Coronavirus Job Retention Scheme

Rosie Winterton Excerpts

Thursday 17th September 2020 Commons Chamber

[Relevant Documents: Second Report of the Treasury Committee, “Economic impact of coronavirus: Gaps in support”, HC 454; and the Government Responses, HC 662 and HC 749; and Eighth Report of the Treasury Committee, “Economic impact of coronavirus: the challenges of recovery”, HC 271.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

I am sure right hon. and hon. Members will know that the two Backbench Business debates are very well subscribed, so there is likely to be a four-minute limit on Back-Bench speeches for both. As we are running behind quite a lot, that limit might have to go down further. With two debates, there will be two Front-Bench winding-up speeches, so the amount of time for Back-Bench contributions will be fairly short.

Covid-19: Future UK-EU Relationship

Rosie Winterton Excerpts

Wednesday 15th July 2020 Commons Chamber

[Pete Wishart]

Well, they never really have. They are no longer a force in Scottish politics—they been well beaten into third place. But we do not really bother about the Labour party in Scotland, just as we are increasingly not bothering about the Conservative party, who we are now beginning to trounce once again.

Then there are the Liberals, none of whom have turned up. [Interruption.] No—the hon. Member for Edinburgh West (Christine Jardine) may have turned up to make a speech, but she is not here for the wind-ups—which is rather discourteous, Madam Deputy Speaker, though I say so myself. She is not here, and neither are the other Scottish Liberals who made speeches today.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. May I clarify? Due to social distancing restrictions, people are not always required to be here, as previously. I know that the hon. Gentleman would not want to cast any aspersions.

[Pete Wishart]

I note that, Madam Deputy Speaker, and I apologise. But there are empty seats; if any of them want to come down, they will still find a few seats where they could sit down and participate in this debate.

The curious thing about the Liberal Democrats and their speeches is that they were not congratulated by these Benches but cheered on by the Tories. They made better Unionist speeches than you Tories! Probably the most thorough Unionists in the whole of Scotland just now are Liberal Democrats. Again, it is no wonder that they are down to God knows how many Members.

Back to the Conservative speeches. There is one that I have to single out, by the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont). It was absolutely and utterly appalling. He tried to suggest that a constitutional political party that has done nothing other than promote our cause civically and democratically is somehow anti-English and racist. That was an appalling slur, for which he should apologise. He is not here, but I tell him something—[Interruption.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Please—no yelling at each other. It is very unseemly.

[Pete Wishart]

I will tell the hon. Gentleman something about condemning things. I condemned what happened on the border a couple of weeks ago within an hour. I will condemn any of that type of activity: whether it is Unionists and loyalists protesting in Glasgow’s George Square, or whether it is activists on the border, I will condemn them. I invite the Scottish Conservatives to condemn those other protests too.

We all have great fun observing what is happening with the “negotiations”—these things that the Government turn up to with the EU. We in Scotland, I suppose, are just a bit more dispassionate about these things. We observe what is happening.

On the one side, we see the EU negotiating team, briefed to the eyeballs, with intimate knowledge of every detail of the withdrawal agreement and political declaration, negotiating in good faith and determined to protect the integrity of the single market and the institutions that have built up over the decades. Then the UK team turn up, and before they have even had the chance to lace up their clown shoes, the EU are running all over them.

The UK team are clueless—no idea what they want, constantly shifting the goal posts. I will tell the House what it is like: it is like the Scotland team of the 2020s out there on the field against the Brazil team of the 1970s. It is that one-sided. It is no wonder that the Europeans are running circles around them just now. It might all just be a clever ploy: perhaps the Government are setting things up to fail so that they get their coveted no deal, which is exactly what they are after. Nobody could be negotiating as badly and poorly as the UK team just now.

Scotland is making up its mind. A majority of people in Scotland now want it to be an independent nation; we have now reached sustained majority support. The thing is that we are doing well in not just the traditional communities—middle Scotland is joining us now. Do Members know who the most passionate supporters of Scottish independence are now? They are “no” voting remainers, who are flooding to our cause. I thank them for being the biggest recruiting sergeants for Scottish independence that we could possibly get. I thank them for driving many more people to the cause of Scottish independence.

[Ian Blackford]

Will my hon. Friend join me in giving some friendly advice to the Government? Devolution has been around for only 20 years—it is a relatively short time in our history. We are proud of our Parliament, and we want it to be independent. People have a real sense of pride, right across Scotland, in what our Parliament has achieved. I have to say in friendly terms to the Government that tomorrow they will introduce a White Paper—we know more about that now, and crucially, in that White Paper, they set up an unelected body that will determine whether or not the Acts of the Scottish Parliament are competent within the new framework that the UK is establishing. It is really quite remarkable—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. That is quite a long intervention. Pete Wishart.

[Ian Blackford]

If you say so, Madam Deputy Speaker. This is the most crucial measure on devolution and it is right that we raise the issue properly. I say to the

Deputy Speaker that Scotland’s voice will be heard.

[Madam Deputy Speaker]

Order. That was extremely rude.

[Ian Blackford]

I beg to differ—[Interruption.]

[Madam Deputy Speaker]

I know they are, but there should be—[Interruption.] The right hon. Gentleman must resume his seat. Pete Wishart.

[Pete Wishart]

Thank you, Madam Deputy Speaker. My right hon. Friend is absolutely right and spot on to be absolutely furious about what is planned for Scotland. Let me tell Government Members something. They are all bawling and screaming. Put the cameras on them—we want Scotland to see them screaming at us. We want to see them screaming at us—that builds support for us. [Interruption.] Keep on doing it.

--- Later in debate ---

[Ian Blackford]

On a point of order, Madam Deputy Speaker. Thank you, I am most grateful. I have received a press release, which has come from the UK Government this afternoon, about a White Paper that will be issued tomorrow morning. It covers the issues of the devolved institutions and the establishment of a UK-wide market. I have to say that we on this side of the House are absolutely furious that this matter has been briefed to the press. I have not, as was suggested earlier, been informed by “Newsnight”, but from elsewhere. Moreover, not only has this been briefed to the press, which I would suggest is discourteous to this House, but none of the devolved institutions has been informed of this White Paper ahead of the media briefings this evening.

Can I ask what mechanisms are open to us, now that we know this is in the public domain—yet the Minister has not sought to inform the House—to summon the Minister to explain this this evening? Moreover, the reason for the importance of this, despite what has been said from the Government Front Bench, is that it will lead, if it is passed, to the establishment of a body that will have oversight of legislation that comes in front of the devolved institutions. We will have to justify, for example, what we have done on tuition fees, or what we have done on the minimum pricing of alcohol. It is an attack on devolution pure and simple, and we must have the opportunity, now that the Government have communicated this to the media, to make sure that we hold this Government to account this evening and without delay.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the right hon. Gentleman for his point of order, and for giving me notice of it. I certainly got the impression that he made his feelings known about this during the course of the debate. I think the House is not unaware of that. With regard to a Minister coming to the House this evening, I have no notice of that, but I believe there is certainly going to be a statement tomorrow on this issue, and I am sure at that point he will have the opportunity to reiterate his views. In the meantime, those on the Treasury Bench have heard what he had to say, and will have noted it and will, I am sure, report back.

[Jacob Young]

On a point of order, Madam Deputy Speaker. I believe it was the right hon. Member for Walsall South (Valerie Vaz) who previously claimed it was “jaw-dropping” that the Government had not voted on an Opposition day motion, and she described abstaining as cynical. Given that the Labour party has chosen not even to show up to today’s Opposition day debate, can I seek your advice on how the House can know the right hon. Lady’s thoughts on the Labour party hiding from tonight’s vote?

[Madam Deputy Speaker]

First, I hope that the hon. Gentleman will have given notice that he is referring to another Member before raising a point of order. Has he done that?

[Jacob Young]

No, I have not.

--- Later in debate ---

[Madam Deputy Speaker]

Well, he really ought to do that. If he is making comments about anybody else or what they have said, they absolutely have the right to be in the Chamber. Before we go any further—because, as I say, it is disrespectful not to have done that—it is very important that each Member of Parliament and each of us has the right to decide which way we vote. Sometimes hon. Members vote Aye, sometimes they vote No, sometimes they abstain. There may well come a point when the hon. Gentleman needs to make such a decision, so I do think it is important that in this House we respect each other’s right to make decisions about which way to vote.

[Shaun Bailey]

On a point of order, Madam Deputy Speaker. As a relatively new Member to this House, I seek your clarification. My understanding is that it is our basic duty to our constituents to ensure that we turn up to debates and that we vote, irrespective of who instigates those debates. How is it compatible with that duty that the official Opposition both do not turn up to a debate and do not vote?

[Madam Deputy Speaker]

I wonder whether the hon. Gentleman did not quite hear what I just said. I can repeat it, but basically it was that I think it is very important that we all respect each other’s right to make decisions on the issue of voting. There may well come a point when the hon. Gentleman is not able to participate in a debate or does not want to participate in a debate, and at that point he may decide that he wishes to abstain. That is his right: it is the right of all of us. That is what I just said, so let us hope we are not going to have any further discussion on this issue.

Deferred Divisions

Motion made, and Question put forthwith (Standing Order No. 41A(3)),

That at this day’s sitting, Standing Order 41A (Deferred divisions) shall not apply to the Motion in the name of Secretary Priti Patel relating to the Prevention and Suppression of Terrorism.—(Eddie Hughes.)

Question agreed to.

[Madam Deputy Speaker]

We will have a brief two-minute suspension, just to make sure that the Dispatch Boxes are clean.

Stamp Duty Land Tax (Temporary Relief) Bill

Rosie Winterton Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

Second Reading

[Madam Deputy Speaker (Dame Rosie Winterton)]

Under the order of the House today, amendments and new clauses to be moved in Committee of the whole House may now be tabled. Hon. Members should table through the Public Bill Office inbox: [e-mail]. In order to be eligible for selection, Members should table amendments within the next 10 minutes.

--- Later in debate ---

[Rob Roberts (Delyn) (Con)]

I am confused as to how the hon. Gentleman draws the conclusion that somebody will be worse off from paying exactly the same as they otherwise would have done. The hon. Member for Liverpool, Walton (Dan Carden) said exactly the same thing—that first-time buyers will lose out. They will not lose out. They were exempt before, and they will still be exempt. It is poor form on his part to mislead first-time buyers into thinking that they are being penalised in some way by this measure.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I hope the hon. Gentleman is not accusing the hon. Member for Warwick and Leamington (Matt Western) of misleading anyone.

[Rob Roberts]

Certainly not, Madam Deputy Speaker.

Economic Update

Rosie Winterton Excerpts

Wednesday 8th July 2020 Commons Chamber

[Rishi Sunak]

Thank you—I think—to my right hon. Friend. I share his passion for getting our campsites open. I hope that an extra incentive today will be the cut in VAT, from 20% to 5%, which extends to campsites, as well as to caravan sites, bed and breakfasts, and hotels. I am not sure that I have the powers to summon anyone, but I will be delighted to bring to bear whatever influence I can on the matter. I look forward to discussing it with him further.

[Madam Deputy Speaker (Dame Rosie Winterton)]

In a moment, I will call the Chancellor of the Exchequer to move a provisional collection of taxes motion. Copies of the motion are available in the Vote Office. In accordance with Standing Order No. 51, on Ways and Means motions, a Minister of the Crown may without notice make a motion for giving provisional statutory effect to any proposals in pursuance of section 5 of the Provisional Collection of Taxes Act 1968. The question on such a motion shall be put forthwith.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motion:

Stamp duty land tax (temporary relief)

That—

(1) This Resolution makes modifications of Part 4 of the Finance Act 2003 in relation to any land transaction the effective date of which falls in the period (“the temporary relief period”)—

(a) beginning with 8 July 2020, and

(b) ending with 31 March 2021.

(2) Section 55(1B) (amount of stamp duty land tax chargeable: general) has effect as if for Table A there were substituted—

“TABLE A: RESIDENTIAL

[Madam Deputy Speaker]

In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am suspending the House for three minutes.

Virtual participation in proceedings concluded (Order, 4 June).

The Economy

Rosie Winterton Excerpts

Wednesday 8th July 2020 Commons Chamber

[Steve Barclay]

Again, this was covered extensively in the earlier debate. First, the furlough is already in place for an extremely long period, until October. That is eight months, and we are only halfway through it. Secondly, other measures are being put in place, including measures to incentivise employers to bring those on furlough back. It is not right that people should stay on furlough for an extended period of time—[Interruption.] Nor have the Opposition set out exactly which sectors they want it extended for, or how that would apply in areas such as the supply chain. We would simply get an indefinite period in which that scheme would be —[Interruption.]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. The hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) has made her point. Yelling at the Minister is probably not quite the way to proceed.

[Steve Barclay]

Thank you, Madam Deputy Speaker.

We will also ensure that those who have sadly lost their jobs are supported back into work as quickly as possible. We will do that by expanding work search and doubling the number of work coaches, so that jobseekers will benefit from high-quality personalised one-to-one support. We will also invest £32 million of new funding over two years to expand the National Careers Service, and we will prioritise support for young people who have not only had to contend with disruption to their education but must now enter the workforce at an extremely difficult moment. The £2 billion kick-start scheme will create hundreds of thousands of new fully subsidised quality jobs for young people aged 16 to 24 who are claiming universal credit and are at the highest risk of long-term unemployment.

There will be new money to invest in schools in England, including tripling the number of sector-based work academy placements and traineeships, and giving all 18 and 19-year-olds the opportunity to study targeted high-value level 2 or 3 courses when no employment opportunities are forthcoming. Furthermore, we will introduce a new youth offer for young people on universal credit, in the form of 13 weeks of intensive support, including referral to work-related training or apprenticeships together with tailored support and coaching for those who need it.

The Government’s immediate focus is on jobs, but our recovery is also an opportunity to renew our commitment to the UK’s long-term prosperity. Six months ago the Government were returned to office by an electorate tired and frustrated by deadlock and delay. Thousands of people in dozens of constituencies lent the Conservative party their vote for the first time because we promised to leave the European Union, unleash the potential of the economy and level up investment and opportunity across the United Kingdom. Those commitments have not changed, and this Government are determined to repay the trust placed in us by bringing about meaningful change to people’s lives.

Last week, the Prime Minister outlined how the United Kingdom could bounce back from this crisis, stronger and better than before, with new jobs and new industries in every region. Together with the plans set out by my right hon. Friend the Chancellor today, this means we will bring forward £8.6 billion of capital investment in infrastructure projects that will support thousands of jobs. That includes more than £1.5 billion for hospital upgrades and maintenance this year, and as the Prime Minister announced last week, we will allocate £1 billion to begin rebuilding schools in England, £142 million to modernise courtrooms and £83 million to invest in the prison estate. Meanwhile, we are working to put in place a new generation of roads, railways and fibre-optic cables to bind the country closer together and unleash the economic potential of the regions.

--- Later in debate ---

[Steve Barclay]

One of the advantages of coming after the Chancellor has spoken for two and a half hours is that many of the same issues come up a second time. He was asked about this, and he said that we have a commitment and he was not going to pre-empt any future announcement from the Prime Minister. Given that that was the Chancellor’s response, I can say that I am certainly not going to pre-empt anything from the Prime Minister, but we recognise the issue. That is an area on which, as the Chancellor covered earlier, the Prime Minister will make any subsequent announcements.

We have announced today £2 billion of green homes grants, which will save energy and, just as importantly, save households money on their bills. Finally, our £40 million green jobs challenge fund will invest in shovel-ready natural capital projects, such as creating new parks and open spaces, cleaning rivers, restoring peatland and helping to plant many more trees during this Parliament. Taken together, these measures will help to ensure that the future is not only more prosperous but happier, healthier and greener too.

Covid-19 has tested our economy to the extreme. The challenges we face in rebuilding are great, but the opportunities are greater still. We can build back better than before, with stronger public services, a new generation of infrastructure that brings our country together and new jobs and opportunities in every region. It will not be easy—it will take all our ingenuity and commitment—but as the Chancellor said earlier today, it is not this crisis that will define us, but our response. The resilience, compassion and determination shown by the British people has carried us through the hardest months, and now, this same sense of collective purpose will drive our recovery too.

[Madam Deputy Speaker (Dame Rosie Winterton)]

It will not have escaped anyone’s notice that many Members wish to contribute to the debate, so there will be an immediate four-minute time limit on Back-Bench speeches. I call the shadow Minister, Wes Streeting.

Finance Bill

Rosie Winterton Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 2—Review of changes to entrepreneurs’ relief—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made to entrepreneur’s relief by section 23 and Schedule 3 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment, and

(c) productivity.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require a review of the impact on investment of the changes made to entrepreneurs’ relief.

New clause 4—Structures and buildings allowances: review—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by section 30 and Schedule 5 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment,

(c) productivity, and

(d) energy efficiency.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require a review of the impact on investment of the changes made to structures and buildings allowances in Schedule 5.

New clause 17—Review of geographical effects of provisions of Sections 28 to 31—

“The Chancellor of the Exchequer must within twelve months of the passing of this Act lay before both Houses of Parliament a report assessing the differential geographical effects, broken down by nation and NUTS 1 statistical region, of the changes made by sections 28 to 31 of this Act.”

This new clause would require a geographical impact assessment of the clauses of the Bill relating to reliefs for business.

Amendment 1, in clause 36, page 34, line 29, at end insert—

“(13) The Chancellor of the Exchequer must, no later than 5 April 2021, lay before the House of Commons a report—

(a) analysing the fiscal and economic effects of Government relief under the Enterprise Investment Scheme since the inception of the Scheme, and the changes in those effects which it estimates will occur as a result of the provisions of this Section, in respect of;

(i) each NUTS 1 statistical region of England and England as a whole,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland;

(b) assessing how the Enterprise Investment Scheme is furthering efforts to mitigate climate change, and any differences in the benefit of this funding in respect of—

(i) each NUTS 1 statistical region of England and England as a whole,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland;

(c) evaluating the lessons that can be drawn from the effects of the Enterprise Investment Scheme with respect to the encouragement of both private and UK Government-backed venture capital funds in the devolved nations of the UK.”

This amendment would require the Chancellor of the Exchequer to analyse the impact of the existing EIS and the changes proposed in Clause 36 in terms of impact on the economy and geographical reach; to assess the EIS’s support for efforts to mitigate climate change; and to evaluate the Scheme’s lessons for the encouragement of UK Government-backed venture capital funds in the devolved nations.

[Bridget Phillipson]

New clause 27 calls on the Government to lay a review before Parliament considering all the tax reliefs within this Act, their effect on taxation revenue and the effectiveness of systems to evaluate these reliefs and to ensure value for money. We know that there are real problems with how the Government monitor tax reliefs. Thanks to the outstanding work of the National Audit Office and its report from February this year, we can see how unwieldy the system has become over the past decade and how much this is costing the public purse. It shows that there are currently 362 tax reliefs, which support Government economic and social objectives. This is a huge financial undertaking. The cost of tax reliefs for 2018-19 is estimated to be £155 billion.

The National Audit Office notes that this is not money that would simply be recouped in tax if these reliefs were abolished, but that is not the point that we are seeking to make. We on the Opposition Benches do not doubt that sometimes the outcomes from tax reliefs can be positive and that they can drive positive social and economic behaviour. The problem, as the NAO’s report makes plainly clear, is that we simply do not know enough about this, because the Government are failing to properly monitor and evaluate their effectiveness.

Of the 362 tax reliefs, only 111 have been costed by Her Majesty’s Revenue and Customs, and only 15 have had published evaluations since 2015. At the same time, on the Government’s watch, their cost has been rising since 2010. In normal times, such an enormous cost, without corresponding effective oversight, would be an area of real concern. As the Office for Budget Responsibility identified in July 2019, tax reliefs are considered to be a new fiscal risk to public finances, due to the Government’s not knowing their full cost and the lack of transparency built into the system. But of course we are not in normal times; we are living through an incredible economic crisis. The lack of effective monitoring and evaluation is hard to justify when our public services are under such enormous strain. The inattention shown by Ministers over the past decade must change and we need a much greater focus on ensuring value for money.

In Committee, we touched on one area where I ask the Minister to respond further today, namely the social investment tax relief, an area also pressed by my hon. Friend the Member for Ilford North (Wes Streeting) and my Front-Bench colleague my hon. Friend the Member for Liverpool, Walton (Dan Carden). What further consideration has the Minister given to extending this relief from April 2021 to April 2023? Will he update us on what further consideration the Treasury has given to this arising from discussions we held in Committee? This important aspect has been raised by many charities. I know that the Minister is sympathetic to the concerns they raise and I am sure they will be grateful for any further updates he might be able to provide in this area.

Our new clause paves the way for a greater focus on value for money, by establishing a more systematic and transparent way for the Government to evaluate the cost of tax reliefs and to empower Parliament to scrutinise this more effectively. The limiting scope for amendments to the Finance Bill set by the Government means that we have been able to opt only for a review of the tax reliefs contained in the Bill. Many changes to tax reliefs—for instance, on the entrepreneurs’ relief and the annual allowance—will potentially have a significant impact on tax revenues. In other areas, there are concerns about whether tax reliefs are being abused.

TaxWatch UK has highlighted particular concerns about the future of research and development tax credits, given the evidence of abuse in recent years. It is therefore right that there is greater transparency and that Parliament can properly scrutinise whether the measures proposed by Government are having their intended effect. The Minister attempted to address some of these concerns in Committee, saying that the Government kept all these reliefs under review and that he has proposed a more systematic evaluation programme for tax reliefs. We would welcome any progress towards such a system. However, if the picture was so rosy, I doubt whether the National Audit Office would have painted such a concerning picture in its report. I also look forward to the Public Accounts Committee’s report on this issue to find out whether it agrees with his assessment or what further insight it might be able to offer.

None the less, this amendment attempts to get to a wider point, which is that Parliament currently has few proper and meaningful opportunities to scrutinise tax reliefs on an ongoing basis. The Minister will know of the 2017 joint report by the Institute for Fiscal Studies, the Institute for Government and the Chartered Institute of Taxation entitled “Better Budgets: Making tax policy better”. It states that the information publicly available to Parliament on the costs and benefits of tax expenditure is not sufficient for it to assess their value for money, pointing out:

“Although taxes constitute almost 40% of national income, Parliament has little standing support to help look at tax legislation, support general inquiries on tax issues or help with post-implementation reviews.”

The report had a clear recommendation:

“Increase support to Parliament on tax issues”.

That means going beyond the support currently available and the opportunities that exist, in Finance Bill Committees, through the Treasury Committee, through Public Accounts Committee and through other work in this House, and instead embedding a proper system so we can assess the value for money of past tax measures. That is hardly controversial. As the Resolution Foundation points out, the Governments of Canada, Australia and New Zealand produce annual tax expenditure statements, which can be accompanied by parliamentary debate.

We want to see improved scrutiny of whether money is being well spent, to ensure that the system is fair and helps those who need it most. When all the benefits and tax reliefs are taken into consideration, the Government provide more support to the richest fifth of non-retired households than to the poorest fifth, and that gap has grown since 2010. This is in part due to the system of tax reliefs that has flourished under this Government and previous Conservative Governments and is clearly not based on any genuine notion of fairness.

Today, as we grapple with the looming jobs crisis, the question of fairness is paramount. We need to create a recovery from coronavirus that benefits everyone in our society, from young to old and right across every region and nation. The Opposition do not doubt the scale of the challenge. Our public finances are enormously stretched, our public services have been pushed to the brink by the pandemic, and there is a risk of unemployment on a scale not seen since the 1980s. We have yet to hear anything about the economic support package that we need: a back-to-work Budget to help those at the sharp end of the looming jobs crisis—a Budget that creates jobs, supports people back into work and properly invests in our young people so that they have the opportunities they deserve at this challenging time.

--- Later in debate ---

[Bridget Phillipson]

We do not intend to divide the House on the new clause, but I will make a few brief points in response to what the Minister has said. I am glad that he shares our assessment that the current situation and system are unwieldy, and therefore we look forward to seeing real progress in that area. Frankly, it is not good enough that of those 362 tax reliefs, only 15 have had published evaluations since 2015, at a time when costs have risen.

During these extraordinary times, we need to see much more from the Government, not just on tackling tax avoidance, as we discussed at some length yesterday. There needs to be a renewed focus on taxpayer value for money, with greater opportunities for scrutiny of tax reliefs in this place and from external experts. Although we are not seeking to divide the House, I hope that we will see progress in that area. It is an issue to which we intend to return. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We will have a three-minute suspension.

--- Later in debate ---

[Jesse Norman]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Government new clause 20—Protected pension age of members re-employed as a result of coronavirus.

Government new clause 21—Modifications of the statutory residence test in connection with coronavirus.

Government new clause 22—Future Fund: EIS and SEIS relief. Government new clause 23—Interest on unpaid tax in case of disaster etc of national significance.

Government new clause 24—Exceptional circumstances preventing disposal of interest in three year period.

Government new clause 25—HGV road user levy. Government new clause 32—Enterprise management incentives: disqualifying events. Government new schedule 1—Taxation of coronavirus support payments.

New clause 29—Review of impact of Act on poverty—

‘(1) The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on poverty and lay this before the House of Commons within six months of Royal Assent.

(2) This assessment must consider—

(a) the impact on absolute poverty,

(b) the impact on relative poverty, and

(c) whether such a study should in future be a regular duty of the Office for Budget Responsibility.’

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on poverty and consider whether the OBR should conduct such assessments as a regular duty.

New clause 10—Impact of provisions of the Act on child poverty—

‘(1) The Chancellor of the Exchequer must review the impact of the provisions of this Act on child poverty and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the impact on—

(a) households at different levels of income,

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

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

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

(3) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on child poverty.

New clause 3—Review of changes to capital allowances—

‘(1) The Chancellor of the Exchequer must review the effect of the changes to chargeable gains with respect to corporate capital losses in this Act in each part of the United Kingdom and each region of England and lay a report of that review before the House of Commons within two months of the passing of this Act.

(2) A review under this section must consider the effects of the changes on—

(a) business investment

(b) employment, and

(c) productivity.

(3) A review under this section must consider the effects in the current and each of the subsequent four financial years.

(4) The review must also estimate the effects on the changes in the event of each of the following—

(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,

(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or

(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.

(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.

(6) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause requires a review of the impact on investment, employment and productivity of the changes to chargeable gains with respect to corporate capital losses over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership.

New clause 6—General anti-abuse rule: review of effect on tax revenues—

‘(1) The Chancellor of the Exchequer must review the effects on tax revenues of section 99 and Schedule 14 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) The review under sub-paragraph (1) must consider—

(a) the expected change in corporation and income tax paid attributable to the provisions in this Schedule; and

(b) an estimate of any change, attributable to the provisions in this Schedule, in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.

(3) The review under subparagraph (2)(b) must consider taxes payable by the owners and employees of Scottish Limited Partnerships.’

This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of Clause 99 and Schedule 14, and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.

New clause 7—Call-off stock arrangements: sectoral review of impact—

‘(1) The Chancellor of the Exchequer must make an assessment of the impact of section 79 on the sectors listed in (2) below and lay a report of that assessment before the House of Commons within six months of the passing of this Act.

(2) The sectors to be assessed under (1) are—

(a) leisure,

(b) retail,

(c) hospitality,

(d) tourism,

(e) financial services,

(f) business services,

(g) health/life/medical services,

(h) haulage/logistics,

(i) aviation,

(j) transport,

(k) professional sport,

(l) oil and gas,

(m) universities, and

(n) fairs.’

This new clause would require the Government to report on the effect of Clause 79 on a number of business sectors.

New clause 8—Review of effects on measures in Act of certain changes in migration levels—

‘(1) The Chancellor of the Exchequer must review the effects on the provisions of this Act of migration in each of the scenarios in subsection (2) and lay a report of that review before the House of Commons within one month of the passing of this Act.

(2) Those scenarios are that—

(a) the UK leaves the EU withdrawal transition period without a negotiated future trade agreement,

(b) the UK leaves the EU withdrawal transition period following a negotiated future trade agreement, and remains in the single market and customs union, and

(c) the UK leaves the EU withdrawal transition period following a negotiated trade agreement, and does not remain in the single market and customs union.

(3) In respect of each of those scenarios the review must consider separately the effects of—

(a) migration by EU nationals, and

(b) migration by non-EU nationals.

(4) In respect of each of those scenarios the review must consider separately the effects on the measures in each part of the United Kingdom and each region of England.

(5) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require a Government review of the effects on measures in the Bill of certain changes in migration levels.

New clause 9—Review of effects on migration of measures in Act—

‘(1) The Chancellor of the Exchequer must review the effects on migration of the provisions of this Act in each of the scenarios in subsection (2) and lay a report of that review before the House of Commons within one month of the passing of this Act.

(2) Those scenarios are that—

(a) the UK leaves the EU withdrawal transition period without a negotiated future trade agreement

(b) the UK leaves the EU withdrawal transition period following a negotiated future trade agreement, and remains in the single market and customs union, and

(c) the UK leaves the EU withdrawal transition period following a negotiated trade agreement, and does not remain in the single market and customs union.

(3) In respect of each of those scenarios the review must consider separately the effects on—

(a) migration by EU nationals, and

(b) migration by non-EU nationals.

(4) In respect of each of those scenarios the review must consider separately the effects in each part of the United Kingdom and each region of England.

(5) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require a Government review of the effects of the measures in the Bill on migration levels.

New clause 11—Assessment of equality impact of measures in Act—

‘(1) The Chancellor of the Exchequer must lay before the House of Commons a report assessing the effects on equalities of the provisions of this Act within 12 months of the passing of this Act.

(2) The review must make a separate assessment with respect to each of the protected characteristics set out in section 4 of the Equality Act 2010.

(3) Each assessment under (2) must report separately on the effects in in each part of the United Kingdom and each region of England.

(4) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

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

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on equalities.

New clause 15—Sectoral review of impact of Act—

‘(1) The Chancellor of the Exchequer must make an assessment of the impact of this Act on the sectors listed in (2) below and lay a report of that assessment before the House of Commons within six months of Royal Assent.

(2) The sectors to be assessed under (1) are—

(a) leisure,

(b) retail,

(c) hospitality,

(d) tourism,

(e) financial services,

(f) business services,

(g) health/life/medical services,

(h) haulage/logistics,

(i) aviation,

(j) transport,

(k) professional sport,

(l) oil and gas,

(m) universities, and

(n) fairs.’

This new clause would require the Government to report on the effect of the Bill on a number of business sectors.

New clause 16—Review of effect of Act on tax revenues—

‘(1) The Chancellor of the Exchequer must review the effects on tax revenues of the Act and lay a report of that review before the House of Commons within six months of Royal Assent.

(2) The review under (1) must contain an estimate of any change attributable to the provisions in this Act in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.

(3) The estimate under (2) must report separately on taxes payable by the owners and employees of Scottish Limited Partnerships.’

This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of the Bill; and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.

New clause 30—Review of rates of air passenger duty—

‘(1) The provisions of section 88 shall not come into effect until the Treasury has carried out and published a review of the likely effect of changes to rates of air passenger duty on the aviation sector.

(2) The review must take into account the effects of Covid-19 on the sector.

(3) The review must be published no later than 1 October 2020.’

This new clause would require that the changes to APD in clause 88 not come into force until a review of the effect of changes to APD has been published by the Treasury.

Amendment 2, in clause 80, page 68, line 2, at end insert—

‘(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.’

This amendment would require the Government to review the impact of the proposed changes to alcohol liquor duties on public health.

Amendment 3, in clause 81, page 68, line 21, at end insert—

‘(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the TPDA 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.’

This amendment would require the Government to review the expected impact of the revised rates of duty on tobacco products on public health.

Amendment 4, in clause 86, page 73, line 20, after “supplies” insert “, including human breastmilk”

This amendment would ensure that vehicles carrying human breastmilk would benefit from the exemption from Vehicle Excise Duty.

Amendment 5, page 77, line 10, leave out Clause 95

Amendment 6, in clause 95, page 77, line 14, at end insert—

‘(2) The Government must lay before the House of Commons by 9 September 2020 a statement of the conditions under which it would consider it appropriate to vary rates of import duty under this Section.’

This amendment would require the Government to state the conditions under which it would consider it appropriate to vary rates of import duty in an international trade dispute.

Amendment 7, page 77, line 14, at end insert—

‘(2) No regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.’

This amendment would require the Government to seek the approval of the House before making regulations varying rates of import duty in an international trade dispute.

Amendment 8, page 77, line 14, at end insert—

‘(2) The Chancellor of the Exchequer must, no later than a month before any exercise of the power in subsection (1), lay before the House of Commons a report containing the following—

(a) an assessment of the fiscal and economic effects of the exercise of the powers in subsection (1);

(b) a comparison of those fiscal and economic effects with the effects of the UK being within the EU Customs Union;

(c) an assessment any differences in the exercise of those powers in respect of—

(i) England,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland; and

(d) an assessment of any differential effects in relation to the matters specified in paragraphs (a) and (b) between—

(i) England,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland.’

This would require a review of the economic and fiscal impact of the use of the powers in clause 95 including comparing those effects with EU Customs Union membership.

Amendment 9, in clause 96, page 77, line 26, after “tax” insert

‘which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 10, page 77, line 27, after “deduction”, insert

‘from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 11, page 78, line 11, after “tax”, insert

‘which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 12, page 78, line 12, after “deduction”, insert

‘from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 13, page 78, line 35, after “tax”, insert

‘which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 14, page 78, line 36, after “deduction”, insert

‘from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

Amendment 15, page 79, line 10, at end insert—

‘(8) The amendments made by this section do not apply to any debt secured by a floating charge in respect of monies were advanced to the debtor before 1 December 2020.’

This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).

[Jesse Norman]

The Government have tabled eight new clauses to the Bill, the majority of which are in response to the covid-19 pandemic. I would like to start by offering Members an explanation for why these new clauses are being brought forward on Report. The Government have been working very hard to combat the pandemic, as the House will know, and these measures are just a small part of a much more extensive and wide-ranging response. I am sure that colleagues across the House will appreciate that Ministers and civil servants have been working in extraordinary circumstances in the past three months. As I often do, I again pay great tribute to officials at the Treasury and Her Majesty’s Revenue and Customs. Without their work, it would not have been possible to deliver many, if any, of these aspects of this extremely comprehensive response, let alone in such a rapid timeframe as, for example, with the coronavirus job retention scheme.

We have brought forward these new clauses at the earliest possible opportunity, and for technical reasons, it is on Report. We have also been slightly limited by the fact that to table each new clause requires a new Ways and Means resolution to be agreed by the House. Report was the first amendable stage of the Bill to take place after the Government had been able to agree the necessary Ways and Means resolution on the Floor of the House. I hope the House will agree that there is a clear need for each of these new clauses to stand part of the Bill.

I will touch on each new clause briefly. New clause 19 seeks to do two things. First, it confirms that grants made under covid-related schemes—for example, the furlough scheme, the self-employment scheme, the small business grant fund, the retail, hospitality and leisure grant fund, the local authority discretionary grant fund and schemes corresponding to those grants within the devolved Administrations—are subject to tax. The new clause also includes a delegated power to add or remove further grant schemes through a statutory instrument, which provides sensible flexibility, so that the Government can continue to support the economy in their response to the pandemic.

The second part of the new clause ensures that HMRC has appropriate and proportionate compliance and enforcement powers in relation to the furlough scheme and the self-employment income support scheme. To ensure that taxpayer money is going only to those who are eligible, the new clause gives HMRC powers to recover overpayments and to impose penalties where there is deliberate non-compliance. HMRC has given a clear undertaking that these powers will not be used to penalise taxpayers who may be going through difficult times but make honest mistakes in their applications. As previously stated, the powers are designed to be proportionate, and they balance the fact that we are in unprecedented and uncertain times with the need to ensure that HMRC has sufficient powers to enforce the schemes according to eligibility criteria set out and to protect the Exchequer.

New clause 20 seeks to mitigate potential pensions impacts for those with a protected pension age returning to work to help in the battle against the pandemic. Its purpose is to provide certainty for those people by temporarily suspending rules that would otherwise see the pension income of recently retired people reduced if they were to return to work in crucial workforces at this important time. These retirees have been and will remain critical to the Government’s response to covid, and this new clause temporarily removes restrictions that might impede a flexible response.

New clause 21 temporarily relaxes the statutory residence test so that highly-skilled individuals from across the world are not discouraged from coming to the UK and helping this country to respond to the unprecedented health emergency. The actions and presence of normally non-resident individuals in the UK could have inadvertently affected their tax residence status. The measure is to be restricted, however, to ensure that it applies only between 1 March and 1 June 2020 for time spent in the UK by individuals who worked specifically on coronavirus disease-related activities in specified sectors. That time will not count towards the residence test.

Finance Bill

Rosie Winterton Excerpts

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

[Bridget Phillipson]

Having listened to the debate, we are keen to see greater scrutiny and transparency in this area, so I seek to press the amendment to a Division.

Question put, That the amendment be made.

The House proceeded to a Division.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I ask all hon. Members, other than Front Benchers and Tellers, to leave the Chamber by the doors behind me. Members should join the queues to vote in Westminster Hall. To vote, Members should enter the Lobby and swipe their pass on one of the pass readers. I remind Members that the Lobby doors will be locked after 12 minutes.

--- Later in debate ---

[Wes Streeting (Ilford North) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 13—Review of impact of Act on UK meeting UN Sustainable Development Goals—

The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting the UN Sustainable Development Goals, and lay this before the House of Commons within six months of Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals.

New clause 14—Review of impact of Act on UK meeting Paris climate change commitments—

The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting its Paris climate change commitments, and lay this before the House of Commons within six months of Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting its Paris climate change commitments.

New clause 34—Impact of Act on human and ecological wellbeing—

The Chancellor of the Exchequer must review the impact of the provisions of this Act on human and ecological wellbeing, including the wellbeing of future generations, and lay a report of that review before both Houses of Parliament within six months of the passing of this Act.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on human and ecological wellbeing, including the wellbeing of future generations.

[Wes Streeting]

The new clause stands in my name and those of my hon. Friend the shadow Chancellor and other right hon. and hon. Members.

We are living through an emergency, and we have seen a response to that emergency that reflects the scale of the challenge—big changes in public policy agreed at rapid speed and with cross-party co-operation; every Government Department tasked with playing its part in the crisis response; the state, the private sector and civil society pulling together in an attempt to avert needless loss of life. The coronavirus pandemic is a public health emergency, and although mistakes have been made that could have been avoided, we now know what an emergency response looks like. More than a year has passed since this House declared a climate emergency, and I do not believe that, hand on heart, we can tell our country that we have seen a response to that emergency that matches the scale of the challenge of preventing catastrophic climate breakdown.

The planet is burning. The last 22 years have produced 20 of the warmest years on record. Prolonged summer heatwaves are crippling infrastructure and causing public health crises. Last year, the Met Office declared the UK’s hottest day on record, with a temperature of 38.7º Celsius. Across Europe, people are needlessly dying of heat-related illnesses. The World Meteorological Organisation is seeking to verify reports of a new record temperature in the Arctic circle. The melting rate of Greenland’s ice has risen to three Olympic-sized swimming pools every second. Sea levels are predicted to rise, with serious consequences for our own country. Across the UK, the Met Office forecasts that flash flooding caused by intense rainfall, which has already devastated homes and businesses across our country in recent years, could become five times as frequent by the end of the century if urgent steps are not taken now.

Across the world, some of the poorest communities are already experiencing the devastation caused by man-made climate change, and the people of the global south and east will be disproportionately affected by the unfolding climate emergency, with 95% of the cities at extreme climate risk situated in Asia and Africa. It is causing death and despair and displacement for climate refugees.

The impact of climate change is already clear. The consequences of our failure to act for future generations are already known, and yet here we are this afternoon presented with a Finance Bill that stands as a symbol of the complacency of our Government, fiddling while the planet burns.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. We have just under 30 minutes before I want to bring in the Minister and we have four more speakers. I do not want to set a time limit, but it would be helpful if speeches did not go over, for example, eight minutes.

[Caroline Lucas]

This debate could not be more important. The Arctic is on fire; 2020 is on course to be the hottest year on record; and 16 of the 17 hottest years on record have been since 2000. There is such a thing as being too late. This is a pivotal moment, because the actions that we take over the next few weeks and months will either lock us into high-carbon dependency for decades to come, in which case we can say goodbye to any chance of avoiding the worst of climate catastrophe, or they will start to lay the foundations for a greener, safer, fairer future as we emerge from the peak of this pandemic. These decisions could not be more consequential and nor could the issue be more urgent.

New clause 34 would require the Chancellor to review the impact of the Bill on human and ecological wellbeing, including the wellbeing of future generations. I am grateful to colleagues for their support. Ministers might like to note that the Scottish and Welsh Governments are already members of the Wellbeing Economy Governments partnership, a global collaboration of nations and regions whose leaders and Finance Ministers recognise that economic progress in the 21st century means delivering human and ecological wellbeing as the overriding priority.

If we are going to build back better, we need to put improving the health and wellbeing of people and nature first when it comes to economic policy making. That should be the primary objective of every Budget, every Finance Bill and every short-term measure that the Chancellor announces next week as part of his plans for economic recovery. I hope that today we can take a small step in that direction by requiring that the Bill be assessed against its impacts on human wellbeing and the health of our natural life-support systems.

My new clause is also a step towards putting the provisions of the Wellbeing of Future Generations Bill into action. That is the subject of Lord Bird’s Today for Tomorrow campaign, which is supported by dozens of colleagues across both Houses. I am pleased to have introduced a private Member’s Bill in this House to match Lord Bird’s in the other place. That would bring about a future generations Act. I pay tribute to Jane Davidson for all her work in the Welsh Assembly on that issue.

Yesterday, the Prime Minister talked of addressing inter-generational injustice, yet so far the Government’s economic response to covid has doubled down on business as usual. Young people are at the forefront of the campaigns for a transformative green new deal, yet all they are being offered is a bargain-basement imitation, with none of the necessary boldness, vision or resource.

My new clause 34 also considers the interim report of the Treasury’s own Dasgupta review on the economics of biodiversity. It recognises, as Professor Dasgupta has written, that economies

“are embedded within—not external to—Nature.”

So we urgently need a new economic rulebook. As Dasgupta explains:

“Unlike standard models of economic growth and development, placing ourselves and our economies within nature helps us to accept that our prosperity is ultimately bounded by that of our planet. This new grammar is needed everywhere, from classrooms to boardrooms, from parish councils to government departments.”

I would argue that it is needed in this Bill as well. The good news is that just 6% of the public want to return to the pre-pandemic economy. Many of them know that GDP is a poor measure of the things that really matter and that we should not let policy be guided by it. The Government must change course and put public health above private wealth.

As for what an assessment of human and ecological wellbeing would look like, the Treasury could do worse than start with the seven wellbeing goals in the Wellbeing of Future Generations (Wales) Act 2015: prosperity; resilience; health; equality; cohesive communities; vibrant culture; and global responsibility. All this comes with a “sustainable development principle” to guide delivery. Even the inventor of GDP was adamant that it should not be used as a measure of wellbeing, because GDP goes up when things that are detrimental to human wellbeing go up. For example, a motorway pile-up is a nightmare for everyone involved, but a boon for GDP, as new vehicles are bought and possessions are replaced. It is little wonder that the majority of people want the UK Government to pursue health and wellbeing ahead of economic growth.

--- Later in debate ---

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I ask all hon. Members other than Front Benchers and Tellers to leave the Chamber by the doors behind me. Members should join the queues to vote in Westminster Hall. To vote, Members should enter the Lobby and swipe their pass on one of the pass readers. The doors will be closed in 12 minutes.

Exiting the European Union: Financial Services and Markets

Rosie Winterton Excerpts

Tuesday 16th June 2020 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I understand it is the will of the House that motions 3 and 4 be taken together. The debate will last up to 90 minutes. When motion 3 has been decided, I will call the Minister to move motion 4 formally. If a Member objects, the motions will be taken separately.

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following motion:

That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.

[John Glen]

I welcome my opposite number, the right hon. Member for Wolverhampton South East (Mr McFadden), to his place. He has a distinguished history of public service and I look forward to a constructive dialogue with him today and on future occasions.

As the House will be aware, the Treasury has been undertaking a significant programme of financial services legislation since 2018, introducing almost 60 statutory instruments under the European Union (Withdrawal) Act 2018. It has been an enormous privilege for me to do the vast majority of those measures. These SIs were made prior to exit day—31 January 2020—and covered all essential legislative changes needed to ensure a coherent and functioning financial services regime at the point of exit, had the UK not entered a transition period.

The European Union (Withdrawal Agreement) Act 2020 received Royal Assent in January this year. The 2020 Act contains a general rule that delays those parts of the SIs that would have come into force immediately before, on or after exit day, so that they instead come into force by reference to the end of the transition period, which we leave at the end of this year. Over the course of this year the Treasury will therefore, where necessary, continue to use powers under the European Union (Withdrawal) Act 2018, as amended by the 2020 Act, to prepare for 1 January 2021. This will involve the Treasury bringing forward a small number of SIs that, in particular, will ensure that recently applicable EU legislation will operate effectively in the UK at the end of the transition period. The SIs before the House today are two such instruments. The approach taken in these SIs is aligned with the general approach established by the EU (Withdrawal) Act 2018, providing continuity by retaining existing legislation at the end of the transition period but amending where necessary to ensure effectiveness in the UK-only context.

I turn to the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020. From now on, I will refer to this instrument as the OTC SI. In preparation for the UK’s withdrawal from the EU on 31 January 2020, Parliament approved several EU exit instruments to ensure that the European market infrastructure regulation would continue to operate effectively in the UK at the point of exit. EMIR was updated on 1 January this year by a regulation known as EMIR 2.2, which now applies in the UK. The OTC SI that we are discussing today address deficiencies in the UK’s post-transition framework arising as a result of that update.

EMIR is Europe’s response to the G20 Pittsburgh commitment in 2009 to regulate over-the-counter derivative markets in the aftermath of the last financial crisis. EMIR mandates the use of central counterparties, known as CCPs, to manage risk between users of derivative products. EMIR has been effective in increasing the safety and transparency of derivative markets, thereby reducing the associated risks that users may face, and UK CCPs play an essential role in reducing systemic risk and ensuring the efficient functioning of global financial markets.

EMIR 2.2 introduced an updated third country or non-EU CCP supervision framework, including an updated recognition regime. This means that EU authorities can have greater oversight over third country CCPs that are systemically important to the EU. Perhaps the most substantial update in EMIR 2.2 is the ability for the European Securities and Markets Authority to tier third country CCPs according to their systemic importance to the EU as part of the recognition process. ESMA will now take on certain supervisory responsibilities for systemic third country CCPs known as tier 2 CCPs.

This OTC SI updates the UK’s recognition framework in line with EMIR 2.2 by transferring ESMA’s new powers to the Bank of England after we leave the transition period. That includes the ability to tier non-UK CCPs as part of the recognition process, and to supervise non-UK CCPs that are systemically important to the UK. The Bank of England has already been given the power to recognise non-UK CCPs wishing to operate in the UK in an earlier SI under the EU (Withdrawal) Act. EMIR 2.2 also empowers the Commission to adopt delegated Acts setting out the details of how the framework will function in practice. This includes how tiering and deference to the rules of home authorities referred to as “comparable compliance” will function. This instrument transfers the power to establish these frameworks to the Bank of England.

Since the Bank already has responsibility for safeguarding financial stability in general, and managing systemic risk in CCPs in particular, this is an appropriate conferral of functions as it allows the Bank to manage the systemic risk posed by some non-UK CCPs in a way that is appropriate for the UK. The statutory instrument therefore transfers the remaining Commission functions—including the power to deploy the so-called location policy—to Her Majesty’s Treasury.

Under EMIR 2.2, ESMA can recommend to the Commission that a third-country CCP that is felt to be substantially systemically important should lose permission to offer some services to EU clearing members, unless those services are offered from inside the EU. This is referred to as the location policy, the inclusion of which in EMIR 2.2 the UK did not support because of concerns that it could lead to market fragmentation and reduce the benefits provided by the global nature of clearing. However, the powers in the European Union (Withdrawal) Act 2018 under which we introduced the SI extend only to the addressing of deficiencies arising from withdrawal. During the passage of that legislation, commitments were made that the powers would not be used to make significant policy changes, so I am not going to deviate from that.

The OTC SI transfers the powers to use the location policy to the Treasury, subject to advice from the Bank of England and appropriate procedural safeguards and transitional provisions. I assure the House that because of the very different nature of the UK’s clearing markets, it is hard to foresee circumstances in which the Bank would appropriate the use of that tool in practice. EMIR 2.2 also makes changes to internally used supervisory and co-operation mechanisms but, as the UK is no longer part of the EU, those provisions are removed by the SI.

Finally, the OTC SI updates the recognition powers set out in the temporary recognition regime, which was established by a previous SI to enable non-UK CCPs to continue their activities in the UK after exit day, while their recognition applications are assessed. This SI updates the recognition requirements in line with the new EMIR 2.2 provisions. The Treasury has worked closely with the Bank of England to prepare the instrument and has also engaged with the financial services industry, as we have done throughout. The draft legislation has been publicly available on the legislation.gov.uk website since 24 February, and the instrument was laid before Parliament on 25 March.

In summary, the OTC SI is necessary to ensure that existing EMIR legislation will continue to function effectively in the UK from the end of the transition period, following the updates made in EMIR 2.2. In particular, it will ensure that the UK has the tools necessary to manage the financial stability risks posed by some of the largest non-UK CCPs.

Let me turn my attention towards the second of tonight’s SIs, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020. Although this SI makes amendments to approximately 20 pieces of legislation, the number and nature of the amendments are modest and minor. They act to preserve the effect of recent changes to EU legislation in the UK, and in doing so limit any impact on business that would otherwise arise at the end of the transition period.

Primarily, this SI fixes deficiencies in recently applicable EU legislation, which is congruous with the Treasury’s approach to previous financial services EU exit instruments and the approach required by the European Union (Withdrawal) Act 2018. It also revokes pieces of retained EU law and UK domestic law that it would not be appropriate to keep on the statute book at the end of the transition period.

This SI contains a small number of minor clarifications and corrections to previous financial services EU exit instruments. The House will be aware of the unprecedented scale of the legislative programme that the Treasury has undertaken, which has been carried out with rigorous checking procedures. However, errors are unfortunately made on occasion, and when they arise it is important that they are corrected as soon as possible. This has happened previously, and I will continue to be completely transparent when such shortcomings become apparent.

I note that this SI also includes provisions initially included in the Cross-Border Distribution of Funds, Proxy Advisors, Prospectus and Gibraltar (Amendment) (EU Exit) Regulations 2019, which were laid using the made affirmative procedure in October 2019, when at the time it was necessary to ensure that the SI was in place prior to the previous exit date of 31 October. That SI subsequently ceased to have effect, but it is important that those provisions, which include amendments to the UK’s prospectus regime to ensure it remains operational in a wholly domestic context, are in force before the end of the transition period. Those provisions have therefore been included in this IS.

I would like to say a few words on the amendments that this SI makes to a previous EU exit instrument, the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which I shall now refer to as the equivalence SI. The equivalence SI allows the Treasury to make equivalence directions for EEA states during the transition period for specified provisions. Today’s SI adds additional equivalence regimes to the scope of the power for the Treasury to make equivalence directions for EEA states during the transition period. This is through the inclusion of provisions relating to central securities depositories, which are entities that hold financial instruments and trade repositories that collect and maintain records of derivative trades.

This SI also amends the existing drafting on the length of the direction power to tie it to the end of the transition period. This will enable Ministers to make directions during the transition period to come into force at the end of the transition period, granting equivalence to the EEA for those regimes. Finally, this SI clarifies that the Treasury can impose limitations on the application of state-level equivalence decisions in granting equivalence to the EEA—for example, in response to EU conditions placed on the UK. As with the OTC SI, the Treasury has been working closely with the financial services regulators in the drafting of this instrument and has engaged with the financial services industry.

In conclusion, the Government believe that these instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of this year when we leave the transition period, and I hope that the House will join me in supporting them. I commend the regulations the House.

Finance Bill (Ways and Means)

Rosie Winterton Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 19th May 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision taking effect in a future year may be made amending Chapters 8 and 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003.

This ways and means motion enables the Government to amend the current Finance Bill in order to implement reforms to the existing off-payroll working rules. We are presenting it separately because we wanted to extend the date at which it comes into force by one year to April 2021 in recognition of the effects of the coronavirus pandemic. The off-payroll working rules have been in place for 20 years. They are designed to ensure that people working like employees but through their own companies pay broadly the same income tax and national insurance contributions as people who are directly employed.

In April 2017, the Government reformed the way in which the rules operate in the public sector by transferring the responsibility for determining whether the rules apply from individual contractors to the public bodies that engage them. Unfortunately, in the private sector, non-compliance with these rules remains widespread, and it is forecast to cost the Exchequer over £1.3 billion a year by 2023-24 if not addressed. This is not a sustainable position. It costs the taxpayer a great deal of revenue that is needed for our public services, it perpetuates an unfairness between individuals working in the same way but paying different levels of tax, and it prolongs the disparity with the public sector, where the rules have been in place now for three years.

At Budget 2018, the Government announced that the reform would be extended to medium and large-sized organisations in the private and voluntary sectors, but it would not apply to engagements with the 1.5 million smallest businesses. It is important to be clear that this is not a new tax. The off-payroll working rules have been on the statute book since 2000. This reform is focused on improving on improving compliance with the rules that are already in place.

Let me turn to the amendment tabled by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) the hon. Member for Haltemprice and Howden. I understand that it will not be moved today, but it is important to be clear about the Government’s position on it. To help businesses and individuals deal with the economic impacts of the coronavirus, on 17 March the Government announced that the reform to the off-payroll working rules would be delayed by one year from 6 April 2020 until 6 April 2021. The amendment would delay the introduction of reform by a further two years to April 2023, but it is hard to see any genuine rationale for this further delay.

The current measure was first introduced at Budget 2018. Since then, the Government have carried out two consultations on the detail of the reform. Her Majesty’s Revenue and Customs has worked extensively to support businesses in preparing for the change. Draft legislation and guidance has been published. There was a further review earlier this year that resulted in several additional improvements. By delaying until 2021, the Government have already ensured that businesses and contractors will not need to make final preparations for this reform until next year. There is therefore no need for further delay. Moreover, such a delay would have very significant drawbacks. It would not address the intrinsic unfairness of taxing two people differently for the same work, it would extend the disparity between the private and public sectors, and it would come at a significant fiscal cost that other taxpayers up and down the country would have to make up.

I turn now to the substance of the measure. I want to address a number of further concerns that have been pressed by colleagues, including, in particular, my hon. Friends the Members for North East Bedfordshire (Richard Fuller), for Barrow and Furness (Simon Fell), for Workington (Mark Jenkinson) and for Watford (Dean Russell). The first of these is that organisations will no longer engage with personal service companies as a result of this reform, reducing the number of contracts available in the labour market. It is important to recognise that the Government are fully aware of the importance of the flexibility for individuals and businesses to agree working arrangements that suit their needs. We know that that has been one of the pillars of the success of the UK labour market in recent years.

In 2017, soon after the implementation of the public sector off-payroll working reform, the Government commissioned independent research to assess its effect on the labour market. It found that the Government and independent researchers had not seen any evidence of an overall change in the demand for the services and skills of contractors.

Some organisations have clearly decided to change the balance of their employees and their contractors. That can be for many reasons—for example, where that better suits the evolving business model of that organisation—but many organisations will still choose to engage contractors using personal service companies where that is appropriate to their business.

Nevertheless, the Government remain keen to ensure the long-term flexibility and success of the labour market. We will therefore use the additional time given by this one-year delay to commission further independent and robust research into the long-term effects of the 2017 reform on the public sector. We want that research to be available before the reform comes into effect in other sectors in April 2021, and I can tell the House that the Government will give careful consideration to the results of that further research and thereafter will continue to monitor the effect of the reform on the labour markets of those sectors, including by commissioning independent research six months after this private and voluntary sector reform has taken effect.

Secondly, colleagues have concerns that organisations might take a blanket approach to status determinations, categorising all engagements as employment, regardless of the facts. The Government have been very clear that determinations must be based on an individual’s contractual terms and actual working arrangements. Many businesses and public sector organisations have described processes that they have put in place to ensure that determinations are correct, based on the actual working practices of the individuals concerned. There is a vigorous contractor lobby, which has also shown itself willing and able to highlight cases where it feels that the rules are not being followed. The reforms themselves include a client-led status disagreement process, where contractors can lodge a complaint if they disagree with how they have been categorised.

Thirdly, HMRC is continuing to help businesses to get their employment status determinations right by ensuring that they have access to a wide programme of education and support. The independent research that we are announcing post-implementation next year will also evaluate from an external perspective whether decisions are being made properly.

Finally, HMRC has committed to a light-touch approach to penalties in the first year of the reform and has stated in terms that the reform will not result in new compliance checks being opened into previous tax years unless there is reason to suppose or suspect fraud or criminal behaviour, and the same is true for penalties for inaccuracies.

The Government very much value the important role that contractors play in the labour market and want businesses to be able to design their workforces in a way that makes sense for them. That should not mean, however, that contractors pay less tax than employees where their engagement meets the test of an employment relationship. The legislation is designed to remedy that unfairness and to support the tax base needed to fund our public services, and I commend it to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I now call Dan Carden, shadow Minister, who is asked to speak for no more than five minutes.

[Dan Carden (Liverpool, Walton) (Lab) [V]]

I am delighted to contribute to this debate as shadow Financial Secretary. May I start by acknowledging the significant interest and the strong feelings of people across the country on this issue? We are considering a technical change to our tax system, reforming compliance on IR35 rules for the private sector, but for many people watching us, there is genuine concern that this technical change—this attempt to strengthen the system against tax avoidance—may affect their incomes and their livelihoods. I and the Labour party approach this matter with the seriousness and the consideration that it merits.

The ambition of IR35 rules and the associated difficulties have been a long-running saga over three decades, and it is a near impossible task to do the issue justice in the five minutes I have to contribute today.

Provisions were introduced by the last Labour Government in 2000 for HMRC to investigate and identify the relationship between businesses and contractors and to ensure that, where individuals actually perform the role of employees, they were contracted as such, to pay the correct tax and benefit from the correct employment protections, two issues that remain at the heart of the difficulty around IR35.

The nature of today’s economy, with the weakening of workers’ rights and employment protections and with zero-hours contracts, demands a radical overhaul. We need a progressive tax system, and we need to rebalance the relationship between those at the top and those at the bottom. In the meantime, what we have are piecemeal attempts to stop some, perhaps the more blatant, tax avoidance arrangements utilised by some companies. The challenge for tax authorities and for us is to understand, and differentiate between, fair and correct contractual relationships for the genuinely self-employed who are providing a crucial service to business and those who are all too often forced into bogus self-employment by unscrupulous employers, a practice that has become all too common and is designed to cheat the tax system and to deprive working people of their rights and even their entitlement to a minimum wage and fair pay. HMRC estimates such bogus self-employment schemes cost around £3 billion a year in lost tax revenue, and the February 2020 Treasury review put the cost of non-compliance with IR35 at £1.3 billion a year by 2023-24.

Having taken effect in the public sector in April 2017, these measures were initially meant to be rolled out to the private sector last month, but that is being delayed by a year due to the current pandemic, and the Labour party broadly supports the decision to delay. We have raised concerns about the implementation of this reform and have called for a proper and thorough review before the roll-out to the private sector, and, as the Financial Secretary recognised, the additional time now available gives him an opportunity to get to grips with these concerns, but we do need reform.

The Labour party is committed to modernising the law around employment status, including new statutory definitions of employment status, and the Government’s own Taylor review was right to conclude that the nature of the tax system acts as an incentive for practices such as bogus claiming of self-employed status, both by businesses and individuals. It called on the Government to make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people. I would also add—as we consider these changes in the midst of the coronavirus pandemic that has forced 2 million people on to universal credit and millions to rely on the Government’s furlough scheme, unsure of their future—that we need a social security system fit for the modern era that can protect all of our people in one of the wealthiest countries on the planet.

I would just like to finish with a few points that I hope the Financial Secretary can respond to when he winds up. Can he explain how reforms will only affect people working like employees through a company, and does he agree that there can be no space in our economy for zero rights employment? Will he respond to concerns most recently set out by the House of Lords Economic Affairs Finance Bill Sub-Committee that lessons have not been learned from the roll-out to the public sector, and will he look again at serious problems highlighted with the “check employment status for tax” online tool?

We need a joined-up approach in the consideration of tax regulations and employment law. We need better protections for the self-employed, and we need to tackle tax avoidance, and the Labour party will work constructively to achieve that end.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I now call David Davis, who is asked to speak for no more than four minutes.

[Mr David Davis (Haltemprice and Howden) (Con)]

In the light of the impact that coronavirus is having across all sectors of the economy, the Government have rightly committed, in the motion, to postponing the planned reforms to IR35, but only until next April. The effects of the pandemic are going to be felt for considerably longer than one year. On this basis, in April next year self-employed contractors will be hit with unnecessary costs, confusion and uncertainty, just as many of them are getting back on their feet after the coronavirus has wreaked havoc across the economy. It is the self-employed and small businesses that make up the beating heart of our economy, and they will power the recovery of our economy out of this crisis.

The IR35 rules, as the Minister said, have long applied to the public sector. This is about applying them across the private sector. In that light, they were studied by the House of Lords Economic Affairs Committee in a report referred to by the shadow Financial Secretary to the Treasury. The report stated that the rules

“have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.”

The report found a system riddled with unfairness and unintended consequences and called for a wide-scale independent review—not just a few research reports, Financial Secretary—focused on how the reforms would affect the wider labour market and the costs that would be forced on businesses. The Lords Committee said that IR35 had the effect of reducing contractors to

“an undesirable ‘halfway house’: they do not enjoy the rights that come with employment, yet they are considerably employees for tax purposes. In short, they are ‘zero-rights employees’”.

That is, zero-rights employees effectively created by the state.

The Lords recommended that the Government adopt the Taylor review proposals, which we as a Government promised to do years ago, as they offer the best long-term alternative solution to the off-payroll rules and provide an opportunity to consider tax, rights and risk together, as they should be. Despite what the Financial Secretary said, however, the Treasury has neither the time nor the capacity for a wholesale review right now. Therefore, the only sensible course of action is to pause these reforms and take the time to properly review the impact they will have on the self-employed. So, I will vote for this motion today, if we have the opportunity, but only in the expectation that will be back here in nine months’ time to do all this again.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call Alison Thewliss, who is asked to speak for no more than five minutes.

[Alison Thewliss (Glasgow Central) (SNP)]

It is a strange day indeed when I end up agreeing with the House of Lords and the right hon. Member for Haltemprice and Howden (Mr Davis), but I very much support a review, as does the SNP, as we had this in our manifesto. Concerns about IR35 have been well raised by myself, my colleagues and colleagues of all parties. I mention in particular my predecessor in this role, my hon. Friend the Member for Aberdeen North (Kirsty Blackman), who in 2018 raised the impact on rural communities where teachers, doctors and nurses may be employed through intermediaries. My hon. Friends the Members for Aberdeen South (Stephen Flynn) and for Gordon (Richard Thomson) and the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) have also raised concerns about the impact of these reforms on people working in the oil and gas industry, which is also under significant pressure at this time.

In my constituency, many people working in IT are already finding that their contracts are not being renewed. This is having an impact on their industry because of the ongoing uncertainty with this policy. I should also like to mention the possibility of an equality impact assessment. Many of those people have come here to work from other countries because of their expertise, and if they are not able to work, that could have an impact on their immigration status and their ability to stay in this country, where they have made their home. I ask the Minister to consider that.

The House of Lords Economic Affairs Committee has set out very well the issues with IR35. Its report states that the Government should reassess the flawed IR35 framework and give serious consideration to the fairer alternatives to the off-payroll working rules. The report sets out a number of options that the Government may wish to pick up. In the Chancellor’s earlier statements on support for self-employed people, he hinted about the support the Government are offering to some of them—not all of them; there are still big gaps in the scheme—but there is an inconsistency in contributions between the self-employed and the employed, with a bit of uncertainty as to what exactly that means when we come out of coronavirus. What will people be expected to contribute? Any clarity that the Government can give on this would be extremely useful. The House of Lords also makes it clear in no uncertain terms that IR35 is not a good base to build on. Yes, it has been in place for 20 years, but for 20 years it has been plagued with these types of problems and by bolting more on to it and trying to reform it, the Government are building a house on the sand. We cannot rely on that house standing any longer.

The Taylor review that the Government carried out made it very clear that there are options open to the Government. The Financial Secretary spoke of reviews past and reviews yet to come, but there is a real lack of proper assessment and understanding of the impact this has already had in the public sector and there is a need to understand how this will work fully when it comes to the private sector. Further, the House of Lords Committee points out that shifting responsibility on to business for a scheme that is not fit for purpose is the Government and HMRC ducking a degree of responsibility.

I want to raise this with the Minister because we, and many in the industry, have concerns about the future of contracting because we do not know what the impact will be. As I have said, this ongoing uncertainty has led to people not having their contracts renewed. A deferral for a year gives the Government and HMRC some time, but they must use it wisely. Although some research has been carried out already, other people have looked at this and the industry understands what they need and what the norm is in their sectors, the outcome is still very unclear. The Government have said that they will use this year, but can the Financial Secretary say when that review will be completed and when it will actually be available for people to see and reflect on? Coming to this in nine months’ time will be too late for lots of people to make those changes; it needs to be much sooner than that. If the Government can say categorically that it will be six months, that is different—it provides a bit more time—but I am not quite convinced yet that the Government know what they want from this and what they are going to achieve.

Overwhelmingly, we are concerned about employment rights. I have seen from my casework, as we all have, people who are uncertain about what they are able to do, what their rights are, and what they are obliged to do by their contracts and by their employers. I think the Government need to reflect carefully on the situation that many have ended up in during the period of coronavirus, when some people have very little at all on which to survive.

[Madam Deputy Speaker (Dame Rosie Winterton)]

The time limit for speeches is four minutes, and I advise hon. Members who are speaking virtually to have a timing device visible.

--- Later in debate ---

[Jesse Norman]

I thank all Members who have contributed to this brief but very lively debate. I thank the hon. Member for Liverpool, Walton (Dan Carden) and the Labour party for their support for this measure and their agreement not merely to the substance of the proposal but to the need for a delay. I think that is absolutely right. They should be congratulated on their bipartisan approach to this important public issue. The hon. Gentleman mentioned the Taylor review, which was picked up by several other Members. The Government whole- heartedly agree: the Taylor review made 53 recommendations, the vast majority of which we accepted, and several have already been put in place.

I covered the question of a delay in my speech. I encourage all Members who would like a further delay to reflect on the points that I made about the intrinsic unfairness of taxing two people differently for the same work, the disparity that it would continue between the private and public sectors, and the significant fiscal cost that would be involved in doing so.

The hon. Member for Glasgow Central (Alison Thewliss) spoke of a review. She should be perfectly clear that I have at no point discussed a further review. We had a review earlier this year, contrary to what the right hon. Member for Kingston and Surbiton (Sir Edward Davey) said. It was a perfectly good-faith discharge of a commitment made during the general election. It involved a wide range of parties discussing how the reforms could be effectively implemented, and several important changes were made as a result of it. Of course, it followed two processes of consultation, draft legislation and a full pre-legislative history.

We are not talking about a further review. We are talking about two pieces of research. The first, later in the year to come before April 2021, will look at the long-term effects on the public sector. It is entirely appropriate to look at the public sector reform, because that is the major case in which the reform has been put in place, and it has led to a significant improvement in the fiscal position relative to those involved and that is all to the good from the taxpayer standpoint. The second piece of research, which I mentioned earlier, will come at the end, after the reform has been introduced. It will be an early take on the effects on the private sector in the first six to 12 months of its introduction.

The hon. Member for Bethnal Green and Bow (Rushanara Ali) raised the issue of whether we could not go further. The Government have gone much, much further. We have essentially had three Budgets already this year, given the astonishing measures that have been taken by the Treasury and across Government to support businesses, people and families during the coronavirus crisis. This resolution and the Finance Bill are designed to bring into law the Budget that we had in March, and that is what they do.

Finally, I remind the House that the measure will not merely improve the fairness and equity of the system, but allow us to fund our public services better—the services on which all of us, across parties and across the country, deeply rely.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I announced to the House earlier this afternoon the provisional determination that a remote Division would not take place on the Question now before the House. That is also Mr Speaker’s final determination.

Question put and agreed to.

Resolved,

That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision taking effect in a future year may be made amending Chapters 8 and 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003.

Social Security

Rosie Winterton Excerpts

Tuesday 5th May 2020 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call Minister Jesse Norman to move the motion. He is asked to speak for no more than 20 minutes.

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Employment Allowance (Increase of Maximum Amount) Regulations 2020 (S.I., 2020, No. 273), dated 11 March 2020, a copy of which was laid before this House on 10 March, be approved.

This draft legislation allows the Government to increase the employment allowance by one third, or £1,000, giving more than 1 million small and medium-sized businesses up to £4,000 off their employer national insurance contributions bills. Employers pay secondary class 1 national insurance contributions on their employees’ earnings above the secondary threshold, which is set at £8,788 this year. Those contributions are charged at 13.8% and constitute the largest business tax by revenue in the UK.

The employment allowance was introduced in 2014 to help businesses with the costs of employment and to encourage them to grow and to hire more staff. It is claimed by more than 1 million employers in order to reduce their employer NICs bill by up to £4,000 per year. The Government recently restricted the employment allowance to smaller businesses with a national insurance contributions liability under £100,000, thereby ensuring that this valuable support is targeted at those who need it most.

At Budget, the Chancellor announced that we would deliver our commitment to increase the employment allowance for smaller businesses from £3,000 to £4,000 from April 2020. Businesses have been able to access that increased support from the start of the tax year. The draft regulations, if passed, will legislate for that increase to the employment allowance. More than half a million eligible businesses will benefit from the increase by up to £1,000. The Treasury expects the average gain from this measure to be about £850.

The Government are committed to supporting the UK’s smallest and often most entrepreneurial businesses, and this measure achieves that. Some 95% of the businesses benefiting from this increase are small and microbusinesses. Increasing the employment allowance to £4,000 means that 65,000 more businesses will see their employer national insurance liabilities fall to zero. Since introducing the employment allowance in 2014, the Government will have taken around 650,000 of the UK’s smallest businesses out of paying national insurance contributions entirely.

The Government are determined now more than ever to support people and businesses. At Budget, we increased the national living wage by 6.2% to £8.72 an hour. Along with increases to the income tax personal allowance and the national insurance primary threshold, that means an employee working full time on the national living wage is £5,200 better off today compared with April 2010.

However, we are aware that by supporting people at work through national living wage increases, we also increase cost for businesses. Increasing the employment allowance helps businesses to meet that cost. Businesses will now be able to employ four rather than three full- time employees on the national living wage without paying any employer national insurance contributions.

This increase will cost more than £2.3 billion over this Parliament; it is a large tax measure. It should be noted that in just four years, the Government have doubled the value of the employment allowance. The draft regulations legislate for a Budget measure that is already helping more than half a million of our smallest businesses with the costs of employment and has been supported by the Federation of Small Businesses.

Before I conclude, let me welcome the hon. Member for Ilford North (Wes Streeting) to the Labour Front Bench. I enjoin him and all colleagues in the House to join me in supporting the draft regulations, which I commend to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister, Wes Streeting, who is asked to speak for no more than 15 minutes.

--- Later in debate ---

[Neil Gray (Airdrie and Shotts) (SNP) [V]]

Thank you, Madam Deputy Speaker. Like the shadow Minister, I do not intend to take anywhere near the quota of time on offer.

I thank the Minister for the motion. I dealt with him positively on the Roadchef Employee Benefits Trust issue and I hope we can continue to assist in progressing that matter. However, I must challenge him on his comments regarding the minimum wage. The minimum wage premium is not the real living wage. I encourage the UK Government to follow the Scottish Government’s lead by engaging with business to encourage more employers to pay the real living wage, if they cannot make it the minimum wage, and to remove the age discrimination that means under-25s cannot earn the same as their older colleagues for doing the same job.

As this is my first virtual speech, let me thank all those in the House staff who have gone out of their way to make the virtual House of Commons work and allow colleagues to hold the British Government to account. That includes Mr Speaker, you Madam Deputy Speaker and your fellow Deputy Speakers. Having spent considerable time on a committee with the Leader of the House, the irony of its being this particular Leader of the House who is proving that remote participation and eventually electronic voting can work, is certainly not lost on me.

Regarding the regulations, it is a pleasure to be able to respond on behalf of the SNP. Colleagues will be relieved that I do not intend to speak for very long. The business before us is uncontentious. We of course welcome an increase in employment allowance, but would have liked to have seen it go further. That is not an opportunistic position that we take for the afternoon to nit-pick or find division where there is none; our manifesto committed us to an increase in the employment allowance from £3,000 to £6,000 per employer, per year. Of course, that was the manifesto that helped the SNP win 80% of the seats we contested in December’s general election.

I welcome the shadow Minister to his place on the Opposition Front Bench. Like him, I encourage the UK Government to do more to assist small employers across the UK during the covid-19 crisis. The job retention scheme and business support schemes have massive gaps that so many of our constituents are falling through, and that is before we get on to the unsatisfactory self-employment scheme. I share the calls from the shadow Minister on bringing about flexibility to the furlough scheme. Something I would like to see on top of what he called for would be an appeals process, where an employer refusing to furlough a member of staff, leaving them without an income, can be challenged. The CBIL scheme is also not helping all those who need support. For many, incurring debt is just not an option. There needs to be much more in the way of grants available. Similarly, not all charities are covered in the third sector scheme, such as research-based charities, so I hope they will look at those areas again.

Short of the full powers of independence, we want the UK Government to devolve control of national insurance to Holyrood, so that the Scottish Government can use economic levers such as these measures to make decisions that support employers to create jobs. At the moment, our control over economic policy is very limited and largely rests with the UK Government, who take decisions that may favour other parts of the UK and may not be in Scotland’s best interests.

We will also continue to oppose the UK Government’s decision to restrict eligibility for employment allowance. In our view, it should cover all firms and all employers. The UK Government estimate that about 7% of all employers will no longer be eligible for the employment allowance. By removing this relief, they will be levying an additional £3,000 in tax on those employers.

In conclusion, we will not be forcing the regulations to a Division—I am sure that that will please those still testing remote electronic voting—but we would have liked the UK Government to have been more ambitious to support job creation by halting the eligibility restrictions and by expanding the relief that is available.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I am now introducing a time limit of five minutes. I advise hon. Members who are speaking virtually to have a timing device visible. I call Kim Johnson.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP) [V]]

I very much welcome the Minister’s announcement today and the Government’s commitment to it. I thank you, Madam Deputy Speaker, for giving me the opportunity to speak.

Initially, the employment allowance was set at £2,000 but was increased to £3,000 from April 2016. From April 2020, the allowance may only be claimed by employers with employers’ national insurance contributions of below £100,000 in the previous tax year, a change announced in 2018. HMRC estimates that the annual cost of the allowance is around £2.2 billion.

I absolutely understand the reason for the inclusion of this measure in the Conservative party manifesto and the Minister’s announcement today, but I am a wee bit concerned that we need to be doing more to help the small and medium-sized businesses that continue to employ large numbers of people across my constituency and the whole United Kingdom of Great Britain and Northern Ireland. In my constituency and across Northern Ireland, we probably have a higher per capita percentage of small and medium-sized businesses than the rest of the United Kingdom. I welcome this measure, but we need to ensure that these small and medium-sized businesses are able to return to the position they were in, so that they can give the opportunity of employment and wages and give the economy a bit of a kick-start.

I want to say an incredibly large thank you to Frances and her staff at my local social security office, who have helped many people and given advice during this crisis. It is important that their hands are not tied by a system that understands the rules but has no discretion to understand individual circumstances.

I welcome the help that will be coming for the many charities that we and many others contribute to. I think of the National Society for the Prevention of Cruelty to Children, Cancer Care, Marie Curie, St John Ambulance and the Cancer Fund for Children here in Northern Ireland. All those charities have no or little fund raising at the moment. The moneys coming into them are direct donations. There may be other moneys coming in, but there is no fund raising taking place. The help that the Government have offered charities is very welcome, but it will never bridge the gap for the incredibly large amounts of money that they are losing.

I was very happy with the Chancellor’s decision to allow workers to be furloughed, although there will be no payment until June for the self-employed. I think also of self-employed directors—I asked the Secretary of State for Work and Pensions a question about this yesterday, and I raise it again now—who put their profits back into the business, so do not have much in the way of savings. Unfortunately, they do not get the real benefits here that they could.

I put on record my thanks to the Government and to Ministers for all that they have done. They have reached out to many people. As elected representatives, we are made aware with each passing day of others who perhaps do not tick the box—who do not fit into a certain category—and I am thinking of them. We therefore bring those people to the attention of Ministers whenever the opportunity arises.

Many of us will be in receipt of a paper from Ian Geary of the Salvation Army referring to the report that has already been mentioned, entitled “Understanding Benefits and Mental Health”. We cannot let this go by without reflecting—in a small way for this debate but in a big way for the individuals themselves—on the barriers that vulnerable groups experience, and on some of the multiple mental health challenges that they are facing. That paper emphasised that the aforementioned findings were collated before the current crisis, but it has highlighted the lack of resilience experienced by many people who need help at this moment.

Again, I welcome the provisions that we have today, which benefit the many who fall within the criteria, but there are others who perhaps fall just outside the criteria or outside the box-ticking exercise that Departments sometimes do. We need to identify and support vulnerable claimants. We need to help those with mental health issues. We need to support businesses and those self-employed people who cannot create the opportunity—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I thank the hon. Gentleman for his speech but we now have to move on to the Minister.