Autumn Statement Resolutions

Priti Patel Excerpts

Wednesday 22nd November 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

I am pleased to follow the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). She has made some important points, some of which I will come on to shortly. I am grateful to my right hon. Friend the Chancellor of the Exchequer for his statement. As we go through the details of the announcements and the delights of the OBR forecast, there will be much discussion in the forthcoming debates. I always take the view that Budgets and fiscal events, some of which I have been part of in the past, need to address three crucial challenges: whether they support the economic freedom of our constituents; whether they empower businesses and enterprise to create economic growth, as it is the private sector, not the state, that grows the economy—I will come on to state spending shortly; and whether they manage the public finances in a sound and sustainable way.

I suspect that you, Mr Deputy Speaker, like me are old enough to remember the great Conservative Budgets from the 1980s delivered by Geoffrey Howe and Nigel Lawson—you do not need to agree with me on that right now. They set the benchmarks that any Chancellor, especially a Conservative one, should look to and follow to get the right balance of creating economic growth and sustaining the public finances in a suitable, sustainable and measured way. It should always be the mission of a Conservative Government to ensure that people can keep more of what they earn; it is right that the Chancellor used that statement a number of times and spoke about the fiscal measures he is introducing to ensure that that happens.

Of course, businesses and people spend their money far more effectively, efficiently and productively than the state, which is why low-tax economies are also naturally the fastest growing ones. A lower tax burden would mean more money in the pockets of our constituents to provide for themselves and their families. Having listened to speeches made by those on the Opposition Benches, it is fair to say that we would all agree that we want all our constituents to be well-off, financially and economically, for their families and their futures. A lower tax burden would also mean more money available to businesses to invest and expand. The Chancellor touched on some measures, and I shall do so shortly, on jobs and higher salaries. Naturally, this leads to more resources for economic growth. That is also why I fundamentally believe the Government should look to bring the levels of personal taxation down. The Chancellor mentioned that today, but I might suggest a few cheeky measures to say what more we can do on that, as more can be done.

Today’s autumn statement marks—these might actually be the words of the Chancellor—a major moment when the Government and the country change gear and focus on how to drive growth in the decade ahead with the a package of tax measures, while seeking to ensure that inflation continues to fall. That is absolutely right. There are different ways in which it can be achieved, and the Chancellor has outlined the ways in which he wants to make sure that it happens.

On the measures announced today, naturally I support cutting the main rate of national insurance contributions—the infamous NICs—from 12% to 10%. It was refreshing to not only address but go as far as abolish class 2 contributions for the self-employed. That will have implications and the devil is in the detail, as touched on by the hon. Member for Hackney South and Shoreditch, including issues of interoperability, such as how that will relate to and engage with the pensions system, technical measures and delivery. That is a fact of life. I do not want to be pointed, but HMRC and DWP use two different systems that are not always interoperable; I am a former DWP Minister and a former Treasury Minister, so I have seen that in action. I urge the Government to pay attention to the delivery of that measure, and I have no doubt that the Public Accounts Committee will be watching very closely as well.

On reducing the tax burden, my colleagues on the Treasury Bench will expect me to say that I maintain, fundamentally, that we can do more to freeze income tax levels. I know Treasury Ministers have heard me and indulged me on that subject before. Back in 2010, the measures around the tax-free threshold and increasing the higher rate threshold were a significant way to help families directly, in a sustainable way. I point to that example because it did not lead to a fall in inflation. Of course, the inflationary measures we see now—external measures, such as the war in Ukraine and energy prices—are different, but I will continue to lobby the Government relentlessly because I want to see a shift in tax-free and higher rate allowances.

That is important in the context set out by the OBR today, which states:

“Tax changes in this Autumn Statement reduce the tax burden by 0.7 per cent of GDP but it still rises in every year to a post-war high of 37.7 per cent of GDP by 2028-29. Income tax increases explain most of the increase in this forecast, rising from 10.2 per cent of GDP this year, to 11.3 per cent in 2028-29”.

Those increases are driven by, dare I say it, the threshold freezes in income tax rates and the nominal earnings growth that will come from that. The implications are self-evident: more of our constituents will pay more income tax, there is the infamous fiscal drag and more people will move into higher rate bands, so ultimately 400,000 more people will pay the additional rate.

[Dame Meg Hillier]

Does the right hon. Lady agree that will create a burden for those people who will then have to complete a tax return? In addition, there will be an impact on child benefit, so there is a double whammy once people hit the higher threshold, if they have children.

[Priti Patel]

The right hon. Lady is correct and makes an important point. I do not want to be boxing the ears of my hon. Friends on the Treasury Bench today, which is their day, but I sound like a broken record on this subject. I would go for complete streamlining and simplification of the tax system, even on NI, where I would like to see measures such as the merger of income tax and NI. I would love to see a simple system where we do not have the burdens of bureaucracy. Even when we spoke about full expensing in the Budget, the business and regulatory implications are pretty vast. The childcare measures are very good and encouraging, but from, a personal perspective, even more complexities are being introduced to the system and we, as Conservatives, could do much more to streamline that.

[Ian Blackford]

I encourage the right hon. Lady on what she said about the integration of tax and national insurance. Although such measures are not without their complications, they can be overcome, so perhaps there should be some work across the House to examine that issue. Let us make things simpler and more straightforward for all our taxpayers.

[Priti Patel]

We could have a separate debate on a single income tax and all sorts of other measures. I would like to see tax transparency as well. I am so old-fashioned that I think we should be able to follow every pound of Government expenditure, and that there should be far greater transparency for the public in that regard. I am sure that the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) would support that, too, from her perspective as Chair of the Public Accounts Committee. I do not say these things lightly. In this modern day, when we have much greater digitalisation and access to information, our constituents naturally also want to see more transparency in that area, especially while the Government are investing in artificial intelligence and all sorts of other things, including bots. His Majesty’s Revenue and Customs could be run by bots before we know it, although on that basis alone we might get more efficient telephone conversations and call handling. None the less, more needs to be done, and we should welcome that.

I will move on to a couple of other measures, but just while we are on the subject of taxation and revenues, I wish to make a point about the savings that can be made from Government efficiencies. This matter has not been addressed today, but the Chancellor did touch on it. There is much more work that needs to be done in this area, although I appreciate that this is an autumn statement and not a full-fat Budget. For the spring in particular, this is one area where we can do much more in boosting state productivity. The Chancellor always mentions the P word—productivity—but in 2021-22, just as an illustration, the Government delivered £4.4 billion-worth of efficiency savings. In monetary terms, that was significant, but it represented just 0.4% of public expenditure —a drop in the ocean. For the benefit of our constituents, let me say that that is £1 for every £250 spent. Again, much more needs to be done in that area.

Let me continue on the theme of hard-pressed taxpayers. This was not mentioned today, but at previous fiscal events I have voiced support for the fuel price escalator. I believe that we should do much more to back our motorists and make sure that the 5p cut in fuel duty, which was introduced in 2022, is maintained. There is some important signalling that we can do as a Government to ensure that the UK’s 37 million drivers are not seen as a cash cow. We must back them and continue to remain on their side.

That brings me to business taxes. Our economy relies on private enterprise. I am an Essex MP, and Essex is the county of entrepreneurs. Some 80% of my constituents work for small and medium-sized enterprises, which is 20% higher than the national average. We are proud of those SMEs, but we really need them to keep their head above water. That is why we must always support businesses —small businesses as well as big businesses. It is the small businesses that are the engines of economic growth.

I am proud to represent a county where we have businesses that are hungry to innovate and invest, and I want the Government to free them from the shackles that hold them back. A lot of that is regulation and red tape; and there is far too much of that. I have previously called for a freeze of the small business rate multiplier, and I am pleased that the Chancellor has agreed. That in its own right will have some benefits. I know that it has been reinstated for another year, along with other retail and hospitality measures. Retail and hospitality are burgeoning and important sectors that can help to boost our struggling high streets.

I welcome the continuation of business support with full expensing, which I have touched on, but there should be greater clarity over how that will operate, what it will mean for businesses, and the burdens that it will place on the sector. Will firms have to employ an army of accountants who will eat into their business expenses? Reducing overall taxes on businesses is, of course, welcome. It will help firms to invest, to create jobs and to boost supply, which is incredibly important.

When I call on businesses to invest, that also means that we must do much more to get them to invest in skills. Skills and productivity are the biggest challenges that we face. I would, at some stage, like to press those on the Treasury Front Bench on why we are still not committing ourselves to a labour market strategy around some of the key sectors where we know we have shortages in skills growth. When it comes to specialist sectors, we want to be the hub for technology, innovation and science, so we need to consider what more we can do. We also need to consider the work that is required around the green economy. As a former Home Secretary, I can say that we rely far too heavily on migration to fulfil our labour market needs. For the past five years, even when in Government, I have consistently and continuously called for that to be addressed. It sits with the Treasury, not just the DWP, and I urge the Chancellor to make good on those calls. I have discussed it with him several times.

I want to speak about the importance of the energy sector. The Chancellor touched on connectivity to the national grid in today’s autumn statement. I am an Essex MP. Off the coast of the east of England, we have enormous potential when it comes to increasing our energy security, because we have been successful in producing renewable energy offshore. We are effectively a hub in the east of England, where we have had investment. Efforts to develop the sector and increase renewable energy are welcome, and we are proud of the work that has taken place, but we are now suffering from the lack of strategic planning.

Windfarms have received consent and been developed without serious thought being given to interoperability and connection to the network and to the grid. That has resulted in one of the most deeply unpopular policies from central Government, which is now affecting the whole of the east of England: the National Grid’s plan to cover the east of England countryside with over 100 miles of pylons and overhead power lines. Our constituents do not support that. I am fully aware of what the Winser review says, and of the prospect of support—financial bribes, as my constituents call it—for local residences, but we need to ensure that there is proper engagement.

We are putting forward alternatives to pylons, and offshore options that we want to work with the Government to develop. That would support our renewables sector, bringing further skills to our region and our country. Ultimately, we have to address the issue of local constituents feeling frustrated. They resent that this is being done to them, rather than it being their suggestions and some of the local investment being taken into consideration. There is a sense that decisions are being made in an opaque way and that their views are being ignored. I would welcome better dialogue and consultation from the Government on this.

The Chancellor touched on the fact that devolution deals are under way. This is a work in progress for us in Essex. I would very much like to engage with the Treasury and the Government on what a greater devolution deal would mean for our fantastic county, particularly when it comes to investment in skills and infrastructure. Devolution deals can promise the earth, but central Government have to deliver the goods, and it has to translate into a return on the investment locally. In Essex, we are net contributors to the Treasury, so we can apply the multiplier effect and work out where we are getting the benefits, and where we are not getting our return on the investment. We should have further discussions on that.

I welcome the direction of travel in the autumn statement. The Chancellor has opened the door to sound economic principles of lower taxes. I welcome the support for business, which is fundamental. I urge everyone on the Government Front Bench to continue to look at ways to lower taxes, including personal taxes. Times have been tough for the British public. We want to ensure that all our constituents are able to keep more of the money that they earn, and ultimately have a secure economic future.

Oral Answers to Questions

Priti Patel Excerpts

Tuesday 14th November 2023 Commons Chamber

[Gareth Davies]

Fuel duty is a major cost for households and businesses. We recognise that. That is why in the spring Budget 2023, the Chancellor extended the 5p temporary duty cut. That was a £5 billion saving for motorists, worth £100 for the average motorist, but we always keep these things under review.

[Priti Patel (Witham) (Con)]

23. What steps he is taking to support economic growth in Essex.

[The Economic Secretary to the Treasury (Bim Afolami)]

As my right hon. Friend knows, the Government are committed to supporting economic growth all over the country, but particularly in the wonderful county of Essex. The recently announced £1.1 billion long-term plan for towns will, for example, provide £20 million of flexible funding over 10 years to Clacton, and there are many other measures.

[Priti Patel]

I welcome my hon. Friend to his new role. I hope that he will know not only that the only way is Essex, but that Essex is a net contributor to the Treasury. We want more economic growth in Essex. In a week’s time, we will have the autumn statement, so may I give a message to those on the Treasury Front Bench? May I appeal to the Chancellor in particular to look at lowering the rates of personal and business taxation, particularly the areas of business rates, corporation tax and all aspects to do with enabling people to keep more of the money they earn?

[Bim Afolami]

My right hon. Friend tempts me to make tax policy. What I will say to her is that she will know that the Chancellor always keeps these things under review, as do the Government. Indeed, we have a fiscal event shortly.

Economic Growth

Priti Patel Excerpts

Tuesday 14th November 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

It is a pleasure and an honour to contribute to the debate. I congratulate His Majesty on delivering the King’s Speech last week, following in the footsteps of his late, great mother and undertaking his constitutional duties to Parliament and our country. I also wish him a happy birthday today.

With the autumn statement just eight days away, it is clear that we need to see ambitious fiscal measures introduced to complement the economic growth provisions outlined in the King’s Speech. Tackling inflation has rightly been one of the Government’s priorities: we understand the corrosive effects of inflation on the economy, economic growth and households around the country. We need the rate to fall further, to manageable levels, but we must also increase supply through reforms and lower business costs to ultimately help bring down inflation.

There are many measures I would like to touch on in the time I have available. One, which I spoke about earlier this year, is the 5p reduction in fuel duty that the Chancellor maintained in the spring, which was incredibly welcome. Such measures are essential, as they can make a huge difference to households and businesses across the country. Against an inflationary backdrop—although we know it is decreasing—this matters because it helps to bring costs down across the whole economy and, importantly, can help businesses and motorists. I say that as an MP from Essex, where we are proud of white van man and where drivers come into London, in particular. Let us not forget that there are other pressures on motorists in London because of the additional burdens they now face, such as the ultra low emission zone.

Alongside that, there is the issue of business rates, which I often speak about. They are a fixed cost to businesses, but actually impede growth on our high streets. As we know, our high streets and town centres are struggling for many reasons. If addressed in a considered way by Government, a freeze in the business rates multiplier can help small businesses and firms to keep their costs down. I press the Government to maintain the freeze in the multiplier and look at reforms to lower the cost burden of business rates, which is having such a corrosive impact.

Some 80% of my constituents are employed by SMEs, which is 20% higher than the national average. We are very proud of that. Essex is an entrepreneurial county and we are risk takers. We like running our own businesses and being self-employed, but that means that the share of the burden on those smaller businesses is much higher. As Conservatives in government, we must always look to tackle that.

To return to my other favourite subject, the Government are aware of my concerns about the OECD plans for minimum levels of corporation tax and the way the Government are rolling them out. I fundamentally maintain the position I have taken on this issue, and the Chancellor of the Exchequer has given me assurances over the assessment and analysis that will be carried out of its impact. We touched on this during discussions about the Finance (No. 2) Act 2023, but those measures will make our country less competitive. They will have an overall impact on businesses, foreign direct investment and investment in our country, so I will want to press Ministers on the reviews of them going forward.

I also maintain my position on income tax. The tax system needs to be simplified and fairer, and we need to reduce the burdens on families and businesses, including levels of personal taxation. One of the core missions of the Conservative party is to support economic freedom and liberty by cutting taxes, ensuring people can keep more of what they earn and encouraging the development of a property-owning democracy, which has been a topic of discussion in the Chamber this afternoon.

Universally, we in this Chamber know we need reforms on planning and that we need to do more on social housing, as well as growing housing across the country in a sustainable and suitable way. People are struggling and the cost of owning property, or even getting a foot on the housing ladder, is astronomical, so we need to do more. I could go on to other statistics, but in the interest of time I will raise another couple of local issues.

In Essex, we are crying out for infrastructure investment. I will happily write business cases to the Treasury on dualling the A120 and expanding the A12. We have had a tremendously successful programme of investment on the great eastern main line because of a business case that went to the Treasury 12 years ago. We are proud of that, and that growth is now paying off.

I want to press the case on pylons and the Winser review. In Essex, we have concerns, which the Treasury must listen to, about the implications of the review. I support the wider measures on energy production and the introduction of the Offshore Petroleum Licensing Bill, but more needs to be done.

To conclude, I welcome the framework of measures, but we have to look at the detail on supporting supply-side reform, lowering taxes for businesses, making sure our economy grows in a sustainable way and dealing with the challenges of inflation, so that we ensure our economy grows for decades to come.

Oral Answers to Questions

Priti Patel Excerpts

Tuesday 5th September 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

Research and development tax credits are vital to help businesses grow and invest, but I have received a large number of complaints from businesses across Essex saying that they are facing complexities and delays in processing claims with HMRC. May I please ask the Minister to meet me and some of these businesses to work through the delays and ensure that these businesses can continue to thrive and grow, because they are vital to our economic growth?

[Victoria Atkins]

I would be delighted to meet my right hon. Friend and those businesses. In fact, the UK is leading world economies with our focus on life sciences and on tech. In that little golden triangle between Oxford, Cambridge and London, we have more tech businesses than anywhere else on the planet other than New York and silicon valley. I hear the cheers opposite, so keen are Labour Members to support British business, but I would be delighted to meet her and to underline the support that this Government give to such important businesses.

Finance (No. 2) Bill

Priti Patel Excerpts

Report stage
Tuesday 20th June 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

I am grateful for the opportunity to speak to amendment 20, tabled in my name, which has the support of more than 25 right hon. and hon. Members.

It is not breaking news that I remain concerned about the introduction of a global minimum corporation tax. We have debated the issue in the House, in Committee— Ministers, the Chancellor and colleagues, including the hon. Member for Ealing North (James Murray), the Opposition spokesperson, are aware of my views—but I think it is right that we have the right level of scrutiny of the policy because I have concerns about the implementation, which I have raised consistently.

Before I come to the range of concerns about the policy, I will touch on the remarks made by the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin). She spoke about the need for business certainty, which is crucial, as did the hon. Member for Ealing North. I believe that the implementation of this tax policy creates challenges for businesses and for business certainty. As she highlighted, it also exacerbates the complexities that businesses face when it comes to administering these policies. There are also implications for capital allowances.

[Richard Drax]

I congratulate my right hon. Friend on amendment 20. The only certainty that the Opposition can offer to businesses is that taxes will be so high that businesses will fail—that is about the only thing the Opposition can do. So far as this measure is concerned, can she tell the House what the Americans think of the idea? Where are they in their thinking?

[Priti Patel]

I thank my hon. Friend for his support for the amendment and for his comments. As we have discussed previously—I was going to touch on this—the United States is not in a position to introduce the policy. It is a fact—politics in the US is like politics here or anywhere in the world—that the Republican party has made it abundantly clear that it will not allow this policy to go through. It wants to go further and to bring in legislation that will put retaliatory measures in place against countries that impose the new tax and burdens on US businesses and multinationals.

Returning to the amendment, I will come on to some specifics with regard to the dialogue I have been having with the Minister and the Chancellor on this subject. It is right that we scrutinise the policy, which the amendment seeks to do. It is right for the Government to pursue international agreement to address the complex tax arrangements, which hon. Members have referred to, that exist with multinational corporations and businesses operating in multiple jurisdictions. That is vital and makes sense.

[Richard Foord (Tiverton and Honiton) (LD)]

On the point about multinational corporations, does the right hon. Member think that it is right that we treat multinational corporations that produce oil and gas in a different way from the way we treat renewable energy companies, including companies that produce renewable energy and invest in renewable energy projects? At the moment, it seems that the energy profits levy treats those things in different ways. Will she be supporting Liberal Democrat amendments to the Bill to encourage investment in renewable energy projects?

[Priti Patel]

I thank the hon. Gentleman for his comments. I would rather businesses had zero taxation policies. I should declare an interest: when I was a Treasury Minister many years ago, I undertook the fiscal review of oil and gas. Frankly, we need to do everything to stimulate investment in both oil and gas and renewables. I would like to see consistency in policies on that.

Specifically to my point about multinationals and how they are taxed in jurisdictions, I support the Government in the sense that it is right to look to close tax loopholes where we see companies operating in multiple jurisdictions, but the plans for a global minimum tax are wrong, as I have raised in the House before. They are wrong and flawed for a number of reasons.

No one would deny that the introduction of such a measure is complex—it is not straightforward. I paid attention to the comments made by the hon. Member for Ealing North. There is no point just saying that we need to crack on and implement this; we have to do it in the right way, which is why I put forward the amendment. It even gives the Government scope for more time to look at the complexities around its implementation and to look at what our competitors are doing. We should not rush headlong into this. These are complex changes that will be challenging to enforce; I will speak about that, too.

I believe the measure is anti-competitive. It undermines our fiscal sovereignty. Without labouring the point too much, we have left the EU. The Government have the ability to make their own tax laws and fiscal sovereignty is crucial to this, too. Why are we are now going to surrender tax powers to the will of the OECD?

Economic growth has already been mentioned by my hon. Friend the Chair of the Treasury Committee. We do not want to undermine our ability to be a low-tax global beacon of free trade. The Government are pursuing policies such as freeports. We all welcome that when it comes to competition, but we do not want to encourage a culture of subsidies, which this policy will do.

I believe that Governments and Parliaments must have flexibility to set their own fiscal policies and tax rates, striking a balance across all sectors, including multinational companies and small and medium-sized enterprises. Speaking as an MP for Essex, which is known to be an entrepreneurial county, SMEs are the backbone of our economy. We have to strike a balance between being competitive and having low tax rates to attract investment, and generating revenue to support public services—I agree with the hon. Member for Ealing North about that. If we are not competitive, we will not have the tax revenues to support public services. However, a minimum corporate tax would prevent us from doing that.

There are problems with the OECD’s plan, which is why I want to have greater scrutiny on implementation. The enforcement and implementation mechanisms are unclear and countries could find ways around them, which should concern us. They could find loopholes to circumvent the policy. The UK looks set to gold plate measures. We follow rules and standards when we sign up to them, which is the right thing to do when it comes to our Government policies. The same cannot be said for more than 130 countries that have taken an interest in the matter. For many, agreeing to the OECD framework appears to be more about rhetoric and the ability to take action on taxing multinationals, than making the changes necessary and following the committed approach that this Government plan to take. I have no doubt that the Minister will want to speak about that, because the Government are being diligent in their approach and more scrutiny is required.

Moreover, limiting fiscal freedoms opens the door for countries to entice investment from big businesses with big subsidies, which distorts the market. All hon. and right hon. Members will understand that in a subsidy race we simply cannot compete with the United States or even China. Some countries can pump millions of dollars into supporting investment from multinationals. That is not what we do in this country.

We are more competitive as a country in being able to deploy a full range of fiscal and tax-cutting powers, than we are in a race to the bottom with subsidies. There are serious concerns about how these plans will be enforced and, importantly, how disputes between countries will be resolved. I understand that negotiations with the OECD are taking longer than expected, which is not a surprise, and I think it will be some time before an agreement is reached, but by baking into primary legislation a requirement for us to implement without any further flexibility, we risk blindly signing up to a package where foreign officials could overrule decisions and interpretations in our own jurisdiction and in on our own Government.

The peer review panels, being set up to review implementation, could be made up of representatives from China or other hostile states—for example, Russia—all countries which are involved in the process and states that have concerning records on human rights, war crimes and other conflicts, which we debate in this House day in, day out. Frankly, they do not meet our standards and we should be cognisant of that. Our tax affairs could be judged by representatives from states that many in this House are concerned about.

There is then the issue of the date of implementation, which I have referred to in my amendment. The Government have been clear that they will implement the policy by the end of this year— as clause 264 states, from 31 December 2023. This measure, despite the concerns I am raising, can only have a chance of succeeding in the way the Government hope if it is implemented in a constituent manner by all states—or, if not that, by a critical mass—at the same time. This is where we have concerns. We are just not seeing this right now in other countries and among our competitors, because they are not as wedded to the date as we are. I understand why we have to put down the date to enshrine it in law.

The United States, as my hon. Friend the Member for South Dorset (Richard Drax) has mentioned, will not be able to take this through to implementation by 2024. The Republicans in the House of Representatives are opposing those plans. But as well as opposing and preventing the US—our largest trading power—from introducing them, they are threatening retaliatory measures on countries that implement the policy, and in doing so will penalise US-based companies. So we could have a situation where this Government introduce a tax measure that adversely impacts on our trade and investment with the US. Of course, that could have an impact on trade negotiations and some of the work that other Departments are doing—such as Business and Trade, for example.

It would be interesting to know from the Minister whether this issue was discussed by the Prime Minister and the President in their recent bilateral talks. The US is crucial in this, but it is not just the US that will not implement the policy. The EU members are not going to implement the policy fully on day one. They have been given six years to implement tit. In Asia, major economies and competitors are setting dates behind the UK: Japan, Singapore, Thailand and Hong Kong. Although that the Government have been clear about their intent, we need to know what they intend to do on implementation. I have put my own concerns about this tax on the record. I think the date is wrong.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

My right hon. Friend knows that I have signed her amendment. It is a good amendment because the compromise, as it stands, gives the Government more time to think carefully about what we are doing here. As she said, the Americans are almost certainly not going to implement this measure. That means that the single largest trading nation in the world will not play a part in this. What assurances has she secured from the Government? Will she press her amendment tonight? If she does so, I will support her. If she does not press it, I will understand that she has some assurances. Can she spell out what the assurances from the Government are?

[Priti Patel]

This is important. The purpose of scrutinising the Bill and discussing the amendment is about the implementation and how the Government will pursue that. We have big concerns. Other countries are not moving forward, so we will be the first. We need a sensible and practical course of action. My amendment is reasonable.

I have had discussions with the Chancellor in particular. He has given some very clear assurances that, in the light of the points that I have raised, not just today but previously, and the conversations that I and all colleagues who have signed the amendment have had, in respect of the implementation of the tax, the Government have committed to bring to this House regular updates on what the OECD is proposing with regards to policing pillar 2. That speaks to my point about how all the enforcement mechanisms will work and about whether countries will be circumventing the rules and the structures of pillar 2. Also, before the summer recess, they will bring forward some detailed assumptions and modelling. The Treasury has forecast and scored, as I understand it, the expected tax revenues from pillar 2. That is something that I have been pursuing and asking specific questions about. It is important that we understand not only what revenues are gained, but the costs that will be incurred, particularly by businesses.

I have received clear assurances that the Government will publish, ahead of the autumn statement, details on the compatibility—or even the lack of compatibility—and interoperability of the US’s global minimum tax legislation and that proposed by the OECD. That, of course, has an impact of double taxation for companies.

Finance (No. 2) Bill

Priti Patel Excerpts

Committee of the whole House
Tuesday 18th April 2023 Commons Chamber

[James Murray]

I am going to make some progress.

Finally, our new clause 2 would require the Government to set out their approach to pillar one of the OECD agreement and the digital services tax. We know that, unlike pillar two, the implementation of which is proceeding both here in the UK and in many countries overseas, the prospects of pillar one being implemented in the near future look less positive. That is likely to have an impact on the Government’s approach to the digital services tax, so I urge the Government to support our new clause, which requires the Chancellor to make a statement to the House on the matter. While new clause 2 has not been selected today, I none the less encourage the Minister to set out the Government’s approach to pillar one and the digital services tax in her closing remarks.

Through today’s debate on the Bill’s clauses and our amendments, we have seen the state that the Government are in. We have seen how they are failing to provide our economy with the stability and certainty that is needed for growth—growth that we need in every part of the country to make everyone, rather than just a few, better off. We have seen how the Government’s Back Benchers risk putting their party before our country at every turn, and how they are unable to provide the long-term plan that people and businesses need. We have seen clearly how this Government are refusing to take fair decisions on taxes—putting up council tax for families across the country, rather than strengthening the windfall tax on oil and gas giants.

When we come to vote at the end of this debate, I urge all hon. Members to support Labour’s new clauses and expose the unfair choices that this Prime Minister and this Conservative Government are making, which are leaving our economy on a path of managed decline.

[Priti Patel (Witham) (Con)]

I rise to speak to the topic at hand, but I want to begin by thanking the Minister for the way in which she has tackled this Committee sitting and her familiarisation with the points made on Second Reading.

I am on the record as having concerns about not just the implementation but the purpose of all this. No one would disagree that multinational companies need to pay their fair share of tax, but I question the way we are going about achieving that. I put it on the record that I was semi-humoured by the comments of the Opposition spokesperson just now. Even when the Labour party is taking a break from its efforts to heap extra burdens on businesses, which is obviously what it stands for, it is raising concerns about implementation timetables.

Labour has missed the opportunity to speak up for British businesses, so it falls to those on the Conservative side of the House to do that. We believe in competition, business growth and business investment. My right hon. Friend the Member for Chelmsford (Vicky Ford) is not in her place right now, but sectors such as insurance employ my constituents, probably the constituents of the hon. Member for Ealing North (James Murray) and hundreds of thousands of constituents up and down the country. Those are the types of jobs we should try to safeguard in the United Kingdom.

The hon. Gentleman was partisan, so I will make a point now as well: the response of the Labour party is always to build up even more red tape, regulations and reporting. I think we all know how we adopt regulations in this country. My own personal view, which I attested to on Second Reading, is that I would like to have a delay to implementation until we see a critical mass of other countries, including very significant competitors, moving some way towards implementing the tax, as has been said by colleagues this afternoon.

As my hon. Friend the Minister already knows from interventions today and from Second Reading, I feel that this new tax risks placing significant compliance costs on British businesses, which are already paying well above the minimum 15% tax rate. We must recognise that there are current pressures and that these inevitable costs will be fed on to consumers. I have touched on the insurance sector, but at the end of the day it is consumers who will end up picking up the costs through higher premiums and other impacts on them. On top of consumer prices, which bear the brunt of that and are also inflationary, there is no way, given the delays that we are seeing elsewhere, that implementing this tax will not have an impact on our competitiveness. By pressing ahead, we risk capital flight and jeopardising future investment income.

Finance (No. 2) Bill

Priti Patel Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

It is an honour to follow the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), because I wholeheartedly support the principle of getting more parents into work and, importantly, we both became Members of Parliament at a similar time, when we both had small children. There is a clear understanding that the childcare system in this country has been dysfunctional and unaffordable for too long. I was a Minister in a Government who developed the policy of tax-free childcare, and we wanted to simplify it. I think she made some important references to simplification and making childcare much more accessible to and practical for parents—we need that.

I say that because our country and our economic prosperity are built not on the foundations of government, high taxes and regulations, but on the ingenuity of the human spirit and the British public going out to work and contributing. That is effectively what we need to be doing. Our economic strength comes from the entrepreneurial spirit of businesses—obviously, I say that as an Essex MP—and from the nation’s wealth creators: our army of hard-working businesses. I come from a small business background myself—people know that I have worked overseas and all the rest of it. That is what builds economic foundations and protects us, allowing us to weather economic hard times.

We must recognise, of course, that we have seen economic hard times—certainly in my decade in this place—and we are not out of the woods; we have high levels of inflation. We also have challenges in the banking system, which could have long-term repercussions. We want to get the economy growing, and for the Government to meet their pledge to grow the economy, create more better-paid jobs—we all believe in better-paid jobs—halve inflation and reduce the national debt, we need businesses such as those in Essex. My hon. Friend the Exchequer Secretary to the Treasury is a Suffolk MP, and I am adding the entrepreneurial eastern region. We have to give people the bandwidth to invest. We need them to feel confident about the strength of our economy and that businesses will do a great deal to invest.

Of course, Governments do not create jobs—we need to recognise that—but they can help to generate growth. That is why we need the right economic foundations, fiscal framework and supply-side reforms—about which we do not talk enough—to encourage free enterprise. So many of us in this place are old enough to remember that that was the approach that lifted our country out of the economic doldrums in the 1980s. As I said in the Budget debate, there are many positives in the Budget, but there is a strong sense among the business community that the Budget and the Bill could have gone further, and that we need to think about future-proofing where we as a country go on the economy and, as many of my hon. Friends have said, about addressing the high tax burden, which curtails our economic freedoms.

I could make many references to one great Conservative, the late Baroness Thatcher, who said:

“Our challenge is to create the kind of economic background which enables private initiative and private enterprise to flourish for the benefit of the consumer, employee, the pensioner, and society as a whole.”

For me, those are the basic tests by which we should judge a Budget and a Finance Bill. Do they support private investment and enterprise? Do they ensure that we are internationally competitive? Do they help households and businesses by giving them economic freedoms?

I will touch on some measures that have already been mentioned. On the rise in corporation tax, there are measures to provide more relief, which can be welcomed, but I do not believe in increasing taxes and then providing relief to compensate for them. Too many risks come with relief. It can create complexities in the tax system, and small businesses in Essex will have to employ armies of lawyers, tax accountants and specialists. I just disagree with that; I do not think it is right, as I said in the Budget debate. I believe that we need a simplified tax code underpinned by lower taxes. We have been talking about that for years in this House but we struggle to deliver it. Of course, businesses are frustrated by that because they are the ones that have to pay the costs of it. Entrepreneurs and small businesses are subject to more regulatory costs and more restrictions, which stifles innovation. We need to do much more in that space.

The OECD minimum rate of corporation tax is a hugely complex change to our tax system that has so far progressed with very limited scrutiny, I am afraid. Given the extent of the 159 clauses, that scrutiny may happen in Committee, as colleagues have said. I hope the Minister can assure me that the time allocated to those clauses in Committee will reflect their complexity, and that key sections will be considered by the whole House, because we are deeply concerned about the impact of the change on the UK’s economic future. I have concerns about the administrative costs of those measures for businesses. We need to look at the change in more detail, given that businesses are already paying above the 15% tax rate. That is of great concern.

[Bob Stewart]

Small businesses in my constituency are complaining hugely about the fact that they will have to employ more and more accountancy hours in order to do their work. It is a real problem because it costs them more and more money.

[Priti Patel]

My right hon. Friend is absolutely right, and that brings me to a point that I hope the Minister will seek to address. The Government’s impact assessment suggests that the costs could be around £13 million initially, and then an additional £8 million annually to maintain. This is a total underestimation. When the lawyers, tax accountants and everything else—the layer cake—is included, the cost will be phenomenal. For example, the insurance sector believes that its compliance costs will increase by a minimum of 20% to 25%. Others say the increase could be as high as 40%. These are business costs—I do not need to spell them out any further.

To quote the Government, the effectiveness of the policy

“depends on a high degree of consistency of the implementation in different jurisdictions”.

It has already been said this afternoon that although we are pressing on with implementation, other countries are not. As my hon. Friend the Member for South Dorset (Richard Drax) said, the EU has granted many member states the right to delay for up to six years. The US is not going to implement it at all. We know exactly what the White House and the US House Committee on Ways and Means have said. If the UK progresses ahead, how high a degree of consistency can we expect elsewhere? In America, the House Committee on Ways and Means is threatening retaliatory measures against any countries that attempt to collect additional taxes from US corporates. We need to understand the implications across Government, because this is about not just the Treasury but the Department for Business and Trade. What impact will the Bill have on the prospects of a UK-US trade deal?

Finally, we are legislating before a final international agreement has been reached. As we know, negotiations are ongoing in respect of several measures, not least the infamous international dispute resolution, which seems to have plagued most Government policy in many other areas. We are signing up to a deal when we do not know whether it will be so loosely policed that China and other countries can game it without thinking about the wider implications. I know that the Minister will pick up these points, and I thank the Front-Bench team and the Chancellor for their strong engagement on all these issues.

I wish briefly to touch on the point that has been made about the Office of Tax Simplification. Much more work needs to be done in this policy area. At the end of the day, it applies to issues such as personal taxation rates. We on this side of the House are Conservatives and believe in allowing people to keep more of what they earn, and we trust them to make more informed choices about how they spend their money. Notwithstanding not just this Finance Bill but previous ones, it is fair to say that since 2010 we have lifted many of the lowest-paid out of income tax by increasing the tax-free allowance to £12,570. We should be proud of that. It has doubled under us and, along with the introduction of the national living wage, we have helped those on low incomes, which is absolutely the right thing to do.

The previous Finance Act that we passed froze the tax-free allowances and respective tax bands until 2028. I want to see so much more done in this policy area to give people more freedoms and to let them keep more of the income they earn, rather than having the state continuously robbing Peter to pay Paul and then reallocating so much public money in difference schemes.

We now face a real problem with fiscal drag that we have to address. Middle-income earners have already faced the impact of fiscal drag, with little change in the 40% higher-rate threshold in recent years. We also know that in 1990-91 there were 1.7 million higher-rate income tax payers out of 26.1 million, which was less than 7% of all earners. Now there are 5.5 million higher-rate income tax payers out of 34 million, which is 16% of all earners. As Members can work out, over the past 30 years we have gone from one in every 14 income tax payers paying the higher rate to one in every six. That is very significant, so this is one area that I would say to the Government, to Treasury Ministers and to the Prime Minister has to be kept under review.

To conclude, I encourage Government Front Benchers to drive forward everything that will promote free enterprise and to look at good tax cuts that will really help people, including those who, quite frankly, are struggling: low-income earners in particular, but also small businesses around the country. This is not just about the large corporates, but those that employ people in our communities. Those businesses are the backbone of our communities and our societies, and if we do more of that, we will have stronger economic freedoms to grow our economy and make our country more prosperous again.

Oral Answers to Questions

Priti Patel Excerpts

Tuesday 21st March 2023 Commons Chamber

[Jeremy Hunt]

It would be if his comment had not been quoted out of context, as the hon. Gentleman just did, because he also said that he could see in the Budget a growth plan and he strongly welcomed measures such as the childcare reform.

[Priti Patel (Witham) (Con)]

In the light of the current pressures on the international banking system, can the Chancellor give an assurance about and an update on the actions he will be taking to ensure that credit flows to small and medium-sized enterprises, our rural businesses and, indeed, start-ups, because at the end of the day they should never be penalised for the misdemeanours of large banks?

[Andrew Griffith]

Yes, I can give my right hon. Friend that assurance. This Government are very keen to make sure that there is a strong flow of credit to the very smallest businesses in society.

Oral Answers to Questions

Priti Patel Excerpts

Tuesday 7th February 2023 Commons Chamber

[Priti Patel (Witham) (Con)]

T2. I noted the Financial Secretary’s earlier comments about the implementation of the OECD’s global minimum corporation tax, but can she or the Chancellor provide some kind of clarity over the plans for the dispute resolution mechanism under pillar two and, importantly, say something about the assurances that will be given to businesses that will be affected by it in the next financial year?

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

I thank my right hon. Friend for her question. The pillar two rules mean that large companies—these are defined as businesses with revenues of €750 million or more—are subject to a top-up tax if the profits that they make are not subject to at least a 15% tax. The reason that the international community is coming together to draw up these rules is precisely to do with the new shape that all our economies are taking, with international businesses spreading out around the world. We are trying to find a way to ensure that those very profitable businesses pay their fair share of tax.

Oral Answers to Questions

Priti Patel Excerpts

Tuesday 11th October 2022 Commons Chamber

[Kwasi Kwarteng]

As my right hon. Friend the Chief Secretary to the Treasury and I have repeatedly said, no decisions have been made. The usual statutory process is being undertaken, and we will have more detail at the time of the medium-term fiscal plan.

[Priti Patel (Witham) (Con)]

The Chancellor will know that Essex is a pro-growth county and a hub of economic growth. To support job creation and more economic growth, will he commit to funding the dualling of the A120 between Braintree and Marks Tey and, importantly, along the route that the county council, businesses and the local community have specified?

[Kwasi Kwarteng]

I pay tribute to my right hon. Friend for her role in the Cabinet and the Government. She is a fantastic colleague. I wish to confirm that the A120 between Braintree and the A12 remains under active consideration, alongside the rest of the third road investment strategy pipeline.