as a shadow Health Minister. Previous Governments have looked at this issue and tried, but at the end of the day, to be really honest, Conservative and Labour Governments have kicked the can down the road. So for once, we are trying. Is it perfect? No, it is not going to be perfect. I will come in a moment to a couple of points that I agree with my colleagues on.

What we cannot do is keep borrowing. Markets are low; we can keep borrowing. We could go to that wonderful private finance initiative market that previous Labour Administrations went to and that we are still paying for now. Lord Darzi came up with a fantastic plan for how to deal with elective surgery in the market without having over-capacity in the NHS. The only problem was that contracts were issued that meant that these companies were being paid even though they were not doing the operations. So nothing is perfect and everybody wants to try.

It is very easy to be in opposition and throw the can across—that is what Oppositions do—but when the crunch comes, these are the hard decisions. I am a fiscal Conservative and a working-class Tory, so I love all this class rubbish that keeps being thrown across the Chamber. It is absolute, complete and utter tosh. At the end of the day, our constituents look to us for guidance and to try to solve their problems. They do not really care where we come from in life and what we end up doing; at the end of the day, that is what they want us to do.

[Several hon. Members rose—]

[Sir Mike Penning]

No, I am not doing to give way, because lots of other colleagues want to speak and every time I give way, I get an extra minute—and I have just lost half a minute by saying that.

We can say to ourselves, “Is this perfect?” No, it is not. Is this going to help? Yes, it is. Are more people going to pay more in taxation? Have we broken a manifesto commitment? Yes—and Governments in previous Administrations have done that for years, and that happens when the public expect us to act on something that has come literally out of the blue. What has come out of the blue? Covid. We have had to borrow unbelievable amounts of money to keep people’s, jobs, incomes and livelihoods going. We cannot keep doing that, so we have to turn around and say, “Is there a way?”

We heard from the Chair of the Treasury Committee that there are myriad other ways to deal with this issue. We have also heard the minutiae of how national insurance contributions come into it, but at the end of the day it seems that national insurance is probably the way to do it. I have one criticism. In my constituency, we still have more than 12,000 council properties. Many of those residents want to buy their property on right to buy. They cannot do so because the maximum discount means that the mortgage is still too large. Having just over an £80,000 cap is not fair nationally. It is really difficult if someone has a property below that level. In parts of the country, £86,000 will buy such a property, but in my constituency, that money would buy a quarter of a one-bedroom flat. That has to be wrong, so we need to look at how we address the issues that were raised by colleagues earlier.

I have one further thing to say. Frankly, anybody watching this debate, especially the earlier engagements, would have been disgusted by what they saw—partisanship, chips on the shoulder, class war, this war, that war. People do not give a monkey’s about that. They want us to come here and do a job, which is to help them and their loved ones. It is about time Opposition Members got off their butts and did it.

National Insurance Contributions Bill

Mike Penning Excerpts

3rd reading
Monday 6th September 2021 Commons Chamber

[James Murray]

I am grateful for the opportunity to speak on this Bill’s Third Reading on behalf of the Opposition. As I have made clear several times, we are not going to oppose the Bill, but we have used the various debates on it to raise important questions about some of the approaches that Ministers have decided to take. I would like to use the opportunity of Third Reading to reiterate some of the sticking points where we do not feel that we have had enough clarity.

I spoke earlier about clauses 1 to 5 and then moved on to discuss clauses 6 and 7, which introduce a new zero rate of secondary class 1 national insurance contributions for the employers of armed forces veterans. As I made clear on Second Reading and in Committee, we believe that this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. Other Members may remember that both on Second Reading and in Committee I asked the Minister and his colleagues to explain why the employers’ relief for veterans is for 12 months—much less than the relief for employers in freeports, also introduced by the Bill, which is three years.

In Committee, I made it clear that I felt that the Exchequer Secretary’s response during Second Reading had failed to address my question about why the Government had chosen to make veterans’ employers’ relief available for only one year. The Financial Secretary responded by expanding on the Government’s position. In relation to the relief for freeport employers, he said that the intention was

“to create circumstances in which they can have long-term secure employment, in particular with all the employment rights that come with more durable employment.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 18.]

At another point in Committee, the Minister said about the Government’s plans for freeport employers:

“The way in which this measure has been structured is focused towards longer-term employment, as the relief runs for three years…From that point of view, it reflects a commitment by the Government to create high-quality and stable longer-term employment.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 6.]

What my colleagues and I find hard to understand is why the Government, despite what the Minister has said throughout the passage of the Bill, do not seem to want to design a system for veterans that both supports transition into civilian life and, at the same time, like the scheme in freeports, seeks to create long-term employment with employment rights.

[Sir Mike Penning (Hemel Hempstead) (Con)]

I am sorry that I was not party to those discussions, but perhaps I can contribute as an ex-serviceman and a former armed services Minister. It is in the first 12 months out of the armed forces when a serviceman finds themselves in a completely different arena. I understand this. In my first six months, I re-joined the armed forces because I could not settle and I could not find the right sort of employment. That was the sort of help our veterans needed then and that is exactly what this part of the Bill does today.

[James Murray]

I thank the right hon. Gentleman for his intervention and for adding to the debate. I certainly recognise what he says about the importance of supporting veterans into civilian employment in the first six months and the first year. The question from the Opposition to which we did not have a satisfactory response is why, in addition to that, there is not a consideration or an option of support for long-term durable employment with employment rights. As that point was made several times by the Minister in relation to the relief for employers in freeports, why does the same support for longer-term employment not apply to veterans as well?

During discussions in Committee, the Minister pointed to a consultation with interested parties about how to design the scheme and mentioned how different parties had been “well sighted” on the options, so I looked at the Government’s consultation to understand what different parties had said. I was expecting to see questions about the length of the relief and whether 12 months or longer would be appropriate, but all I could find was a statement saying:

“The Government has announced that this relief will be available for the first 12 months of a veteran’s civilian employment.”

There did not seem to be any option or question about whether a longer relief would be appropriate.

Moving on to other measures we debated during the passage of the Bill, clause 10 provides a national insurance contributions exemption for payments made under a self-isolation support scheme. As we have heard, that ensures that these payments are not taken into account for the purposes of computing profits liable to class 4 NICs or for the purposes of class 2 NICs. As I set out on Second Reading and in Committee, we welcome this exemption from national insurance contributions for payments made under a self-isolation support scheme. It is crucial that people who need support to self-isolate receive it, so we welcome any steps that make the system for self-isolation payments more effective and less subject to administrative burden.

The Minister may recall that during the debate in Committee there was a brief discussion about why the exemption for class 2 and class 4 contributions was not implemented earlier. We discussed the comments that the Exchequer Secretary made on that point on Second Reading, and in Committee I asked the Minister to confirm exactly when the Treasury announced, by way of ministerial statement or other appropriate means, that the exemption for national insurance contributions would be extended to class 2 and class 4 contributions for payments made under a self-isolation support scheme. The Minister responded by saying:

“I do not have the date that he describes at hand, and I am happy to write to him on that.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 22.]

I am sure he will forgive me if I have missed his letter on this matter, but my office and I cannot find a record of its having been received, so perhaps he could write to me this week, for the first time or again, to confirm that point.

We also debated clause 11, which widens existing regulation-making powers so that regulations can be made for national insurance to mirror the amendments to the disclosure of tax avoidance schemes procedures—DOTAS—that are included in the Finance Act 2021. As I made clear in earlier debates, we welcome any measures that help HMRC to tackle tax avoidance. In earlier debates I also took the opportunity to draw Ministers’ attention to a point made by the Chartered Institute of Taxation: that it believes there is a hard core of between 20 and 30 promoters of tax avoidance schemes, identified by HMRC, who clearly do not play by the rules. I asked the Minister whether he recognised this number, and, as he may recall, welcomed his confirmation that HMRC recognises the number of 20 to 30 hardcore promoters. He said, however, that he did

“not think that it would be prudent to make an estimate or assessment of what the appropriate number of promoters is or could be.”

It is therefore important that we have a better understanding of what progress we have actually made. The Minister said that

“over the past six years, more than 20 promoters have left the market.”––[Official Report, National Insurance Contributions Public Bill Committee, 22 June 2021; c. 24.]

However, he did not sign up to a commitment or a target for the coming years. I would welcome him writing to me in the coming days to explain what the number of hardcore promoters was six years ago, so that I can understand whether those who have left the market have been replaced by new promoters.

Finally, to conclude—I am very conscious, Mr Deputy Speaker, of your and Madam Deputy Speaker’s steer about what not to focus on in this debate—it is frustrating to rely only on newspaper briefings to know what is going on. I had hoped, as the Treasury Minister is the first to address the House of Commons since we first heard that the Government might be considering a national insurance rise, that we could have heard the position from him directly today. I leave the thought in his head that we would like to know why the Government’s plan for social care is one that hits hardest low earners, young people and businesses creating new jobs.

Finance Bill

Mike Penning Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Mr McFadden]

Quite.

Infrastructure expenditure is, of course, welcome, and we support it. It makes sense to do this when interest rates are historically low.

[Sir Mike Penning (Hemel Hempstead) (Con)]

There are people in our constituencies whose lives are being destroyed every day because the loan charge has been applied to them retrospectively. Forget what Mr Speaker might say—will the Labour party support new clause 31 if it is called? If not, why not?

--- Later in debate ---

[Stephen Hammond]

My hon. Friend anticipates some of the questions I might have for the Minister in a moment. The loan charge raises particularly unique considerations; that is why 55 Members of the House have signed the new clause tabled by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). The whole aspect of proportionality and the unusual construction of the charge also raise issues about the capability of HMRC and the role of financial advisers.

I have spoken in various debates, and made representations to my right hon. Friend the Financial Secretary to the Treasury only this week, about the charge and the impact it is having on very many people. I am pleased that the Government set up the Morse review and that they have accepted most of its recommendations, but I ask the Minister to address a couple of points in his closing remarks.

First, Morse explicitly states:

“I am also very clear that I have no sympathy for the people who promoted…loan schemes after the law became clear.”

Will my right hon. Friend the Minister clarify this: if financial advisers gave recommendations when the law was not clear that the loans were illegal, why will the Government not accept that those individuals acted in good faith and look at the ability to treat them more leniently?

Secondly, given the Morse comment, will my right hon. Friend confirm whether HMRC is investigating the advisers? Is it seeking reparations from the advisers, and, if it intends to do so, would it agree that the amount of reparation sought from the financial adviser be set against the liability of the person who took the loan?

As my hon. Friend the Member for Beaconsfield (Joy Morrissey) said, we all want to ensure that bankruptcy, home loss and family destruction do not happen. My right hon. Friend the Minister has alluded in previous remarks to the fact that the Government are keen to ensure that that does not happen and that he has asked HMRC to work with individuals to ensure that it does not. Will he set out tonight exactly how he intends to instruct HMRC to do that?

Finally, I will just have a look at amendment 55. I absolutely support the intent, which is to help those affected and to alleviate the crisis that many face. Like most people, I absolutely oppose the concept of retrospectivity and retroactivity, so it is a bit of a disappointment to many of us that, in accepting the Morse recommendations, the Government did not feel able to accept the recommendation that loans between 2010 and 2016 be exempt. I wonder whether the Minister might, even at this late stage, choose to do so. I suspect not.

[Sir Mike Penning]

Don’t hold your breath.