Finance Bill

Vicky Ford Excerpts

Tuesday 31st October 2017 Commons Chamber

[Peter Dowd]

I am pleased that the Minister raises that point because we will no doubt have another debate about it in the future. I have an interesting assertion that I shall make when we debate the tax gap, but that is for another day. I am happy to debate that subject with the Minister in due course.

[Vicky Ford (Chelmsford) (Con)]

Does not the hon. Gentleman agree that a tax gap that is one of the lowest in the world is something that we should celebrate while we are debating a Bill about taxation? We should be thanking the Government for making sure that the taxes we approve are collected.

[Peter Dowd]

This does not actually include the multinationals, but I was trying to make the point that I am happy to return to that point in another debate, if the Government so wish.

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[James Cleverly]

I will be more than happy to invite Treasury officials and Mark Carney to the end of days party that it seems I will be throwing for my hon. Friend and my right hon. Friend the Member for Broxtowe (Anna Soubry). We can sit down to discuss such things, sharing my beautifully aged claret—[Interruption.]. Or indeed some wine from the constituency of my hon. Friend the Member for Wealden (Ms Ghani), which produces some fantastic wine. We will discuss the implications for the British economy of fear-mongering.

[Vicky Ford]

We are debating a new clause that suggests that, within 15 months of passing the Bill, there should be another review. Fifteen months would be February 2019, a month before Brexit. Financial services companies are already having to rethink their operations to cope with Brexit. Does my hon. Friend agree that the new clause is a distraction that the sector does not need and that the sector contributes more than £70 billion in tax to the UK economy, which we want to keep?

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[Bim Afolami]

I accept that point. Members present appear to be reaching consensus that the Government should always be thinking of how to balance the need for fairness and simplicity with closing loopholes so that people do not take advantage of the fair laws in this country.

Many Members have discussed in the speeches made so far—I told you, Mr Speaker, that I was listening—the importance of businesses bringing in money to fund our public services. We all recognise that that is important; indeed, it is the reason why many, if not all, of us became Members of Parliament. However, it is also worth making the point that having a thriving economy in which individuals, on their own merit and through their own effort and time, can make the most of themselves is in and of itself a good thing. We should not always revert to thinking about business as something simply to be milked for the Exchequer; the Exchequer, the Government and Parliament should set, and are setting, a clear, simple, as-low-as-possible framework in which individuals and corporations can thrive. That is the sort of fiscal and economic policy that I support.

[Vicky Ford]

I thank my hon. Friend for the work he has done on the detail of this Bill. Does he agree that clauses 29 to 32 remove the loophole of permanent non-dom status, but clause 8 means that the UK can continue to benefit from the approximately £9 billion a year from overseas investments, yet if we accept the Labour amendment we put that £9 billion at risk?

[Bim Afolami]

My hon. Friend is expert in these matters and knows about them in immense detail, having served in the European Parliament. When both serving on the Finance Bill Committee and during this debate, I have been struck by the keenness of this Government to be fair at the same time as promoting competitiveness. Fairness and competitiveness together are what make Britain the best place in the world to do business.

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[Vicky Ford]

Will the hon. Lady give way?

[Ellie Reeves]

I will make some progress.

It seems curious that the Government want to make it a priority to enshrine it in statute that compensation for injury to feelings awards connected to the termination of employment should be taxed as earnings. This is yet another example of how the Government, rather than going after the big corporations that are avoiding tax, would penalise those who have been unlawfully discriminated against at work.

When we last debated the Bill in Committee on 11 October, it was suggested by Government Members that injury to feelings was some sort of new concept that Labour was trying to introduce to create a tax loophole. Yet injury to feelings is a well-established head of damage, enshrined in the Equality Act 2010 and in the various pieces of anti-discrimination legislation that preceded it, including the Sex Discrimination Act 1975. Guidance on the level of awards was given in the case of Vento some years ago, and it has just been upgraded. The highest award is £42,000 for the most serious acts of discrimination, which usually involves a course of conduct over many years, and the lowest award is £800—usually for a one-off comment. That is established legal principle.

Under these proposals, however, such awards would be taxed as a matter of routine when the £30,000 threshold is exceeded. Not only does that seem inherently unfair to victims of discrimination, but in practical terms it will lead to all sorts of litigation and drafting issues about whether an award is in connection with the termination or a previous act of discrimination unconnected to the termination. For example, a woman is subjected to sexual harassment at work over a sustained period. She subsequently tells her employer she is pregnant and is dismissed as a result. She pursues a claim for sexual harassment, unfair dismissal and maternity discrimination. She is awarded £30,000 for loss of earnings, which takes her up to the tax-free threshold. She is awarded another £10,000 for injury to feelings. Who determines what part of the award is for the harassment, which is unconnected to the termination of her employment and therefore not taxable, and what part is in relation to the pregnancy-related dismissal and therefore taxable?

Moreover, because personal injury claims will be exempt from tax but injury to feelings will not be, we are likely to see more employment tribunal claims pleading personal injury—for example, psychiatric damage—which will inevitably lead to complex medical evidence and longer hearings. With strains already on the employment tribunal system and on HMRC, that is surely not the route we should be going down. Or is this just the start of a slippery slope, with the Government ultimately wanting to tax all injury to feelings awards and all personal injury awards?

For those reasons, I urge the Government to accept our amendments and to go after the real tax avoiders, not hard-working individuals who have been treated unlawfully at work.