Asked by: Patrick Hurley (Labour - Southport)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when her Department plans to bring forward secondary legislation required under the Building Societies Act 1986 (Amendment) Act 2024 to enact provisions around the disapplication of the wholesale funding limit for funds held for prudential purposes.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The government is committed to supporting the growth of building societies in line with the manifesto commitment to double the size of the mutual and co-operative sector. As part of this, the government is committed to ensuring that building societies can operate in a modern and supportive legislative environment.
On 14 October 2024, the government introduced two statutory instruments to modernise the 1986 Act. The Building Societies Act 1986 (Amendment of Small Business Turnover Limit) Order 2024 came into force on 4 November 2024 and the Building Societies Act 1986 (Modifications) Order 2024 came into force on 6 January 2025.
The government will look to give effect to the further powers enabled through the Building Societies Act 1986 (Amendment) Act 2024 in due course.
Asked by: Patrick Hurley (Labour - Southport)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what support she is offering for the building societies, in the context of the government's ambition to double the size of the mutuals sector.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The government is committed to supporting the growth of building societies in line with the manifesto commitment to double the size of the mutual and co-operative sector. HM Treasury has already announced measures to support the sector and is currently progressing these.
For building societies specifically, HM Treasury has committed to progressing further amendments to the Building Societies Act 1986. This follows two statutory instruments being laid in October 2024, which raise the turnover limit for the definition of a small business for the purpose of wholesale funding limit exclusions, remove outdated director retirement requirements, and simplify how balance sheets are signed. These will create a more supportive legislative environment for building societies.
To support all financial mutuals, HM Treasury has also asked the Prudential Regulation Authority and Financial Conduct Authority to produce a report on the current landscape of the sector. This is expected to be published before the end of 2025. The government also welcomed the establishment of the Mutual and Co-operative Sector Business Council to consider mutual and co-operative solutions. The government also published the Financial Services Growth and Competitiveness Strategy, which will support all organisations in the financial services sector and encourages the sector to continue to work in partnership with government to deliver growth.
Asked by: Patrick Hurley (Labour - Southport)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has had recent discussions with relevant stakeholders on the potential merits of introducing an exemption from the higher business rates multiplier for (a) cultural and (b) entertainment venues.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government has met with a wide range of stakeholders on business rates reform.
As announced at Autumn Budget 2024, the Government will introduce permanently lower tax rates for retail, hospitality, and leisure properties with rateable values (RVs) below £500,000 from 2026/27. This permanent tax cut will ensure that eligible cultural and entertainment venues benefit from much-needed certainty and support.
This tax cut must be sustainably funded, and so the Government will introduce a higher rate on the most valuable properties in 2026/27 – those with RVs of £500,000 and above. These represent less than one per cent of all properties, but cover the majority of large distribution warehouses, including those used by online giants.
The final design, including the rates, for the new business rates multipliers will be announced at Budget 2025, so that the Government can factor the revaluation outcomes and broader economic and fiscal context into decision-making.
Asked by: Patrick Hurley (Labour - Southport)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment her Department has made of the effectiveness of safeguards in the Research and Development (R&D) tax relief scheme to prevent misuse by third-party claims agents; and whether she is taking steps to ensure that R&D tax incentives are (a) directed towards genuine innovation and (b) not subject to potential abuse.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC has implemented a number of policy and operational changes to the R&D reliefs in recent years to improve overall levels of compliance. This includes mandating digital claims and requiring additional information, which has transformed the ability to risk assess claims, as well as identify and address patterns of non-compliance.
The use of nominations and assignments for R&D tax credit payments have also been restricted, reducing the incentive for agents to submit spurious claims, providing customers with greater visibility over claims made on their behalf and ensuring claimants receive payments directly.
HMRC also investigate and take action against agents who encourage ineligible R&D claims, including issuing penalties, suspending their ability to make claims on behalf of clients and refusing to deal with an agent. This includes criminal action which can lead to arrests being made for R&D tax fraud, as was seen in September 2024.
The latest error and fraud estimates, published in HMRC's Annual Report and Accounts 2024 to 2025, show that the policy and operational changes are proving effective in driving down non-compliance. The estimates show a drop in the error and fraud rates to 9.9% (£759 million) for 2022 to 2023 compared to 17.6% (£1.34 billion) for 2021 to 2022. Illustrative estimates for 2023 to 2024 and 2024 to 2025 show error and fraud is expected to have fallen further to 6.5% (£497 million) and then to 5.9% (£481 million).
HMRC remains committed to tackling error and fraud, whilst also ensuring the claims process is straightforward for genuine claimants and supports the UK’s most innovative businesses.
HMRC has consulted on widening the use of advance clearances for R&D tax relief claims and has recently recruited an R&D Expert Advisory Panel. The Panel will work with HMRC to increase clarity of guidance for claimants and enhance HMRC’s understanding of innovation and developments across key growth sectors.