Draft Postal Packets (Miscellaneous Amendments) Regulations 2023
Victoria Atkins Excerpts(1 year, 10 months ago)
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The Chair
Before we proceed any further, I would like to make two things clear for the Committee. First, the membership of the Committee is not a matter for the Chair; it is a matter for the Committee of Selection, as I set out earlier. The Government Whip is in his place and will have heard the strength of feeling among right hon. and hon. Members on that point. Secondly, Standing Order No. 118(5) requires that the Committee debate the motion
“That the committee has considered”
the draft regulations.
I will now call the Minister to move the motion. I will take no further points of order at this point, but if necessary I will take them later, when she has moved the motion.
The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move,
That the Committee has considered the draft Postal Packets (Miscellaneous Amendments) Regulations 2023.
May I say what a pleasure it is to serve under your chairmanship, Mr Pritchard? May I also thank hon. Members, including right hon. and hon. Friends, for coming to this Committee today? I hope that they are able to hear me. I thank them for coming to this Committee. I do understand the sensitivities—
Sir James Duddridge
No, I am asking Mr Pritchard to take a point of order. I am not asking to intervene on the Minister; I am making a point of order.
The Chair
In answer to the right hon. Member’s question, this Committee sitting will end at 9.10 pm. On his wider point, I will say again that I said that when the Minister and shadow Minister were in attendance, we would proceed. The only caveat to that, which the right hon. Member will know—having been here longer than I have, as a distinguished parliamentarian—is that the Committee has to be quorate.
I am agnostic: I am not looking around at who is here, who is not, and who is supporting the Government. I am completely neutral in this. I am looking, procedurally, at whether the Minister and shadow Minister are here, and whether the Committee is quorate. I cannot just make up the rules as we go along. Otherwise, we would have chaos. I call the Minister.
Victoria Atkins
Thank you, Mr Pritchard. To reiterate, I beg to move the motion. Before I start, I do recognise the concerns of right hon. and hon. Members and the care with which they have made their points. I hope that I can answer some of their questions in my speech. As ever, I hope that colleagues from across the House who know me know that I will always do my absolute best to answer questions. Whether I am able to do that in Committee or outside Committee, I will always, always endeavour to help with colleagues’ careful scrutiny of Government legislation.
The statutory instrument before us will provide United Kingdom authorities with powers in relation to postal packets or parcels moving from Great Britain to Northern Ireland. It does nothing more or less than that. It does not, itself, put in place the wider Windsor framework arrangements.
The powers are part of delivering what we promised for consumers and businesses in Northern Ireland. They are necessary to ensure that we can implement the Windsor framework and remove the burdensome regime that the old Northern Ireland protocol would ultimately have required. As I say, I am very aware of the sensitivities and the concerns; indeed, I hope that I can help to clarify what the framework itself requires in respect of parcel movements, so I will try to deal with that now.
If I may just take us back a moment, I think it is important to remember that the Northern Ireland protocol was negotiated in good faith and under extreme pressure. If we cast our minds back to the circumstances in 2019, it was negotiated in good faith, as I say, in an effort to provide solutions to the issues raised about trade, on the island of Ireland and within the United Kingdom, following our exit from the single market.
As the protocol began to be implemented, however, practical issues came to the fore. I know that there are right hon. and hon. Members present who were absolutely forthright, and I think very persuasive, in highlighting the problems that businesses in particular were facing. Our concern has always been that, had it been fully implemented, the Northern Ireland protocol would have required international customs processes for all parcel movements from Great Britain to Northern Ireland. Nobody wants that. Indeed, that is why the Prime Minister, assisted by the Foreign Secretary, the Secretary of State for Northern Ireland and—I will give him a shout-out in due course—the Minister of State, Northern Ireland Office, my hon. Friend the Member for Wycombe (Mr Baker), negotiated a deal with the EU that, frankly, few at the time dared to hope would be possible.
Victoria Atkins
If I may, I just want to set out the circumstances, because I very much hope that that will help with some of the concerns that have been raised. I know that there is a great deal of interest in these arrangements, so I am going to be absolutely clear with the Committee what these measures entail and, importantly, what impact they will have not just for our constituents, but for the United Kingdom family.
In short, someone in Great Britain sending a parcel to their friends or family in Northern Ireland will not need to engage with any customs processes. Nothing will change for those movements compared with today. Similarly, Northern Ireland recipients of parcels sent by their friends or family in Great Britain will not need to engage with any customs processes. Nothing changes compared with today. A grandchild in Blackpool—I pick Blackpool because that was where I went to school, and there is a wonderfully rich Irish community in and around Blackpool and Preston—sending a package to his grandparents in Belfast will not need to do anything new to send it and, importantly, the grandparents will not need to do anything new to receive it.
Businesses in Great Britain selling to consumers in Northern Ireland will not need to complete customs declarations, international or otherwise. Nothing changes. Northern Irish consumers buying from British sellers, including—hon. Members have raised this point with me—the likes of Amazon and other online shops, will not need to engage with any customs processes. Nothing changes. They will buy from the British seller and receive their goods without doing anything new; I say that very clearly for the sake of colleagues here today and for others outside this Committee Room who may be listening. Those facts are now recorded in Hansard and can be scrutinised. I say that very deliberately, so that those who have concerns understand exactly what we have set out in the framework.
The Windsor framework explicitly removes those requirements on goods being sold to Northern Ireland consumers and, of course, on goods being sent to friends and family. There will be no routine checks or controls applied to parcels. There will be interventions only on the basis of a risk-based, intelligence-led approach. That means that the overwhelming majority of parcels will not be subject to checks.
Parcels sent from a business in Great Britain to a business in Northern Ireland will be treated the same as equivalent freight movements. They can be moved through the new green lane when eligible, when it is introduced from October 2024.
Victoria Atkins
I promise I will give way to hon. Friends and Members.
As will be the case for freight movements, the green lane will ensure that eligible goods will no longer require international customs processes; they will instead require only the provision of routine commercial information.
Victoria Atkins
I must give way to my right hon. Friend the Member for Wokingham, and then I will give way to the hon. Member for North Antrim.
John Redwood
The form of this statutory instrument is to amend regulations relating to foreign postal packets. It includes GB-NI postal packets alongside foreign postal packets in important matters in the regulations specified. How can the Government defend that? They are effectively treating Northern Ireland and GB as foreign countries to each other, accepting a form of regulation designed for a true international border and clearly violating the terms of the internal market legislation governing the United Kingdom? [Interruption.]
Victoria Atkins
If I may, I will address that point, and then I promise I will come to the hon. Member for North Antrim in due course. I am pleased that my right hon. Friend the Member for Wokingham used that language, so that I can make it clear for the purposes of Hansard that this is not about trying to differentiate or draw lines around our precious Union.
Several hon. Members rose—
Victoria Atkins
If I may, I will continue. In relation to the overwhelming majority of parcels, there will be no changes. The one instance in which there will be a requirement to go through green lane processes is where businesses are selling to business from Great Britain to Northern Ireland. I accept that this is—in the phrase used by my hon. Friend the Minister of State, Northern Ireland Office—a hard compromise. I accept that, and I say that with great respect, but we have to make the framework work because we have no alternative. I am not in the business—
Victoria Atkins
I will give way to the hon. Gentleman in a moment; I am still answering my right hon. Friend the Member for Wokingham. Had the Prime Minister not negotiated the new Windsor framework, we would still be bound by the Northern Ireland protocol, and we know the many problems that that posed for both private residents and businesses, so this framework is a real step forward. This SI—which is a very, very small SI in the context of the framework, dealing as it does only with parcel movements—is a step forwards in ensuring that we protect the Union. However, I very much acknowledge and appreciate, as my hon. Friend the Member for Wycombe has, that for people who are committed to the Union and to leaving the EU, it is a hard compromise, but I am afraid that it is one we must take.
Ian Paisley
The Minister has come to the nub of this matter, because this is about business-to-business trade. I want to know the statistics on which she has based the claim that the vast majority of parcels will be private trade; perhaps she could share those. Secondly, could she outline who will ultimately pay the additional cost that will be put on business to do these things and how long any support will be in place?
Thirdly, the Minister must accept that this measure has the potential to lead to a diversion of trade, forcing businesses in England that really cannot be bothered with the burden of filling in forms to send a very small amount of their overall trade parcel to Northern Ireland. That will force businesses in Northern Ireland to divert trade and do their business elsewhere. Does the Minister accept that that is the likely outcome of this two, three or four years down the line from now?
Fourthly, does the Minister accept that the green lane she has outlined is the safety valve for all of this, in terms of most businesses being able to operate in it? The fact of the matter is that most businesses cannot operate in the green lane—that the green lane is there for only a very few high-class businesses. The vast majority of businesses in Northern Ireland—about 20,000—will not be able to operate in the green lane structure.
Finally, can the Minister—
The Chair
Order. On that point, I have given latitude for four points of intervention rather than one. The hon. Gentleman will be called to speak if he rises from his chair later, and he will have another opportunity. I know that he is an experienced Member and will respect the view and ruling of the Chair.
Victoria Atkins
I will certainly answer the first of the points the hon. Gentleman made in his intervention—I was not able to catch them all, so I very much hope that he will be able to speak in due course. I will absolutely undertake to write to him if I am not able to deal with them in my speech.
I am told that about 5% of GB to NI parcel movements —please forgive the acronyms—are to Northern Ireland businesses. Within that 5%, the level of checks will be minimal, because we are applying this risk-based and intelligence-led approach to checks. We have not put a percentage on it, other than that it would be within that 5%, but we expect this to be minimal, because the very thing we want to encourage is trade between a thriving GB economy and a thriving Northern Irish economy.
In relation to the green lane and whether only a few businesses will be able to benefit, the answer is no. We expect the use of the green lane to be widespread. We are working to ensure that businesses in Northern Ireland and Great Britain know how to be eligible. Indeed, if there are any observations that the hon. Gentleman and others have as to the challenges that businesses face, or representations that they would like to make, will they please continue to work with us? We genuinely want to make this work for people and businesses—of course we do. As I said, I hope that the hon. Gentleman will be able to continue his speech in due course.
To return to my own speech, I was trying to set out the requirements on businesses and, importantly, the lack of requirements on individuals, families, friends and so on. Movements via the red lane, including those goods destined for the EU, will be subject to the customs processes required by the EU, as I hope colleagues will understand.The Prime Minister negotiated the Windsor framework to ensure that consumers and businesses in Northern Ireland—and, indeed, British businesses selling into Northern Ireland—could benefit by protecting internal trade within the UK.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I have a concern when it comes to the integrity of our United Kingdom, because the final sentence of paragraph 7.6 on page 3 of the explanatory memorandum states:
“This means that prior to this instrument coming into force, postal packets moving within the UK cannot be searched, seized or intercepted by HMRC or Border Force.”
This instrument will therefore change the internal integrity of our United Kingdom and is a huge giveaway of our country’s sovereignty.
Victoria Atkins
I am really pleased that my hon. Friend has brought that up, because it touches on the timing point that colleagues have raised. Understandably, colleagues have asked, “Why is this happening now? Why can’t it wait until October next year?” Of course, the Windsor framework arrangements will come into force in October next year, but there is a limited range of prohibited or restricted goods that are supposed to comply with EU customs rules today—for example, hazardous chemicals and chemicals that can deplete the ozone, and blood diamonds have also been mentioned to me. We do not have those powers at the moment, so we need to fill the gap as quickly as we can, so that in respect of those goods—
Victoria Atkins
May I finish the point, please? We need to ensure that Northern Ireland is not being used as a back door into the EU. I am coming at this matter not necessarily from the perspective of being particularly mindful of what may or may not happen in the single market—I do not know whether I am allowed to say that, but there we go—but because I do not want communities in Northern Ireland to be facing these pressures. I look across the room to those who know far better than I, but I am very conscious and have some small understanding of just how those pressures have been withstood valiantly in the past by communities in Northern Ireland. We want to do everything we can to support them in that and to ensure that they can continue to thrive.
Sammy Wilson
I am bemused by the Minister’s explanation. If she is concerned about hazardous substances, invasive species and the other things that are mentioned in the explanatory memorandum being transferred by post from GB to Northern Ireland, is she not also concerned about them being transferred in parcels from London to Scotland and London to Wales? If the regulations are all about protecting markets, why are the Government singling out Northern Ireland?
Victoria Atkins
I remind the Committee that we are looking at parcels, not at freight—although of course there are extensions in that regard. Of course, if items are being imported into Great Britain via Dover, Harwich, Immingham or wherever, there are separate powers on those goods to protect communities in Great Britain and, I would argue, further afield. I acknowledge the difficulties, particularly for those representing Unionist interests in Northern Ireland, but we wish to move these issues forward, and the Windsor framework is a good deal for the United Kingdom as a whole.
We need powers now to stop non-Northern Irish recipients using Northern Ireland as a back door, which is why we are so keen to pass this provision quickly and to make progress. I imagine that businesses in Northern Ireland, and businesses in Great Britain that wish to conduct business with Northern Ireland, will want to ensure that we can do this as quickly as we can. This was a significant deal for the Government, and I absolutely understand and respect the wish to scrutinise it, but we have to move forwards with this.
Sir James Duddridge
The list of goods seems quite general, and I was wondering whether there were more specifics. It refers to
“restricted goods, for example invasive alien species or ozone depleting substances”.
In particular, I am mindful of a company in Shoeburyness that exports seeds. It has already stopped exporting to some EU countries because of problems as a result of Brexit, but I could see it giving up unless there is a definitive list. Is there a list, or will one come out through a further SI?
Victoria Atkins
I want to ensure that I can provide the list to my hon. Friend now. However, just on that wider subject, the situation that he has described is exactly what we want to try to avoid in the future. He will know that there was uncertainty about how the protocol would apply. I think it was the chairman of Marks & Spencer at the time who came on to the radio at some point and talked about the 50 or so checks that M&S had to go through to send products to its stores in Northern Ireland. We want to cut through all of that, and I hope the Windsor framework will help the businesses in my hon. Friend’s constituency. I also hope that he will know that we are putting a great deal of effort into the trader support service to help businesses to navigate these new customs duties. Of course, that is in the freight space as well. The Government want to grow the economy and our relationship with businesses. I am very helpfully reminded that there is published guidance on gov.uk already, but I am happy to provide it separately to my hon. Friend if he wishes to see the complete list. It is published on there already.
Stephen Farry (North Down) (Alliance)
I am grateful to the Minister for giving way, and I congratulate her on the clarity with which she is explaining the issue. I will stress that there are people in Northern Ireland who support the Windsor framework and appreciate that it is a good deal. Obviously, with Brexit, there are no perfect solutions to these situations.
Just building on the answer that the Minister has just given about the trader support service, does she recognise that there is a potential role for the Government beyond that to try to promote to GB-based businesses the requirements in terms of selling into Northern Ireland? I think that is an area where more work can be done without impinging directly upon the legal framework that has been agreed.
Victoria Atkins
I am very open to ideas and suggestions, particularly from those parliamentarians who represent Northern Ireland, as to how we can improve that understanding within the Northern Irish business community but also, importantly, here in Great Britain, because I want businesses to continue trading, and indeed to grow their trade, with Northern Ireland.
There are experts in this room who know just how ambitious and powerful the messages of support were from the international community when the Windsor framework was signed about the opportunities available for this corner of the United Kingdom, so I very much hope that this measure is seen as part of that drive and that ambition to help Northern Irish businesses to grow.
Ian Paisley
I would like to come back to the point where the Minister indicated, essentially, that there will be discrimination between businesses, business dealings and trade. The Minister claims that this issue has been addressed and that this measure is compliant with the European convention on human rights. How does it comply with article 14 of the ECHR, which prevents discrimination between businesses and individuals?
Victoria Atkins
Again, I just remind the Committee that we are dealing with parcel movements here; we are not litigating the entirety of the Windsor framework. As I say, we think it is a really positive step forward for the whole of the United Kingdom. Of course the hon. Gentleman is looking at it—quite rightly—very particularly through the lens of his constituents and Northern Ireland. However, in terms of the whole United Kingdom, and of all our businesses being able to have that certainty about how to deal with the EU, both in relation to Northern Ireland and in our wider relations with the EU, it is a good thing. After years of discussion, we now have an agreement that really gives us all, I hope, some clarity and certainty as to how we will conduct trade with the EU in the future.
As I say, I appreciate that hon. Members have rightly been scrutinising some parts of the agreement, but on the article 14 point, I am required as a Minister to satisfy myself as to the measures. I gently point to the fact that, in terms of individuals to individuals, nothing changes and, in relation to businesses—GB to NI only—nothing changes. It is simply where there may be onward traffic to the EU—as indeed, would be the case if there were onward traffic to the US—that that duty may be payable. I am veering into freight; I am conscious that, in relation to the small group of transactions we are talking about, there is a certain amount of overlap or mirroring, but we are, again, looking just at parcel movements for this SI.
Ian Paisley
The Minister talks about business to business, but who does business? It is people; people do business. Business to business is about people, and their rights—the company rights and the individual rights of the people doing business—are being trampled upon. Where businesses are doing that business on behalf of other people and consumers, those people are being discriminated against in terms of cost and the diversion of trade, and there will be general discrimination because we in Northern Ireland will be treated differently from the rest of the UK, or the rest of the UK will be treated differently from Northern Ireland—the point the Minister made to my right hon. Friend the Member for East Antrim.
Victoria Atkins
Again, I will try to answer the hon. Gentleman’s intervention as fully as I can. The Windsor framework does not introduce any discrimination against anyone. Businesses do not have human rights in the same way that individuals do. Articles 6, 2 and 8 do not apply to businesses. On his point about the business treatment, the Windsor framework is a positive step forward from what would have happened under the Northern Irish protocol. We have to operate under what would have been because I cannot pretend that the protocol did not exist or that those strictures would not come in in due course. As I say, that is not a commentary on what was negotiated at the time under those extremely difficult circumstances, but the United Kingdom and the EU have got around the table, acknowledged the significant difficulties that have been identified and come up with the Windsor framework, which answers all those concerns and does so, I would say, in a way that really moves our relationship with the EU forward.
Victoria Atkins
If I may, I will make a little progress, but I hope that colleagues feel that I have been generous with interventions.
The Government need to ensure that the powers of HMRC and Border Force are sufficient to allow them to monitor the rules for movements of parcels and that, where certain requirements are in place—the point my hon. Friend the Member for Rochford and Southend East made—for movements intended ultimately for the EU, they can be enforced. We need to be able to determine that parcels destined for the EU can be detected and to ensure that they follow the requirements of the red lane.
I know from conversations outside the Committee Room that some colleagues have read the Secondary Legislation Scrutiny Committee’s report into the rationale for bringing the instrument into force on 31 August. As I have said, some existing rules apply to prevent illicit movements of certain categories of goods, such as invasive species or ozone-depleting chemicals, which is why we are bringing these powers forward to HMRC and Border Force at this time, rather than waiting over a year.
The Committee’s report also noted the arguments submitted to it that the regulations would contravene the principle of unfettered access within the UK by introducing a customs border. Indeed, I have carefully noted the submission by the Democratic Unionist party about its concerns relating to the Good Friday agreement. We acknowledge, as I have said throughout, that there are a range of views on the Windsor framework itself, but these regulations are discrete and relate solely to the powers available to HMRC and Border Force. That said, I hope that I have been able to clarify for hon. Members and hon. Friends what the framework does and does not do, and therefore what the powers granted by the regulations will monitor and enforce.
Robin Millar (Aberconwy) (Con)
I thank you, Mr Pritchard, for bringing us to a meaningful debate on this matter. I also thank the Minister; she has been dealt a difficult hand here and she is handling it very well.
The Minister has referred several times to smallness and how this is about small packets, but these are actually big principles. I want to be reassured by what she is saying, but I have a question. It relates specifically to business and the package of information that was brought into the Committee room containing submissions, including the DUP’s submission. I will quote one submission from the Road Haulage Association, on page 15, by way of example. It gives several examples of where the regulations will be changed by this provision:
“after ‘foreign postal packets’ insert ‘and all GB-NI postal packets’”.
So the revised version will read
“foreign postal packets and all GB-NI postal packets”.
In other words,
“movements from GB to NI are no longer considered on the same domestic terms as movements between England, Wales and Scotland”.
Does the Minister understand why there is confusion about this? Does she understand how it causes me and others to have concerns about the introduction of a border within the United Kingdom? Perhaps she can explain why that treatment, in that way, does not constitute an internal border within the United Kingdom.
Victoria Atkins
I genuinely thank my hon. Friend and acknowledge the spirit in which he asked those questions.
Historically, the role of postal parcels has not necessarily been defined in freight. As I said before, with that precise wording we are trying to ensure mirroring for this small cohort—so not between individuals or between businesses to Northern Irish individuals; that does not change. However, we do want to ensure that the mirroring in relation to green lanes and red lanes of freight is clear when it comes to those parcels.
We have been dreaming up interesting examples today in preparation for this, but I have used the example of lace. A business in Great Britain may produce lace and send it to a business in Belfast that makes dresses. If that business sells the dresses within Northern Ireland or back to GB, it will not be affected; it will not see any changes. This kicks in only if some of the dresses are sold to Dublin or further afield. We have tried to ensure that the regulations mirror each other, whether one sends a parcel by post or in a great big container.
I reiterate that the vast majority of parcels will move without any additional requirements on parcel recipients in Northern Ireland. We have pushed genuinely very hard to ensure that the interests of Northern Irish consumers, and of GB businesses selling to Northern Ireland, are protected. There are huge improvements compared with the previous protocol, but we need to manage the risk in relation to movements across the Irish border in order to avoid EU tariffs and regulatory controls. We fully accept that this is a trade-off, but we have put protecting people and businesses in Northern Ireland at the very forefront of our efforts, to try to ensure that we get to a proportioned approach in this mechanism. I hope that answers my hon Friend’s question.
John Redwood
I thought that, in law, and certainly politically, the Good Friday agreement took precedence over other agreements, given its importance. How is this measure in any way compatible with the Good Friday agreement when it does not have the consent of the Unionist community—an important underlying principle of the whole agreement? I would also like to assure the Minister that I do not use the phrase “hard compromise”, and I have not been recommending these kinds of proposals.
Victoria Atkins
I am sorry; I did not catch my right hon. Friend’s last point. Would he repeat it?
John Redwood
I thought the Minister implied earlier that I thought that this was a hard compromise. I do not; I think it is bad policy.
Victoria Atkins
I think my right hon. Friend misheard me. I was referring to the Northern Ireland Minister, the hon. Member for Wycombe (Mr Baker). I would not dream of putting words in the mouth of my right hon. Friend the Member for Wokingham.
A point was made about the Road Haulage Association. The answer to that intervention is that the powers were available to Border Force in respect of international movements. We understand the sensitivities and the concerns raised about making powers available for GB to NI movements, but we would say that that is not the same as making these international movements.
My right hon. Friend the Member for Wokingham asked a very important question about the Good Friday agreement. We do not accept that this is contrary to the Good Friday agreement. These regulations are in fact an enabler to the agreement that we have negotiated. As I said, we have ensured that consumer interests in Northern Ireland and the interests of British businesses selling to Northern Ireland are protected, but that means that an incentive now exists to move goods into Northern Ireland and take them across the Irish border to avoid EU tariffs. If we are to manage that risk—[Interruption.]
The Chair
Order. So that we are absolutely clear, we will return here after 15 minutes if there is one Division. For subsequent Divisions, 10 minutes will be allowed. If the Minister and shadow Minister are present and we are quorate, the proceedings will resume.
Victoria Atkins
I am conscious of the interest in the room, so to give others a chance to speak I propose to sum up very quickly by simply saying that the parcels arrangements are a significant improvement for UK citizens compared with the requirements under the old Northern Ireland protocol. However, it is vital to understand how little will change compared to the status quo for the vast majority of Northern Irish parcel recipients and those in Great Britain sending goods to them. I commend the regulations to the Committee.
The Chair
The new time for the end of the proceedings will be 21 minutes past 9. I ask colleagues to rise if they wish to speak, in order to help the Clerks and the Chair. There is no time limit on speeches, but speakers may want to be mindful of allowing the shadow Minister and the Minister to respond to the debate.
Victoria Atkins
We acknowledge the range of views on the framework, but I emphasise that the SI is solely concerned with the powers available to HMRC and Border Force to ensure that the improvements in respect of policies that we have secured through the Windsor framework are implemented.
Victoria Atkins
I would like to answer the shadow Minister’s questions and then I will happily give way.
In terms of HMRC, we are fully confident that we have the staff and resources to meet the expectations of not just this element, but the whole Windsor framework.
Victoria Atkins
I give way to my hon. Friend the Member for Rochford and Southend East.
Sir James Duddridge
I was standing to be called in the debate to make my 18 points; I was not asking the Minister to give way—apologies.
Reforming Anti-Money laundering and Counter-terrorism Financing Supervision
Victoria Atkins Excerpts(1 year, 10 months ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
My noble friend the Treasury Lords Minister, Baroness Penn, made the following written statement on 30 June:
On 30 June 2023, HM Treasury published a consultation regarding the reform of the UK’s anti-money laundering and counter-terrorism financing (AML/CTF) supervisory regime.
Consulting on and implementing reform of the AML/CTF supervisory system is a key commitment in the Economic Crime Plan 2023 to 2026. It is expected to complement a number of other actions aimed at strengthening the UK’s anti-money laundering regime, and ensuring that businesses most vulnerable to abuse for money laundering or terrorism financing have robust and proportionate controls in place, and are subject to effective supervision.
The Treasury’s 2022 Review of the UK’s AML/CTF regulatory and supervisory regime concluded that, while further improvements should be made to the current regime, structural change may be needed to address certain weaknesses. This consultation outlines in more detail four potential models for the future of supervision and seeks to gather evidence on which will best deliver the reform objectives.
The first model, OPBAS+, would provide increased powers to the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). OPBAS was established in 2017 and has made significant progress against its aim of ensuring high and consistent supervisory standards among the 22 professional body supervisors (PBSs) which supervise the legal and accountancy sectors.
The second model would consolidate PBSs so that between two and six PBSs would retain responsibility for AML/CTF supervision.
The third model would see the creation of new public body. This could take over the AML/CTF supervision of the supervisory populations of PBSs, and potentially some additional sectors currently supervised by HMRC. Alternatively, it could be given responsibility for the AML/CTF supervision of all populations currently supervised by a PBS or by HMRC. This would create a system whereby either three or four public bodies carry out all AML/CTF supervision.
Finally, the fourth model would place the AML/CTF supervision of all sectors regulated under the Money Laundering Regulations under the remit of a single public body.
These four models represent a commitment to strengthen the UK’s defences against economic crime, responding to calls to address weaknesses in the current system made by stakeholders such as the international AML/CTF standard-setter, the Financial Action Taskforce. The consultation also seeks views on whether there is a case to increase requirements on supervisors and their regulated populations to further support compliance with sanctions.
The consultation will be open for three months, closing on the 30 September 2023. After this, the Government will make a policy decision by the end of Q1 2024 on the model which best achieves the reform objectives. Strengthening the effectiveness of the UK’s AML/CTF regime will also support wider public and private sector priorities set out in the Economic Crime Plan 202 to 2026, such as the reforms of Companies House legislated for through the Economic Crime and Corporate Transparency Bill. Taken together, these reforms will help to cut crime, protect our national security, and support the UK’s legitimate economic growth and competitiveness.
The consultation is published on gov.uk: https://www.gov.uk/government/consultations/reforming-anti-money-laundering-and-counter-terrorism-financing-supervision
[HCWS905]
Post Office Compensation Update
Victoria Atkins Excerpts(1 year, 11 months ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
This House is aware that the Post Office Horizon scandal has had a devastating impact on the lives of many postmasters since it began over 20 years ago. The Government are deeply concerned about ensuring the fair treatment of this group. The tax treatment of payments made under the Horizon shortfall scheme (HSS) and the group litigation order (GLO) scheme is of vital importance to ensure fair compensation, and a key part of this is the consistency of such treatment with other historic compensation schemes, and the principles behind such decisions.
The Government have already announced their decision that payments made under the GLO scheme and payments made to postmasters with overturned convictions will not be liable for income tax and that top-up payments will be made to ensure that the compensation of those on the HSS is not unduly reduced by tax.
Today, we go further to correct the historic injustices by announcing that the Government will not collect any inheritance tax (IHT) that may arise in relation to payments made under the HSS and the GLO scheme to victims of the Post Office Horizon scandal. This brings the IHT treatment of payments made to victims under the HSS and the GLO scheme in line with those made to postmasters with overturned convictions. This exemption recognises the unusual status of the HSS and the GLO scheme, and the egregious nature of the Post Office Horizon scandal.
The Government will legislate to exempt these payments from IHT in due course, but to ensure that recipients have certainty over their tax position prior to legislation being introduced, from today HM Revenue and Customs (HMRC) will not collect any IHT in relation to payments made up to the date the legislation comes into force. Any IHT paid by the personal representatives of estates who did not previously qualify for relief from IHT on HSS and GLO scheme payments will now be entitled to a refund from HMRC.
With the Government being the sole shareholder in the Post Office, we will continue to work across Government and with the Post Office to ensure the postmasters get the full compensation they deserve.
[HCWS896]
Draft Double Taxation Relief and International Tax Enforcement (Brazil) Order 2023
Draft Double Taxation Relief and International Tax Enforcement (San Marino) Order 2023
Victoria Atkins Excerpts(1 year, 11 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Brazil) Order 2023.
The Chair
With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (San Marino) Order 2023.
Victoria Atkins
It is a pleasure not only to serve under your chairmanship, Sir Robert, but to have a high-powered Committee scrutinising these important measures. Nestled among us is the United Kingdom trade envoy to Brazil, my hon. Friend the Member for Dudley North (Marco Longhi). He may wish to address the Committee in due course.
The orders give effect to double taxation conventions with Brazil and San Marino. Like all conventions, these agreements are based on the OECD model tax convention and will provide tax certainty to business and investors by removing double taxation without creating opportunities for the avoidance of tax. They will remove barriers to cross-border trade and investment, support growth, and provide a clear and fair framework for taxing businesses that invest and trade across borders. This will benefit businesses and the economies of both the UK and the respective treaty partner.
The agreements contain all the minimum standards that were introduced by the joint OECD/G20 project on base erosion and profit shifting, which ensure that such conventions are not used to avoid or evade tax. They are clear that it is not the purpose of such a convention to create opportunities for tax evasion and avoidance, and a principal purpose test denies treaty benefits in cases of abuse. Both conventions allow for the exchange of information between the two countries to facilitate tax transparency, which will strengthen our defences against tax avoidance and evasion.
I am delighted to bring the Brazil order before the Committee, because Brazil is the largest economy with which the United Kingdom does not—until now—have a comprehensive double taxation convention. It has long been the United Kingdom’s ambition to reach an agreement with Brazil, and it has been a regular request from businesses. The convention will bring many benefits to the UK, including to our businesses and investors, and those who want to take advantage of the opportunity to trade in the country with the 10th largest GDP in the world, with a population of 214 million people.
This measure provides limits on the tax that can be charged on dividends, royalties and interest, which in many circumstances are less than the tax rates applied under Brazil’s domestic law. It also limits the circumstances under which trading profits of United Kingdom enterprises may be taxed in Brazil. UK businesses will particularly welcome the fact that the convention phases out, over a four-year period, Brazilian taxes on some payments to United Kingdom-based service providers and provides for significantly lower taxes during that period.
The San Marino convention is really good for business. San Marino is smaller in terms of its population and economy; none the less, the agreement will exempt the majority of dividends, interests and royalties from source state taxation. That means that United Kingdom residents with investments in San Marino will not pay tax in San Marino on the income that they receive. The exception to this is in respect of United Kingdom real estate investment trusts, where the convention preserves the United Kingdom’s right to these at 15%. That will ensure that the UK does not lose taxing rights where the profits from these structures are otherwise exempt. We have also set out rules on dispute resolution, which are in line with the OECD’s expectations and provide certainty for parties in both countries. The taxpayer can refer any matter for independent arbitration if agreement cannot be reached by the two countries.
In summary, the United Kingdom and both Brazil and San Marino can be happy with these agreements. They protect United Kingdom revenue and provide a clear, fair, stable, long-term framework within which trade and investment between the UK and Brazil, and the UK and San Marino can continue to flourish. I commend the draft orders to the Committee.
Victoria Atkins
The usual parliamentary appetite is for such Committees to be short and to the point, but I really did welcome the contribution from my hon. Friend the Member for Dudley North (Marco Longhi). As the UK’s trade envoy to Brazil, he was able to add to our considerations not only the enthusiasm that the Brazilian authorities have for the order, but the intensely hard work that has gone into the agreements—and, of course, his role in helping to ensure that the Brazilian procedures run as smoothly as we would like, once we have done our part and passed the draft orders.
Turning to the shadow Minister’s question about non-domiciled taxpayers, I gently remind him that the UK-San Marino agreement covers some £16 million in trade between both countries and that the Brazilian tax agreement covers some nearly £8 billion in trade. I am sure he will agree with the UK Government that it is right to try to ensure that we clear away the trade barriers that were so eloquently referred to by my hon. Friend the Member for Dudley North, to ensure that wealth and prosperity moves between both countries.
The Brazilian DTA applies only to remitted income from Brazil, but the remittance basis is not generally a factor in applying the double taxation agreement. Indeed, residence and source of income are the factors. In relation to the convention more generally, it takes effect only in respect of payments remitted to the UK. Relief cannot be given on unremitted amounts on which tax has not been paid.
I trust that the Committee is content with its consideration, and I am most grateful to its members for their contributions. I am asked to remind the Committee—although I think my hon. Friend dealt with this—that Brazil has not yet completed its processes for ratifying the convention, but we are playing our part in this place by ratifying our side of things. We look forward to Brazil doing the same imminently. I hope that the Committee will approve the draft orders today.
Question put and agreed to.
Draft Double Taxation Relief and International Tax Enforcement (San Marino) Order 2023
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (San Marino) Order 2023.—(Victoria Atkins.)
Legislation Day: Finance Bill
Victoria Atkins Excerpts(1 year, 11 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Victoria Atkins)
In line with the approach to tax policy making set out in the Government’s documents, “Tax policy making: a new approach”, published in 2010, and, “The new Budget timetable and the tax policy making process”, published in 2017, the Government are committed, where possible, to publishing most tax legislation in draft for technical consultation before the legislation is laid before Parliament.
The Government will publish draft clauses for the next Finance Bill, which will largely cover pre-announced policy changes, on 18 July along with accompanying explanatory notes, tax information and impact notes, responses to consultations and other supporting documents. All publications will be available on the gov.uk website.
[HCWS876]
Finance (No. 2) Bill
Victoria Atkins ExcerptsTuesday 20th June 2023
(1 year, 11 months ago)
Commons ChamberRead Full debate Finance (No. 2) Act 2023 View all Finance (No. 2) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 20 June 2023 - (20 Jun 2023)
The Financial Secretary to the Treasury (Victoria Atkins)
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:
Amendment (a) to new clause 4, at end insert—
“(2) The Treasury may by regulations amend subsection (1) by substituting a later date for the date for the time being specified there.”
Government new clause 5—Communications data.
New clause 1—Review of alternatives to the abolition of the lifetime allowance charge—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the impact of the abolition of the lifetime allowance charge introduced by section 18 of this Act and other changes to tax-free pension allowances introduced by sections 19 to 23 of this Act, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how the policies referred to in subsection (1)(a) could be replaced with an alternative approach that provided equivalent benefits only for NHS doctors.”
This new clause requires the Chancellor to review the impact of the tax free pension allowance changes and to recommend an alternative approach targeted at NHS doctors.
New clause 2—Reports to Treasury Committee on measures to simplify tax system—
“(1) The Treasury must report to the Treasury Committee of the House of Commons on steps taken by the Treasury and HMRC to simplify the tax system in the absence of the Office of Tax Simplification.
(2) Reports under this section must include information on steps to—
(a) simplify existing taxes, tax reliefs and allowances,
(b) simplify new taxes, tax reliefs and allowances,
(c) engage with stakeholders to understand needs for tax simplification,
(d) develop metrics to measure performance on tax simplification, and performance against those metrics.
(3) A report under this section must be sent to the Committee before the end of each calendar year after the year in which section 346 (abolition of the Office of Tax Simplification) comes into force.”
This new clause would require the Treasury to report annually to the Treasury Committee on tax simplification if the Office of Tax Simplification is abolished.
New clause 3—Review of public health and poverty effects of Act—
“(1) The Chancellor of the Exchequer must review the public health and poverty effects of the provisions 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) The review must consider—
(a) the effects of the provisions of this Act on the levels of relative and absolute poverty across the UK including devolved nations and regions,
(b) the effects of the provisions of this Act on socioeconomic inequalities and on population groups with protected characteristics as defined by the 2010 Equality Act across the UK, including by devolved nations and regions,
(c) the effects of the provisions of this Act on life expectancy and healthy life expectancy across the UK, including by devolved nations and regions, and
(d) the implications for the public finances of the public health effects of the provisions of this Act.”
New clause 6—Review of business taxes—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the business taxes, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how to—
(a) use business taxes to encourage and increase the investment of profits and revenue;
(b) ensure businesses have more certainty about the taxes to which they are subject; and
(c) ensure that the system of capital allowances operates effectively to incentivise investment, including for small businesses.
(3) In this section, ‘the business taxes’ includes any tax in respect of which this Act makes provision that is paid by a business, including in particular provisions made under sections 5 to 15 of this Act.”
This new clause would require the Chancellor to conduct a review of business taxes, and to make recommendations on how to increase certainty and investment, before the next Finance Bill is published.
New clause 7—Statement on efforts to support implementation of the Pillar 2 model rules—
“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.”
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
New clause 8—Review of energy (oil and gas) profits levy allowances—
“(1) The Chancellor of the Exchequer must, within three months of the passing of this Act—
(a) conduct a review of section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022, as introduced by subsection 12(2) of this Act, and
(b) lay before the House of Commons a report arising from the review.
(2) The review must include consideration of the implications for the public finances of the provisions in section 2(3)—
(a) were all the provisions in section 2(3) to apply, and
(b) were the provisions in section 2(3)(b) not to apply.”
This new clause requires the Chancellor to review the investment allowances introduced as part of the energy profits levy, and to set out what would happen if the allowance for all expenditure, apart from that spent on de-carbonisation, were removed.
New clause 9—Review of section 36—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact on the public finances of the measures provided for by section 36 of this Act (‘the section 36 measures’).
(2) The assessment must include details of any analysis by the Treasury or HMRC of—
(a) the amount of additional tax raised by the section 36 measures and,
(b) the number of individuals who are required to pay additional tax as a result of the section 36 measures.”
This new clause requires the Chancellor to review the impact of the measures in the Act that affect people with non-domiciled status, including by setting out how many people will be required to pay additional tax and how much this will raise in total.
New clause 10—Review of new bands and rates of air passenger duty—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes to air passenger duty introduced by this Act on—
(a) the public finances;
(b) carbon emissions; and
(c) household finances.
(2) The assessment under subsection (1) must consider how households at a range of different income levels are affected by these changes.”
This new clause requires the Chancellor to publish an assessment of this Act’s changes to air passenger duty on the public finances, carbon emissions, and on the finances of households at a range of different income levels.
New clause 11—Review of impact of tax changes in this Act on households—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes in this Act on household finances.
(2) The assessment in subsection (1) must consider how households at a range of different income levels are affected by these changes.”
This new clause requires the Chancellor to publish an assessment of the changes in this Act on the finances of households at a range of different income levels.
New clause 12—Review of Part 5—
“(1) The Treasury must conduct a review of the provisions of Part 5 of this Act (electricity generator levy).
(2) The review must consider the case for ending or amending the charge on exceptional generation receipts when energy market conditions change.
(3) The report of the review must be published and laid before the House of Commons within six months of this Act being passed.”
This new clause would require the Government to conduct a review into the energy generator levy with a view to sunsetting the levy when market conditions change.
New clause 13—Review of effects of Act on the affordability of food—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons an assessment of the impact of the measures of this Act, and in particular sections 1 to 4 (income tax), on the ability of households to afford the price of food.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on the affordability of food.
New clause 14—Review of effects of Act on small businesses—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the likely impact of the measures of this Act on small businesses.
(2) The report must assess the effect on small businesses of any taxes charged under this Act, in the context of other financial pressures currently facing small businesses including—
(a) the rate of inflation, and
(b) b) the cost of energy.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on small business with particular regard to inflation and the cost of energy.
New clause 15—Review of effects of Act on SME R&D tax relief—
“(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review of the impact of the measures in section 10 relating to research and development tax relief for small and medium-sized enterprises.
(2) The review must compare the impact of the relief before and after 1 April 2023, with regard to the following—
(a) the viability and competitiveness of UK technology start-up and scale-up businesses,
(b) the number of jobs created and lost in the UK technology sector, and
(c) long-term UK economic growth.
(3) In this section, ‘technology start-up’ means a business trading for no more than three years; with an average headcount of staff of less than 50 during that three-year period; and which spends at least 15% of its costs on research and development activities.
(4) In this section, ‘technology scale-up’ means a business that has achieved growth of 20% or more in either employment or turnover year on year for at least two years and has a minimum employee count of 10 at the start of the observation period; and spends at least 15% of its costs on research and development activities.”
This new clause would require the Government to produce an impact assessment of the effect of changes to SME R&D tax credits in this act on tech start-ups and scale-ups.
Government amendments 9 to 13.
Amendment 1, page 12, line 30, leave out clause 18.
Amendment 2, page 12, line 37, leave out clause 19.
Amendment 3, page 13, line 31, leave out clause 20.
Amendment 4, page 14, line 1, leave out clause 21.
Amendment 5, page 14, line 11, leave out clause 22.
Amendment 6, page 14, line 20, leave out clause 23.
Government amendments 14 to 16.
Amendment 22, in clause 115, page 74, line 10, at end insert—
“(1A) The Chancellor of the Exchequer must, within one month of this Act coming into force, lay before the House of Commons an assessment of the impact of extending the provision of subsection (1) to wine which—
(a) is obtained from the alcoholic fermentation of fresh grapes or the must of fresh grapes and fortified with spirits,
(b) is included in one or more of the United Kingdom Geographical Indication Scheme registers, and
(c) is of an alcoholic strength of at least 15.5% but not exceeding 20%.”
This amendment requires the Chancellor to lay before the House an assessment of the impact of providing comparable transitional relief to fortified wine made from fresh grapes, such as port and sherry, as has been made available to other forms of table wine.
Amendment 20, in clause 264, page 188, line 7, at end insert—
“(2) The Treasury may by regulations amend subsection (1) by substituting a later date for the date for the time being specified there.”
Amendment 23, in clause 278, page 198, line 9, after “costs” insert “and relevant investment expenditure”.
This amendment is linked to Amendment 24.
Amendment 24, in clause 278, page 198, line 12 at end insert—
“Where the generating undertaking is a generator of renewable energy, determine the amount of relevant investment expenditure and also subtract that amount.”
This amendment, together with Amendments 23, 25 and 26 would allow generators of renewable energy to offset money re-invested in renewable projects against the levy.
Amendment 25, in clause 279, page 199, line 21, at end insert—
“a ‘generator of renewable energy’ means—
(a) a company, other than a member of a group, that operates, or
(b) a group of companies that includes at least one member who operates a generating station generating electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;
‘relevant investment expenditure’ means any profits of a generator of renewable energy that have been re-invested in renewable projects;”.
This amendment is linked to Amendment 24.
Amendment 26, in clause 279, page 199, line 26, at end insert—
“a ‘renewable project’ is any project involving the generation of electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;”.
This amendment is linked to Amendment 24.
Government amendments 17 to 19.
Amendment 7, page 265, line 2, leave out clause 346.
This amendment would leave out Clause 346, which abolishes the Office of Tax Simplification.
Amendment 21, in schedule 16, page 399, line 27, at end insert—
“(2A) The Treasury may by regulations amend subsection 2(a) by substituting later dates for the dates for the time being specified there.”
The aim of this amendment is to enable the Treasury to extend the permitted period for multinational groups to make transitional safe harbour elections, reducing the compliance burden, in the event that other countries are slow to follow suit in implementing these rules.
Victoria Atkins
Let me first thank all right hon. and hon. Members who have taken part in debates on the Finance Bill so far. Today is Report stage, but there has been intense scrutiny of many measures in the Bill, not just line by line in Committee on the Committee Corridor but, importantly, in Committee of the whole House. I hope that I will hear from right hon. and hon. Members on some of those discussions.
We are focusing on a number of proposed amendments to the Bill, which I will address in turn. Many of the Government’s amendments focus on ensuring the proper functioning of the legislation in response to scrutiny from businesses, business representative groups, parliamentarians and feedback. Others take forward responses to substantive issues that have emerged during the Bill’s passage. This is an exercise of how scrutiny in this place works, and I hope it works well. I will address each Government amendment in turn in this part of the debate. To reassure colleagues, I want to listen to the debates that will follow on non-Government amendments and proposed new clauses, and I hope to deal with points raised by right hon. and hon. Members when I wind up.
Government amendments 9 and 10 seek to ensure that our policy of full expensing achieves its intended affect. The existing wording can result in balancing charges being incorrectly calculated by not applying the correct apportionment to the disposal receipts. This is a straightforward and necessary technical adjustment to a policy that will help businesses to invest with confidence and boost UK productivity.
Government amendments 11, 12 and 13 provide that both the decarbonisation allowance and the existing investment allowance in the energy profits levy work as intended. They correct unintended exclusions by revising definitions to ensure that the investment allowances apply throughout the UK, in UK waters and on the United Kingdom continental shelf.
Government amendment 14 is a minor technical amendment that concerns the lifetime allowance—specifically, in clause 23, which allows modifications of certain existing transitional protections to ensure that stand-alone lump sums can continue to be paid to those who are entitled. The amendment clarifies the tax treatment for any amount above the limited 5 April maximum. The amendment is required to avoid an unintended outcome that would otherwise arise as a result of the removal of the lifetime allowance charge, whereby those who are entitled to stand-alone lump sums may not have been able to access their full benefit. The amendment corrects that. We are grateful to members of His Majesty’s Revenue and Customs pensions industry stakeholder forum for raising the issue.
New clause 4 relates to the domestic minimum top-up tax, which is part of the global minimum tax agreement. That agreement protects against large multinational groups and companies using aggressive tax planning and shifting their UK profits overseas. The amendment simply puts beyond doubt that the commencement date for the domestic top-up tax aligns with the multinational top-up tax and the internationally agreed timings, and no earlier. The start date is for accounting periods beginning on or after 31 December 2023. We will discuss the global minimum tax agreement in more detail later, precisely because it is of particular interest to right hon. and hon. Members. I will respond to those further arguments and suggestions when I wind up.
Stewart Hosie (Dundee East) (SNP)
The subparagraphs that new clause 5 intends to delete were not in the original Finance Act 2008 but were added by the Investigatory Powers Act. I am at a loss as to why it is necessary to remove them from that Act to make it work in the way intended.
Victoria Atkins
That gives me the opportunity to declare that I sat not only on the Joint Committee for that Bill but on the Select Committee. There was a great deal of concentration and discussion, as I recall—the House will have to forgive me as I am rolodexing back several years in my memory—about the meaning of communications data, because of the sensitivities in relation to some of the powers rightly given to our security services in order to safeguard national security and for other purposes.
There has been some debate about how the General Data Protection Regulation and the Data Protection Act apply in the years that have fallen since. The clarification has been made because the Home Office wanted to ensure that it defines that accurately, protects citizens’ rights and permits Government agencies, law enforcement agencies and other agencies to collect and review the data necessary to protect us all. We are tabling this amendment now at the first opportunity we have had, to ensure that that phrasing still permits HMRC to collect the vital data that we need to ensure that our taxes are collected properly. To sum up my point on new clause 5, the civil information powers allow HMRC to continue to collect vital revenue to fund our public services.
In conclusion, the Government’s proposed amendments will ensure that the legislation works as it should and that HMRC has the powers it needs to continue collecting tax revenue that is vital to fund our public services that so many in our country rely on. I will, of course, address all amendments tabled by other Members when I wind up later. I very much want to listen closely to the debate that will now follow. In the meantime, I commend amendments 9 to 19 and new clauses 4 and 5 to the House. I urge hon. Members to accept them in due course.
James Murray (Ealing North) (Lab/Co-op)
It is important, briefly, to first recognise the context in which we consider amendments and new clauses to the Bill. Yesterday we heard the news that the average rate for a two-year fixed-rate mortgage has now breached 6% for the first time since December. That news will leave the 400,000 people across the country whose existing fixed deals end between July and September feeling anxious and fearful. They face the prospect of having hundreds of pounds less in their pockets each month when their current deal expires and they have to re-mortgage. That is not to mention all those on variable rates, who have already seen their payments rise relentlessly as a result of interest rates going up again and again.
Across the country, mortgage payers are facing interest rate rises above 6% for the second time in 12 months. The first time came in the wake of the Conservatives’ disastrous mini-budget last autumn; now it is because inflation means that banks expect interest rates to stay higher for far longer than anyone feared. The truth is that mortgage payers are feeling pain because the Tories crashed the economy and have no plan to fix it. What is more, we know the current increases in mortgage payments come after 13 years of low growth and stagnant wages. They also come after 25 tax rises by the Government in this Parliament alone, increases that have pushed the tax burden in this country to its highest level in 70 years.
I will begin considering the detail of our amendments on Report by focusing on something very rare indeed: a tax cut from this Government. That tax cut is included in clause 18. Through that section of the Bill, the Government will be spending £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. Ministers may claim that their decision was driven by a desire to get doctors back into work, but since the policy was first announced the Government have flatly rejected any call to consider a fairer and less costly fix targeted at doctors’ pensions.
It is not just Labour who have been questioning the Government’s approach; the Conservative Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), said that even she was surprised that Ministers had opted for a blanket cut rather than a bespoke policy for doctors. That is why we will be voting today for our amendment 1, which deletes clause 18, thereby abandoning plans for this blanket change that fails to spend public money wisely. As our new clause 1 makes clear, the Chancellor should finally do what so many have been calling on him to do and produce an alternative approach to pensions that is targeted at NHS doctors and provides taxpayers with value for money.
Harriett Baldwin
My right hon. Friend highlights that this is not an easy task. The point I am trying to make with my amendments, which I hope he will support, is that, by abolishing the Office of Tax Simplification, we lose not only a source of valuable advice on how to simplify the tax system but the message that we want to do so, which I know the Chancellor wants to convey.
Higher up the income scale, the £100,000 income bracket triggers the withdrawal of the very welcome steps we have taken on tax-free childcare and the personal allowance. This means that a family with two children in full-time childcare, if they happen to live in London, would be better off earning £99,999 than earning more than £150,000 because they would have a more than 100% withdrawal of extra earnings in that income bracket, which is very distorting. It provides disincentives to work, and we see that obstacle to economic growth reflected in the workforce numbers produced by the Office for National Statistics.
The Chancellor agrees that
“the tax system is overcomplicated and the trend of ever more complication must be reversed.”
It is surprising that, on coming to office, he chose not to reverse the abolition of the Office of Tax Simplification. It was established in 2010, and it was given a ringing endorsement by the Treasury in its 2021 statutory review. Disbanding the independent champion for simpler tax sits very uncomfortably with the Government’s insistence that tax simplification is a priority.
However, the most important factor in securing tax simplification in practice would be for the Chancellor to take on the personal responsibility for simplification that he pledged to take, which brings me to the Treasury Committee’s new clause 2. We have heard that, while the Treasury and HMRC focus on new taxes, the Office of Tax Simplification did important practical work seeking to simplify the existing tax system. We also heard in our evidence session that the Office of Tax Simplification did good work listening to taxpayers to understand how the complexity of the tax system works against them. The reports of the Office of Tax Simplification were published very transparently, unlike the private advice given to Ministers, and they facilitated parliamentary scrutiny of tax simplification efforts.
The Chancellor told us that he intends to be a Chancellor who makes “progress on tax simplification.” I welcome the simplification of the lifetime allowance, which the Opposition opposed earlier, but the Committee wants the ability to hold him accountable for that. Under new clause 2, the Treasury would report to the Committee annually on the Chancellor’s promise to simplify taxes.
Victoria Atkins
I have genuinely enjoyed my hon. Friend’s contributions not just today but at earlier stages, and I enjoyed being grilled with the Committee’s very thoughtful questions last week. In the spirit of agreement and co-operation, would it meet with her and the Committee’s approval if I committed to write to the Committee once a tax year, including this tax year, on the subject of simplification? The Committee could look at that report, decide for itself how the Government of the day are doing and, of course, call Ministers to account before the Committee.
Harriett Baldwin
I thank the Financial Secretary for that intervention, which is very much in the spirit of what we are calling for in our new clause. Our report set out the sorts of things we would like to see. The report from the Treasury should be annual and it should include international comparisons, where available. It should also set out what the Treasury has done within that year to simplify taxes for our constituents and those who run businesses.
Victoria Atkins
I should have known by now that my hon. Friend the Member for Amber Valley (Nigel Mills) would put his points succinctly and with expertise. He has taken me a little by surprise in ending as he did, but I thank him greatly for his comments.
May I conclude this stage of the scrutiny of the Bill by first of all genuinely thanking all right hon. and hon. Friends and Members for their contributions on Report? It has genuinely been the sort of scrutiny that shows this House in its best light: although there has been a certain amount of party politicking in certain parts of the Chamber, a very detailed set of questions and concerns has been raised about some of the most complex parts of the Bill. When I responded to the Chair of the Treasury Select Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin), in giving evidence last week, I said that VAT is the most complex part of tax law, which in itself is incredibly complex. I think I am about to prove that pillar 2 may be joining that very elevated rank.
If I may, I shall concentrate on some of the amendments that have been the focus of the House this afternoon; I hope colleagues will understand if I do not address some amendments that have not been spoken to, or will not be pushed to a Division. First and foremost, I will deal with tax simplification—in new clause 2 and amendment 7, which have been tabled by my hon. Friend the Member for West Worcestershire. Again, I very much thank our Treasury Select Committee colleagues for their interest, their expertise and their commitment on this issue, and their scrutiny of opportunities for tax simplification. I have read the report already, which I hope shows my commitment to simplification. I hope my hon. Friend will understand if I do not respond in detail to the report now; we will of course respond formally to it in due course.
My right hon. Friend the Chancellor and I remain deeply committed to simplifying the tax system. My right hon. Friend the Member for North West Hampshire (Kit Malthouse) intervened earlier on: he is a chartered accountant, so he knows with great expertise just how complicated some aspects of the tax system can be. I very much share the Chancellor’s ambition and determination to try to bring some simplicity to some of these reliefs and rules. We very much want to engage constructively with the Treasury Select Committee and, indeed, the whole House in our efforts to do so.
If I may, I will just touch on amendment 7. We have introduced through this Finance Bill our determination to put simplification at the heart of the tax system and our consideration of it, which is why we will not be able to renege on our commitment to abolish the Office of Tax Simplification. We are going to stay the course with that policy, but we genuinely see the Bill as an opportunity to enable us to put simplification at the heart of the Treasury.
With regard to new clause 2, the Chancellor has set a clear mandate to Treasury and HMRC officials to focus on both the simplicity of new tax policy design and simplifying the existing tax rules and administration at all times. At spring Budget, the Chancellor announced the first steps of that work, including a range of improvements to make it easier for businesses, especially small businesses, to interact with the tax system. That includes—this is by no means an exhaustive list—a systematic review to transform HMRC guidance and key forms for small businesses, and a consultation on expanding the cash basis, which is a simplified way for over 4 million sole traders to calculate and pay their income tax. As my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) said, these need to be practical simplification measures. I very much hope that the consultation on the cash basis will provide some of that practicality that she and others so wish for.
We are also taking further action to simplify the tax system through the Bill. A great example of that is the permanent £1 million limit to the annual investment allowance, which provides 100% first-year relief for qualifying main and special-rate investments in plant and machinery, simplifying the tax treatment of capital expenditure for 99% of businesses. The Bill will also simplify the process of granting share options under an enterprise management incentive scheme. We also announced at spring Budget our efforts to simplify the customs import and export processes. That includes opportunities to streamline customs declaration requirements and engage with traders on plans to rationalise and digitise HMRC’s authorisation processes, all of which is obviously essential with our bright new future out of the EU.
The Chancellor has also set out that he is asking officials to consider tax simplification ahead of every fiscal event. Of course, hon. Members will have ample opportunity to scrutinise the Government’s progress on simplification through the finance Bill process each year. We also continue to publish tax information and impact notes, which set out the expected impact of tax policy changes on individuals and businesses, and HMRC’s annual customer experience surveys, which measure taxpayers’ overall experience of interacting with HMRC.
Dame Andrea Leadsom
Just to clarify, will the Minister include in her assessment a simplification of the cliff edges that the Chair of the Treasury Committee raised? We have taken quite a lot of evidence on that, and it really does create disincentives to invest, to work and so on.
Victoria Atkins
That is a very interesting point. I hope the Chair will not mind my saying so, but when I gave evidence last week, quite rightly I was challenged about how we measure success. This is incredibly complex, as my right hon. Friend will appreciate. For example, with the corporation tax rises, we have introduced the tapering because we have the policy intent of trying to help businesses that are small or perhaps finding their feet, and we do not want to be charging them 25% corporation tax if they have not reached the levels of profit set out in the Bill. The metrics we will use are very much being considered. I am not in a position to commit to those metrics at the moment, but I promise I will come back to her when we have a settled package that we think will address not only the concerns of the Committee but the wider concerns beyond simplification, such as fairness and encouraging growth.
HMRC also reports annually in its reports on its objective to make it easy to get tax right. As I have just set out, we are actively considering how to develop a suite of metrics to measure progress on that. Precisely because we recognise the concerns and the thoughtful considerations of the Treasury Committee and others across the House, I was very pleased at being able to intervene on my hon. Friend the Member for West Worcestershire to commit today to reporting annually—that is, in each tax year—to the Committee to provide an overarching summary of the Government’s progress on the simplification. To be very clear, I intend that to start this tax year, because I take this very seriously and I very much hope that Committee members and others in the House will share my intentions in so doing. I therefore hope that my hon. Friend and Committee members will not feel the need to press their amendments and new clauses.
I turn now to the subject of the global minimum tax legislation, which is again a complicated area. If I may, Madam Deputy Speaker, with your munificence, I will just spend a little bit of time on it, precisely because I understand the concerns that my hon. Friends have and, indeed, the level of scrutiny they have quite rightly given it as the Bill has made its journey through the House. First and foremost, if I may—I am very keen to get this on the record, because I know that my right hon. Friend the Member for Witham (Priti Patel) will rightly expect such commitments on the record—before I make the commitments that the Chancellor has made in his letter, I will set out the background to pillar 2. Although my right hon. Friend the Member for Witham clearly has a great deal of knowledge about this area, it is fair to say that not everybody in Parliament will have the same understanding.
By way of an explainer, pillar 2 will ensure that large multinational groups with revenues of more than £750 million pay a minimum effective tax rate of 15% in every jurisdiction they operate in. It is designed to protect against the risk of harmful tax planning by multinational groups and to promote fair and open competition on tax policy. It is really to prevent those large multinationals from shifting profit out of the UK to those parts of the world that charge far lower tax rates than us. This will help to ensure that profits generated here in the UK are taxed in the UK, and it will strengthen the UK’s international competitiveness through placing a floor on the low tax rates that have been available in some countries.
A lot of questions have been asked about implementation, and I shall go into detail on them in a moment, but if we do not implement these rules, the tax will still be collected, but by another jurisdiction. That is because pillar 2 is designed as an interlocking set of rules ensuring that low-taxed profits will be taxed even if the UK or other countries do not move ahead. This is why we are determined to introduce or implement pillar 2 from 31 December this year, along with other EU member states and with Australia, Canada, Japan and Switzerland, so that we are moving in lockstep with our international peers.
Before I answer some of the questions that my right hon. Friend the Member for Witham has rightly raised, let me put on record my sincere thanks to her, and to other colleagues and friends who signed her amendment—and to whom I have spoken over many months in the run-up to today—to scrutinise what this means for the United Kingdom and for businesses. I absolutely understand why they are asking the questions. As I said, this is Parliament at its best, and I am genuinely grateful to her for raising these questions. What is more, the Chancellor is grateful. My right hon. Friend wrote to the Chancellor, and I am pleased to inform the House that he replied to her in the following way, to ensure that we all understand and appreciate the levels of scrutiny that have taken place.
The Chancellor maintains that the Government are sadly not in a position to support the amendment, but we recognise the importance of these matters to hon. Friends and Members of the House. On that basis, the Chancellor and I are happy to provide an update on pillar 2 implementation as part of the forthcoming fiscal event in the autumn, and if necessary in the spring. That update will include the latest revenue forecast from the OBR—that is an important point—and a status update on international implementation, which is a point that hon. Members are focused on. It goes without saying—I hope my right hon. Friend and others know this—that the Chancellor and I stand ready and are happy to continue to discuss such issues with her and others, as we move towards implementation towards the end of the year.
Quite rightly, my right hon. Friend and others have posed questions, and I will try to answer some of them. I was asked about implementation, which I completely understand. The member states of the EU are committed to implementation, and the EU directive in place is legally binding. The directive allows small member states—defined as those with 12 or fewer parent entities, and, therefore, those that are much smaller than our economy—more time to introduce the rules. Those countries are very few, and are not in the same economic position as the United Kingdom. They will not get an advantage from delaying implementation, as the directive requires other EU member states to collect the tax instead.
I have also looked to countries such as Thailand, Singapore and Hong Kong. The UK has a large and mixed economy, where it is appropriate for us to take action to combat aggressive tax planning and support measures that support competition. Australia, Japan and Canada, which are our peers by size and shape of economy, are also implementing that rule. Indeed, Japan’s 2023 tax reform Bill was enacted after passing Japanese procedures in March. It will be introducing the income inclusion rule from 1 April, four months after us next year.
On the States, I understand why the question is being posed, and my hon. Friend the Member for Amber Valley set out some of the history behind where America has got to. In 2017, the US introduced a minimum tax on the foreign income of its multinationals, and it has recently introduced a minimum tax on the domestic income of large groups, including foreign headed multinationals. The US already has in place rules that operate on a similar basis to pillar 2, and it has been one of the strongest advocates for developing a global standard. It has maintained its commitment to align its rules with the agreed pillar 2 template, but until that happens, the OECD inclusive framework members, including the US, have agreed how the US rules and pillar 2 rules should interact, to ensure that US multinationals are subject to the same standard as groups in other countries. That is an important context.
If it is not implemented in the UK, what does that mean? Again, the question posed is a fair one. Generally, the international top-up tax is applied at the top of the business, and at the level of the ultimate parent entity. If that jurisdiction has not implemented the rule, the taxing right passes down the ownership chain of the business, until there is an entity in a jurisdiction that has implemented the rule. This is why without UK rules, this tax—chargeable in the UK, if it did apply—would be payable to another jurisdiction unless and until we implement the rules.
I very much understand the concerns raised about sovereignty. We retain the sovereignty to set our corporation tax rate. It is still the lowest in the G7, and we can use important tax levers to boost investment, including the UK’s world-leading R&D credit and full expensing regimes announced in the Budget. We have also ensured that UK tax reliefs such as the refundable R&D credit will not be treated as depressing the effective tax rates of claimants. We have been able to achieve that because we have been at the forefront of discussions and negotiations on these rules.
On the point about how these rules are agreed, implemented and who holds who to account, the model rules were agreed by consensus requiring the agreement of each country and jurisdiction. It is then up to each country and jurisdiction to implement the rules. There is not a higher body than jurisdictions here to do so. I very much understand the concern about innovation and growth. We will remain free to use the corporation tax system to support innovation, business investment and regional growth through R&D tax credits, enhanced capital allowances and tax reliefs in investment zones. We must continue to work together with our partners to avoid a subsidy race that could distort trade or impact sectors.
In answering those questions, I hope I have addressed some of the issues that Members have raised in relation to pillar 2. I very much hope that my right hon. Friend the Member for Witham, having brought the scrutiny which would be expected from her, will feel able not to press her amendment to a vote.
On the lifetime allowance and the Opposition’s new clause 1 and amendments 1 and 6, the Opposition just do not seem to get it. This measure has been brought forward to help the NHS retain those doctors and consultants whom we are so desperate to have in our NHS looking after our constituents and helping to cut the backlogs, as the Prime Minister has set out as one of his five priorities. That is why we have introduced this policy. The hon. Member for Ealing North (James Murray) seems to think—and we have had this conversation many times before—we could have dreamt up a proposal dealing just with doctors in the same amount of time it took us to bring in this policy—two weeks. The fact is that this measure started having an impact on our doctors, our consultants, our chief constables and others this tax year, as hon. and right hon. Friends have set out. We want to make that change precisely because we believe that our NHS and public services deserve it, and that is why we are bringing that lifetime allowance forward.
Moving to the non-doms point, this is again a conversation we have had repeatedly with those on the Opposition Front Bench. The hon. Member for Ealing North asked about the £830 million and seemed to question it. I am sorry to break it to him, but that has been scorecarded by the Office for Budget Responsibility. It has certified it, costed it and said that it will bring in £830 million over the scorecard period.
My right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) raised important questions regarding alcohol duty. He welcomes the changes in the round, but as the chair of the all-party parliamentary beer group, it is understandable that he is asking whether the draft relief is designed to apply to off-trade pints as well as on-trade pints. I am afraid that it is not, because we want to support consumption of beer in pubs. It is one of many ways not only to support our local pubs, but also to secure opportunities arising out of our exit from the European Union. Only pints in pubs will be subject to this measure, not pints poured into takeaway containers. The industry body the Campaign for Real Ale has lobbied to ask that that could happen. We have looked at the idea carefully, as has the Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), but we have serious concerns that it would overcomplicate the draft relief. I hope to reassure my right hon. Friend and CAMRA that takeaway services can continue so long as the beer comes from a full-duty barrel. I am reminded that takeaway off-trade beer accounts for 0.1% of beer sales, but, when the Bill passes its Third Reading today, I am sure that we will all be raising a pint in celebration.
We touched briefly on the electricity generator levy, which is payable only on the portion of revenues that exceeds the long-run average for electricity prices. We have done that carefully to try to ensure that we achieve the Government’s wanted net zero ends while looking after customers. New clause 12 perhaps misunderstands how the EGL operates, so we urge colleagues to reject it. In relation to the energy profits levy, it is important to note that the Government expect it to raise just under £26 billion between 2022 and 2028, helping to fund the vital cost of living support that we have discussed.
In relation to air passenger duty and new clause 10, we have made changes to take advantage again of our post-EU freedoms and to support the United Kingdom. We want friends and family to be able to fly to see each other across the United Kingdom. I am not quite clear whether Labour understands that or is now against helping friends and family across the UK to reunite. I am sure that all will become about as clear as its £28 billion U-turn.
I turn to new clause 5. The right hon. Member for Dundee East (Stewart Hosie) asked why are we making this change on Report. It became apparent that a welcome clarification by the Home Office on how information is obtained for criminal investigations means that some data that is genuinely needed by His Majesty’s Revenue and Customs to check a person’s tax position is deemed as communications data. The clarification aims to secure that into law. We are trying to do it as quickly as possible, which is why it is in the Finance Bill.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) raised the duty to report on public health and the poverty effects of the Bill. We already publish data on people in both relative and absolute low-income households each year through the “Households below average income” publication. The Welfare Reform and Work Act 2016 also requires us to publish statistics on the percentage of children in relative and absolute low income, combined low income and material deprivation and persistent low income. I very much hope that she will welcome the £3,300 on average of help that we are securing for families across the United Kingdom in these difficult times.
To conclude—[Interruption.] I thought that the House might be interested in some of the details; apologies for that. The Bill contains a number of important measures that will support the UK economy, people and businesses. I therefore urge the House to reject the proposed non-Government amendments for the reasons that I detailed, and agree to the Government’s amendments and new clauses. In closing, I thank everybody involved for their contributions to our discussions not just today but in the months that have led up to this.
Question put and agreed to.
New clause 4 accordingly read a Second time, and added to the Bill.
New Clause 5
Communications data
‘(1) Section 12(2) of the Investigatory Powers Act 2016 (restriction of powers to obtain communications data) does not apply to a power falling within subsection (2).
(2) A power falls within this subsection if it is conferred (whether before, on or after the passing of this Act) by or under—
(a) any Finance Act of any year (including this Act and any other numbered Finance Act);
(b) the Taxes Acts (within the meaning of TMA 1970);
(c) the customs and excise Acts (within the meaning of CEMA 1979);
(d) any enactment relating to value added tax;
(e) any enactment, not falling within paragraphs (a) to (d), that relates to tax.
(3) But subsection (1) does not apply in relation to the exercise of such a power by a public authority in the course of a criminal investigation by the authority.
(4) In section 12 of the Investigatory Powers Act 2016, after subsection (2) insert—
“(2A) Subsection (2) is subject to section (Communications data)(1) of the Finance (No. 2) Act 2023 (no restriction on tax related powers).”
(5) In Schedule 36 to FA 2008 (information and inspection powers), in paragraph 19, omit sub-paragraphs (4) and (5).
(6) In consequence of the repeal made by subsection (5), omit paragraph 10 of Schedule 2 to the Investigatory Powers Act 2016.
(7) The modification and amendments made by subsections (1) to (6) are to be treated as having always had effect.
(8) Subsections (9) and (10) apply where—
(a) before the day on which this Act is passed, a public authority imposed a requirement on a person under a power falling within subsection (2), and
(b) as a result of section 12(2) of the Investigatory Powers Act 2016 the public authority did not, ignoring this section, have the power to impose it.
(9) The requirement is to be treated as having been imposed on the day on which this Act is passed (and accordingly the period in which it must be complied with is to be treated as starting on that day) unless—
(a) the requirement was withdrawn by the public authority before that day, or
(b) the person complied with the requirement before that day.
(10) Where, before the day on which this Act is passed, the public authority imposed a penalty on the person for contravening the requirement—
(a) the penalty is of no effect, and
(b) if already paid, the authority is liable to repay it.’—(Victoria Atkins.)
This new clause removes a restriction on the exercise of civil information powers (for example, Schedule 36 of the Finance Act 2008 which HMRC use to obtain information from, and about, taxpayers) which otherwise might prevent their use in certain cases (for example, where online banks or other financial institutions are regarded as telecommunications or postal operators).
Brought up, read the First and Second time, and added to the Bill.
New Clause 7
Statement on efforts to support implementation of the Pillar 2 model rules
“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.”—(James Murray.)
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Victoria Atkins
I beg to move, That the Bill be now read the Third time.
My right hon. Friend the Chancellor delivered a Budget for growth. He was clear that this Government’s focus is not just growth from emerging out of a downturn, but long-term, fiscally sustainable, healthy growth.
The Finance (No. 2) Bill, which Members of this House have had the opportunity to scrutinise and debate over the last three months, delivers on these commitments. It takes forward measures to support enterprise and grow the economy by encouraging business investment and helping to increase employment. It legislates for announcements made at previous fiscal events, which take advantage of our opportunities outside the EU, and it implements the tax measures needed to continue improving and simplifying our tax system to ensure that it is fit for purpose.
As the Bill has received such scrutiny, I do not propose to go into a detailed summary of the Bill. I just wish to thank the many people involved in bringing such a piece of legislation forward, because they work tirelessly behind the scenes and rarely receive the thanks they deserve.
First and foremost, I thank officials across the Treasury and HMRC for all their help, advice and expertise in creating the Bill and the proposals within it. In particular, I thank the Bill manager, Mikael Shirazi, who has navigated the Bill with great aplomb, often managing teams of tens of officials on my screens as I was having briefings. I am extremely grateful to him and all the Bill team for their very hard work.
I must also thank my private office—again, the unsung heroes of any ministerial office. They have worked extremely hard, particularly Holly, a member of my private office. I thank the Parliamentary Counsel; the Bill Committee Chairs on the Committee Corridor; the Doorkeepers; the Clerks; the Whips, of course; other Treasury Ministers who have helped in this; and, of course, you, Madam Deputy Speaker, for your consideration. I thank your fellow Deputy Speakers for their consideration, too.
Finally, I thank all hon. and right hon. Friends and Members across the House who have contributed to the scrutiny of this important Bill. I hope that, at the end of this, we can be very proud of the measures that have been taken forward as part of our Budget for growth.
Oral Answers to Questions
Victoria Atkins Excerpts(1 year, 11 months ago)
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Ben Lake (Ceredigion) (PC)
The Financial Secretary to the Treasury (Victoria Atkins)
Hospitality businesses play an important role in local communities and the UK economy. They will benefit from business rates support worth £13.6 billion over the next five years, which includes increased generosity from the retail, hospitality and leisure relief scheme from 50% to 75% in 2023-24. There is also our Brexit pub guarantee, which means that the duty on a draught pint in a pub will always be lower than its equivalent in the supermarket.
Ben Lake
The Minister will be aware of long-standing calls from the sector to reduce VAT to bring it into line with European equivalents. Will the Treasury undertake an assessment of the economic benefits of doing so? Will it consider that as part of a package, alongside increasing the threshold for VAT registration from £85,000 to £100,000 to support smaller businesses?
Victoria Atkins
The hon. Gentleman poses many questions for me, some of which are very complicated. VAT relief for the hospitality sector was important in the aftermath of the pandemic, but it cost us a great deal of money and we have had to raise it back up to 20%. We keep the other VAT matters under review, and I would be delighted to meet him to discuss the complexities behind them.
Stephen Crabb (Preseli Pembrokeshire) (Con)
A great many of the new job opportunities and career paths being created in Pembrokeshire are in the tourism and hospitality sector. Does my hon. Friend agree that the very last thing that business people who are creating those growth opportunities need right now is a tourism tax of the kind being brought forward by the Welsh Labour Government in Cardiff, which will hit businesses with new burdens and raise the cost of going on holiday in Wales?
Victoria Atkins
The sun always shines in my right hon. Friend’s corner of Pembrokeshire when he speaks up for it. He is quite right to identify how the Conservatives in Government are trying to help businesses through our business rates relief in England, through our energy support scheme over recent months and, of course, through the Brexit pub guarantee. Welsh Labour, on the other hand, wants to call last orders and have higher taxes for the businesses he is so keen to support.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
The 2019 Conservative manifesto, some three Prime Ministers and four Chancellors ago, promised a fundamental reform of business rates. This is another broken Tory promise. Will the Minister admit that only a Labour Government will end the chaos, scrap business rates and replace them with a fairer system, so that our amazing hospitality sector can thrive and grow faster?
Victoria Atkins
I have a great deal of respect for the hon. Lady, but I must point out to her gently that we have, in fact, conducted that review. In the autumn statement, we were able to announce a £13.6 billion package of help over the next five years, including a multiplier freeze for all ratepayers, large and small; a transitional relief cap funded by the Exchequer; retail, hospitality and leisure relief; and a small business support scheme, which will help to cap bill increases at £600 per year for any business losing eligibility for some or all small business rate relief or rural rate relief at the 2023 revaluation. We have done that review and are supporting businesses that need help.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Patrick Grady (Glasgow North) (SNP)
The Financial Secretary to the Treasury (Victoria Atkins)
As per my previous response to the same question by the hon. Gentleman in the last Treasury oral questions, I note that the UK has grown at a similar rate to comparable European economies since 2016, and that it still remains challenging to separate out the effects of Brexit and wider global trends on the UK economy. We remain absolutely committed to seizing the opportunities we now have, free from the EU.
Patrick Grady
That is very convenient. Only the UK has to deal with Brexit. Everyone has had to deal with covid and everyone has had to deal with Ukraine, but only the UK has had to deal with Brexit. That is why, according to the London School of Economics, customers have collectively paid nearly £7 billion extra in their food bills as a direct result of all the checks and frustrations that have come with Brexit. Is the Minister honestly saying that it was a good idea, and that it has not hurt the UK economy?
Victoria Atkins
Let me again gently remind the hon. Gentleman to look at what is happening in the rest of the EU. For example, the eurozone is suffering from the effects of mild recession. All this is due to the global headwinds that we are all facing. However, I know that the hon. Gentleman will be delighted by the recent growth upgrades from the Office for Budget Responsibility, the Bank of England and the OECD. We do face challenges, and of course we have to work with our global counterparts to try to deal with those global headwinds, but we are focusing very much on the Prime Minister’s priority of halving inflation, because that is what will make a real difference to our constituents.
Mr John Baron (Basildon and Billericay) (Con)
Does the Minister agree that, despite “Project Fear” forecasts, we have record employment, very low unemployment, good inward investment and trade deals in abundance? Perhaps the Scottish National party should focus on its poor record on the economy and, indeed, on financial transparency, and get over the fact that we have left the EU.
Victoria Atkins
May I take this opportunity to congratulate my hon. Friend on his recent honour, which is extremely well deserved? He has made his point very succinctly. We have an exciting future ahead of us—we are already signing trade deals with non-EU countries, and we have a fantastic deal with the EU—and it is now up to us to make a real success of it.
Peter Aldous (Waveney) (Con)
The Financial Secretary to the Treasury (Victoria Atkins)
The Government recognise the challenges facing households as a result of the elevated cost of living, and we took further action in this year’s spring Budget to provide targeted support to protect the most vulnerable. That included the new cost of living payments this year, help with the cost of essentials through a further extension of the household support fund in England, and the uprating of benefits in line with inflation in April this year.
Peter Aldous
One of the best ways of supporting those on lower incomes is to remove the barriers that prevent them from acquiring the new skills that are necessary for better-paid jobs. Will my hon. Friend confirm that the Treasury is working closely with the Department for Education and the Department for Work and Pensions to ensure that the Lifelong Learning (Higher Education Fee Limits) Bill gets rid of those obstacles, and can she provide an update on the progress of the Barber review?
Victoria Atkins
I know that you like Ministers to answer briefly, Mr Speaker, so, if I may, I will answer my hon. Friend’s first question now and respond in writing to his question about the Barber review.
My right hon. Friend the Chancellor made employment one of the four Es in his drive for growth in the spring Budget, and we are working closely with the Department for Education to invest in exactly the way that my hon. Friend describes. That includes investment in free courses for jobs, which enable people to study high-value level 3 subjects and gain free qualifications, and employer-led skills bootcamps in high-growth areas—a phrase that I never thought I would find myself uttering—which, apparently, involve sectors such as digital, and are available to those who are either unemployed or in work and wanting to retrain.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Food banks, playgroups and warm spaces are among the services provided by mosques, temples, synagogues and churches for all our constituents to help them cope with the cost of living crisis, but many of the buildings are creaking and falling apart. Will Ministers consider extending Gordon Brown’s policy of VAT relief on building works for listed places of worship to all such places, to recognise their role in providing social good and to alleviate the pressure on multiple systems?
Victoria Atkins
I thank the hon. Lady for raising an important point. There has been an incredible outpouring of support across communities—not just in religious communities, but at village and town halls around the United Kingdom—in an effort to help people with the cost of living pressures that we face in the winter. The picture is quite complicated, but perhaps I can write to the hon. Lady with a fuller response to her question, because I want to do it justice and I know I will get in trouble with you, Mr Speaker, if I do so now.
Daisy Cooper (St Albans) (LD)
The Government’s business rates review last autumn was anything but fundamental, because it did not even look at the calculations for fair and maintainable trade, which are hammering the viability of pubs in St Albans. If the Chancellor has in fact abandoned his commitment for a fundamental review of business rates, which he himself called for last summer, will he at least look at the calculations for fair and maintainable trade before any more of our valuable pubs have to close?
The Financial Secretary to the Treasury (Victoria Atkins)
We conducted a review and put in place the £13.6 billion package of support to help businesses on our high streets. If the hon. Lady is able to look at, for example, the multiplier freeze, she will see that that has had a significant impact on those rates, as has the retail, hospitality and leisure business rates relief, which will help raise the rate of relief from 50% to 75%. We have targeted this very carefully at exactly the businesses that she mentions.
BACKBENCH BUSINESS
Victoria Atkins Excerpts(1 year, 11 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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The Financial Secretary to the Treasury (Victoria Atkins)
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate my right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) on securing this debate, and I thank him sincerely for the personal experiences that he has brought into it.
For what it is worth, I did not know that my right hon. Friend has lived with dyslexia. I have seen him so many times in the Chamber, both at the Dispatch Box and as am eminent Back Bencher. I am genuinely in awe of his ability to memorise the briefs that we get. Anyone who has had to stand at the Dispatch Box, whether in Government or in Opposition, will know how densely written and complex they can be.
Sir Mike Penning
The Minister and the civil servants who are listening will realise just how petrified officials were when I walked into my first ministerial position and said, “By the way, I memorise—I do not read—the submissions that you want me to read out at the Dispatch Box.” In a further seven Departments, the message not to try to push stuff in front of me eventually got round Westminster. It is interesting that we take for granted that people are reading verbatim what is in front of them. An awful lot of people with reading and learning difficulties do not. They actually go with their gut feeling, which is what I have always tended to do.
Victoria Atkins
My right hon. Friend makes an important point more generally, if I may have your munificence for a moment, Mr Sharma. It is so important that people such as my right hon. Friend show that dyslexia or other learning conditions need not be a barrier in a person’s ability to achieve success nowadays. In many ways, he will have been at the forefront of that change. I was horrified to hear about the reaction he had at school. I hope and trust that nowadays, children with a similar condition would not have that reaction; it would be much better understood. The fact that he rather endearingly described that he thought it was a tropical disease shows just how far we have come. He and others have been at the forefront of that, and I am genuinely grateful to him for sharing his experiences with us.
Ensuring that everybody is able to access books in all their forms is something that this Government take very seriously. Driving up standards in literacy has been our long-term priority in education, and our focus over the past decade has been on improving the teaching of reading for everybody. We have given students across the country a solid foundation in reading. That is not just to give young people the skills that are vital for their success in later life, but—as the hon. Member for Motherwell and Wishaw (Marion Fellows) put it so eloquently—to encourage a lifelong love and respect for one of life’s greatest pleasures.
I very much understand the enormous pleasures that audiobooks can bring, as someone whose constituency is quite some distance from London—I know the hon. Lady’s is, too. I have had an excitable seven, eight, nine, 10 and then 11-year-old throughout my career in this place, and having an audiobook that really grips a young child’s attention can be a godsend to parents struggling on long journeys.
I am veering into flippancy, but there is a much more serious point about what an audiobook can mean for an individual’s ability to read and enjoy reading. My right hon. Friend the Member for Hemel Hempstead gave the compelling example of his constituent who is losing her sight and with it, she fears, her ability to continue enjoying reading. I take that very seriously. I understand his point about the difference in timing and the implications of VAT.
We believe that a love of reading should be ignited at a young age, which is why we have committed to ensuring that early reading is taught well in schools. We have introduced packages of measures.
Christine Jardine (Edinburgh West) (LD)
The Minister is making a good point. In a previous life as a university lecturer in journalism, I had a student who was blind. The books that were available as audiobooks were much more expensive because of the VAT, and there were fewer of them. With podcasts, there is more material. The educational value is not just in schools, but goes right through to higher education. I had an elderly grandparent who went blind, but was still able to read through audiobooks, which became a lifeline. The VAT is an obstacle to providing a vital lifeline to elderly people who can no longer read.
Victoria Atkins
Although this part of my speech focuses on children, I very much accept the point about people having a love of reading throughout their life. I want to mention the positive work, which I hope is welcomed across the House, in schools to improve literacy and give that love of reading to young people. The English hubs programme promotes a love of reading and spreads best practice in teaching pupils to read. It supports schools in England in providing excellent phonics and early language teaching. The hon. Lady will be able to help us with what happens in Scotland. The ability to teach reading, particularly through the use of phonics, is very much recognised. Through the hub programme, literary specialists provide tailored support to schools, including by running events to showcase excellent practice in teaching and reading, and by working with local schools to develop their practice. So far, it has supported 1,600 schools intensively, and focuses on supporting the children who are making the slowest progress in reading, many of whom come from disadvantaged backgrounds.
Sir Mike Penning
The work the Minister alludes to is on key stage 1 English. It is on the teaching of phonics. The hubs are brilliant—absolutely great—but they do not help dyslexic kids, or kids who are visually impaired, because it is a book-reading hub; it is not what they need. Nothing I have said today takes away from the fact that we want more people to have that wonderful experience of reading, but those who cannot are being excluded from those hubs.
Victoria Atkins
I hope my right hon. Friend will understand that this is not my area of expertise, and that I am here responding on VAT, but I will take away his observations on the hubs. Schools find their own ways of teaching their children. I recently had the pleasure of a Friday afternoon visit to a wonderful primary school in my constituency, Mareham Le Fen Primary School. They have “mystery reading”, where someone reads an extract of a book to the entire primary school to try to encourage pupils to finish that book. Schools across the country have programmes like that to encourage reading and to make it a real pleasure for children, and I very much support any efforts to bring that about.
We have provided £8.7 million of funding this academic year to support schools in purchasing complete systematic synthetic phonics programmes for their curriculum—that is a good example of Department for Education jargon. By ensuring high-quality phonics teaching and improving literacy, we are giving children a solid base on which to build as they progress through school. We published the reading framework in 2021. Over 90% of schools have read that framework, which provides guidance on how to improve the teaching of reading. It focuses on the early stages of teaching reading, and on the contribution of talk, stories and systematic synthetic phonics. It also helps schools to meet expectations for teaching early reading.
We very much appreciate the fact that these measures are paying off. England came fourth out of the 43 countries that tested children of the same age for primary reading proficiency in the Progress in International Reading Literacy Study, the results of which were published last month. That is a real success, and we know that it is down to the concentration on phonics and is driven by improvements for those pupils who have perhaps struggled in the past. I am very grateful, as I know my right hon. Friend the Member for Hemel Hempstead is, to ministerial colleagues whose efforts over the years have driven those changes.
However, we also recognise the importance of provision for children with special educational needs and disabilities, including children who live with some of the conditions that we have heard about today, including partial sightedness and blindness, dyslexia and other learning conditions. These cohorts may require extra support, so the next reading framework to be published will include guidance on supporting children who are struggling to read, including those with special educational needs. The Government speak regularly to experts, including SEND specialists, specialist schools and English hubs, about how we can support teachers to ensure that children with dyslexia and other learning difficulties can progress well in their reading, and meet the expectations on them by the time they leave primary school.
If I may, I will now turn to the subject of VAT. Of course, as colleagues from across the House know, VAT is a broad-based tax on consumption, and the 20% standard rate applies to most goods and services. Although there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations.
We did indeed cut the VAT on certain digital publications in the March 2020 Budget to support literacy and reading in all its forms, and to make it clear that e-books, e-newspapers, e-magazines, and academic e-journals are entitled to the same VAT treatment as their physical counterparts.
The extension of the zero rate of VAT to e-publications was introduced to address the inconsistency of approach between certain physical publications and their digital counterparts, so that there is a mirroring between the two; if a publication in physical form has a zero rating, then in digital form it now has the same exemption. There will be categories of publication where, because the physical form does not have zero rating, the digital form does not either. I say that because audiobooks—and podcasts, which the hon. Member for Edinburgh West (Christine Jardine) mentioned—would not come under that approach, if one were to extend it to audio publications. We say that there is no such inconsistency in relation to audiobooks, but I appreciate that that is the point under discussion today.
As colleagues know, any VAT relief would come at a cost to the Exchequer, and it would be very difficult to target. The hon. Member for Motherwell and Wishaw said that the RNIB has asked if this approach has been costed, both for people living with sight conditions and the public more generally. My answer to her is that there is ongoing work on that. I do not have figures that I can give her today, because I need to satisfy myself that any figures I give are accurate, but I take her point, and I will write to her in due course, when I am in a position to do so, because that is a very fair question.
As was noted by the hon. Member for Ealing North (James Murray), who spoke for the Opposition, there is a sense that the law has to try to keep pace with the speed of change in technology, which can be difficult; I think we all acknowledge that. For example, many audiobooks are now provided through subscription, along with other forms of media, such as podcasts, and trying to introduce distinctions between these different types of products would introduce additional complexity into the VAT system.
There is also no guarantee that the benefit of any VAT relief would be passed on to the consumer in the form of lower prices. That is quite an important point. We all assume that the VAT exemption announced in March 2020 was passed on to consumers by businesses, but it seems that that is not necessarily the case. It is not for me to advise either right hon. and hon. Members or charities, but where that benefit is not being passed on to consumers, perhaps publishers of e-books and so on should be asked why.
Audiobooks are enjoyed by a wide range of consumers, so the majority of any relief would primarily be felt by those not living with disabilities that prevent them from accessing physical and digital books. Also, I am obliged to mention, as in any debate on VAT, that it is the third largest tax in the UK in terms of yield, and it allows the Government and the state to provide public services. It is forecast to raise £161 billion this financial year alone. Many public services are supported from those funds, so we have to look very carefully at every request to change or tweak the VAT system, or to use it to meet the laudable aims and concerns of colleagues from across the House.
There was a question about the VAT cut. Some might say, “Hang on a minute; if the Government have imposed the VAT cut, why can’t they force businesses to pass on that cut?” We set the tax framework, and businesses must operate within it, but if a business chooses to absorb that tax relief as profit, rather than pass it on to consumers, that is a commercial decision taken by the business. That may be something that others outside this Chamber may wish to reflect on when considering the issue as a whole.
In conclusion, we understand why my right hon. Friend the Member for Hemel Hempstead called for this debate. We agree that literacy is a vital issue, not just for our youngest citizens but throughout our lifetimes. We are confident that our record over the past 13 years shows that we are making the right decisions for children in school. We believe that the measures that we continue to take to support reading are the best way to target our resources to deliver this wonderful benefit to everyone. However, we do not rest on our laurels; that is why the reading framework guidance will also focus on the needs of children living with special educational needs.
I thank my right hon. Friend for his debate, and I thank hon. Members from across the House for their contributions. I am sorry that I am not able to give quite the news that my right hon. Friend was hoping for, but I look forward to discussing the matter with him in future.
National Insurance Record Gaps
Victoria Atkins Excerpts(1 year, 11 months ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
The Government intend to extend the deadline for eligible individuals to retrospectively fill gaps in their national insurance record for the period covering April 2006 to April 2016. The current 31 July 2023 deadline will be extended to 5 April 2025.
This extension will also apply to contributions relating to all years which would reach their payment deadline before 5 April 2025, including tax years 2016 to 2017 and 2017 to 2018. All relevant voluntary national insurance contributions (NICs) payments will be accepted at the rates applicable in 2022 to 2023 until 5 April 2025.
This extension means that people will have more time to fill gaps in their national insurance record that may increase the amount they receive in state pension.
Furthermore, HMRC and DWP are taking the opportunity through the extension period to make improvements to the digital service, with the intention that ultimately the majority of customers should be able to complete the process online. Further announcements will follow in due course.
[HCWS843]
Double Taxation Convention: San Marino
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
A double taxation convention with San Marino was signed in London on 17 May. The text of the convention is available on HM Revenue and Customs’ pages of the gov.uk website and will be deposited in the Libraries of both Houses. The text of the convention will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
[HCWS782]